Schwab Core Equity Fund (SWANX) N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-7704

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)

Randall W. Merk
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: April 30, 2009

Item 1: Report(s) to Shareholders.

Semiannual report dated April 30, 2009 enclosed.

Prospectus Supplements and

Semiannual Report Enclosed

Schwab Active Equity Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core
Equity Fund

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Schwab Active Equity Funds

Semiannual Report

April 30, 2009

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core
Equity Fund

This page is intentionally left blank.

Schwab Active Equity Funds

In This Report
Performance at a Glance	2
From the President	3
The Investment Environment	4
Fund Management	5
Schwab Premier Equity Fund®	6
Schwab Core Equity Fundtm	8
Schwab Dividend Equity Fundtm	10
Schwab Large-Cap Growth Fundtm	12
Schwab Small-Cap Equity Fundtm	14
Schwab Hedged Equity Fundtm	16
Schwab Financial Services Fundtm	18
Schwab Health Care Fundtm	20
Schwab® International Core Equity Fund	22
Fund Expenses	24
Financial Statements	26
Financial Notes	94
Trustees and Officers	105
Glossary	108

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for
the Report Period
Schwab Premier Equity Fund®
Investor Shares (Ticker Symbol: SWPNX)	-8.94%
Select Shares® (Ticker Symbol: SWPSX)	-8.90%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 6-7
Schwab Core Equity Fundtm
(Ticker Symbol: SWANX)	-8.49%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 8-9
Schwab Dividend Equity Fundtm
Investor Shares (Ticker Symbol: SWDIX)	-11.20%
Select Shares® (Ticker Symbol: SWDSX)	-11.03%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Large-Cap Value	-9.07%
Performance Details	pages 10-11
Schwab Large-Cap Growth Fundtm
Investor Shares (Ticker Symbol: SWLNX)	-5.80%
Select Shares® (Ticker Symbol: SWLSX)	-5.65%
Benchmark: Russell 1000 Growth Index	-1.52%
Fund Category: Morningstar Large-Cap Growth	-2.58%
Performance Details	pages 12-13
Schwab Small-Cap Equity Fundtm
Investor Shares (Ticker Symbol: SWSIX)	-7.94%
Select Shares® (Ticker Symbol: SWSCX)	-7.82%
Benchmark: S&P Small-Cap 600 Index	-8.47%
Benchmark: Russell 2000® Index	-8.40%
Fund Category: Morningstar Small-Cap Blend	-5.44%
Performance Details	pages 14-15
Schwab Hedged Equity Fundtm
Investor Shares (Ticker Symbol: SWHIX)	-4.23%
Select Shares® (Ticker Symbol: SWHEX)	-4.12%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Long-Short	-2.20%
Performance Details	pages 16-17
Schwab Financial Services Fundtm
(Ticker Symbol: SWFFX)	-18.92%
Benchmark: S&P 1500 SuperComposite Financials Sector Index	-27.33%
Fund Category: Morningstar Financial Services	-16.33%
Performance Details	pages 18-19
Schwab Health Care Fundtm
(Ticker Symbol: SWHFX)	-9.21%
Benchmark: S&P 1500 SuperComposite Health Care Sector Index	-8.84%
Fund Category: Morningstar Health Care	-6.77%
Performance Details	pages 20-21
Schwab® International Core Equity Fund
Investor Shares (Ticker Symbol: SICVX)1	-4.47%
Select Shares® (Ticker Symbol: SICSX)1	-4.35%
Institutional Shares (Ticker Symbol: SICNX)1	-4.26%
Benchmark: MSCI EAFE Index®(Gross)*	-2.35%
Fund Category: Morningstar Foreign Large-Cap Blend	-3.30%
Performance Details	pages 10-11
Minimum Initial Investment2
Investor Shares	$    100
Select Shares®	$    100
Institutional Shares	$    100

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Source for category information: Morningstar, Inc.

1	The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.
2	Please see prospectus for further detail and eligibility requirements.
*	The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs.

2 Schwab Active Equity Funds

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

With this in mind, we’ve made a number of improvements to the Schwab Funds family of mutual funds making investing cheaper and easier for our clients. I am pleased to report that on May 5, 2009, we lowered expenses on Schwab Equity Index Funds and announced that we are simplifying share classes for Schwab equity and bond funds. Each Schwab equity and bond fund offers one low fund expense to investors regardless of how much they invest, starting at a low $100 minimum investment. Our goal is to make investing easier for our clients and the advisors who serve them−at a very low cost.

These enhancements are intended to help our clients continue to invest no matter what the market conditions may be. We hope that each and every client feels more comfortable planning for a financially secure future knowing that we are constantly working to make investing easier and more affordable.

Thank you for investing with us.

Sincerely,

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Schwab Active Equity Funds 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Schwab Active Equity Funds

Fund Management

	Jeffrey Mortimer, CFA, Chief Investment Officer, Charles Schwab Investment Management, is responsible for the overall management of each of the funds. Prior to joining the firm in October 1997, he worked for more than 8 years in asset management.
	Vivienne Hsu, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. Prior to joining the firm in August 2004, she worked for more than 11 years in asset management and quantitative analysis at other investment firms.
	Larry Mano, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. Prior to joining the firm in November 1998, he worked for 20 years in equity management.
	Paul Alan Davis, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. Prior to joining the firm in 2003, he worked for more than 12 years in portfolio management.
	Eric Thaller, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of the Schwab Large-Cap Growth Fund, Schwab Core Equity Fund, Schwab Small-Cap Equity Fund and Schwab International Core Equity Fund. Prior to joining the firm in January 2008, he worked for 12 years in quantitative analysis and asset management.

Schwab Active Equity Funds 5

Schwab Premier Equity Fund^®

The Schwab Premier Equity Fund Investor Shares returned -8.94% during the period, underperforming the benchmark S&P 500 Index, which returned -8.53%. Relative to the benchmark, allocation and stock selection in Utilities, Materials, and Information Technology detracted most significantly from performance. Stock selection and allocation in Financials and Energy were the leading offsetting contributors. When looking at returns in the fund on a sector specific level, Utilities declined the most, returning -30%, followed by Industrials and Financials, which returned -20% and -17%, respectively. Telecomm Services, the best performing sector, returned 18%. The fund was overweight to companies with smaller market caps ($10 billion and below), which generally performed better than larger companies during the period. However, on a relative basis, the fund’s securities in this space generally underperformed the benchmark, limiting the overall impact of allocation on performance.

As of 04/30/09:

 Statistics

Number of Holdings 104

Weighted Average Market

  Cap ($ x 1,000,000) $26,980

Price/Earnings Ratio (P/E) 30.6

Price/Book Ratio (P/B) 1.6

Portfolio Turnover Rate¹ 44%

 Sector Weightings % of Investments

Information Technology 17.9%

Health Care 15.4%

Consumer Staples 12.6%

Energy 12.4%

Financials 10.9%

Consumer Discretionary 9.6%

Industrials 8.3%

Telecommunication Services 4.4%

Materials 3.1%

Utilities 3.1%

Other 2.3%

Total 100.0%

 Top Holdings % Net Assets²

States Street Institutional

  Liquid Reserves Fund - Institutional

  Class 2.2%

Hewlett-Packard Co. 1.5%

Northrop Grumman Corp. 1.5%

The Goldman Sachs Group, Inc. 1.5%

Sybase, Inc. 1.4%

L-3 Communications Holdings, Inc. 1.4%

JPMorgan Chase & Co. 1.4%

Symantec Corp. 1.4%

International Business Machines

  Corp. 1.4%

BMC Software, Inc. 1.4%

Total 15.1%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

6 Schwab Active Equity Funds

 Schwab Premier Equity Fund^®

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		3 Years		Since Inception
Investor Shares (3/21/05)		-8.94%		-36.67%		-13.62%		-5.64%
Select Shares (3/21/05)		-8.90%		-36.56%		-13.49%		-5.52%
Benchmark: S&P 500® Index		-8.53%		-35.31%		-10.76%		-5.32%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-11.15%		-5.29%

Fund Expense Ratios³: Investor Shares: 1.17% / Select Shares: 1.02%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab Active Equity Funds 7

Schwab Core Equity Fund^tm

The Schwab Core Equity Fund returned -8.49% for the period, narrowly outperforming the benchmark S&P 500 Index, which returned -8.53%. Relative to the benchmark, stock selection in Financials was the most significant beneficial contributor, while stock selection in Consumer Discretionary, Consumer Staples, and Utilities detracted from performance. Generally, sector stock selection benefited the fund, while sector allocations detracted. When looking at returns in the fund on a sector specific level, Utilities was the worst performing sector, returning -25%, followed by Financials and Consumer Staples, which returned -16% and -14%, respectively. Better performing sectors were Telecomm Services and Information Technology, which returned 15% and 6%, respectively. In terms of market capitalization, allocation to small-company stocks (less than $5 billion market cap) benefited the fund, as these companies generally had better returns. However, relative to the benchmark, stock selection in the small-cap space detracted from performance. Better performing securities in the fund included IBM and Symantec, while avoiding Citigroup and General Electric also benefited the fund. Securities detracting from performance were led by General Mills, NRG Energy, and Valero.

As of 04/30/09:

 Statistics

Number of Holdings 124

Weighted Average Market

  Cap ($ x 1,000,000) $63,007

Price/Earnings Ratio (P/E) 19.6

Price/Book Ratio (P/B) 1.9

Portfolio Turnover Rate¹ 22%

 Sector Weightings % of Investments

Information Technology 20.5%

Health Care 15.8%

Financials 13.9%

Consumer Staples 12.0%

Energy 11.8%

Industrials 11.0%

Consumer Discretionary 8.1%

Utilities 2.3%

Telecommunication Services 2.1%

Materials 1.9%

Other 0.6%

Total 100.0%

 Top Holdings % Net Assets²

International Business Machines

  Corp. 5.5%

Hewlett-Packard Co. 4.5%

Exxon Mobil Corp. 4.1%

JPMorgan Chase & Co. 3.6%

Raytheon Co. 3.5%

Lockheed Martin Corp. 3.0%

The Procter & Gamble Co. 2.5%

Pfizer, Inc. 2.4%

Wal-Mart Stores, Inc. 2.4%

Chevron Corp. 2.0%

Total 33.5%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

8 Schwab Active Equity Funds

 Schwab Core Equity Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment¹

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		5 Years		10 Years
Fund: Schwab Core Equity Fundtm (7/1/96)		-8.49%		-32.18%		-0.83%		-1.24%
Benchmark: S&P 500®Index		-8.53%		-35.31%		-2.70%		-2.48%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%

Fund Expense Ratios³: Net 0.75%; Gross 0.78%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab Active Equity Funds 9

Schwab Dividend Equity Fund^tm

The Schwab Dividend Equity Fund Investor Shares returned -11.20% for the period, underperforming the benchmark S&P 500 Index, which returned -8.53%. Underperformance was primarily attributable to the fund’s focus on dividend paying stocks which underperformed non-dividend stocks during the period. Unlike the benchmark, which is comprised of both dividend and non-dividend paying stocks, the fund primarily holds companies that pay dividends. Specifically, allocation and stock selection in Information Technology and Health Care, and stock selection in Consumer Staples detracted most significantly from performance. Stock selection and allocation in Financials, and stock selection in Industrials were the leading offsetting contributors. When looking at returns in the fund on a sector specific level, Financials declined the most, returning -23%, followed by Consumer Staples and Health Care, which returned -15% and -12%, respectively. Telecomm Services, the best performing sector, returned 8%. From a market capitalization perspective, small companies generally outperformed their larger counterparts. Allocation to small companies benefited the fund, but stock selection in small and mid-sized corporations detracted. In terms of overall stock selection, an overweight to D.R. Horton was the leading contributor, while avoiding Citigroup, General Electric, and Wells Fargo also helped. Securities detracting from performance were led by Sun Trust Bank, Inc. and General Mills.

As of 04/30/09:

 Statistics

Number of Holdings 114

Weighted Average Market

  Cap ($ x 1,000,000) $50,014

Price/Earnings Ratio (P/E) 25.7

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 17%

 Sector Weightings % of Investments

Health Care 14.4%

Financials 14.4%

Information Technology 13.9%

Consumer Staples 11.9%

Industrials 11.9%

Energy 11.3%

Consumer Discretionary 9.3%

Utilities 5.2%

Telecommunications Services 4.2%

Materials 1.3%

Other 2.2%

Total 100.0%

 Top Holdings % Net Assets²

JPMorgan Chase & Co. 2.3%

International Business Machines

  Corp. 2.3%

Occidental Petroleum Corp. 2.2%

Raytheon Co. 2.0%

Exxon Mobil Corp. 2.0%

Johnson & Johnson 1.8%

Microsoft Corp. 1.8%

McDonald’s Corp. 1.8%

Chevron Corp. 1.8%

Wyeth 1.8%

Total 19.8%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

10 Schwab Active Equity Funds

 Schwab Dividend Equity Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception
Investor Shares (9/2/03)		-11.20%		-32.22%		-1.05%		1.80%
Select Shares (9/2/03)		-11.03%		-32.05%		-0.89%		1.95%
Benchmark: S&P 500®Index		-8.53%		-35.31%		-2.70%		-0.56%
Fund Category: Morningstar Large-Cap Value		-9.07%		-36.27%		-2.73%		-0.28%

Fund Expense Ratios³: Investor Shares: 1.04% / Select Shares: 0.89%

 Style Assessment⁴

 Yields¹

SEC Yield
Investor Shares	2.87%
Select Shares	3.01%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab Active Equity Funds 11

Schwab Large-Cap Growth Fund^tm

The Schwab Large-Cap Growth Fund Investor Shares returned -5.80% during the period, underperforming the benchmark Russell 1000 Growth Index, which returned -1.52%. Relative to the benchmark, allocation and stock selection in Consumer Discretionary and Industrials, and stock selection in Consumer Staples and Health Care detracted most significantly from performance. Stock selection and allocation in Financials led offsetting contributors. When looking at returns in the fund on a sector specific level, Utilities declined the most, returning -25%, followed by Consumer Staples and Health Care, which returned -15% and -10%, respectively. Telecomm Services, the best performing sector, returned 21%. In terms of market capitalization, stock selection in companies with smaller market caps detracted from performance relative to the benchmark. In terms of overall stock selection, an overweight to BMC Software and an underweight to Abbott Labs led positive performance contributors. Securities detracting from performance were led by overweights to General Mills, Covanta Holdings Corp., and Apollo Group.

As of 04/30/09:

 Statistics

Number of Holdings 104

Weighted Average Market

  Cap ($ x 1,000,000) $57,124

Price/Earnings Ratio (P/E) 17.0

Price/Book Ratio (P/B) 2.7

Portfolio Turnover Rate¹ 27%

 Sector Weightings % of Investments

Information Technology 34.3%

Health Care 14.5%

Industrials 12.0%

Consumer Staples 11.0%

Consumer Discretionary 10.0%

Energy 6.3%

Financials 4.3%

Materials 2.0%

Telecommunication Services 1.2%

Utilities 0.3%

Other 4.1%

Total 100.0%

 Top Holdings % Net Assets²

International Business Machines

  Corp. 4.7%

Hewlett-Packard Co. 4.2%

Apple, Inc. 3.3%

Exxon Mobil Corp. 3.1%

Microsoft Corp. 3.0%

Accenture Ltd., Class A 2.9%

Lockheed Martin Corp. 2.9%

MBC Software, Inc. 2.7%

iShares Russell 1000 Growth

  Index Fund 2.6%

Cisco Systems, Inc. 2.5%

Total 31.9%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

12 Schwab Active Equity Funds

 Schwab Large-Cap Growth Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		3 Years		Since Inception
Investor Shares (10/3/05)		-5.80%		-31.07%		-9.67%		-6.82%
Select Shares (10/3/05)		-5.65%		-30.94%		-9.48%		-6.65%
Benchmark: Russell 1000 Growth Index		-1.52%		-31.57%		-8.49%		-5.63%
Fund Category: Morningstar Large-Cap Growth		-2.58%		-33.51%		-10.02%		-6.53%

Fund Expense Ratios³: Investor Shares: 1.16% / Select Shares: Net 0.99%; Gross 1.01%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab Active Equity Funds 13

Schwab Small-Cap Equity Fund^tm

The Schwab Small-Cap Equity Fund Investor Shares returned -7.94% during the period, outperforming the benchmark S&P 600 Index, which returned -8.47%. Relative to the benchmark, stock selection and allocation in Financials and Industrials, and stock selection in Health Care, were the most significant beneficial contributors, while stock selection in Utilities acted to offset. Generally, both sector stock selection and allocation benefited the fund. When looking at returns in the fund on a sector specific level, Energy was the worst performing sector, returning -27%, followed by Utilities and Telecomm Services, which returned -25% and -21%, respectively. Better performing sectors were Consumer Discretionary and Consumer Staples, which returned 9% and 6%, respectively. In terms of market capitalization, stock selection in companies with larger market caps benefited the fund relative to the benchmark, while allocation in this space acted to offset. In terms of overall stock selection, overweights to Hot Topic, EMCOR Group, and Sybase were the leading performance contributors. Securities detracting from performance were led by overweights to SVB Financial Group, Mirant Corp, and W&T Offshore, Inc.

As of 04/30/09:

 Statistics

Number of Holdings 358

Weighted Average Market

  Cap ($ x 1,000,000) $1,059

Price/Earnings Ratio (P/E) -38.6

Price/Book Ratio (P/B) 1.3

Portfolio Turnover Rate¹ 40%

 Sector Weightings % of Investments

Information Technology 19.5%

Financials 16.9%

Industrials 16.8%

Consumer Discretionary 15.6%

Health Care 12.9%

Materials 4.1%

Consumer Staples 4.0%

Utilities 3.6%

Energy 3.2%

Telecommunication Services 0.8%

Other 2.6%

Total 100.0%

 Top Holdings % Net Assets²

Emulex Corp. 1.5%

UMB Financial Corp. 1.2%

EMCOR Group, Inc. 1.2%

Sybase, Inc. 1.2%

Hot Topic, Inc. 1.2%

Watson Wyatt Worldwide, Inc.,

  Class A 1.2%

Mirant Corp. 1.2%

AMERIGROUP Corp. 1.2%

Hewitt Associates, Inc., Class A 1.2%

Synopsys, Inc. 1.2%

Total 12.3%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Small company stocks are subject to greater volatility than other asset classes.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

14 Schwab Active Equity Funds

 Schwab Small-Cap Equity Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception
Investor Shares (7/1/03)		-7.94%		-33.77%		-1.95%		3.17%
Select Shares (7/1/03)		-7.82%		-33.62%		-1.77%		3.35%
Benchmark: S&P Small-Cap 600 Index		-8.47%		-30.05%		-0.13%		3.96%
Benchmark: Russell 2000® Index		-8.40%		-30.74%		-1.45%		2.74%
Fund Category: Morningstar Small-Cap Blend		-5.44%		-32.07%		-1.74%		2.48%

Fund Expense Ratios³: Investor Shares: 1.27% / Select Shares: 1.12%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab Active Equity Funds 15

Schwab Hedged Equity Fund^tm

The Schwab Hedged Equity Fund Investor Shares returned -4.23% for the period, outperforming the benchmark S&P 500 Index, which returned -8.53%. Relative to the benchmark, outperformance was primarily due to the fund’s long positions. Short positions also added value, but to a lesser degree. In particular, allocation and stock selection on the long side in the Financials sector was a positive performance contributor, improving returns against the index’s worst performing sector. Both long and short positions in the Industrials sector were also significant contributors to relative outperformance. Detracting from performance were long and short positions in the Materials sector and the Utilities sector. In terms of overall stock selection, positive performance contributors on the long side were led by an overweight to BMC Software, avoiding Bank of America, and an overweight to Sybase. Securities detracting from performance were led by overweights to SunTrust Banks, W&T Offshore, Inc., and SVB Financial Group.

As of 04/30/09:

 Statistics

Number of Holdings

  Long Holdings 154

  Short Positions 103

Weighted Average Market

  Cap ($ x 1,000,000)

  Long Holdings $18,318

  Short Positions $10,765

Price/Earnings Ratio (P/E)

  Long Holdings 96.2

  Short Positions (59.0)

Price/Book Ratio (P/B)

  Long Holdings 1.6

  Short Positions 2.2

Portfolio Turnover Rate¹ 90%

Portfolio Turnover Rate

  excluding short sales¹ 59%

 Top Long Holdings % of Net Assets²

Sybase, Inc. 2.6%

Anadarko Petroleum Corp. 2.5%

Raytheon Co. 2.5%

EMCOR Group, Inc. 2.2%

BMC Software, Inc. 2.2%

Total 12.0%

 Top Short Holdings % of Net Assets²

Leucadia National Corp. 1.0%

Texas Industries, Inc. 0.9%

Staples, Inc. 0.9%

The Boeing Co. 0.8%

Caterpillar, Inc. 0.8%

Total 4.4%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

16 Schwab Active Equity Funds

 Schwab Hedged Equity Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception
Investor Shares (3/1/05)		-4.23%		-19.58%		n/a		-2.06%
Select Shares (9/3/02)		-4.12%		-19.41%		1.37%		4.11%
Benchmark: S&P 500® Index		-8.53%		-35.31%		-2.70%		(3/1/05) -5.49%
								(9/3/02) 1.24%
Fund Category: Morningstar Long-Short		-2.20%		-13.50%		1.56%		(3/1/05) 0.09%
								(9/3/02) 2.33%

Fund Expense Ratios³: Investor Shares: Net 1.88%; Gross 2.34% / Select Shares: Net 1.72%; Gross 2.19%

The Hedged Equity Fund’s long positions can decline in value at the same time the value of its shorted stocks increases, thereby increasing the potential for loss. The potential loss associated with short positions is much greater than the original value of the securities sold. The use of borrowing and short sales may cause the fund to have higher expenses than those of equity funds that do not use such techniques.

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Includes dividend expense on securities sold short. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Active Equity Funds 17

Schwab Financial Services Fund^tm

The Schwab Financial Services Fund returned -18.92% during the period, outperforming the benchmark S&P 1500 SuperComposite Financials Sector Index, which returned -27.33%. Relative to the benchmark, stock selection and allocation in Asset Management & Custody Banks and Diversified Financial Services, along with allocation in Data Processing & Outsourced Services and Diversified Banks were the most significant beneficial contributors. Stock selection in Investment Banking & Brokerage and allocation in Regional Banks acted to offset. When looking at returns in the fund on an industry group specific level, Thrifts & Mortgage Finance was the worst performing industry sub-group, returning -51%, followed by Diversified Financial Services and Regional Banks, which returned -44% and -42%, respectively. Better performing sectors were Data Processing & Outsourced Services and Specialized Finance, which returned 18% and 13%, respectively. In terms of market capitalization, allocation benefited the fund across cap levels relative to the benchmark, while stock selection in medium and large corporations also added value. In terms of overall stock selection, an underweight to Bank of America, an overweight to Ameriprise Financial, and an underweight to Citigroup were the leading contributors. Securities detracting from performance were led by an overweight to Sun Trust Banks, Inc., an underweight to Morgan Stanley, and an overweight to SVB Financial Group.

As of 04/30/09:

 Statistics

Number of Holdings 80

Weighted Average Market

  Cap ($ x 1,000,000) $24,432

Price/Earnings Ratio (P/E) -197.1

Price/Book Ratio (P/B) 0.9

Portfolio Turnover¹ 13%

 Industry Weightings % of Investments

Diversified Financials 43.0%

Insurance 24.0%

Banks 16.4%

Software and Services 5.8%

Real Estate 5.7%

Commercial and Professional

Services 0.3%

Media 0.2%

Other 4.6%

Total 100.0%

 Top Holdings % Net Assets²

JPMorgan Chase & Co. 6.4%

The Goldman Sachs Group, Inc. 5.5%

Ameriprise Financial, Inc. 4.8%

MasterCard, Inc., Class A 3.4%

Northern Trust Corp. 3.4%

The Travelers Cos., Inc. 3.3%

Bank of America Corp. 3.2%

The Chubb Corp. 2.9%

Bank of New York Mellon Corp. 2.7%

Morgan Stanley 2.6%

Total 38.2%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

18 Schwab Active Equity Funds

 Schwab Financial Services Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment¹

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		5 Years		Since Inception
Fund: Schwab Financial Services Fundtm (7/3/00)		-18.92%		-45.61%		-6.73%		-0.79%
Benchmark: S&P 1500 SuperComposite Financials Sector Index		-27.33%		-55.02%		-13.64%		-4.91%
Fund Category: Morningstar Financial Services		-16.33%		-43.80%		-9.11%		-0.21%

Fund Expense Ratio³: 0.94%

Since the Financial Services Fund focuses its investments on companies involved in specific sectors, this fund may involve a greater degree of risk than an investment in mutual funds that do not concentrate their investments.

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Active Equity Funds 19

Schwab Health Care Fund^tm

The Schwab Health Care Fund returned -9.21% for the period, underperforming the benchmark S&P 1500 SuperComposite Health Care Sector Index, which returned -8.84%. Relative to the benchmark, allocation and stock selection in Health Care Equipment, Pharmaceuticals, and Managed Health Care detracted most significantly from performance. Stock selection in Biotechnology and allocation in Health Care Services led offsetting contributors. When looking at returns in the fund on an industry group specific level, Health Care Equipment and Health Care Supplies declined the most among major industry sub-groups, returning -16% and -15%, respectively. Health Care Technology, the best performing sector, returned 50%. From a market capitalization perspective, stock selection generally detracted across cap levels, while allocation acted to offset, relative to the benchmark. In terms of overall stock selection, Watson Pharmaceuticals, Pfizer, and Express Scripts were the leading contributors. Securities detracting from performance were led by an underweight to Wyeth, avoiding Wellpoint, and an overweight to Baxter International.

As of 04/30/09:

 Statistics

Number of Holdings 118

Weighted Average Market

  Cap ($ x 1,000,000) $31,349

Price/Earnings Ratio (P/E) 16.7

Price/Book Ratio (P/B) 2.0

Portfolio Turnover¹ 16%

 Industry Weightings % of Investments

Pharmaceuticals, Biotechnology

& Life Sciences 57.4%

Healthcare-Services 34.8%

Diversified Financials 0.9%

Real Estate 0.9%

Capital Goods 0.3%

Materials 0.1%

Other 5.6%

Total 100.0%

 Top Holdings % Net Assets²

Johnson & Johnson 5.8%

Amgen, Inc. 4.9%

Pfizer, Inc. 4.5%

Baxter International, Inc. 4.3%

Express Scripts, Inc. 3.9%

Merck & Co., Inc. 3.5%

Abbott Laboratories 3.5%

Watson Pharmaceuticals, Inc. 3.3%

Thermo Fisher Scientific, Inc. 2.7%

Biogen Idec, Inc. 2.7%

Total 39.1%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

20 Schwab Active Equity Funds

 Schwab Health Care Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment¹

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		5 Years		Since Inception
Fund: Schwab Health Care Fundtm (7/3/00)		-9.21%		-22.65%		1.83%		1.94%
Benchmark: S&P 1500 SuperComposite Health Care Sector Index		-8.84%		-22.20%		-2.69%		-1.82%
Fund Category: Morningstar Health Care		-6.77%		-21.57%		-1.36%		-0.86%

Fund Expense Ratio³: 0.82%

Since the Health Care Fund focuses its investments on companies involved in specific sectors, this fund may involve a greater degree of risk than an investment in mutual funds that do not concentrate their investments.

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Active Equity Funds 21

Schwab^® International Core Equity Fund

The Schwab International Core Equity Fund Investor Shares returned -4.47% for the period underperforming the benchmark MSCI EAFE Index (Gross), which returned -2.35%. From an industry group standpoint, Materials, Real Estate, and Technology Hardware & Equipment detracted most significantly relative to the benchmark. Positive contributors were led by Utilities, Automobiles & Components, and Energy. When looking at returns in the fund on an industry group specific level, Pharmaceuticals Biotechnology & Life Sciences detracted most, returning -11.64%, followed by Banks, which returned -7.70%. Positive contributors included Energy, up 4.02% and Capital Goods, up 11.50%. The fund maintained regional weights that were very close to those of the benchmark; in continental Europe, which represented 41% of the fund, stock selection was a positive contributor to performance; in Asia, which represented 38% of the fund, stock selection detracted from performance. The fund’s UK holding represented 19% of the fund. In terms of overall stock selection, positive performance contributors were led by Tullett Prebon Group, and Petrofac, while avoiding Volkswagen also helped the fund. Securities detracting from performance were led by Lloyds Banking Group, Alpha Bank, and Resona Holdings.

As of 04/30/09:

 Country Weightings % of Investments

Japan 23.5%

United Kindom 19.1%

France 9.2%

Germany 8.5%

Australia 5.7%

Spain 5.1%

Switzerland 5.1%

United States 3.9%

Hong Kong 3.1%

Other Countries 16.8%

Total 100.0%

 Statistics

Number of Holdings 180

Weighted Average Market

  Cap ($ x 1,000,000) $27,170

Price/Earnings Ratio (P/E) 12.0

Price/Book Ratio (P/B) 1.2

Portfolio Turnover Rate¹ 52%

 Sector Weightings % of Investments

Financials 19.9%

Industrials 13.4%

Consumer Discretionary 10.6%

Health Care 10.4%

Consumer Staples 9.2%

Energy 9.2%

Materials 9.0%

Utilities 5.9%

Information Technology 4.9%

Telecommunication Services 4.5%

Other 3.0%

Total 100.0%

 Top Holdings % Net Assets²

State Street Institutional

  Liquid Reserves Fund 2.9%

Telefonica S.A. 1.9%

BP plc 1.8%

Sanofi-Aventis 1.8%

Royal Dutch Shell plc, B Share 1.7%

Novartis AG - Reg’d 1.7%

Banco Santander S.A. 1.6%

GlaxoSmithKline PLC 1.5%

France Telecom S.A. 1.4%

Nestle S.A. - Reg’d 1.3%

Total 17.6%

The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Foreign securities can involve risks such as political and economic instability and currency risk.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

22 Schwab Active Equity Funds

 Schwab^® International Core Equity Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$500,000 Investment in Institutional Shares¹

 Total Returns^1,2

Fund Class and Inception Date	6 Months		Since Inception
Investor Shares (5/30/08)		-4.47%		-44.11%
Select Shares (5/30/08)		-4.35%		-44.04%
Institutional Shares (5/30/08)		-4.26%		-43.99%
Benchmark: MSCI EAFE Index®(Gross)*		-2.35%		-42.75%
Fund Category: Morningstar Foreign Large-Cap Blend		-3.30%		-44.07%

Fund Expense Ratios³: Investor Shares: Net 1.10%; Gross 1.65% / Select Shares: Net 0.95%; Gross 1.50% /

             Institutional Shares: Net 0.86%; Gross 1.50%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

*	The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs.
1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab Active Equity Funds 23

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Premier Equity Fund®*
Investor Shares
Actual Return		1.21%	$	1,000	$	910.60	$	5.73
Hypothetical 5% Return		1.21%	$	1,000	$	1,018.79	$	6.06
Select Shares®
Actual Return		1.06%	$	1,000	$	911.00	$	5.02
Hypothetical 5% Return		1.06%	$	1,000	$	1,019.54	$	5.31
Schwab Core Equity Fundtm
Actual Return		0.75%	$	1,000	$	915.10	$	3.56
Hypothetical 5% Return		0.75%	$	1,000	$	1,021.08	$	3.76
Schwab Dividend Equity Fundtm*
Investor Shares
Actual Return		1.06%	$	1,000	$	888.00	$	4.96
Hypothetical 5% Return		1.06%	$	1,000	$	1,019.54	$	5.31
Select Shares
Actual Return		0.91%	$	1,000	$	889.70	$	4.26
Hypothetical 5% Return		0.91%	$	1,000	$	1,020.28	$	4.56
Schwab Large-Cap Growth Fundtm*
Investor Shares
Actual Return		1.19%	$	1,000	$	942.00	$	5.73
Hypothetical 5% Return		1.19%	$	1,000	$	1,018.89	$	5.96
Select Shares
Actual Return		0.99%	$	1,000	$	943.50	$	4.77
Hypothetical 5% Return		0.99%	$	1,000	$	1,019.89	$	4.96
Schwab Small-Cap Equity Fundtm*
Investor Shares
Actual Return		1.30%	$	1,000	$	920.60	$	6.19
Hypothetical 5% Return		1.30%	$	1,000	$	1,018.35	$	6.51
Select Shares
Actual Return		1.12%	$	1,000	$	921.80	$	5.34
Hypothetical 5% Return		1.12%	$	1,000	$	1,019.24	$	5.61

*  Effective May 5, 2009, the expense limitation for all share classes has been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

24 Schwab Active Equity Funds

Fund Expenses (Unaudited) continued

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Hedged Equity Fundtm*
Investor Shares
Actual Return		2.44%	$	1,000	$	957.70	$	11.84
Hypothetical 5% Return		2.44%	$	1,000	$	1,012.69	$	12.18
Select Shares
Actual Return		2.27%	$	1,000	$	958.80	$	11.02
Hypothetical 5% Return		2.27%	$	1,000	$	1,013.54	$	11.33
Schwab Financial Services Fundtm
Actual Return		1.02%	$	1,000	$	810.80	$	4.58
Hypothetical 5% Return		1.02%	$	1,000	$	1,019.74	$	5.11
Schwab Health Care Fundtm
Actual Return		0.84%	$	1,000	$	907.90	$	3.97
Hypothetical 5% Return		0.84%	$	1,000	$	1,020.63	$	4.21
Schwab® International Core Equity Fund*
Investor Shares
Actual Return		1.10%	$	1,000	$	955.30	$	5.33
Hypothetical 5% Return		1.10%	$	1,000	$	1,019.34	$	5.51
Select Shares®
Actual Return		0.95%	$	1,000	$	956.50	$	4.61
Hypothetical 5% Return		0.95%	$	1,000	$	1,020.08	$	4.76
Institutional Shares
Actual Return		0.86%	$	1,000	$	957.40	$	4.17
Hypothetical 5% Return		0.86%	$	1,000	$	1,020.53	$	4.31

*  Effective May 5, 2009, the expense limitation for all share classes has been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

Schwab Active Equity Funds 25

Schwab Premier Equity Fund^®

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			3/21/051 –
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.04			13.98			12.50			10.70			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.05			0.03			0.01			0.02
Net realized and unrealized gains (losses)		(0.75	)		(5.10	)		1.46			1.83			0.68
Total from investment operations		(0.72	)		(5.05	)		1.49			1.84			0.70
Less distributions:
Distributions from net investment income		(0.04	)		(0.03	)		(0.01	)		(0.04	)		—
Distributions from net realized gains		—			(0.86	)		—			—			—
Total distributions		(0.04	)		(0.89	)		(0.01	)		(0.04	)		—
Net asset value at end of period		7.28			8.04			13.98			12.50			10.70
Total return (%)		(8.94	)2		(38.37	)		11.89			17.22			7.00	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.21	3		1.17			1.16	4		1.17			0.78	3
Gross operating expenses		1.21	3		1.17			1.16			1.18			1.23	3
Net investment income (loss)		0.63	3		0.35			0.18			0.01			0.52	3
Portfolio turnover rate		44	2		92			72			73			33	2
Net assets, end of period ($ x 1,000,000)		182			261			663			690			364

	11/1/08–			11/1/07–			11/1/06–			11/1/05 –			3/21/051 –
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.05			14.01			12.51			10.71			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.06			0.04			0.02			0.03
Net realized and unrealized gains (losses)		(0.75	)		(5.11	)		1.48			1.83			0.68
Total from investment operations		(0.72	)		(5.05	)		1.52			1.85			0.71
Less distributions:
Distributions from net investment income		(0.06	)		(0.05	)		(0.02	)		(0.05	)		—
Distributions from net realized gains		—			(0.86	)		—			—			—
Total distributions		(0.06	)		(0.91	)		(0.02	)		(0.05	)		—
Net asset value at end of period		7.27			8.05			14.01			12.51			10.71
Total return (%)		(8.90	)2		(38.32	)		12.20			17.28			7.10	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.06	3		1.02			1.01			1.02			0.68	3
Gross operating expenses		1.06	3		1.02			1.01			1.03			1.08	3
Net investment income (loss)		0.77	3		0.50			0.32			0.17			0.63	3
Portfolio turnover rate		44	2		92			72			73			33	2
Net assets, end of period ($ x 1,000,000)		347			441			983			857			481

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ The ratio of net operating expenses would have been 1.15% if interest expenses had not been included.

26 See financial notes

 Schwab Premier Equity Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97	.6%	Common Stock		580,223		516,546
	2	.2%	Other Investment Company		11,450		11,450
	0	.1%	Short-Term Investments		640		640
	99	.9%	Total Investments		592,313		528,636
	0	.1%	Other Assets and Liabilities, Net				698
	100	.0%	Total Net Assets				529,334

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 97.6% of net assets
Banks 0.8%
SunTrust Banks, Inc.		200,000		2,888
UMB Financial Corp.		35,000		1,602
				4,490
Capital Goods 6.6%
Dover Corp.		150,000		4,617
Fluor Corp.		125,000		4,734
General Electric Co.		275,000		3,479
L-3 Communications Holdings, Inc.		100,000		7,615
Northrop Grumman Corp.		160,000		7,736
Raytheon Co.		150,000		6,784
				34,965
Commercial & Professional Supplies 0.9%
Covanta Holding Corp. *		325,000		4,586
Consumer Durables & Apparel 1.0%
The Warnaco Group, Inc. *		175,000		5,047
Consumer Services 2.8%
Apollo Group, Inc., Class A *		50,000		3,148
Bally Technologies, Inc. *		125,000		3,272
McDonald’s Corp.		65,000		3,464
Yum! Brands, Inc.		150,000		5,002
				14,886
Diversified Financials 5.1%
JPMorgan Chase & Co.		230,000		7,590
Morgan Stanley		225,000		5,319
Northern Trust Corp.		115,000		6,251
The Goldman Sachs Group, Inc.		60,000		7,710
				26,870
Energy 12.4%
Anadarko Petroleum Corp.		165,000		7,105
Chevron Corp.		105,000		6,940
ENSCO International, Inc.		185,000		5,232
Exxon Mobil Corp.		100,000		6,667
General Maritime Corp.		200,000		1,986
Murphy Oil Corp.		115,000		5,487
Nabors Industries Ltd. *		475,000		7,225
National-Oilwell Varco, Inc. *		220,000		6,661
Occidental Petroleum Corp.		120,000		6,755
Tidewater, Inc.		125,000		5,406
Valero Energy Corp.		300,000		5,952
				65,416
Food & Staples Retailing 2.7%
Safeway, Inc.		270,000		5,332
The Kroger Co.		275,000		5,945
Winn-Dixie Stores, Inc. *		275,000		3,152
				14,429
Food, Beverage & Tobacco 7.5%
Altria Group, Inc.		375,000		6,124
Archer-Daniels-Midland Co.		225,000		5,539
ConAgra Foods, Inc.		225,000		3,983
Constellation Brands, Inc., Class A *		375,000		4,346
General Mills, Inc.		100,000		5,069
Hansen Natural Corp. *		130,000		5,299
The Hershey Co.		150,000		5,421
The Pepsi Bottling Group, Inc.		120,000		3,752
				39,533
Health Care Equipment & Services 6.8%
Baxter International, Inc.		85,000		4,123
CIGNA Corp.		260,000		5,125
Express Scripts, Inc. *		85,000		5,437
Gen-Probe, Inc. *		75,000		3,612
Humana, Inc. *		100,000		2,878
McKesson Corp.		125,000		4,625
Omnicare, Inc.		200,000		5,142
Quest Diagnostics, Inc.		100,000		5,133
				36,075
Household & Personal Products 2.4%
Alberto-Culver Co.		240,000		5,350
Church & Dwight Co., Inc.		135,000		7,345
				12,695

See financial notes 27

 Schwab Premier Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Insurance 5.0%
Aon Corp.		100,000		4,220
Prudential Financial, Inc.		175,000		5,054
The Chubb Corp.		145,000		5,648
The Travelers Cos., Inc.		150,000		6,171
Unum Group		325,000		5,310
				26,403
Materials 3.1%
MeadWestvaco Corp.		350,000		5,481
Owens-Illinois, Inc. *		225,000		5,488
Rock-Tenn Co., Class A		150,000		5,664
				16,633
Media 1.7%
The Interpublic Group of Cos., Inc. *		900,000		5,634
Time Warner, Inc.		155,000		3,384
				9,018
Pharmaceuticals, Biotechnology & Life Sciences 8.5%
Abbott Laboratories		75,000		3,139
Amgen, Inc. *		100,000		4,847
Biogen Idec, Inc. *		75,000		3,625
Bristol-Myers Squibb Co.		250,000		4,800
Forest Laboratories, Inc. *		275,000		5,965
Johnson & Johnson		95,000		4,974
King Pharmaceuticals, Inc. *		450,000		3,546
Pfizer, Inc.		350,000		4,676
Warner Chilcott Ltd., Class A *		350,000		3,427
Watson Pharmaceuticals, Inc. *		200,000		6,188
				45,187
Retailing 4.1%
Amazon.com, Inc. *		50,000		4,026
Family Dollar Stores, Inc.		150,000		4,978
Macy’s, Inc.		475,000		6,498
The Gap, Inc.		400,000		6,216
				21,718
Semiconductors & Semiconductor Equipment 1.6%
FEI Co. *		250,000		4,295
LSI Corp. *		1,100,000		4,224
				8,519
Software & Services 7.6%
Affiliated Computer Services, Inc., Class A *		110,000		5,322
BMC Software, Inc. *		215,000		7,454
Sybase, Inc. *		225,000		7,641
Symantec Corp. *		440,000		7,590
Synopsys, Inc. *		340,000		7,405
Western Union Co.		300,000		5,025
				40,437
Technology Hardware & Equipment 8.7%
Cisco Systems, Inc. *		325,000		6,279
EMC Corp. *		275,000		3,446
Hewlett-Packard Co.		215,000		7,736
Ingram Micro, Inc., Class A *		275,000		3,993
International Business Machines Corp.		72,500		7,483
JDS Uniphase Corp. *		800,000		3,688
NCR Corp. *		450,000		4,567
Tellabs, Inc. *		700,000		3,668
Teradata Corp. *		300,000		5,016
				45,876
Telecommunication Services 4.4%
American Tower Corp., Class A *		150,000		4,764
Sprint Nextel Corp. *		1,300,000		5,668
Telephone & Data Systems, Inc.		195,000		5,591
Verizon Communications, Inc.		150,000		4,551
Windstream Corp.		300,000		2,490
				23,064
Transportation 0.8%
Alaska Air Group, Inc. *		250,000		4,195
Utilities 3.1%
DTE Energy Co.		125,000		3,696
Exelon Corp. *		110,000		5,075
Mirant Corp. *		325,000		4,137
NRG Energy, Inc. *		200,000		3,596
				16,504
Total Common Stock (Cost $580,223)				516,546
	Number
	of Shares		Value
Security	($ x 1,000)		($ x 1,000)
Other Investment Company 2.2% of net assets
State Street Institutional Liquid Reserves Fund - Institutional Class		11,450,061		11,450
Total Other Investment Company (Cost $11,450)				11,450
	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 0.1% of net assets
U.S. Treasury Obligations 0.1%
U.S. Treasury Bill
0.16%, 06/18/09 (a)		600		600

28 See financial notes

 Schwab Premier Equity Fund

Portfolio Holdings (Unaudited) continued

	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
0.07%, 06/18/09 (a)		40		40
Total Short-Term Investments (Cost $640)				640
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $592,793 and the unrealized appreciation and depreciation were $38,670 and ($102,827), respectively, with a net depreciation of ($64,157).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		125		5,438		622

See financial notes 29

 Schwab Premier Equity Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $592,313)		$528,636
Receivables:
Investments sold		2,196
Dividends		385
Fund shares sold		336
Due from brokers for futures		5
Interest	+	6
Total assets		531,564
Liabilities
Payables:
Investments bought		1,311
Investment adviser and administrator fees		39
Transfer agent and shareholder services fees		7
Fund shares redeemed		792
Trustees’ fees		1
Accrued expenses	+	80
Total liabilities		2,230
Net Assets
Total assets		531,564
Total liabilities	−	2,230
Net assets		$529,334
Net Assets by Source
Capital received from investors		817,538
Net investment income not yet distributed		685
Net realized capital losses		(225,834	)
Net unrealized capital losses		(63,055	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$182,393		25,059			$7.28
Select Shares	$346,941		47,714			$7.27

30 See financial notes

 Schwab Premier Equity Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends		$5,038
Interest	+	31
Total investment income		5,069
Net Realized Gains and Losses
Net realized losses on investments		(165,225	)
Net realized losses on futures contracts	+	(5,197	)
Net realized losses		(170,422	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		99,080
Net unrealized gains on futures contracts	+	3,290
Net unrealized gains		102,370
Expenses
Investment adviser and administrator fees		2,505
Transfer agent and shareholder service fees:
Investor Shares		250
Select Shares		176
Shareholder reports		59
Registration fees		26
Portfolio accounting fees		26
Professional fees		19
Custodian fees		11
Trustees’ fees		8
Other expenses	+	7
Net expenses		3,087
Increase (Decrease) in Net Assets from Operations
Total investment income		5,069
Net Expenses	−	3,087
Net investment income		1,982
Net realized losses		(170,422	)
Net unrealized gains	+	102,370
Decrease in net assets from operations		($66,070	)

See financial notes 31

 Schwab Premier Equity Fund

Statements of

Changes in Net Assets

For the current and prior report periods; unaudited. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$1,982			$5,310
Net realized losses			(170,422	)		(55,087	)
Net unrealized gains (losses)	+		102,370			(457,934	)
Decrease in net assets from operations			(66,070	)		(507,711	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			1,202			1,212
Select Shares	+		3,171			3,379
Total distributions from net investment income			4,373			4,591
Distributions from net realized gains
Investor Shares			—			39,517
Select Shares	+		—			58,845
Total distributions from net realized gains			—			98,362
Total distributions			$4,373			$102,953

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			356			$2,434			1,998			$23,061
Select Shares	+		4,908			32,776			8,803			96,437
Total Shares Sold			5,264			$35,210			10,801			$119,498
Shares Reinvested
Investor Shares			155			$1,099			3,027			$37,593
Select Shares	+		256			1,818			3,526			43,788
Total Shares Reinvested			411			$2,917			6,553			$81,381
Shares Redeemed
Investor Shares			(7,950	)		($55,202	)		(19,931	)		($223,871	)
Select Shares	+		(12,169	)		(84,784	)		(27,777	)		(310,406	)
Total Shares Redeemed			(20,119	)		($139,986	)		(47,708	)		($534,277	)
Net transactions in fund shares			(14,444	)		($101,859	)		(30,354	)		($333,398	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			87,217			$701,636			117,571			$1,645,698
Total decrease	+		(14,444	)		(172,302	)		(30,354	)		(944,062	)
End of period			72,773			$529,334			87,217			$701,636
Net investment income not yet distributed						$685						$3,076

32 See financial notes

Schwab Core Equity Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		13.43			20.49			18.40			15.81			13.81			12.71
Income (loss) from investment operations:
Net investment income (loss)		0.10			0.23			0.16			0.10			0.13			0.12
Net realized and unrealized gains (losses)		(1.24	)		(7.06	)		2.35			2.58			2.03			1.09
Total from investment operations		(1.14	)		(6.83	)		2.51			2.68			2.16			1.21
Less distributions:
Distributions from net investment income		(0.22	)		(0.18	)		(0.10	)		(0.09	)		(0.16	)		(0.11	)
Distributions from net realized gains		—			(0.05	)		(0.32	)		—			—			—
Total distributions		(0.22	)		(0.23	)		(0.42	)		(0.09	)		(0.16	)		(0.11	)
Net asset value at end of period		12.07			13.43			20.49			18.40			15.81			13.81
Total return (%)		(8.49	)1		(33.71	)		13.88			17.02			15.74			9.57
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.75	2		0.75			0.75			0.75			0.75			0.75
Gross operating expenses		0.79	2		0.78			0.78			0.81			0.85			0.88
Net investment income (loss)		1.76	2		1.28			0.91			0.63			0.93			0.89
Portfolio turnover rate		22	1		35			18			42			48			86
Net assets, end of period ($ x 1,000,000)		1,310			1,449			2,133			1,125			547			263

* Unaudited.

¹ Not annualized.

² Annualized.

See financial notes 33

 Schwab Core Equity Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.1%	Common Stock		1,587,729		1,298,688
	0	.2%	Other Investment Company		3,186		3,186
	0	.4%	Short-Term Investment		5,004		5,004
	99	.7%	Total Investments		1,595,919		1,306,878
	0	.3%	Other Assets and Liabilities, Net				3,299
	100	.0%	Total Net Assets				1,310,177

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 99.1% of net assets
Banks 0.5%
KeyCorp		355,000		2,183
SunTrust Banks, Inc.		320,000		4,621
				6,804
Capital Goods 9.9%
Emerson Electric Co.		178,320		6,070
Flowserve Corp.		50,000		3,395
Fluor Corp.		239,500		9,070
General Dynamics Corp.		50,110		2,589
Jacobs Engineering Group, Inc. *		90,000		3,423
Lockheed Martin Corp.		500,000		39,265
Northrop Grumman Corp.		220,450		10,659
Raytheon Co.		1,000,000		45,230
Tyco International Ltd.		449,100		10,671
				130,372
Consumer Durables & Apparel 0.5%
Polo Ralph Lauren Corp.		85,000		4,576
Toll Brothers, Inc. *		75,000		1,520
				6,096
Consumer Services 2.2%
Apollo Group, Inc., Class A *		165,000		10,387
McDonald’s Corp.		350,000		18,651
				29,038
Diversified Financials 8.5%
Ameriprise Financial, Inc.		433,550		11,424
Bank of New York Mellon Corp.		428,280		10,913
Capital One Financial Corp.		75,000		1,255
Discover Financial Services		600,000		4,878
JPMorgan Chase & Co.		1,424,200		46,999
Morgan Stanley		535,000		12,647
Northern Trust Corp.		143,290		7,789
State Street Corp.		200,000		6,826
The Goldman Sachs Group, Inc.		70,000		8,995
				111,726
Energy 11.8%
Anadarko Petroleum Corp.		220,000		9,473
Chevron Corp.		400,030		26,442
ConocoPhillips		200,900		8,237
ENSCO International, Inc.		200,000		5,656
Exxon Mobil Corp.		800,950		53,399
FMC Technologies, Inc. *		85,000		2,910
Murphy Oil Corp.		100,000		4,771
National-Oilwell Varco, Inc. *		101,050		3,060
Occidental Petroleum Corp.		464,490		26,146
Valero Energy Corp.		735,000		14,582
				154,676
Food & Staples Retailing 3.7%
SUPERVALU, Inc.		130,000		2,126
The Kroger Co.		700,000		15,134
Wal-Mart Stores, Inc.		630,000		31,752
				49,012
Food, Beverage & Tobacco 4.9%
Altria Group, Inc.		490,890		8,016
Archer-Daniels-Midland Co.		320,000		7,878
Coca-Cola Enterprises, Inc.		345,000		5,886
General Mills, Inc.		430,340		21,814
Reynolds American, Inc.		93,960		3,569
The Coca-Cola Co.		280,440		12,073
The Pepsi Bottling Group, Inc.		150,000		4,690
				63,926
Health Care Equipment & Services 6.0%
Aetna, Inc.		499,095		10,985
Baxter International, Inc.		386,680		18,754
Becton, Dickinson & Co.		123,110		7,446
CIGNA Corp.		326,760		6,440
Express Scripts, Inc. *		246,160		15,747
Humana, Inc. *		270,885		7,796
McKesson Corp.		50,000		1,850
Omnicare, Inc.		360,000		9,256
				78,274
Household & Personal Products 3.4%
Church & Dwight Co., Inc.		205,000		11,154
The Procter & Gamble Co.		669,389		33,095
				44,249

34 See financial notes

 Schwab Core Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Insurance 4.8%
American Financial Group, Inc.		79,290		1,394
Aon Corp.		125,000		5,275
MetLife, Inc.		700,000		20,825
Prudential Financial, Inc.		211,090		6,096
The Chubb Corp.		152,660		5,946
The Travelers Cos., Inc.		582,940		23,982
				63,518
Materials 1.9%
AK Steel Holding Corp.		127,270		1,656
Ball Corp.		100,000		3,772
Crown Holdings, Inc. *		85,000		1,874
International Paper Co.		242,155		3,066
Owens-Illinois, Inc. *		123,710		3,017
Sonoco Products Co.		326,650		7,974
Terra Industries, Inc.		125,000		3,312
				24,671
Media 1.1%
CBS Corp., Class B		320,090		2,253
Liberty Global, Inc., Series A *		350,000		5,772
Omnicom Group, Inc.		88,050		2,771
Time Warner, Inc.		166,666		3,638
				14,434
Pharmaceuticals, Biotechnology & Life Sciences 9.8%
Amgen, Inc. *		380,000		18,419
Bristol-Myers Squibb Co.		250,000		4,800
Cephalon, Inc. *		245,000		16,074
Eli Lilly & Co.		100,000		3,292
Endo Pharmaceuticals Holdings, Inc. *		86,560		1,432
Forest Laboratories, Inc. *		350,000		7,591
Johnson & Johnson		200,000		10,472
Life Technologies Corp. *		221,637		8,267
Merck & Co., Inc.		317,080		7,686
Pfizer, Inc.		2,382,530		31,831
Schering-Plough Corp.		200,000		4,604
Watson Pharmaceuticals, Inc. *		305,000		9,437
Wyeth		100,000		4,240
				128,145
Retailing 4.3%
Amazon.com, Inc. *		250,000		20,130
Family Dollar Stores, Inc.		410,000		13,608
Macy’s, Inc.		300,000		4,104
The Gap, Inc.		770,000		11,966
The Home Depot, Inc.		100,000		2,632
The Sherwin-Williams Co.		70,000		3,965
				56,405
Semiconductors & Semiconductor Equipment 1.7%
Intel Corp.		548,020		8,648
LSI Corp. *		850,000		3,264
Marvell Technology Group Ltd. *		250,000		2,745
Texas Instruments, Inc.		400,000		7,224
				21,881
Software & Services 6.2%
Accenture Ltd., Class A		75,000		2,207
BMC Software, Inc. *		510,640		17,704
Cadence Design Systems, Inc. *		602,790		3,364
Computer Sciences Corp. *		150,000		5,544
Microsoft Corp.		645,650		13,081
Oracle Corp.		250,000		4,835
Symantec Corp. *		1,375,900		23,734
Synopsys, Inc. *		506,140		11,024
				81,493
Technology Hardware & Equipment 12.5%
Apple, Inc. *		150,565		18,946
Cisco Systems, Inc. *		402,650		7,779
EMC Corp. *		200,000		2,506
Hewlett-Packard Co.		1,628,900		58,608
International Business Machines Corp.		693,160		71,541
NCR Corp. *		126,445		1,283
Xerox Corp.		549,070		3,355
				164,018
Telecommunication Services 2.1%
AT&T, Inc.		160,000		4,099
CenturyTel, Inc.		248,360		6,743
Frontier Communications Corp.		700,000		4,977
Qwest Communications International, Inc.		2,119,420		8,244
Telephone & Data Systems, Inc.		105,290		3,019
				27,082
Transportation 1.0%
Continental Airlines, Inc., Class B *		170,960		1,798
CSX Corp.		115,000		3,403
Union Pacific Corp.		150,000		7,371
				12,572
Utilities 2.3%
Duke Energy Corp.		210,000		2,900
Exelon Corp. *		275,000		12,686
NRG Energy, Inc. *		700,000		12,586
PG&E Corp.		57,220		2,124
				30,296
Total Common Stock (Cost $1,587,729)				1,298,688

See financial notes 35

 Schwab Core Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Company 0.2% of net assets
State Street Institutional Liquid Reserves Fund - Institutional Class		3,185,668		3,186
Total Other Investment Company (Cost $3,186)				3,186
	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.4% of net assets
U.S. Treasury Obligations 0.4%
U.S. Treasury Bill
0.02%, 06/18/09 (a)		1,138		1,138
0.07%, 06/18/09 (a)		15		15
0.16%, 06/18/09 (a)		3,851		3,851
Total Short-Term Investment (Cost $5,004)				5,004
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $1,600,929 and the unrealized appreciation and depreciation were $56,022 and ($350,073), respectively, with a net unrealized depreciation of ($294,051).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		125		5,438		760

36 See financial notes

 Schwab Core Equity Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $1,595,919)		$1,306,878
Receivables:
Investments sold		477
Fund shares sold		2,304
Dividends		1,168
Foreign tax reclaims		18
Interest		16
Due from brokers for futures		6
Prepaid expenses	+	2
Total assets		1,310,869
Liabilities
Payables:
Investment adviser and administrator fees		50
Transfer agent and shareholder services fees		27
Fund shares redeemed		520
Trustee’s fees		1
Accrued expenses	+	94
Total liabilities		692
Net Assets
Total assets		1,310,869
Total liabilities	−	692
Net assets		$1,310,177
Net Assets by Source
Capital received from investors		1,848,916
Net investment income not yet distributed		5,722
Net realized capital losses		(256,180	)
Net unrealized capital losses		(288,281	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$1,310,177		108,567			$12.07

See financial notes 37

 Schwab Core Equity Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $14)		$16,305
Interest	+	129
Total Investment Income		16,434
Net Realized Gains and Losses
Net realized losses on investments		(161,360	)
Net realized losses on futures contracts	+	(3,636	)
Net realized losses		(164,996	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		27,882
Net unrealized losses on futures contracts	+	(723	)
Net unrealized gains		27,159
Expenses
Investment adviser and administrator fees		3,339
Transfer agent and shareholder service fees		1,640
Shareholder reports		92
Portfolio accounting fees		34
Registration fees		26
Professional fees		18
Custodian fees		16
Trustees’ fees		13
Other expenses	+	12
Total expenses		5,190
Expense reduction by adviser and Schwab	−	269
Net expenses		4,921
Increase (Decrease) in Net Assets from Operations
Total investment income		16,434
Net expenses	−	4,921
Net investment income		11,513
Net realized losses		(164,996	)
Net unrealized gains	+	27,159
Decrease in net assets from operations		($126,324	)

38 See financial notes

 Schwab Core Equity Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-04/30/09			11/1/07-10/31/08
Net investment income			$11,513			$24,216
Net realized losses			(164,996	)		(90,616	)
Net unrealized gains (losses)	+		27,159			(659,582	)
Decrease in net assets from operations			(126,324	)		(725,982	)
Distributions to Shareholders
Distributions from net investment income			23,930			18,271
Distributions from net realized gains	+		—			4,682
Total distributions			$23,930			$22,953

Transactions in Fund Shares

		11/1/08-04/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			21,692			$255,944			31,275			$534,240
Shares Reinvested			1,386			16,786			845			16,336
Shares Redeemed	+		(22,421	)		(261,462	)		(28,312	)		(485,951	)
Net transactions in fund shares			657			$11,268			3,808			$64,625
Shares Outstanding and Net Assets
		11/1/08-04/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			107,910			$1,449,163			104,102			$2,133,473
Total increase or decrease	+		657			(138,986	)		3,808			(684,310	)
End of period			108,567			$1,310,177			107,910			$1,449,163
Net investment income not yet distributed						$5,722						$18,139

See financial notes 39

Schwab Dividend Equity Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		10.68			15.70			14.61			12.80			12.06			10.60
Income (loss) from investment operations:
Net investment income (loss)		0.13			0.32			0.26			0.24			0.26			0.29
Net realized and unrealized gains (losses)		(1.33	)		(5.01	)		1.38			1.97			0.93			1.49
Total from investment operations		(1.20	)		(4.69	)		1.64			2.21			1.19			1.78
Less distributions:
Distributions from net investment income		(0.12	)		(0.28	)		(0.24	)		(0.24	)		(0.26	)		(0.32	)
Distributions from net realized gains		—			(0.05	)		(0.31	)		(0.16	)		(0.19	)		—
Total distributions		(0.12	)		(0.33	)		(0.55	)		(0.40	)		(0.45	)		(0.32	)
Net asset value at end of period		9.36			10.68			15.70			14.61			12.80			12.06
Total return (%)		(11.20	)1		(30.30	)		11.43			17.63			9.98			17.00
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.06	2		1.04			1.04			1.05			1.07			0.65
Gross operating expenses		1.06	2		1.04			1.04			1.05			1.09			1.19
Net investment income (loss)		2.72	2		2.19			1.71			1.78			2.17			2.71
Portfolio turnover rate		17	1		22			18			36			26			39
Net assets, end of period ($ x 1,000,000)		375			415			760			624			528			267

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		10.63			15.66			14.60			12.80			12.06			10.60
Income (loss) from investment operations:
Net investment income (loss)		0.13			0.32			0.28			0.26			0.28			0.31
Net realized and unrealized gains (losses)		(1.30	)		(4.97	)		1.37			1.98			0.93			1.48
Total from investment operations		(1.17	)		(4.65	)		1.65			2.24			1.21			1.79
Less distributions:
Distributions from net investment income		(0.15	)		(0.33	)		(0.28	)		(0.28	)		(0.28	)		(0.33	)
Distributions from net realized gains		—			(0.05	)		(0.31	)		(0.16	)		(0.19	)		—
Total distributions		(0.15	)		(0.38	)		(0.59	)		(0.44	)		(0.47	)		(0.33	)
Net asset value at end of period		9.31			10.63			15.66			14.60			12.80			12.06
Total return (%)		(11.03	)1		(30.23	)		11.55			17.86			10.17			17.07
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.91	2		0.89			0.89			0.90			0.92			0.54
Gross operating expenses		0.91	2		0.89			0.89			0.90			0.94			1.04
Net investment income (loss)		2.87	2		2.33			1.83			1.92			2.32			2.83
Portfolio turnover rate		17	1		22			18			36			26			39
Net assets, end of period ($ x 1,000,000)		724			824			1,340			729			509			252

* Unaudited.

¹ Not annualized.

² Annualized.

40 See financial notes

 Schwab Dividend Equity Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97	.5%	Common Stock		1,311,305		1,070,436
	2	.2%	Short-Term Investment		24,205		24,205
	99	.7%	Total Investments		1,335,510		1,094,641
	0	.3%	Other Assets and Liabilities, Net				3,800
	100	.0%	Total Net Assets				1,098,441

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 97.5% of net assets
Banks 0.7%
KeyCorp		300,000		1,845
SunTrust Banks, Inc.		400,887		5,789
				7,634
Capital Goods 9.0%
Cooper Industries Ltd., Class A		255,000		8,361
Emerson Electric Co.		423,600		14,419
L-3 Communications Holdings, Inc.		150,000		11,423
Lockheed Martin Corp.		200,000		15,706
Masco Corp.		300,000		2,658
Northrop Grumman Corp.		290,400		14,041
Raytheon Co.		487,100		22,032
Tyco International Ltd.		300,000		7,128
United Technologies Corp.		75,000		3,663
				99,431
Commercial & Professional Supplies 2.4%
Pitney Bowes, Inc.		200,000		4,908
R.R. Donnelley & Sons Co.		460,000		5,359
Waste Management, Inc.		590,000		15,735
				26,002
Consumer Durables & Apparel 3.0%
D.R. Horton, Inc.		1,169,314		15,260
Hasbro, Inc.		325,000		8,664
Leggett & Platt, Inc.		250,000		3,590
VF Corp.		100,000		5,927
				33,441
Consumer Services 3.1%
McDonald’s Corp.		375,000		19,984
Yum! Brands, Inc.		435,000		14,507
				34,491
Diversified Financials 7.3%
Ameriprise Financial, Inc.		125,000		3,294
Bank of New York Mellon Corp.		500,845		12,762
Capital One Financial Corp.		100,000		1,674
JPMorgan Chase & Co.		775,584		25,594
Morgan Stanley		450,000		10,638
Northern Trust Corp.		175,000		9,513
State Street Corp.		170,000		5,802
The Goldman Sachs Group, Inc.		85,000		10,922
				80,199
Energy 11.2%
Anadarko Petroleum Corp.		300,000		12,918
Boardwalk Pipeline Partners L.P.		191,500		3,926
Chevron Corp.		300,000		19,830
ConocoPhillips		400,000		16,400
Exxon Mobil Corp.		325,800		21,721
Noble Energy		75,000		4,256
Occidental Petroleum Corp.		420,000		23,642
Patterson-UTI Energy, Inc.		225,000		2,860
The Williams Cos., Inc.		230,000		3,243
Valero Energy Corp.		735,000		14,582
				123,378
Food & Staples Retailing 1.3%
The Kroger Co.		335,000		7,243
Wal-Mart Stores, Inc.		150,000		7,560
				14,803
Food, Beverage & Tobacco 8.4%
Altria Group, Inc.		610,000		9,961
Coca-Cola Enterprises, Inc.		150,000		2,559
ConAgra Foods, Inc.		150,000		2,655
General Mills, Inc.		270,000		13,686
H.J. Heinz Co.		435,000		14,973
Kellogg Co.		340,000		14,317
Reynolds American, Inc.		426,400		16,195
The Coca-Cola Co.		370,000		15,929
The J.M. Smucker Co.		39,197		1,544
				91,819
Health Care Equipment & Services 3.3%
Baxter International, Inc.		325,000		15,762
Becton, Dickinson & Co.		254,000		15,362
McKesson Corp.		125,000		4,625
				35,749
Household & Personal Products 2.2%
Colgate-Palmolive Co.		235,000		13,865

See financial notes 41

 Schwab Dividend Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
The Procter & Gamble Co.		200,000		9,888
				23,753
Insurance 5.5%
Aon Corp.		396,250		16,722
Axis Capital Holdings Ltd.		100,000		2,464
HCC Insurance Holdings, Inc.		300,000		7,176
MetLife, Inc.		100,000		2,975
Prudential Financial, Inc.		100,000		2,888
The Chubb Corp.		351,000		13,671
The Travelers Cos., Inc.		358,000		14,728
				60,624
Materials 1.3%
Ball Corp.		75,000		2,829
International Paper Co.		500,000		6,330
MeadWestvaco Corp.		150,000		2,349
Sonoco Products Co.		100,000		2,441
				13,949
Media 0.7%
CBS Corp., Class B		600,000		4,224
Gannett Co., Inc.		200,000		782
Time Warner, Inc.		100,000		2,183
				7,189
Pharmaceuticals, Biotechnology & Life Sciences 11.1%
Abbott Laboratories		425,000		17,786
Bristol-Myers Squibb Co.		900,000		17,280
Eli Lilly & Co.		550,000		18,106
Johnson & Johnson		387,000		20,263
Merck & Co., Inc.		560,000		13,575
Pfizer, Inc.		1,200,000		16,032
Wyeth		455,000		19,292
				122,334
Real Estate 0.9%
Boston Properties, Inc.		65,000		3,212
Essex Property Trust, Inc.		50,000		3,174
Vornado Realty Trust		61,066		2,986
				9,372
Retailing 2.4%
Family Dollar Stores, Inc.		125,000		4,149
Macy’s, Inc.		300,000		4,104
The Gap, Inc.		400,000		6,216
The Home Depot, Inc.		325,000		8,554
The TJX Cos., Inc.		135,000		3,776
				26,799
Semiconductors & Semiconductor Equipment 3.5%
Analog Devices, Inc.		290,000		6,171
Intel Corp.		1,125,000		17,752
Texas Instruments, Inc.		775,000		13,997
				37,920
Software & Services 6.0%
Accenture Ltd., Class A		535,000		15,745
Automatic Data Processing, Inc.		335,000		11,792
CA, Inc.		450,000		7,763
Microsoft Corp.		1,000,000		20,260
Oracle Corp.		250,000		4,835
Paychex, Inc.		200,000		5,402
				65,797
Technology Hardware & Equipment 4.4%
Hewlett-Packard Co.		520,000		18,710
International Business Machines Corp.		242,500		25,028
Seagate Technology		385,000		3,142
Xerox Corp.		290,000		1,772
				48,652
Telecommunication Services 4.2%
AT&T, Inc.		450,407		11,539
CenturyTel, Inc.		100,000		2,715
Embarq Corp.		210,000		7,678
Frontier Communications Corp.		700,000		4,977
Qwest Communications International, Inc.		700,000		2,723
Verizon Communications, Inc.		477,300		14,481
Windstream Corp.		200,000		1,660
				45,773
Transportation 0.4%
CSX Corp.		150,000		4,439
Utilities 5.2%
American Electric Power Co., Inc.		451,000		11,897
CenterPoint Energy, Inc.		150,000		1,596
DTE Energy Co.		425,000		12,567
Duke Energy Corp.		250,000		3,453
Edison International		100,000		2,851
Exelon Corp.		125,000		5,766
PG&E Corp.		450,000		16,704
Pinnacle West Capital Corp.		75,000		2,054
				56,888
Total Common Stock (Cost $1,311,305)				1,070,436
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 2.2% of net assets
Commercial Paper & Other Obligations 2.1%
Citibank, New York Time Deposit
0.03%, 05/01/09		22,966		22,966
U.S. Treasury Obligations 0.1%
U.S. Treasury Bill

42 See financial notes

 Schwab Dividend Equity Fund

Portfolio Holdings (Unaudited) continued

Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
0.16%, 06/18/09 (a)		1,239		1,239
Total Short-Term Investment (Cost $24,205)				24,205
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/2009, the tax basis cost of the fund’s investments was $1,335,509 and the unrealized appreciation and depreciation were $53,845 and ($294,713), respectively, with a net unrealized depreciation of ($240,868).

(a) All or a portion of this security is held as collateral for open futures contracts.

In addition to the above, the fund held the following at

04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract 0.9% of net assets
S & P 500 Index, e-mini, Long, expires 06/19/09		225		9,788		1,368

See financial notes 43

 Schwab Dividend Equity Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $1,335,510)		$1,094,641
Receivables:
Fund shares sold		2,271
Dividends		2,230
Foreign tax reclaims		12
Due from brokers for futures		10
Prepaid expenses	+	4
Total assets		1,099,168
Liabilities
Payables:
Investment adviser and administrator fees		69
Transfer agent and shareholder services fees		14
Fund shares redeemed		544
Trustees’ fees		1
Accrued expenses	+	99
Total liabilities		727
Net Assets
Total assets		1,099,168
Total liabilities	−	727
Net assets		$1,098,441
Net Assets by Source
Capital received from investors		1,525,745
Net investment income not yet distributed		1,457
Net realized capital losses		(189,260	)
Net unrealized capital losses		(239,501	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$374,783		40,026			$9.36
Select Shares	$723,658		77,765			$9.31

44 See financial notes

 Schwab Dividend Equity Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $9)		$20,478
Interest	+	11
Total investment income		20,489
Net Realized Gains and Losses
Net realized losses on investments		(143,332	)
Net realized losses on futures contracts	+	(1,607	)
Net realized losses		(144,939	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(9,230	)
Net unrealized gains on futures contracts	+	967
Net unrealized losses		(8,263	)
Expenses
Investment advisor and administrator fees		4,185
Transfer agent and shareholder service fees:
Investor Shares		463
Select Shares		358
Shareholder reports		73
Registration fees		37
Portfolio accounting fees		32
Professional fees		20
Custodian fees		17
Trustees’ fees		11
Interest expense		2
Other expenses	+	11
Total expenses		5,209
Increase (Decrease) in Net Assets from Operations
Total investment income		20,489
Net expenses	−	5,209
Net investment income		15,280
Net realized losses		(144,939	)
Net unrealized losses	+	(8,263	)
Decrease in net assets from operations		(137,922	)

See financial notes 45

 Schwab Dividend Equity Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			11/01/07-10/31/08
Net investment income			$15,280			$39,812
Net realized losses			(144,939	)		(44,452	)
Net unrealized losses	+		(8,263	)		(576,086	)
Decrease in net assets from operations			(137,922	)		(580,726	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			4,820			12,236
Select Shares	+		11,239			27,045
Total distributions from net investment income			16,059			39,281
Distributions from net realized gains
Investor Shares			—			2,493
Select Shares	+		—			4,513
Total distributions from net realized gains			—			7,006
Total distributions			$16,059			$46,287

Transactions in Fund Shares

		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			5,947			$56,364			4,894			$64,964
Select Shares	+		11,424			105,800			16,086			217,167
Total shares sold			17,371			$162,164			20,980			$282,131
Shares Reinvested
Investor Shares			431			$4,005			890			$12,329
Select Shares	+		591			5,502			1,256			17,359
Total shares reinvested			1,022			$9,507			2,146			$29,688
Shares Redeemed
Investor Shares			(5,256	)		($48,578	)		(15,293	)		($207,978	)
Select Shares	+		(11,765	)		(110,138	)		(25,411	)		(338,104	)
Total shares redeemed			(17,021	)		($158,716	)		(40,704	)		($546,082	)
Net transactions in fund shares			1,372			$12,955			(17,578	)		($234,263	)
Shares Outstanding and Net Assets
		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			116,419			$1,239,467			133,997			$2,100,743
Total increase or decrease	+		1,372			(141,026	)		(17,578	)		(861,276	)
End of period			117,791			$1,098,441			116,419			$1,239,467
Net investment income not yet distributed						$1,457						$2,236

46 See financial notes

Schwab Large-Cap Growth Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			10/3/051–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.21			12.75			11.07			9.73			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.04			0.02			0.01			(0.00	)2
Net realized and unrealized gains (losses)		(0.50	)		(4.55	)		1.67			1.33			(0.27	)
Total from investment operations		(0.48	)		(4.51	)		1.69			1.34			(0.27	)
Less distributions:
Distributions from net investment income		(0.02	)		(0.03	)		(0.01	)		(0.00	)2		—
Net asset value at end of period		7.71			8.21			12.75			11.07			9.73
Total return (%)		(5.80	)3		(35.45	)		15.32			13.80			(2.70	)3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.19	4		1.16			1.18			1.20			1.20	4
Gross operating expenses		1.19	4		1.16			1.18			1.26			1.71	4
Net investment income (loss)		0.60	4		0.37			0.22			0.09			(0.61	)4
Portfolio turnover rate		27	3		49			30			53			4	3
Net assets, end of period ($ x 1,000,000)		58			65			119			70			25

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			10/3/051–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.22			12.77			11.09			9.73			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.06			0.04			0.02			(0.00	)2
Net realized and unrealized gains (losses)		(0.50	)		(4.56	)		1.67			1.35			(0.27	)
Total from investment operations		(0.47	)		(4.50	)		1.71			1.37			(0.27	)
Less distributions:
Distributions from net investment income		(0.04	)		(0.05	)		(0.03	)		(0.01	)		—
Net asset value at end of period		7.71			8.22			12.77			11.09			9.73
Total return (%)		(5.65	)3		(35.36	)		15.47			14.04			(2.70	)3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.99	4		0.99			0.99			0.99			0.99	4
Gross operating expenses		1.04	4		1.01			1.03			1.12			1.56	4
Net investment income (loss)		0.79	4		0.53			0.33			0.26			(0.40	)4
Portfolio turnover rate		27	3		49			30			53			4	3
Net assets, end of period ($ x 1,000,000)		329			332			492			107			33

* Unaudited.

¹ Commencement of operations.

² Per share amount was less then $0.01.

³ Not annualized.

⁴ Annualized.

See financial notes 47

 Schwab Large Cap Growth Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	96	.4%	Common Stock		438,396		372,614
	2	.6%	Other Investment Company		9,527		10,046
	1	.5%	Short-Term Investments		5,881		5,881
	100	.5%	Total Investments		453,804		388,541
	(0	.5)%	Other Assets and Liabilities, Net				(2,064	)
	100	.0%	Total Net Assets				386,477

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 96.4% of net assets
Capital Goods 10.0%
Cooper Industries Ltd., Class A		111,800		3,666
Dover Corp.		105,000		3,232
Emerson Electric Co.		14,600		497
Fluor Corp.		160,000		6,059
Jacobs Engineering Group, Inc. *		45,000		1,712
L-3 Communications Holdings, Inc.		80,000		6,092
Lockheed Martin Corp.		140,000		10,994
Northrop Grumman Corp.		20,000		967
Raytheon Co.		122,800		5,554
				38,773
Commercial & Professional Supplies 1.0%
Covanta Holding Corp. *		270,000		3,810
Consumer Services 4.7%
Apollo Group, Inc., Class A *		100,500		6,326
McDonald’s Corp.		175,000		9,326
Yum! Brands, Inc.		75,000		2,501
				18,153
Diversified Financials 3.1%
JPMorgan Chase & Co.		88,900		2,934
Northern Trust Corp.		83,000		4,512
State Street Corp.		20,000		683
The Goldman Sachs Group, Inc.		31,000		3,983
				12,112
Energy 6.4%
Anadarko Petroleum Corp.		32,000		1,378
Cameron International Corp. *		25,000		639
Exxon Mobil Corp.		180,800		12,054
National-Oilwell Varco, Inc. *		15,500		469
Noble Energy		20,000		1,135
Occidental Petroleum Corp.		122,500		6,896
Valero Energy Corp.		100,000		1,984
				24,555
Food & Staples Retailing 4.2%
CVS Caremark Corp.		70,000		2,225
The Kroger Co.		230,000		4,972
Wal-Mart Stores, Inc.		180,000		9,072
				16,269
Food, Beverage & Tobacco 3.9%
Altria Group, Inc.		300,000		4,899
Archer-Daniels-Midland Co.		100,000		2,462
General Mills, Inc.		100,000		5,069
H.J. Heinz Co.		13,500		465
The Coca-Cola Co.		35,800		1,541
The Pepsi Bottling Group, Inc.		25,000		782
				15,218
Health Care Equipment & Services 7.7%
Aetna, Inc.		19,900		438
Baxter International, Inc.		185,000		8,973
Becton, Dickinson & Co.		60,800		3,677
CIGNA Corp.		40,500		798
Express Scripts, Inc. *		150,000		9,596
Humana, Inc. *		71,000		2,043
McKesson Corp.		25,000		925
St. Jude Medical, Inc. *		29,000		972
UnitedHealth Group, Inc.		98,000		2,305
				29,727
Household & Personal Products 2.9%
Church & Dwight Co., Inc.		78,000		4,244
Colgate-Palmolive Co.		25,000		1,475
The Procter & Gamble Co.		110,374		5,457
				11,176
Insurance 1.2%
Aon Corp.		36,000		1,519
Axis Capital Holdings Ltd.		70,000		1,725
The Travelers Cos., Inc.		30,000		1,234
				4,478
Materials 2.0%
AK Steel Holding Corp.		158,500		2,062
Ball Corp.		35,000		1,320
Owens-Illinois, Inc. *		75,000		1,830
Sonoco Products Co.		44,000		1,074

48 See financial notes

 Schwab Large Cap Growth Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Terra Industries, Inc.		60,000		1,590
				7,876
Media 1.8%
Liberty Global, Inc., Series A *		115,000		1,896
Omnicom Group, Inc.		114,000		3,588
The DIRECTV Group, Inc. *		50,000		1,236
The Interpublic Group of Cos., Inc. *		50,000		313
				7,033
Pharmaceuticals, Biotechnology & Life Sciences 6.9%
Abbott Laboratories		27,000		1,130
Amgen, Inc. *		35,000		1,696
Biogen Idec, Inc. *		50,000		2,417
Bristol-Myers Squibb Co.		160,000		3,072
Cephalon, Inc. *		126,000		8,267
Endo Pharmaceuticals Holdings, Inc. *		35,000		579
Forest Laboratories, Inc. *		125,000		2,711
Merck & Co., Inc.		125,000		3,030
Pfizer, Inc.		200,000		2,672
Schering-Plough Corp.		51,000		1,174
				26,748
Retailing 3.5%
Amazon.com, Inc. *		95,000		7,649
The Gap, Inc.		175,000		2,720
The Sherwin-Williams Co.		35,000		1,982
The TJX Cos., Inc.		45,000		1,259
				13,610
Semiconductors & Semiconductor Equipment 3.2%
Analog Devices, Inc.		87,000		1,851
Intel Corp.		250,000		3,945
LSI Corp. *		165,000		634
Marvell Technology Group Ltd. *		175,000		1,922
Texas Instruments, Inc.		220,000		3,973
				12,325
Software & Services 15.8%
Accenture Ltd., Class A		380,000		11,183
Adobe Systems, Inc. *		80,000		2,188
BMC Software, Inc. *		301,500		10,453
Computer Sciences Corp. *		85,000		3,142
eBay, Inc. *		62,500		1,029
Google, Inc., Class A *		7,000		2,772
MasterCard, Inc., Class A		10,000		1,835
Microsoft Corp.		572,500		11,599
Oracle Corp.		238,800		4,618
Symantec Corp. *		516,000		8,901
Synopsys, Inc. *		93,500		2,036
Western Union Co.		65,000		1,089
				60,845
Technology Hardware & Equipment 15.6%
Apple, Inc. *		100,000		12,583
Cisco Systems, Inc. *		500,700		9,673
EMC Corp. *		200,000		2,506
Hewlett-Packard Co.		455,000		16,371
International Business Machines Corp.		175,000		18,062
NCR Corp. *		67,500		685
Seagate Technology		45,000		367
				60,247
Telecommunication Services 1.2%
Embarq Corp.		45,000		1,645
Qwest Communications International, Inc.		138,000		537
Sprint Nextel Corp. *		585,000		2,551
				4,733
Transportation 1.0%
CSX Corp.		50,000		1,480
Union Pacific Corp.		50,000		2,457
				3,937
Utilities 0.3%
NRG Energy, Inc. *		55,000		989
Total Common Stock (Cost $438,396)				372,614
Other Investment Company 2.6% of net assets
iShares Russell 1000 Growth Index Fund		260,000		10,046
Total Other Investment Company (Cost $9,527)				10,046
Short-Term Investments 1.5% of net assets
Commercial Paper & Other Obligations 1.3%
Citibank, New York Time Deposit
0.03%, 05/01/09		5,051		5,051
U.S. Treasury Obligation 0.2%
U.S. Treasury Bill
0.16%, 06/18/09		830		830
Total Short-Term Investments (Cost $5,881)				5,881
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $453,816, and the unrealized appreciation and depreciation were $10,377 and ($75,652), respectively, with a net unrealized depreciation of ($65,275).

* Non-income producing security.

See financial notes 49

 Schwab Large Cap-Growth Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $453,804)		$388,541
Receivables:
Investments sold		3,158
Fund shares sold		620
Dividends		261
Prepaid expenses	+	1
Total assets		392,581
Liabilities
Payables:
Investments bought		5,873
Investment adviser and administrator fees		23
Transfer agent and shareholder services fees		7
Fund shares redeemed		136
Trustees’ fees		1
Accrued expenses	+	64
Total liabilities		6,104
Net Assets
Total assets		392,581
Total liabilities	−	6,104
Net assets		$386,477
Net Assets by Source
Capital received from investors		557,455
Net investment income not yet distributed		635
Net realized capital losses		(106,350	)
Net unrealized capital losses		(65,263	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$57,884		7,510			$7.71
Select Shares	$328,593		42,630			$7.71

50 See financial notes

 Schwab Large Cap-Growth Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends		$3,229
Interest	+	5
Total investment income		3,234
Net Realized Gains and Losses
Net realized losses on investments		(47,199	)
Net realized losses on futures contracts	+	(200	)
Net realized losses		(47,399	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		24,147
Net unrealized losses on futures contracts	+	(112	)
Net unrealized gains		24,035
Expenses
Investment adviser and administrator fees		1,579
Transfer agent and shareholder service fees:
Investor Shares		71
Select Shares		153
Shareholder reports		36
Registration fees		29
Portfolio accounting fees		22
Professional fees		19
Custodian fees		7
Trustees’ fees		6
Other expenses	+	4
Total expenses		1,926
Expense reduction by adviser and Schwab	−	77
Net expenses		1,849
Increase (Decrease) in Net Assets from Operations
Total investment income		3,234
Net expenses	−	1,849
Net investment income		1,385
Net realized losses		(47,399	)
Net unrealized gains	+	24,035
Decrease in net assets from operations		($21,979	)

See financial notes 51

 Schwab Large Cap-Growth Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$1,385			$2,691
Net realized losses			(47,399	)		(54,032	)
Net unrealized gains (losses)	+		24,035			(165,666	)
Decrease in net assets from operations			(21,979	)		(217,007	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			176			282
Select Shares	+		1,820			2,030
Total distributions from net investment income			$1,996			$2,312

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			540			$4,007			1,823			$20,286
Select Shares	+		7,304			53,437			11,725			125,732
Total shares sold			7,844			$57,444			13,548			$146,018
Shares Reinvested
Investor Shares			21			$158			21			$254
Select Shares	+		35			265			27			328
Total shares reinvested			56			$423			48			$582
Shares Redeemed
Investor Shares			(940	)		($6,858	)		(3,257	)		($35,189	)
Select Shares	+		(5,038	)		(36,875	)		(9,952	)		(106,495	)
Total shares redeemed			(5,978	)		($43,733	)		(13,209	)		($141,684	)
Net transactions in fund shares			1,922			$14,134			387			$4,916
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			48,218			$396,318			47,831			$610,721
Total increase or decrease	+		1,922			(9,841	)		387			(214,403	)
End of period			50,140			$386,477			48,218			$396,318
Net investment income not yet distributed						$635						$1,246

52 See financial notes

Schwab Small-Cap Equity Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		10.46			18.10			17.72			15.72			14.13			11.81
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		(0.05	)		(0.09	)		(0.05	)		0.01			(0.04	)
Net realized and unrealized gains (losses)		(0.82	)		(6.52	)		0.55			2.48			3.12			2.58
Total from investment operations		(0.83	)		(6.57	)		0.46			2.43			3.13			2.54
Less distributions:
Distributions from net investment income		—			—			—			(0.00	)1		—			—
Distributions from net realized gains		—			(1.07	)		(0.08	)		(0.43	)		(1.54	)		(0.22	)
Total distributions		—			(1.07	)		(0.08	)		(0.43	)		(1.54	)		(0.22	)
Net asset value at end of period		9.63			10.46			18.10			17.72			15.72			14.13
Total return (%)		(7.94	)2		(38.25	)		2.59			15.71			23.65			21.74
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.30	3		1.27			1.24			1.29			1.28			1.30
Gross operating expenses		1.34	3		1.27			1.24			1.29			1.38			1.61
Net investment income (loss)		(0.07	)3		(0.25	)		(0.43	)		(0.39	)		0.11			(0.35	)
Portfolio turnover rate		40	2		50			106			82			90			118
Net assets, end of period ($ x 1,000,000)		111			135			420			431			170			37

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		10.55			18.22			17.80			15.78			14.16			11.81
Income (loss) from investment operations:
Net investment income (loss)		0.00	1		(0.01	)		(0.10	)		(0.02	)		0.00	1		(0.02	)
Net realized and unrealized gains (losses)		(0.83	)		(6.59	)		0.60			2.49			3.16			2.59
Total from investment operations		(0.83	)		(6.60	)		0.50			2.47			3.16			2.57
Less distributions:
Distributions from net investment income		(0.00	)1		—			—			(0.02	)		—			—
Distributions from net realized gains		—			(1.07	)		(0.08	)		(0.43	)		(1.54	)		(0.22	)
Total distributions		0.00			(1.07	)		(0.08	)		(0.45	)		(1.54	)		(0.22	)
Net asset value at end of period		9.72			10.55			18.22			17.80			15.78			14.16
Total return (%)		(7.82	)2		(38.16	)		2.80			15.89			23.83			22.00
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.12	3		1.11			1.09			1.12			1.11			1.12
Gross operating expenses		1.19	3		1.12			1.09			1.14			1.23			1.46
Net investment income (loss)		0.10	3		(0.09	)		(0.28	)		(0.21	)		0.09			(0.16	)
Portfolio turnover rate		40	2		50			106			82			90			118
Net assets, end of period ($ x 1,000,000)		73			79			228			276			80			18

* Unaudited.

¹ Per share amount was less than $0.01.

² Not Annualized.

³ Annualized.

See financial notes 53

 Schwab Small-Cap Equity Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	96	.2%	Common Stock		219,134		177,117
	1	.1%	Foreign Common Stock		2,488		2,008
	2	.6%	Short-Term Investments		4,853		4,853
	99	.9%	Total Investments		226,475		183,978
	0	.1%	Other Assets and Liabilities, Net				173
	100	.0%	Total Net Assets				184,151

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 96.2% of net assets
Automobiles & Components 0.3%
Stoneridge, Inc. *		60,600		140
Superior Industries International, Inc.		17,300		261
TRW Automotive Holdings Corp. *		24,400		210
				611
Banks 5.2%
BancFirst Corp.		38,100		1,627
Bank Mutual Corp.		20,200		207
Central Pacific Financial Corp.		87,800		515
Chemical Financial Corp.		15,000		320
East West Bancorp, Inc.		20,500		140
First Citizens BancShares, Inc., Class A		3,900		467
Flagstar Bancorp, Inc. *		67,900		98
MGIC Investment Corp.		95,100		243
Nara Bancorp, Inc.		22,900		85
NBT Bancorp, Inc.		37,700		893
Popular, Inc.		123,100		352
Radian Group, Inc.		47,800		83
SVB Financial Group *		87,200		1,810
The South Financial Group, Inc.		62,600		104
UMB Financial Corp.		48,900		2,238
Webster Financial Corp.		26,400		138
Whitney Holding Corp.		7,800		93
Wintrust Financial Corp.		5,500		94
				9,507
Capital Goods 11.3%
A.O. Smith Corp.		11,000		342
AAR CORP. *		5,400		81
Acuity Brands, Inc.		40,200		1,155
Altra Holdings, Inc. *		87,100		476
American Science & Engineering, Inc.		4,200		253
American Woodmark Corp.		25,200		522
Apogee Enterprises, Inc.		16,100		216
Applied Signal Technology, Inc.		20,900		413
Belden, Inc.		4,400		71
Blount International, Inc. *		25,000		160
Brady Corp., Class A		23,200		489
Chart Industries, Inc. *		23,800		329
CIRCOR International, Inc.		6,400		165
Crane Co.		80,000		1,847
Cubic Corp.		50,500		1,450
DynCorp International, Inc., Class A *		26,400		403
EMCOR Group, Inc. *		107,600		2,237
Encore Wire Corp.		13,100		286
EnPro Industries, Inc. *		42,200		674
Esterline Technologies Corp. *		12,800		337
Gardner Denver, Inc. *		33,600		894
GenCorp, Inc. *		98,500		236
Gibraltar Industries, Inc.		72,200		484
Griffon Corp. *		27,700		240
Insituform Technologies, Inc., Class A *		20,000		307
Kadant, Inc. *		11,900		147
L.B. Foster Co., Class A *		15,100		495
Michael Baker Corp. *		3,300		111
Mueller Industries, Inc.		27,700		609
Orbital Sciences Corp. *		36,100		558
Polypore International, Inc. *		37,400		282
Robbins & Myers, Inc.		30,000		568
Rush Enterprises, Inc., Class A *		27,800		366
Tecumseh Products Co., Class A *		24,800		253
Teledyne Technologies, Inc. *		6,600		211
Tredegar Corp.		83,700		1,471
Trex Co., Inc. *		19,400		212
Triumph Group, Inc.		2,100		87
United Rentals, Inc. *		51,300		311
Universal Forest Products, Inc.		4,000		134
Watts Water Technologies, Inc., Class A		40,300		897
				20,779
Commercial & Professional Supplies 4.1%
American Reprographics Co. *		45,000		290
ATC Technology Corp. *		40,900		650
Bowne & Co., Inc.		89,966		460
CDI Corp.		32,800		392
Cenveo, Inc. *		120,700		570
Consolidated Graphics, Inc. *		4,900		95
CRA International, Inc. *		7,500		175
Heidrick & Struggles International, Inc.		6,200		105
Knoll, Inc.		59,900		424
Korn/Ferry International *		9,500		101
Spherion Corp. *		290,900		1,044
The Brink’s Co.		21,900		621
The Standard Register Co.		34,300		179
United Stationers, Inc. *		3,700		121

54 See financial notes

 Schwab Small-Cap Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Viad Corp.		9,400		179
Watson Wyatt Worldwide, Inc., Class A		41,600		2,207
				7,613
Consumer Durables & Apparel 5.9%
Blyth, Inc.		33,325		1,469
Brunswick Corp.		10,300		62
Carter’s, Inc. *		43,000		919
Furniture Brands International, Inc.		132,300		418
KB HOME		43,000		777
Kenneth Cole Productions, Inc., Class A		20,000		138
Lennar Corp., Class A		8,700		85
Maidenform Brands, Inc. *		58,000		740
Smith & Wesson Holdings Corp. *		19,600		141
Steinway Musical Instruments, Inc. *		9,900		133
Steven Madden Ltd. *		47,600		1,400
The Stanley Works		38,400		1,460
The Timberland Co., Class A *		51,400		835
The Warnaco Group, Inc. *		55,100		1,589
Toll Brothers, Inc. *		22,200		450
Universal Electronics, Inc. *		8,700		163
				10,779
Consumer Services 3.5%
California Pizza Kitchen, Inc. *		17,100		269
Career Education Corp. *		42,400		934
DineEquity, Inc.		5,900		189
Isle of Capri Casinos, Inc. *		16,900		182
Krispy Kreme Doughnuts, Inc. *		254,300		1,002
Landry’s Restaurants, Inc. *		34,500		315
P.F. Chang’s China Bistro, Inc. *		9,600		290
Regis Corp.		57,000		1,091
Ruby Tuesday, Inc. *		5,900		45
Shuffle Master, Inc. *		132,100		503
Steiner Leisure Ltd. *		17,500		554
The Cheesecake Factory, Inc. *		20,100		349
WMS Industries, Inc. *		19,900		639
				6,362
Diversified Financials 3.3%
Cash America International, Inc.		8,500		190
CompuCredit Corp. *		28,700		92
Discover Financial Services		13,000		106
Evercore Partners, Inc., Class A		3,600		68
Interactive Brokers Group, Inc., Class A *		58,000		855
Investment Technology Group, Inc. *		44,900		1,023
Knight Capital Group, Inc., Class A *		31,600		489
LaBranche & Co., Inc. *		108,800		455
MarketAxess Holdings, Inc. *		37,400		359
Nelnet, Inc., Class A *		27,700		167
Penson Worldwide, Inc. *		36,300		368
Piper Jaffray Cos., Inc. *		12,300		426
Rewards Network, Inc. *		88,000		328
SWS Group, Inc.		21,000		269
Teton Advisors, Inc. (b)(c) *		87		—
TradeStation Group, Inc. *		99,700		809
				6,004
Energy 3.2%
Basic Energy Services, Inc. *		77,900		795
Cal Dive International, Inc. *		8,100		64
CARBO Ceramics, Inc.		3,900		120
Dresser-Rand Group, Inc. *		85,100		2,096
ENGlobal Corp. *		14,100		81
Foundation Coal Holdings, Inc.		19,500		317
General Maritime Corp.		51,000		506
Oil States International, Inc. *		5,500		104
SEACOR Holdings, Inc. *		5,500		361
VAALCO Energy, Inc. *		154,400		737
World Fuel Services Corp.		18,500		705
				5,886
Food & Staples Retailing 0.9%
Casey’s General Stores, Inc.		29,800		793
Nash Finch Co.		3,400		100
The Andersons, Inc.		9,700		156
The Pantry, Inc. *		24,300		574
Weis Markets, Inc.		1,600		59
				1,682
Food, Beverage & Tobacco 1.7%
Alliance One International, Inc. *		476,100		1,785
Chiquita Brands International, Inc. *		16,900		128
Darling International, Inc. *		58,500		335
Del Monte Foods Co.		21,300		161
J & J Snack Foods Corp.		16,600		643
Universal Corp., VA		5,000		151
				3,203
Health Care Equipment & Services 8.8%
Align Technology, Inc. *		8,900		111
Alliance Imaging, Inc. *		83,400		656
America Service Group, Inc. *		4,800		68
American Medical Systems Holdings, Inc. *		60,600		750
AMERIGROUP Corp. *		73,000		2,181
AMN Healthcare Services, Inc. *		20,400		141
AmSurg Corp. *		6,100		125
Centene Corp. *		60,000		1,102
Chemed Corp.		7,000		296
CONMED Corp. *		59,700		795
CryoLife, Inc. *		46,100		250
Cyberonics, Inc. *		12,100		160
Emergency Medical Services Corp., Class A *		24,800		864
Hanger Orthopedic Group, Inc. *		25,400		353
HEALTHSOUTH Corp. *		6,500		61
Healthspring, Inc. *		19,500		180
Healthways, Inc. *		7,400		77
ICU Medical, Inc. *		12,100		455
Immucor, Inc. *		11,500		187
Invacare Corp.		29,200		449
inVentiv Health, Inc. *		11,700		130

See financial notes 55

 Schwab Small-Cap Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Magellan Health Services, Inc. *		55,700		1,647
Merit Medical Systems, Inc. *		71,200		1,104
Molina Healthcare, Inc. *		57,400		1,243
Omnicare, Inc.		36,000		926
Omnicell, Inc. *		25,100		221
Owens & Minor, Inc.		14,600		506
PharMerica Corp. *		15,700		287
RehabCare Group, Inc. *		33,300		556
Res-Care, Inc. *		14,500		232
Sun Healthcare Group, Inc. *		8,100		69
U.S. Physical Therapy, Inc. *		8,000		93
				16,275
Household & Personal Products 1.3%
Alberto-Culver Co.		6,200		138
Central Garden & Pet Co., Class A *		73,800		669
Church & Dwight Co., Inc.		2,200		120
Nu Skin Enterprises, Inc., Class A		69,300		889
Prestige Brands Holdings, Inc. *		33,000		213
Revlon, Inc., Class A *		83,500		396
				2,425
Insurance 3.4%
Allied World Assurance Co. Holdings Ltd.		20,300		754
American Financial Group, Inc.		93,300		1,640
American Physicians Capital, Inc.		15,250		635
Amerisafe, Inc. *		33,300		511
Aspen Insurance Holdings Ltd.		3,400		80
Delphi Financial Group, Inc., Class A		15,200		262
First Mercury Financial Corp. *		7,300		97
Harleysville Group, Inc.		34,300		992
HCC Insurance Holdings, Inc.		18,500		443
Meadowbrook Insurance Group, Inc.		12,900		77
ProAssurance Corp. *		11,400		501
Safety Insurance Group, Inc.		2,100		69
Selective Insurance Group, Inc.		8,100		120
The Navigators Group, Inc. *		2,200		100
				6,281
Materials 4.0%
A. Schulman, Inc.		35,300		554
AK Steel Holding Corp.		92,700		1,206
Brush Engineered Materials, Inc. *		6,900		117
Bway Holding Co. *		23,500		219
Innophos Holdings, Inc.		22,400		332
Landec Corp. *		15,400		104
Minerals Technologies, Inc.		5,700		212
OM Group, Inc. *		5,900		164
PolyOne Corp. *		135,300		371
Quaker Chemical Corp.		17,700		207
Rock-Tenn Co., Class A		45,600		1,722
Rockwood Holdings, Inc. *		109,000		1,341
Sonoco Products Co.		37,200		908
				7,457
Media 0.6%
Marvel Entertainment, Inc. *		9,400		281
The Interpublic Group of Cos., Inc. *		119,700		749
Valassis Communications, Inc. *		14,900		77
				1,107
Pharmaceuticals, Biotechnology & Life Sciences 4.1%
Cubist Pharmaceuticals, Inc. *		7,800		130
Dionex Corp. *		5,000		315
Endo Pharmaceuticals Holdings, Inc. *		6,600		109
Enzon Pharmaceuticals, Inc. *		56,700		326
Immunomedics, Inc. *		9,800		11
King Pharmaceuticals, Inc. *		41,500		327
Martek Biosciences Corp. *		37,700		687
Matrixx Initiatives, Inc. *		32,900		563
Maxygen, Inc. *		7,500		44
Medicis Pharmaceutical Corp., Class A		72,000		1,157
Myriad Genetics, Inc. *		4,100		159
Noven Pharmaceuticals, Inc. *		27,000		279
NPS Pharmaceuticals, Inc. *		33,300		115
OSI Pharmaceuticals, Inc. *		21,000		705
Par Pharmaceutical Cos., Inc. *		73,900		793
Valeant Pharmaceuticals International *		19,300		323
ViroPharma, Inc. *		84,500		476
Watson Pharmaceuticals, Inc. *		33,300		1,030
				7,549
Real Estate 3.9%
Acadia Realty Trust		19,300		280
American Campus Communities, Inc.		6,000		130
BioMed Realty Trust, Inc.		45,000		513
EastGroup Properties, Inc.		14,000		471
Entertainment Properties Trust		20,000		462
Equity Lifestyle Properties, Inc.		2,600		103
Essex Property Trust, Inc.		1,500		95
Franklin Street Properties Corp.		8,800		118
Home Properties, Inc.		20,000		729
Inland Real Estate Corp.		36,000		316
Kilroy Realty Corp.		20,200		435
Medical Properties Trust, Inc.		35,700		191
Mid-America Apartment Communities, Inc.		15,500		573
National Retail Properties, Inc.		45,000		798
PS Business Parks, Inc.		9,000		394
Senior Housing Properties Trust		65,000		1,065
Tanger Factory Outlet Centers, Inc.		17,500		583
				7,256
Retailing 5.3%
Charlotte Russe Holding, Inc. *		6,500		82
Family Dollar Stores, Inc.		14,900		495
Fred’s, Inc., Class A		5,600		76
Hot Topic, Inc. *		181,300		2,219
HSN, Inc. *		11,500		79
Jo-Ann Stores, Inc. *		30,000		550

56 See financial notes

 Schwab Small-Cap Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
NutriSystem, Inc.		13,600		187
RadioShack Corp.		68,900		970
Rent-A-Center, Inc. *		6,800		131
Shoe Carnival, Inc. *		9,400		110
Shutterfly, Inc. *		62,000		794
Stage Stores, Inc.		12,600		154
The Cato Corp., Class A		79,800		1,534
The Children’s Place Retail Stores, Inc. *		25,600		728
The Dress Barn, Inc. *		36,200		548
The Finish Line, Inc., Class A		75,200		639
The Men’s Wearhouse, Inc.		16,700		311
The Wet Seal, Inc., Class A *		64,600		246
				9,853
Semiconductors & Semiconductor Equipment 3.5%
Advanced Energy Industries, Inc. *		41,800		352
Amkor Technology, Inc. *		151,600		654
Applied Micro Circuits Corp. *		28,200		154
Cirrus Logic, Inc. *		20,300		94
Cypress Semiconductor Corp. *		38,000		301
DSP Group, Inc. *		20,300		128
Entegris, Inc. *		168,700		250
FEI Co. *		13,400		230
Integrated Device Technology, Inc. *		189,300		1,028
MKS Instruments, Inc. *		26,300		412
Silicon Image, Inc. *		147,800		402
Silicon Storage Technology, Inc. *		62,900		116
Skyworks Solutions, Inc. *		84,700		749
Ultratech, Inc. *		74,500		1,007
Veeco Instruments, Inc. *		66,200		479
				6,356
Software & Services 7.3%
CACI International, Inc., Class A *		7,600		301
CIBER, Inc. *		41,900		135
CyberSource Corp. *		6,200		91
DealerTrack Holdings, Inc. *		23,800		361
EarthLink, Inc. *		28,700		218
Global Payments, Inc.		40,000		1,282
Hewitt Associates, Inc., Class A *		68,700		2,154
i2 Technologies, Inc. *		58,300		520
j2 Global Communications, Inc. *		5,700		137
JDA Software Group, Inc. *		13,800		195
MICROS Systems, Inc. *		9,400		197
MSC.Software Corp. *		39,500		242
Novell, Inc. *		465,800		1,751
Perficient, Inc. *		14,300		100
SPSS, Inc. *		25,100		776
Sybase, Inc. *		65,800		2,235
Synopsys, Inc. *		97,200		2,117
Take-Two Interactive Software, Inc. *		10,600		96
TIBCO Software, Inc. *		13,000		82
TiVo, Inc. *		29,700		223
Wright Express Corp. *		7,200		165
				13,378
Technology Hardware & Equipment 8.8%
3Com Corp. *		67,900		275
Acme Packet, Inc. *		52,300		403
Adaptec, Inc. *		257,500		737
ADC Telecommunications, Inc. *		25,800		190
Arris Group, Inc. *		62,200		664
Avid Technology, Inc. *		20,300		225
Benchmark Electronics, Inc. *		33,900		411
BigBand Networks *		48,800		286
Black Box Corp.		12,000		328
Brightpoint, Inc. *		26,900		140
Emulex Corp. *		266,900		2,794
Harmonic, Inc. *		95,000		696
Hutchinson Technology, Inc. *		50,000		96
Insight Enterprises, Inc. *		26,300		150
InterDigital, Inc. *		5,400		142
Intermec, Inc. *		14,300		173
JDS Uniphase Corp. *		72,200		333
LoJack Corp. *		22,800		78
Mercury Computer Systems, Inc. *		40,300		327
Methode Electronics, Inc.		173,000		1,042
NCR Corp. *		20,900		212
Novatel Wireless, Inc. *		42,600		292
PC-Tel, Inc.		14,800		72
Plantronics, Inc.		38,200		487
QLogic Corp. *		108,200		1,534
Rackable Systems, Inc. *		77,200		352
RadiSys Corp. *		38,200		274
Rogers Corp. *		23,600		601
ScanSource, Inc. *		5,400		133
Symmetricom, Inc. *		65,800		328
Synaptics, Inc. *		7,200		234
Tekelec *		49,400		766
Tellabs, Inc. *		83,100		435
TTM Technologies, Inc. *		58,500		434
Vishay Intertechnology, Inc. *		92,500		543
				16,187
Telecommunication Services 0.8%
Syniverse Holdings, Inc. *		116,400		1,467
Transportation 1.4%
Arkansas Best Corp.		3,800		88
Avis Budget Group, Inc. *		120,200		251
Hawaiian Holdings, Inc. *		42,600		212
Heartland Express, Inc.		16,500		247
Horizon Lines, Inc., Class A		56,700		302
International Shipholding Corp.		5,700		120
JetBlue Airways Corp. *		68,600		338
Marten Transport Ltd. *		23,000		477
Republic Airways Holdings, Inc. *		26,200		188
SkyWest, Inc.		27,700		333
				2,556
Utilities 3.6%
Calpine Corp. *		99,700		809
Central Vermont Public Services Corp.		29,000		498
El Paso Electric Co. *		72,700		1,003

See financial notes 57

 Schwab Small-Cap Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Mirant Corp. *		173,300		2,206
National Fuel Gas Co.		50,000		1,635
NRG Energy, Inc. *		15,500		279
The Laclede Group, Inc.		3,300		114
				6,544
Total Common Stock (Cost $219,134)				177,117
Foreign Common Stock 1.1% of net assets
Bermuda 1.1%
Insurance 1.1%
Platinum Underwriters Holdings, Ltd.		69,800		2,008
Total Foreign Common Stock (Cost $2,488)				2,008
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 2.6% of net assets
Commercial Paper & Other Obligations 2.4%
Citibank, New York Time Deposit
0.03%, 05/01/09		4,483		4,483
U.S. Treasury Obligation 0.2%
U.S. Treasury Bill
0.16%, 06/18/09 (a)		370		370
Total Short-Term Investments (Cost $4,853)				4,853
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $226,905 and the unrealized appreciation and depreciation were $13,258 and ($56,185), respectively, with a net unrealized depreciation of ($42,927).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.
(b)	Fair-valued by Management.
(c)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets.

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
Russell 2000 Index,e-mini, Long, expires 06/19/09		60		2,920		590

58 See financial notes

 Schwab Small-Cap Equity Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $226,475)			$183,978
Receivables:		��
Fund shares sold			265
Dividends	+		93
Total assets			184,336
Liabilities
Payables:
Investment advisers and administrator fees			14
Transfer agent and shareholder services fees			3
Fund shares redeemed			114
Due to brokers for futures			12
Trustees’ fees			1
Accrued expenses	+		41
Total liabilities			185
Net Assets
Total assets			184,336
Total liabilities	−		185
Net assets			$184,151
Net Assets by Source
Capital received from investors			321,745
Distributions in excess of net investment income			(35	)
Net realized capital losses			(95,652	)
Net unrealized capital losses			(41,907	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$111,110		11,533			$9.63
Select Shares	$73,041		7,514			$9.72

See financial notes 59

 Schwab Small-Cap Equity Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends		$1,038
Interest	+	2
Total Investment Income		1,040
Net Realized Gains and Losses
Net realized losses on investments		(46,904	)
Net realized losses on futures contracts	+	(591	)
Net realized losses		(47,495	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		28,756
Net unrealized gains on futures contracts	+	590
Net unrealized gains		29,346
Expenses
Investment adviser and administrator fees		830
Transfer agent and shareholder service fees:
Investor Shares		132
Select Shares		32
Portfolio accounting fees		21
Registration fees		20
Shareholder reports		20
Professional fees		19
Custodian fees		6
Trustees’ fees		5
Interest expense		1
Other expenses	+	3
Total expenses		1,089
Expense reduction by adviser and Schwab	−	(43	)
Net expenses		1,046
Increase (Decrease) in Net Assets from Operations
Total investment income		1,040
Net expenses	−	1,046
Net investment loss		(6	)
Net realized losses		(47,495	)
Net unrealized gains	+	29,346
Decrease in net assets from operations		($18,155	)

60 See financial notes

 Schwab Small-Cap Equity Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment loss			($6	)		($751	)
Net realized losses			(47,495	)		(47,880	)
Net unrealized gains (losses)	+		29,346			(125,756	)
Decrease in net assets from operations			(18,155	)		(174,387	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			—			—
Select Shares	+		36			—
Total distributions from net investment income			36			—
Distributions from net realized gains
Investor Shares			—			22,156
Select Shares	+		—			11,434
Total distributions from net realized gains			—			33,590
Total Distributions			$36			$33,590

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			382			$3,315			568			$8,177
Select Shares	+		1,203			10,350			1,043			14,622
Total shares sold			1,585			$13,665			1,611			$22,799
Shares Reinvested
Investor Shares			—			$-			1,303			$20,400
Select Shares	+		4			32			640			10,084
Total shares reinvested			4			$32			1,943			$30,484
Shares Redeemed
Investor Shares			(1,808	)		($15,548	)		(12,120	)		($178,753	)
Select Shares	+		(1,174	)		(10,238	)		(6,725	)		(100,469	)
Total shares redeemed			(2,982	)		($25,786	)		(18,845	)		($279,222	)
Net transactions in fund shares			(1,393	)		($12,089	)		(15,291	)		($225,939	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			20,440			$214,431			35,731			$648,347
Total decrease	+		(1,393	)		(30,280	)		(15,291	)		(433,916	)
End of period			19,047			$184,151			20,440			$214,431
Distribution in excess of net investment income /						($35	)					$7
Net investment income not yet distributed

See financial notes 61

Schwab Hedged Equity Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			3/1/051–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		12.52			16.35			15.95			14.45			13.51
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		(0.11	)		0.11			0.06			0.03
Net realized and unrealized gains (losses)		(0.52	)		(3.59	)		0.36			1.74			0.91
Total from investment operations		(0.53	)		(3.70	)		0.47			1.80			0.94
Less distributions:
Distributions from net investment income		—			(0.13	)		(0.07	)		(0.04	)		—
Distributions from net realized gains		—			—			—			(0.26	)		—
Total distributions		—			(0.13	)		(0.07	)		(0.30	)		—
Net asset value at end of period		11.99			12.52			16.35			15.95			14.45
Total return (%)		(4.23	)2		(22.80	)		2.94			12.71			6.96	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses (including dividend expense on short sales)		2.44	3		2.34			2.19			2.11			2.32	3
Net operating expenses (excluding dividend expense on short sales)		1.80	3		1.95			1.93			1.99	4		2.05	3,4
Gross operating expenses		2.62	3		2.34			2.19			2.12			2.35	3
Net investment income (loss)		(0.54	)3		(0.35	)		0.64			0.58			0.56	3
Portfolio turnover rate		90	2		138			72			100			87	2
Net assets, end of period ($ x 1,000,000)		102			79			211			207			33

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		12.55			16.39			15.98			14.46			13.01			11.53
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		(0.05	)		0.14			0.07			0.04			(0.09	)
Net realized and unrealized gains (losses)		(0.50	)		(3.63	)		0.36			1.76			2.05			1.57
Total from investment operations		(0.52	)		(3.68	)		0.50			1.83			2.09			1.48
Less distributions:
Distributions from net investment income		(0.01	)		(0.16	)		(0.09	)		(0.05	)		—			—
Distributions from net realized gains		—			—			—			(0.26	)		(0.64	)		—
Total distributions		(0.01	)		(0.16	)		(0.09	)		(0.31	)		(0.64	)		—
Net asset value at end of period		12.02			12.55			16.39			15.98			14.46			13.01
Total return (%)		(4.12	)2		(22.66	)		3.11			12.82			16.52			12.84
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses (including dividend expense on short sales)		2.27	3		2.17	5		2.03	5		1.90			2.26			2.43
Net operating expenses (excluding dividend expense on short sales)		1.60	3		1.77			1.77			1.77	6		1.92	6		2.10	6
Gross operating expenses		2.50	3		2.19			2.04			1.97			2.39			2.71
Net investment income (loss)		(0.34	)3		(0.17	)		0.79			0.77			0.55			(0.86	)
Portfolio turnover rate		90	2		138			72			100			87			99
Net assets, end of period ($ x 1,000,000)		294			343			948			931			229			68

*  Unaudited.

¹ Commencement of operation.

² Not annualized.

³ Annualized.

4	The ratio of net operating expense would have been 2.00% and 1.98% for the periods ended 10/31/05 and 10/31/06, respectively, if interest expense had not been included.
5	The ratio of net operating expenses would have been 2.02% and 2.16% for the periods ended 10/31/07 and 10/31/08, respectively, if interest expenses had not been included.
6	The ratio of net operating expenses would have been 2.00%, 1.82%, and 1.76% for the periods ended 10/31/04, 10/31/05 and 10/31/06, respectively, if interest expense had not been included.

62 See financial notes

 Schwab Hedged Equity Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost			Value
Holdings by Category				($ x 1,000)			($ x 1,000)
	93	.9%	Common Stock		419,255			371,997
	0	.1%	Foreign Common Stock		491			443
	7	.1%	Other Investment Company		28,103			28,103
	0	.6%	Short-Term Investment		2,253			2,253
	101	.7%	Total Investments		450,102			402,796
	(31	.9)%	Short Sales		(136,984	)		(126,378	)
	30	.2%	Other Assets and Liabilities, Net					119,546
	100	.0%	Total Net Assets					395,964

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 93.9% of net assets
Automobiles & Components 0.0%
Ford Motor Co. *		28,300		169
Banks 1.4%
SunTrust Banks, Inc. (a)		25,900		374
UMB Financial Corp. (a)		113,000		5,172
				5,546
Capital Goods 7.8%
Armstrong World Industries, Inc. (a)*		36,100		656
EMCOR Group, Inc. *		422,600		8,786
Gardner Denver, Inc. *		75,200		2,002
GrafTech International Ltd. *		48,100		423
Granite Construction, Inc.		25,200		994
Hubbell, Inc., Class B		31,200		1,036
L-3 Communications Holdings, Inc.		15,000		1,142
Lockheed Martin Corp. (a)		24,500		1,924
Masco Corp. (a)		159,000		1,409
Raytheon Co. (a)		215,200		9,733
Tyco International Ltd. (a)		113,800		2,704
				30,809
Commercial & Professional Supplies 1.1%
Covanta Holding Corp. (a)*		112,700		1,590
R.R. Donnelley & Sons Co.		227,700		2,653
The Brink’s Co. (a)		6,300		179
				4,422
Consumer Durables & Apparel 3.2%
Carter’s, Inc. (a)*		159,800		3,417
Jones Apparel Group, Inc.		41,800		386
Polo Ralph Lauren Corp. (a)		12,800		689
The Black & Decker Corp. (a)		44,600		1,797
The Stanley Works		71,300		2,712
The Warnaco Group, Inc. (a)*		128,600		3,709
				12,710
Consumer Services 1.4%
Apollo Group, Inc., Class A (a)*		25,700		1,618
McDonald’s Corp.		22,300		1,189
Regis Corp.		54,300		1,039
Wyndham Worldwide Corp.		154,800		1,808
				5,654
Diversified Financials 4.5%
AmeriCredit Corp. *		63,300		644
Discover Financial Services (a)		576,600		4,688
E*TRADE Financial Corp. *		352,600		504
Investment Technology Group, Inc. *		38,800		884
JPMorgan Chase & Co. (a)		118,100		3,897
Morgan Stanley		92,500		2,186
Northern Trust Corp. (a)		90,100		4,898
				17,701
Energy 6.8%
Anadarko Petroleum Corp. (a)		228,100		9,822
Cameron International Corp. (a)*		75,500		1,931
Chevron Corp. (a)		34,600		2,287
Dresser-Rand Group, Inc. *		93,600		2,305
ENSCO International, Inc.		57,800		1,635
Exxon Mobil Corp. (a)		85,100		5,674
Occidental Petroleum Corp. (a)		15,000		844
Pride International, Inc. *		25,100		570
World Fuel Services Corp.		50,600		1,929
				26,997
Food & Staples Retailing 1.3%
Safeway, Inc.		83,800		1,655
SUPERVALU, Inc.		8,800		144
The Kroger Co. (a)		163,650		3,538
				5,337
Food, Beverage & Tobacco 5.8%
Altria Group, Inc. (a)		354,400		5,787
Archer-Daniels-Midland Co. (a)		81,100		1,997
Chiquita Brands International, Inc. (a)*		263,100		1,992
Constellation Brands, Inc., Class A *		91,100		1,056
Del Monte Foods Co.		30,700		232
General Mills, Inc. (a)		45,500		2,306
Lancaster Colony Corp.		37,700		1,651
Reynolds American, Inc.		57,900		2,199
The Pepsi Bottling Group, Inc.		187,400		5,860
				23,080

See financial notes 63

 Schwab Hedged Equity Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Health Care Equipment & Services 6.5%
Baxter International, Inc. (a)		84,700		4,108
Becton, Dickinson & Co. (a)		5,800		351
Boston Scientific Corp. (a)*		458,400		3,855
C.R. Bard, Inc.		9,800		702
CIGNA Corp.		13,800		272
Express Scripts, Inc. *		10,900		697
Gen-Probe, Inc. *		16,700		804
Humana, Inc. (a)*		172,100		4,953
Immucor, Inc. *		41,400		674
Magellan Health Services, Inc. (a)*		205,800		6,084
McKesson Corp.		41,900		1,550
Quest Diagnostics, Inc.		21,100		1,083
ResMed, Inc. *		17,100		658
				25,791
Household & Personal Products 1.9%
Alberto-Culver Co. (a)		95,400		2,126
Church & Dwight Co., Inc. (a)		99,700		5,425
				7,551
Insurance 4.8%
American Financial Group, Inc. (a)		142,000		2,496
Aon Corp. (a)		164,800		6,955
Arch Capital Group Ltd. (a)*		49,100		2,837
Assurant, Inc. (a)		35,400		865
Axis Capital Holdings Ltd. (a)		37,700		929
MetLife, Inc. (a)		80,400		2,392
PartnerRe Ltd. (a)		18,300		1,248
Prudential Financial, Inc.		22,400		647
The Travelers Cos., Inc.		11,300		465
				18,834
Materials 5.1%
AK Steel Holding Corp. (a)		111,500		1,451
Ball Corp.		49,000		1,848
Bemis Co., Inc. (a)		15,300		368
Crown Holdings, Inc. *		29,700		655
MeadWestvaco Corp. (a)		154,000		2,412
Pactiv Corp. *		1,900		41
Silgan Holdings, Inc.		149,200		6,936
Sonoco Products Co. (a)		84,000		2,050
Temple-Inland, Inc.		110,700		1,322
Terra Industries, Inc.		48,600		1,288
The Scotts Miracle-Gro Co., Class A		53,900		1,820
				20,191
Media 2.6%
Liberty Global, Inc., Series A (a)*		97,800		1,613
The Interpublic Group of Cos., Inc. *		516,500		3,233
Time Warner Cable, Inc., Class A		47,173		1,520
Time Warner, Inc.		187,933		4,103
				10,469
Pharmaceuticals, Biotechnology & Life Sciences 7.5%
Amgen, Inc. (a)*		129,400		6,272
Biogen Idec, Inc. *		12,300		595
Forest Laboratories, Inc. (a)*		99,000		2,147
King Pharmaceuticals, Inc. (a)*		734,600		5,789
Millipore Corp. *		6,100		360
Myriad Genetics, Inc. *		24,600		954
Pfizer, Inc. (a)		268,500		3,587
Thermo Fisher Scientific, Inc. (a)*		153,900		5,399
Valeant Pharmaceuticals International *		61,800		1,036
Watson Pharmaceuticals, Inc. *		108,800		3,366
				29,505
Retailing 6.6%
Family Dollar Stores, Inc. (a)		184,600		6,127
Macy’s, Inc.		18,100		248
RadioShack Corp. (a)		495,900		6,982
Rent-A-Center, Inc. *		239,900		4,618
The Gap, Inc. (a)		493,300		7,666
The Home Depot, Inc.		21,800		574
				26,215
Semiconductors & Semiconductor Equipment 2.2%
Amkor Technology, Inc. (a)*		725,900		3,129
Cypress Semiconductor Corp. *		9,500		75
Integrated Device Technology, Inc. *		372,300		2,022
International Rectifier Corp. *		6,900		116
LSI Corp. *		552,700		2,122
MKS Instruments, Inc. (a)*		41,700		653
Skyworks Solutions, Inc. *		47,800		423
				8,540
Software & Services 9.0%
Affiliated Computer Services, Inc., Class A (a)*		25,600		1,239
BMC Software, Inc. (a)*		250,100		8,671
Computer Sciences Corp. *		82,400		3,046
Hewitt Associates, Inc., Class A *		199,500		6,256
Sybase, Inc. *		307,500		10,443
Symantec Corp. *		74,100		1,278
Synopsys, Inc. (a)*		204,200		4,447
WebMD Health Corp., Class A *		4,900		126
				35,506
Technology Hardware & Equipment 7.0%
3Com Corp. *		1,871,300		7,579
Cisco Systems, Inc. *		41,300		798
EMC Corp. *		66,900		838
Hewlett-Packard Co.		175,800		6,325
Ingram Micro, Inc., Class A *		66,800		970
InterDigital, Inc. *		16,500		434
JDS Uniphase Corp. (a)*		769,700		3,548
NCR Corp. *		177,700		1,804
Tellabs, Inc. *		805,600		4,222
Teradata Corp. *		38,700		647
Western Digital Corp. *		21,800		513
				27,678
Telecommunication Services 4.2%
AT&T, Inc.		35,200		902

64 See financial notes

 Schwab Hedged Equity Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Sprint Nextel Corp. *		848,900		3,701
Syniverse Holdings, Inc. (a)*		93,300		1,175
Telephone & Data Systems, Inc. (a)		205,500		5,892
United States Cellular Corp. (a)*		10,700		364
Verizon Communications, Inc.		70,000		2,124
Windstream Corp. (a)		314,600		2,611
				16,769
Transportation 0.9%
Alaska Air Group, Inc. (a)*		52,200		876
AMR Corp. (a)*		380,600		1,811
CSX Corp.		27,200		805
				3,492
Utilities 2.3%
Exelon Corp. *		67,600		3,118
Mirant Corp. *		277,100		3,528
National Fuel Gas Co.		26,700		873
NRG Energy, Inc. *		57,200		1,029
Public Service Enterprise Group, Inc.		16,200		483
				9,031
Total Common Stock (Cost $419,255)				371,997
Foreign Common Stock 0.1% of net assets
Bermuda 0.1%
Platinum Underwriters Holdings, Ltd. (a)		15,400		443
Total Foreign Common Stock (Cost $491)				443
Other Investment Company 7.1% of net assets
State Street Institutional Liquid Reserves Fund - Institutional Class		28,103		28,103
Total Other Investment Company (Cost $28,103)				28,103
Short-Term Investment 0.6% of net assets
U.S. Treasury Bill 0.6%
U.S. Treasury Bill
0.16%, 06/18/09 (b)		2,254		2,253
Total Short-Term Investments (Cost $2,253)				2,253
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $453,890 and the unrealized appreciation and depreciation were $25,866 and ($76,960), respectively, with a net unrealized depreciation of ($51,094).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for short sales.
(b)	All or a portion of this security is held as collateral for open futures contracts.

In addition to the above, the fund held the following at 04/30/09. All numbers are x1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		325		14,138		1,975

	Number of		Value
Security	Shares		($ x 1,000)
Short Sales 31.9% of net assets
Automobiles & Components 0.7%
BorgWarner, Inc.		16,300		472
Harley-Davidson, Inc.		69,500		1,540
The Goodyear Tire & Rubber Co. *		56,400		620
				2,632
Banks 0.4%
First Financial Bankshares, Inc.		24,500		1,208
People’s United Financial, Inc.		6,100		95
U.S. Bancorp		10,700		195
				1,498
Capital Goods 3.5%
Caterpillar, Inc.		92,200		3,281
CLARCOR, Inc.		95,400		2,965
Curtiss-Wright Corp.		6,200		198
Graco, Inc.		41,800		986
Kaydon Corp.		57,500		1,838
PACCAR, Inc.		8,900		315
Textron, Inc.		69,500		746
The Boeing Co.		84,500		3,384
				13,713
Commercial & Professional Supplies 1.5%
Copart, Inc. *		52,100		1,636
Corrections Corp. of America *		111,900		1,581
Mine Safety Appliances Co.		116,100		2,862
				6,079

See financial notes 65

 Schwab Hedged Equity Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Consumer Durables & Apparel 1.0%
Hanesbrands, Inc. *		192,100		3,162
Mattel, Inc.		49,000		733
				3,895
Consumer Services 0.8%
Carnival Corp.		9,800		263
International Game Technology		87,500		1,081
Sonic Corp. *		95,500		1,043
Starbucks Corp. *		23,500		340
Starwood Hotels & Resorts Worldwide, Inc.		13,300		277
				3,004
Diversified Financials 2.4%
Eaton Vance Corp.		35,900		983
Federated Investors, Inc., Class B		7,700		176
Legg Mason, Inc.		97,000		1,947
Leucadia National Corp. *		184,300		3,913
SLM Corp. *		364,500		1,760
T. Rowe Price Group, Inc.		22,500		867
				9,646
Energy 1.8%
Cabot Oil & Gas Corp.		70,800		2,137
Cimarex Energy Co.		21,600		581
Continental Resources, Inc. *		104,700		2,445
Newfield Exploration Co. *		7,100		221
Petrohawk Energy Corp. *		13,400		316
Plains Exploration & Production Co. *		14,500		274
Weatherford International Ltd. *		13,200		220
XTO Energy, Inc.		28,300		981
				7,175
Food & Staples Retailing 0.1%
Ruddick Corp.		12,200		313
Walgreen Co.		5,100		160
				473
Food, Beverage & Tobacco 0.5%
Corn Products International, Inc.		14,100		337
Molson Coors Brewing Co., Class B		4,900		188
PepsiCo, Inc.		31,700		1,577
				2,102
Health Care Equipment & Services 2.3%
Allscripts Healthcare Solutions, Inc.		164,700		2,046
athenahealth, Inc. *		80,500		2,560
IDEXX Laboratories, Inc. *		63,100		2,480
Intuitive Surgical, Inc. *		3,000		431
NuVasive, Inc. *		10,000		379
Psychiatric Solutions, Inc. *		23,300		452
Stryker Corp.		19,800		766
				9,114
Household & Personal Products 0.0%
Energizer Holdings, Inc. *		2,500		143
Insurance 0.5%
Marsh & McLennan Cos., Inc.		12,700		268
MBIA, Inc. *		10,200		48
Mercury General Corp.		38,200		1,291
Zenith National Insurance Corp.		17,700		403
				2,010
Materials 3.1%
Alcoa, Inc.		183,500		1,664
Freeport-McMoRan Copper & Gold, Inc.		11,600		495
Southern Copper Corp.		50,700		941
Steel Dynamics, Inc.		191,400		2,383
Texas Industries, Inc.		111,300		3,559
United States Steel Corp.		59,800		1,588
Westlake Chemical Corp.		88,000		1,646
				12,276
Media 0.1%
DreamWorks Animation SKG, Inc., Class A *		5,800		139
Regal Entertainment Group, Class A		5,200		68
				207
Pharmaceuticals, Biotechnology & Life Sciences 2.7%
AMAG Pharmaceuticals, Inc. *		20,900		937
BioMarin Pharmaceuticals, Inc. *		116,800		1,502
Cepheid, Inc. *		248,900		2,414
Covance, Inc. *		79,400		3,119
Mettler-Toledo International, Inc. *		4,100		253
Theravance, Inc. *		12,800		183
United Therapeutics Corp. *		28,000		1,759
Vertex Pharmaceuticals, Inc. *		11,800		364
				10,531
Real Estate 1.0%
CB Richard Ellis Group, Inc., Class A *		294,200		2,206
Jones Lang LaSalle, Inc.		8,700		281
The St. Joe Co. *		66,314		1,650
				4,137
Retailing 3.6%
Abercrombie & Fitch Co., Class A		25,300		685
AutoZone, Inc. *		2,500		416
Best Buy Co., Inc.		15,000		576
LKQ Corp. *		151,900		2,579
Nordstrom, Inc.		83,600		1,892
O’Reilly Automotive, Inc. *		59,900		2,327
Staples, Inc.		166,300		3,429
Target Corp.		48,700		2,009

66 See financial notes

 Schwab Hedged Equity Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Tiffany & Co.		6,800		197
Urban Outfitters, Inc. *		8,700		169
				14,279
Semiconductors & Semiconductor Equipment 0.5%
Linear Technology Corp.		17,500		381
Microchip Technology, Inc.		9,100		209
NVIDIA Corp. *		132,400		1,520
				2,110
Software & Services 2.6%
Blackbaud, Inc.		90,800		1,382
Cognizant Technology Solutions Corp., Class A *		11,700		290
Electronic Arts, Inc. *		97,700		1,988
Equinix, Inc. *		36,500		2,563
Microsoft Corp.		134,400		2,723
Visa, Inc., Class A		19,500		1,267
				10,213
Technology Hardware & Equipment 1.5%
Corning, Inc.		180,100		2,633
EchoStar Corp., Class A *		72,900		1,153
National Instruments Corp.		16,100		355
Palm, Inc. *		169,000		1,773
Zebra Technologies Corp., Class A *		8,100		172
				6,086
Telecommunication Services 0.6%
Crown Castle International Corp. *		25,300		620
MetroPCS Communications, Inc. *		106,000		1,812
				2,432
Transportation 0.1%
Kansas City Southern *		17,200		262
Utilities 0.6%
EQT Corp.		70,200		2,361
Total Short Sales (Proceeds $136,984)				126,378
End of Short Sale Positions.

* Non-income producing security.

See financial notes 67

 Schwab Hedged Equity Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $450,102)		$402,796
Deposits with broker for short sales		134,536
Receivables:
Investments sold		8,869
Fund shares sold		1,255
Dividends		214
Due from brokers for futures		15
Interest		11
Foreign tax reclaims		5
Prepaid expenses	+	1
Total assets		547,702
Liabilities
Securities sold short, at value (proceeds $136,984)		126,378
Payables:
Investments bought		24,633
Investment adviser and administrator fees		29
Transfer agent and shareholder services fees		13
Fund shares redeemed		572
Dividends on short sales		75
Payable to custodian		4
Trustees’ fees		1
Accrued expenses	+	33
Total liabilities		151,738
Net Assets
Total assets		547,702
Total liabilities	−	151,738
Net assets		395,964
Net Assets by Source
Capital received from investors		474,784
Distributions in excess of net investment income		(1,082	)
Net realized capital losses		(43,013	)
Net unrealized capital losses		(34,725	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$102,296		8,532			$11.99
Select Shares	$293,668		24,440			$12.02

68 See financial notes

 Schwab Hedged Equity Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends		$4,231
Interest	+	(451	)
Total Investment Income		3,780
Net Realized Gains and Losses
Net realized losses on investments		(98,737	)
Net realized gains on short sales		92,499
Net realized losses on futures contracts	+	(694	)
Net realized losses		(6,932	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		73,737
Net unrealized losses on short sales		(84,623	)
Net unrealized gains on futures contracts	+	919
Net unrealized losses		(9,967	)
Expenses
Investment adviser and administrator fees		3,296
Transfer agent and shareholder service fees:
Investor Shares		114
Select Shares		151
Dividends on short sales		1,302
Registration fees		27
Professional fees		25
Portfolio accounting fees		21
Shareholder reports		14
Custodian fees		9
Trustees’ fees		6
Other expenses	+	5
Total expenses		4,970
Expense reduction by adviser and Schwab	−	432
Net expenses		4,538
Increase (Decrease) in Net Assets from Operations
Total investment income		3,780
Net expenses	−	4,538
Net investment loss		(758	)
Net realized losses		(6,932	)
Net unrealized losses	+	(9,967	)
Decrease in net assets from operations		($17,657	)

See financial notes 69

 Schwab Hedged Equity Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment loss			($758	)		($1,611	)
Net realized gains (losses)			(6,932	)		9,369
Net unrealized losses	+		(9,967	)		(182,720	)
Decrease in net assets from operations			(17,657	)		(174,962	)
Distributions to shareholders
Distributions from net investment income
Investor Shares			-			1,512
Select Shares	+		324			8,315
Total distributions from net investment income			$324			$9,827

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			4,663			$55,635			1,439			$21,463
Select Shares	+		4,590			54,407			7,429			111,815
Total shares sold			9,253			$110,042			8,868			$133,278
Shares Reinvested
Investor Shares			-			$-			90			$1,392
Select Shares	+		21			250			424			6,600
Total shares reinvested			21			$250			514			$7,992
Shares Redeemed
Investor Shares			(2,426	)		($28,655	)		(8,135	)		($121,483	)
Select Shares	+		(7,488	)		(89,267	)		(38,408	)		(572,804	)
Total shares redeemed			(9,914	)		($117,922	)		(46,543	)		($694,287	)
Net transactions in fund shares			(640	)		($7,630	)		(37,161	)		($553,017	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			33,612			$421,575			70,773			$1,159,381
Total decrease	+		(640	)		(25,611	)		(37,161	)		(737,806	)
End of period			32,972			$395,964			33,612			$421,575
Distributions in excess of net investment income						($1,082	)					$-

70 See financial notes

Schwab Financial Services Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		9.05			15.88			15.75			14.42			13.12			11.77
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.18			0.18			0.10			0.12			0.08
Net realized and unrealized gains (losses)		(1.78	)		(6.78	)		0.25			1.98			2.21			1.37
Total from investment operations		(1.71	)		(6.60	)		0.43			2.08			2.33			1.45
Less distributions:
Distributions from net investment income		(0.15	)		(0.21	)		(0.11	)		(0.11	)		(0.09	)		(0.10	)
Distributions from net realized gains		—			(0.02	)		(0.19	)		(0.64	)		(0.94	)		—
Total distributions		(0.15	)		(0.23	)		(0.30	)		(0.75	)		(1.03	)		(0.10	)
Net asset value at end of period		7.19			9.05			15.88			15.75			14.42			13.12
Total return (%)		(18.92	)1		(42.08	)		2.75			14.85			18.62			12.39
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.02	2		0.94			0.90			0.98			1.07			1.05
Gross operating expenses		1.02	2		0.94			0.90			0.98			1.15			1.25
Net investment income (loss)		1.95	2		1.56			1.06			0.87			1.01			0.62
Portfolio turnover rate		13	1		59			54			57			74			85
Net assets, end of period ($ x 1,000,000)		65			84			94			95			29			20

* Unaudited.

¹ Not annualized.

² Annualized.

See financial notes 71

 Schwab Financial Services Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	94	.1%	Common Stock		97,659		60,715
	1	.1%	Foreign Common Stock		807		691
	4	.6%	Short-Term Investments		2,983		2,983
	99	.8%	Total Investments		101,449		64,389
	0	.7%	Collateral Invested for Securities on Loan		445		445
	(0	.5)%	Other Assets and Liabilities, Net				(295	)
	100	.0%	Total Net Assets				64,539

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 94.1% of net assets
Banks 16.4%
1st Source Corp.		6,000		118
BancFirst Corp.		18,900		807
Bank of Hawaii Corp.		10,000		351
Commerce Bancshares, Inc.		15,588		516
First Citizens BancShares, Inc., Class A		7,408		886
First Horizon National Corp.		30,800		354
Guaranty Bancorp *		2,500		6
Huntington Bancshares, Inc.		104,500		292
KeyCorp		102,200		629
NBT Bancorp, Inc.		20,200		478
Popular, Inc.		81,100		232
Santander BanCorp		21,600		145
SunTrust Banks, Inc.		83,600		1,207
SVB Financial Group *		45,800		951
The South Financial Group, Inc.		50,100		83
UMB Financial Corp.		34,700		1,588
Webster Financial Corp.		46,500		243
Wells Fargo & Co.		72,000		1,441
WSFS Financial Corp.		8,600		233
				10,560
Commercial & Professional Supplies 0.3%
Duff & Phelps Corp., Class A *		10,000		189
Diversified Financials 42.4%
Advanta Corp., Class B		57,550		67
American Express Co.		16,000		404
AmeriCredit Corp. *		57,800		588
Ameriprise Financial, Inc.		117,900		3,107
Bank of America Corp.		228,400		2,040
Bank of New York Mellon Corp.		68,000		1,733
Capital One Financial Corp.		21,400		358
Cash America International, Inc.		30,000		671
Citigroup, Inc. (b)		144,100		439
Discover Financial Services		80,800		657
GAMCO Investors, Inc., Class A		18,500		928
Interactive Brokers Group, Inc., Class A *		42,700		630
JPMorgan Chase & Co.		124,600		4,112
LaBranche & Co., Inc. *		146,370		612
MarketAxess Holdings, Inc. *		25,300		243
Morgan Stanley		70,000		1,655
Nelnet, Inc., Class A *		30,900		186
Northern Trust Corp.		40,000		2,174
PHH Corp. *		47,700		800
Raymond James Financial, Inc.		50,800		797
State Street Corp.		25,000		853
TD Ameritrade Holding Corp. *		50,000		795
Teton Advisors, Inc. (a)(c) *		276		—
The Goldman Sachs Group, Inc.		27,400		3,521
				27,370
Insurance 23.3%
American Financial Group, Inc.		77,950		1,370
Aon Corp.		18,200		768
Arch Capital Group Ltd. *		8,500		491
Assurant, Inc.		35,800		875
Axis Capital Holdings Ltd.		30,000		739
Berkshire Hathaway, Inc., Class A *		8		752
HCC Insurance Holdings, Inc.		44,700		1,069
MetLife, Inc.		48,600		1,446
Principal Financial Group, Inc.		10,000		164
Prudential Financial, Inc.		32,700		944
RenaissanceRe Holdings Ltd.		4,700		229
The Chubb Corp.		47,400		1,846
The Hartford Financial Services Group, Inc.		31,500		361
The Travelers Cos., Inc.		51,000		2,098
Transatlantic Holdings, Inc.		7,300		277
Unum Group		98,800		1,615
				15,044
Media 0.2%
Interactive Data Corp.		6,600		148
Real Estate 5.7%
AMB Property Corp.		7,500		143
AvalonBay Communities, Inc.		5,791		329
Boston Properties, Inc.		5,300		262
BRE Properties, Inc.		4,000		98
DiamondRock Hospitality Co.		10,000		65
Equity Residential		21,000		481
Essex Property Trust, Inc.		2,500		159
HCP, Inc.		9,000		198
Host Hotels & Resorts, Inc.		19,000		146
ProLogis		19,400		177
Public Storage		7,000		468

72 See financial notes

 Schwab Financial Services Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Simon Property Group, Inc.		16,212		836
Vornado Realty Trust		6,819		333
				3,695
Software & Services 5.8%
MasterCard, Inc., Class A		12,000		2,201
Western Union Co.		90,000		1,508
				3,709
Total Common Stock (Cost $97,659)				60,715
Foreign Common Stock 1.1% of net assets
Bermuda 1.1%
Diversified Financials 0.5%
Lazard Ltd., Class A		11,000		300
Insurance 0.6%
Platinum Underwriters Holdings, Ltd.		13,600		391
Total Foreign Common Stock (Cost $807)				691
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 4.6% of net assets
Citibank, New York Time Deposit
0.03%, 05/01/09		1,700		1,700
Wells Fargo, San Francisco Time Deposit
0.03%, 05/01/09		1,283		1,283
Total Short-Term Investments (Cost $2,983)				2,983
End of Investments.
	Number		Value
Security	of Shares		($ x 1,000)
Collateral Invested for Securities on Loan 0.7% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust		444,909		445
Total collateral invested for securities on loan (Cost $445)				445
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $101,460 and the unrealized appreciation and depreciation were $365 and ($37,436), respectively, with a net unrealized depreciation of ($37,071).

*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	All or a portion of this security is on loan.
(c)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets.

See financial notes 73

 Schwab Financial Services Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value including securities on loan of $418 (cost $101,449)		$64,389
Collateral invested for securities on loan		445
Receivables:
Fund shares sold		141
Dividends		47
Income from securities on loan	+	28
Total assets		65,050
Liabilities
Collateral held for securities on loan		445
Payables:
Investment advisers and administrator fees		3
Transfer agent and shareholder services fees		1
Fund shares redeemed		30
Trustees’ fees		1
Accrued expenses	+	31
Total liabilities		511
Net Assets
Total assets		65,050
Total liabilities	−	511
Net assets		$64,539
Net Assets by Source
Capital received from investors		120,360
Net investment income not yet distributed		241
Net realized capital losses		(19,002	)
Net unrealized capital losses		(37,060	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$64,539		8,982			$7.19

74 See financial notes

 Schwab Financial Services Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $1)		$874
Interest		1
Securities on loan	+	36
Total investment income		911
Net Realized Gains and Losses
Net realized losses		(10,216	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(6,713	)
Expenses
Investment adviser and administrator fees		166
Transfer agent and shareholder service fees		77
Registration fees		19
Portfolio accounting fees		18
Professional fees		15
Shareholder reports		9
Trustees’ fees		4
Custodian fees		3
Other expenses	+	2
Net expenses		313
Increase (Decrease) in Net Assets from Operations
Total investment income		911
Net expenses	−	313
Net investment income		598
Net realized losses		(10,216	)
Net unrealized losses	+	(6,713	)
Decrease in net assets from operations		($16,331	)

See financial notes 75

 Schwab Financial Services Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-04/30/09			11/1/07-10/31/08
Net investment income			$598			$1,364
Net realized losses			(10,216	)		(8,838	)
Net unrealized losses	+		(6,713	)		(41,408	)
Decrease in net assets from operations			(16,331	)		(48,882	)
Distributions to Shareholders
Distribution from net investment income			1,346			1,182
Distribution from net realized gains	+		—			140
Total distributions paid			$1,346			$1,322

Transactions in Fund Shares

		11/1/08-04/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			2,050			$14,307			6,693			$82,051
Shares Reinvested			167			1,229			83			1,188
Shares Redeemed	+		(2,545	)		(17,572	)		(3,361	)		(42,425	)
Net transactions in fund shares			(328	)		($2,036	)		3,415			$40,814
Shares Outstanding and Net Assets
		11/1/08-04/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			9,310			$84,252			5,895			$93,642
Total increase or decrease	+		(328	)		(19,713	)		3,415			(9,390	)
End of period			8,982			$64,539			9,310			$84,252
Net investment income not yet distributed						$241						$989

76 See financial notes

Schwab Health Care Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		12.55			17.08			15.05			14.03			10.78			8.43
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.08			0.05			(0.01	)		(0.02	)		(0.06	)
Net realized and unrealized gains (losses)		(1.22	)		(4.46	)		2.11			1.03			3.27			2.41
Total from investment operations		(1.15	)		(4.38	)		2.16			1.02			3.25			2.35
Less distributions:
Distributions from net investment income		(0.09	)		(0.05	)		—			—			—			—
Distributions from net realized gains		—			(0.10	)		(0.13	)		—			—			—
Total distributions		(0.09	)		(0.15	)		(0.13	)		—			—			—
Net asset value at end of period		11.31			12.55			17.08			15.05			14.03			10.78
Total return (%)		(9.21	)1		(25.87	)		14.49			7.27			30.15			27.88
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.84	2		0.82			0.82			0.84			0.89			1.04
Gross operating expenses		0.84	2		0.82			0.82			0.84			0.89			1.07
Net investment income (loss)		1.05	2		0.48			0.32			(0.07	)		(0.28	)		(0.73	)
Portfolio turnover rate		16	1		50			34			76			42			105
Net assets, end of period ($ x 1,000,000)		450			545			834			611			397			54

* Unaudited.

¹ Not annualized.

² Annualized.

See financial notes 77

 Schwab Health Care Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	91	.8%	Common Stock		507,447		413,278
	1	.6%	Foreign Common Stock		8,210		6,994
	0	.9%	Other Investment		4,170		4,192
	5	.6%	Short-Term Investments		25,129		25,129
	99	.9%	Total Investments		544,956		449,593
	0	.1%	Other Assets and Liabilities, Net				543
	100	.0%	Total Net Assets				450,136

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 91.8% of net assets
Health Care Equipment & Services 35.0%
Aetna, Inc.		230,600		5,076
Align Technology, Inc. *		30,000		372
Alliance Imaging, Inc. *		75,000		590
American Medical Systems Holdings, Inc. *		35,000		433
AmerisourceBergen Corp.		150,000		5,046
AmSurg Corp. *		15,000		308
Baxter International, Inc.		400,000		19,400
Becton, Dickinson & Co.		175,000		10,584
Boston Scientific Corp. *		800,000		6,728
C.R. Bard, Inc.		70,000		5,014
Centene Corp. *		75,000		1,378
Cerner Corp. *		50,000		2,690
CIGNA Corp.		400,000		7,884
Cochlear Ltd.		3,000		108
CONMED Corp. *		75,000		999
DaVita, Inc. *		125,000		5,796
Edwards Lifesciences Corp. *		25,000		1,585
Emergency Medical Services Corp., Class A *		10,000		348
Ensign Group, Inc.		10,000		155
ev3, Inc. *		50,000		418
Express Scripts, Inc. *		275,000		17,592
Fresenius Medical Care AG & Co. KGaA		6,400		248
Gen-Probe, Inc. *		85,000		4,094
Hanger Orthopedic Group, Inc. *		25,000		348
Humana, Inc. *		174,300		5,016
ICU Medical, Inc. *		30,000		1,128
Immucor, Inc. *		25,000		407
Invacare Corp.		175,000		2,693
inVentiv Health, Inc. *		15,000		166
Kindred Healthcare, Inc. *		75,000		977
LifePoint Hospitals, Inc. *		50,000		1,293
Magellan Health Services, Inc. *		80,000		2,365
McKesson Corp.		200,000		7,400
Medco Health Solutions, Inc. *		100,000		4,355
Merit Medical Systems, Inc. *		50,000		776
Omnicare, Inc.		240,000		6,170
Omnicell, Inc. *		15,000		132
Owens & Minor, Inc.		62,500		2,167
PharMerica Corp. *		30,000		548
Quest Diagnostics, Inc.		175,000		8,983
ResMed, Inc. *		100,000		3,845
St. Jude Medical, Inc. *		50,000		1,676
STERIS Corp.		60,000		1,446
Sun Healthcare Group, Inc. *		15,000		127
Synovis Life Technologies, Inc. *		40,000		607
Synthes, Inc.		6,600		668
Teleflex, Inc.		35,000		1,504
Thoratec Corp. *		25,000		727
UnitedHealth Group, Inc.		200,000		4,704
Vnus Medical Technologies, Inc. *		15,000		332
				157,406
Pharmaceuticals, Biotechnology & Life Sciences 56.0%
Abbott Laboratories		375,000		15,694
Accelrys, Inc. *		30,000		135
Adolor Corp. *		65,000		146
Albany Molecular Research, Inc. *		25,000		244
Alkermes, Inc. *		125,000		956
Amgen, Inc. *		450,000		21,811
AstraZeneca PLC		71,100		2,490
Bayer AG *		8,400		418
Bio-Rad Laboratories, Inc., Class A *		10,000		697
Biogen Idec, Inc. *		250,000		12,085
Bristol-Myers Squibb Co.		550,000		10,560
Cephalon, Inc. *		150,000		9,841
CSL Ltd.		31,700		790
Cubist Pharmaceuticals, Inc. *		25,000		415
Eli Lilly & Co.		330,000		10,864
Endo Pharmaceuticals Holdings, Inc. *		175,000		2,894
Enzon Pharmaceuticals, Inc. *		50,000		288
Forest Laboratories, Inc. *		423,900		9,194
Genzyme Corp. *		175,000		9,333
GlaxoSmithKline PLC		127,000		1,956
Johnson & Johnson		500,000		26,180
King Pharmaceuticals, Inc. *		1,300,000		10,244
Life Technologies Corp. *		210,000		7,833
Martek Biosciences Corp. *		100,000		1,822
Matrixx Initiatives, Inc. *		10,000		171
Maxygen, Inc. *		50,000		293
Medarex, Inc. *		75,000		444
Medicis Pharmaceutical Corp., Class A		300,000		4,821
Merck & Co., Inc.		650,000		15,756
Merck KGaA		8,900		798
Millipore Corp. *		35,000		2,068
Nabi Biopharmaceuticals *		100,000		344
Novartis AG - Reg’d		70,900		2,683
Noven Pharmaceuticals, Inc. *		20,000		206

78 See financial notes

 Schwab Health Care Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Novo Nordisk A/S, Class B		15,300		728
NPS Pharmaceuticals, Inc. *		25,000		87
Par Pharmaceutical Cos., Inc. *		75,000		805
Pfizer, Inc.		1,500,000		20,040
Pharmaceutical Product Development, Inc.		50,000		981
Salix Pharmaceuticals Ltd. *		25,000		275
Sanofi-Aventis		50,700		2,936
Schering-Plough Corp.		200,000		4,604
Shionogi & Co., Ltd.		6,000		103
Techne Corp.		25,000		1,431
Teva Pharmaceutical Industries Ltd.		29,900		1,313
The Medicines Co. *		200,000		1,996
Thermo Fisher Scientific, Inc. *		350,000		12,278
Valeant Pharmaceuticals International *		100,000		1,676
ViroPharma, Inc. *		300,000		1,689
Warner Chilcott Ltd., Class A *		200,000		1,958
Watson Pharmaceuticals, Inc. *		475,000		14,696
				252,070
Real Estate 0.8%
Health Care REIT, Inc.		50,000		1,703
Healthcare Realty Trust, Inc.		125,000		2,099
				3,802
Total Common Stock (Cost $507,447)				413,278
Foreign Common Stock 1.6% of net assets
Belgium 0.0%
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
UCB S.A. *		1,200		33
Canada 0.0%
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Biovail Corp.		8,600		94
France 0.2%
Health Care Equipment & Services 0.2%
Essilor International S.A.		15,600		672
Japan 0.8%
Pharmaceuticals, Biotechnology & Life Sciences 0.8%
Astellas Pharma, Inc.		56,000		1,821
Chugai Pharmaceutical Co., Ltd.		24,000		446
Santen Pharmaceutical Co., Ltd.		6,000		169
Takeda Pharmaceutical Co., Ltd.		37,000		1,312
				3,748
Switzerland 0.6%
Pharmaceuticals, Biotechnology & Life Sciences 0.6%
Roche Holding AG		19,400		2,447
Total Foreign Common Stock (Cost $8,210)				6,994
Other Investment Company 0.9% of net assets
United States 0.9%
iShares MSCI EAFE Index Fund		100,000		4,192
Total Other Investment Company (Cost $4,170)				4,192
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 5.6% of net assets
Commercial Paper & Other Obligations 5.0%
Citibank, New York Time Deposit
0.03%, 05/01/09		13,800		13,800
Wells Fargo, San Francisco Time Deposit
0.03%, 05/01/09		8,750		8,750
				22,550
U.S. Treasury Obligations 0.6%
U.S. Treasury Bills
0.15%, 06/18/09 (a)		450		450
0.17%, 06/18/09 (a)		10		10
0.09%, 06/18/09 (a)		879		879
0.16%, 06/18/09 (a)		1,240		1,240
				2,579
Total Short-Term Investments (Cost $25,129)				25,129
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $545,063 and the unrealized appreciation and depreciation were $23,191 and ($118,661), respectively, with a net unrealized depreciation of ($95,470).
At 04/30/09, the values of certain foreign securities held by the fund aggregating $19,203 were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.

Reg’d — Registered

REIT — Real Estate Investment Trust

See financial notes 79

 Schwab Health Care Fund

Portfolio Holdings continued

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		500		21,750		2,391

80 See financial notes

 Schwab Health Care Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $544,956)		$449,593
Cash		13
Foreign currency, at value (Cost $125)		125
Receivables:
Investments sold		560
Dividends		306
Fund shares sold		207
Foreign tax reclaims		46
Due from brokers for futures		23
Prepaid expenses	+	1
Total assets		450,874
Liabilities
Investment adviser and administrator fees		20
Transfer agent and shareholder service fees		9
Fund shares redeemed		651
Trustees’ fees		1
Accrued expenses	+	57
Total liabilities		738
Net Assets
Total assets		450,874
Total liabilities	−	738
Net assets		$450,136
Net Assets by Source
Capital received from investors		574,103
Net investment income not yet distributed		2,224
Net realized capital losses		(33,219	)
Net unrealized capital losses		(92,972	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$450,136		39,809			$11.31

See financial notes 81

 Schwab Health Care Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $63)		$4,591
Interest		9
Securities on loan	+	2
Total investment income		4,602
Net Realized Gains and Losses
Net realized losses on investments		(22,992	)
Net realized gains on foreign currency transactions		382
Net realized losses on futures contracts	+	(4,544	)
Net realized losses		(27,154	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(31,225	)
Net unrealized gains on futures contracts		4,600
Net unrealized gains on foreign currency translations	+	1
Net unrealized losses		(26,624	)
Expenses
Investment adviser and administrator fees		1,311
Transfer agent and shareholder service fees		607
Shareholder reports		50
Portfolio accounting fees		24
Registration fees		18
Professional fees		16
Custodian fees		10
Trustees’ fees		7
Other expenses	+	5
Total expenses		2,048
Increase (Decrease) in Net Assets from Operations
Total investment income		4,602
Net expenses	−	2,048
Net investment income		2,554
Net realized losses		(27,154	)
Net unrealized losses	+	(26,624	)
Decrease in net assets from operations		($51,224	)

82 See financial notes

 Schwab Health Care Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			11/01/07-10/31/08
Net investment income			$2,554			$3,551
Net realized losses			(27,154	)		(5,177	)
Net unrealized losses	+		(26,624	)		(209,234	)
Decrease in net assets from operations			(51,224	)		(210,860	)
Distributions to Shareholders
Distributions from net investment income			3,760			2,381
Distributions from net realized gains	+		—			4,855
Total distributions			$3,760			$7,236

Transactions in Fund Shares

		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			3,032			$35,477			12,076			$187,775
Shares Reinvested			282			3,366			396			6,542
Shares Redeemed	+		(6,907	)		(78,407	)		(17,912	)		(265,632	)
Net transactions in fund shares			(3,593	)		($39,564	)		(5,440	)		($71,315	)
Shares Outstanding and Net Assets
		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			43,402			$544,684			48,842			$834,095
Total decrease	+		(3,593	)		(94,548	)		(5,440	)		(289,411	)
End of period			39,809			$450,136			43,402			$544,684
Net investment income not yet distributed						$2,224						$3,430

See financial notes 83

Schwab^® International Core Equity Fund

Financial Statements

Financial Highlights

	11/1/08–			5/30/081–
Investor Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		5.85			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.05
Net realized and unrealized gains (losses)		(0.33	)		(4.20	)
Total from investment operations		(0.26	)		(4.15	)
Less distributions:
Distributions from net investment income		(0.08	)		—
Net asset value at end of period		5.51			5.85
Total return (%)		(4.47	)2		(41.50	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.10	3		1.10	3
Gross operating expenses		1.64	3		1.52	3
Net investment income (loss)		2.39	3		1.37	3
Portfolio turnover rate		52	2		56	2
Net assets, end of period ($ x 1,000,000)		19			21

	11/1/08–			5/30/081–
Select Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		5.85			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.07
Net realized and unrealized gains (losses)		(0.32	)		(4.22	)
Total from investment operations		(0.25	)		(4.15	)
Less distributions:
Distributions from net investment income		(0.09	)		—
Net asset value at end of period		5.51			5.85
Total return (%)		(4.35	)2		(41.50	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.95	3		0.95	3
Gross operating expenses		1.48	3		1.36	3
Net investment income (loss)		2.58	3		1.49	3
Portfolio turnover rate		52	2		56	2
Net assets, end of period ($ x 1,000,000)		8			9

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

84 See financial notes

 Schwab^® International Core Equity Fund

Financial Highlights continued

	11/1/08–			5/30/081–
Institutional Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		5.85			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.06
Net realized and unrealized gains (losses)		(0.32	)		(4.21	)
Total from investment operations		(0.25	)		(4.15	)
Less distributions:
Distributions from net investment income		(0.09	)		—
Net asset value at end of period		5.51			5.85
Total return (%)		(4.26	)2		(41.50	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.86	3		0.86	3
Gross operating expenses		1.49	3		1.39	3
Net investment income (loss)		2.67	3		1.67	3
Portfolio turnover rate		52	2		56	2
Net assets, end of period ($ x 1,000,000)		3			3

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

See financial notes 85

 Schwab International Core Equity Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	96	.3%	Common Stock		38,793		28,712
	2	.9%	Other Investment Company		873		873
	99	.2%	Total Investments		39,666		29,585
	0	.8%	Other Assets and Liabilities				240
	100	.0%	Net Assets				29,825

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 96.3% of net assets
Australia 5.7%
Banks 0.9%
Commonwealth Bank of Australia		8,066		206
Westpac Banking Corp.		4,800		67
				273
Commercial & Professional Supplies 0.2%
Downer EDI Ltd.		12,227		45
Consumer Services 0.1%
Tatts Group Ltd.		16,799		34
Energy 1.2%
Caltex Australia Ltd.		21,220		151
Origin Energy Ltd.		17,421		206
				357
Food & Staples Retailing 1.2%
Metcash Ltd.		53,520		161
Woolworths Ltd.		10,345		201
				362
Materials 1.4%
Amcor Ltd.		57,834		202
BlueScope Steel Ltd.		16,824		28
Boral Ltd.		14,692		44
Iluka Resources Ltd. *		53,578		127
				401
Transportation 0.1%
Toll Holdings Ltd.		7,150		31
Utilities 0.6%
AGL Energy Ltd.		16,469		181
				1,684
Austria 1.2%
Banks 0.7%
Erste Group Bank AG		9,259		193
Transportation 0.5%
Oesterreichische Post AG		5,575		163
				356
Belgium 0.3%
Diversified Financials 0.3%
Fortis *		38,930		96
Bermuda 0.3%
Energy 0.2%
CNPC Hong Kong Ltd.		80,000		40
Frontline Ltd.		1,500		29
				69
Real Estate 0.1%
Great Eagle Holdings Ltd.		20,000		28
				97
China 1.3%
Banks 1.3%
Bank of China Ltd., Class H		98,000		36
China Construction Bank Corp., Class H		331,000		191
Industrial & Commercial Bank of China Ltd., Class H		282,000		161
				388
Denmark 0.7%
Pharmaceuticals, Biotechnology & Life Sciences 0.7%
Novo Nordisk A/S, Class B		4,534		216
Finland 1.3%
Materials 0.8%
Huhtamaki Oyj		25,936		250
Software & Services 0.5%
Tieto Oyj		11,682		150
				400
France 9.1%
Capital Goods 1.9%
Alstom S.A.		996		62
Bouygues S.A.		1,055		45
Safran S.A.		2,177		26
Schneider Electric S.A.		2,952		225
Vinci S.A.		2,109		94
Zodiac Aerospace		3,951		115
				567
Consumer Durables & Apparel 0.3%
LVMH Moet Hennessy Louis Vuitton S.A.		1,242		94

86 See financial notes

 Schwab International Core Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Insurance 1.3%
Axa S.A. *		14,151		238
CNP Assurances		2,124		167
				405
Materials 0.2%
Air Liquide S.A.		611		50
Media 1.6%
Publicis Groupe		6,906		211
Vivendi		9,579		258
				469
Pharmaceuticals, Biotechnology & Life Sciences 1.8%
Sanofi-Aventis		9,251		536
Software & Services 0.6%
Cap Gemini S.A. *		4,816		180
Telecommunication Services 1.4%
France Telecom S.A.		18,550		412
				2,713
Germany 8.5%
Automobiles & Components 1.0%
Daimler AG - Reg’d		8,447		303
Banks 0.3%
Aareal Bank AG		9,414		88
Capital Goods 1.6%
Bilfinger Berger AG		866		41
MAN AG		3,190		198
MTU Aero Engines Holding AG		7,174		241
				480
Consumer Durables & Apparel 1.7%
Adidas AG		8,782		332
Puma AG Rudolf Dassler Sport *		767		164
				496
Insurance 0.9%
Muenchener Rueckversicherungs-Gesellschaft AG - Reg’d		1,847		255
Pharmaceuticals, Biotechnology & Life Sciences 1.1%
Bayer AG *		6,456		321
Retailing 0.6%
Fielmann AG		3,109		191
Transportation 0.5%
Deutsche Lufthansa AG - Reg’d		12,174		155
Utilities 0.8%
RWE AG		3,351		242
				2,531
Greece 0.9%
Banks 0.7%
National Bank of Greece S.A.		10,043		209
Consumer Services 0.2%
OPAP S.A.		2,340		72
				281
Hong Kong 3.1%
Energy 0.7%
CNOOC Ltd.		191,000		213
Real Estate 0.1%
Wheelock & Co., Ltd.		14,000		30
Telecommunication Services 0.1%
China Mobile Ltd.		3,500		30
Utilities 2.2%
CLP Holdings Ltd.		48,000		324
Hongkong Electric Holdings Ltd.		53,000		313
				637
				910
Italy 2.3%
Automobiles & Components 1.0%
Fiat S.p.A. *		13,005		127
Pirelli & C. S.p.A.		433,128		169
				296
Capital Goods 0.3%
Prysmian S.p.A.		5,766		70
Insurance 0.1%
Milano Assicurazioni S.p.A.		10,311		32
Media 0.0%
Seat Pagine Gialle S.p.A. *		8,076		2
Pharmaceuticals, Biotechnology & Life Sciences 0.7%
Recordati S.p.A.		37,929		218
Utilities 0.2%
Enel S.p.A.		10,688		58
				676
Japan 23.4%
Automobiles & Components 1.6%
Nhk Spring Co., Ltd.		39,000		181
NIissan Shatai Co., Ltd.		30,000		189
The Yokohama Rubber Co., Ltd.		26,000		113
				483
Banks 2.1%
Hokuhoku Financial Group, Inc.		36,000		64
Kiyo Holdings, Inc.		116,000		139
Resona Holdings, Inc.		9,300		125
The 77 Bank Ltd.		25,000		128
The Sumitomo Trust & Banking Co., Ltd.		42,000		176
				632
Capital Goods 2.7%
Itochu Corp.		34,000		182
Marubeni Corp.		24,000		87
Mitsubishi Corp.		10,400		160
Mitsui & Co., Ltd.		18,000		191
Sumitomo Corp.		18,000		157
Toyo Engineering Corp.		13,000		42
				819
Commercial & Professional Supplies 0.5%
Toppan Forms Co., Ltd.		14,700		158

See financial notes 87

 Schwab International Core Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Consumer Durables & Apparel 0.8%
Goldcrest Co., Ltd.		2,410		55
NAMCO BANDAI Holdings, Inc.		14,600		146
Sanki Engineering Co., Ltd.		4,000		27
				228
Consumer Services 0.4%
Oriental Land Co., Ltd.		2,100		132
Diversified Financials 0.7%
Acom Co., Ltd.		30		1
Hitachi Capital Corp.		12,400		137
Takefuji Corp.		12,520		67
				205
Food & Staples Retailing 0.5%
Lawson, Inc.		3,100		120
Matsumotokiyoshi Holdings Co., Ltd.		1,600		28
				148
Food, Beverage & Tobacco 2.8%
Asahi Breweries Ltd.		20,500		257
Nippon Meat Packers, Inc.		12,000		124
Nisshin Seifun Group, Inc.		22,500		232
Toyo Suisan Kaisha Ltd.		11,000		215
				828
Household & Personal Products 0.3%
Kobayashi Pharmaceutical Co., Ltd.		2,900		94
Insurance 0.7%
Tokio Marine Holdings, Inc.		7,900		208
Materials 3.5%
Godo Steel Ltd.		68,000		176
Nippon Paper Group, Inc.		5,200		148
Nippon Soda Co., Ltd.		62,000		203
Rengo Co., Ltd.		18,000		90
Shin-Etsu Chemical Co., Ltd.		4,400		214
Tokyo Steel Manufacturing Co., Ltd.		12,900		132
Ube Industries Ltd.		35,000		66
				1,029
Real Estate 1.9%
Daito Trust Construction Co., Ltd.		3,500		146
Leopalace21 Corp.		19,100		140
Nomura Real Estate Holdings, Inc.		17,300		283
				569
Semiconductors & Semiconductor Equipment 0.5%
Mimasu Semiconductor Industry Co., Ltd.		11,900		137
Software & Services 0.3%
Hitachi Software Engineering Co., Ltd.		8,000		99
Technology Hardware & Equipment 1.7%
Canon, Inc.		11,900		356
Seiko Epson Corp.		10,500		148
				504
Telecommunication Services 0.6%
NTT DoCoMo, Inc.		118		165
Transportation 1.1%
Mitsui O.S.K. Lines Ltd.		29,000		166
Nippon Yusen Kabushiki Kaisha		38,000		155
				321
Utilities 0.7%
Electric Power Development Co., Ltd.		7,300		213
				6,972
Malaysia 0.2%
Food, Beverage & Tobacco 0.2%
British American Tobacco Malaysia Berhad		4,600		57
Mexico 0.3%
Materials 0.3%
Grupo Mexico S.A.B. de C.V., Series B		104,381		81
Netherlands 2.1%
Capital Goods 0.2%
European Aeronautic Defence & Space Co.		3,538		51
Diversified Financials 0.8%
ING Groep N.V. CVA		25,583		233
Food & Staples Retailing 0.1%
Koninklijke Ahold N.V.		4,277		47
Food, Beverage & Tobacco 0.4%
Unilever N.V.		6,217		123
Technology Hardware & Equipment 0.6%
Gemalto N.V. CVA *		5,918		186
				640
Norway 0.6%
Energy 0.6%
TGS Nopec Geophysical Co., A.S.A. *		22,400		165
Portugal 0.6%
Telecommunication Services 0.5%
Portugal Telecom SGPS S.A. - Reg’d		19,352		147
Utilities 0.1%
EDP - Energias de Portugal S.A.		7,953		29
				176
Republic of Korea 1.2%
Consumer Services 0.3%
Kangwon Land, Inc.		7,290		89
Food, Beverage & Tobacco 0.2%
KT&G Corp.		885		49
Materials 0.6%
Korea Zinc Co., Ltd.		532		57
LG Chem Ltd.		1,206		133
				190
Semiconductors & Semiconductor Equipment 0.1%
Samsung Electronics Co., Ltd.		61		28
				356

88 See financial notes

 Schwab International Core Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Singapore 1.1%
Energy 0.3%
Singapore Petroleum Co., Ltd.		34,000		76
Technology Hardware & Equipment 0.3%
Venture Corp., Ltd.		20,000		80
Transportation 0.5%
ComfortDelGro Corp., Ltd.		119,000		114
Singapore Airlines Ltd.		7,000		50
				164
				320
Spain 5.0%
Banks 1.9%
Banco Bilbao Vizcaya Argentaria S.A.		3,174		34
Banco de Sabadell S.A.		11,508		66
Banco Santander S.A.		49,739		479
				579
Diversified Financials 0.4%
Corporacion Financiera Alba S.A.		2,826		122
Telecommunication Services 1.9%
Telefonica S.A.		30,395		576
Utilities 0.8%
Endesa S.A.		10,588		227
				1,504
Sweden 2.2%
Banks 1.1%
Nordea Bank AB		44,728		333
Capital Goods 1.0%
Alfa Laval AB		13,300		118
Skanska AB, B Shares		16,101		173
				291
Diversified Financials 0.1%
L E Lundbergforetagen AB, B Shares		1,022		39
				663
Switzerland 5.0%
Capital Goods 1.1%
Geberit AG - Reg’d		1,488		159
Schindler Holding AG		3,033		159
				318
Food, Beverage & Tobacco 1.2%
Nestle S.A. - Reg’d		11,407		372
Insurance 0.3%
Baloise Holding AG - Reg’d		858		63
Zurich Financial Services AG - Reg’d		222		41
				104
Pharmaceuticals, Biotechnology & Life Sciences 2.4%
Novartis AG - Reg’d		13,017		493
Roche Holding AG		1,723		217
				710
				1,504
United Kingdom 19.0%
Banks 1.1%
Barclays plc		30,000		122
HSBC Holdings plc		18,863		134
Lloyds Banking Group plc		33,220		54
				310
Capital Goods 0.7%
BAE Systems plc		40,643		214
Commercial & Professional Supplies 0.3%
Regus plc		88,552		100
Diversified Financials 1.9%
Provident Financial plc		15,526		194
Tullett Prebon plc		93,640		367
				561
Energy 6.2%
Acergy S.A.		4,600		36
AMEC plc		19,595		178
BG Group plc		22,684		362
BP plc		76,530		541
Petrofac Ltd.		25,413		214
Royal Dutch Shell plc, Class B		22,487		509
				1,840
Food, Beverage & Tobacco 1.8%
British American Tobacco plc		13,124		317
Cadbury plc		29,857		223
				540
Household & Personal Products 0.4%
Reckitt Benckiser Group plc		2,760		108
Materials 2.2%
Anglo American plc		2,952		64
Antofagasta plc		18,024		155
Croda International plc		26,234		209
Filtrona plc		111,071		195
Rexam plc		8,677		40
				663
Pharmaceuticals, Biotechnology & Life Sciences 2.7%
AstraZeneca plc		9,953		348
GlaxoSmithKline plc		29,460		454
				802
Retailing 0.9%
HMV Group plc		77,366		163
WH Smith plc		17,849		110
				273
Software & Services 0.3%
Logica plc		83,703		94
Utilities 0.5%
Drax Group plc		19,741		150
				5,655

See financial notes 89

 Schwab International Core Equity Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
United States 0.9%
Health Care Equipment & Services 0.9%
Synthes, Inc.		2,676		271
Total Common Stock (Cost $38,793)				28,712
Other Investment Company 2.9% of net assets
United States 2.9%
State Street Institutional Liquid Reserves Fund – Institutional Class		872,930		873
Total Other Investment Company (Cost $873)				873
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $39,825 and the unrealized appreciation and depreciation were $754 and ($10,994), respectively, with a net unrealized depreciation of ($10,240).
At 04/30/09, the values of certain foreign securities held by the fund aggregating $27,617 were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

* Non-income producing security.

CVA — Dutch Certificate

Reg’d — Registered

90 See financial notes

 Schwab International Core Equity Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $39,666)		$29,585
Foreign currency, at value (cost $76)		77
Receivables:
Dividends		151
Fund shares sold		4
Foreign tax reclaims		19
Interest		1
Prepaid expenses	+	4
Total assets		29,841
Liabilities
Payables:
Investment advisers and administrator fees		5
Transfer agent and shareholder services fees		2
Fund shares redeemed	+	9
Total liabilities		16
Net Assets
Total assets		29,841
Total liabilities	−	16
Net assets		$29,825
Net Assets by Source
Capital received from investors		58,455
Net investment income not yet distributed		304
Net realized capital losses		(18,855	)
Net unrealized capital losses		(10,079	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$18,833		3,420			$5.51
Select Shares	$8,466		1,537			$5.51
Institutional Shares	$2,526		459			$5.51	*

*  Due to rounding, net assets divided by shares outstanding, does not equal net asset value.

See financial notes 91

 Schwab International Core Equity Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $45)		$510
Interest	+	2
Total Investment Income		512
Net Realized Gains and Losses
Net realized losses on investments		(11,676	)
Net realized gains on foreign currency transactions	+	5
Net realized losses		(11,671	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		9,753
Net unrealized losses on foreign currency translations	+	(3	)
Net unrealized gains		9,750
Expenses
Investment adviser and administrator fees		118
Transfer agent and shareholder service fees:
Investor Shares		23
Select Shares		1
Institutional Shares		4
Custodian fees		25
Professional fees		24
Registration fees		15
Portfolio accounting fees		8
Shareholder reports		7
Trustees’ fees		4
Other expenses	+	2
Total expenses		231
Expense reduction by adviser and Schwab	−	79
Net expenses		152
Increase (Decrease) in Net Assets from Operations
Total investment income		512
Net expenses	−	152
Net investment income		360
Net realized losses		(11,671	)
Net unrealized gains	+	9,750
Decrease in net assets from operations		($1,561	)

92 See financial notes

 Schwab International Core Equity Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			5/30/08*-10/31/08
Net investment income			$360			$328
Net realized losses			(11,671	)		(7,108	)
Net unrealized gains (losses)	+		9,750			(19,829	)
Decrease in net assets from operations			(1,561	)		(26,609	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			283			—
Select Shares			135			—
Institutional Shares	+		42			—
Total distributions from net investment income			$460			$-

Transactions in Fund Shares

		11/01/08-04/30/09						5/30/08*-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			204			$1,100			4,667			$46,199
Select Shares			204			1,059			2,361			23,461
Institutional Shares	+		—			1			458			4,508
Total shares sold			408			$2,160			7,486			$74,168
Shares Reinvested
Investor Shares			45			$249			—			$-
Select Shares			20			111			—			—
Institutional Shares	+		1			5			—			—
Total shares reinvested			66			$365			—			$-
Shares Redeemed
Investor Shares			(465	)		($2,428	)		(1,031	)		($8,130	)
Select Shares			(246	)		(1,307	)		(802	)		(6,373	)
Institutional Shares	+		—			-			-			-
Total shares redeemed			(711	)		($3,735	)		(1,833	)		($14,503	)
Net transactions in fund shares			(237	)		($1,210	)		5,653			$59,665
Shares Outstanding and Net Assets
		11/01/08-04/30/09						5/30/08*-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			5,653			$33,056			—			$-
Total increase or decrease	+		(237	)		(3,231	)		5,653			33,056
End of period			5,416			$29,825			5,653			$33,056
Net Investment income not yet distributed						$304						$404

*  Commencement of operations.

See financial notes 93

 Schwab Active Equity Funds

Financial Notes, unaudited

1. Business Structure of the Funds

Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

Schwab Capital Trust (organized May 7, 1993)
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MartketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund Laudus International MarketMasters Fund
Schwab Balanced Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid
 Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund–Moderate Payout
Schwab Monthly Income Fund–Enhanced Payout
Schwab Monthly Income Fund–Maximum Payout

Schwab Premier Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund and Schwab Hedged Equity Fund offer two share classes: Investor Shares and Select Shares^®. Shares of each class represent interest in the same portfolio. Schwab Core Equity Fund, Schwab Financial Services Fund, and Schwab Health Care Fund each offer one share class.

Schwab International Core Equity commenced operations on May 30, 2008. The fund offers three classes of shares: Investor Shares, Select Shares^®, and Institutional Shares. Shares of each class represent interest in the same portfolio.

Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares of a fund or share class, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

       (All dollar amounts are x 1,000)

The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America.

(a) Security Valuation:

The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:

•  Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate.

94 

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

•  Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when a security 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. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  International Fair Valuation: The Board of Trustees has adopted procedures to fair value foreign securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. 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 of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  Futures and Forwards: valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day’s exchange rates (for forwards).

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

•  Underlying funds: valued at their respective net asset values as determined by those funds in accordance with the 1940 Act for a given day.

(b) Portfolio Investments:

Futures Contract: The funds may invest in futures contracts. Futures contracts involve certain risks because they can be very sensitive to market movements.

One risk is that the price of a futures contract may not move in perfect correlation with the price of the underlying securities. Another risk is that, at certain times, it may be impossible for a fund to close out a position in a futures contract, due to a difference in trading hours or to market conditions that may reduce the liquidity for a futures contract or its underlying securities. The potential for losses associated with futures contracts may exceed amounts recorded in the Statement of Assets and Liabilities.

Because futures contracts carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount. Subsequent payments (“variation margin”) are made or received by a fund depending on daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Futures are traded publicly on exchanges, and their market value changes daily.

Short Sale: The Schwab Hedged Equity Fund may sell securities short (sell securities it does not own). When it does so, the fund identifies assets worth at least 100% of the value of the short securities as collateral. If the market value of the short securities subsequently falls, the fund can realize a gain by closing the position. However, if the value rises, the fund typically would have to add to its collateral or close out its short position at a loss. The potential for losses associated with short positions is much greater than the original value of the securities sold short and may exceed amounts recorded in the Statement of Assets and Liabilities.

Securities Lending: The funds may loan securities to certain brokers, dealers and other financial institutions that pay the funds negotiated fees. The funds receive cash, letters of credit or U.S. government securities as collateral on these loans. All of the cash collateral received is reinvested in high quality, short-term investments. The value of the collateral must be at least 102% of the

95

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

market value of the loaned securities as of the first day of the loan, and at least 100% each day thereafter. If the value of the collateral falls below 100%, it will be adjusted the following day.

Repurchase Agreements: The funds may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created.

The funds’ repurchase agreements will be fully collateralized by U.S. government securities or U.S. government agency securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Forward Currency Contract: The International Core Equity Fund may invest in forward currency contracts in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange rates. “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. Forwards are similar to futures except that they are not publicly traded, but are agreements directly between two parties.

As with futures, forwards involve certain risks that are not fully reflected in the fund’s financial statements. If counter-parties to the contracts or if the value of the foreign currency changes unfavorably, the fund could sustain a loss.

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

If the fund sells securities short, it records the proceeds received as an asset and the obligation to buy back the securities as a liability. At the time a short sale is initiated, the asset and liability are of equal value and effectively cancel each other out. Subsequently, the fund values the liability side of the transaction according to the market price of the securities sold short, and values the asset side according to the value of the proceeds. When the Fund closes out a short position (buys the security), it records the outcome as a realized gain or loss. Interest and dividends accrued on securities sold short are recorded as an expense on the fund’s records.

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Gains realized by the funds on the sale of securities in certain foreign countries are subject to non-U.S. taxes. The fund record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gains or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to/from broker”).

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date.

(e) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to its net assets.

96 

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(f) Distributions to Shareholders:

The funds make distributions from net investment income once a year, with the exception of Dividend Equity Fund which typically pays quarterly dividends. The funds make distributions from net realized capital gains once a year.

(g) Custody Credit:

Certain funds have an arrangement with their custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.

(i) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(j) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.

(k) Accounting Pronouncements:

The Funds adopted Financial Accounting Standard Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

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 funds’ investments as of April 30, 2009:

97

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
(All dollar amounts are x 1,000)

	Premier Equity Fund				Core Equity Fund				Dividend Equity Fund
			Other				Other				Other
	Investments		Financial		Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments*		in Securities		Instruments*
Level 1		$527,996		$622		$1,301,874		$760		$1,070,436		$1,368
Level 2		640		—		5,004		—		24,205		—
Level 3		—		—		—		—		—		—
Total		$528,636		$622		$1,306,878		$760		$1,094,641		$1,368

	Large-Cap Growth Fund				Small-Cap Equity Fund				Hedged Equity Fund
			Other				Other							Other
	Investments		Financial		Investments		Financial		Investments		Securities			Financial
Valuation Inputs	in Securities		Instruments**		in Securities		Instruments*		in Securities		Sold Short			Instruments*
Level 1		$382,660		$—		$179,125		$590		$400,543		($126,378	)		$1,975
Level 2		5,881		—		4,853		—		2,253		—			—
Level 3		—		—		—		—		—		—			—
Total		$388,541		$—		$183,978		$590		$402,796		($126,378	)		$1,975

									International
	Financial Services Fund				Health Care Fund				Core Equity Fund
			Other				Other				Other
	Investments		Financial		Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments**		in Securities		Instruments*		in Securities		Instruments**
Level 1		$61,406		$—		$405,261		$2,391		$1,968		$—
Level 2		2,983		—		44,332		—		27,617		—
Level		—		—		—		—		—		—
Total		$64,389		$—		$449,593		$2,391		$29,585		$—

*	Other Financial Instruments are future or forward contracts which are not included in Portfolio Holdings and are valued at the unrealized appreciation or depreciation.
**	The funds had no Other Financial Instruments.

In April 2009, the FASB issued FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the funds’ or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the funds’ financial statement disclosures.

3. Risk factors

Investing in the funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below:

Stock markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of your investment in a fund will fluctuate, which means that you could lose money.

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. Individual companies may report poor results or be negatively affected by industry

98 

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

3. Risk factors (continued):

and/or economic trends and developments. The prices of securities issued by such companies may suffer a decline in response. In addition, the equity market tends to move in cycles which may cause stock prices to fall over short or extended periods of time.

Historically, small-cap stocks have been riskier than large- and mid-cap stocks. Stock prices of smaller companies may be based in substantial part on the future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Small-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more establish companies. During a period when small-cap stocks fall behind other types of investments — large-cap stocks, for instance — a fund’s performance also will lag these investments.

The funds’ investment adviser makes investment decisions for the funds using a strategy based largely on historical information. There is no guarantee that a strategy based on historical information will produce the desired results in the future. In addition, if market dynamics change, the effectiveness of this strategy may be limited. Either of these risks may cause the funds to underperform its benchmark or other funds with a similar investment objective. The funds may invest in stocks that have not received Schwab Equity Ratings, and these stocks may underperform the funds’ stocks that receive Schwab Equity Ratings.

If the price of the stock goes up after the short sale, the fund will loose money because it will have to pay more to replace the borrowed stock than it received when it sold the stock short. A fund’s use of short selling may reduce the risk of general equity market volatility but can not completely eliminate that risk.

A fund’s long positions could decline in value at the same time that the value of the stocks sold short increase, thereby increasing the fund’s overall potential for loss. A fund’s short sales may result in a loss if the price of the borrowed securities rise and it costs more to replace the borrowed securities. In contrast to a fund’s long positions, for which the risk of loss is typically limited to the amount invested, the potential loss on a fund’s short positions is unlimited. In addition, any gain on a short sale is decreased, and any loss is increased, by the amount of any payment, dividend or interest that the fund may be required to pay with respect to the borrowed securities. Market factors may prevent a fund from closing out a short position at the most desirable time or at a favorable price. The lender of the borrowed securities may require a fund to return the securities on short notice, which may require the fund to purchase the borrowed securities at an unfavorable price, resulting in a loss.

Short sales are transactions in which a fund sells a security it does not own. To complete a short sale, a fund must borrow the security to deliver to the buyer. A fund is then obligated to replace the borrowed security by purchasing the security at the market price at the time of replacement. This price may be more or less than the price at which the security was sold by the fund and the fund will incur a loss if the price of the security sold short increases between the time of the short sale and the time the fund replaces the borrowed security.

Because funds’ certain investments are concentrated in issuers doing business in the same sector, an investment is exposed to that sector’s risks. The companies in which a fund invests are affected by many of the same factors, such as legislative or regulatory changes, intense competition for market share and other competitive challenges posed by joint ventures and mergers between U.S. and foreign firms. In addition, a fund is subject to the risks that stocks of these companies may underperform other segments of the equity market or the stock market as a whole and are likely to have above-average volatility.

Certain funds are non-diversified, which means that they may invest in the securities of relatively few issuers. As a result, a single adverse economic or regulatory occurrence may have a more significant effect on a fund’s investments, and a fund may experience increased volatility.

Please refer to the funds’ prospectus for a complete description of the principal risks of investing in the funds.

4. Affiliates and Affiliated Transactions:

       (All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

99

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

For its advisory and administrative services to each fund, the investment adviser is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:

	Premier		Core		Dividend		Large-Cap		Small-Cap		Hedged
Average daily net assets	Equity Fund		Equity Fund		Equity Fund		Growth Fund		Equity Fund		Equity Fund
First $500 million		0.91%		0.54%		0.775%		0.87%		0.975%		1.675%
$500 million to $1 billion		0.885%		0.49%		0.77%		0.85%		0.93%		1.65%
$1 billion to $2 billion		0.860%		n/a		0.76%		0.83%		0.91%		1.63%
over $2 billion		n/a		n/a		n/a		0.81%		n/a		n/a

	Financial		Health Care		International
Average daily net assets	Services Fund		Fund		Core Equity Fund
First $500 million		0.54%		0.54%		0.81%
$500 million to $1 billion		0.515%		0.515%		0.79%
$1 billion to $2 billion		0.490%		0.490%		0.77%
over $2 billion		n/a		n/a		n/a

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

For its transfer agent and shareholder services, Schwab is entitled to receive an annual fee payable monthly based on each Fund’s average daily net assets described as follows:

	Transfer Agent Fees		Shareholder Service Fees
Investor Shares		0.05%		0.20%
Select Shares*		0.05%		0.05%
Institutional Shares**		0.05%		0.05%

Although these agreements specify certain fees for these services, CSIM and Schwab had previously made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses, through February 27, 2011, as follows:

Premier

Core

Dividend

Large-Cap

Small-Cap

Hedged

Equity Fund

Equity Fund

Equity Fund

Growth Fund

Equity Fund

Equity Fund

Investor Shares

1.30%

0.75%

1.10%

1.20%

1.30%

1.49%

***

Select Shares*

1.15%

n/a

0.95%

0.99%

1.12%

1.33%

***

International

Financial

Health Care

Core

Services Fund

Fund

Equity Fund

Investor Shares

1.10%

1.10%

1.10%

Select Shares*

n/a

n/a

0.95%

Institutional Shares**

n/a

n/a

0.86%

100 

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Effective May 5, 2009, CSIM and Schwab have agreed to limit the net operating expenses charged, excluding interest, taxes and certain non-routine expenses for as long as CSIM serves as the adviser, as follows:

	Premier		Dividend		Large-Cap		Small-Cap		Hedged
	Equity Fund		Equity Fund		Growth Fund		Equity Fund		Equity Fund
Investor Shares		1.02%		0.89%		0.99%		1.12%		1.33%
Select Shares*		1.02%		0.89%		0.99%		1.12%		1.33%
	International
	Core
	Equity Fund
Investor Shares		0.86%
Select Shares*		0.86%
Institutional Shares*		0.86%

*	Select Shares are only offered by Premier Equity Fund, Dividend Equity Fund, Large-Cap Growth Fund, Small-Cap Equity Fund, and Hedged Equity Fund.
**	Institutional Shares are only offered by International Core Equity Fund.

***  Excluded dividend and interest paid on securities sold short.

Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentage of each Active Equity Fund owned by other Schwab Funds as of April 30, 2009.

	Core		Dividend			Small-Cap
	Equity Fund		Equity Fund			Equity Fund
Schwab Target Funds:
Target 2010		0.5%		0.1%			1.5%
Target 2015		0.1%		-	*		0.2%
Target 2020		1.7%		0.5%			4.3%
Target 2025		0.2%		—	*		0.5%
Target 2030		1.8%		0.5%			5.6%
Target 2035		0.2%		—	*		0.5%
Target 2040		1.6%		0.4%			4.6%
Retirement Income		—		0.4%			—
Schwab Balanced Fund		2.6%		—			—

*  Less than 0.01%.

As of April 30, 2009, the shares owned by each Charitable Giving Trust as a percentage of the total share of the Dividend Equity Fund is 4.5%.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs.

101

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2009, each fund’s total aggregate security transactions with other Schwab Funds were as follows:

Premier Equity Fund	$—
Core Equity Fund	—
Dividend Equity Fund	—
Large-Cap Growth Fund	—
Small-Cap Equity Fund	4,727
Hedged Equity Fund	—
Financial Services Fund	—
Health Care Fund	—
International Core Equity Fund	—

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for the funds during the period.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.

6. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The Funds pay interest on the amounts they borrow at rates that are negotiated periodically. There were no borrowings from the line of credit for the funds during the period. However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

7. Purchases and Sales of Investment Securities:

       (All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
Premier Equity Fund		$240,232		$333,331
Core Equity Fund		336,082		283,091
Dividend Equity Fund		185,237		180,249
Large-Cap Growth Fund		120,978		96,936
Small-Cap Equity Fund		68,339		81,415
Hedged Equity Fund*		414,467		336,912
Financial Services Fund		8,414		10,409
Health Care Fund		73,362		116,406
International Core Equity Fund		14,879		15,791

*  Included securities sold short.

102 

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

8. Redemption Fee:

       (All dollar amounts are x 1,000)

The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior report period are:

	Current Period			Prior Period
	(11/01/08-4/30/09)			(11/01/07-10/31/08)
Premier Equity Fund		$2			$9
Core Equity Fund		62			57
Dividend Equity Fund		29			45
Large-Cap Growth Fund		13			16
Small-Cap Equity Fund		2			3
Hedged Equity Fund		22			24
Financial Services Fund		11			38
Health Care Fund		15			49
International Core Equity Fund		0	**		23	*

*	For the period 5/31/08 through 10/31/08.
**	Less than $1.

9. Other

       (All dollar amounts are x 1,000)

As of the close of business on September 18, 2008, Lehman Brothers Holdings Inc. was in default of the security lending agreement with the Schwab Core Equity Fund, Schwab Small-Cap Equity Fund, and Schwab Health care Fund (“the Funds”). As a result the Funds took possession of the collateral and repurchased the securities on loan through open market purchases. The collateral held exceeded the replacement value of the securities. In accordance with Accounting for Transfers of Financial Assets and Repurchase Financing Transactions (“FAS 140”) the Funds recognized the following gains or losses that are not recognized for federal income tax purposes:

Schwab Core Equity Fund	($1,797	)
Schwab Small Cap Equity Fund	(33	)
Schwab Health Care Fund	18

10. Federal Income Taxes:

       (All dollar amounts are x 1,000)

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2008, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

	Premier		Core		Dividend		Large-Cap		Small-Cap		Hedged
Expire	Equity Fund		Equity Fund		Equity Fund		Growth Fund		Equity Fund		Equity Fund
2013		$—		$—		$—		$158		$—		$—
2014		—		—		—		2,674		—		12,200
2015		—		—		—		2,012		—		22,795
2016		58,079		84,157		43,921		53,983		47,891		—
Total		$58,079		$84,157		$43,921		$58,827		$47,891		$34,995

103

 Schwab Active Equity Funds

Financial Notes, unaudited (continued)

10. Federal Income Taxes:
(All dollar amounts are x 1,000) (continued):

					International
	Financial		Health Care		Core
Expire	Services Fund		Fund		Equity Fund
2013		$—		$—		$—
2014		—		—		—
2015		—		—		—
2016		8,786		8,169		7,120
Total		$8,786		$8,169		$7,120

As of October 31, 2008, capital losses utilized to offset current year’s capital gains were as follows:

	Hedged
	Equity Fund
Capital losses utilized		$10,335

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2008, the funds did not incur any interest or penalties.

11. Subsequent Event:

The Board of Trustees of the Trust (the “Board”) has approved an Agreement and Plan of Reorganization that would provide for the reorganization of the Laudus U.S. MarketMasters Fund into the Schwab Core Equity Fund. The reorganization was approved by shareholders of the U.S. MarketMasters Fund. Effective May 21, 2009, the U.S. MarketMasters Fund transferred its assets and liabilities to the Core Equity Fund in exchange for Investor Shares of the Core Equity Fund, and subsequently distributed those Core Equity Fund shares to shareholders of the U.S. MarketMasters Fund (the “Reorganization”). The Reorganization is intended to be tax-free, meaning that the U.S. MarketMasters Fund’s shareholders will become shareholders of the Core Equity Fund without realizing any gain or loss for federal income tax purposes.

104 

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

105

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

106 

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

107

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

108 

Schwab Funds^® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.

Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large^* Company Index Fund

Schwab Fundamental US Small-Mid^* Company Index Fund

Schwab Fundamental International^* Large Company Index Fund

Schwab Fundamental International^* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets^* Index Fund

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity¹. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.

^* SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

¹ Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC^®

Printed on recycled paper.

MFR27230-06

Semiannual report dated April 30, 2009 enclosed.

Prospectus Supplement and

Semiannual Report Enclosed

Schwab Equity Index Funds

Schwab S&P 500 Index Fund

Schwab Institutional Select^®

S&P 500 Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market

Index Fund^®

Schwab International

Index Fund^®

You could have received this

document faster via email.

Save paper. Sign up for electronic delivery

at www.schwab.com/edelivery.

This supplement is not part of the shareholder report.

Supplement to the February 28, 2009

Schwab Equity Index Funds^® Prospectus

The information provided in this supplement is as of July 1, 2009.

This supplement provides new and additional information beyond that contained in the Prospectus and should be read in conjunction with the Prospectus.

The Schwab Total Stock Market Index Fund’s primary benchmark index, The Dow Jones Wilshire 5000 Composite Index, recently changed its name to The Dow Jones U.S. Total Stock Market Index. Accordingly, the “Investment Objective” Section on Page 19 of the Prospectus is hereby deleted and replaced in its entirety with the following:

Investment Objective

The fund’s goal is to track the total return of the entire U.S. stock market, as measured by The Dow Jones U.S. Total Stock Market Index^sm.

Additionally, the footnote on page 20 of the Prospectus is deleted and replaced in its entirety with the following:

Index ownership — “Dow Jones” and “The Dow Jones U.S. Total Stock Market Index^SM” are service marks of Dow Jones & Company, Inc. and have been licensed for use for certain purposes by Charles Schwab Investment Management, Inc. The Schwab Total Stock Market Index Fund^®, based on The Dow Jones U.S. Total Stock Market Index^SM, is not sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes no representation regarding the advisability of investing in such product.

Please retain this supplement for future reference

^©2009 Charles Schwab & Co., Inc. All Rights Reserved

Member SIPC REG48321 (07/09)

Schwab Equity Index Funds

Semiannual Report

April 30, 2009

Schwab S&P 500 Index Fund

Schwab Institutional Select^®

S&P 500 Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market

Index Fund^®

Schwab International

Index Fund^®

This page is intentionally left blank.

Six cost-efficient ways to tap into the power of

the stock market for long-term growth potential.

In This Report
Performance at a Glance	2
From the President	3
The Investment Environment	4
Fund Management	5
Schwab S&P 500 Index Fund	6
Schwab Institutional Select® S&P 500 Fund	8
Schwab 1000 Index® Fund	10
Schwab Small-Cap Index Fund®	12
Schwab Total Stock Market Index Fund®	14
Schwab International Index Fund®	16
Fund Expenses	18
Financial Statements	20
Financial Notes	63
Trustees and Officers	73
Glossary	76

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for
the Report Period
Schwab S&P 500 Index Fund
Investor Shares (Ticker Symbol: SWPIX)	-8.52%
Select Shares® (Ticker Symbol: SWPPX)	-8.40%
e.Shares (Ticker Symbol: SWPEX)	-8.45%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 6-7
Schwab Institutional Select® S&P 500 Fund
(Ticker Symbol: ISLCX)	-8.55%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 8-9
Schwab 1000 Index® Fund
Investor Shares (Ticker Symbol: SNXFX)	-7.57%
Select Shares® (Ticker Symbol: SNXSX)	-7.50%
Benchmark: Schwab 1000 Index®	-7.54%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 10-11
Schwab Small-Cap Index Fund®
Investor Shares (Ticker Symbol: SWSMX)	-6.23%
Select Shares® (Ticker Symbol: SWSSX)	-6.21%
Benchmark: Schwab Small-Cap Index®	-6.06%
Fund Category: Morningstar Small-Cap Blend	-5.44%
Performance Details	pages 12-13
Schwab Total Stock Market Index Fund®
Investor Shares (Ticker Symbol: SWTIX)	-7.23%
Select Shares® (Ticker Symbol: SWTSX)	-7.13%
Benchmark: Dow Jones U.S. Total Stock Market IndexSM1	-6.97%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 14-15
Schwab International Index Fund®
Investor Shares (Ticker Symbol: SWINX)2	-6.00%
Select Shares® (Ticker Symbol: SWISX)2	-5.86%
Benchmark: Schwab International Index®	-3.93%
Fund Category: Morningstar Foreign Large-Cap Blend	-3.30%
Performance Details	pages 16-17
Minimum Initial Investment3
Investor Shares	$    100
Select Shares®	$    100
e.Shares ($500 for retirement, education and custodial accounts)	$   1,000
Institutional Select S&P 500 Fund	$    100

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

1	Previously, this index was called Dow Jones Wilshire 5000 Composite Index.
2	The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.
3	Please see prospectus for further detail and eligibility requirements.

2 Schwab Equity Index Funds

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

With this in mind, we’ve made a number of improvements to the Schwab Funds family of mutual funds making investing cheaper and easier for our clients. I am pleased to report that on May 5, 2009, we lowered expenses on Schwab Equity Index Funds and announced that we are simplifying share classes for Schwab equity and bond funds. Each Schwab equity and bond fund offers one low fund expense to investors regardless of how much they invest, starting at a low $100 minimum investment. Our goal is to make investing easier for our clients and the advisors who serve them−at a very low cost.

These enhancements are intended to help our clients continue to invest no matter what the market conditions may be. We hope that each and every client feels more comfortable planning for a financially secure future knowing that we are constantly working to make investing easier and more affordable.

Thank you for investing with us.

Sincerely,

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Schwab Equity Index Funds 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Schwab Equity Index Funds

Fund Management

	Jeffrey Mortimer, CFA, Chief Investment Officer, Charles Schwab Investment Management, is responsible for the overall management of each of the funds. Prior to joining the firm in October 1997, he worked for more than 8 years in asset management.
	Larry Mano, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the Schwab Total Stock Market Index Fund, and the Schwab International Index Fund, and co-management of each of the remaining funds. Prior to joining the firm in November 1998, he worked for 20 years in equity management.
	Ron Toll, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds, except the Schwab Total Stock Market Index Fund and the Schwab International Index Fund. He joined the firm in 1998, became Manager, Portfolio Operations in 2000, Manager, Portfolio Operations and Analytics in 2005 and was named to his current position in 2007.

Schwab Equity Index Funds 5

Schwab S&P 500 Index Fund

The Schwab S&P 500 Index Fund Investor Shares returned -8.52% during the period, compared to the benchmark S&P 500 Index, which returned -8.53%. Unlike the fund, the index does not include operational and transactional costs. The S&P 500 Index includes the stocks of 500 leading U.S. publicly traded companies from a broad range of industries and is market-capitalization weighted. Therefore, its returns are most influenced by the largest companies in the index. When looking at returns in the fund on a sector-specific level, Financials declined the most, returning -29.05%, followed by Industrials and Energy, which returned -12.76% and -10.25%, respectively. Better performing sectors included Information Technology, which returned 5.59%, and Consumer Discretionary and Telecomm Service, which returned 4.16% and 3.69%, respectively. When looking at price-to-earnings ratios, companies with negative and very high price-to-earnings ratios generally did worse. In terms of market capitalization, larger companies generally underperformed smaller. Better performing securities represented in the fund were led by Apple, Inc., Goldman Sachs, and IBM. Securities detracting from performance included Bank of America Corp., General Electric Corp., and Citigroup, Inc.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 516

Weighted Average Market

  Cap ($ x 1,000,000) $67,263

Price/Earnings Ratio (P/E) 33.4

Price/Book Ratio (P/B) 1.9

Portfolio Turnover Rate² 2%

 Sector Weightings % of Investments

Information Technology 18.3%

Health Care 13.7%

Energy 12.5%

Financials 12.1%

Consumer Staples 11.9%

Industrials 10.3%

Consumer Discretionary 9.6%

Utilities 3.8%

Telecommunication Services 3.7%

Materials 3.4%

Other 0.7%

Total 100.0%

 Top Holdings % of Net Assets³

Exxon Mobil Corp. 4.4%

Microsoft Corp. 2.0%

AT&T, Inc. 2.0%

The Procter & Gamble Co. 1.9%

Johnson & Johnson 1.9%

International Business Machines

  Corp. 1.8%

Chevron Corp. 1.8%

General Electric Co. 1.7%

JPMorgan Chase & Co. 1.6%

Cisco System, Inc. 1.5%

Total 20.6%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Standard & Poor’s^®, S&P^®, S&P 500^®, Standard & Poor’s 500^® and 500^® are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the fund. The fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the fund.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

6 Schwab Equity Index Funds

 Schwab S&P 500 Index Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$10,000 Investment in e.Shares¹

 Pre-Tax Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (5/1/96)		-8.52%		-35.13%		-2.85%		-2.71%
Select Shares (5/19/97)		-8.40%		-34.96%		-2.67%		-2.54%
e.Shares (5/1/96)		-8.45%		-35.00%		-2.72%		-2.60%
Benchmark: S&P 500® Index		-8.53%		-35.31%		-2.70%		-2.48%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%

Fund Expense Ratios³: Investor Shares: 0.36% / Select Shares: Net 0.19%; Gross 0.21% / e.Shares: 0.21%

 Average Annual Total Returns After Tax^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (5/1/96)
Pre-Liquidation (still own shares)		-8.89%		-35.40%		-3.24%		-3.11%
Post-Liquidation (shares were sold)		-5.01%		-22.46%		-2.46%		-2.39%
Select Shares® (5/19/97)
Pre-Liquidation (still own shares)		-8.81%		-35.25%		-3.03%		-2.95%
Post-Liquidation (shares were sold)		-4.90%		-22.33%		-2.25%		-2.24%
e.Shares® (5/1/96)
Pre-Liquidation (still own shares)		-8.86%		-35.29%		-3.07%		-3.00%
Post-Liquidation (shares were sold)		-4.94%		-22.35%		-2.28%		-2.28%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		-8.75%		-36.63%		-3.74%		-2.70%
Post-Liquidation (shares were sold)		-5.03%		-23.17%		-2.50%		-1.69%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
2	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 04/30/09 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Equity Index Funds 7

Schwab Institutional Select^® S&P 500 Fund

The Schwab Institutional Select S&P 500 Fund returned -8.55% during the period, compared to the benchmark S&P 500 Index, which returned -8.53%. The S&P 500 Index includes the stocks of 500 leading U.S. publicly traded companies from a broad range of industries and is market-capitalization weighted. Therefore, its returns are most influenced by the largest companies in the index. When looking at returns in the fund on a sector-specific level, Financials declined the most, returning -29.03%, followed by Industrials and Energy, which returned -12.68% and -10.37%, respectively. Better performing sectors included Information Technology, which returned 5.60%, and Consumer Discretionary and Telecomm Service, which returned 4.36% and 3.40%, respectively. When looking at price-to-earnings ratios, companies with negative and very high price-to-earnings ratios generally did worse. In terms of market capitalization, larger companies generally underperformed smaller. Better performing securities represented in the fund were led by Apple, Inc., Goldman Sachs, and IBM. Securities detracting from performance included Bank of America Corp., General Electric Corp., and Citigroup, Inc.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 514

Weighted Average Market

  Cap ($ x 1,000,000) $66,671

Price/Earnings Ratio (P/E) 33.2

Price/Book Ratio (P/B) 1.9

Portfolio Turnover Rate² 1%

 Sector Weightings % of Investments

Information Technology 18.0%

Health Care 13.4%

Energy 12.2%

Financials 11.9%

Consumer Staples 11.8%

Industrials 10.2%

Consumer Discretionary 9.5%

Utilities 3.8%

Telecommunication Services 3.6%

Materials 3.4%

Other 2.2%

Total 100.0%

 Top Holdings % of Net Assets³

Exxon Mobil Corp. 4.2%

Microsoft Corp. 2.0%

AT&T, Inc. 1.9%

Johnson & Johnson 1.8%

The Procter & Gamble Co. 1.8%

International Business Machines

  Corp. 1.8%

General Electric Co. 1.7%

Chevron Corp. 1.7%

JPMorgan Chase & Co. 1.6%

Wal-Mart Stores, Inc. 1.4%

Total 19.9%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Standard & Poor’s^®, S&P^®, S&P 500^®, Standard & Poor’s 500^® and 500^® are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the fund. The fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the fund.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

8 Schwab Equity Index Funds

 Schwab Institutional Select^® S&P 500 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$75,000 Investment¹

 Pre-Tax Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		5 Years		10 Years
Fund: Schwab Institutional Select® S&P 500 Fund (2/1/99)		-8.55%		-35.24%		-2.70%		-2.54%
Benchmark: S&P 500® Index		-8.53%		-35.31%		-2.70%		-2.48%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%

Fund Expense Ratios³: Net 0.10%; Gross 0.22%

 Average Annual Total Returns After Tax^1,2

	6 Months		1 Year		5 Years		10 Years
Fund: Schwab Institutional Select® S&P 500 Fund (2/1/99)
Pre-Liquidation (still own shares)		-8.95%		-35.52%		-3.04%		-2.95%
Post-Liquidation (shares were sold)		-5.03%		-22.53%		-2.29%		-2.26%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		-8.75%		-36.63%		-3.74%		-2.70%
Post-Liquidation (shares were sold)		-5.03%		-23.17%		-2.50%		-1.69%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
2	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 04/30/09 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Equity Index Funds 9

Schwab 1000 Index^® Fund

The Schwab 1000 Index Fund Investor Shares declined -7.57% during the period, compared to the benchmark Schwab 1000 Index, which returned -7.54%. Unlike the fund, the index does not include operation and transactional costs. The Schwab 1000 Index is comprised of the stocks of the largest 1,000 publicly traded companies in the United States, and is market-capitalization weighted. Therefore, its returns are most influenced by the largest companies in the index. When looking at returns in the fund on a sector-specific level, Financials declined the most, returning -26.06%, followed by Industrials and Energy, which returned -11.31% and -9.30%, respectively. Better performing sectors included Information Technology, which returned 5.78%, and Consumer Discretionary and Telecomm Service, which returned 5.03% and 3.54%, respectively. When looking at price-to-earnings ratios, companies with negative and very high price-to-earnings ratios generally did worse. In terms of market capitalization, larger companies generally underperformed smaller. Better performing securities represented in the fund were led by Apple, Inc., Goldman Sachs, and IBM. Securities detracting from performance included Bank of America Corp., General Electric Corp., and Citigroup, Inc.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 997

Weighted Average Market

  Cap ($ x 1,000,000) $59,522

Price/Earnings Ratio (P/E) 35.3

Price/Book Ratio (P/B) 1.9

Portfolio Turnover Rate² 3%

 Sector Weightings % of Investments

Information Technology 18.0%

Financials 13.4%

Health Care 13.2%

Energy 12.4%

Industrials 10.9%

Consumer Staples 10.8%

Consumer Discretionary 10.0%

Utilities 4.1%

Materials 3.7%

Telecommunication Services 3.5%

Total 100.0%

 Top Holdings % of Net Assets³

Exxon Mobil Corp. 3.8%

Microsoft Corp. 1.8%

AT&T, Inc. 1.7%

The Procter & Gamble Co. 1.7%

Johnson & Johnson 1.7%

International Business Machines

  Corp. 1.6%

Chevron Corp. 1.5%

General Electric Co. 1.5%

JPMorgan Chase & Co. 1.4%

Cisco Systems, Inc. 1.3%

Total 18.0%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

10 Schwab Equity Index Funds

 Schwab 1000 Index^® Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Pre-Tax Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (4/2/91)		-7.57%		-34.97%		-2.44%		-2.14%
Select Shares (5/19/97)		-7.50%		-34.86%		-2.29%		-2.01%
Benchmark: Schwab 1000 Index®		-7.54%		-35.16%		-2.20%		-1.89%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%

Fund Expense Ratios³: Investor Shares: 0.49% / Select Shares: 0.34%

 Average Annual Total Returns After Tax^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (4/2/91)
Pre-Liquidation (still own shares)		-7.90%		-35.21%		-2.72%		-2.45%
Post-Liquidation (shares were sold)		-4.47%		-22.42%		-2.06%		-1.89%
Select Shares® (5/19/97)
Pre-Liquidation (still own shares)		-7.86%		-35.12%		-2.60%		-2.36%
Post-Liquidation (shares were sold)		-4.38%		-22.31%		-1.93%		-1.79%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		-8.75%		-36.63%		-3.74%		-2.70%
Post-Liquidation (shares were sold)		-5.03%		-23.17%		-2.50%		-1.69%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
2	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 04/30/09 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Equity Index Funds 11

Schwab Small-Cap Index Fund^®

The Schwab Small-Cap Index Fund Investor Shares returned -6.23% during the period, compared to the benchmark Schwab Small-Cap Index, which returned -6.06%. The Schwab Small-Cap Index is comprised of the stocks of the second largest 1,000 publicly traded companies in the United States, and is market-capitalization weighted. Therefore, its returns are most influenced by the largest companies in the index. When looking at returns in the fund on a sector-specific level, Energy and Financials declined the most during the period, returning -21.24% and -19.04%, respectively. Relatively better performing sectors included Information Technology, up 10.14%, and Consumer Discretionary, up 9.55%. Better performing securities represented in the fund were led by Dendreon Corp., PMC-Sierra, Inc. and Ashland, Inc. Securities detracting from performance included Penn-Virgina, SVB Financial Group, and Stone Energy.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 1028

Weighted Average Market

  Cap ($ x 1,000,000) $814

Price/Earnings Ratio (P/E) -7.5

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate² 25%

 Sector Weightings % of Investments

Financials 20.2%

Information Technology 18.3%

Industrials 16.1%

Consumer Discretionary 15.0%

Health Care 11.3%

Energy 6.6%

Materials 4.3%

Consumer Staples 3.6%

Utilities 3.1%

Telecommunication Services 1.2%

Other 0.3%

Total 100.0%

 Top Holdings % of Net Assets³

Dendreon Crop. 0.4%

PMC-Sierra, Inc. 0.4%

3Com Corp. 0.3%

WMS Industries, Inc. 0.3%

Corporate Office Properties

  Trust 0.3%

Jarden Corp. 0.3%

Skyworks Solutions, Inc. 0.3%

Informatica Corp. 0.3%

National Retail Properties, Inc. 0.3%

The Warnaco Group, Inc. 0.3%

Total 3.2%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Small-company stocks are subject to greater volatility than other asset classes.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

12 Schwab Equity Index Funds

 Schwab Small-Cap Index Fund^®

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Pre-Tax Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (12/3/93)		-6.23%		-31.36%		-0.92%		2.88%
Select Shares (5/19/97)		-6.21%		-31.27%		-0.77%		3.03%
Benchmark: Schwab Small-Cap Index®		-6.06%		-31.20%		-0.67%		3.13%
Fund Category: Morningstar Small-Cap Blend		-5.44%		-32.07%		-1.74%		4.44%

Fund Expense Ratios³: Investor Shares: 0.57% / Select Shares: 0.42%

 Average Annual Total Returns After Tax^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (12/3/93)
Pre-Liquidation (still own shares)		-6.79%		-31.77%		-2.15%		1.71%
Post-Liquidation (shares were sold)		-3.93%		-20.30%		-0.67%		2.28%
Select Shares® (5/19/97)
Pre-Liquidation (still own shares)		-6.83%		-31.73%		-2.05%		1.81%
Post-Liquidation (shares were sold)		-3.91%		-20.23%		-0.56%		2.37%
Fund Category: Morningstar Small-Cap Blend
Pre-Liquidation (still own shares)		-7.15%		-33.38%		-3.42%		2.92%
Post-Liquidation (shares were sold)		-3.94%		-21.08%		-1.55%		3.61%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
2	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 04/30/09 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Equity Index Funds 13

Schwab Total Stock Market Index Fund^®

The Schwab Total Stock Market Index Fund Investor Shares returned -7.23% during the period, compared to the benchmark Dow Jones U.S. Total Stock Market Index, which returned -6.97%. The Dow Jones U.S. Total Stock Market Index includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available. When looking at returns in the fund on a sector-specific level, Financials and Industrials declined the most during the period, returning -23.80% and -10.40%, respectively. Relatively better performing sectors included Information Technology, up 5.39%, and Consumer Discretionary, up 5.52%. Better performing securities represented in the fund were led by Apple, Inc., Goldman Sachs, and IBM. Securities detracting from performance included Bank of America Corp., General Electric Corp., and Citigroup, Inc.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 2,333

Weighted Average Market

  Cap ($ x 1,000,000) $55,489

Price/Earnings Ratio (P/E) 35.4

Price/Book Ratio (P/B) 1.9

Portfolio Turnover Rate² 2%

 Sector Weightings % of Investments

Information Technology 18.2%

Financials 14.2%

Health Care 12.2%

Energy 11.4%

Industrials 10.8%

Consumer Staples 10.7%

Consumer Discretionary 10.7%

Materials 3.7%

Utilities 3.7%

Telecommunication Services 3.1%

Other 1.3%

Total 100.0%

 Top Holdings % of Net Assets³

Exxon Mobil Corp. 3.3%

Wal-Mart Stores, Inc. 1.9%

Microsoft Corp. 1.8%

AT&T, Inc. 1.5%

Berkshire Hathaway, Inc.,

  Class A 1.4%

Johnson & Johnson 1.4%

The Procter & Gamble Co. 1.4%

International Business Machines

  Corp. 1.4%

Chevron Corp. 1.3%

General Electric Co. 1.3%

Total 16.7%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

“Dow Jones” and “The Dow Jones U.S.Total Stock Market Index^SM” are service marks of Dow Jones & Company, Inc. and have been licensed for certain purposes by CSIM. The Schwab Total Stock Market Index Fund, based on The Dow Jones U.S. Total Stock Market Index^SM, is not sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes no representation regarding the advisability of investing in such a product.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

14 Schwab Equity Index Funds

 Schwab Total Stock Market Index Fund^®

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Pre-Tax Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception
Investor Shares (6/1/99)		-7.23%		-34.12%		-2.03%		-1.43%
Select Shares (6/1/99)		-7.13%		-33.99%		-1.87%		-1.28%
Benchmark: Dow Jones U.S. Total Stock Market IndexSM		-6.97%		-34.37%		-1.86%		-1.30%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.60%

Fund Expense Ratios³: Investor Shares: 0.53% / Select Shares: 0.38%

 Average Annual Total Returns After Tax^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception
Investor Shares (6/1/99)
Pre-Liquidation (still own shares)		-7.53%		-34.33%		-2.29%		-1.72%
Post-Liquidation (shares were sold)		-4.30%		-21.89%		-1.71%		-1.30%
Select Shares® (6/1/99)
Pre-Liquidation (still own shares)		-7.46%		-34.22%		-2.21%		-1.63%
Post-Liquidation (shares were sold)		-4.20%		-21.79%		-1.63%		-1.21%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		-8.75%		-36.63%		-3.74%		n/a
Post-Liquidation (shares were sold)		-5.03%		-23.17%		-2.50%		n/a

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
2	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 04/30/09 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
3	As stated in the prospectus. Reflects the total annual fund operating expenses without the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Equity Index Funds 15

Schwab International Index Fund^®

The Schwab International Index Fund Investor Shares returned -6.00% during the period, compared to the benchmark Schwab International Index, which returned -3.93%. The Schwab International Index is comprised of 350 companies encompassing 21 developed countries. When looking at returns in the fund from a regional perspective, Europe declined the most, returning -5.70%, followed by Asia/Pacific and North America, which returned -1.76% and -0.84%, respectively. In terms of sectors, Health Care and Utilities lost the most, returning -13.49% and -10.02%, respectively. Better performing sectors were led by Materials, up 10.82% and Industrials, up 6.22%. From a price-to-earnings (P/E) standpoint, companies with negative and high price-to-earnings ratios generally underperformed those with mid to low P/E ratios. From a market capitalization perspective, larger companies generally underperformed smaller companies. Better performing securities represented in the fund included Mizuho Financial, BHP Billiton, and Allianz. Securities detracting from performance were led by HSBC Holdings, Volkswagen, and Novartis.

As of 04/30/09:

 Style Assessment¹

 Country Weightings % of Investments

United Kingdom 18.9%

Japan 18.0%

France 11.1%

Canada 9.2%

Germany 8.8%

Switzerland 8.0%

Australia 6.3%

Spain 4.9%

Italy 3.1%

Netherlands 2.6%

Other Countries 9.1%

Total 100.0%

 Statistics

Number of Holdings 350

Weighted Average Market

  Cap ($ x 1,000,000) $45,227

Price/Earnings Ratio (P/E) 13.9

Price/Book Ratio (P/B) 1.3

Portfolio Turnover Rate² 9%

 Sector Weightings % of Investments

Financials 25.3%

Energy 11.8%

Consumer Staples 9.2%

Materials 8.8%

Health Care 8.7%

Industrials 8.4%

Consumer Discretionary 8.0%

Telecommunication Services 7.5%

Utilities 6.6%

Information Technology 5.0%

Other 0.7%

Total 100.0%

 Top Holdings % of Net Assets³

BP plc 2.0%

Nestle S.A. - Reg’d 1.9%

Total S.A. 1.8%

Toyota Motor Corp. 1.6%

Novartis AG - Reg’d 1.5%

Vodafone Group plc 1.5%

Telefonica S.A. 1.4%

Roche Holding AG 1.4%

HSBC Holdings plc 1.3%

Royal Dutch Shell plc, Class A 1.3%

Total 15.7%

The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Foreign securities can involve risks such as political and economic instability and currency risk.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

16 Schwab Equity Index Funds

 Schwab International Index Fund^®

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Pre-Tax Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (9/9/93)		-6.00%		-43.25%		0.45%		-0.51%
Select Shares (5/19/97)		-5.86%		-43.15%		0.64%		-0.36%
Benchmark: Schwab International Index®		-3.93%		-42.81%		1.04%		0.02%
Fund Category: Morningstar Foreign Large-Cap Blend		-3.30%		-43.52%		0.21%		-0.18%

Fund Expense Ratios³: Investor Shares: 0.69% / Select Shares: Net 0.50%; Gross 0.54%

 Average Annual Total Returns After Tax^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years
Investor Shares (9/9/93)
Pre-Liquidation (still own shares)		-6.28%		-43.42%		0.03%		-1.00%
Post-Liquidation (shares were sold)		-2.66%		-27.37%		0.46%		-0.57%
Select Shares® (5/19/97)
Pre-Liquidation (still own shares)		-6.19%		-43.35%		0.17%		-0.90%
Post-Liquidation (shares were sold)		-2.52%		-27.27%		0.61%		-0.46%
Fund Category: Morningstar Foreign Large-Cap Blend
Pre-Liquidation (still own shares)		-6.00%		-45.23%		-1.21%		-1.30%
Post-Liquidation (shares were sold)		-2.80%		-28.60%		-0.13%		-0.45%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

*	The Morgan Stanley Capital International Europe, Australasia, Far East Index (Net) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs.
1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
2	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/09 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Equity Index Funds 17

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab S&P 500 Index Fund*
Investor Shares
Actual Return		0.37%	$	1,000	$	914.80	$	1.76
Hypothetical 5% Return		0.37%	$	1,000	$	1,022.96	$	1.86
Select Shares®
Actual Return		0.19%	$	1,000	$	916.00	$	0.90
Hypothetical 5% Return		0.19%	$	1,000	$	1,023.85	$	0.95
e.Shares®
Actual Return		0.22%	$	1,000	$	915.50	$	1.04
Hypothetical 5% Return		0.22%	$	1,000	$	1,023.70	$	1.10
Schwab Institutional Select® S&P 500 Fund*
Actual Return		0.10%	$	1,000	$	914.50	$	0.47
Hypothetical 5% Return		0.10%	$	1,000	$	1,024.30	$	0.50
Schwab 1000 Index® Fund*
Investor Shares
Actual Return		0.51%	$	1,000	$	924.30	$	2.43
Hypothetical 5% Return		0.51%	$	1,000	$	1,022.27	$	2.56
Select Shares
Actual Return		0.36%	$	1,000	$	925.00	$	1.72
Hypothetical 5% Return		0.36%	$	1,000	$	1,023.01	$	1.81
Schwab Small-Cap Index Fund®*
Investor Shares
Actual Return		0.59%	$	1,000	$	937.70	$	2.83
Hypothetical 5% Return		0.59%	$	1,000	$	1,021.87	$	2.96
Select Shares
Actual Return		0.42%	$	1,000	$	937.90	$	2.02
Hypothetical 5% Return		0.42%	$	1,000	$	1,022.71	$	2.11

*  Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

18 Schwab Equity Index Funds

Fund Expenses (Unaudited) continued

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Total Stock Market Index Fund®*
Investor Shares
Actual Return		0.56%	$	1,000	$	927.70	$	2.68
Hypothetical 5% Return		0.56%	$	1,000	$	1,022.02	$	2.81
Select Shares
Actual Return		0.39%	$	1,000	$	928.70	$	1.87
Hypothetical 5% Return		0.39%	$	1,000	$	1,022.86	$	1.96
Schwab International Index Fund®*
Investor Shares
Actual Return		0.69%	$	1,000	$	940.00	$	3.32
Hypothetical 5% Return		0.69%	$	1,000	$	1,021.37	$	3.46
Select Shares
Actual Return		0.50%	$	1,000	$	941.40	$	2.41
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51

*  Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

Schwab Equity Index Funds 19

Schwab S&P 500 Index Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		15.21			24.17			21.47			18.79			17.61			16.36
Income (loss) from investment operations:
Net investment income (loss)		0.17			0.40			0.38			0.34			0.34			0.23
Net realized and unrealized gains (losses)		(1.46	)		(8.98	)		2.65			2.64			1.14			1.23
Total from investment operations		(1.29	)		(8.58	)		3.03			2.98			1.48			1.46
Less distributions:
Distributions from net investment income		(0.39	)		(0.38	)		(0.33	)		(0.30	)		(0.30	)		(0.21	)
Net asset value at end of period		13.53			15.21			24.17			21.47			18.79			17.61
Total return (%)		(8.52	)1		(36.02	)		14.29			16.03			8.44			9.03
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.37	2		0.36			0.35			0.36			0.37			0.37
Gross operating expenses		0.37	2		0.36			0.35			0.36			0.40			0.45
Net investment income (loss)		2.71	2		1.89			1.60			1.57			1.74			1.35
Portfolio turnover rate		2	1		3			2			3			4			3
Net assets, end of period ($ x 1,000,000)		2,209			2,369			3,948			3,685			3,666			3,849

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		15.28			24.28			21.56			18.88			17.68			16.41
Income (loss) from investment operations:
Net investment income (loss)		0.20			0.44			0.41			0.37			0.36			0.26
Net realized and unrealized gains (losses)		(1.48	)		(9.02	)		2.68			2.65			1.16			1.24
Total from investment operations		(1.28	)		(8.58	)		3.09			3.02			1.52			1.50
Less distributions:
Distributions from net investment income		(0.42	)		(0.42	)		(0.37	)		(0.34	)		(0.32	)		(0.23	)
Net asset value at end of period		13.58			15.28			24.28			21.56			18.88			17.68
Total return (%)		(8.40	)1		(35.92	)		14.50			16.18			8.66			9.25
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.19	2		0.19			0.19			0.19			0.19			0.19
Gross operating expenses		0.22	2		0.21			0.20			0.21			0.25			0.30
Net investment income (loss)		2.90	2		2.06			1.78			1.74			1.92			1.53
Portfolio turnover rate		2	1		3			2			3			4			3
Net assets, end of period ($ x 1,000,000)		2,237			2,598			4,345			4,038			3,938			4,119

* Unaudited.

¹ Not annualized.

² Annualized.

20 See financial notes

 Schwab S&P 500 Index Fund

Financial Highlights continued

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
e.Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		15.23			24.20			21.50			18.81			17.62			16.37
Income (loss) from investment operations:
Net investment income (loss)		0.28			0.39			0.40			0.35			0.39			0.26
Net realized and unrealized gains (losses)		(1.56	)		(8.95	)		2.67			2.67			1.11			1.21
Total from investment operations		(1.28	)		(8.56	)		3.07			3.02			1.50			1.47
Less distributions:
Distributions from net investment income		(0.42	)		(0.41	)		(0.37	)		(0.33	)		(0.31	)		(0.22	)
Net asset value at end of period		13.53			15.23			24.20			21.50			18.81			17.62
Total return (%)		(8.45	)1		(35.92	)		14.44			16.25			8.58			9.10
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.22	2		0.21			0.20			0.21			0.24			0.28
Gross operating expenses		0.22	2		0.21			0.20			0.21			0.25			0.30
Net investment income (loss)		2.90	2		2.05			1.76			1.72			1.88			1.44
Portfolio turnover rate		2	1		3			2			3			4			3
Net assets, end of period ($ x 1,000,000)		134			186			274			241			220			249

* Unaudited.

¹ Not annualized.

² Annualized.

See financial notes 21

 Schwab S&P 500 Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.4%	Common Stock		4,840,128		4,553,088
	0	.8%	Short-Term Investments		33,958		33,958
	100	.2%	Total Investments		4,874,086		4,587,046
	0	.2%	Collateral Invested for Securities on Loan		9,834		9,834
	(0	.4)%	Other Assets and Liabilities, Net				(16,651	)
	100	.0%	Net Assets				4,580,229

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 99.3% of net assets
Automobiles & Components 0.4%
Other Securities			0.4		20,414
Banks 2.4%
U.S. Bancorp	1,059,232		0.4		19,299
Wells Fargo & Co.	2,486,376		1.1		49,752
Other Securities			0.9		41,919
			2.4		110,970
Capital Goods 7.6%
3M Co.	415,741		0.5		23,947
General Electric Co.	6,237,677		1.7		78,907
United Technologies Corp.	570,169		0.6		27,847
Other Securities			4.8		215,668
			7.6		346,369
Commercial & Professional Supplies 0.7%
Other Securities			0.7		32,099
Consumer Durables & Apparel 1.1%
Other Securities			1.1		49,731
Consumer Services 1.8%
McDonald’s Corp.	671,221		0.8		35,769
Other Securities			1.0		45,362
			1.8		81,131
Diversified Financials 6.3%
Bank of America Corp.	3,837,204		0.8		34,266
JPMorgan Chase & Co.	2,251,616		1.6		74,303
The Charles Schwab Corp. (b)	582,786		0.2		10,770
The Goldman Sachs Group, Inc.	297,977		0.8		38,290
Other Securities			3.0		132,628
			6.4		290,257
Energy 12.5%
Chevron Corp.	1,219,559		1.8		80,613
ConocoPhillips	906,119		0.8		37,151
Exxon Mobil Corp.	3,052,491		4.4		203,510
Occidental Petroleum Corp.	495,524		0.6		27,893
Schlumberger Ltd.	728,459		0.8		35,687
Other Securities			4.1		187,408
			12.5		572,262
Food & Staples Retailing 3.3%
CVS Caremark Corp.	854,940		0.6		27,170
Wal-Mart Stores, Inc.	1,331,643		1.5		67,115
Other Securities			1.2		56,652
			3.3		150,937
Food, Beverage & Tobacco 5.8%
Altria Group, Inc.	1,193,829		0.4		19,495
Kraft Foods, Inc., Class A	882,400		0.4		20,648
PepsiCo, Inc.	927,083		1.0		46,132
Philip Morris International, Inc.	1,214,884		1.0		43,979
The Coca-Cola Co.	1,184,352		1.1		50,986
Other Securities			1.9		82,810
			5.8		264,050
Health Care Equipment & Services 4.3%
Medtronic, Inc.	670,796		0.5		21,466
Other Securities			3.8		175,244
			4.3		196,710
Household & Personal Products 2.8%
The Procter & Gamble Co.	1,774,636		1.9		87,738

22 See financial notes

 Schwab S&P 500 Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number			% of Net		Value
of Shares			Assets		($ x 1,000)
Other Securities				0.9		42,545
				2.8		130,283
Insurance 2.3%
Other Securities				2.3		107,518
Materials 3.4%
Monsanto Co.		329,326		0.6		27,956
Other Securities				2.8		128,005
				3.4		155,961
Media 2.6%
Comcast Corp., Class A		1,727,063		0.6		26,700
The Walt Disney Co.		1,111,116		0.5		24,334
Other Securities				1.5		70,138
				2.6		121,172
Pharmaceuticals, Biotechnology & Life Sciences 9.4%
Abbott Laboratories		924,205		0.9		38,678
Amgen, Inc. *		633,298		0.7		30,696
Bristol-Myers Squibb Co.		1,189,853		0.5		22,845
Eli Lilly & Co.		604,055		0.4		19,886
Gilead Sciences, Inc. *		551,294		0.6		25,249
Johnson & Johnson		1,655,330		1.9		86,673
Merck & Co., Inc.		1,272,857		0.7		30,854
Pfizer, Inc.		4,016,667		1.2		53,663
Schering-Plough Corp.		946,326		0.5		21,784
Wyeth		800,282		0.7		33,932
Other Securities				1.3		65,560
	��			9.4		429,820
Real Estate 1.0%
Other Securities				1.0		46,056
Retailing 3.7%
The Home Depot, Inc.		1,019,607		0.6		26,836
Other Securities				3.1		141,317
				3.7		168,153
Semiconductors & Semiconductor Equipment 2.5%
Intel Corp.		3,333,326		1.2		52,600
Other Securities				1.3		62,370
				2.5		114,970
Software & Services 6.9%
Google, Inc., Class A *		141,971		1.2		56,216
Microsoft Corp.		4,613,998		2.0		93,480
Oracle Corp.		2,331,376		1.0		45,089
Other Securities				2.7		123,617
				6.9		318,402
Technology Hardware & Equipment 8.8%
Apple, Inc. *		532,505		1.5		67,005
Cisco Systems, Inc. *		3,498,668		1.5		67,594
Hewlett-Packard Co.		1,456,373		1.1		52,400
International Business Machines Corp.		802,287		1.8		82,804
QUALCOMM, Inc.		986,578		0.9		41,752
Other Securities				2.0		93,523
				8.8		405,078
Telecommunication Services 3.7%
AT&T, Inc.		3,500,842		2.0		89,692
Verizon Communications, Inc.		1,693,606		1.1		51,384
Other Securities				0.6		27,068
				3.7		168,144
Transportation 2.1%
United Parcel Service, Inc., Class B		596,665		0.7		31,229
Other Securities				1.4		64,829
				2.1		96,058
Utilities 3.9%
Other Securities				3.9		176,543
Total Common Stock (Cost $4,840,128)						4,553,088
Security		Face Amount	% of Net		Value
Rate, Maturity Date		($ x 1,000)	Assets		($ x 1,000)
Short-Term Investments 0.8% of net assets
Commercial Paper & Other Obligations 0.7%
Citibank, New York Time Deposit
0.03%, 05/01/09		28,456		0.7		28,456
U.S. Treasury Obligations 0.1%
Other Securities				0.1		5,502
Total Short-Term Investments (Cost $33,958)						33,958
End of Investments.

See financial notes 23

 Schwab S&P 500 Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Collateral Invested for Securities on Loan 0.2% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust	9,834,058		0.2		9,834
Total Collateral Invested for Securities on Loan (Cost $9,834)					9,834
End of collateral invested for securities on loan.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $4,916,023 and the unrealized appreciation and depreciation were $1,131,129 and ($1,460,106), respectively, with a net unrealized depreciation of ($328,977).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts. Please see complete schedule of holdings.
(b)	Issuer is affiliated with the fund’s adviser. Please see complete schedule of holdings.
(c)	All or a portion of this security is on loan. Please see complete schedule of holdings.

ADR — American Depositary Receipt

REIT — Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		500		21,750		2,605

24 See financial notes

 Schwab S&P 500 Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value including securities on loan of $9,229 (cost $4,874,086)		$4,587,046
Collateral invested for securities on loan		9,834
Receivables:
Dividends		6,592
Fund shares sold		3,579
Income from securities on loan		620
Foreign tax reclaims		13
Due from brokers for futures		2
Prepaid expenses	+	15
Total assets		4,607,701
Liabilities
Collateral held for securities on loan		9,834
Payables:
Investment adviser and administrator fees		36
Transfer agent and shareholder services fees		59
Fund shares redeemed		17,314
Trustees’ fees		4
Accrued expenses	+	225
Total liabilities		27,472
Net Assets
Total assets		4,607,701
Total liabilities	−	27,472
Net assets		$4,580,229
Net Assets by Source
Capital received from investors		5,724,134
Net investment income not yet distributed		35,881
Net realized capital losses		(895,351	)
Net unrealized capital losses		(284,435	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$2,209,167		163,235			$13.53
Select Shares	$2,236,618		164,751			$13.58
e.Shares	$134,444		9,936			$13.53

See financial notes 25

 Schwab S&P 500 Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (including $71 from affiliated issuer and net of foreign withholding tax of $4)		$66,897
Interest		15
Securities on loan	+	793
Total investment income		67,705
Net Realized Gains and Losses
Net realized gains on investments		318
Net realized losses on futures contracts	+	(9,155	)
Net realized losses		(8,837	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(498,150	)
Net unrealized losses on futures contracts	+	(740	)
Net unrealized losses		(498,890	)
Expenses
Investment adviser and administrator fees		2,121
Transfer agent and shareholder service fees:
Investor Shares		2,591
Select Shares		1,087
e.Shares		68
Shareholder reports		181
Portfolio accounting fees		76
Registration fees		71
Custodian fees		66
Trustees’ fees		35
Professional fees		33
Interest expense		20
Other expenses	+	77
Total expenses		6,426
Expense reduction by adviser and Schwab	−	358
Net expenses		6,068
Increase (Decrease) in Net Assets from Operations
Total investment income		67,705
Net expenses	−	6,068
Net investment income		61,637
Net realized losses		(8,837	)
Net unrealized losses	+	(498,890	)
Decrease in net assets from operations		($446,090	)

26 See financial notes

 Schwab S&P 500 Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$61,637			$141,674
Net realized losses			(8,837	)		(48,887	)
Net unrealized losses	+		(498,890	)		(3,050,324	)
Decrease in net assets from operations			(446,090	)		(2,957,537	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			61,219			61,410
Select Shares			70,329			74,254
e.Shares	+		4,259			4,519
Total distributions from net investment income			$135,807			$140,183

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			16,317			$212,008			20,489			$401,669
Select Shares			17,563			229,499			23,870			470,078
e.Shares	+		2,134			28,276			4,609			79,000
Total shares sold			36,014			$469,783			48,968			$950,747
Shares Reinvested
Investor Shares			4,242			$58,541			2,585			$58,820
Select Shares			4,510			62,414			2,885			65,826
e.Shares	+		272			3,759			181			4,127
Total shares reinvested			9,024			$124,714			5,651			$128,773
Shares Redeemed
Investor Shares			(13,038	)		($166,546	)		(30,693	)		($612,594	)
Select Shares			(27,370	)		(358,633	)		(35,683	)		(704,340	)
e.Shares	+		(4,705	)		(60,794	)		(3,896	)		(78,278	)
Total shares redeemed			(45,113	)		($585,973	)		(70,272	)		($1,395,212	)
Net transactions in fund shares			(75	)		$8,524			(15,653	)		($315,692	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			337,997			$5,153,602			353,650			$8,567,014
Total decrease	+		(75	)		(573,373	)		(15,653	)		(3,413,412	)
End of period			337,922			$4,580,229			337,997			$5,153,602
Net investment income not yet distributed						$35,881						$110,051

See financial notes 27

Schwab Institutional Select^® S&P 500 Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		7.79			12.39			10.99			9.57			8.95			8.30
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.21			0.21			0.16			0.15			0.13
Net realized and unrealized gains (losses)		(0.75	)		(4.60	)		1.36			1.39			0.62			0.64
Total from investment operations		(0.66	)		(4.39	)		1.57			1.55			0.77			0.77
Less distributions:
Distributions from net investment income		(0.21	)		(0.21	)		(0.17	)		(0.13	)		(0.15	)		(0.12	)
Net asset value at end of period		6.92			7.79			12.39			10.99			9.57			8.95
Total return (%)		(8.55	)1		(36.00	)		14.43			16.39			8.64			9.36
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.10	2		0.10			0.10			0.10			0.10			0.15
Gross operating expenses		0.23	2		0.22			0.22			0.28			0.33			0.35
Net investment income (loss)		2.87	2		2.17			1.89			1.84			1.82			1.56
Portfolio turnover rate		1	1		1			1			2			3			3
Net assets, end of period ($ x 1,000,000)		2,491			2,385			3,103			2,080			1,246			348

* Unaudited.

¹ Not annualized.

² Annualized.

28 See financial notes

 Schwab Institutional Select S&P 500 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as Other Securities in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	96	.9%	Common Stock		3,258,475		2,413,924
	2	.2%	Short-Term Investments		54,287		54,287
	99	.1%	Total Investments		3,312,762		2,468,211
	0	.2%	Collateral Invested for Securities on Loan		4,286		4,286
	0	.7%	Other Assets and Liabilities, Net				18,372
	100	.0%	Net Assets				2,490,869

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 96.9% of net assets
Automobiles & Components 0.5%
Other Securities			0.5		12,155
Banks 2.4%
U.S. Bancorp	555,696		0.4		10,125
Wells Fargo & Co.	1,350,433		1.1		27,022
Other Securities			0.9		21,820
			2.4		58,967
Capital Goods 7.3%
3M Co.	219,478		0.5		12,642
General Electric Co.	3,321,675		1.7		42,019
United Technologies Corp.	298,166		0.6		14,562
Other Securities			4.5		112,122
			7.3		181,345
Commercial & Professional Supplies 0.7%
Other Securities			0.7		17,377
Consumer Durables & Apparel 1.0%
Other Securities			1.0		25,549
Consumer Services 1.7%
McDonald’s Corp.	355,817		0.8		18,962
Other Securities			0.9		24,276
			1.7		43,238
Diversified Financials 6.1%
Bank of America Corp.	2,033,607		0.7		18,160
JPMorgan Chase & Co.	1,193,415		1.6		39,383
The Charles Schwab Corp. (a)	299,895		0.2		5,542
The Goldman Sachs Group, Inc.	159,892		0.8		20,546
Other Securities			2.8		69,122
			6.1		152,753
Energy 12.1%
Chevron Corp.	632,875		1.7		41,833
ConocoPhillips	467,871		0.8		19,183
Exxon Mobil Corp.	1,574,407		4.2		104,966
Occidental Petroleum Corp.	255,926		0.6		14,406
Schlumberger Ltd.	378,380		0.7		18,537
Other Securities			4.1		101,942
			12.1		300,867
Food & Staples Retailing 3.2%
CVS Caremark Corp.	464,011		0.6		14,746
Wal-Mart Stores, Inc.	711,059		1.4		35,837
Other Securities			1.2		29,742
			3.2		80,325
Food, Beverage & Tobacco 5.7%
Altria Group, Inc.	647,862		0.4		10,580
Kraft Foods, Inc., Class A	461,554		0.4		10,800
PepsiCo, Inc.	495,756		1.0		24,669
Philip Morris International, Inc.	633,262		0.9		22,924
The Coca-Cola Co.	633,176		1.1		27,258
Other Securities			1.9		45,831
			5.7		142,062
Health Care Equipment & Services 4.1%
Medtronic, Inc.	349,443		0.4		11,182
Other Securities			3.7		92,044
			4.1		103,226
Household & Personal Products 2.7%
The Procter & Gamble Co.	925,554		1.8		45,760

See financial notes 29

 Schwab Institutional Select S&P 500 Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Other Securities			0.9		21,998
			2.7		67,758
Insurance 2.3%
Other Securities			2.3		57,311
Materials 3.3%
Monsanto Co.	174,574		0.6		14,820
Other Securities			2.7		68,226
			3.3		83,046
Media 2.6%
Comcast Corp., Class A	915,401		0.6		14,152
The Walt Disney Co.	587,267		0.5		12,861
Other Securities			1.5		37,156
			2.6		64,169
Pharmaceuticals, Biotechnology & Life Sciences 9.2%
Abbott Laboratories	486,581		0.8		20,363
Amgen, Inc. *	330,261		0.6		16,008
Bristol-Myers Squibb Co.	623,911		0.5		11,979
Eli Lilly & Co.	318,468		0.4		10,484
Gilead Sciences, Inc. *	287,381		0.5		13,162
Johnson & Johnson	874,095		1.8		45,768
Merck & Co., Inc.	663,486		0.6		16,083
Pfizer, Inc.	2,119,005		1.1		28,310
Schering-Plough Corp.	512,575		0.5		11,800
Wyeth	419,782		0.7		17,799
Other Securities			1.7		36,819
			9.2		228,575
Real Estate 1.0%
Other Securities			1.0		25,443
Retailing 3.6%
The Home Depot, Inc.	540,343		0.5		14,222
Other Securities			3.1		75,496
			3.6		89,718
Semiconductors & Semiconductor Equipment 2.5%
Intel Corp.	1,771,579		1.1		27,955
Other Securities			1.4		33,583
			2.5		61,538
Software & Services 6.8%
Google, Inc., Class A *	75,787		1.2		30,009
Microsoft Corp.	2,427,833		1.9		49,188
Oracle Corp.	1,213,310		0.9		23,465
Other Securities			2.8		66,752
			6.8		169,414
Technology Hardware & Equipment 8.6%
Apple, Inc. *	282,135		1.4		35,501
Cisco Systems, Inc. *	1,846,360		1.4		35,672
Hewlett-Packard Co.	758,335		1.1		27,285
International Business Machines Corp.	424,403		1.8		43,803
QUALCOMM, Inc.	526,787		0.9		22,294
Other Securities			2.0		49,677
			8.6		214,232
Telecommunication Services 3.6%
AT&T, Inc.	1,851,394		1.9		47,433
Verizon Communications, Inc.	898,272		1.1		27,254
Other Securities			0.6		14,012
			3.6		88,699
Transportation 2.1%
United Parcel Service, Inc., Class B	314,953		0.7		16,485
Other Securities			1.4		35,388
			2.1		51,873
Utilities 3.8%
Other Securities			3.8		94,284
Total Common Stock (Cost $3,258,475)					2,413,924
Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investments 2.2% of net assets
Commercial Paper & Other Obligation 1.7%
Citibank, New York Time Deposit
0.03%, 05/01/09	42,792		1.7		42,792
U.S. Treasury Obligations 0.5%
Other Securities			0.5		11,495
Total Short-Term Investments (Cost $54,287)					54,287
End of Investments.

30 See financial notes

 Schwab Institutional Select S&P 500 Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Collateral Invested for Securities on Loan 0.2% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust	4,286,285		0.2		4,286
Total Collateral Invested for Securities on Loan (Cost $4,286)					4,286
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $3,324,040, and the unrealized appreciation and depreciation were $69,320 and ($925,149), respectively, with a net unrealized depreciation of ($855,829).

*	Non-income producing security.
(a)	Issuer is affiliated with the fund’s adviser.
(b)	All or a portion of this security is held as collateral for open futures contracts. Please see complete schedule of holdings.
(c)	All or a portion of this security is on loan. Please see complete schedule of holdings.

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		1,700		73,950		6,862

See financial notes 31

 Schwab Institutional Select S&P 500 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value including securities on loan of $4,023 (cost $3,312,762)		$2,468,211
Collateral invested for securities on loan		4,286
Receivables:
Fund shares sold		21,110
Dividends		3,393
Income from securities on loan		270
Due from brokers for futures		33
Foreign tax reclaims		6
Prepaid expenses	+	7
Total assets		2,497,316
Liabilities
Collateral held for securities on loan		4,286
Payables:
Transfer agent and shareholder services fees		15
Fund shares redeemed		2,025
Trustees’ fees		2
Accrued expenses	+	119
Total liabilities		6,447
Net Assets
Total assets		2,497,316
Total liabilities	−	6,447
Net assets		$2,490,869
Net Assets by Source
Capital received from investors		3,475,720
Net investment income not yet distributed		18,329
Net realized capital losses		(165,491	)
Net unrealized capital losses		(837,689	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$2,490,869		359,709			$6.92

32 See financial notes

 Schwab Institutional Select S&P 500 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (including of $31 from affiliated issuer and net of foreign withholding tax of $2)		$31,420
Interest		28
Securities on loan	+	350
Total investment income		31,798
Net Realized Gains and Losses
Net realized losses on investments		(10,213	)
Net realized losses on futures contracts	+	(20,123	)
Net realized losses		(30,336	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(184,501	)
Net unrealized gains on futures contracts	+	13,345
Net unrealized losses		(171,156	)
Expenses
Investment adviser and administrator fees		1,113
Transfer agent and shareholder service fees		1,071
Registration fees		108
Portfolio accounting fees		45
Custodian fees		37
Shareholder reports		25
Professional fees		20
Trustees’ fees		18
Other expenses	+	29
Total expenses		2,466
Expense reduction by adviser and Schwab	−	1,395
Net expenses		1,071
Increase in Net Assets from Operations
Total investment income		31,798
Net expenses	−	1,071
Net investment income		30,727
Net realized losses		(30,336	)
Net unrealized losses	+	(171,156	)
Decrease in net assets from operations		($170,765	)

See financial notes 33

 Schwab Institutional Select S&P 500 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$30,727			$63,096
Net realized losses			(30,336	)		(85,977	)
Net unrealized losses	+		(171,156	)		(1,206,648	)
Decrease in net assets from operations			(170,765	)		(1,229,529	)
Distributions to Shareholders
Distributions from net investment income			$62,797			$53,061

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			117,001			$758,544			135,006			$1,356,798
Shares Reinvested			8,016			56,596			4,137			48,190
Shares Redeemed	+		(71,243	)		(475,394	)		(83,668	)		(840,651	)
Net transactions in fund shares			53,774			$339,746			55,475			$564,337
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			305,935			$2,384,685			250,460			$3,102,938
Total increase or decrease	+		53,774			106,184			55,475			(718,253	)
End of period			359,709			$2,490,869			305,935			$2,384,685
Net investment income not yet distributed						$18,329						$50,399

34 See financial notes

Schwab 1000 Index^® Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		28.69			45.81			40.40			35.31			32.54			30.25
Income (loss) from investment operations:
Net investment income (loss)		0.31	1		0.66	1		0.60	1		0.50	1		0.55			0.37
Net realized and unrealized gains (losses)		(2.48	)		(17.13	)		5.33			5.05			2.70			2.26
Total from investment operations		(2.17	)		(16.47	)		5.93			5.55			3.25			2.63
Less distributions:
Distributions from net investment income		(0.64	)		(0.62	)		(0.52	)		(0.46	)		(0.48	)		(0.34	)
Distributions from net realized gains		—			(0.03	)		—			—			—			—
Total distributions		(0.64	)		(0.65	)		(0.52	)		(0.46	)		(0.48	)		(0.34	)
Net asset value at end of period		25.88			28.69			45.81			40.40			35.31			32.54
Total return (%)		(7.57	)2		(36.43	)		14.81			15.84			10.04			8.78
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.51	3		0.49			0.48			0.49			0.50			0.50
Gross operating expenses		0.51	3		0.49			0.48			0.49			0.50			0.50
Net investment income (loss)		2.51	3		1.68			1.39			1.34			1.49			1.15
Portfolio turnover rate		3	2		4			6			5			6			5
Net assets, end of period ($ x 1,000,000)		1,983			2,260			3,974			3,918			4,166			4,258

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		28.71			45.84			40.43			35.34			32.56			30.27
Income (loss) from investment operations:
Net investment income (loss)		0.33	1		0.71	1		0.66	1		0.56	1		0.56			0.42
Net realized and unrealized gains (losses)		(2.48	)		(17.12	)		5.34			5.04			2.74			2.25
Total from investment operations		(2.15	)		(16.41	)		6.00			5.60			3.30			2.67
Less distributions:
Distributions from net investment income		(0.70	)		(0.69	)		(0.59	)		(0.51	)		(0.52	)		(0.38	)
Distributions from net realized gains		—			(0.03	)		—			—			—			—
Total distributions		(0.70	)		(0.72	)		(0.59	)		(0.51	)		(0.52	)		(0.38	)
Net asset value at end of period		25.86			28.71			45.84			40.43			35.34			32.56
Total return (%)		(7.50	)2		(36.33	)		14.98			16.01			10.21			8.90
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.36	3		0.34			0.33			0.34			0.35			0.35
Gross operating expenses		0.36	3		0.34			0.33			0.34			0.35			0.35
Net investment income (loss)		2.66	3		1.83			1.54			1.48			1.63			1.30
Portfolio turnover rate		3	2		4			6			5			6			5
Net assets, end of period ($ x 1,000,000)		1,729			2,021			3,311			2,924			2,328			2,138

* Unaudited.

¹ Calculated based on the average shares outstanding during the period.

² Not annualized.

³ Annualized.

See financial notes 35

 Schwab 1000 Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.7%	Common Stock		2,561,394		3,699,003
	0	.2%	Foreign Common Stock		7,039		5,414
		—%	Short-Term Investments		1,538		1,538
	99	.9%	Total Investments		2,569,971		3,705,955
	0	.2%	Collateral Invested for Securities on Loan		7,838		7,838
	(0	.1)%	Other Assets and Liabilities, Net				(2,099	)
	100	.0%	Net Assets				3,711,694

Security and Number		% of Net			Value
of Shares		Assets			($ x 1,000)
Common Stock 99.7% of net assets
Automobiles & Components 0.5%
Other Securities			0.5			18,973
Banks 2.5%
U.S. Bancorp	746,805		0.4			13,607
Wells Fargo & Co.	1,796,396		1.0			35,946
Other Securities			1.1			44,390
			2.5			93,943
Capital Goods 7.9%
3M Co.	294,934		0.5			16,988
General Electric Co.	4,453,122		1.5			56,332
United Technologies Corp.	402,863		0.5			19,676
Other Securities			5.4			199,041
			7.9			292,037
Commercial & Professional Supplies 0.9%
Other Securities			0.9			33,479
Consumer Durables & Apparel 1.1%
Other Securities			1.1			40,265
Consumer Services 1.9%
McDonald’s Corp.	475,036		0.7			25,315
Other Securities			1.2	��		46,020
			1.9			71,335
Diversified Financials 5.8%
Bank of America Corp.	2,731,741		0.7			24,394
JPMorgan Chase & Co.	1,592,978		1.4			52,568
The Charles Schwab Corp. (a)	403,065		0.2			7,449
The Goldman Sachs Group, Inc.	212,932		0.7			27,362
Other Securities			2.8			104,788
			5.8			216,561
Energy 12.4%
Chevron Corp.	858,277		1.5			56,732
ConocoPhillips	630,366		0.7			25,845
Exxon Mobil Corp.	2,105,122		3.8			140,348
Occidental Petroleum Corp.	343,316		0.5			19,325
Schlumberger Ltd.	507,106		0.7			24,843
Other Securities			5.2			192,089
			12.4			459,182
Food & Staples Retailing 2.9%
CVS Caremark Corp.	608,511		0.5			19,338
Wal-Mart Stores, Inc.	950,927		1.3			47,927
Other Securities			1.1			41,381
			2.9			108,646
Food, Beverage & Tobacco 5.3%
Altria Group, Inc.	876,965		0.4			14,321
Kraft Foods, Inc., Class A	624,564		0.4			14,615
PepsiCo, Inc.	658,587		0.9			32,771
Philip Morris International, Inc.	849,065		0.8			30,736
The Coca-Cola Co.	845,854		1.0			36,414
Other Securities			1.8			66,460
			5.3			195,317
Health Care Equipment & Services 4.4%
Medtronic, Inc.	472,968		0.4			15,135
Other Securities			4.0			148,789
			4.4			163,924
Household & Personal Products 2.6%
The Procter & Gamble Co.	1,255,619		1.7			62,078

36 See financial notes

 Schwab 1000 Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number			% of Net		Value
of Shares			Assets		($ x 1,000)
Other Securities				0.9		35,315
				2.6		97,393
Insurance 3.4%
Berkshire Hathaway, Inc., Class A *		273		0.7		25,662
Other Securities				2.7		101,829
				3.4		127,491
Materials 3.7%
Monsanto Co.		232,234		0.5		19,714
Other Securities				3.2		119,144
				3.7		138,858
Media 2.8%
Comcast Corp., Class A		1,225,703		0.5		18,949
The Walt Disney Co.		788,652		0.5		17,272
Other Securities				1.8		65,763
				2.8		101,984
Pharmaceuticals, Biotechnology & Life Sciences 8.7%
Abbott Laboratories		654,946		0.7		27,409
Amgen, Inc. *		440,660		0.6		21,359
Bristol-Myers Squibb Co.		839,339		0.4		16,115
Eli Lilly & Co.		424,771		0.4		13,983
Gilead Sciences, Inc. *		386,112		0.5		17,684
Johnson & Johnson		1,175,467		1.7		61,547
Merck & Co., Inc.		897,085		0.6		21,745
Pfizer, Inc.		2,845,010		1.0		38,009
Schering-Plough Corp.		686,616		0.4		15,806
Wyeth		564,533		0.7		23,936
Other Securities				1.7		66,251
				8.7		323,844
Real Estate 1.5%
Other Securities				1.5		56,519
Retailing 3.7%
The Home Depot, Inc.		720,115		0.5		18,954
Other Securities				3.2		117,133
				3.7		136,087
Semiconductors & Semiconductor Equipment 2.5%
Intel Corp.		2,364,780		1.0		37,316
Other Securities				1.5		54,141
				2.5		91,457
Software & Services 7.3%
Google, Inc., Class A *		101,561		1.1		40,215
Microsoft Corp.		3,258,938		1.8		66,026
Oracle Corp.		1,661,910		0.9		32,141
Other Securities				3.5		132,493
				7.3		270,875
Technology Hardware & Equipment 8.2%
Apple, Inc. *		377,914		1.3		47,553
Cisco Systems, Inc. *		2,484,615		1.3		48,003
Hewlett-Packard Co.		1,044,068		1.0		37,566
International Business Machines Corp.		572,040		1.6		59,040
QUALCOMM, Inc.		701,878		0.8		29,703
Other Securities				2.2		81,886
				8.2		303,751
Telecommunication Services 3.5%
AT&T, Inc.		2,499,177		1.7		64,029
Verizon Communications, Inc.		1,206,237		1.0		36,597
Other Securities				0.8		27,443
				3.5		128,069
Transportation 2.1%
United Parcel Service, Inc., Class B		422,075		0.6		22,091
Other Securities	��			1.5		53,678
				2.1		75,769
Utilities 4.1%
Other Securities				4.1		153,244
Total Common Stock (Cost $2,561,394)						3,699,003
Foreign Common Stock 0.2% of net assets
Bermuda 0.2%
Capital Goods 0.1%
Other Securities				0.1		1,397
Diversified Financials 0.1%
Other Securities				0.1		2,866
Insurance 0.0%
Other Securities				0.0		923
Software & Services 0.0%
Other Securities				0.0		100
				0.2		5,286
British Virgin Islands 0.0%
Transportation 0.0%
Other Securities				0.0		128
Total Foreign Common Stock (Cost $7,039)						5,414

See financial notes 37

 Schwab 1000 Index Fund

Portfolio Holdings (Unaudited) continued

Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investments 0.0% of net assets
U.S. Treasury Obligations 0.0%
Other Securities			0.0		1,538
End of Investments.
Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Collateral Invested for Securities on Loan 0.2% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust	7,837,902		0.2		7,838
Total Collateral Invested for Securities on Loan (Cost $7,838)					7,838
End of collateral invested for securities on loan.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $2,545,459 and the unrealized appreciation and depreciation were $1,606,252 and ($445,756), respectively, with a net unrealized appreciation of $1,160,496.

*	Non-income producing security.
(a)	Issuer is affiliated with the fund’s adviser.
(b)	All or a portion of this security is held as collateral for open futures contracts. Please see complete schedule of holdings.
(c)	All or a portion of this security is on loan. Please see complete schedule of holdings.

REIT — Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		75		3,263		215

38 See financial notes

 Schwab 1000 Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value including securities on loan of $7,356 (cost $2,569,971)		$3,705,955
Collateral invested for securities on loan		7,838
Receivables:
Dividends		5,134
Fund shares sold		3,076
Income from securities on loan		452
Foreign tax reclaims		15
Interest		7
Due from brokers for futures		3
Prepaid expenses	+	13
Total assets		3,722,493
Liabilities
Collateral held for securities on loan		7,838
Payables:
Investments bought		15
Investment adviser and administrator fees		70
Transfer agent and shareholder services fees		54
Fund shares redeemed		2,548
Payable to custodian		81
Trustees’ fees		9
Accrued expenses	+	184
Total liabilities		10,799
Net Assets
Total assets		3,722,493
Total liabilities	−	10,799
Net assets		$3,711,694
Net Assets by Source
Capital received from investors		2,516,011
Net investment income not yet distributed		27,500
Net realized capital gains		31,984
Net unrealized capital gains		1,136,199

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$1,983,041		76,616			$25.88
Select Shares	$1,728,653		66,850			$25.86

See financial notes 39

 Schwab 1000 Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (including $51 from affiliated issuer and net of foreign withholding tax of $11)		$53,978
Interest		15
Securities on loan	+	595
Total investment income		54,588
Net Realized Gains and Losses
Net realized gains on investments		11,830
Net realized gains on affiliated issuer		130
Net realized gains on futures contracts	+	640
Net realized gains		12,600
Net Unrealized Gains and Losses
Net unrealized losses on investments		(403,449	)
Net unrealized losses on futures contracts	+	(172	)
Net unrealized losses		(403,621	)
Expenses
Investment adviser and administrator fees		4,177
Transfer agent and shareholder service fees:
Investor Shares		2,393
Select Shares		851
Shareholder reports		167
Portfolio accounting fees		70
Registration fees		54
Trustees’ fees		46
Custodian fees		45
Professional fees		33
Interest expense		11
Other expenses	+	37
Total expenses		7,884
Expense reduction by adviser and Schwab	−	1
Net expenses		7,883
Increase (Decrease) in Net Assets from Operations
Total investment income		54,588
Net expenses	−	7,883
Net investment income		46,705
Net realized gains		12,600
Net unrealized losses	+	(403,621	)
Decrease in net assets from operations		($344,316	)

40 See financial notes

 Schwab 1000 Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods; All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$46,705			$106,353
Net realized gains			12,600			16,203
Net unrealized losses	+		(403,621	)		(2,658,720	)
Decrease in net assets from operations			(344,316	)		(2,536,164	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			50,004			52,859
Select Shares	+		49,147			49,349
Total distributions from net investment income			99,151			102,208
Distributions from net realized gains
Investor Shares			—			2,740
Select Shares	+		—			2,293
Total distributions from net realized gains			—			5,033
Total distributions			$99,151			$107,241

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			3,319			$81,752			5,772			$217,822
Select Shares	+		7,843			196,422			10,059			373,493
Total shares sold			11,162			$278,174			15,831			$591,315
Shares Reinvested
Investor Shares			1,767			$45,998			1,186			$51,269
Select Shares	+		1,524			39,629			974			42,080
Total shares reinvested			3,291			$85,627			2,160			$93,349
Shares Redeemed
Investor Shares			(7,220	)		($174,740	)		(14,962	)		($569,361	)
Select Shares	+		(12,925	)		(314,886	)		(12,842	)		(476,106	)
Total shares redeemed			(20,145	)		($489,626	)		(27,804	)		($1,045,467	)
Net transactions in fund shares			(5,692	)		($125,825	)		(9,813	)		($360,803	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			149,158			$4,280,986			158,971			$7,285,194
Total decrease	+		(5,692	)		(569,292	)		(9,813	)		(3,004,208	)
End of period			143,466			$3,711,694			149,158			$4,280,986
Net investment income not yet distributed						$27,500						$79,946

See financial notes 41

Schwab Small-Cap Index Fund^®

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		13.82			25.30			25.92			22.31			19.92			18.22
Income (loss) from investment operations:
Net investment income (loss)		0.11	1		0.30	1		0.32	1		0.23	1		0.14			0.13
Net realized and unrealized gains (losses)		(0.99	)		(7.88	)		2.35			3.67			2.38			1.68
Total from investment operations		(0.88	)		(7.58	)		2.67			3.90			2.52			1.81
Less distributions:
Distributions from net investment income		(0.26	)		(0.28	)		(0.24	)		(0.14	)		(0.13	)		(0.11	)
Distributions from net realized gains		—			(3.62	)		(3.05	)		(0.15	)		—			—
Total distributions		(0.26	)		(3.90	)		(3.29	)		(0.29	)		(0.13	)		(0.11	)
Net asset value at end of period		12.68			13.82			25.30			25.92			22.31			19.92
Total return (%)		(6.23	)2		(34.60	)		11.16			17.62			12.66			9.98
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.59	3		0.57			0.57			0.57			0.58			0.59
Gross operating expenses		0.60	3		0.57			0.57			0.57			0.58			0.59
Net investment income (loss)		1.95	3		1.62			1.28			0.94			0.57			0.66
Portfolio turnover rate		25	2		64			31			29			40			39
Net assets, end of period ($ x 1,000,000)		389			448			756			771			823			869

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		13.85			25.35			25.97			22.36			19.96			18.25
Income (loss) from investment operations:
Net investment income (loss)		0.12	1		0.33	1		0.35	1		0.27	1		0.17			0.17
Net realized and unrealized gains (losses)		(1.00	)		(7.89	)		2.36			3.67			2.39			1.68
Total from investment operations		(0.88	)		(7.56	)		2.71			3.94			2.56			1.85
Less distributions:
Distributions from net investment income		(0.29	)		(0.32	)		(0.28	)		(0.18	)		(0.16	)		(0.14	)
Distributions from net realized gains		—			(3.62	)		(3.05	)		(0.15	)		—			—
Total distributions		(0.29	)		(3.94	)		(3.33	)		(0.33	)		(0.16	)		(0.14	)
Net asset value at end of period		12.68			13.85			25.35			25.97			22.36			19.96
Total return (%)		(6.21	)2		(34.48	)		11.35			17.78			12.86			10.16
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.42	3		0.42			0.42			0.42			0.41			0.42
Gross operating expenses		0.45	3		0.42			0.42			0.42			0.43			0.44
Net investment income (loss)		2.12	3		1.78			1.43			1.10			0.74			0.82
Portfolio turnover rate		25	2		64			31			29			40			39
Net assets, end of period ($ x 1,000,000)		576			628			969			889			795			761

* Unaudited.

¹ Calculated based on the average shares outstanding during the period.

² Not annualized.

³ Annualized.

42 See financial notes

 Schwab Small-Cap Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.7%	Common Stock		1,185,598		953,092
	1	.2%	Foreign Common Stock		18,351		11,413
	0	.1%	Preferred Stock		1,145		625
		—%	Rights		44		17
	0	.3%	Short-Term Investment		3,303		3,303
	100	.3%	Total Investments		1,208,441		968,450
	(0	.3)%	Other Assets and Liabilities, Net				(2,472	)
	100	.0%	Net Assets				965,978

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 98.7% of net assets
Automobiles & Components 0.5%
Other Securities			0.5		4,893
Banks 7.0%
Washington Federal, Inc.	171,039		0.2		2,220
Other Securities			6.8		65,077
			7.0		67,297
Capital Goods 10.0%
EMCOR Group, Inc. *	117,104		0.3		2,435
Gardner Denver, Inc. *	87,512		0.2		2,330
Nordson Corp.	61,043		0.2		2,215
Regal-Beloit Corp.	62,547		0.3		2,541
Watsco, Inc.	55,882		0.2		2,400
Other Securities			8.8		84,518
			10.0		96,439
Commercial & Professional Supplies 3.7%
Other Securities			3.7		36,100
Consumer Durables & Apparel 3.8%
Jarden Corp. *	138,808		0.3		2,790
Phillips-Van Heusen Corp.	92,100		0.3		2,674
The Warnaco Group, Inc. *	92,763		0.3		2,675
Wolverine World Wide, Inc.	98,936		0.2		2,061
Other Securities			2.7		26,272
			3.8		36,472
Consumer Services 4.8%
Bally Technologies, Inc. *	98,062		0.3		2,567
Jack in the Box, Inc. *	101,588		0.3		2,498
WMS Industries, Inc. *	89,551		0.3		2,875
Other Securities			3.9		38,487
			4.8		46,427
Diversified Financials 3.0%
AmeriCredit Corp. *	235,100		0.3		2,391
Stifel Financial Corp. *	42,150		0.2		2,075
Other Securities			2.5		24,830
			3.0		29,296
Energy 6.7%
World Fuel Services Corp.	57,978		0.2		2,211
Other Securities			6.5		62,130
			6.7		64,341
Food & Staples Retailing 1.1%
Casey’s General Stores, Inc.	90,926		0.2		2,419
Other Securities			0.9		8,025
			1.1		10,444
Food, Beverage & Tobacco 1.8%
Green Mountain Coffee Roasters, Inc. *	29,800		0.2		2,155
Other Securities			1.6		15,700
			1.8		17,855
Health Care Equipment & Services 6.6%
LifePoint Hospitals, Inc. *	95,641		0.2		2,472
NuVasive, Inc. *	64,700		0.2		2,452
The Cooper Cos., Inc.	80,500		0.2		2,314
West Pharmaceutical Services, Inc.	63,465		0.2		2,072
Other Securities			5.8		54,256
			6.6		63,566
Household & Personal Products 0.7%
Other Securities			0.7		7,047

See financial notes 43

 Schwab Small-Cap Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Insurance 2.9%
Other Securities			2.9		27,671
Materials 4.3%
Ashland, Inc.	118,400		0.3		2,600
Eagle Materials, Inc.	77,890		0.2		2,165
Rock-Tenn Co., Class A	68,400		0.3		2,583
Other Securities			3.5		33,865
			4.3		41,213
Media 1.1%
Other Securities			1.1		11,105
Pharmaceuticals, Biotechnology & Life Sciences 4.7%
Dendreon Corp. *	173,500		0.4		3,678
Dionex Corp. *	36,344		0.2		2,290
Other Securities			4.1		38,991
			4.7		44,959
Real Estate 6.9%
Corporate Office Properties Trust	92,349		0.3		2,822
MFA Financial, Inc.	396,064		0.2		2,333
National Retail Properties, Inc.	150,826		0.3		2,676
OMEGA Healthcare Investors, Inc.	147,258		0.2		2,315
Tanger Factory Outlet Centers, Inc.	62,034		0.2		2,067
Other Securities			5.7		54,008
			6.9		66,221
Retailing 4.6%
Chico’s FAS, Inc. *	293,200		0.2		2,240
Rent-A-Center, Inc. *	130,705		0.3		2,516
Tractor Supply Co. *	55,200		0.2		2,229
Williams-Sonoma, Inc.	155,000		0.2		2,170
Other Securities			3.7		35,574
			4.6		44,729
Semiconductors & Semiconductor Equipment 4.5%
International Rectifier Corp. *	142,500		0.2		2,405
PMC-Sierra, Inc. *	432,923		0.3		3,429
Skyworks Solutions, Inc. *	313,308		0.3		2,770
Other Securities			3.7		35,185
			4.5		43,789
Software & Services 7.1%
Convergys Corp. *	218,400		0.2		2,208
Digital River, Inc. *	61,200		0.2		2,351
Informatica Corp. *	171,381		0.3		2,725
Other Securities			6.4		60,815
			7.1		68,099
Technology Hardware & Equipment 6.6%
3Com Corp. *	803,119		0.3		3,253
ADTRAN, Inc.	98,005		0.2		2,073
Arris Group, Inc. *	219,860		0.2		2,346
Palm, Inc. *	196,360		0.2		2,060
Tech Data Corp. *	89,500		0.3		2,577
Other Securities			5.4		51,432
			6.6		63,741
Telecommunication Services 1.1%
Other Securities			1.1		11,034
Transportation 2.2%
Other Securities			2.2		21,193
Utilities 3.0%
Portland General Electric Co.	120,800		0.2		2,207
Suburban Propane Partners L.P.	55,094		0.2		2,204
Other Securities			2.6		24,750
			3.0		29,161
Total Common Stock (Cost $1,185,598)					953,092
Foreign Common Stock 1.2% of net assets
Bermuda 1.2%
Capital Goods 0.1%
Other Securities			0.1		955
Consumer Durables & Apparel 0.1%
Other Securities			0.1		863
Consumer Services 0.1%
Other Securities			0.1		413
Insurance 0.5%
Other Securities			0.5		5,169
Software & Services 0.2%
Other Securities			0.2		2,037
Telecommunication Services 0.1%
Other Securities			0.1		673
Transportation 0.0%
Other Securities			0.0		389
Utilities 0.1%
Other Securities			0.1		526
			1.2		11,025
Liberia 0.0%
Transportation 0.0%
Other Securities			0.0		388
Total Foreign Common Stock (Cost $18,351)					11,413

44 See financial notes

 Schwab Small-Cap Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Preferred Stock 0.1% of net assets
Healthcare - Services 0.1%
Other Securities			0.1		625
Total Preferred Stock (Cost $1,145)					625
Rights 0.0% of net assets
Other Securities			0.0		17
Total Rights (Cost $44)					17
Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investment 0.3% of net assets
Commercial Paper & Other Obligation 0.2%
Citibank, New York Time Deposit
0.03% , 05/01/09	2,344		0.2		2,344
U.S. Treasury Obligations 0.1%
Other Securities			0.1		959
Total Short-Term Investment (Cost $3,303)					3,303
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $1,230,405 and the unrealized appreciation and depreciation were $103,023 and ($364,978), respectively, with a net unrealized depreciation of ($261,955).

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of holdings.
(b)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. Please see complete schedule of holdings.

See financial notes 45

 Schwab Small Cap Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $1,208,441)		$968,450
Receivables:
Dividends		955
Fund shares sold		550
Due from investment adviser		1
Prepaid expenses	+	2
Total assets		969,958
Liabilities
Payables:
Investment adviser and administrator fees		24
Transfer agent and shareholder services fees		11
Fund shares redeemed		3,865
Due to brokers for futures		32
Trustees’ fees		1
Accrued expenses	+	47
Total liabilities		3,980
Net Assets
Total assets		969,958
Total liabilities	−	3,980
Net assets		$965,978
Net Assets by Source
Capital received from investors		1,301,224
Net investment income not yet distributed		5,952
Net realized capital losses		(101,207	)
Net unrealized capital losses		(239,991	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$389,486		30,722			$12.68
Select Shares	$576,492		45,456			$12.68

46 See financial notes

 Schwab Small Cap Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $4)		$11,212
Interest	+	16
Total Investment Income		11,228
Net Realized Gains and Losses
Net realized losses on investments		(46,960	)
Net realized losses on foreign currency transactions		(3	)
Net realized losses on futures contracts	+	(8,724	)
Net realized losses		(55,687	)
Net Unrealized Losses
Net unrealized losses on investments		(24,933	)
Net unrealized losses on futures contracts	+	(989	)
Net unrealized losses		(25,922	)
Expenses
Investment adviser and administrator fees		1,359
Transfer agent and shareholder service fees:
Investor Shares		443
Select Shares		264
Shareholder reports		47
Portfolio accounting fees		34
Professional fees		25
Custodian fees		25
Registration fees		16
Trustees’ fees		10
Interest expense		2
Other expenses	+	10
Total expenses		2,235
Expense reduction by adviser and schwab	−	74
Net expenses		2,161
Increase (Decrease) in Net Assets from Operations
Total investment income		11,228
Net expenses	−	2,161
Net investment income		9,067
Net realized losses		(55,687	)
Net unrealized losses	+	(25,922	)
Decrease in net assets from operations		($72,542	)

See financial notes 47

 Schwab Small Cap Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$9,067			$24,861
Net realized losses			(55,687	)		(48,380	)
Net unrealized losses	+		(25,922	)		(540,995	)
Decrease in net assets from operations			(72,542	)		(564,514	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			8,184			8,132
Select Shares	+		13,636			12,287
Total distributions from net investment income			21,820			20,419
Distributions from net realized gains
Investor Shares			—			106,591
Select Shares	+		—			140,533
Total distributions from net realized gains			—			247,124
Total distributions			$21,820			$267,543

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			2,244			$25,518			4,071			$65,918
Select Shares	+		6,399			71,448			8,084			143,442
Total shares sold			8,643			$96,966			12,155			$209,360
Shares Reinvested
Investor Shares			643			$7,679			5,458			$107,685
Select Shares	+		1,059			12,634			7,095			140,062
Total shares reinvested			1,702			$20,313			12,553			$247,747
Shares Redeemed
Investor Shares			(4,573	)		($49,998	)		(6,996	)		($127,623	)
Select Shares	+		(7,340	)		(82,581	)		(8,050	)		(146,320	)
Total shares redeemed			(11,913	)		($132,579	)		(15,046	)		($273,943	)
Net transactions in fund shares			(1,568	)		($15,300	)		9,662			$183,164
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			77,746			$1,075,640			68,084			$1,724,533
Total increase or decrease	+		(1,568	)		(109,662	)		9,662			(648,893	)
End of period			76,178			$965,978			77,746			$1,075,640
Net investment income not yet distributed						$5,952						$18,705

48 See financial notes

Schwab Total Stock Market Index Fund^®

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		17.03			26.96			23.83			20.77			19.04			17.48
Income (loss) from investment operations:
Net investment income (loss)		0.17			0.36			0.35			0.30			0.29			0.19
Net realized and unrealized gains (losses)		(1.40	)		(9.90	)		3.06			3.01			1.69			1.53
Total from investment operations		(1.23	)		(9.54	)		3.41			3.31			1.98			1.72
Less distributions:
Distributions from net investment income		(0.34	)		(0.33	)		(0.28	)		(0.25	)		(0.25	)		(0.16	)
Distributions from net realized gains		—			(0.06	)		—			—			—			—
Total distributions		(0.34	)		(0.39	)		(0.28	)		(0.25	)		(0.25	)		(0.16	)
Net asset value at end of period		15.46			17.03			26.96			23.83			20.77			19.04
Total return (%)		(7.23	)1		(35.85	)		14.44			16.05			10.45			9.93
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.56	2		0.53			0.52			0.53			0.54			0.56
Gross operating expenses		0.56	2		0.53			0.52			0.53			0.54			0.56
Net investment income (loss)		2.39	2		1.56			1.34			1.27			1.37			1.07
Portfolio turnover rate		2	1		1			0	3		3			2			2
Net assets, end of period ($ x 1,000,000)		396			422			673			607			600			592

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		17.08			27.04			23.90			20.83			19.09			17.52
Income (loss) from investment operations:
Net investment income (loss)		0.18			0.40			0.37			0.31			0.31			0.22
Net realized and unrealized gains (losses)		(1.40	)		(9.93	)		3.09			3.04			1.71			1.54
Total from investment operations		(1.22	)		(9.53	)		3.46			3.35			2.02			1.76
Less distributions:
Distributions from net investment income		(0.37	)		(0.37	)		(0.32	)		(0.28	)		(0.28	)		(0.19	)
Distributions from net realized gains		—			(0.06	)		—			—			—			—
Total distributions		(0.37	)		(0.43	)		(0.32	)		(0.28	)		(0.28	)		(0.19	)
Net asset value at end of period		15.49			17.08			27.04			23.90			20.83			19.09
Total return (%)		(7.13	)1		(35.76	)		14.62			16.23			10.63			10.10
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.39	2		0.38			0.37			0.38			0.39			0.39
Gross operating expenses		0.41	2		0.38			0.37			0.38			0.39			0.41
Net investment income (loss)		2.55	2		1.71			1.49			1.41			1.52			1.23
Portfolio turnover rate		2	1		1			0	3		3			2			2
Net assets, end of period ($ x 1,000,000)		550			585			906			762			617			548

* Unaudited.

¹ Not annualized.

² Annualized.

³ Less than 1%.

See financial notes 49

 Schwab Total Stock Market Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.2%	Common Stock		1,084,714		929,276
	0	.2%	Foreign Common Stock		2,428		1,394
	0	.1%	Preferred Stock		955		1,243
		—%	Rights		13		5
	1	.5%	Short-Term Investments		13,714		13,714
	100	.0%	Total Investments		1,101,824		945,632
	0	.1%	Collateral Invested for Securities on Loan		972		972
	(0	.1)%	Other Assets and Liabilities, Net				(489	)
	100	.0%	Net Assets				946,115

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 98.2% of net assets
Automobiles & Components 0.4%
Other Securities			0.4		3,931
Banks 2.9%
Wells Fargo & Co.	386,406		0.8		7,732
Other Securities			2.1		19,315
			2.9		27,047
Capital Goods 7.6%
3M Co.	65,000		0.4		3,744
General Electric Co.	954,266		1.3		12,071
United Technologies Corp.	88,068		0.5		4,301
Other Securities			5.4		52,171
			7.6		72,287
Commercial & Professional Supplies 1.2%
Other Securities			1.2		11,196
Consumer Durables & Apparel 1.3%
Other Securities			1.3		12,632
Consumer Services 2.2%
McDonald’s Corp.	110,300		0.6		5,878
Other Securities			1.6		14,646
			2.2		20,524
Diversified Financials 5.4%
Bank of America Corp.	577,956		0.6		5,161
JPMorgan Chase & Co.	337,444		1.2		11,136
The Charles Schwab Corp. (c)	111,120		0.2		2,054
The Goldman Sachs Group, Inc.	42,700		0.6		5,487
Other Securities			2.8		27,575
			5.4		51,413
Energy 11.4%
Chevron Corp.	186,939		1.3		12,357
ConocoPhillips	138,223		0.6		5,667
Exxon Mobil Corp.	466,166		3.3		31,079
Occidental Petroleum Corp.	78,020		0.5		4,392
Schlumberger Ltd.	105,000		0.6		5,144
Other Securities			5.1		48,869
			11.4		107,508
Food & Staples Retailing 3.3%
CVS Caremark Corp.	125,640		0.4		3,993
Wal-Mart Stores, Inc.	359,100		1.9		18,099
Other Securities			1.0		9,138
			3.3		31,230
Food, Beverage & Tobacco 5.1%
Kraft Foods, Inc., Class A	147,513		0.4		3,452
PepsiCo, Inc.	140,800		0.7		7,006
Philip Morris International, Inc.	182,800		0.7		6,617
The Coca-Cola Co.	210,200		1.0		9,049
Other Securities			2.3		22,063
			5.1		48,187
Health Care Equipment & Services 4.4%
Other Securities			4.4		41,594
Household & Personal Products 2.3%
The Procter & Gamble Co.	264,215		1.4		13,063

50 See financial notes

 Schwab Total Stock Market Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Other Securities			0.9		8,679
			2.3		21,742
Insurance 4.0%
Berkshire Hathaway, Inc., Class A *	143		1.4		13,442
Other Securities			2.6		24,804
			4.0		38,246
Materials 3.7%
Monsanto Co.	48,290		0.5		4,099
Other Securities			3.2		30,856
			3.7		34,955
Media 3.0%
Comcast Corp., Class A	227,004		0.4		3,510
The Walt Disney Co.	185,410		0.4		4,060
Other Securities			2.2		20,425
			3.0		27,995
Pharmaceuticals, Biotechnology & Life Sciences 7.8%
Abbott Laboratories	136,705		0.6		5,721
Amgen, Inc. *	103,268		0.5		5,005
Bristol-Myers Squibb Co.	177,250		0.4		3,403
Eli Lilly & Co.	106,400		0.4		3,503
Gilead Sciences, Inc. *	84,840		0.4		3,886
Johnson & Johnson	251,370		1.4		13,162
Merck & Co., Inc.	194,552		0.5		4,716
Pfizer, Inc.	610,192		0.9		8,152
Schering-Plough Corp.	144,750		0.4		3,332
Wyeth	119,400		0.6		5,063
Other Securities			1.7		17,916
			7.8		73,859
Real Estate 1.6%
Other Securities			1.6		14,983
Retailing 3.8%
Amazon.com, Inc. *	41,700		0.4		3,358
The Home Depot, Inc.	151,070		0.4		3,976
Other Securities			3.0		28,530
			3.8		35,864
Semiconductors & Semiconductor Equipment 2.4%
Intel Corp.	515,832		0.9		8,140
Other Securities			1.5		14,833
			2.4		22,973
Software & Services 8.2%
Google, Inc., Class A *	28,400		1.2		11,246
Microsoft Corp.	830,850		1.8		16,833
Oracle Corp.	449,449		0.9		8,692
Visa, Inc., Class A	80,000		0.6		5,197
Other Securities			3.7		35,356
			8.2		77,324
Technology Hardware & Equipment 7.5%
Apple, Inc. *	80,000		1.1		10,066
Cisco Systems, Inc. *	541,909		1.1		10,470
Hewlett-Packard Co.	234,636		0.9		8,442
International Business Machines Corp.	126,510		1.4		13,057
QUALCOMM, Inc.	155,100		0.7		6,564
Other Securities			2.3		22,702
			7.5		71,301
Telecommunication Services 3.1%
AT&T, Inc.	540,056		1.5		13,836
Verizon Communications, Inc.	253,572		0.8		7,693
Other Securities			0.8		7,773
			3.1		29,302
Transportation 1.9%
United Parcel Service, Inc., Class B	91,480		0.5		4,788
Other Securities			1.4		13,675
			1.9		18,463
Utilities 3.7%
Other Securities			3.7		34,720
Total Common Stock (Cost $1,084,714)					929,276
Foreign Common Stock 0.2% of net assets
Bermuda 0.2%
Capital Goods 0.0%
Other Securities			0.0		36
Consumer Services 0.0%
Other Securities			0.0		10
Diversified Financials 0.1%
Other Securities			0.1		715
Insurance 0.1%
Other Securities			0.1		407
Software & Services 0.0%
Other Securities			0.0		135
Telecommunication Services 0.0%
Other Securities			0.0		33
			0.2		1,336

See financial notes 51

 Schwab Total Stock Market Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
British Virgin Islands 0.0%
Transportation 0.0%
Other Securities			0.0		58
Total Foreign Common Stock (Cost $2,428)					1,394
Preferred Stock 0.1% of net assets
Health Care Equipment & Services 0.0%
Other Securities			0.0		57
Real Estate 0.1%
Other Securities			0.1		1,186
Total Preferred Stock (Cost $955)					1,243
Rights 0.0% of net assets
Capital Goods 0.0%
Other Securities			0.0		5
Pharmaceuticals 0.0%
Other Securities			0.0		—
Total Rights (Cost $13)					5
Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investments 1.5% of net assets
Commercial Paper & Other Obligations 1.3%
Citibank, New York Time Deposit
0.03%, 05/01/09	12,093		1.3		12,093
U.S. Treasury Obligations 0.2%
Other Securities			0.2		1,621
Total Short-Term Investments (Cost $13,714)					13,714
End of Investments.
Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Collateral Invested for Securities on Loan 0.1% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust	972,130		0.1		972
Total Collateral Invested for Securities on Loan (Cost $972)					972
End of collateral invested for securities on loan.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $1,100,890 and the unrealized appreciation and depreciation were $173,315 and ($328,573), respectively, with a net unrealized depreciation of ($155,258).

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of holdings.
(b)	All or a portion of this security is held as collateral for open futures contracts. Please see complete schedule of holdings.
(c)	Issuer is affiliated with the fund’s adviser.
(d)	Illiquid security. At the period end, the value of these amounted to $3 or 0.0% of net assets. Please see complete schedule of holdings.
(e)	All or a portion of this security is on loan. Please see complete schedule of holdings.

ADR — American Depositary Receipt

REIT — Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contracts
Russell 2000 Index, e-mini, Long, expires 06/19/09		150		7,301		951
S & P 500 Index, e-mini, Long, expires 06/19/09		120		5,220		499
Net unrealized gains on futures						1,450

52 See financial notes

 Schwab Total Stock Market Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value including securities on loan of $912 (cost $1,101,824)		$945,632
Collateral invested for securities on loan		972
Receivables:
Fund shares sold		1,570
Dividends		1,207
Income from securities on loan		61
Foreign tax reclaims		3
Prepaid expenses	+	3
Total assets		949,448
Liabilities
Collateral held for securities on loan		972
Payables:
Investments bought		1,189
Investment adviser and administrator fees		20
Transfer agent and shareholder services fees		12
Fund shares redeemed		1,091
Due to brokers for futures		21
Trustees’ fees		1
Accrued expenses	+	27
Total liabilities		3,333
Net Assets
Total assets		949,448
Total liabilities	−	3,333
Net assets		$946,115
Net Assets by Source
Capital received from investors		1,122,575
Net investment income not yet distributed		7,026
Net realized capital losses		(28,744	)
Net unrealized capital losses		(154,742	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$395,785		25,598			$15.46
Select Shares	$550,330		35,537			$15.49

See financial notes 53

 Schwab Total Stock Market Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (including $13 from affiliated issuer and net of foreign withholding tax of $4)		$13,041
Interest		6
Securities on loan	+	82
Total investment income		13,129
Net Realized Gains and Losses
Net realized losses on investments		(1,845	)
Net realized losses on futures contracts	+	(3,331	)
Net realized losses		(5,176	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(82,883	)
Net unrealized gains on futures contracts	+	1,903
Net unrealized losses		(80,980	)
Expenses
Investment adviser and administrator fees		1,182
Transfer agent and shareholder service fees:
Investor Shares		460
Select Shares		263
Shareholder reports		40
Registration fees		39
Portfolio accounting fees		39
Professional fees		25
Custodian fees		20
Trustees’ fees		10
Other expenses	+	8
Total expenses		2,086
Expense reduction by adviser and Schwab	−	43
Net expenses		2,043
Increase in Net Assets from Operations
Total investment income		13,129
Net expenses	−	2,043
Net investment income		11,086
Net realized losses		(5,176	)
Net unrealized lossses	+	(80,980	)
Decrease in net assets from operations		($75,070	)

54 See financial notes

 Schwab Total Stock Market Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$11,086			$22,422
Net realized losses			(5,176	)		(23,326	)
Net unrealized losses	+		(80,980	)		(562,957	)
Decrease in net assets from operations			(75,070	)		(563,861	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			8,380			8,309
Select Shares	+		12,961			12,465
Total distributions from net investment income			21,341			20,774
Distributions from net realized gains
Investor Shares			—			1,506
Select Shares	+		—			2,022
Total distributions from net realized gains			—			3,528
Total distributions			$21,341			$24,302

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			3,805			$55,640			4,610			$101,344
Select Shares	+		8,537			126,230			8,006			177,993
Total shares sold			12,342			$181,870			12,616			$279,337
Shares Reinvested
Investor Shares			502			$7,748			361			$9,166
Select Shares	+		699			10,803			472			11,987
Total shares reinvested			1,201			$18,551			833			$21,153
Shares Redeemed
Investor Shares			(3,495	)		($50,487	)		(5,154	)		($115,426	)
Select Shares	+		(7,951	)		(114,532	)		(7,746	)		(169,194	)
Total shares redeemed			(11,446	)		($165,019	)		(12,900	)		($284,620	)
Net transactions in fund shares			2,097			$35,402			549			$15,870
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			59,038			$1,007,124			58,489			$1,579,417
Total increase or decrease	+		2,097			(61,009	)		549			(572,293	)
End of period			61,135			$946,115			59,038			$1,007,124
Net investment income not yet distributed						$7,026						$17,281

See financial notes 55

Schwab International Index Fund^®

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		13.94			25.92			21.12			17.07			14.82			12.74
Income (loss) from investment operations:
Net investment income (loss)		0.22			0.63			0.50			0.48			0.35			0.26
Net realized and unrealized gains (losses)		(1.05	)		(12.10	)		4.92			3.92			2.18			2.05
Total from investment operations		(0.83	)		(11.47	)		5.42			4.40			2.53			2.31
Less distributions:
Distributions from net investment income		(0.61	)		(0.51	)		(0.62	)		(0.35	)		(0.28	)		(0.23	)
Net asset value at end of period		12.50			13.94			25.92			21.12			17.07			14.82
Total return (%)		(6.00	)1		(45.09	)		26.26			26.15			17.30			18.40
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.69	2		0.68			0.69			0.69			0.68			0.69
Gross operating expenses		0.73	2		0.69			0.69			0.70			0.72			0.73
Net investment income (loss)		3.09	2		2.95			2.15			2.41			2.05			1.78
Portfolio turnover rate		9	1		10			5			11			10			1
Net assets, end of period ($ x 1,000,000)		398			469			872			706			595			550

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		13.95			25.95			21.14			17.09			14.83			12.75
Income (loss) from investment operations:
Net investment income (loss)		0.20			0.68			0.54			0.50			0.38			0.28
Net realized and unrealized gains (losses)		(1.02	)		(12.13	)		4.93			3.93			2.19			2.05
Total from investment operations		(0.82	)		(11.45	)		5.47			4.43			2.57			2.33
Less distributions:
Distributions from net investment income		(0.64	)		(0.55	)		(0.66	)		(0.38	)		(0.31	)		(0.25	)
Net asset value at end of period		12.49			13.95			25.95			21.14			17.09			14.83
Total return (%)		(5.86	)1		(45.02	)		26.50			26.35			17.56			18.56
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.50	2		0.50			0.50			0.50			0.50			0.50
Gross operating expenses		0.58	2		0.54			0.54			0.55			0.57			0.58
Net investment income (loss)		3.28	2		3.15			2.34			2.60			2.23			1.97
Portfolio turnover rate		9	1		10			5			11			10			1
Net assets, end of period ($ x 1,000,000)		646			711			1,264			954			776			687

* Unaudited.

¹ Not annualized.

² Annualized.

56 See financial notes

 Schwab International Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.5%	Common Stock		1,022,869		1,029,112
	0	.2%	Preferred Stock		3,232		2,034
		—%	Rights		—		—
	0	.3%	Other Investment Company		2,336		2,934
	0	.5%	Short-Term Investment		5,101		5,101
	99	.5%	Total Investments		1,033,538		1,039,181
	0	.5%	Other Assets and Liabilities, Net				5,528
	100	.0%	Net Assets				1,044,709

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 98.5% of net assets
Australia 6.3%
BHP Billiton Ltd.	551,567		1.3		13,325
Commonwealth Bank of Australia	232,449		0.6		5,939
Westpac Banking Corp.	478,668		0.6		6,673
Other Securities			3.8		39,664
			6.3		65,601
Austria 0.2%
Other Securities			0.2		2,193
Belgium 0.7%
Other Securities			0.7		7,073
Bermuda 0.1%
Other Securities			0.1		1,048
Canada 9.2%
EnCana Corp.	120,062		0.5		5,503
Research In Motion Ltd. *	78,948		0.5		5,454
Royal Bank of Canada	223,468		0.8		7,922
The Toronto-Dominion Bank	135,532		0.5		5,350
Other Securities			6.9		71,765
			9.2		95,994
Denmark 0.7%
Other Securities			0.7		7,652
Finland 1.0%
Nokia Oyj	613,039		0.8		8,707
Other Securities			0.2		2,116
			1.0		10,823
France 11.0%
BNP Paribas	146,042		0.7		7,688
France Telecom S.A.	304,264		0.6		6,755
GDF Suez	225,749		0.8		8,108
Sanofi-Aventis	165,635		0.9		9,592
Total S.A.	379,677		1.8		18,997
Other Securities			6.2		63,891
			11.0		115,031
Germany 8.6%
Allianz SE - Reg’d	72,500		0.6		6,690
BASF SE *	148,324		0.5		5,597
Bayer AG *	123,306		0.6		6,129
Daimler AG - Reg’d	155,304		0.5		5,568
Deutsche Telekom AG - Reg’d.	477,162		0.6		5,770
E.ON AG	320,551		1.0		10,840
SAP AG	137,740		0.5		5,296
Siemens AG - Reg’d	146,478		1.0		9,848
Other Securities			3.3		33,793
			8.6		89,531
Greece 0.2%
Other Securities			0.2		2,478
Hong Kong 1.5%
Other Securities			1.5		15,682
Ireland 0.4%
Other Securities			0.4		3,829
Italy 3.1%
Eni S.p.A.	398,855		0.8		8,559
Other Securities			2.3		23,673
			3.1		32,232

See financial notes 57

 Schwab International Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Japan 17.9%
Canon, Inc.	178,995		0.5		5,357
Honda Motor Co., Ltd.	246,739		0.7		7,231
Mitsubishi UFJ Financial Group, Inc.	1,671,009		0.9		9,115
Toyota Motor Corp.	427,803		1.6		16,932
Other Securities			14.2		148,275
			17.9		186,910
Luxembourg 0.3%
Other Securities			0.3		3,136
Netherlands 2.6%
Unilever N.V. CVA	274,655		0.5		5,435
Other Securities			2.1		21,341
			2.6		26,776
Norway 0.5%
Other Securities			0.5		5,236
Portugal 0.3%
Other Securities			0.3		3,103
Singapore 0.6%
Other Securities			0.6		6,604
Spain 4.8%
Banco Bilbao Vizcaya Argentaria S.A.	614,226		0.6		6,657
Banco Santander S.A.	1,304,375		1.2		12,547
Iberdrola S.A.	801,243		0.6		6,310
Telefonica S.A.	753,618		1.4		14,278
Other Securities			1.0		10,773
			4.8		50,565
Sweden 1.7%
Other Securities			1.7		17,572
Switzerland 7.9%
ABB Ltd. - Reg’d *	372,453		0.5		5,273
Credit Suisse Group AG - Reg’d	159,054		0.6		6,215
Nestle S.A. - Reg’d	613,467		1.9		19,997
Novartis AG - Reg’d	423,440		1.5		16,027
Roche Holding AG	112,533		1.4		14,191
UBS AG - Reg’d *	472,086		0.6		6,485
Other Securities			1.4		14,645
			7.9		82,833
United Kingdom 18.8%
AstraZeneca PLC	235,719		0.8		8,254
Barclays plc	1,360,383		0.5		5,523
BG Group plc	545,612		0.8		8,712
BHP Billiton plc	358,112		0.7		7,433
BP plc	2,999,726		2.0		21,198
British American Tobacco plc	280,225		0.6		6,758
GlaxoSmithKline PLC	832,673		1.2		12,826
HSBC Holdings plc	1,946,527		1.3		13,843
Rio Tinto plc	143,473		0.6		5,829
Royal Dutch Shell plc, B share	438,079		0.9		9,914
Royal Dutch Shell plc, Class A	588,320		1.3		13,493
Tesco plc	1,280,582		0.6		6,345
Vodafone Group plc	8,404,590		1.5		15,447
Other Securities			6.0		60,724
			18.8		196,299
United States 0.1%
Other Securities			0.1		911
Total Common Stock (Cost $1,022,869)					1,029,112
Preferred Stock 0.2% of net assets
Germany 0.2%
Other Securities			0.2		2,034
Total Preferred Stock (Cost $3,232)					2,034
Rights 0.0% of net assets
Other Securities			0.0		—
Total Rights (Cost $-)					—-
Other Investment Company 0.3% of net assets
United States 0.3%
iShares MSCI EAFE Index Fund	70,00		0.3		2,934
Total Other Investment Company (Cost $2,336)					2,934
Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investment 0.5% of net assets
Citibank, New York Time Deposit
0.03%, 05/01/09	5,101		0.5		5,101
Total Short-Term Investment (Cost $5,101)					5,101
End of Investments.

58 See financial notes

 Schwab International Index Fund

Portfolio Holdings (Unaudited) continued

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $1,044,172 and the unrealized appreciation and depreciation were $223,013 and ($228,004), respectively, with a net unrealized appreciation of ($4,991).

At 04/30/09, the values of certain foreign securities held by the fund aggregating $893,029 were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of holdings.
(b)	Illiquid security. At the period end, the value of these amounted to $38 or 0.0% of net assets. Please see complete schedule of holdings.

CVA — Dutch Certificate

Reg’d — Registered

See financial notes 59

 Schwab International Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $1,033,538)		$1,039,181
Foreign currency, at value (cost $673)		673
Receivables:
Dividends		4,698
Foreign tax reclaims		980
Fund shares sold		730
Prepaid expenses	+	4
Total assets		1,046,266
Liabilities
Payables:
Investments bought		49
Investment adviser and administrator fees		32
Transfer agent and shareholder services fees		11
Fund shares redeemed		1,347
Accrued expenses	+	118
Total liabilities		1,557
Net Assets
Total assets		1,046,266
Total liabilities	−	1,557
Net assets		$1,044,709
Net Assets by Source
Capital received from investors		1,319,878
Net investment income not yet distributed		2,036
Net realized capital losses		(282,865	)
Net unrealized capital gains		5,660

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$398,455		31,869			$12.50
Select Shares	$646,254		51,745			$12.49

60 See financial notes

 Schwab International Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $1,945)		$19,321
Interest	+	1
Total investment income		19,322
Net Realized Gains and Losses
Net realized losses on investments		(47,251	)
Net realized gains on foreign currency transactions	+	116
Net realized losses		(47,135	)
Net Unrealized Gains and Losses
Net unrealized losses on investments		(47,421	)
Net unrealized losses on foreign currency translations	+	(56	)
Net unrealized losses		(47,477	)
Expenses
Investment adviser and administrator fees		2,067
Transfer agent and shareholder service fees:
Investor Shares		493
Select Shares		314
Custodian fees		189
Shareholder reports		54
Portfolio accounting fees		47
Registration fees		39
Professional fees		26
Trustees’ fees		11
Interest expenses		8
Other expenses	+	14
Total expenses		3,262
Expense reduction by adviser and Schwab	−	321
Net expenses		2,941
Increase (Decrease) in Net Assets from Operations
Total investment income		19,322
Net expenses	−	2,941
Net investment income		16,381
Net realized losses		(47,135	)
Net unrealized losses	+	(47,477	)
Decrease in net assets from operations		($78,231	)

See financial notes 61

 Schwab International Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$16,381			$55,150
Net realized losses			(47,135	)		(11,824	)
Net unrealized losses	+		(47,477	)		(992,846	)
Decrease in net assets from operations			(78,231	)		(949,520	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			19,181			17,168
Select Shares	+		33,020			26,872
Total distributions from net investment income			$52,201			$44,040

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			3,792			$46,830			6,740			$126,669
Select Shares	+		6,679			82,142			10,127			200,887
Total shares sold			10,471			$128,972			16,867			$327,556
Shares Reinvested
Investor Shares			1,390			$17,442			646			$15,700
Select Shares	+		2,394			29,992			992			24,068
Total shares reinvested			3,784			$47,434			1,638			$39,768
Shares Redeemed
Investor Shares			(6,943	)		($82,405	)		(7,378	)		($151,710	)
Select Shares	+		(8,281	)		(98,292	)		(8,895	)		(178,511	)
Total shares redeemed			(15,224	)		($180,697	)		(16,273	)		($330,221	)
Net transactions in fund shares			(969	)		($4,291	)		2,232			$37,103
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			84,583			$1,179,432			82,351			$2,135,889
Total increase or decrease	+		(969	)		(134,723	)		2,232			(956,457	)
End of period			83,614			$1,044,709			84,583			$1,179,432
Net investment income not yet distributed						$2,036						$37,856

62 See financial notes

 Schwab Equity Index Funds

Financial Notes

1. Business Structure of the Funds:

Each of the funds discussed in this report is a series of Schwab Capital Trust, except Schwab 1000 Index Fund, which is a series of Schwab Investments. Both Capital Trust and Schwab Investments (the “trusts”), are no-load, open-end management investment companies. Each trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trusts including the funds discussed in this report, which are highlighted:

Schwab Capital Trust (organized May 7, 1993)
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MartketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Balanced Fund (formerly Schwab Viewpoints Fund)
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund—Moderate Payout
Schwab Monthly Income Fund—Enhanced Payout
Schwab Monthly Income Fund—Maximum Payout

Schwab Investments (organized October 26, 1990)
Schwab 1000 Index Fund
Schwab YieldPlus Fund
Schwab Short-Term Bond Market Fund
Schwab Total Bond Market Fund
Schwab GNMA Fund
Schwab Inflation Protected Fund
Schwab Tax-Free YieldPlus Fund
Schwab Tax-Free Bond Fund
Schwab California Tax-Free YieldPlus Fund
Schwab California Tax-Free Bond Fund
Schwab Global Real Estate Fund

The Schwab Equity Index Funds, with the exception of Schwab Institutional Select S&P 500 Fund, offer multiple share classes. Shares of each class represent interest in the same portfolio. The e.Shares^®, are available only to clients of Schwab Institutional^®, Charles Schwab Trust Company and certain tax-advantaged retirement plans, and can only be traded electronically. Schwab S&P 500 Index Fund offers three classes of shares: Investor Shares, Select Shares^® and e.Shares^®. Schwab 1000 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund each offer two classes of shares: Investor Shares and Select Shares^®. Schwab Institutional Select S&P 500 Fund offers one share class.

Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares of a fund or share class, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund also may keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

       (All dollar amounts are x 1,000)

The following is a summary of the significant accounting policies the funds use in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America.

63

 Schwab Equity Index Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(a) Security Valuation:

The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:

Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate.

•  Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when a security 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. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  International Fair Valuation: The Board of Trustees has adopted procedures to fair value foreign securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. 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 of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  Futures and Forwards: valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day’s exchange rates (for forwards).

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

•  Underlying funds: valued at their respective net asset values as determined by those funds in accordance with the 1940 Act for a given day.

(b) Portfolio Investments:

Futures Contract: The funds may invest in futures contracts. Futures contracts involve certain risks because they can be very sensitive to market movements.

One risk is that the price of a futures contract may not move in perfect correlation with the price of the underlying securities. Another risk is that, at certain times, it may be impossible for a fund to close out a position in a futures contract, due to a difference in trading hours or to market conditions that may reduce the liquidity for a futures contract or its underlying securities. The potential for losses associated with futures contracts may exceed amounts recorded in the Statement of Assets and Liabilities.

Because futures contracts carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the future contract and are accounted for as unrealized gains or losses. Futures are traded publicly on exchanges, and their market value changes daily.

Forward Currency Contract: The Schwab International Index Fund may invest in forward currency contracts in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange

64 

 Schwab Equity Index Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

rates. “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. Forwards are similar to futures except that they are not publicly traded, but are agreements directly between two parties.

As with futures, forwards involve certain risks that are not fully reflected in the funds’ financials. If counter-parties to the contracts or if the value of the foreign currency changes unfavorably, the funds could sustain a loss.

Repurchase Agreements: The funds may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created.

The funds’ repurchase agreements will be fully collateralized by U.S. government securities or U.S. government agency securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Securities Lending: The funds may loan securities to certain brokers, dealers and other financial institutions that pay the funds negotiated fees. The funds receive cash, letters of credit or U.S. government securities as collateral on these loans. All of the cash collateral received is reinvested in high quality, short-term investments. The value of the collateral must be at least 102% of the market value of the loaned securities as of the first day of the loan, and at least 100% each day thereafter. If the value of the collateral falls below 100%, it will be adjusted the following day.

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Gains realized by the funds on the sale of securities in certain foreign countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to/from broker”).

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date.

(e) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to its average daily net assets.

(f) Distributions to Shareholders:

The funds make distributions from net investment income and net realized capital gains once a year.

65

 Schwab Equity Index Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(g) Custody Credit:

Certain funds have an arrangement with their custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset their custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.

(i) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(j) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.

(k) Accounting Pronouncements:

The funds adopted Financial Accounting Standard Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments)

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 funds’ investments as of April 30, 2009:

	S&P 500 Index Fund				Institutional Select S&P 500 Fund				1000 Index Fund
Valuation	Investments in		Other Financial		Investments in		Other Financial		Investments in		Other Financial
Inputs	Securities		Instruments*		Securities		Instruments*		Securities		Instruments*
Level 1		$4,553,088		$2,605		$2,413,924		$6,862		$3,704,417		$215
Level 2		33,958		—		54,287		—		1,538		—
Level 3		—		—		—		—		—		—
Total		$4,587,046		$2,605		$2,468,211		$6,862		$3,705,955		$215

66 

 Schwab Equity Index Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

	Small-Cap Index Fund				Total Stock Market Index Fund				International Index Fund
Valuation	Investments in		Other Financial		Investments in		Other Financial		Investments in		Other Financial
Inputs	Securities		Instruments**		Securities		Instruments*		Securities		Instruments**
Level 1		$965,147		$—		$931,915		$1,450		$141,013		$—
Level 2		3,303		—		13,714		—		898,130		—
Level 3		—		—		3		—		38		—
Total		$968,450		$—		$945,632		$1,450		$1,039,181		$—

*  Other Financial Instruments are future or forward contracts which are not included in Portfolio Holdings and are valued at unrealized appreciation or depreciation.

**  The fund had no Other Financial Instruments.

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

	Investments in Securities
	Total
	Stock Market			International
	Index Fund			Index Fund
Balance as of 11/01/08		$3			$—
Accrued discount/premiums		—			—
Realized gain (loss)		—			—
Change in unrealized appreciation (depreciation)		1			1
Net purchase (sales)		(1	)		37
Transfer in and/or out of Level 3		—			—
Balance as of 04/30/09		3			38

All net realized and unrealized gains (losses) in the table above are reflected in the accompanying statement of operations. Net unrealized gains (losses) relate to those financial instruments held by the Fund at April 30, 2009.

In April 2009, the FASB issued FASB Staff Position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the funds’ or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the funds’ financial statement disclosures.

3. Risk Factors:

Investing in the funds may involve certain risks, as described in the prospectus, including, but not limited to, those described below:

Stock markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of your investment in a fund will fluctuate, which means that you could lose money.

Your investment follows either the U.S. stock market or the performance of a mix of international large-cap stocks, as measured by an index. It follows this market during upturns as well as downturns. Because of its indexing strategy, the funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the funds’ expenses, the funds’ performance is normally below that of the index.

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. Individual companies may report poor results or be negatively affected by industry

67

 Schwab Equity Index Funds

Financial Notes (continued)

3. Risk Factors (continued):

and/or economic trends and developments. The prices of securities issued by such companies may suffer a decline in response. In addition, the equity market tends to move in cycles which may cause stock prices to fall over short or extended periods of time.

Historically, small-cap stocks have been riskier than large and mid-cap stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply especially during market upturns and downturns. Small-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — bonds or large-cap stocks, for instance — a fund’s performance also will lag those investments.

A fund’s investment in securities of foreign issuers involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risk of adverse changes in foreign economic, political, regulatory and other conditions, or changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges). In certain countries, legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and, at times more volatile than securities of comparable U.S. companies. A fund may also experience more rapid or extreme changes in value as compared to a fund that invests solely in securities of U.S. companies because the securities markets of many foreign countries are relatively small with a limited number of companies representing a small number of industries.

Please refer to the funds’ prospectus for a complete description of the principal risks of investing in the funds.

4. Affiliates and Affiliated Transactions:

       (All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

For its advisory and administrative services to each fund, the investment adviser is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:

			Institutional
	S&P 500		Select S&P		1000
Average daily net assets	Index Fund		500 Fund		Index Fund
First $500 million		0.15%		0.15%		0.30%
$500 million to $5 billion		0.09%		0.09%		0.22%
$5 billion to $10 billion		0.08%		0.08%		0.20%
over $10 billion		0.07%		0.07%		0.18%

			Total
	Small-Cap		Stock Market		International
Average daily net assets	Index Fund		Index Fund		Index Fund
First $500 million		0.33%		0.30%		0.43%
Over $500 million		0.28%		0.22%		0.38%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

68 

 Schwab Equity Index Funds

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

For its transfer agent and shareholder services, Schwab is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:

	Transfer Agent Fees		Shareholder Service Fees
Investor Shares		0.05%		0.20%
Select Shares		0.05%		0.05%
e. Shares*		0.05%		0.05%
Institutional Select Shares*		0.05%		0.05%

*  e.Shares is only offered by S&P 500 Index Fund and Institutional Select Shares is only offered by Institutional Select S&P 500 Fund.

Although these agreements specify certain fees for these services, CSIM and Schwab had previously made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses, through February 27, 2011, as follows:

Institutional

Total

S&P 500

Select S&P

1000

Small-Cap

Stock Market

International

Index Fund

500 Fund

Index Fund

Index Fund

Index Fund

Index Fund

Investor Shares

0.37%

n/a

0.51%

0.60%

0.58%

0.69%

Select Shares

0.19%

n/a

0.36%

0.42%

0.39%

0.50%

e.Shares*

0.28%

n/a

n/a

n/a

n/a

n/a

Institutional Select Shares*

n/a

0.10%

n/a

n/a

n/a

n/a

Effective May 5, 2009, CSIM and Schwab have agreed to limit the net operating expenses charged, excluding interest, taxes and certain non-routine expenses for as long as CSIM serves as the adviser, as follows:

Institutional

Total

S&P 500

Select S&P

1000

Small-Cap

Stock Market

International

Index Fund

500 Fund

Index Fund

Index Fund

Index Fund

Index Fund

Investor Shares

0.09%

n/a

0.29%

0.19%

0.09%

0.19%

Select Shares

0.09%

n/a

0.29%

0.19%

0.09%

0.19%

e.Shares*

0.09%

n/a

n/a

n/a

n/a

n/a

Institutional Select Shares*

n/a

0.09%

n/a

n/a

n/a

n/a

*  e.Shares is only offered by S&P 500 Index Fund and Institutional Select Shares is only offered by Institutional Select S&P 500 Fund.

Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentage of each Equity Index Fund owned by other Schwab Funds as of April 30, 2009.

69

 Schwab Equity Index Funds

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):
(All dollar amounts are x 1,000)

			Institutional
	S&P 500		Select S&P			Small-Cap		International
	Index Fund		500 Fund			Index Fund		Index Fund
Schwab MarketTrack Portfolios:
All Equity Portfolio		—%		6.6%			10.2%		10.9%
Growth Portfolio		—%		8.0%			10.7%		9.5%
Balanced Portfolio		—%		4.6%			6.1%		5.6%
Conservative Portfolio		0.3%		1.4%			2.6%		2.4%
Schwab Annuity Portfolios:
Growth Portfolio II		—%		0.3%			0.6%		0.6%
Schwab Target Funds:
Target 2010		—%		0.2%			—%		—%
Target 2015		—%		0.0%	*		—%		—%
Target 2020		—%		0.8%			—%		—%
Target 2025		—%		0.1%			—%		—%
Target 2030		—%		0.8%			—%		—%
Target 2035		—%		0.1%			—%		—%
Target 2040		—%		0.7%			—%		—%

*  Less than 0.05%

As of April 30, 2009, the shares owned by the Charitable Giving Trust as a percentage of the total shares of the Schwab Institutional Select S&P 500 Fund was 1.59%.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2009, each fund’s total security transactions with other Schwab Funds were as follows:

S&P 500 Index	$—
Institutional Select S&P 500 Fund	111,447
1000 Index Fund	56,297
Small-Cap Index Fund	56,297
Total Stock Market Index Fund	—
International Index Fund	—

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for any fund during the period.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limit the percentage of such “interested persons” who may serve on a trust’s board, and the trusts were in compliance with these limitations throughout the report period. The trusts did not pay any of these persons for their service as trustees, but the trusts did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.

6. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds covered in this report have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of

70 

 Schwab Equity Index Funds

Financial Notes (continued)

6. Borrowing from Banks (continued):

America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.

The funds had no borrowings from the line of credit during the period. However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

7. Purchases and Sales of Investment Securities:

       (All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
S&P 500 Index Fund		$103,166		$102,483
Institutional Select S&P 500 Fund		336,399		12,561
1000 Index Fund		110,083		233,094
Small-Cap Index Fund		252,641		225,788
Total Stock Market Index Fund		43,769		15,382
International Index Fund		90,754		130,920

8. Redemption Fee:

       (All dollar amounts are x 1,000)

The funds charges a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current period and prior fiscal year are:

	Current Period		Prior Period
	(11/01/08-4/30/09)		(11/01/07-10/31/08)
S&P 500 Index Fund		$164		$167
Institutional Select S&P 500 Fund		76		76
1000 Index Fund		99		103
Small-Cap Index Fund		23		18
Total Stock Market Index Fund		50		43
International Index Fund		19		29

9. Other:

       (All dollar amounts are x 1,000)

As of the close of business on September 18, 2008, Lehman Brothers Holdings Inc. was in default of the security lending agreement with the Schwab S&P 500 Index Fund, Schwab Institutional Select S&P 500 Fund, Schwab 1000 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund (“the Funds”). As a result, the Funds took possession of the collateral and repurchased the securities on a loan through open market purchases. The collateral held exceeded the replacement value of the securities. In accordance with Accounting for Transfers of Financial Assets and Repurchase Financing Transactions (“FAS 140”) the Funds recognized the following gains or losses that are not recognized for federal income tax purposes:

Schwab S&P 500 Index Fund	$980
Schwab Institutional Select S&P 500 Fund	(2,613	)
Schwab 1000 Index Fund	27,130
Schwab Small-Cap Index fund	(20,239	)
Schwab Total Stock Market Index Fund	1,738
Schwab International Index Fund	(101	)

71

 Schwab Equity Index Funds

Financial Notes (continued)

10. Federal Income Taxes:

       (All dollar amounts are x 1,000)

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2008, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

			Institutional						Total
	S&P 500		Select S&P		1000		Small-Cap		Stock Market		International
	Index Fund		500 Fund		Index Fund		Index Fund		Index Fund		Index Fund
2009		$7,194		$6,440		$—		$—		$—		$61,592
2010		400,268		27,646		—		—		—		112,722
2011		72,381		1,609		—		—		—		39,016
2012		29,212		—		—		—		—		8,278
2013		175,896		—		—		—		—		—
2014		109,257		2,359		—		—		—		—
2015		—		—		—		—		—		—
2016		47,044		89,645		9,317		7,310		25,404		3,212
Total		$841,252		$127,699		$9,317		$7,310		$25,404		$224,820

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended April 30, 2009, the Funds did not incur any interest or penalties.

11. Subsequent Event:

The Board of Trustees of the Trust (the “Board”) has approved an Agreement and Plan of Reorganization that would provide for the reorganization of the Institutional Select S&P 500 Fund into the S&P 500 Fund. On or about September 9, 2009, the Institutional Select S&P 500 Fund will transfer its assets and liabilities to the S&P 500 Fund, and subsequently distribute those S&P 500 Fund shares to the shareholders of the Institutional Select S&P 500 Fund (the “Reorganization”). After the Reorganization is completed, shareholders of the Institutional Select S&P 500 Fund will become shareholders of the S&P 500 Fund. The Reorganization is intended to be tax-free, meaning that the Institutional Select S&P 500 Fund’s shareholders will become shareholders of the S&P 500 Fund without realizing any gain or loss for federal income tax purposes.

72 

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

73

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

74 

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

75

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

76 

Schwab Funds^® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.

Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large^* Company Index Fund

Schwab Fundamental US Small-Mid^* Company Index Fund

Schwab Fundamental International^* Large Company Index Fund

Schwab Fundamental International^* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets^* Index Fund

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity¹. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.

^* SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

¹ Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC^®

Printed on recycled paper.

MFR13562-12

Semiannual report dated April 30, 2009 enclosed.

Schwab Fundamental Index* Funds

Schwab Fundamental US Large* Company Index Fund

Schwab Fundamental US Small-Mid* Company Index Fund

Schwab Fundamental

International* Large Company

Index Fund

Schwab Fundamental

International* Small-Mid

Company Index Fund

Schwab Fundamental

Emerging Markets* Index Fund

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*  SCHWAB is a registered trademark of Charles Schwab & Co., Inc.
FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

This wrapper is not part of the shareholder report.

Schwab Fundamental Index* Funds

Semiannual Report

April 30, 2009

Schwab Fundamental US Large* Company Index Fund

Schwab Fundamental US Small-Mid* Company Index Fund

Schwab Fundamental

International* Large Company

Index Fund

Schwab Fundamental

International* Small-Mid

Company Index Fund

Schwab Fundamental

Emerging Markets* Index Fund

*  SCHWAB is a registered trademark of Charles Schwab & Co., Inc.
FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

This page is intentionally left blank.

Schwab Fundamental Index Funds

In This Report
Performance at a Glance	2
From the President	3
The Investment Environment	4
Fund Management	5
Schwab Fundamental US Large Company Index Fund	6
Schwab Fundamental US Small-Mid Company Index Fund	8
Schwab Fundamental International Large Company Index Fund	10
Schwab Fundamental International Small-Mid Company Index Fund	12
Schwab Fundamental Emerging Markets Index Fund	14
Fund Expenses	16
Financial Statements	18
Financial Notes	58
Trustees and Officers	67
Glossary	70

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for
the Report Period
Schwab Fundamental US Large* Company Index Fund
Investor Shares (Ticker Symbol: SFLVX)	-4.85%
Select Shares® (Ticker Symbol: SFLSX)	-4.81%
Institutional Shares (Ticker Symbol: SFLNX)	-4.83%
Benchmark: FTSE RAFI US 1000 Index®	-4.76%
Fund Category: Morningstar Large-Cap Value	-9.07%
Performance Details	pages 6-7
Schwab Fundamental US Small-Mid* Company Index Fund
Investor Shares (Ticker Symbol: SFSVX)	-0.67%
Select Shares® (Ticker Symbol: SFSSX)	-0.48%
Institutional Shares (Ticker Symbol: SFSNX)	-0.49%
Benchmark: FTSE RAFI US Mid Small 1500 Index®	-1.05%
Fund Category: Morningstar Small-Cap Blend	-5.44%
Performance Details	pages 8-9
Schwab Fundamental International* Large Company Index Fund
Investor Shares (Ticker Symbol: SFNVX)1	-0.16%
Select Shares® (Ticker Symbol: SFNSX)1,2	0.03%
Institutional Shares (Ticker Symbol: SFNNX)1	-0.02%
Benchmark: FTSE RAFI Developed ex US 1000 Index®	2.62%
Fund Category: Morningstar Foreign Large-Cap Blend	-3.30%
Performance Details	pages 10-11
Schwab Fundamental International* Small-Mid Company Index Fund
Investor Shares (Ticker Symbol: SFIVX)1	7.86%
Select Shares® (Ticker Symbol: SFSMX)1	7.96%
Institutional Shares (Ticker Symbol: SFILX)1	7.85%
Benchmark: FTSE RAFI Developed ex US Mid Small 1500 Index	11.99%
Fund Category: Morningstar Foreign Small/Mid Growth	3.44%
Performance Details	pages 12-13
Schwab Fundamental Emerging Markets* Index Fund
Investor Shares (Ticker Symbol: SFEMX)1	17.79%
Select Shares® (Ticker Symbol: SFESX)1	17.89%
Institutional Shares (Ticker Symbol: SFENX)1	17.82%
Benchmark: FTSE RAFI Emerging Index®	21.02%
Fund Category: Morningstar Diversified Emerging Markets	12.10%
Performance Details	pages 14-15
Minimum Initial Investment3
Investor Shares	$    100
Select Shares	$    100
Institutional Shares	$    100

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Index ownership—“FTSE^®” is trademark of The Financial Times Limited (“FT”) and the London Exchange Plc (the “Exchange”) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of Research Affiliates LLC (“RA”). The Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by FTSE or RA, and FTSE and RA do not make any representation regarding the advisability of investing in shares of the fund.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Source for category information: Morningstar, Inc.

*	SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.
1	The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.
2	Return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the financial highlights section of the report is calculated in the same manner, but also taking into account certain adjustments that are necessary under generally accepted accounting principles which are required when preparing the semiannual report.
3	Please see prospectus for further detail and eligibility requirements.

2 Schwab Fundamental Index Funds

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

With this in mind, we’ve made a number of improvements to the Schwab Funds family of mutual funds making investing cheaper and easier for our clients. I am pleased to report that on May 5, 2009, we lowered expenses on Schwab Equity Index Funds and announced that we are simplifying share classes for Schwab equity and bond funds. Each Schwab equity and bond fund offers one low fund expense to investors regardless of how much they invest, starting at a low $100 minimum investment. Our goal is to make investing easier for our clients and the advisors who serve them−at a very low cost.

These enhancements are intended to help our clients continue to invest no matter what the market conditions may be. We hope that each and every client feels more comfortable planning for a financially secure future knowing that we are constantly working to make investing easier and more affordable.

Thank you for investing with us.

Sincerely,

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Schwab Fundamental Index Funds 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Schwab Fundamental Index Funds

Fund Management

	Jeffrey Mortimer, CFA, Chief Investment Officer, Charles Schwab Investment Management, is responsible for the overall management of each of the funds. Prior to joining the firm in October 1997, he worked for more than 8 years in asset management.
	Larry Mano, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of each of the funds. Prior to joining the firm in November 1998, he worked for 20 years in equity management.
	Ron Toll, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. He joined the firm in 1998, became Manager, Portfolio Operations in 2000, Manager, Portfolio Operations and Analytics in 2005 and was named to his current position in 2007.

Schwab Fundamental Index Funds 5

Schwab Fundamental US Large* Company
Index Fund

Schwab Fundamental US Large Company Index Fund Investor Shares returned -4.85% during the period, compared to the benchmark FTSE RAFI US 1000 Index, which returned -4.76%. The FTSE RAFI US 1000 Index includes the largest listed companies incorporated in the United States ranked by fundamental value. Unlike the fund, the index does not bear operational and transactional costs.

From a total return standpoint, losses in the fund were primarily the result of declines in Financials, Industrials, and Consumer Staples; Financials, down the most, returned -30.37%, while Industrials and Consumer Staples returned -11.16% and -7.38%, respectively. Consumer Discretionary, up 16.02%, and Information Technology, up 6.20%, acted to offset. In terms of market capitalization, small- and mid-cap stocks in the fund generally outperformed large-cap stocks. Better performing stocks in the fund included Ford Motor Corp., Goldman Sachs, and Morgan Stanley. Stocks detracting from performance were led by Citigroup, Inc., Bank of America Corp. and Wells Fargo.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 981

Weighted Average Market

  Cap ($ x 1,000,000) $44,323

Price/Earnings Ratio (P/E) -2.1

Price/Book Ratio (P/B) 1.2

Portfolio Turnover Rate² 31%

 Sector Weightings % of Investments

Financials 25.8%

Consumer Discretionary 15.4%

Industrials 11.8%

Information Technology 10.4%

Energy 8.7%

Consumer Staples 8.1%

Health Care 7.5%

Materials 4.7%

Utilities 3.9%

Telecommunication Services 3.3%

Other 0.4%

Total 100.0%

 Top Holdings % Net Assets³

Bank of America Corp. 3.7%

Citigroup, Inc. 2.8%

General Electric Co. 2.7%

Exxon Mobil Corp. 2.2%

Ford Motor Co. 1.9%

JPMorgan Chase & Co. 1.8%

AT&T, Inc. 1.4%

Microsoft Corp. 1.4%

Chevron Corp. 1.3%

Wells Fargo & Co. 1.3%

Total 20.5%

*SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

6 Schwab Fundamental Index Funds

 Schwab Fundamental US Large* Company Index Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$500,000 Investment in Institutional Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		Since Inception
Investor Shares (4/2/07)		-4.85%		-35.16%		-20.59%
Select Shares (4/2/07)		-4.81%		-35.10%		-20.48%
Institutional Shares (4/2/07)		-4.83%		-34.98%		-20.36%
Benchmark: FTSE RAFI US 1000 Index®		-4.76%		-35.10%		-20.34%
Fund Category: Morningstar Large-Cap Value		-9.07%		-36.27%		-21.46%

Fund Expense Ratios³: Investor Shares: Net 0.59%; Gross 0.67% / Select Shares: Net 0.44%; Gross 0.52% /

             Institutional Shares: Net 0.35%; Gross 0.52%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Fundamental Index Funds 7

Schwab Fundamental US Small-Mid* Company
Index Fund

Schwab Fundamental US Small-Mid Company Index Fund Investor Shares returned -0.67% during the period, compared to the benchmark FTSE RAFI US Mid Small 1500 Index, which returned 1.05%. The FTSE RAFI US Mid Small 1500 Index is composed of small and medium-sized companies incorporated in the United States ranked by fundamental value. Unlike the fund, the index does not include operational and transactional costs.

From a total return standpoint, losses in the fund were primarily the result of declines in Financials, Energy, and Industrials; Financials, down the most, returned -15.54%, while Energy and Industrials returned -15.37% and -4.70%, respectively. Although the Energy sector declined more on average than the Industrial sector, the impact on performance was similar because the fund’s allocation to Industrials is almost three times that of Energy. Consumer Discretionary, up 17.95%, and Information Technology, up 9.19%, acted to offset. In terms of market capitalization, smaller stocks in the fund generally outperformed their larger counterparts. Better performing stocks in the fund included Ruby Tuesday, Valassis Communications and Palm, Inc. Securities detracting from performance were led by Headwaters, Inc., AHR, and Unify.

As of 04/30/09:

 Style Assessment¹

 Statistics

Number of Holdings 1,358

Weighted Average Market

  Cap ($ x 1,000,000) $732

Price/Earnings Ratio (P/E) -4.0

Price/Book Ratio (P/B) 0.9

Portfolio Turnover Rate² 28%

 Sector Weightings % of Investments

Financials 22.8%

Consumer Discretionary 22.0%

Industrials 16.6%

Information Technology 15.5%

Health Care 6.2%

Energy 5.9%

Materials 5.5%

Consumer Staples 2.8%

Utilities 1.5%

Telecommunication Services 1.1%

Other 0.1%

Total 100.0%

 Top Holdings % Net Assets³

Ruby Tuesday, Inc. 0.6%

Valassis Communication, Inc. 0.5%

Modine Manufacturing Co. 0.4%

La-Z-Boy, Inc. 0.3%

Pacific Sunwear of California, Inc. 0.3%

Ashford Hospitality Trust 0.3%

ADC Telecommunications, Inc. 0.3%

Spherion Corp. 0.3%

United Natural Foods, Inc. 0.3%

Advance America Cash Advance

  Centers, Inc. 0.3%

Total 3.6%

*SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Small-company stocks are subject to greater volatility than other asset classes.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

8 Schwab Fundamental Index Funds

 Schwab Fundamental US Small-Mid* Company Index Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$500,000 Investment in Institutional Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		Since Inception
Investor Shares (4/2/07)		-0.67%		-30.84%		-19.99%
Select Shares (4/2/07)		-0.48%		-30.68%		-19.83%
Institutional Shares (4/2/07)		-0.49%		-30.65%		-19.76%
Benchmark: FTSE RAFI US Mid Small 1500 Index®		-1.05%		-29.81%		-19.20%
Fund Category: Morningstar Small-Cap Blend		-5.44%		-32.07%		-21.08%

Fund Expense Ratios³: Investor Shares: Net 0.59%; Gross 0.84% / Select Shares: Net 0.44%; Gross 0.68% /

             Institutional Shares: Net 0.35%; Gross 0.71%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Fundamental Index Funds 9

Schwab Fundamental International* Large Company Index Fund

Schwab Fundamental International Large Company Index Fund Investor Shares returned -0.16% during the period, compared to the benchmark FTSE RAFI Developed ex US 1000 Index, which returned 2.62%. The FTSE RAFI Developed ex US 1000 Index consists of the 1000 largest listed companies incorporated outside of the United States ranked by fundamental value. Unlike the fund, the index does not include operational or transactional costs.

From a total return standpoint, losses in the fund were primarily the result of declines in Financials, Industrials, and Consumer Staples; Financials, down the most, returned -30.37%, while Industrials and Consumer Staples returned -11.16% and -7.38%, respectively. Consumer Discretionary, up 16.02%, and Information Technology, up 6.20%, acted to offset. In terms of market capitalization, small- and mid-cap stocks in the fund generally outperformed large-cap stocks. Better performing securities in the fund included Barclays Capital, ING Group, and Deutsche Bank. Securities detracting from performance were led by HSBC Holdings and Volkswagen.

As of 04/30/09:

 Style Assessment¹

 Country Weightings % of Investments

United Kingdom 20.9%

Japan 15.7%

France 10.5%

Germany 9.8%

Australia 6.6%

Italy 5.2%

Canada 4.9%

Switzerland 4.6%

Netherlands 4.2%

Spain 3.6%

Sweden 2.8%

Other Countries 11.2%

Total 100.0%

 Statistics

Number of Holdings 1011

Weighted Average Market

  Cap ($ x 1,000,000) $31,135

Price/Earnings Ratio (P/E) 18.8

Price/Book Ratio (P/B) 0.8

Portfolio Turnover Rate² 72%

 Sector Weightings % of Investments

Financials 34.7%

Consumer Discretionary 13.1%

Industrials 10.9%

Materials 9.0%

Energy 8.2%

Consumer Staples 5.8%

Telecommunication Services 5.4%

Utilities 5.3%

Information Technology 3.6%

Health Care 3.3%

Other 0.7%

Total 100.0%

 Top Holdings % Net Assets³

ING Groep N.V. CVA 2.3%

HSBC Holdings plc 1.8%

Barclays plc 1.6%

BP plc 1.5%

Royal Dutch Shell plc, Class A 1.1%

Daimler AG - Reg’d 1.1%

Vodafone Group plc 1.1%

Deutsche Bank AG - Reg’d 1.1%

Total S.A. 1.1%

Axa 1.0%

Total 13.7%

*SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.

Foreign securities can involve risks such as political and economic instability and currency risk.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

10 Schwab Fundamental Index Funds

 Schwab Fundamental International* Large Company Index Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$500,000 Investment in Institutional Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		Since Inception
Investor Shares (4/2/07)		-0.16%		-40.61%		-21.46%
Select Shares (4/2/07)		0.03%*		-40.46%		-21.30%
Institutional Shares (4/2/07)		-0.02%		-40.45%		-21.24%
Benchmark: FTSE RAFI Developed ex US 1000 Index®		2.62%		-39.78%		-19.79%
Fund Category: Morningstar Foreign Large-Cap Blend		-3.30%		-43.52%		-22.66%

Fund Expense Ratios³: Investor Shares: Net 0.60%; Gross 0.89%/ Select Shares: Net 0.45%; Gross 0.75% /

             Institutional Shares: Net 0.35%; Gross 0.74%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

*	Return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the financial highlights section of the report is calculated in the same manner, but also taking into account certain adjustments that are necessary under generally accepted accounting principles which are required when preparing the semiannual report.
1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Fundamental Index Funds 11

Schwab Fundamental International* Small-Mid Company Index Fund

Schwab Fundamental International Small-Mid Company Index Fund Investor Shares returned 7.86% for the period, while the benchmark FTSE RAFI Developed ex US Mid Small 1500 Index returned 11.99%. The fund generally invests in stocks that comprise the FTSE RAFI Developed ex US Mid Small 1500 Index. The index is comprised of 1500 small and medium-sized companies domiciled in developed countries outside the United States ranked by fundamental value. Unlike the fund, the index does not include operational or transactional costs.

From a total return standpoint, losses in the fund were primarily the result of declines in Financials, Industrials, and Consumer Staples; Financials, down the most, returned -30.37%, while Industrials and Consumer Staples returned -11.16% and -7.38%, respectively. Consumer Discretionary, up 16.02%, and Information Technology, up 6.20%, acted to offset. In terms of market capitalization, small- and mid-cap stocks in the fund generally outperformed large-cap stocks. Better performing securities represented in the fund included Trelleborg, Northgate, and Pacific Brands. Securities detracting from performance were led by Okinawa Electric Power, and Nishimatsu Construction.

As of 04/30/09:

 Style Assessment¹

 Country Weightings % of Investments

Japan 28.1%

United Kingdom 14.4%

Canada 7.4%

Australia 7.1%

Germany 4.1%

Switzerland 3.6%

Sweden 3.4%

France 3.1%

Netherlands 3.0%

Italy 2.7%

Hong Kong 2.6%

Other Countries 20.5%

Total 100.0%

 Statistics

Number of Holdings 1437

Weighted Average Market

  Cap ($ x 1,000,000) $1,655

Price/Earnings Ratio (P/E) 26.4

Price/Book Ratio (P/B) 0.2

Portfolio Turnover Rate² 63%

 Sector Weightings % of Investments

Industrials 24.4%

Financials 19.6%

Consumer Discretionary 18.0%

Materials 10.9%

Consumer Staples 8.4%

Information Technology 7.7%

Energy 4.1%

Health Care 3.1%

Utilities 1.8%

Telecommunication Services 0.8%

Other 1.2%

Total 100.0%

 Top Holdings % Net Assets³

SIG plc 0.7%

iShares MSCI EAFE Index Fund 0.6%

Trelleborg AB, B Shares 0.6%

Lundin Mining Corp. 0.4%

Northgate plc 0.4%

Oce N.V. 0.3%

Sherritt International Corp. 0.3%

Macquarie CountryWide Trust 0.3%

Grafton Group plc 0.3%

Pacific Brands Ltd. 0.3%

Total 4.2%

*SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.

Foreign securities can involve risks such as political and economic instability and currency risk.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

12 Schwab Fundamental Index Funds

 Schwab Fundamental International* Small-Mid Company Index Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$500,000 Investment in Institutional Shares¹

 Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		Since Inception
Investor Shares (1/31/08)		7.86%		-36.37%		-27.54%
Select Shares (1/31/08)		7.96%		-36.27%		-27.39%
Institutional Shares (1/31/08)		7.85%		-36.23%		-27.35%
Benchmark: FTSE RAFI Developed ex US Mid Small 1500 Index®		11.99%		-34.29%		-24.61%
Fund Category: Morningstar Foreign Small/Mid Growth		3.44%		-44.99%		-35.15%

Fund Expense Ratios³: Investor Shares: Net 0.80%; Gross 4.52%/ Select Shares: Net 0.65%; Gross 4.08% /

             Institutional Shares: Net 0.57%; Gross 5.45%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/19. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Fundamental Index Funds 13

Schwab Fundamental Emerging Markets*
Index Fund

Schwab Fundamental Emerging Markets Index Fund Investor Shares returned 17.79% for the period, while the benchmark FTSE RAFI Emerging Index returned 21.02%. The fund generally invests in stocks that comprise the FTSE RAFI Emerging Index. The Index is comprised of 350 companies from emerging markets ranked by fundamental value. Unlike the fund, the index does not include operational or transactional costs.

From a total return standpoint, losses in the fund were primarily the result of declines in Financials, Industrials, and Consumer Staples; Financials, down the most, returned -30.37%, while Industrials and Consumer Staples returned -11.16% and -7.38%, respectively. Consumer Discretionary, up 16.02%, and Information Technology, up 6.20%, acted to offset. In terms of market capitalization, small- and mid-cap stocks in the fund generally outperformed large-cap stocks. Better performing securities in the fund included China Petroleum and Petro Brasileiro.

As of 04/30/09:

 Style Assessment¹

 Country Weightings % of Investments

Republic of Korea 27.9%

China 19.8%

Taiwan 11.3%

Brazil 9.9%

Russia 6.1%

South Africa 5.9%

Mexico 4.7%

India 4.4%

Other Countries 10.0%

Total 100.0%

 Statistics

Number of Holdings 377

Weighted Average Market

  Cap ($ x 1,000,000) $26,236

Price/Earnings Ratio (P/E) 10.5

Price/Book Ratio (P/B) 0.7

Portfolio Turnover Rate² 85%

 Sector Weightings % of Investments

Energy 21.6%

Financials 19.9%

Materials 14.6%

Information Technology 10.5%

Industrials 9.9%

Telecommunication Services 8.1%

Consumer Discretionary 7.2%

Consumer Staples 3.7%

Utilities 3.1%

Other 1.4%

Total 100.0%

 Top Holdings % Net Assets³

PetroChina Co., Ltd., Class H 5.5%

China Petroleum & Chemical

  Corp., Class H 3.2%

Samsung Electronics Co., Ltd. 3.1%

Gazprom ADR - Reg’d 1.8%

Bank of China Ltd., Class H 1.7%

Industrial & Commercial Bank

  of China Ltd., Class H 1.7%

Banco Itau Holding Financeira S.A. 1.6%

LUKOIL ADR 1.5%

Petroleo Brasileiro S.A. 1.5%

Honam Petrochemical Corp. 1.4%

Total 23.0%

*SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.

Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.
2	Not annualized.
3	This list is not a recommendation of any security by the investment adviser.

14 Schwab Fundamental Index Funds

 Schwab Fundamental Emerging Markets* Index Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

Performance of a Hypothetical
$500,000 Investment in Institutional Shares¹

 Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		Since Inception
Investor Shares (1/31/08)		17.79%		-38.59%		-27.00%
Select Shares (1/31/08)		17.89%		-38.54%		-26.85%
Institutional Shares (1/31/08)		17.82%		-38.52%		-26.88%
Benchmark: FTSE RAFI Emerging Index®		21.02%		-37.29%		-25.08%
Fund Category: Morningstar Diversified Emerging Markets		12.10%		-45.92%		-34.92%

Fund Expense Ratios³: Investor Shares: Net 0.87%; Gross 3.99%/ Select Shares: Net 0.72%; Gross 3.35% /

             Institutional Shares: Net 0.63%; Gross 4.08%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/19. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

Schwab Fundamental Index Funds 15

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Fundamental US Large Company Index Fund*
Investor Shares
Actual Return		0.59%	$	1,000	$	951.50	$	2.85
Hypothetical 5% Return		0.59%	$	1,000	$	1,021.87	$	2.96
Select Shares®
Actual Return		0.44%	$	1,000	$	951.90	$	2.13
Hypothetical 5% Return		0.44%	$	1,000	$	1,022.61	$	2.21
Institutional Shares
Actual Return		0.35%	$	1,000	$	951.70	$	1.69
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.06	$	1.76
Schwab Fundamental US Small-Mid Company Index Fund*
Investor Shares
Actual Return		0.59%	$	1,000	$	993.30	$	2.92
Hypothetical 5% Return		0.59%	$	1,000	$	1,021.87	$	2.96
Select Shares®
Actual Return		0.44%	$	1,000	$	995.20	$	2.18
Hypothetical 5% Return		0.44%	$	1,000	$	1,022.61	$	2.21
Institutional Shares
Actual Return		0.35%	$	1,000	$	995.10	$	1.73
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.06	$	1.76
Schwab Fundamental International Large Company Index Fund*
Investor Shares
Actual Return		0.59%	$	1,000	$	998.40	$	2.92
Hypothetical 5% Return		0.59%	$	1,000	$	1,021.87	$	2.96
Select Shares®
Actual Return		0.44%	$	1,000	$	998.60	$	2.18
Hypothetical 5% Return		0.44%	$	1,000	$	1,022.61	$	2.21
Institutional Shares
Actual Return		0.35%	$	1,000	$	999.80	$	1.74
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.06	$	1.76

*  Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

16 Schwab Fundamental Index Funds

Fund Expenses (Unaudited) continued

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Fundamental International Small-Mid Company Index Fund*
Investor Shares
Actual Return		0.80%	$	1,000	$	1,078.60	$	4.12
Hypothetical 5% Return		0.80%	$	1,000	$	1,020.83	$	4.01
Select Shares®
Actual Return		0.65%	$	1,000	$	1,079.60	$	3.35
Hypothetical 5% Return		0.65%	$	1,000	$	1,021.57	$	3.26
Institutional Shares
Actual Return		0.56%	$	1,000	$	1,078.50	$	2.89
Hypothetical 5% Return		0.56%	$	1,000	$	1,022.02	$	2.81
Schwab Fundamental Emerging Markets Index Fund*
Investor Shares
Actual Return		0.86%	$	1,000	$	1,177.90	$	4.64
Hypothetical 5% Return		0.86%	$	1,000	$	1,020.53	$	4.31
Select Shares®
Actual Return		0.71%	$	1,000	$	1,178.90	$	3.84
Hypothetical 5% Return		0.71%	$	1,000	$	1,021.27	$	3.56
Institutional Shares
Actual Return		0.61%	$	1,000	$	1,178.20	$	3.29
Hypothetical 5% Return		0.61%	$	1,000	$	1,021.77	$	3.06

*  Effective May 5, 2009, the expense limitation for all share classes have been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

Schwab Fundamental Index Funds 17

Schwab Fundamental US Large Company Index Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			4/2/071–
Investor Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.44			10.73			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.16			0.05
Net realized and unrealized gains (losses)		(0.41	)		(4.36	)		0.68
Total from investment operations		(0.32	)		(4.20	)		0.73
Less distributions:
Distributions from net investment income		(0.18	)		(0.08	)		—
Distributions from net realized gains		—			(0.01	)		—
Total distributions		(0.18	)		(0.09	)		—
Net asset value at end of period		5.94			6.44			10.73
Total return (%)		(4.85	)2		(39.46	)		7.30	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.59	3		0.59			0.59	3
Gross operating expenses		0.70	3		0.67			0.75	3
Net investment income (loss)		2.80	3		1.96			1.45	3
Portfolio turnover rate		31	2		26			2	2
Net assets, end of period ($ x 1,000,000)		30			43			47

	11/1/08–			11/1/07–			4/2/071–
Select Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.45			10.74			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.19			0.05
Net realized and unrealized gains (losses)		(0.41	)		(4.38	)		0.69
Total from investment operations		(0.32	)		(4.19	)		0.74
Less distributions:
Distributions from net investment income		(0.19	)		(0.09	)		—
Distributions from net realized gains		—			(0.01	)		—
Total distributions		(0.19	)		(0.10	)		—
Net asset value at end of period		5.94			6.45			10.74
Total return (%)		(4.81	)2		(39.38	)		7.40	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.44	3		0.44			0.44	3
Gross operating expenses		0.55	3		0.52			0.60	3
Net investment income (loss)		2.92	3		2.10			1.60	3
Portfolio turnover rate		31	2		26			2	2
Net assets, end of period ($ x 1,000,000)		56			67			101

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

18 See financial notes

 Schwab Fundamental US Large Company Index Fund

Financial Highlights continued

	11/1/08–			11/1/07–			4/2/071–
Institutional Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.47			10.75			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.20			0.05
Net realized and unrealized gains (losses)		(0.41	)		(4.38	)		0.70
Total from investment operations		(0.32	)		(4.18	)		0.75
Less distributions:
Distributions from net investment income		(0.20	)		(0.09	)		—
Distributions from net realized gains		—			(0.01	)		—
Total distributions		(0.20	)		(0.10	)		—
Net asset value at end of period		5.95			6.47			10.75
Total return (%)		(4.83	)2		(39.22	)		7.50	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.35	3		0.35			0.35	3
Gross operating expenses		0.55	3		0.52			0.60	3
Net investment income (loss)		2.97	3		2.19			1.66	3
Portfolio turnover rate		31	2		26			2	2
Net assets, end of period ($ x 1,000,000)		276			277			345

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

See financial notes 19

 Schwab Fundamental US Large Company Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.2%	Common Stock		526,778		358,991
	0	.2%	Foreign Common Stock		460		524
	0	.2%	Other Investment Company		723		723
	0	.2%	Short-Term Investments		846		846
	99	.8%	Total Investments		528,807		361,084
	0	.2%	Other Assets and Liabilities, Net				798
	100	.0%	Net Assets				361,882

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 99.2% of net assets
Automobiles & Components 3.5%
Ford Motor Co. *	1,166,774		1.9		6,977
General Motors Corp.	725,810		0.4		1,394
Other Securities			1.2		4,199
			3.5		12,570
Banks 3.8%
U.S. Bancorp	87,500		0.4		1,594
Wells Fargo & Co.	229,825		1.3		4,599
Other Securities			2.1		7,754
			3.8		13,947
Capital Goods 8.6%
General Electric Co.	757,075		2.7		9,577
United Technologies Corp.	25,615		0.4		1,251
Other Securities			5.5		20,422
			8.6		31,250
Commercial & Professional Supplies 0.8%
Other Securities			0.8		2,738
Consumer Durables & Apparel 2.0%
Other Securities			2.0		7,210
Consumer Services 1.5%
Other Securities			1.5		5,578
Diversified Financials 13.4%
American Express Co.	69,425		0.5		1,751
Bank of America Corp.	1,493,860		3.7		13,340
Citigroup, Inc.	3,373,835		2.8		10,290
Invesco Ltd.	260,000		1.1		3,827
JPMorgan Chase & Co.	199,042		1.8		6,568
Morgan Stanley	74,735		0.5		1,767
The Charles Schwab Corp. (b)	16,315		0.1		302
The Goldman Sachs Group, Inc.	18,911		0.7		2,430
Other Securities			2.2		8,107
			13.4		48,382
Energy 8.7%
Chevron Corp.	72,655		1.3		4,803
ConocoPhillips	83,310		1.0		3,416
Exxon Mobil Corp.	116,670		2.2		7,778
Marathon Oil Corp.	41,090		0.3		1,220
Other Securities			3.9		14,240
			8.7		31,457
Food & Staples Retailing 2.7%
Wal-Mart Stores, Inc.	78,325		1.1		3,947
Other Securities			1.6		5,927
			2.7		9,874
Food, Beverage & Tobacco 4.0%
Altria Group, Inc.	143,680		0.7		2,346
Kraft Foods, Inc., Class A	52,092		0.3		1,219
PepsiCo, Inc.	24,230		0.3		1,206
The Coca-Cola Co.	33,665		0.4		1,449
Other Securities			2.3		8,186
			4.0		14,406
Health Care Equipment & Services 3.7%
WellPoint, Inc. *	31,670		0.4		1,354
Other Securities			3.3		12,136
			3.7		13,490
Household & Personal Products 1.3%
The Procter & Gamble Co.	57,895		0.8		2,862

20 See financial notes

 Schwab Fundamental US Large Company Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Other Securities			0.5		1,969
			1.3		4,831
Insurance 6.5%
American International Group, Inc.	1,689,600		0.6		2,332
Berkshire Hathaway, Inc., Class A *	28		0.7		2,632
Berkshire Hathaway, Inc., Class B *	390		0.3		1,195
MetLife, Inc.	57,905		0.5		1,723
Prudential Financial, Inc.	47,640		0.4		1,376
The Hartford Financial Services Group, Inc.	131,310		0.4		1,506
Other Securities			3.6		12,799
			6.5		23,563
Materials 4.7%
Alcoa, Inc.	134,905		0.3		1,224
E.I. du Pont de Nemours & Co.	43,045		0.3		1,201
The Dow Chemical Co.	154,900		0.7		2,478
Other Securities			3.4		12,179
			4.7		17,082
Media 3.7%
Comcast Corp., Class A	79,540		0.4		1,230
The Walt Disney Co.	64,150		0.4		1,405
Time Warner, Inc.	78,188		0.5		1,707
Other Securities			2.4		8,993
			3.7		13,335
Pharmaceuticals, Biotechnology & Life Sciences 3.7%
Johnson & Johnson	42,095		0.6		2,204
Merck & Co., Inc.	62,815		0.4		1,523
Pfizer, Inc.	253,420		0.9		3,386
Other Securities			1.8		6,388
			3.7		13,501
Real Estate 1.9%
Other Securities			1.9		6,845
Retailing 4.7%
Target Corp.	32,795		0.4		1,353
The Home Depot, Inc.	69,696		0.5		1,834
Other Securities			3.8		13,708
			4.7		16,895
Semiconductors & Semiconductor Equipment 1.6%
Intel Corp.	148,110		0.7		2,337
Other Securities			0.9		3,359
			1.6		5,696
Software & Services 3.7%
Microsoft Corp.	242,315		1.4		4,909
Other Securities			2.3		8,488
			3.7		13,397
Technology Hardware & Equipment 5.1%
Cisco Systems, Inc. *	96,465		0.5		1,864
Hewlett-Packard Co.	62,475		0.6		2,248
International Business Machines Corp.	22,395		0.7		2,311
Other Securities			3.3		11,877
			5.1		18,300
Telecommunication Services 3.3%
AT&T, Inc.	192,085		1.4		4,921
Sprint Nextel Corp. *	313,000		0.4		1,365
Verizon Communications, Inc.	121,430		1.0		3,684
Other Securities			0.5		1,961
			3.3		11,931
Transportation 2.4%
United Parcel Service, Inc., Class B	25,980		0.4		1,360
Other Securities			2.0		7,207
			2.4		8,567
Utilities 3.9%
Other Securities			3.9		14,146
Total Common Stock (Cost $526,778)					358,991
Foreign Common Stock 0.2% of net assets
Bermuda 0.1%
Other Securities			0.1		427
Luxembourg 0.1%
Other Securities			0.1		97
Total Foreign Common Stock (Cost $460)					524
Other Investment Company 0.2% of net assets
Other Securities			0.2		723
Total Other Investment Company (Cost $723)					723

See financial notes 21

 Schwab Fundamental US Large Company Index Fund

Portfolio Holdings (Unaudited) continued

Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investments 0.2% of net assets
U.S. Treasury Obligations 0.2%
Other Securities			0.2		846
Total Short-Term Investments (Cost $846)					846
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $542,954 and the unrealized appreciation and depreciation were $7,624 and ($189,494), respectively, with a net depreciation of ($181,870).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts. Please see complete schedule of holdings.
(b)	Issuer is affiliated with the fund’s adviser

REIT — Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		50		2,175		47

22 See financial notes

 Schwab Fundamental US Large Company Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $528,807)		$361,084
Receivables:
Investments sold		2,401
Dividends		398
Fund shares sold		345
Due from brokers for futures		2
Foreign tax reclaims		2
Interest		1
Prepaid expense	+	1
Total assets		364,234
Liabilities
Payables:
Investments bought		2,022
Investment adviser and administrator fees		6
Transfer agent and shareholder services fees		1
Fund shares redeemed		297
Trustees’ fees		1
Accrued expenses	+	25
Total liabilities		2,352
Net Assets
Total assets		364,234
Total liabilities	−	2,352
Net assets		$361,882
Net Assets by Source
Capital received from investors		644,067
Net investment income not yet distributed		2,810
Net realized capital losses		(117,319	)
Net unrealized capital losses		(167,676	)

Net Asset Value (NAV) by Share Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$30,347		5,110			$5.94
Select Shares	$56,027		9,428			$5.94
Institutional Shares	$275,508		46,304			$5.95

See financial notes 23

 Schwab Fundamental US Large Company Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (including $2 from affiliated issuer and net of foreign withholding tax of $1)		$5,527
Interest	+	12
Total Investment Income		5,539
Net Realized Gains and Losses
Net realized losses on unaffiliated issuers		(61,119	)
Net realized losses on affiliated issuers		(32	)
Net realized losses on futures contracts	+	(957	)
Net realized losses		(62,108	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		32,661
Net unrealized losses on affiliated issuers		(30	)
Net unrealized losses on futures contracts	+	(15	)
Net unrealized gains		32,616
Expenses
Investment adviser and administrator fees		498
Transfer agent and shareholder service fees:
Investor Shares		42
Select Shares		27
Institutional Shares		123
FTSE RAFI Index fees		112
Registration fees		34
Portfolio accounting fees		27
Professional fees		25
Shareholder reports		21
Custodian fees		10
Trustees’ fees		6
Interest expense		4
Other expenses	+	4
Total expenses		933
Expense reduction by adviser and Schwab	−	285
Net expenses		648
Increase (Decrease) in Net Assets from Operations
Total investment income		5,539
Net expenses	−	648
Net investment income		4,891
Net realized losses		(62,108	)
Net unrealized gains	+	32,616
Decrease in net assets from operations		($24,601	)

24 See financial notes

 Schwab Fundamental US Large Company Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			11/01/07-10/31/08
Net investment income			$4,891			$11,283
Net realized losses			(62,108	)		(55,426	)
Net unrealized gains (losses)	+		32,616			(206,556	)
Decrease in net assets from operations			(24,601	)		(250,699	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			1,139			352
Select Shares			1,941			824
Institutional Shares	+		8,172			3,041
Total distributions from net investment income			11,252			4,217
Distributions from net realized gains
Investor Shares			—			42
Select Shares			—			90
Institutional Shares	+		—			317
Total distributions from net realized gains			—			449
Total distributions			$11,252			$4,666

Transactions in Fund Shares

		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			1,859			$10,282			4,835			$42,547
Select Shares			2,066			11,173			8,415			76,537
Institutional Shares	+		22,797			125,434			34,654			315,247
Total shares sold			26,722			$146,889			47,904			$434,331
Shares Reinvested
Investor Shares			166			$961			35			$350
Select Shares			284			1,637			80			813
Institutional Shares	+		848			4,901			214			2,174
Total shares reinvested			1,298			$7,499			329			$3,337
Shares Redeemed
Investor Shares			(3,591	)		($19,342	)		(2,588	)		($22,633	)
Select Shares			(3,330	)		(17,917	)		(7,513	)		(66,082	)
Institutional Shares	+		(20,179	)		(106,652	)		(24,136	)		(199,856	)
Total shares redeemed			(27,100	)		($143,911	)		(34,237	)		($288,571	)
Net transactions in fund shares			920			$10,477			13,996			$149,097
Shares Outstanding and Net Assets
		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			59,922			$387,258			45,926			$493,526
Total increase or decrease	+		920			(25,376	)		13,996			(106,268	)
End of period			60,842			$361,882			59,922			$387,258
Net investment income not yet distributed						$2,810						$9,171

See financial notes 25

Schwab Fundamental US Small-Mid Company Index Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			4/2/071–
Investor Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.28			10.34			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.06			0.09			0.04
Net realized and unrealized gains (losses)		(0.11	)		(4.09	)		0.30
Total from investment operations		(0.05	)		(4.00	)		0.34
Less distributions:
Distributions from net investment income		(0.05	)		(0.05	)		—
Distributions from net realized gains		—			(0.01	)		—
Total distributions		(0.05	)		(0.06	)		—
Net asset value at end of period		6.18			6.28			10.34
Total return (%)		(0.67	)2		(38.88	)		3.40	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.59	3		0.59			0.59	3
Gross operating expenses		0.78	3		0.84			1.00	3
Net investment income (loss)		1.67	3		1.08			1.08	3
Portfolio turnover rate		28	2		37			4	2
Net assets, end of period ($ x 1,000,000)		19			24			25

	11/1/08–			11/1/07–			4/2/071–
Select Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.29			10.35			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.10			0.04
Net realized and unrealized gains (losses)		(0.09	)		(4.09	)		0.31
Total from investment operations		(0.04	)		(3.99	)		0.35
Less distributions:
Distributions from net investment income		(0.06	)		(0.06	)		—
Distributions from net realized gains		—			(0.01	)		—
Total distributions		(0.06	)		(0.07	)		—
Net asset value at end of period		6.19			6.29			10.35
Total return (%)		(0.48	)2		(38.79	)		3.50	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.44	3		0.44			0.44	3
Gross operating expenses		0.63	3		0.68			0.85	3
Net investment income (loss)		1.85	3		1.21			1.20	3
Portfolio turnover rate		28	2		37			4	2
Net assets, end of period ($ x 1,000,000)		20			21			28

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

26 See financial notes

 Schwab Fundamental US Small-Mid Company Index Fund

Financial Highlights continued

	11/1/08–			11/1/07–			4/2/071–
Institutional Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.30			10.36			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.06			0.05			0.05
Net realized and unrealized gains (losses)		(0.10	)		(4.04	)		0.31
Total from investment operations		(0.04	)		(3.99	)		0.36
Less distributions:
Distributions from net investment income		(0.07	)		(0.06	)		—
Distributions from net realized gains		—			(0.01	)		—
Total distributions		(0.07	)		(0.07	)		—
Net asset value at end of period		6.19			6.30			10.36
Total return (%)		(0.49	)2		(38.73	)		3.60	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.35	3		0.35			0.35	3
Gross operating expenses		0.64	3		0.71			0.89	3
Net investment income (loss)		1.95	3		1.44			1.36	3
Portfolio turnover rate		28	2		37			4	2
Net assets, end of period ($ x 1,000,000)		147			131			33

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

See financial notes 27

 Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97	.7%	Common Stock		210,253		181,038
	2	.2%	Foreign Common Stock		5,030		4,060
		—%	Preferred Stock		42		29
		—%	Rights		3		1
	0	.1%	Short-Term Investment		205		205
	100	.0%	Total Investments		215,533		185,333
	0	.0%	Other Assets and Liabilities, Net				49
	100	.0%	Net Assets				185,382

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 97.7% of net assets
Automobiles & Components 1.3%
Modine Manufacturing Co.	193,515		0.4		739
Other Securities			0.9		1,674
			1.3		2,413
Banks 8.2%
Citizens Republic Bancorp, Inc. *	295,700		0.3		497
United Bankshares, Inc.	15,595		0.2		405
Other Securities			7.7		14,256
			8.2		15,158
Capital Goods 8.7%
NACCO Industries, Inc., Class A	9,700		0.2		371
Other Securities			8.5		15,833
			8.7		16,204
Commercial & Professional Supplies 4.7%
Acco Brands Corp. *	197,770		0.2		413
EnergySolutions, Inc.	36,300		0.1		352
Spherion Corp. *	149,790		0.3		538
Other Securities			4.1		7,447
			4.7		8,750
Consumer Durables & Apparel 4.9%
American Greetings Corp., Class A	57,600		0.2		452
Brookfield Homes Corp.	70,400		0.2		370
La-Z-Boy, Inc.	225,100		0.3		599
Polaris Industries, Inc.	11,800		0.2		395
Other Securities			4.0		7,278
			4.9		9,094
Consumer Services 6.1%
Cracker Barrel Old Country Store, Inc.	12,120		0.2		395
DineEquity, Inc.	12,590		0.2		403
Isle of Capri Casinos, Inc. *	43,375		0.3		466
Ruby Tuesday, Inc. *	136,170		0.6		1,046
Other Securities			4.8		8,936
			6.1		11,246
Diversified Financials 4.3%
Advance America Cash Advance Centers, Inc.	126,015		0.3		504
Eaton Vance Corp.	14,065		0.2		385
MCG Capital Corp.	255,405		0.2		450
Other Securities			3.6		6,586
			4.3		7,925
Energy 5.6%
Global Industries Ltd. *	58,405		0.2		378
Other Securities			5.4		9,926
			5.6		10,304
Food & Staples Retailing 0.8%
United Natural Foods, Inc. *	22,155		0.3		505
Other Securities			0.5		989
			0.8		1,494
Food, Beverage & Tobacco 1.4%
Other Securities			1.4		2,652
Health Care Equipment & Services 4.6%
Other Securities			4.6		8,540
Household & Personal Products 0.6%
Other Securities			0.6		1,006

28 See financial notes

 Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Insurance 2.7%
National Financial Partners Corp.	69,225		0.3		489
Other Securities			2.4		4,530
			2.7		5,019
Materials 5.5%
Century Aluminum Co. *	115,015		0.2		465
Ferro Corp.	143,530		0.2		398
Rock-Tenn Co., Class A	10,915		0.2		412
Other Securities			4.9		8,869
			5.5		10,144
Media 2.4%
John Wiley & Sons, Inc., Class A	11,015		0.2		373
Mediacom Communications Corp., Class A *	62,340		0.2		355
Valassis Communications, Inc. *	171,985		0.5		889
Other Securities			1.5		2,869
			2.4		4,486
Pharmaceuticals, Biotechnology & Life Sciences 1.5%
Other Securities			1.5		2,817
Real Estate 7.0%
Arbor Realty Trust, Inc.	155,700		0.2		437
Ashford Hospitality Trust	192,045		0.3		580
DiamondRock Hospitality Co.	59,075		0.2		383
FelCor Lodging Trust, Inc.	244,050		0.3		483
Forest City Enterprises, Inc., Class A	42,760		0.2		360
LaSalle Hotel Properties	29,340		0.2		351
National Retail Properties, Inc.	21,805		0.2		387
Pennsylvania Real Estate Investment Trust	61,000		0.3		473
Sunstone Hotel Investors, Inc.	86,155		0.2		456
Other Securities			4.9		8,998
			7.0		12,908
Retailing 7.1%
Brown Shoe Co., Inc.	61,462		0.2		395
MarineMax, Inc. *	97,800		0.2		445
Pacific Sunwear of California, Inc. *	143,450		0.3		581
Stein Mart, Inc. *	83,095		0.2		363
The Dress Barn, Inc. *	25,175		0.2		381
The Finish Line, Inc., Class A	44,452		0.2		378
Tuesday Morning Corp. *	139,430		0.2		475
Other Securities			5.6		10,185
			7.1		13,203
Semiconductors & Semiconductor Equipment 3.4%
Cree, Inc. *	12,995		0.2		356
ON Semiconductor Corp. *	71,174		0.2		386
RF Micro Devices, Inc. *	199,065		0.2		420
Other Securities			2.8		5,197
			3.4		6,359
Software & Services 5.6%
EarthLink, Inc. *	50,075		0.2		380
Other Securities			5.4		9,986
			5.6		10,366
Technology Hardware & Equipment 6.1%
ADC Telecommunications, Inc. *	73,600		0.3		542
Technitrol, Inc.	97,590		0.2		397
Other Securities			5.6		10,293
			6.1		11,232
Telecommunication Services 1.1%
Other Securities			1.1		2,088
Transportation 2.6%
Other Securities			2.6		4,787
Utilities 1.5%
Other Securities			1.5		2,843
Total Common Stock (Cost $210,253)					181,038
Foreign Common Stock 2.2% of net assets
Bahamas 0.1%
Other Securities			0.1		171
Bermuda 1.3%
Assured Guaranty Ltd.	36,565		0.2		353
Other Securities			1.1		2,020
			1.3		2,373
British Virgin Islands 0.1%
Other Securities			0.1		102
Canada 0.0%
Other Securities			0.0		66
Cayman Islands 0.1%
Other Securities			0.1		144

See financial notes 29

 Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings (Unaudited) continued

Greece 0.0%
Other Securities			0.0	32
Liberia 0.2%
Other Securities			0.2	348
Netherlands 0.1%
Other Securities			0.1	120
Netherlands Antilles 0.0%
Other Securities			0.0	66
Panama 0.2%
Other Securities			0.2	440
Singapore 0.1%
Other Securities			0.1	198
Total Foreign Common Stock (Cost $5,030)				4,060
Preferred Stock 0.0% of net assets
Health Care Equipment & Services 0.0%
Other Securities			0.0	29
Total Preferred Stock (Cost $42)				29
Rights 0.0% of net assets
Capital Goods 0.0%
Other Securities			0.0	1
Total Rights (Cost $3)				1
Security	% of Net	Value
Rate, Maturity Date	Assets	($ x 1,000)
Short-Term Investment 0.1% of net assets
U.S. Treasury Obligation 0.1%
Other Securities			0.1	205
Total Short-Term Investment
(Cost $205)				205
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $217,306, and the unrealized appreciation and depreciation were $14,041 and ($46,014), respectively, with a net depreciation of ($31,973).

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of investments.
(b)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. Please see complete schedule of investments.

30 See financial notes

 Schwab Fundamental US Small-Mid Company Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $215,533)		$185,333
Receivables:
Investments sold		4
Fund shares sold		473
Dividends	+	116
Total assets		185,926
Liabilities
Payables:
Investment adviser and administrator fees		1
Fund shares redeemed		297
Payable to custodian		230
Accrued expenses	+	16
Total liabilities		544
Net Assets
Total assets		185,926
Total liabilities	−	544
Net assets		$185,382
Net Assets by Source
Capital received from investors		236,853
Net investment income not yet distributed		740
Net realized capital losses		(22,011	)
Net unrealized capital losses		(30,200	)

Net Asset Value (NAV) by Share Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$18,579		3,006			$6.18
Select Shares	$20,106		3,250			$6.19
Institutional Shares	$146,697		23,706			$6.19

See financial notes 31

 Schwab Fundamental US Small-Mid Company Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $1)		$1,618
Interest	+	9
Total investment income		1,627
Net Realized Gains and Losses
Net realized losses on investments		(17,102	)
Net realized gains on futures contracts	+	403
Net realized losses		(16,699	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		16,412
Net unrealized losses on futures contracts	+	(212	)
Net unrealized gains		16,200
Expenses
Investment adviser and administrator fees		226
Transfer agent and shareholder service fees:
Investor Shares		23
Select Shares		9
Institutional Shares		58
FTSE RAFI Index fees		51
Registration fees		27
Shareholder reports		27
Portfolio accounting fees		26
Professional fees		24
Custodian fees		13
Trustees’ fees		4
Interest expense		1
Other expenses	+	3
Total expenses		492
Expense reduction by adviser and Schwab	−	206
Net expenses		286
Increase (Decrease) in Net Assets from Operations
Total investment income		1,627
Net expenses	−	286
Net investment income		1,341
Net realized losses		(16,699	)
Net unrealized gains	+	16,200
Increase in net assets from operations		$842

32 See financial notes

 Schwab Fundamental US Small-Mid Company Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			11/01/07-10/31/08
Net investment income			$1,341			$1,428
Net realized losses			(16,699	)		(5,388	)
Net unrealized gains (losses)	+		16,200			(46,629	)
Increase (Decrease) in net assets from operations			842			(50,589	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			190			128
Select Shares			200			189
Institutional Shares	+		1,400			206
Total distributions from net investment income			1,790			523
Distributions from net realized gains
Investor Shares			—			22
Select Shares			—			28
Institutional Shares	+		—			29
Total distributions from net realized gains			—			79
Total distributions			$1,790			$602

Transactions in Fund Shares

		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			815			$4,372			2,817			$24,591
Select Shares			990			5,210			3,446			30,642
Institutional Shares	+		9,729			49,666			21,311			152,362
Total shares sold			11,534			$59,248			27,574			$207,595
Shares Reinvested
Investor Shares			27			$151			14			$130
Select Shares			28			155			19			187
Institutional Shares	+		64			351			20			188
Total shares reinvested			119			$657			53			$505
Shares Redeemed
Investor Shares			(1,615	)		($8,019	)		(1,491	)		($12,873	)
Select Shares			(1,091	)		(5,480	)		(2,838	)		(24,773	)
Institutional Shares	+		(6,904	)		(35,786	)		(3,721	)		(29,895	)
Total shares redeemed			(9,610	)		($49,285	)		(8,050	)		($67,541	)
Net transactions in fund shares			2,043			$10,620			19,577			$140,559
Shares Outstanding and Net Assets
		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			27,919			$175,710			8,342			$86,342
Total increase	+		2,043			9,672			19,577			89,368
End of period			29,962			$185,382			27,919			$175,710
Net investment income not yet distributed						$740						$1,189

See financial notes 33

Schwab Fundamental International Large Company Index Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			4/2/071–
Investor Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		5.99			11.37			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.07			0.22			0.08
Net realized and unrealized gains (losses)		(0.09	)		(5.50	)		1.29
Total from investment operations		(0.02	)		(5.28	)		1.37
Less distributions:
Distributions from net investment income		(0.28	)		(0.08	)		—
Distributions from net realized gains		—			(0.02	)		—
Total distributions		(0.28	)		(0.10	)		—
Net asset value at end of period		5.69			5.99			11.37
Total return (%)		(0.16	)2		(46.80	)		13.70	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.59	3		0.60	4		0.59	3
Gross operating expenses		0.94	3		0.89			1.45	3
Net investment income (loss)		2.93	3		3.06			2.16	3
Portfolio turnover rate		72	2		74			50	2
Net assets, end of period ($ x 1,000,000)		24			24			27

	11/1/08–			11/1/07–			4/2/071–
Select Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.00			11.39			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.24			0.08
Net realized and unrealized gains (losses)		(0.10	)		(5.52	)		1.31
Total from investment operations		(0.02	)		(5.28	)		1.39
Less distributions:
Distributions from net investment income		(0.29	)		(0.09	)		—
Distributions from net realized gains		—			(0.02	)		—
Total distributions		(0.29	)		(0.11	)		—
Net asset value at end of period		5.69			6.00			11.39
Total return (%)		(0.14	)2		(46.76	)		13.90	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.44	3		0.45	5		0.44	3
Gross operating expenses		0.79	3		0.75			1.33	3
Net investment income (loss)		3.08	3		3.16			2.16	3
Portfolio turnover rate		72	2		74			50	2
Net assets, end of period ($ x 1,000,000)		29			30			37

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ The ratio of net operating expenses would have been 0.59%, if interest expenses had not been included.

⁵ The ratio of net operating expenses would have been 0.44%, if interest expenses had not been included.

34 See financial notes

 Schwab Fundamental International Large Company Index Fund

Financial Highlights continued

	11/1/08–			11/1/07–			4/2/071–
Institutional Shares	4/30/09*			10/31/08			10/31/07
Per-Share Data ($)
Net asset value at beginning of period		6.01			11.40			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.12			0.28			0.08
Net realized and unrealized gains (losses)		(0.14	)		(5.56	)		1.32
Total from investment operations		(0.02	)		(5.28	)		1.40
Less distributions:
Distributions from net investment income		(0.29	)		(0.09	)		—
Distributions from net realized gains		—			(0.02	)		—
Total distributions		(0.29	)		(0.11	)		—
Net asset value at end of period		5.70			6.01			11.40
Total return (%)		(0.02	)2		(46.70	)		14.00	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.35	3		0.35			0.36	3,4
Gross operating expenses		0.79	3		0.74			1.28	3
Net investment income (loss)		3.17	3		3.41			2.30	3
Portfolio turnover rate		72	2		74			50	2
Net assets, end of period ($ x 1,000,000)		131			145			166

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ The ratio of net operating expenses would have been 0.35%, if interest expenses had not been included.

See financial notes 35

 Schwab Fundamental International Large Company Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.1%	Common Stock		252,216		180,561
	0	.1%	Other Investment Company		75		83
	0	.5%	Preferred Stock		1,722		905
		—%	Rights		31		32
	0	.7%	Short-Term Investment		1,337		1,337
	99	.4%	Total Investments		255,381		182,918
	0	.6%	Other Assets and Liabilities, Net				1,179
	100	.0%	Net Assets				184,097

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 98.1% of net assets
Australia 6.5%
BHP Billiton Ltd.	46,712		0.6		1,128
Macquarie Communications Infrastructure Group	443,904		0.4		724
Other Securities			5.5		10,147
			6.5		11,999
Austria 0.6%
Other Securities			0.6		1,032
Belgium 1.6%
Fortis	422,614		0.6		1,039
Other Securities			1.0		1,878
			1.6		2,917
Bermuda 0.3%
Other Securities			0.3		612
Canada 4.8%
Royal Bank of Canada	21,222		0.4		752
Other Securities			4.4		8,153
			4.8		8,905
Cayman Islands 0.1%
Other Securities			0.1		188
Denmark 0.7%
Other Securities			0.7		1,271
Finland 1.4%
Nokia Oyj	59,574		0.5		846
Other Securities			0.9		1,631
			1.4		2,477
France 10.5%
Axa *	110,608		1.0		1,858
BNP Paribas	30,782		0.9		1,620
France Telecom S.A.	39,414		0.5		875
Renault S.A.	26,160		0.5		839
Sanofi-Aventis	12,737		0.4		738
Societe Generale	18,914		0.5		967
Total S.A.	38,759		1.1		1,939
Other Securities			5.6		10,391
			10.5		19,227
Germany 9.3%
Allianz SE - Reg’d	16,381		0.8		1,512
BASF SE *	21,182		0.4		799
Daimler AG - Reg’d	57,450		1.1		2,060
Deutsche Bank AG - Reg’d	36,534		1.1		1,949
Deutsche Telekom AG - Reg’d.	82,968		0.6		1,003
E.ON AG	41,405		0.8		1,400
Siemens AG - Reg’d	13,944		0.5		937
Other Securities			4.0		7,496
			9.3		17,156
Greece 0.6%
Other Securities			0.6		1,145
Hong Kong 1.6%
Other Securities			1.6		2,924
Ireland 1.1%
Other Securities			1.1		2,013
Israel 0.2%
Other Securities			0.2		383

36 See financial notes

 Schwab Fundamental International Large Company Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Italy 5.1%
Assicurazioni Generali S.p.A.	35,309		0.4		718
Enel S.p.A.	133,629		0.4		724
Eni S.p.A.	57,930		0.7		1,243
Intesa Sanpaolo S.p.A. *	272,223		0.5		867
UniCredit S.p.A. *	745,636		1.0		1,815
Other Securities			2.1		4,025
			5.1		9,392
Japan 15.6%
Mitsubishi UFJ Financial Group, Inc.	135,734		0.4		740
Toyota Motor Corp.	43,600		0.9		1,726
Other Securities			14.3		26,266
			15.6		28,732
Luxembourg 0.4%
Other Securities			0.4		670
Netherlands 4.2%
ING Groep N.V. CVA	463,834		2.3		4,228
Other Securities			1.9		3,534
			4.2		7,762
New Zealand 0.1%
Other Securities			0.1		175
Norway 0.8%
Other Securities			0.8		1,509
Portugal 0.3%
Other Securities			0.3		600
Republic of Korea 0.0%
Other Securities			0.0		40
Singapore 0.6%
Other Securities			0.6		1,098
Spain 3.6%
Banco Bilbao Vizcaya Argentaria S.A.	87,367		0.5		947
Banco Santander S.A.	162,465		0.8		1,563
Telefonica S.A.	45,817		0.5		868
Other Securities			1.8		3,187
			3.6		6,565
Sweden 2.8%
Nordea Bank AB	101,135		0.4		752
Other Securities			2.4		4,405
			2.8		5,157
Switzerland 4.5%
Credit Suisse Group AG - Reg’d	29,767		0.6		1,163
Nestle S.A. - Reg’d	29,759		0.5		970
Novartis AG - Reg’d	22,028		0.5		834
Swiss Re - Reg’d	30,267		0.4		718
UBS AG - Reg’d *	81,866		0.6		1,124
Zurich Financial Services AG - Reg’d	4,127		0.4		767
Other Securities			1.5		2,784
			4.5		8,360
United Kingdom 20.8%
Aviva plc	158,633		0.4		731
Barclays plc	711,012		1.6		2,887
BHP Billiton plc	53,199		0.6		1,104
BP plc	401,219		1.5		2,835
GlaxoSmithKline plc	61,701		0.5		950
HSBC Holdings plc	458,178		1.8		3,258
Lloyds TSB Group plc	535,789		0.5		869
Rio Tinto plc	19,407		0.4		789
Royal Bank of Scotland Group plc *	2,019,851		0.7		1,233
Royal Dutch Shell plc, Class B	69,503		0.9		1,573
Royal Dutch Shell plc, Class A	90,750		1.1		2,089
Vodafone Group plc	1,092,208		1.1		2,008
Other Securities			9.7		17,891
			20.8		38,217
United States 0.0%
Other Securities			0.0		35
Total Common Stock (Cost $252,216)					180,561
Other Investment Company 0.1% of net assets
Australia 0.1%
Australian Infrastructure Fund	75,431		0.1		83
Total Other Investment Company (Cost $75)					83
Preferred Stock 0.5% of net assets
Germany 0.4%
Other Securities			0.4		757
Italy 0.1%
Other Securities			0.1		148
Total Preferred Stock (Cost $1,722)					905

See financial notes 37

 Schwab Fundamental International Large Company Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Rights 0.0% of net assets
Other Securities			0.0		32
Total Rights (Cost $31)					32
Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investment 0.7% of net assets
Citibank, New York Time Deposit
0.03% , 05/01/09	1,337		0.7		1,337
Total Short-Term Investment (Cost $1,337)					1,337
End of Investments.
(All dollar amounts are x 1,000)
At 4/30/09 the tax basis cost of the fund’s investments was $279,954 and the unrealized appreciation and depreciation were $0 and ($97,036), respectively, with a net unrealized depreciation of ($97,036).
At 4/30/09, the values of certain foreign securities held by the fund aggregating $166,428 were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of holdings.
(b)	Illiquid Security. At the period end, the value of these amounted to $3 or 0.0% of net assets. Please see complete schedule of holdings.

CVA — Dutch Certificate

Reg’d — Registered

38 See financial notes

 Schwab Fundamental International Large Company Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $255,381)		$182,918
Foreign currency, at value (cost $56)		56
Receivables:
Investments sold		1,333
Dividends		835
Fund shares sold		615
Foreign tax reclaims		190
Prepaid expenses	+	16
Total assets		185,963
Liabilities
Payables:
Investments bought		1,607
Transfer agent and shareholder services fees		1
Trustee fees		1
Fund shares redeemed	+	257
Total liabilities		1,866
Net Assets
Total assets		185,963
Total liabilities	−	1,866
Net assets		$184,097
Net Assets by Source
Capital received from investors		344,808
Net investment income not yet distributed		2,051
Net realized capital losses		(90,295	)
Net unrealized capital losses		(72,467	)

Net Asset Value (NAV) by Share Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$23,537		4,136			$5.69
Select Shares	$29,126		5,115			$5.69
Institutional Shares	$131,434		23,061			$5.70

See financial notes 39

 Schwab Fundamental International Large Company Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $285)		$3,162
Net Realized Gains and Losses
Net realized losses on investments		(72,135	)
Net realized losses on foreign currency transactions	+	(36	)
Net realized losses		(72,171	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		63,718
Net unrealized losses on foreign currency translations	+	(5	)
Net unrealized gains		63,713
Expenses
Investment adviser and administrator fees		269
Transfer agent and shareholder service fees:
Investor Shares		27
Select Shares		13
Institutional Shares		65
Custodian fees		157
FTSE RAFI Index fee		62
Portfolio accounting fees		40
Registration fees		33
Professional fees		26
Shareholder reports		16
Trustees’ fees		5
Interest expense		4
Other expenses	+	8
Total expenses		725
Expense reduction by adviser and Schwab	−	369
Net expenses		356
Increase (Decrease) in Net Assets from Operations
Total investment income		3,162
Net expenses	−	356
Net investment income		2,806
Net realized losses		(72,171	)
Net unrealized gains	+	63,713
Decrease in net assets from operations		($5,652	)

40 See financial notes

 Schwab Fundamental International Large Company Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			11/01/07-10/31/08
Net investment income			$2,806			$9,059
Net realized losses			(72,171	)		(18,302	)
Net unrealized gains (losses)	+		63,713			(152,100	)
Decrease in net assets from operations			(5,652	)		(161,343	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			1,142			212
Select Shares			1,437			306
Institutional Shares	+		6,459			1,625
Total distributions from net investment income			9,038			2,143
Distributions from net realized gains
Investor Shares			—			63
Select Shares			—			83
Institutional Shares	+		—			418
Total distributions from net realized gains			—			564
Total distributions			$9,038			$2,707

Transactions in Fund Shares

		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			899			$4,816			3,192			$29,638
Select Shares			1,305			6,951			4,064			36,332
Institutional Shares	+		12,616			67,855			19,960			189,615
Total shares sold			14,820			$79,622			27,216			$255,585
Shares Reinvested
Investor Shares			173			$943			22			$239
Select Shares			223			1,213			31			330
Institutional Shares	+		886			4,817			147			1,572
Total shares reinvested			1,282			$6,973			200			$2,141
Shares Redeemed
Investor Shares			(985	)		($5,059	)		(1,553	)		($13,870	)
Select Shares			(1,372	)		(7,046	)		(2,365	)		(20,654	)
Institutional Shares	+		(14,566	)		(74,656	)		(10,511	)		(89,716	)
Total shares redeemed			(16,923	)		($86,761	)		(14,429	)		($124,240	)
Net transactions in fund shares			(821	)		($166	)		12,987			$133,486
Shares Outstanding and Net Assets
		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			33,133			$198,953			20,146			$229,517
Total increase or decrease	+		(821	)		(14,856	)		12,987			(30,564	)
End of period			32,312			$184,097			33,133			$198,953
Net investment income not yet distributed						$2,051						$8,283

See financial notes 41

Schwab Fundamental International Small-Mid Company Index Fund

Financial Statements

Financial Highlights

	11/1/08–			1/31/081–
Investor Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		6.20			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.06	2		0.20	2
Net realized and unrealized gains (losses)		0.41			(4.00	)
Total from investment operations		0.47			(3.80	)
Less distributions:
Distributions from net investment income		(0.26	)		—
Net asset value at end of period		6.41			6.20
Total return (%)		(7.86	)3		(38.00	)3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.80	4,5		0.79	4
Gross operating expenses		4.08	4		4.51	4
Net investment income (loss)		2.27	4		2.91	4
Portfolio turnover rate		63	3		132	3
Net assets, end of period ($ x 1,000,000)		5			4

	11/1/08–			1/31/081–
Select Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		6.21			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04	2		0.21	2
Net realized and unrealized gains (losses)		0.43			(4.00	)
Total from investment operations		0.47			(3.79	)
Less distributions:
Distributions from net investment income		(0.26	)		—
Net asset value at end of period		6.42			6.21
Total return (%)		(7.96	)3		(37.90	)3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.65	4,6		0.64	4
Gross operating expenses		3.95	4		4.07	4
Net investment income (loss)		2.54	4		3.07	4
Portfolio turnover rate		63	3		132	3
Net assets, end of period ($ x 1,000,000)		7			5

* Unaudited.

¹ Commencement of operations.

² Calculated based on the average shares outstanding during the period.

³ Not annualized.

⁴ Annualized.

⁵ The ratio of net operating expenses would have been 0.79% for the period end, if interest expenses had not been included.

⁶ The ratio of net operating expenses would have been 0.64% for the period end, if interest expenses had not been included.

42 See financial notes

 Schwab Fundamental International Small-Mid Company Index Fund

Financial Highlights continued

	11/1/08–			1/31/081–
Institutional Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		6.22			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.08	2		0.27	2
Net realized and unrealized gains (losses)		0.37			(4.05	)
Total from investment operations		0.45			(3.78	)
Less distributions:
Distributions from net investment income		(0.25	)		—
Net asset value at end of period		6.42			6.22
Total return (%)		(7.85	)3		(37.80	)3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.56	4,5		0.56	4,5
Gross operating expenses		3.99	4		5.44	4
Net investment income (loss)		2.63	4		3.55	4
Portfolio turnover rate		63	3		132	3
Net assets, end of period ($ x 1,000,000)		5			3

* Unaudited.

¹ Commencement of operations.

² Calculated based on the average shares outstanding during the period.

³ Not annualized.

⁴ Annualized.

⁵ The ratio of net operating expenses would have been 0.55% for the period end, if interest expenses had not been included.

See financial notes 43

 Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97	.3%	Common Stock		20,069		16,266
	0	.7%	Other Investment Companies		105		113
	0	.4%	Preferred Stock		94		69
	0	.3%	Rights		5		46
		—%	Warrants		—		—
	0	.4%	Short-Term Investment		75		75
	99	.1%	Total Investments		20,348		16,569
	0	.9%	Other Assets and Liabilities, Net				144
	100	.0%	Net Assets				16,713

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Common Stock 97.3% of net assets
Australia 7.1%
Alesco Corp., Ltd.	11,052		0.2		32
Alumina Ltd.	30,362		0.2		39
ASX Ltd.	1,484		0.2		35
Australand Property Group	95,882		0.2		31
AWB Ltd.	33,212		0.2		32
CSR Ltd.	34,989		0.2		34
ING Industrial Fund	336,063		0.3		41
Macquarie CountryWide Trust	235,375		0.3		54
Macquarie Office Trust	256,802		0.2		36
Pacific Brands Ltd.	99,605		0.3		50
Other Securities			4.8		797
			7.1		1,181
Austria 1.0%
Atrium European Real Estate Ltd. *	9,393		0.2		37
Other Securities			0.8		129
			1.0		166
Belgium 1.3%
Other Securities			1.3		221
Bermuda 1.6%
Other Securities			1.6		270
British Virgin Islands 0.0%
Other Securities			0.0		3
Canada 7.3%
Cameco Corp.	1,906		0.3		44
Fortis, Inc.	1,603		0.2		30
Lundin Mining Corp. *	41,030		0.4		75
Methanex Corp.	3,517		0.2		40
Sherritt International Corp.	12,759		0.3		55
Uranium One, Inc. *	15,000		0.3		41
Other Securities			5.6		935
			7.3		1,220
Cayman Islands 1.4%
Other Securities			1.4		227
China 0.1%
Other Securities			0.1		22
Cyprus 0.1%
Other Securities			0.1		14
Denmark 1.5%
Jyske Bank A/S - Reg’d *	1,199		0.2		31
Other Securities			1.3		217
			1.5		248
Finland 1.4%
Other Securities			1.4		239
France 3.1%
Other Securities			3.1		520
Germany 3.6%
Premiere AG *	17,581		0.3		43
Other Securities			3.3		563
			3.6		606
Gibraltar 0.1%
Other Securities			0.1		15

44 See financial notes

 Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
Greece 1.1%
Other Securities			1.1		181
Hong Kong 2.6%
Other Securities			2.6		433
Ireland 1.3%
DCC plc	1,636		0.2		30
Grafton Group plc *	14,232		0.3		50
Other Securities			0.8		141
			1.3		221
Israel 0.9%
Other Securities			0.9		155
Italy 2.7%
Other Securities			2.7		450
Japan 27.8%
CSK Holdings Corp. *	8,000		0.3		42
MEIJI Holdings Co., Ltd. *	1,500		0.3		46
Trend Micro, Inc.	1,000		0.2		30
Other Securities			27.0		4,529
			27.8		4,647
Liechtenstein 0.1%
Other Securities			0.1		18
Luxembourg 0.2%
Other Securities			0.2		35
Mauritius 0.1%
Other Securities			0.1		21
Netherlands 3.0%
Oce N.V.	8,779		0.3		56
Other Securities			2.7		439
			3.0		495
New Zealand 0.6%
Other Securities			0.6		108
Norway 1.4%
Other Securities			1.4		234
Portugal 0.7%
Other Securities			0.7		111
Singapore 2.0%
Other Securities			2.0		327
Spain 2.1%
Other Securities			2.1		359
Sweden 3.1%
Eniro AB	20,015		0.3		44
Modern Times Group MTG AB, B Shares	1,422		0.2		38
Ratos AB, B Shares	1,752		0.2		30
Trelleborg AB, B Shares *	24,731		0.6		101
Other Securities			1.8		313
			3.1		526
Switzerland 3.6%
OC Oerlikon Corp. AG - Reg’d *	580		0.2		33
Other Securities			3.4		568
			3.6		601
United Kingdom 14.3%
BBA Aviation plc	22,787		0.2		35
Bellway plc	3,150		0.2		33
Close Brothers Group plc	3,581		0.2		33
Cookson Group plc	138,015		0.2		39
Debenhams plc	26,845		0.2		36
Derwent London plc	2,577		0.2		32
Electrocomponents plc	15,711		0.2		37
Hays plc	29,082		0.2		39
IMI plc	6,460		0.2		34
Informa plc	6,847		0.2		30
Intermediate Capital Group plc	5,785		0.2		41
Johnston Press plc *	168,758		0.2		30
Laird plc	14,037		0.2		32
Meggitt plc	13,870		0.2		37
Northgate plc	28,276		0.4		61
Pennon Group plc	5,242		0.2		34
SIG plc	46,073		0.7		108
Other Securities			10.2		1,692
			14.3		2,383
United States 0.1%
Other Securities			0.1		9
Total Common Stock (Cost $20,069)					16,266
Other Investment Companies 0.7% of net assets
Canada 0.1%
Other Securities			0.1		8

See financial notes 45

 Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)
United States 0.6%
iShares MSCI EAFE Index Fund	2,500		0.6		105
Total Other Investment Companies (Cost $105)					113
Preferred Stock 0.4% of net assets
Germany 0.4%
Other Securities			0.4		69
Total Preferred Stock (Cost $94)					69
Rights 0.3% of net assets
Denmark 0.0%
Other Securities			0.0		2
Spain 0.0%
Other Securities			0.0		—
Sweden 0.3%
Trelleborg AB *	16,612		0.3		44
Total Rights (Cost $5)					46
Warrants 0.0% of net assets
Bermuda 0.0%
Other Securities			0.0		—
Hong Kong 0.0%
Other Securities			0.0		—
Total Warrants (Cost $—)					—
Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investment 0.4% of net assets
Commercial Paper & Other Corporate Obligations 0.4%
Citibank, New York Time Deposit
0.03%, 05/01/09	75,171		0.4		75
Total Short-Term Investment (Cost $75)					75
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $20,872, and the unrealized appreciation and depreciation were $423 and ($4,726), respectively, with a net unrealized depreciation of ($4,303).
At 04/30/09, the values of certain foreign securities held by the fund aggregating $14,924, were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of holdings.
(b)	Illiquid Security. At the period end, the value of these amounted to $37 or 0.2% of net assets. Please see complete schedule of holdings.

CVA — Dutch Certificate

Reg’d — Registered

REIT — Real Estate Investment Trust

46 See financial notes

 Schwab Fundamental International Small-Mid Company Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $20,348)		$16,569
Foreign currency, at value (cost $5)		5
Receivables:
Investments sold		258
Dividends		95
Fund shares sold		36
Foreign tax reclaims		7
Due from investment adviser		5
Prepaid expenses	+	71
Total assets		17,046
Liabilities
Payables:
Investments bought		319
Transfer agent and shareholder services fees		2
Fund shares redeemed	+	12
Total liabilities		333
Net Assets
Total assets		17,046
Total liabilities	−	333
Net assets		$16,713
Net Assets by Source
Capital received from investors		23,654
Net investment income not yet distributed		133
Net realized capital losses		(3,295	)
Net unrealized capital losses		(3,779	)

Net Asset Value (NAV) by Share Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$5,137		801			$6.41
Select Shares	$6,953		1,082			$6.42	*
Institutional Shares	$4,623		720			$6.42

*  Due to rounding, net assets divided by shares outstanding does not equal the net asset value per share.

See financial notes 47

 Schwab Fundamental International Small-Mid Company Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $22)		$212
Net Realized Gains and Losses
Net realized losses on investments		(2,458	)
Net realized gains on foreign currency transactions	+	54
Net realized losses		(2,404	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		3,380
Expenses
Investment adviser and administrator fees		27
Transfer agent and shareholder service fees:
Investor Shares		5
Select Shares		3
Institutional Shares		2
Custodian fees		149
Portfolio accounting fees		41
Professional fees		25
FTSE RAFI Index fee		8
Trustees’ fees		4
Shareholder reports		3
Registration fees		1
Other expenses	+	2
Total expenses		270
Expense reduction by adviser and Schwab	−	225
Net expenses		45
Increase (Decrease) in Net Assets from Operations
Total investment income		212
Net expenses	−	45
Net investment income		167
Net realized losses		(2,404	)
Net unrealized gains	+	3,380
Increase in net assets from operations		$1,143

48 See financial notes

 Schwab Fundamental International Small-Mid Company Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			1/31/08*-10/31/08
Net investment income			$167			$484
Net realized losses			(2,404	)		(883	)
Net unrealized gains (losses)	+		3,380			(7,159	)
Increase (Decrease) in net assets from operations			1,143			(7,558	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			194			—
Select Shares			207			—
Institutional Shares	+		125			—
Total distributions from net investment income			$526			$-

Transactions in Fund Shares

		11/01/08-04/30/09						1/31/08*-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			275			$1,601			891			$8,225
Select Shares			492			2,879			1,650			14,954
Institutional Shares	+		404			2,410			1,941			18,373
Total shares sold			1,171			$6,890			4,482			$41,552
Shares Reinvested
Investor Shares			28			$166			—			$-
Select Shares			21			121			—			—
Institutional Shares	+		14			81			—			—
Total shares reinvested			63			$368			—			$-
Shares Redeemed
Investor Shares			(212	)		($1,225	)		(181	)		($1,593	)
Select Shares			(293	)		(1,672	)		(788	)		(5,864	)
Institutional Shares	+		(187	)		(1,066	)		(1,452	)		(13,736	)
Total shares redeemed			(692	)		($3,963	)		(2,421	)		($21,193	)
Net transactions in fund shares			542			$3,295			2,061			$20,359
Shares Outstanding and Net Assets
		11/01/08-04/30/09						1/31/08*-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			2,061			$12,801			—			$-
Total increase	+		542			3,912			2,061			12,801
End of period			2,603			$16,713			2,061			$12,801
Net investment income not yet distributed						$133						$492

*  Commencement of operations.

See financial notes 49

Schwab Fundamental Emerging Markets Index Fund

Financial Statements

Financial Highlights

	11/1/08–			1/31/081–
Investor Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		5.73			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.11
Net realized and unrealized gains (losses)		0.97			(4.38	)
Total from investment operations		0.99			(4.27	)
Less distributions:
Distributions from net investment income		(0.14	)		—
Net asset value at end of period		6.58			5.73
Total return (%)		17.79	2		(42.70	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.86	3,4		0.85	3,4
Gross operating expenses		2.18	3		3.97	3
Net investment income (loss)		0.96	3		2.65	3
Portfolio turnover rate		85	2		159	2
Net assets, end of period ($ x 1,000,000)		9			7

	11/1/08–			1/31/081–
Select Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		5.74			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.14
Net realized and unrealized gains (losses)		0.96			(4.40	)
Total from investment operations		1.00			(4.26	)
Less distributions:
Distributions from net investment income		(0.15	)		—
Net asset value at end of period		6.59			5.74
Total return (%)		17.89	2		(42.60	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.71	3,5		0.70	3,5
Gross operating expenses		2.02	3		3.33	3
Net investment income (loss)		1.11	3		2.87	3
Portfolio turnover rate		85	2		159	2
Net assets, end of period ($ x 1,000,000)		10			7

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ The ratio of net operating expenses would have been 0.84% for the period end, if interest expenses had not been included.

⁵ The ratio of net operating expenses would have been 0.69% for the period end, if interest expenses had not been included.

50 See financial notes

 Schwab Fundamental Emerging Markets Index Fund

Financial Highlights continued

	11/1/08–			1/31/081–
Institutional Shares	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		5.74			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.16
Net realized and unrealized gains (losses)		0.96			(4.42	)
Total from investment operations		0.99			(4.26	)
Less distributions:
Distributions from net investment income		(0.15	)		—
Net asset value at end of period		6.58			5.74
Total return (%)		17.82	2		(42.60	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.61	3,4		0.61	3,4
Gross operating expenses		1.93	3		4.06	3
Net investment income (loss)		1.30	3		2.31	3
Portfolio turnover rate		85	2		159	2
Net assets, end of period ($ x 1,000,000)		29			6

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ The ratio of net operating expenses would have been 0.60% for the period end, if interest expenses had not been included.

See financial notes 51

 Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds^® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.

In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	90	.6%	Common Stock		39,370		43,298
	7	.3%	Preferred Stock		3,310		3,475
		—%	Rights		—		—
	0	.8%	Other Investment Company		356		373
	0	.6%	Short-Term Investments		278		278
	99	.3%	Total Investments		43,314		47,424
	0	.7%	Other Assets and Liabilities, Net				351
	100	.0%	Net Assets				47,775

		% of Net		Value
Security and Number of Shares		Assets		($ x 1,000)
Common Stock 90.6% of net assets
Argentina 0.1%
Other Securities			0.1		45
Brazil 2.6%
Petroleo Brasileiro S.A.	18,400		0.7		310
Other Securities			1.9		928
			2.6		1,238
Chile 0.6%
Other Securities			0.6		311
China 19.7%
Bank of China Ltd., Class H	2,231,000		1.7		827
China Life Insurance Co., Ltd., Class H	131,000		1.0		460
China Petroleum & Chemical Corp., Class H	1,990,000		3.2		1,547
China Shenhua Energy Co., Ltd., Class H  *	190,500		1.1		527
Industrial & Commercial Bank of China Ltd., Class H	1,451,000		1.7		825
PetroChina Co., Ltd., Class H	2,991,000		5.5		2,607
Other Securities			5.5		2,600
			19.7		9,393
Columbia 0.1%
Other Securities			0.1		65
Czech Republic 0.5%
Other Securities			0.5		232
Hong Kong 0.1%
Other Securities			0.1		58
Hungary 0.7%
Other Securities			0.7		311
India 4.4%
Axis Bank Ltd.	18,430		0.4		208
Reliance Industries Ltd.	5,656		0.4		207
Other Securities			3.6		1,682
			4.4		2,097
Indonesia 0.9%
Other Securities			0.9		427
Luxembourg 0.2%
Other Securities			0.2		108
Malaysia 1.6%
Other Securities			1.6		766
Mexico 4.7%
America Movil S.A.B. de C.V., Series L	201,100		0.7		329
Carso Global Telecom S.A.B. de C.V., Class A1  *	70,500		0.5		253
Cemex S.A.B. de C.V.  *	423,200		0.7		312
Telefonos de Mexico S.A.B. de C.V.	388,600		0.6		311
Other Securities			2.2		1,039
			4.7		2,244
Philippines 0.1%
Other Securities			0.1		72
Poland 1.1%
Other Securities			1.1		531

52 See financial notes

 Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

		% of Net		Value
Security and Number of Shares		Assets		($ x 1,000)
Republic of Korea 27.7%
Daeduck GDS Co., Ltd.	41,980		0.5		228
Daekyo Co., Ltd.	56,410		0.6		276
Honam Petrochemical Corp.	11,464		1.4		685
Hynix Semiconductor, Inc.  *	21,740		0.5		244
Hyundai Motor Co.	10,380		1.2		555
Korea Electric Power Corp.  *	15,120		0.7		327
KP Chemical Corp.  *	57,210		0.7		313
KT Corp.	7,760		0.5		226
LG Corp.	8,008		0.7		354
LG Electronics, Inc.	4,579		0.8		378
Lotte Chilsung Beverage Co., Ltd.	887		1.2		574
ON*Media Corp.  *	185,640		0.9		415
POSCO	2,042		1.3		630
Samsung Electronics Co., Ltd.	3,244		3.1		1,498
Shinhan Financial Group Co., Ltd.  *	16,590		0.9		410
SK Holdings Co., Ltd.	6,612		1.3		612
SK Telecom Co., Ltd.	1,424		0.4		203
Other Securities			11.0		5,287
			27.7		13,215
Russia 6.1%
Gazprom ADR - Reg’d	49,477		1.8		868
LUKOIL ADR	16,167		1.5		710
Sberbank GDR - Reg’d	1,907		0.6		260
Surgutneftegaz ADR  *	40,242		0.6		283
Other Securities			1.6		783
			6.1		2,904
South Africa 5.8%
Impala Platinum Holdings Ltd.	11,958		0.5		229
Sasol	7,839		0.5		236
Standard Bank Group Ltd.	28,397		0.6		275
Other Securities			4.2		2,039
			5.8		2,779
Taiwan 11.2%
Cathay Financial Holding Co., Ltd.	193,850		0.5		217
China Steel Corp.	379,200		0.6		293
Formosa Chemicals & Fibre Corp.	167,000		0.6		265
Formosa Petrochemical Corp.	161,000		0.8		375
Hon Hai Precision Industry Co., Ltd.	128,950		0.8		372
Nan Ya Plastics Corp.	220,000		0.6		291
Taiwan Semiconductor Manufacturing Co., Ltd.	243,169		0.9		411
Other Securities			6.4		3,134
			11.2		5,358
Thailand 1.0%
Other Securities			1.0		479
Turkey 1.3%
Other Securities			1.3		620
United Kingdom 0.1%
Other Securities			0.1		45
Total Common Stock (Cost $39,370)					43,298
Preferred Stock 7.3% of net assets
Brazil 7.2%
Banco Bradesco S.A.	42,100		1.1		521
Banco Itau Holding Financeira S.A.	53,850		1.6		748
Companhia Vale do Rio Doce, Class A	22,700		0.7		316
Petroleo Brasileiro S.A.	53,500		1.5		722
Other Securities			2.3		1,140
			7.2		3,447
Columbia 0.1%
Other Securities			0.1		28
Total Preferred Stock (Cost $3,310)					3,475
Rights 0.0% of net assets
Other Securities			0.0		—
Total Right (Cost $—)					—
Other Investment Company 0.8% of net assets
iShares MSCI Emerging Markets Index Fund	13,000		0.8		373
Total Other Investment Company (Cost $356)					373

See financial notes 53

 Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

Security	Face Amount	% of Net		Value
Rate, Maturity Date	($ x 1,000)	Assets		($ x 1,000)
Short-Term Investments 0.6% of net assets
Citibank New York, Time Deposit 0.03% , 05/01/09			0.5		229
Other Securities			0.1		49
Total Short-Term Investments (Cost $278)			0.6		278
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $49,013, and the unrealized appreciation and depreciation were $384 and ($1,973), respectively, with a net unrealized depreciation of ($1,589).
At 04/30/09, the values of certain foreign securities held by the fund aggregating $38,816 were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management. Please see complete schedule of holdings.
(b)	Illiquid security. At the period end, the value of these amounted to $25 or 0.1% of net assets. Please see complete schedule of holdings.

ADR — American Depositary Receipt

GDR — Global Depositary Receipt

Reg’d — Registered

54 See financial notes

 Schwab Fundamental Emerging Markets Index Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $43,314)		$47,424
Foreign currency, at value (cost $18)		19
Receivables:
Fund shares sold		194
Dividends		99
Due from investment adviser		9
Prepaid expenses	+	96
Total assets		47,841
Liabilities
Payables:
Transfer agent and shareholder services fees		8
Fund shares redeemed		13
Foreign capital gains tax expense	+	45
Total liabilities		66
Net Assets
Total assets		47,841
Total liabilities	−	66
Net assets		$47,775
Net Assets by Source
Capital received from investors		55,018
Net investment income not yet distributed		89
Net realized capital losses		(11,398	)
Net unrealized capital gains		4,066

Net Asset Value (NAV) by Share Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$8,890		1,351			$6.58
Select Shares	$9,586		1,454			$6.59
Institutional Shares	$29,299		4,453			$6.58

See financial notes 55

 Schwab Fundamental Emerging Markets Index Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $26)		$284
Net Realized Gains and Losses
Net realized losses on investments		(7,635	)
Net realized losses on foreign currency transactions	+	(101	)
Net realized losses		(7,736	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		15,756
Net unrealized losses on foreign currency translations	+	(35	)
Net unrealized gains		15,721
Expenses
Investment adviser and administrator fees		76
Transfer agent and shareholder service fees:
Investor Shares		9
Select Shares		4
Institutional Shares		8
Custodian fees		105
Portfolio accounting fees		38
Professional fees		25
FTSE RAFI Index fee		18
Registration fees		10
Shareholder reports		5
Trustees’ fees		3
Interest expense		2
Other expenses	+	3
Total expenses		306
Expense reduction by adviser and Schwab	−	201
Net expenses		105
Increase (Decrease) in Net Assets from Operations
Total investment income		284
Net expenses	−	105
Net investment income		179
Net realized losses		(7,736	)
Net unrealized gains	+	15,721
Increase in net assets from operations		$8,164

56 See financial notes

 Schwab Fundamental Emerging Markets Index Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for current period are unaudited.

Operations

		11/01/08-04/30/09			1/31/08*-10/31/08
Net investment income			$179			$470
Net realized losses			(7,736	)		(3,691	)
Net unrealized gains (losses)	+		15,721			(11,655	)
Increase (Decrease) in net assets from operations			8,164			(14,876	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			181			—
Select Shares			179			—
Institutional Shares	+		171			—
Total distributions from net investment income			$531			$-

Transactions in Fund Shares

		11/01/08-04/30/09						1/31/08*-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			584			$3,200			1,630			$14,977
Select Shares			1,003			5,559			2,353			21,345
Institutional Shares	+		4,322			22,698			2,648			24,423
Total shares sold			5,909			$31,457			6,631			$60,745
Shares Reinvested
Investor Shares			29			$163			—			$-
Select Shares			25			136			—			—
Institutional Shares	+		18			100			—			—
Total shares reinvested			72			$399			—			$-
Shares Redeemed
Investor Shares			(468	)		($2,500	)		(424	)		($3,187	)
Select Shares			(810	)		(4,254	)		(1,117	)		(7,286	)
Institutional Shares	+		(921	)		(4,904	)		(1,614	)		(15,452	)
Total shares redeemed			(2,199	)		($11,658	)		(3,155	)		($25,925	)
Net transactions in fund shares			3,782			$20,198			3,476			$34,820
Shares Outstanding and Net Assets
		11/01/08-04/30/09						1/31/08*-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			3,476			$19,944			—			$-
Total increase	+		3,782			27,831			3,476			19,944
End of period			7,258			$47,775			3,476			$19,944
Net investment income not yet distributed						$89						$441

*  Commencement of operations.

See financial notes 57

 Schwab Fundamental Index Funds

Financial Notes, unaudited

1. Business Structure of the Funds

Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

Schwab Capital Trust (organized May 7, 1993)
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MartketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Balanced
Schwab Premier Equity Fund Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout

Each fund offers three classes of shares: Investor Shares, Select Shares, and Institutional Shares. Shares of each class represent interest in the same portfolio.

Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

Schwab Fundamental U.S. Large Company Index Fund, Schwab Fundamental U.S. Small-Mid Company Index Fund and Schwab Fundamental International Large Company Index Fund, commenced operations on April 2, 2007. Schwab Fundamental International Small-Mid Company Index Fund and Schwab Fundamental Emerging Markets Index Fund commenced operations on January 31, 2008.

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America.

(a) Security Valuation:

The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:

•  Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate.

•  Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security’s primary pricing source is

58 

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

unable or unwilling to provide a price or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  International Fair Valuation: The Board of Trustees has adopted procedures to fair value foreign securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. 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 of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  Futures and Forwards: valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day’s exchange rates (for forwards).

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

•  Underlying funds: valued at their respective net asset values as determined by those funds in accordance with the 1940 Act for a given day.

(b) Portfolio Investments:

Futures Contract: The funds may invest in futures contracts. Futures contracts involve certain risks because they can be sensitive to market movements.

One risk is that the price of a futures contract may not move in perfect correlation with the price of the underlying securities. Another risk is that, at certain times, it may be impossible for a fund to close out a position in a futures contract, due to a difference in trading hours or to market conditions that may reduce the liquidity for a futures contract or its underlying securities. The potential for losses associated with futures contracts may exceed amounts recorded in the Statement of Assets and Liabilities.

Because futures contracts carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Futures are traded publicly on exchanges, and their market value changes daily.

Forward Currency Contract: The funds may invest in forward currency contracts in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange rates. “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. Forwards are similar to futures except that they are not publicly traded, but are agreements directly between two parties.

As with futures, forwards involve certain risks that are not fully reflected in the funds’ financials. If counter-parties to the contracts or if the value of the foreign currency changes unfavorably, the funds could sustain a loss.

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction

59

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

date. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Gains realized by the funds on the sale of securities in certain foreign countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly, A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to / from broker”).

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date.

(e) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to their average daily net assets.

(f) Distributions to Shareholders:

The funds make distributions from net investment income and net realized capital gains once a year.

(g) Custody Credit:

Certain funds have an arrangement with their custodian bank under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It is possible that once the results are known, they may turn out to be different from these estimates.

(i) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(j) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.

60 

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(k) New Accounting Standards:

The Funds adopted Financial Accounting Standard Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

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 Funds’ investments as of April 30, 2009:

	Fundamental US Large Company Index Fund				Fundamental US Small-Mid Company Index Fund				Fundamental International Large Company Index Fund
			Other				Other				Other
	Investments		Financial		Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments**		in Securities		Instruments**
Level 1		$360,238		$47		$185,128		$—		$15,139		$—
Level 2		846		—		205		—		167,766		—
Level 3		—		—		—		—		13		—
Total		$361,084		$47		$185,333		$—		$182,918		$—
												��
	Fundamental International Small-Mid Company Index Fund				Fundamental Emerging Market Index Fund
			Other				Other
	Investments		Financial		Investments		Instruments
Valuation Inputs	in Securities		Instruments**		in Securities		Financial**
Level 1		$1,494		$—		$8,305		$—
Level 2		14,999		—		39,094		—
Level 3		76		—		25		—
Total		$16,569		$—		$47,424		$—

*	Other Financial Instruments are future or forward contracts which are not included in Portfolio Holdings and are valued at the unrealized appreciation or depreciation.
**	The funds had no Other Financial Instruments.

61

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

	Investment in Securities
				Fundamental
	Fundamental			International			Fundamental
	International			Small-Mid			Emerging
	Large Company			Company			Markets
Valuation Inputs	Index Fund			Index Fund			Index Fund
Balance as of 10/31/08		$122			$36			$63
Accrued discount/premiums		—			—			—
Realized gain (loss)		(16	)		(66	)		—
Change in unrealized appreciation (depreciation)		6			28			(38	)
Net purchase (sales)		(35	)		(34	)		—
Transfer in and/or out of Level 3		(64	)		44			—
Balance as of 04/30/09		$13			$76			$25

All net realized and unrealized gains (losses) in the table above are reflected in the accompanying statement of operations. Net unrealized gains (losses) relate to those financial instruments held by the Fund at April 30, 2009.

In April 2009, the FASB issued FASB Staff Position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the funds’ or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the funds’ financial statement disclosures.

3. Risk factors:

Investing in the funds may involve certain risks, as described in the Funds’ prospectus, including, but not limited to those described below:

Stock markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of your investment in a fund will fluctuate, which means that you could lose money.

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. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments. The prices of securities issued by such companies may suffer a decline in response. In addition, the equity market tends to move in cycles which may cause stock prices to fall over short or extended periods of time.

The funds invest in companies within the U.S. stock market and outside the U.S. stock market, as measured by the respective Index. It follows these stocks during upturns as well as downturns. Because of its indexing strategy, the funds do not take steps to reduce market exposure or to lessen the effects of a declining market, even though these stocks may go in and out of favor based on market and economic conditions. As a result, during a period when these stocks fall behind other types of investments — bonds or U.S. securities, for instance — the funds performance also will lag those investments. In addition, because of the funds expenses, the funds performance may be below that of the Index.

At times the segment of the equity markets represented by the Index may underperform other market segments. A significant percentage of the Index may be composed of securities in a single industry or sector of the economy. If the fund is focused in an industry or sector, it may present more risks than if it were broadly diversified over numerous industries and sectors of the

62 

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

3. Risk factors (continued):

economy. Because of the way the Index is composed, the Index may perform differently or worse than an equity index that is based solely on market capitalization.

Historically, small and mid company stocks have been riskier than large company stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Smaller companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies.

Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and unreliable securities valuation. It is sometimes difficult to obtain and enforce court judgments in such countries and there is often a greater potential for nationalization and/or expropriation of assets by the government of an emerging market country. 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 a fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar.

A fund’s investments in securities of foreign companies involve certain risks than are greater than those associated with investments in securities of U.S. companies. These include risks of adverse changes in foreign economic, political, regulatory and other conditions, or changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges). In certain countries, legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and, at times, more volatile than securities of comparable U.S. companies. A fund may also experience more rapid or extreme changes in value as compared to a fund that invests solely in securities of U.S. companies because the securities’ markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries.

Please refer to the funds’ prospectus for a complete description of the principal risks of investing in the funds.

4.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

For its advisory and administrative services to each fund, the investment adviser is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:

							Fundamental
	Fundamental		Fundamental		Fundamental		International		Fundamental
	US Large		US Small-Mid		International		Small-Mid		Emerging
	Company		Company		Large Company		Company		Markets
Average daily net assets	Index Fund		Index Fund		Index Fund		Index Fund		Index Fund
First $500 million		0.30%		0.30%		0.30%		0.40%		0.50%
$500 million to $5 billion		0.22%		0.22%		0.22%		0.38%		0.48%
$5 billion to $10 billion		0.20%		0.20%		0.20%		0.36%		0.46%
over $10 billion		0.18%		0.18%		0.18%		0.34%		0.44%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

63

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

For its transfer agent and shareholder services, Schwab is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:

	Transfer Agent Fees		Shareholder Service Fees
Investor Shares		0.05%		0.20%
Select Shares		0.05%		0.05%
Institutional Shares		0.05%		0.05%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with each fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses, through February 27, 2011, except for the Fundamental International Small-Mid Company Index Fund and the Fundamental Emerging Market Fund which are limited through February 27, 2019, as follows:

							Fundamental
	Fundamental		Fundamental		Fundamental		International		Fundamental
	US Large		US Small-Mid		International		Small-Mid		Emerging
	Company		Company		Large Company		Company		Markets
	Index Fund		Index Fund		Index Fund		Index Fund		Index Fund
Investor Shares		0.59%		0.59%		0.59%		0.79%		0.84%
Select Shares		0.44%		0.44%		0.44%		0.64%		0.69%
Institutional Shares		0.35%		0.35%		0.35%		0.55%		0.60%

Effective May 5, 2009, CSIM and Schwab have agreed to limit the net operating expenses, excluding interest, taxes and certain non-routine expenses for so long as CSIM serves as the adviser, as follows:

							Fundamental
	Fundamental		Fundamental		Fundamental		International		Fundamental
	US Large		US Small-Mid		International		Small-Mid		Emerging
	Company		Company		Large Company		Company		Markets
	Index Fund		Index Fund		Index Fund		Index Fund		Index Fund
Investor Shares		0.35%		0.35%		0.35%		0.55%		0.60%
Select Shares		0.35%		0.35%		0.35%		0.55%		0.60%
Institutional Shares		0.35%		0.35%		0.35%		0.55%		0.60%

CSIM has entered into a license agreement with FTSE to use certain FTSE indexes and trademarks in connection with the offering and operation of certain registered investment companies. The funds have entered into a sub-license agreement with CSIM pursuant to which CSIM has agreed to sub-license certain FTSE indexes and trademarks to the funds. Under the sub-license agreement, each fund has agreed to pay its pro rata share of licensing fees and to reimburse CSIM for its pro rata share of a one-time advance licensing payment made by CSIM to FTSE.

The funds may engage in certain transactions involving affiliates. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index.

As of April 30, 2009, the shares owned by the Schwab Charitable Giving Trust as a percentage of the total share of the Fundamental International Large Company Index is 13.6%.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2009, there were no security transactions with other Schwab Funds.

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity by the funds during the period.

64 

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.

6. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds covered in this report have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. There were no borrowings from the line of credit by the funds during the period.

However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

7.  Purchases and Sales of Investment Securities:

(All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
Fundamental US Large Company Index Fund		$111,627		$105,754
Fundamental US Small-Mid Company Index Fund		60,069		43,005
Fundamental International Large Company Index Fund		130,107		137,247
Fundamental International Small-Mid Company Index Fund		11,453		8,576
Fundamental Emerging Markets Index Fund		45,636		26,104

8.  Redemption Fee:

(All dollar amounts are x 1,000)

The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior period are:

	Current Period		Prior Period
	(11/01/08-4/30/09)		(11/01/07-10/31/08)
Fundamental US Large Company Index Fund		$35		$24
Fundamental US Small-Mid Company Index Fund		42		9
Fundamental International Large Company Index Fund		64		17
Fundamental International Small-Mid Company Index Fund		1	1*
Fundamental Emerging Markets Index Fund		3	11*

*   For the period 1/31/08-10/31/08.

65

 Schwab Fundamental Index Funds

Financial Notes, unaudited (continued)

9.  Federal Income Taxes:

(All dollar amounts are x 1,000)

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2008, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

	Fundamental		Fundamental		Fundamental		Fundamental		Fundamental
	US Large		US Small-Mid		International		Small-Mid		Emerging
	Company		Company		Large Company		Company		Markets
Expire	Index Fund		Index Fund		Index Fund		Index Fund		Index Fund
2016		48,847		4,210		10,522		463		147

As of October 31, 2008, the funds had no capital losses utilized or capital losses deferred.

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2008, the funds did not incur any interest or penalties.

66 

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

67

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

68 

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

69

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

70 

Notes

Notes

Schwab Funds^® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.

Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large^* Company Index Fund

Schwab Fundamental US Small-Mid^* Company Index Fund

Schwab Fundamental International^* Large Company Index Fund

Schwab Fundamental International^* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets^* Index Fund

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity¹. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.

^* SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

¹ Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC^®

Printed on recycled paper.

MFR37675-02

Semiannual report dated April 30, 2009 enclosed.

Schwab MarketTrack Portfolios ^®

Schwab MarketTrack

All Equity Portfolio^tm

Schwab MarketTrack

Growth Portfolio^tm

Schwab MarketTrack

Balanced Portfolio^tm

Schwab MarketTrack

Conservative Portfolio^tm

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This wrapper is not part of the shareholder report.

Schwab MarketTrack Portfolios ^®

Semiannual Report

April 30, 2009

Schwab MarketTrack

All Equity Portfolio^tm

Schwab MarketTrack

Growth Portfolio^tm

Schwab MarketTrack

Balanced Portfolio^tm

Schwab MarketTrack

Conservative Portfolio^tm

This page is intentionally left blank.

Four portfolios that combine the power of

indexing with the benefits of asset allocation.

In This Report
Performance at a Glance	2
From the President	3
The Investment Environment	4
Fund Management	5
Schwab MarketTrack All Equity Portfoliotm	6
Schwab MarketTrack Growth Portfoliotm	8
Schwab MarketTrack Balanced Portfoliotm	10
Schwab MarketTrack Conservative Portfoliotm	12
Fund Expenses	14
Financial Statements	15
Financial Notes	35
Trustees and Officers	44
Glossary	47

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for the Report Period
Schwab MarketTrack All Equity Portfoliotm (Ticker Symbol: SWEGX)	-7.39%
Benchmark: All Equity Composite Index	-5.66%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 6-7
Schwab MarketTrack Growth Portfoliotm
Investor Shares (Ticker Symbol: SWHGX)	-4.64%
P Shares (Ticker Symbol: SWPGX)	-4.60%
Benchmark: Growth Composite Index	-3.31%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 8-9
Schwab MarketTrack Balanced Portfoliotm (Ticker Symbol: SWBGX)	-2.37%
Benchmark: Balanced Composite Index	-0.49%
Fund Category: Morningstar Moderate Allocation	-1.19%
Performance Details	pages 10-11
Schwab MarketTrack Conservative Portfoliotm
Investor Shares (Ticker Symbol: SWCGX)*	0.09%
P Shares (Ticker Symbol: SWCPX)	0.14%
Benchmark: Conservative Composite Index	2.23%
Fund Category: Morningstar Conservative Allocation	1.23%
Performance Details	pages 12-13
Minimum Initial Investment1
Investor Shares	$    100
P Shares	$100,000

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Portfolio expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares.

The All Equity Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 70% Dow Jones U.S. Total Stock Market Index and 30% MSCI EAFE Index. The index is maintained by Charles Schwab Investment Management, Inc.

The Growth Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 60% Dow Jones U.S. Total Stock Market Index, 20% MSCI EAFE Index, 15% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.

The Balanced Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 45% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE Index, 35% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.

The Conservative Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 30% Dow Jones U.S. Total Stock Market Index, 10% MSCI EAFE Index, 55% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.

Source for category information: Morningstar, Inc.

*

Return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the financial highlights section of the report is calculated in the same manner, but also taking into account certain adjustments that are necessary under generally accepted accounting principles which are required when preparing the semiannual report.

1

Please see prospectus for further detail and eligibility requirements.

2 Schwab MarketTrack Portfolios

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

With this in mind, we’ve made a number of improvements to the Schwab Funds family of mutual funds making investing cheaper and easier for our clients. I am pleased to report that on May 5, 2009, we lowered expenses on Schwab Equity Index Funds and announced that we are simplifying share classes for Schwab equity and bond funds. Each Schwab equity and bond fund offers one low fund expense to investors regardless of how much they invest, starting at a low $100 minimum investment. Our goal is to make investing easier for our clients and the advisors who serve them−at a very low cost.

These enhancements are intended to help our clients continue to invest no matter what the market conditions may be. We hope that each and every client feels more comfortable planning for a financially secure future knowing that we are constantly working to make investing easier and more affordable.

Thank you for investing with us.

Sincerely,

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Schwab MarketTrack Portfolios 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Schwab MarketTrack Portfolios

Portfolio Management

	Jeffrey Mortimer, CFA, Chief Investment officer, Charles Schwab Investment Management, is responsible for the overall management of the portfolios. Prior to joining the firm in October 1997, he worked for more than 8 years in asset management.
	Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of the portfolios. He was appointed portfolio manager in 2008. Prior to joining the firm in 2003, he worked for more than 13 years in the investment management industry, with more than 6 of those years spent in portfolio management.
	Caroline Lee, a managing director and portfolio manager of the investment adviser, co-manages the portfolios. Prior to joining the firm in November 2005, she worked in asset management for over 4 years overseeing subadvisor relationships in the pension group of a major corporation. She has also had 3 years of previous experience in investment management at another financial services firm.

Schwab MarketTrack Portfolios 5

Schwab MarketTrack All Equity Portfolio^tm

The Schwab MarketTrack Portfolios incorporate a mix of different asset classes, and each invests mainly in a combination of other Schwab Funds most of which are managed using indexing strategies. Each portfolio pursues a different investment goal. Accordingly, portfolio returns over a given period will reflect a blend of returns of the underlying asset classes, and will depend on their relative weightings in each portfolio.

The Schwab MarketTrack All Equity Portfolio returned -7.39% during the period, compared to the benchmark All Equity Composite Index, which returned -5.66%. The portfolio focuses on long-term stock growth, while remaining close to the target allocations of 45% in large-cap, 30% in international and 25% in small-cap stocks. The portfolio’s negative return was primarily driven by domestic equities, which underperformed international equities. In general, small-cap stocks did relatively better than large-cap. In the large-cap space, the Schwab Institutional Select S&P 500 Fund returned -8.55%. In the small-cap space, the Schwab Small-Cap Index Fund Select Shares returned -6.21%. On the international equity side, the Schwab International Index Fund Select Shares returned -5.86%.

As of 04/30/09:

 Statistics

Number of Holdings 5

Weighted Average Market

  Cap ($ x 1,000,000) $42,912

Price/Earnings Ratio (P/E) 16.7

Price/Book Ratio (P/B) 1.7

Portfolio Turnover Rate¹ 6%

 Asset Class Weightings % of Investments

Large-Cap Stocks 43.2%

International Stocks 29.7%

Small-Cap Stocks 25.9%

Short-Term Investments 1.2%

Total 100.0%

 Top Holdings % Net Assets²

Schwab Institutional Select

  S&P 500 Fund 43.2%

Schwab International Index

  Fund, Select Shares 29.7%

Schwab Small-Cap Index Fund,

  Select Shares 25.9%

Total 98.8%

Manager views and portfolio holdings may have changed since the report date.

Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

6 Schwab MarketTrack Portfolios

 Schwab MarketTrack All Equity Portfolio^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment¹

 Average Annual Total Returns^1,2

Portfolio and Inception Date	6 Months		1 Year		5 Years		10 Years
Portfolio: Schwab MarketTrack All Equity Portfoliotm (5/19/98)		-7.39%		-36.88%		-1.54%		-0.81%
Benchmark: All Equity Composite Index		-5.66%		-36.94%		-1.05%		-1.00%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%

Portfolio Expense Ratios³: Net 0.80%; Gross 1.03%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	The All Equity Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 70% Dow Jones U.S. Total Stock Market Index and 30% MSCI EAFE Index. The index is maintained by Charles Schwab Investment Management, Inc.
2	Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares.
3	As stated in the prospectus. Includes expenses of the Underlying Funds in which the Portfolio invests. The annualized weighted average expense ratio of the Underlying Funds was 0.30%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the portfolio based on a ten-factor model for value and growth characteristics. The portfolio’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the portfolio’s holdings as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab MarketTrack Portfolios 7

Schwab MarketTrack Growth Portfolio^tm

The Schwab MarketTrack Portfolios incorporate a mix of different asset classes, and each invests mainly in a combination of other Schwab Funds most of which are managed using indexing strategies. Each portfolio pursues a different investment goal. Accordingly, portfolio returns over a given period will reflect a blend of returns of the underlying asset classes, and will depend on their relative weightings in each portfolio.

The Schwab MarketTrack Growth Portfolio Investor Shares returned -4.64% during the period, compared to the benchmark Growth Composite Index, which returned -3.31%. The portfolio focuses on stock investments, while including some bonds and cash investments, remaining close to the target allocations of 80% stocks, 15% bonds, and 5% cash. The portfolio’s negative return was primarily driven by U.S. equity components, while the domestic fixed income components helped to offset. In general, small-cap stocks did relatively better than large cap. In the large-cap space, the Schwab Institutional Select S&P 500 Fund returned -8.55%. In the small-cap space, the Schwab Small-Cap Index Fund Select Shares returned -6.21%. On the international equity side, the Schwab International Index Fund Select Shares returned -5.86%. In the fixed income space, the Schwab Total Bond Market Fund returned 4.07%. The Schwab Value Advantage Money Fund Institutional Shares returned 0.55%.

As of 04/30/09:

 Statistics

Number of Holdings 6

Weighted Average Market

  Cap ($ x 1,000,000) $44,188

Price/Earnings Ratio (P/E) 17.8

Price/Book Ratio (P/B) 1.7

Portfolio Turnover Rate¹ 19%

 Asset Class Weightings % of Investments

Large-Cap Stocks 40.0%

Small-Cap Stocks 20.9%

International Stocks 20.1%

Bonds 14.5%

Short-Term Investments 4.5%

Total 100.0%

 Top Holdings % Net Assets²

Schwab Institutional Select

  S&P 500 Fund 40.0%

Schwab Small-Cap Index Fund,

  Select Shares 20.9%

Schwab International Index

  Fund, Select Shares 20.1%

Schwab Total Bond Market Fund 14.5%

Schwab Value Advantage Money

  Fund, Institutional Shares 4.1%

Total 99.6%

Manager views and portfolio holdings may have changed since the report date.

Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

8 Schwab MarketTrack Portfolios

 Schwab MarketTrack Growth Portfolio^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$100,000 Investment in P Shares¹

 Average Annual Total Returns^1,2

Portfolio Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception
Investor Shares (11/20/95)		-4.64%		-29.79%		-0.64%		0.30%		4.36%
P Shares (4/6/06)		-4.60%		-29.67%		n/a		n/a		-8.10%
Benchmark: Growth Composite Index		-3.31%		-29.49%		0.13%		0.36%		(11/20/95) 4.83%
										(4/6/06) -7.28%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%		(11/20/95) 4.25%
										(4/6/06) -10.89%

Portfolio Expense Ratios³: Investor Shares: Net 0.80%; Gross 1.01% / P Shares: Net 0.65%; Gross 0.86%

 Style Assessment⁴

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	The Growth Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 60% Dow Jones U.S. Total Stock Market Index, 20% MSCI EAFE Index, 15% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.
2	Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares.
3	As stated in the prospectus. Includes expenses of the Underlying Funds in which the Portfolio invests. The annualized weighted average expense ratio of the Underlying Funds was 0.30%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the portfolio based on a ten-factor model for value and growth characteristics. The portfolio’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the portfolio’s holdings as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Schwab MarketTrack Portfolios 9

Schwab MarketTrack Balanced Portfolio^tm

The Schwab MarketTrack Portfolios incorporate a mix of different asset classes, and each invests mainly in a combination of other Schwab Funds most of which are managed using indexing strategies. Each portfolio pursues a different investment goal. Accordingly, portfolio returns over a given period will reflect a blend of returns of the underlying asset classes, and will depend on their relative weightings in each portfolio.

The Schwab MarketTrack Balanced Portfolio returned -2.37%, compared to the benchmark Balanced Composite Index, which returned -0.49%. The portfolio focuses on both stock and bond investments, while remaining close to the target allocations of 60% stocks, 35% bonds, and 5% cash. The portfolio’s negative return was primarily driven by U.S. equity components, while the domestic fixed income components helped to offset. In general, small-cap stocks did relatively better than large-cap. In the large-cap space, the Schwab Institutional Select S&P 500 Fund returned -8.55%. In the small-cap space, the Schwab Small-Cap Index Fund Select Shares returned -6.21%. On the international equity side, the Schwab International Index Fund Select Shares returned -5.86%. In the fixed income space, the Schwab Total Bond Market Fund returned 4.07%. The Schwab Value Advantage Money Fund Institutional Shares returned 0.55%.

As of 04/30/09:

 Statistics

Number of Holdings 6

Weighted Average Market

  Cap ($ x 1,000,000) $44,460

Price/Earnings Ratio (P/E) 18.0

Price/Book Ratio (P/B) 1.7

Portfolio Turnover Rate¹ 21%

 Asset Class Weightings % of Investments

Bonds 34.3%

Large-Cap Stocks 30.0%

Small-Cap Stocks 15.6%

International Stocks 15.5%

Short-Term Investments 4.6%

Total 100.0%

 Top Holdings % Net Assets²

Schwab Total Bond Market Fund 34.2%

Schwab Institutional Select

  S&P 500 Fund 30.0%

Schwab Small-Cap Index Fund,

  Select Shares 15.5%

Schwab International Index

  Fund, Select Shares 15.4%

Schwab Value Advantage Money

  Fund, Institutional Shares 3.4%

Total 98.5%

Manager views and portfolio holdings may have changed since the report date.

Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

10 Schwab MarketTrack Portfolios

 Schwab MarketTrack Balanced Portfolio^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment¹

 Average Annual Total Returns^1,2

Portfolio and Inception Date	6 Months		1 Year		5 Years		10 Years
Portfolio: Schwab MarketTrack Balanced Portfoliotm (11/20/95)		-2.37%		-23.41%		0.13%		1.35%
Benchmark: Balanced Composite Index		-0.49%		-21.92%		1.41%		1.82%
Fund Category: Morningstar Moderate Allocation		-1.19%		-25.32%		-0.44%		0.90%

Portfolio Expense Ratios³: Net 0.84%; Gross 1.06%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	The Balanced Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 45% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE Index, 35% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.
2	Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares.
3	As stated in the prospectus. Includes expenses of the Underlying Funds in which the Portfolio invests. The annualized weighted average expense ratio of the Underlying Funds was 0.34%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab MarketTrack Portfolios 11

Schwab MarketTrack Conservative Portfolio^tm

The Schwab MarketTrack Portfolios incorporate a mix of different asset classes, and each invests mainly in a combination of other Schwab Funds most of which are managed using indexing strategies. Each portfolio pursues a different investment goal. Accordingly, portfolio returns over a given period will reflect a blend of returns of the underlying asset classes, and will depend on their relative weightings in each portfolio.

The Schwab MarketTrack Conservative Portfolio Investor Shares returned 0.09% during the period, compared to the benchmark Conservative Composite Index, which returned 2.23%. The portfolio focuses on bond investments, but also includes equity investments, remaining close to the target allocations of 55% bonds, 40% stocks, and 5% cash. The portfolio’s positive return was driven by the well performing fixed income component; negative returns in the fund’s U.S. equity components acted to offset gains. In the fixed income space, the Schwab Total Bond Market Fund returned 4.07%. The Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. On the equity side, small-cap stocks generally did better than large-cap. In the large-cap space, the Schwab Institutional Select S&P 500 Fund returned -8.55%. In the small-cap space, the Schwab Small-Cap Index Fund Select Shares returned -6.21%. On the international equity side, the Schwab International Index Fund Select Shares returned -5.86%.

As of 04/30/09:

 Statistics

Number of Holdings 7

Weighted Average Market

  Cap ($ x 1,000,000) $44,490

Price/Earnings Ratio (P/E) 18.0

Price/Book Ratio (P/B) 1.7

Portfolio Turnover Rate¹ 16%

 Asset Class Weightings % of Investments

Bonds 54.6%

Large-Cap Stocks 20.4%

International Stocks 10.3%

Small-Cap Stocks 10.3%

Short-Term Investments 4.4%

Total 100.0%

 Top Holdings % Net Assets²

Schwab Total Bond Market Fund 54.3%

Schwab Institutional Select

  S&P 500 Fund 14.3%

Schwab International Index

  Fund, Select Shares 10.3%

Schwab Small-Cap Index Fund,

  Select Shares 10.3%

Schwab S&P 500 Index Fund,

  Select Shares 6.0%

Schwab Value Advantage Money

  Fund, Institutional Shares 4.3%

Total 99.5%

Manager views and portfolio holdings may have changed since the report date.

Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

12 Schwab MarketTrack Portfolios

 Schwab MarketTrack Conservative Portfolio^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$100,000 Investment in P Shares¹

 Average Annual Total Returns^1,2

Portfolio Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception
Investor Shares (11/20/95)		0.09%*		-16.59%		0.87%		2.29%		4.54%
P Shares (4/6/06)		0.14%		-16.39%		n/a		n/a		-3.12%
Benchmark: Conservative Composite Index		2.23%		-13.86%		2.61%		3.18%		(11/20/95) 5.60%
										(4/6/06) -0.74%
Fund Category: Morningstar Conservative Allocation		1.23%		-16.74%		0.79%		1.77%		(11/20/95) 4.14%
										(4/6/06) -2.86%

Portfolio Expense Ratios³: Investor Shares: Net 0.91%; Gross 1.15% / P Shares: Net 0.76%; Gross 1.00%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

*	Return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the financial highlights section of the report is calculated in the same manner, but also taking into account certain adjustments that are necessary under generally accepted accounting principles which are required when preparing the semiannual report.
1	The Conservative Composite Index is based on a comparable portfolio asset allocation and calculated using the following portion allocations: 30% Dow Jones U.S. Total Stock Market Index, 10% MSCI EAFE Index, 55% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.
2	Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares.
3	As stated in the prospectus. Includes expenses of the Underlying Funds in which the Portfolio invests. The annualized weighted average expense ratio of the Underlying Funds was 0.41%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab MarketTrack Portfolios 13

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab MarketTrack All Equity Portfoliotm
Actual Return		0.50%	$	1,000	$	926.10	$	2.39
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51
Schwab MarketTrack Growth Portfoliotm
Investor Shares
Actual Return		0.50%	$	1,000	$	953.60	$	2.42
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51
P Shares
Actual Return		0.35%	$	1,000	$	954.00	$	1.70
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.06	$	1.76
Schwab MarketTrack Balanced Portfoliotm
Actual Return		0.50%	$	1,000	$	976.30	$	2.45
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51
Schwab MarketTrack Conservative Portfoliotm
Investor Shares
Actual Return		0.50%	$	1,000	$	1,000.00	$	2.48
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51
P Shares
Actual Return		0.35%	$	1,000	$	1,001.40	$	1.74
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.06	$	1.76

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights; does not include expenses of underlying funds in which the portfolios invest.
2	Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

14 Schwab MarketTrack Portfolios

Schwab MarketTrack All Equity Portfolio^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		9.44			15.58			13.63			11.55			10.44			9.43
Income (loss) from investment operations:
Net investment income (loss)		0.27			0.20			0.21			0.11			0.12			0.08
Net realized and unrealized gains (losses)		(0.95	)		(6.11	)		2.01			2.10			1.11			1.02
Total from investment operations		(0.68	)		(5.91	)		2.22			2.21			1.23			1.10
Less distributions:
Distributions from net investment income		(0.23	)		(0.22	)		(0.27	)		(0.13	)		(0.12	)		(0.09	)
Distributions from net realized gains		(0.52	)		(0.01	)		—			—			—			—
Total distributions		(0.75	)		(0.23	)		(0.27	)		(0.13	)		(0.12	)		(0.09	)
Net asset value at end of period		8.01			9.44			15.58			13.63			11.55			10.44
Total return (%)		(7.39	)1		(38.46	)		16.55			19.31			11.81			11.75
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses2		0.50	3		0.50			0.50			0.50			0.50			0.50
Gross operating expenses2		0.78	3		0.73			0.72			0.74			0.75			0.76
Net investment income (loss)		6.67	3		1.46			1.24			0.89			1.07			0.83
Portfolio turnover rate		6	1		10	��		0	4		8			49			7
Net assets, end of period ($ x 1,000,000)		381			429			682			527			463			450

* Unaudited.

¹ Not annualized.

² The expenses incurred by underlying funds in which the portfolio invests are not included in this ratio.

³ Annualized.

⁴ Less than 1%.

See financial notes 15

 Schwab MarketTrack All Equity Portfolio

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.8%	Other Investment Companies		501,277		377,055
	1	.2%	Short-Term Investments		4,462		4,462
	100	.0%	Total Investments		505,739		381,517
	0	.0%	Other Assets and Liabilities, Net				(63	)
	100	.0%	Total Net Assets				381,454

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 98.8% of net assets
Schwab Institutional Select S&P 500 Fund (a)		23,830,784		164,909
Schwab International Index Fund, Select Shares (a)		9,084,070		113,460
Schwab Small-Cap Index Fund, Select Shares (a)		7,782,828		98,686
Total Other Investment Companies (Cost $501,277)				377,055
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 1.2% of net assets
Commercial Paper & Other Obligations 1.0%
Citibank, New York Time Deposit
0.03%, 05/01/09		3,909		3,909
U.S. Treasury Obligation 0.2%
U.S. Treasury Bill
0.16%, 06/18/09 (b)		553		553
Total Short-Term Investments (Cost $4,462)				4,462
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $535,714 and the unrealized appreciation and depreciation were $0 and ($154,197) respectively, with net unrealized depreciation of ($154,197).

(a)	Issuer is affiliated with the fund’s adviser.
(b)	All or a portion of this security is held as collateral for open futures contracts.

In addition to the above, the fund held the following at

04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		100		4,350		608

16 See financial notes

 Schwab MarketTrack All Equity Portfolio

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $501,277)		$377,055
Investments in unaffiliated issuers, at value (cost $4,462)	+	4,462
Total investments, at value (cost $505,739)		$381,517
Receivables:
Investments sold		400
Fund shares sold		245
Due from brokers for futures		5
Prepaid expenses	+	1
Total assets		382,168
Liabilities
Payables:
Investments bought		400
Investment adviser and administrator fees		5
Transfer agent and shareholder services fees		8
Fund shares redeemed		241
Trustees’ fees		1
Accrued expenses	+	59
Total liabilities		714
Net Assets
Total assets		382,168
Total liabilities	−	714
Net assets		381,454
Net Assets by Source
Capital received from investors		561,894
Distributions in excess of net investment income		(1,184	)
Net realized capital losses		(55,642	)
Net unrealized capital losses		(123,614	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$381,454		47,617			$8.01

See financial notes 17

 Schwab MarketTrack All Equity Portfolio

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$13,086
Interest	+	2
Total investment income		13,088
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds		(20,256	)
Net realized losses on futures contracts	+	(2,221	)
Net realized losses		(22,477	)
Net Unrealized Gains and Losses
Net unrealized losses on affiliated underlying funds		(24,890	)
Net unrealized gains on futures contracts	+	1,754
Net unrealized losses		(23,136	)
Expenses
Investment adviser and administrator fees		803
Transfer agent and shareholder service fees		456
Shareholder reports		79
Registration fees		23
Professional fees		20
Portfolio accounting fees		12
Custodian fees		8
Trustees’ fees		6
Other expense	+	10
Total expenses		1,417
Expense reduction by adviser and Schwab	−	504
Net expenses		913
Increase (Decrease) in Net Assets from Operations
Total investment income		13,088
Net expenses	−	913
Net investment income		12,175
Net realized losses		(22,477	)
Net unrealized losses	+	(23,136	)
Decrease in net assets from operations		($33,438	)

18 See financial notes

 Schwab MarketTrack All Equity Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$12,175			$8,840
Net realized gains (losses)			(22,477	)		4,479
Net unrealized losses	+		(23,136	)		(285,270	)
Decrease in net assets from operations			(33,438	)		(271,951	)
Distributions to Shareholders
Distributions from net investment income			10,448			9,700
Distributions from net realized gains	+		23,862			437
Total distributions			$34,310			$10,137

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			5,143			$40,783			11,241			$147,763
Shares Reinvested			3,934			32,337			666			9,651
Shares Redeemed	+		(6,941	)		(53,048	)		(10,225	)		(128,596	)
Net transactions in fund shares			2,136			$20,072			1,682			$28,818
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			45,481			$429,130			43,799			$682,400
Total increase or decrease	+		2,136			(47,676	)		1,682			(253,270	)
End of period			47,617			$381,454			45,481			$429,130
Distributions in excess of net investment income						($1,184	)					($2,911	)

See financial notes 19

Schwab MarketTrack Growth Portfolio^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		13.71			21.09			19.16			16.81			15.57			14.36
Income (loss) from investment operations:
Net investment income (loss)		0.31			0.37			0.40			0.30			0.27			0.21
Net realized and unrealized gains (losses)		(0.93	)		(6.94	)		2.16			2.33			1.20			1.21
Total from investment operations		(0.62	)		(6.57	)		2.56			2.63			1.47			1.42
Less distributions:
Distributions from net investment income		(0.40	)		(0.41	)		(0.46	)		(0.28	)		(0.23	)		(0.21	)
Distributions from net realized gains		(0.44	)		(0.40	)		(0.17	)		—			—			—
Total distributions		(0.84	)		(0.81	)		(0.63	)		(0.28	)		(0.23	)		(0.21	)
Net asset value at end of period		12.25			13.71			21.09			19.16			16.81			15.57
Total return (%)		(4.64	)1		(32.27	)		13.69			15.83			9.48			9.94
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses2		0.50	3		0.50			0.50			0.50			0.50			0.50
Gross operating expenses2		0.75	3		0.71			0.70			0.71			0.72			0.73
Net investment income (loss)		5.20	3		1.99			1.94			1.74			1.58			1.35
Portfolio turnover rate		19	1		10			4			7			33			9
Net assets, end of period ($ x 1,000,000)		419			454			686			602			657			614

	11/1/08–			11/1/07–			11/1/06–			4/6/064–
P Shares	4/30/09*			10/31/08			10/31/07			10/31/06
Per-Share Data ($)
Net asset value at beginning of period		13.72			21.10			19.18			18.32
Income (loss) from investment operations:
Net investment income (loss)		0.33			0.37			0.42			0.10
Net realized and unrealized gains (losses)		(0.95	)		(6.91	)		2.16			0.76
Total from investment operations		(0.62	)		(6.54	)		2.58			0.86
Less distributions:
Distributions from net investment income		(0.42	)		(0.44	)		(0.49	)		—
Distributions from net realized gains		(0.44	)		(0.40	)		(0.17	)		—
Total distributions		(0.86	)		(0.84	)		(0.66	)		—
Net asset value at end of period		12.24			13.72			21.10			19.18
Total return (%)		(4.60	)1		(32.14	)		13.83			4.69	1
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses2		0.35	3		0.35			0.35			0.35	3
Gross operating expenses2		0.60	3		0.56			0.55			0.56	3
Net investment income (loss)		5.35	3		2.10			2.07			0.95	3
Portfolio turnover rate		19	1		10			4			7	1
Net assets, end of period ($ x 1,000,000)		78			94			138			119

* Unaudited.

¹ Not annualized.

² The expenses incurred by underlying funds in which the portfolio invests are not included in this ratio.

³ Annualized.

⁴ Commencement of operations.

20 See financial notes

 Schwab MarketTrack Growth Portfolio

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.6%	Other Investment Companies		549,255		494,027
	0	.4%	Short-Term Investment		1,838		1,838
	100	.0%	Total Investments		551,093		495,865
	0	.0%	Other Assets and Liabilities, Net				243
	100	.0%	Total Net Assets				496,108

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.6% of net assets
Schwab Institutional Select S&P 500 Fund (a)		28,677,545		198,449
Schwab International Index Fund, Select Shares (a)		7,975,125		99,609
Schwab Small-Cap Index Fund, Select Shares (a)		8,182,408		103,753
Schwab Total Bond Market Fund (a)		8,233,150		71,958
Schwab Value Advantage Money Fund, Institutional Shares (a)		20,258,077		20,258
Total Other Investment Companies (Cost $549,255)				494,027
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.4% of net assets
Commercial Paper & Other Obligation 0.4%
Citibank, New York Time Deposit
0.03%, 05/01/09		1,838		1,838
Total Short-Term Investment (Cost $1,838)				1,838
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $563,740 and the unrealized appreciation and depreciation were $0 and ($67,875), respectively, with a net unrealized depreciation of ($67,875).

(a) Issuer is affiliated with the fund’s adviser.

See financial notes 21

 Schwab MarketTrack Growth Portfolio

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $549,255)		$494,027
Investments in unaffiliated issuers, at value (cost $1,838)	+	1,838
Total investments, at value (cost $551,093)		495,865
Receivables:
Investments sold		1,500
Fund shares sold		518
Dividends		258
Prepaid expenses	+	1
Total assets		498,142
Liabilities
Payables:
Investments bought		1,500
Investment adviser and administrator fees		8
Transfer agent and shareholder services fees		9
Fund shares redeemed		463
Trustees’ fees		1
Accrued expenses	+	53
Total liabilities		2,034
Net Assets
Total assets		498,142
Total liabilities	−	2,034
Net assets		$496,108
Net Assets by Source
Capital received from investors		581,159
Net investment income not yet distributed		790
Net realized capital losses		(30,613	)
Net unrealized capital losses		(55,228	)

Net Asset Value (NAV) by Share Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$418,500		34,153			$12.25
P Shares	$77,608		6,338			$12.24

22 See financial notes

 Schwab MarketTrack Growth Portfolio

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds and stocks		$12,792
Dividends received from unaffiliated issuers	+	947
Total investment income		13,739
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds and stocks		(15,623	)
Net realized losses on unaffiliated investments	+	(7,743	)
Net realized losses		(23,366	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds and stocks		351
Net unrealized losses on unaffiliated investments	+	(17,890	)
Net unrealized losses		(17,539	)
Expenses
Investment adviser and administrator fees		1,058
Transfer agent and shareholder service fees:
Investor Shares		501
P Shares		40
Shareholder reports		57
Professional fees		21
Portfolio accounting fees		16
Registration fees		15
Custodian fees		9
Trustees’ fees		7
Interest expense		1
Other expenses	+	11
Total expenses		1,736
Expense reduction by adviser and Schwab	−	591
Net expenses		1,145
Increase in Net Assets from Operations
Total investment income		13,739
Net expenses	−	1,145
Net investment income		12,594
Net realized losses		(23,366	)
Net unrealized losses	+	(17,539	)
Decrease in net assets from operations		($28,311	)

See financial notes 23

 Schwab MarketTrack Growth Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$12,594			$14,619
Net realized gains (losses)			(23,366	)		15,981
Net unrealized losses	+		(17,539	)		(295,758	)
Decrease in net assets from operations			(28,311	)		(265,158	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			13,232			13,372
P. Shares	+		2,792			3,067
Total distributions from net investment income			16,024			16,439
Distributions from net realized gains
Investor Shares			14,726			13,018
P. Shares	+		2,923			2,778
Total distributions from net realized gains			17,649			15,796
Total distributions			$33,673			$32,235

Transactions in Fund Shares

					��
		11/1/08-4/30/09							11/1/07-10/31/08
		SHARES				VALUE			SHARES			VALUE
Shares Sold
Investor Shares			3,478				$41,850			5,270			$93,615
P. Shares	+		483				6,035			1,702			31,974
Total shares sold			3,961				$47,885			6,972			$125,589
Shares Reinvested
Investor Shares			2,157				$26,857			1,316			$25,447
P. Shares	+		460				5,715			302			5,845
Total shares reinvested			2,617				$32,572			1,618			$31,292
Shares Redeemed
Investor Shares			(4,588	)			($53,154	)		(6,000	)		($104,934	)
P. Shares	+		(1,475	)			(17,456	)		(1,659	)		(29,888	)
Total shares redeemed			(6,063	)			($70,610	)		(7,659	)		($134,822	)
Net transactions in fund shares			515				$9,847			931			$22,059
Shares Outstanding and Net Assets
		11/1/08-4/30/09							11/1/07-10/31/08
		SHARES				NET ASSETS			SHARES			NET ASSETS
Beginning of period			39,976				$548,245			39,045			$823,579
Total increase or decrease	+		515				(52,137	)		931			(275,334	)
End of period			40,491				$496,108			39,976			$548,245
Net investment income not yet distributed							$790						$4,220

24 See financial notes

Schwab MarketTrack Balanced Portfolio^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		12.74			18.13			17.04			15.46			14.66			13.78
Income (loss) from investment operations:
Net investment income (loss)		0.27			0.42			0.47			0.38			0.34			0.29
Net realized and unrealized gains (losses)		(0.57	)		(5.06	)		1.41			1.58			0.74			0.88
Total from investment operations		(0.30	)		(4.64	)		1.88			1.96			1.08			1.17
Less distributions:
Distributions from net investment income		(0.44	)		(0.48	)		(0.50	)		(0.34	)		(0.28	)		(0.29	)
Distributions from net realized gains		(0.24	)		(0.27	)		(0.29	)		(0.04	)		—			—
Total distributions		(0.68	)		(0.75	)		(0.79	)		(0.38	)		(0.28	)		(0.29	)
Net asset value at end of period		11.76			12.74			18.13			17.04			15.46			14.66
Total return (%)		(2.37	)1		(26.59	)		11.38			12.92			7.41			8.61
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses2		0.50	3		0.50			0.50			0.50			0.50			0.50
Gross operating expenses2		0.74	3		0.72			0.72			0.73			0.73			0.74
Net investment income (loss)		4.73	3		2.57			2.65			2.35			2.20			2.03
Portfolio turnover rate		21	1		17			6			8			25			11
Net assets, end of period ($ x 1,000,000)		378			405			598			534			519			541

* Unaudited.

¹ Not annualized.

² The expenses incurred by underlying funds in which the portfolio invests are not included in this ratio.

³ Annualized.

See financial notes 25

 Schwab MarketTrack Balanced Portfolio

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.6%	Other Investment Companies		397,820		372,433
	1	.2%	Short-Term Investment		4,734		4,734
	99	.8%	Total Investments		402,554		377,167
	0	.2%	Other Assets and Liabilities, Net				575
	100	.0%	Total Net Assets				377,742

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 98.6% of net assets
Schwab Institutional Select S&P 500 Fund (a)		16,383,078		113,371
Schwab International Index Fund, Select Shares (a)		4,668,942		58,315
Schwab Small-Cap Index Fund, Select Shares (a)		4,631,555		58,728
Schwab Total Bond Market Fund (a)		14,792,748		129,288
Schwab Value Advantage Money Fund, Institutional Shares (a)		12,730,710		12,731
Total Other Investment Companies (Cost $397,820)				372,433
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 1.2% of net assets
Commercial Paper & Other Obligation 1.2%
Citibank, New York Time Deposit
0.03%, 05/01/09		4,734		4,734
Total Short-Term Investment (Cost $4,734)				4,734
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $411,795 and the unrealized appreciation and depreciation were $0 and ($34,628), respectively, with net unrealized depreciation of ($34,628).

(a) Issuer is affiliated with the fund’s adviser.

26 See financial notes

 Schwab MarketTrack Balanced Portfolio

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $397,820)		$372,433
Investments in unaffiliated issuers, at value (cost $4,734)	+	4,734
Total investments, at value (cost $402,554)		377,167
Receivables:
Investments sold		1,500
Dividends		459
Fund shares sold		306
Prepaid expenses	+	1
Total assets		379,433
Liabilities
Payables:
Investments bought		1,500
Investment adviser and administrator fees		6
Transfer agent and shareholder services fees		7
Fund shares redeemed		133
Trustees’ fees		1
Accrued expenses	+	44
Total liabilities		1,691
Net Assets
Total assets		379,433
Total liabilities	−	1,691
Net assets		$377,742
Net Assets by Source
Capital received from investors		423,024
Net investment income not yet distributed		1,560
Net realized capital losses		(21,455	)
Net unrealized capital losses		(25,387	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$377,742		32,116			$11.76

See financial notes 27

 Schwab MarketTrack Balanced Portfolio

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds and stocks		$8,973
Dividends received from unaffiliated issuers		630
Interest	+	2
Total investment income		9,605
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds and stocks		(11,436	)
Net realized losses on unaffiliated investments	+	(5,706	)
Net realized losses		(17,142	)
Net Unrealized Gains and Losses
Net unrealized losses on unaffiliated investments		(11,406	)
Net unrealized gains on affiliated underlying funds and stocks	+	8,476
Net unrealized losses		(2,930	)
Expenses
Investment adviser and administrator fees		808
Transfer agent and shareholder service fees		459
Shareholder reports		31
Professional fees		20
Portfolio accounting fees		14
Registration fees		13
Custodian fees		7
Trustees’ fees		6
Other expenses	+	10
Total expenses		1,368
Expense reduction by adviser and Schwab	−	449
Net expenses		919
Increase (Decrease) in Net Assets from Operations
Total investment income		9,605
Net expenses	−	919
Net investment income		8,686
Net realized losses		(17,142	)
Net unrealized losses	+	(2,930	)
Decrease in net assets from operations		($11,386	)

28 See financial notes

 Schwab MarketTrack Balanced Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$8,686			$13,698
Net realized gains (losses)			(17,142	)		6,587
Net unrealized losses	+		(2,930	)		(174,098	)
Decrease in net assets from operations			(11,386	)		(153,813	)
Distributions to Shareholders
Distributions from net investment income			14,076			15,748
Distributions from net realized gains	+		7,744			9,065
Total distributions			$21,820			$24,813

Transactions in Fund Shares

		11/1/08-04/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Total shares sold			2,925			$34,101			5,213			$83,413
Total shares reinvested			1,742			20,735			1,408			23,635
Total shares redeemed	+		(4,339	)		(48,887	)		(7,834	)		(121,760	)
Net transactions in fund shares			328			$5,949			(1,213	)		($14,712	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			31,788			$404,999			33,001			$598,337
Total increase or decrease	+		328			(27,257	)		(1,213	)		(193,338	)
End of period			32,116			$377,742			31,788			$404,999
Net investment income not yet distributed						$1,560						$6,950

See financial notes 29

Schwab MarketTrack Conservative Portfolio^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		11.34			14.90			14.33			13.42			13.09			12.53
Income (loss) from investment operations:
Net investment income (loss)		0.25			0.43			0.49			0.42			0.36			0.34
Net realized and unrealized gains (losses)		(0.25	)		(3.40	)		0.78			0.92			0.32			0.57
Total from investment operations		—			(2.97	)		1.27			1.34			0.68			0.91
Less distributions:
Distributions from net investment income		(0.25	)		(0.46	)		(0.51	)		(0.42	)		(0.35	)		(0.35	)
Distributions from net realized gains		(0.09	)		(0.13	)		(0.19	)		(0.01	)		—			—
Total distributions		(0.34	)		(0.59	)		(0.70	)		(0.43	)		(0.35	)		(0.35	)
Net asset value at end of period		11.00			11.34			14.90			14.33			13.42			13.09
Total return (%)		0.00	1,2		(20.59	)		9.12			10.13			5.24			7.38
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.50	4		0.50			0.50			0.50			0.50			0.50
Gross operating expenses3		0.75	4		0.74			0.73			0.74			0.75			0.75
Net investment income (loss)		4.61	4		3.12			3.37			3.12			2.67			2.70
Portfolio turnover rate		16	1		16			4			11			9			10
Net assets, end of period ($ x 1,000,000)		162			182			252			232			300			290

	11/1/08–			11/01/07–			11/01/06–			4/06/065–
P Shares	4/30/09*			10/31/08			10/31/07			10/31/06
Per-Share Data ($)
Net asset value at beginning of period		11.30			14.87			14.32			13.93
Income (loss) from investment operations:
Net investment income (loss)		0.25			0.42			0.51			0.23
Net realized and unrealized gains (losses)		(0.23	)		(3.36	)		0.78			0.35
Total from investment operations		0.02			(2.94	)		1.29			0.58
Less distributions:
Distributions from net investment income		(0.28	)		(0.50	)		(0.55	)		(0.19	)
Distributions from net realized gains		(0.09	)		(0.13	)		(0.19	)		—
Total distributions		(0.37	)		(0.63	)		(0.74	)		(0.19	)
Net asset value at end of period		10.95			11.30			14.87			14.32
Total return (%)		0.14	1		(20.47	)		9.32			4.22	1
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.35	4		0.35			0.35			0.35	4
Gross operating expenses3		0.60	4		0.59			0.58			0.60	4
Net investment income (loss)		4.67	4		3.20			3.48			2.81	4
Portfolio turnover rate		16	1		16			4			11	1
Net assets, end of period ($ x 1,000,000)		84			86			99			79

* Unaudited.

¹ Not annualized.

² Less than 0.01%

³ The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio.

⁴ Annualized.

⁵ Commencement of operations.

30 See financial notes

 Schwab MarketTrack Conservative Portfolio

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.5%	Other Investment Companies		263,421		245,024
	0	.1%	Short-Term Investment		163		163
	99	.6%	Total Investments		263,584		245,187
	0	.4%	Other Assets and Liabilities, Net				934
	100	.0%	Total Net Assets				246,121

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.5% of net assets
Schwab Institutional Select S&P 500 Fund (a)		5,087,635		35,206
Schwab International Index Fund, Select Shares (a)		2,025,386		25,297
Schwab S&P 500 Index Fund, Select Shares (a)		1,086,205		14,751
Schwab Small-Cap Index Fund, Select Shares (a)		1,992,645		25,267
Schwab Total Bond Market Fund (a)		15,306,955		133,783
Schwab Value Advantage Money Fund, Institutional Shares (a)		10,720,178		10,720
Total Other Investment Companies (Cost $263,421)				245,024
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.1% of net assets
Commercial Paper & Other Obligations 0.1%
Citibank, London Time Deposit
0.03%, 05/01/09		163		163
Total Short-Term Investment (Cost $163)				163
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $268,139 and the unrealized appreciation and depreciation were $575 and ($23,527), respectively, with a net unrealized depreciation of ($22,952).

(a) Issuer is affiliated with the fund’s adviser.

See financial notes 31

 Schwab MarketTrack Conservative Portfolio

Statement of

Assets and Liabilities

As of April 30,2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $263,421)		$245,024
Investments in unaffiliated issuers, at value (cost $163)	+	163
Total investments, at value (cost $263,584)		245,187
Receivables:
Investments sold		2,000
Dividends		482
Fund shares sold		192
Prepaid expenses	+	1
Total assets		247,862
Liabilities
Payables:
Investments bought		1,500
Investment adviser and administrator fees		4
Transfer agent and shareholder services fees		4
Fund shares redeemed		194
Trustees’ fees		1
Accrued expenses	+	38
Total liabilities		1,741
Net Assets
Total assets		247,862
Total liabilities	−	1,741
Net assets		$246,121
Net Assets by Source
Capital received from investors		278,498
Net investment income not yet distributed		394
Net realized capital losses		(14,374	)
Net unrealized capital losses		(18,397	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$162,468		14,763			$11.00	*
P Shares	$83,653		7,640			$10.95

*  Due to rounding, net assets divided by shares outstanding does not equal net asset value per share.

32 See financial notes

 Schwab MarketTrack Conservative Portfolio

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds and stocks		$6,149
Dividends received from unaffiliated issuers	+	150
Total Investment Income		6,299
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds and stocks		(9,978	)
Net realized losses on unaffiliated investments	+	(2,423	)
Net realized losses		(12,401	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds and stocks		7,281
Net unrealized losses on unaffiliated investments	+	(1,607	)
Net unrealized gains		5,674
Expenses
Investment adviser and administrator fees		545
Transfer agent and shareholder service fees
Investor Shares		206
P Shares		42
Professional fees		21
Portfolio accounting fees		12
Shareholder reports		12
Registration fees		10
Custodian fees		6
Trustees’ fees		5
Other expenses	+	9
Total expenses		868
Expense reduction by adviser and Schwab	−	310
Net expenses		558
Increase (Decrease) in Net Assets from Operations
Total investment income		6,299
Net expenses	−	558
Net investment income		5,741
Net realized losses		(12,401	)
Net unrealized gains	+	5,674
Decrease in net assets from operations		($986	)

See financial notes 33

 Schwab MarketTrack Conservative Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$5,741			$10,619
Net realized gains (losses)			(12,401	)		1,899
Net unrealized gains (losses)	+		5,674			(85,437	)
Decrease in net assets from operations			(986	)		(72,919	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			3,871			7,893
P Shares	+		2,131			3,905
Total distributions from net investment income			6,002			11,798
Distributions from net realized gains
Investor Shares			1,450			2,228
P Shares	+		714			1,018
Total distributions from net realized gains			2,164			3,246
Total distributions			$8,166			$15,044

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			1,752			$19,070			3,003			$41,069
P Shares	+		572			6,277			2,204			31,328
Total shares sold			2,324			$25,347			5,207			$72,397
Shares Reinvested
Investor Shares			454			$5,010			689			$9,481
P Shares	+		259			2,844			358			4,923
Total shares reinvested			713			$7,854			1,047			$14,404
Shares Redeemed
Investor Shares			(3,533	)		($37,817	)		(4,522	)		($59,815	)
P Shares	+		(799	)		(8,481	)		(1,596	)		(21,433	)
Total shares redeemed			(4,332	)		($46,298	)		(6,118	)		($81,248	)
Net transactions in fund shares			(1,295	)		($13,097	)		136			$5,553
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			23,698			$268,370			23,562			$350,780
Total increase or decrease	+		(1,295	)		(22,249	)		136			(82,410	)
End of period			22,403			$246,121			23,698			$268,370
Net investment income not yet distributed						$394						$655

34 See financial notes

 Schwab MarketTrack Portfolios

Financial Notes

1. Business Structure of the Funds

Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

Schwab Capital Trust (organized May 7, 1993)
Schwab MartketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Balanced Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income–Moderate Payout
Schwab Monthly Income–Enhanced Payout
Schwab Monthly Income–Maximum Payout

The Schwab MarketTrack Portfolios are primarily “fund of funds” as they invest a major portion of their assets in a combination of other Schwab Funds (underlying funds) to achieve their investment objectives and maintain their asset allocation. In addition, the portfolios may purchase individual securities to achieve their investment objectives. Each portfolio bears its share of the allocable expenses of the underlying funds in which they invest. Such expenses are reflected in the NAV.

Both Schwab MarketTrack Growth Portfolio and Schwab MarketTrack Conservative Portfolio offer two share classes: Investor Shares and P Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums. Schwab MarketTrack All Equity Portfolio and Schwab MarketTrack Balanced Portfolio each offer one share class.

Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares of a fund or share class, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.

2.  Significant Accounting Policies:

(All dollar amounts are x 1,000)

The following is a summary of the significant accounting policies the funds use in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America. For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.

(a) Security Valuation:

The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:

•  Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily

35

 Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate.

•  Securities for which no quoted value is available or when a significant event has occurred between the time of the security’s last close and the time the fund calculates net asset value: valued at fair value, as determined in good faith by the funds’ investment adviser using guidelines adopted by the funds’ Board of Trustees and the Pricing Committee. Some of the more common reasons that may necessitate that a security be valued at fair value include: the security’s trading has been halted or suspended; the security has been de-listed from a national exchange; the security’s primary pricing source is not able or willing to provide a price, or certain foreign securities’ closing market prices adjusted for changes in value that may occur between the close of foreign exchange and the time at which funds’ shares are priced. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  Futures and Forwards: valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day’s exchange rates (for forwards).

•  Underlying funds: valued at their respective net asset values as determined by those funds in accordance with the 1940 Act for a given day.

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

(b) Portfolio Investments:

Futures Contract: The funds may invest in futures contracts. Futures contracts involve certain risks because they can be very sensitive to market movements.

One risk is that the price of a futures contract may not move in perfect correlation with the price of the underlying securities. Another risk is that, at certain times, it may be impossible for a fund to close out a position in a futures contract, due to a difference in trading hours or to market conditions that may reduce the liquidity for a futures contract or its underlying securities. The potential for losses associated with futures contracts may exceed amounts recorded in the Statement of Assets and Liabilities.

Because futures contracts carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount. Subsequent payments (“Variation Margin”) are made or received by a fund depending on the daily fluctuations in the value of the future contract and are accounted for as unrealized gains or losses. Futures are traded publicly on exchanges, and their market value changes daily.

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to / from broker”).

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on

36 

 Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.

(e) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to its average daily net assets.

(f) Distributions to Shareholders:

The funds make distributions from net investment income and net realized capital gains once a year, except for the MarketTrack Conservative Portfolio, which makes distributions quarterly.

(g) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.

(h) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(i) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications.

The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.

(j) Accounting Pronouncements:

The funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.

Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments)

37

 Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

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 funds’ investments as of April 30, 2009:

	MarketTrack				MarketTrack
	All Equity Portfolio				Growth Portfolio
			Other				Other
	Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments**
Level 1		$377,055		$608		$494,027		$—
Level 2		4,462		—		1,838		—
Level 3		—		—		—		—
Total		$381,517		$608		$495,865		$—

	MarketTrack				MarketTrack
	Balanced Portfolio				Conservative Portfolio
			Other				Other
	Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments**		in Securities		Instruments**
Level 1		$372,433		$—		$245,024		$—
Level 2		4,734		—		163		—
Level 3		—		—		—		—
Total		$377,167		$—		$245,187		$—

*   Other Financial Investments are future or forward contracts which are not included in Portfolio Holdings and are valued at the unrealized appreciation and depreciation.

**  The funds had no Other Financial Instruments.

In April 2009, the FASB issued FASB Staff Position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the funds’ or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the funds’ financial statement disclosures.

3. Risk factors:

Investing in the funds and the underlying funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below:

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 portfolios will fluctuate, which means that you could lose money.

The portfolio’s asset and stock allocations can have a substantial effect on performance. The risks and returns of different classes of assets and different segments of the stock market can vary over the long-term and the short-term. Because a portfolio may maintain exposure to bonds as well as stocks, the portfolio will be hurt by poor performance in either market. Also, because it does not intend to make strategic changes in its allocation, a portfolio’s performance may be hurt during times when segments emphasized by its target allocation are out of favor.

Many of the risks of the portfolios are associated with their investments in underlying stock and bond index funds. A portfolio’s underlying index funds seek to track the performance of various segments of the stock or bond market, as measured by their

38 

 Schwab MarketTrack Portfolios

Financial Notes (continued)

3. Risk factors (continued):

respective indices. Neither the portfolios, because of its asset allocation strategy, nor the underlying funds, because of their indexing strategy, take steps to reduce market exposure or to lessen the effects of a declining market. While a portfolio’s underlying funds seek to track the returns of various indices, in each case an underlying fund’s performance normally is below that of the index. This gap occurs mainly because, unlike an index, the underlying funds incur expenses and must keep a small portion of their assets in cash. To the extent that an underlying fund lends securities or makes short-term or other investments to reduce its performance gap, it may increase the risk that its performance will be reduced. A portfolio itself keeps a small portion of its assets in cash, which may contribute modestly to lower performance.

Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. A portfolio’s performance also could be affected if an issuer or guarantor of a bond held by the portfolio fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to its issuer’s ability to make timely payments or otherwise honor its obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy. Mortgage-or asset-backed securities are subject to the risk that these bonds may be paid off earlier or later than expected. Either situation could cause the portfolio to hold securities paying lower than market rates of interest, which could hurt the portfolio’s yield or share price. Also, bonds of foreign issuers may be more volatile than those of comparable bonds from U.S. issuers, for reasons ranging from limited issuer information to the risk of political upheaval. A portfolio’s use of mortgage dollar rolls could cause the portfolio to lose money if the price of the mortgage-backed securities sold fall below the agreed upon repurchase price, or if the counterparty is unable to honor the agreement.

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. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments. The prices of securities issued by such companies may suffer a decline in response. In addition, the equity market tends to move in cycles which may cause stock prices to fall over short or extended periods of time.

Historically, small-cap stocks have been riskier than large-and mid-cap stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Small-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — bonds or large-cap stocks, for instance — a portfolio’s performance also will lag these investments.

A portfolio’s investments in securities of foreign issuers 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, or changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges). In certain countries, legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and, at times, more volatile than securities of comparable U.S. companies. A portfolio may also experience more rapid or extreme changes in value as compared to a fund that invests solely in securities of U.S. companies because the securities’ markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries.

Please refer to the funds’ prospectus for a complete description of the principal risks of investing in the funds.

4.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

39

 Schwab MarketTrack Portfolios

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

For its advisory and administrative services to each fund, the investment adviser is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:

Average daily net assets
First $500 million	0.44%
over $500 million	0.39%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

For its transfer agent and shareholder services, Schwab is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:

	Transfer Agent Fees		Shareholder Service Fees
Investor Shares		0.05%		0.20%
P Shares*		0.05%		0.05%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses, through February 27, 2011, as follows:

	MarketTrack		MarketTrack		MarketTrack		MarketTrack
	All Equity		Growth		Balanced		Conservative
	Portfolio		Portfolio		Portfolio		Portfolio
Investor Shares		0.50%		0.50%		0.50%		0.50%
P Shares*		n/a		0.35%		n/a		0.35%

*  P Shares are only offered by MarketTrack Growth Portfolio and MarketTrack Conservative Portfolio.

The funds may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the funds may invest in other related funds. As of April 30, 2009, the percentages of shares of other related funds owned by each MarketTrack Portfolio are:

	MarketTrack		MarketTrack		MarketTrack		MarketTrack
	All Equity		Growth		Balanced		Conservative
	Portfolio		Portfolio		Portfolio		Portfolio
Schwab Equity Index Funds:
S&P 500 Index Fund		—%		—%		—%		0.3%
Small-Cap Index Fund		10.2%		10.7%		6.1%		2.6%
International Index Fund		10.9%		9.5%		5.6%		2.4%
Schwab Bond Funds:
Total Bond Market Fund		—%		7.7%		13.8%		14.3%
Schwab Institutional Select Funds:
Institutional Select S&P 500 Index		6.6%		8.0%		4.6%		1.4%
Schwab Money Funds:
Value Advantage Money Fund		—%	—%*		—%*		—%*

* Less than 0.05%

As of April 30, 2009, the shares owned by each Charitable Giving Trust as a percentage of the total shares of the MarketTrack Growth Portfolio and MarketTrack Conservative Portfolios are 15.6% and 34.0%, respectively.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs.

40 

 Schwab MarketTrack Portfolios

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2009, each fund’s total aggregate security transactions with other Schwab Funds were as follows;

Schwab MartketTrack All Equity Portfolio	$	—
Schwab MarketTrack Growth Portfolio		61,069
Schwab MarketTrack Balanced Portfolio		40,771
Schwab MarketTrack Conservative Portfolio		9,607

Below is a summary of the affiliated transactions for each underlying fund during the period ended April 30, 2009:

MarketTrack All Equity Portfolio

												Realized			Distribution
	Balance of							Balance of		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2008 to			11/01/2008 to
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		04/30/2009		04/30/2009			04/30/2009
Schwab Equity Index Funds:
Small-Cap Index Fund		7,853,845		374,051		(445,068	)		7,782,828		$98,686		($4,811	)		$2,340
International Index Fund		9,006,531		614,372		(536,833	)		9,084,070		113,640		(5,358	)		5,707
Schwab Institutional Select Funds:
Institutional Select S&P 500 Index		24,175,121		1,557,158		(1,901,495	)		23,830,784		164,909		(10,087	)		5,039
Total											$377,055		($20,256	)		$13,086

MarketTrack Growth Portfolio

												Realized			Distribution
	Balance of							Balance of		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2008 to			11/01/2008 to
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		04/30/2009		04/30/2009			04/30/2009
Schwab Equity Index Funds:
Small-Cap Index Fund		7,975,717		835,053		(628,362	)		8,182,408		$103,753		($6,206	)		$2,450
International Index Fund		7,559,140		539,543		(123,558	)		7,975,125		99,609		(1,212	)		4,915
Schwab Bond Funds:
Total Bond Market Fund		9,539,883		1,011,078		(2,317,811	)		8,233,150		71,958		(2,708	)		1,577
Schwab Institutional Select Funds:
Institutional Select S&P 500 Index		17,368,767		12,655,422		(1,346,644	)		28,677,545		198,449		(5,544	)		3,717
Schwab Money Funds:
Value Advantage Money Fund		27,419,712		138,365		(7,300,000	)		20,258,077		20,258		—			132
Total											$494,027		($15,670	)		$12,791

41

 Schwab MarketTrack Portfolios

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

MarketTrack Balanced Portfolio

												Realized			Distribution
	Balance of							Balance of		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2008 to			11/01/2008 to
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		04/30/2009		04/30/2009			04/30/2009
Schwab Equity Index Funds:
Small-Cap Index Fund		4,445,891		632,697		(457,033	)		4,631,555		$58,728		($3,653	)		$1,392
International Index Fund		4,194,205		474,737		—			4,668,942		58,315		—			2,805
Schwab Bond Funds:
Total Bond Market Fund		16,524,627		1,424,560		(3,156,439	)		14,792,748		129,288		(3,812	)		2,800
Schwab Institutional Select Funds:
Institutional Select S&P 500 Index		8,600,045		9,192,311		(1,409,279	)		16,383,077		113,371		(3,977	)		1,907
Schwab Money Funds:
Value Advantage Money Fund		12,712,884		67,826		(50,000	)		12,730,710		12,731		—			68
Total											$372,433		($11,442	)		$8,972

MarketTrack Conservative Portfolio

												Realized		Distribution
	Balance of							Balance of		Market		Gain (Loss)		Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2008 to		11/01/2008 to
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		04/30/2009		04/30/2009		04/30/2009
Schwab Equity Index Funds:
S&P 500 Index Fund		1,785,442		50,883		(750,120	)		1,086,205		$14,751		$1,597		$704
Small-Cap Index Fund		1,958,569		373,314		(339,238	)		1,992,645		25,267		2,611		619
International Index Fund		1,861,476		331,994		(168,083	)		2,025,387		25,297		1,538		1,285
Schwab Bond Funds:
Total Bond Market Fund		17,173,417		1,371,386		(3,237,848	)		15,306,955		133,783		4,235		2,946
Schwab Institutional Select Funds:
Institutional Select S&P 500 Index		1,973,844		3,113,791		—			5,087,635		35,206		—		538
Schwab Money Funds:
Value Advantage Money Fund		10,389,731		555,447		(225,000	)		10,720,178		10,720		—		56
Total											$245,024		$9,981		$6,148

*  Distributions received include distributions from net investment income and from capital gains from the underlying funds.

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for any fund during the period.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.

42 

 Schwab MarketTrack Portfolios

Financial Notes (continued)

6. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.

There were no borrowings from the line of credit for the funds during the period. However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

7.  Purchases and Sales of Investment Securities:

(All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
MarketTrack All Equity Portfolio		$22,936		$23,475
MarketTrack Growth Portfolio		95,334		106,890
MarketTrack Balanced Portfolio		76,890		83,512
MarketTrack Conservative Portfolio		39,011		54,283

8.  Redemption Fee:

(All dollar amounts are x 1,000)

The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior period are:

	Current Period		Prior Period
	(11/01/08-4/30/09)		(11/01/07-10/31/08)
MarketTrack All Equity Portfolio		$12		$62
MarketTrack Growth Portfolio		13		18
MarketTrack Balance Portfolio		3		14
MarketTrack Conservative Portfolio		5		14

9.  Federal Income Taxes:

(All dollar amounts are x 1,000)

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2008, the funds had no capital loss carry forwards.

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2008, the funds did not incur any interest or penalties.

43

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

44 

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

45

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

46 

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

47

Notes

Schwab Funds^® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.

Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large^* Company Index Fund

Schwab Fundamental US Small-Mid^* Company Index Fund

Schwab Fundamental International^* Large Company Index Fund

Schwab Fundamental International^* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets^* Index Fund

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity¹. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.

^* SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

¹ Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC^®

Printed on recycled paper.

MFR13559-12

Semiannual report dated April 30, 2009 enclosed.

Schwab Balanced Fund^tm

You could have received this

document faster via email.

Save paper. Sign up for electronic delivery

at www.schwab.com/edelivery.

This wrapper is not part of the shareholder report.

Schwab Balanced Fund^tm

Semiannual Report

April 30, 2009

This page is intentionally left blank.

Schwab Balanced Fund^tm

In This Report
Performance at a Glance	2
From the President	3
The Investment Environment	4
Fund Management	5
Schwab Balanced Fundtm	6
Fund Expenses	8
Financial Statements	9
Financial Notes	14
Trustees and Officers	20
Glossary	23

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for the Report Period
Schwab Balanced Fundtm (Ticker Symbol: SWOBX)	-2.82%
Benchmark: Balanced Blended Index	-1.84%
Fund Category: Morningstar Moderate Allocation	-1.19%
Performance Details	pages 6-7
Minimum Initial Investment1	$ 100

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Source for category information: Morningstar, Inc.

¹  Please see prospectus for further detail and eligibility requirements.

2 Schwab Balanced Fund

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the fund covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

With this in mind, we’ve made a number of improvements to the Schwab Funds family of mutual funds making investing cheaper and easier for our clients. I am pleased to report that on May 5, 2009, we lowered expenses on Schwab Equity Index Funds and announced that we are simplifying share classes for Schwab equity and bond funds. Each Schwab equity and bond fund offers one low fund expense to investors regardless of how much they invest, starting at a low $100 minimum investment. Our goal is to make investing easier for our clients and the advisors who serve them−at a very low cost.

These enhancements are intended to help our clients continue to invest no matter what the market conditions may be. We hope that each and every client feels more comfortable planning for a financially secure future knowing that we are constantly working to make investing easier and more affordable.

Thank you for investing with us.

Sincerely,

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Schwab Balanced Fund 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Schwab Balanced Fund

Fund Management

	Jeffrey Mortimer, CFA, Chief Investment officer, Charles Schwab Investment Management, is responsible for the overall management of the fund. Prior to joining the firm in October 1997, he worked for more than 8 years in asset management.
	Caroline Lee, a managing director and portfolio manager of the investment adviser, co-manages the fund. Prior to joining the firm in November 2005, she worked in asset management for over 4 years overseeing subadvisor relationships in the pension group of a major corporation. She has also had 3 years of previous experience in investment management at another financial services firm.
	Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of the fund. He was appointed portfolio manager in 2008. Prior to joining the firm in 2003, he worked for more than 13 years in the investment management industry, with more than 6 of those years spent in portfolio management.

Schwab Balanced Fund 5

Schwab Balanced Fund^tm

Schwab Balanced Fund returned -2.82% for the period, underperforming the Balanced Blended Benchmark, which returned -1.84%. During the period, the equity portion of the Schwab Balanced Fund’s portfolio experienced the largest drop in returns. The Schwab Core Equity Fund returned -8.49%, in line with the S&P 500 Index, which returned -8.53%. In the small-cap portion of the portfolio, the Laudus Small-Cap MarketMasters Fund Select Shares declined by -5.03%, outperforming the Russell 2000 Index, which returned -8.40%. The Schwab Total Bond Market Fund returned 4.07%, but underperformed the Barclays Capital U.S. Aggregate Bond Index, which returned 7.74%.

As of 04/30/09:

 Statistics

Number of Holdings 4

Weighted Average Market

  Cap ($ x 1,000,000) $43,641

Price/Earnings Ratio (P/E) 87.4

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 17%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 63.7%

Fixed - Income Funds 35.5%

Short-Term Investments 0.8%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Core Equity Fund 43.4%

Schwab Total Bond Market Fund 35.3%

Laudus Small-Cap MarketMasters

  Fund, Select Shares 20.1%

State Street Institutional

  Liquid Reserves Fund - Institutional

  Class 0.8%

Total 99.6%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Small company stocks are subject to greater volatility than other asset classes.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

6 Schwab Balanced Fund

 Schwab Balanced Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		5 Years		10 Years
Fund: Schwab Balanced Fundtm (11/18/96)		-2.82%		-20.08%		0.08%		1.80%
Benchmark: Balanced Blended Index		-1.84%		-21.05%		0.51%		1.07%
Fund Category: Morningstar Moderate Allocation		-1.19%		-25.32%		-0.44%		0.90%

Fund Expense Ratios³: Net 0.47%; Gross 0.75%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Because the fund originally used a different asset allocation strategy and a multi-fund strategy, its performance prior to June 3, 2002 does not reflect the current strategy and may have been different if it did. From June 3, 2002 to February 28, 2008, the fund used a manager of managers strategy, and therefore its performance during this time does not reflect the fund’s current multi-fund strategy and may have been different if it did.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Balanced Blended Index is composed of 60% S&P 500® Index and 40% Barclays Capital U.S. Aggregate Bond Index.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.47%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Balanced Fund 7

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Balanced Fundtm
Actual Return		-%	$	1,000	$	971.80	$	0.00
Hypothetical 5% Return		-%	$	1,000	$	1,024.79	$	0.00

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

8 Schwab Balanced Fund

Schwab Balanced Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
	4/30/09*			10/31/081			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		9.82			13.86			13.39			12.85			11.88			11.07
Income (loss) from investment operations:
Net investment income (loss)		0.16	2		0.20	2		0.25	2		0.25	2		0.15			0.08
Net realized and unrealized gains (losses)		(0.42	)		(3.26	)		1.06			0.83			0.91			0.86
Total from investment operations		(0.26	)		(3.06	)		1.31			1.08			1.06			0.94
Less distributions:
Distributions from net investment income		(0.37	)		(0.29	)		(0.24	)		(0.16	)		(0.09	)		(0.13	)
Distributions from net realized gains		(0.32	)		(0.69	)		(0.60	)		(0.38	)		—			—
Total distributions		(0.69	)		(0.98	)		(0.84	)		(0.54	)		(0.09	)		(0.13	)
Net asset value at end of period		8.87			9.82			13.86			13.39			12.85			11.88
Total return (%)		(2.82	)3		(23.56	)		10.24			8.59			8.92			8.59
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses4		0.00	5,6		0.36			1.02	7		1.03	7		1.10			1.10
Gross operating expenses4		0.24	5		0.53			1.27			1.26			1.27			1.32
Net investment income (loss)		3.58	5		1.81			1.84			1.90			1.14			0.68
Portfolio turnover rate		17	3		267			244			244			283			242
Net assets, end of period ($ x 1,000,000)		78			85			112			122			130			130

* Unaudited.

¹ Effective on February 28, 2008, all outstanding Select Shares were converted into Investor Shares. The figures in the Financial Highlights reflect only the remaining share class.

² Calculated based on average shares outstanding during the period.

³ Not annualized.

⁴ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁵ Annualized.

⁶ Effective February 28, 2008, Schwab and the investment adviser have agreed to limit the “net operating expenses” (excluding interest, taxes and certain non-routine expenses) to 0.00%, through February 27, 2011; does not include expenses of underlying funds in which the fund invests.

⁷ The ratio of net operating expenses would have been 1.10% for both periods ended 10/31/06 and 10/31/07, respectively, if custody credits and dividend and interest expenses on short sales had not been included.

See financial notes 9

 Schwab Balanced Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.6%	Other Investment Companies		97,208		77,827
	99	.6%	Total Investments		97,208		77,827
	0	.4%	Other Assets and Liabilities				289
	100	.0%	Net Assets				78,116

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.6% of net assets
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		1,868,489		15,695
Schwab Core Equity Fund (a)		2,807,654		33,888
Schwab Total Bond Market Fund (a)		3,158,632		27,607
State Street Institutional Liquid Reserves Fund - Institutional Class		636,703		637
Total Other Investment Companies (Cost $97,208)				77,827
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $97,976, and the unrealized appreciation and depreciation were $0 and ($20,149), respectively, with a net depreciation of ($20,149).

(a) Issuer is affiliated with the fund’s adviser.

10 See financial notes

 Schwab Balanced Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $96,571)		$77,190
Investments in unaffiliated issuers, at value (cost $637)	+	637
Total Investments, at value (cost $97,208)		77,827
Receivables:
Fund shares sold		266
Dividends		102
Due from investment adviser		1
Interest		1
Prepaid expenses	+	1
Total assets		78,198
Liabilities
Payables:
Fund shares redeemed		22
Trustees’ fees		1
Accrued expenses	+	59
Total liabilities		82
Net Assets
Total assets		78,198
Total liabilities	−	82
Net assets		$78,116
Net Assets by Source
Capital received from investors		102,566
Net investment income not yet distributed		313
Net realized capital losses		(5,382	)
Net unrealized capital losses		(19,381	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$78,116		8,806			$8.87

See financial notes 11

 Schwab Balanced Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$1,379
Interest	+	5
Total Investment Income		1,384
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds		(4,928	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds		946
Expenses
Shareholder reports		37
Professional fees		25
Registration fees		14
Portfolio accounting fees		7
Trustees’ fees		4
Other expenses	+	6
Total expenses		93
Expense reduction by adviser and Schwab	−	93
Net expenses		—
Increase (Decrease) in Net Assets from Operations
Net investment income		1,384
Net realized losses		(4,928	)
Net unrealized gains	+	946
Decrease in net assets from operations		($2,598	)

12 See financial notes

 Schwab Balanced Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/01/08-04/30/09			11/01/07-10/31/08
Net investment income			$1,384			$2,079
Net realized gains (losses)			(4,928	)		3,160
Net unrealized gains (losses)	+		946			(33,936	)
Decrease in net assets from operations			(2,598	)		(28,697	)
Distributions to Shareholders1
Distributions from net investment income
Investor Shares			3,133			2,272
Select Shares	+		—			573
Total distributions from net investment income			3,133			2,845
Distributions from net realized gains
Investor Shares			2,727			5,482
Select Shares	+		—			1,276
Total distributions from net realized gains			2,727			6,758
Total distributions			$5,860			$9,603

Transactions in Fund Shares¹

		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			497			$4,459			2,660			$31,962
Select Shares	+		—			—			125			1,558
Total shares sold			497			$4,459			2,785			$33,520
Shares Reinvested
Investor Shares			608			$5,511			593			$7,378
Select Shares	+		—			—			132			1,638
Total shares reinvested			608			$5,511			725			$9,016
Shares Redeemed
Investor Shares			(935	)		($8,237	)		(2,719	)		($31,898	)
Select Shares	+		—			—			(2,242	)		(27,365	)
Total shares redeemed			(935	)		($8,237	)		(4,961	)		($59,263	)
Net transactions in fund shares			170			$1,733			(1,451	)		($16,727	)
Shares Outstanding and Net Assets
		11/01/08-04/30/09						11/01/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			8,636			$84,841			10,087			$139,868
Total increase or decrease	+		170			(6,725	)		(1,451	)		(55,027	)
End of period			8,806			$78,116			8,636			$84,841
Net investment income not yet distributed						$313						$2,062

¹  Effective on February 28, 2008, all outstanding Select Shares (1,906 shares valued at $23,077) were converted into Investor Shares.

See financial notes 13

 Schwab Balanced Fund

Financial Notes

1. Business Structure of the Funds

Schwab Balanced Fund is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the fund discussed in this report, which is highlighted:

Schwab Capital Trust (organized May 7, 1993)
Schwab Balanced Fund
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid
Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout

The Schwab Balanced Fund is a single class “fund of funds” which seeks to achieve its investment objective by investing in a diversified group of other Schwab and/or Laudus Funds, but also may invest in other mutual funds, including exchange traded funds. In addition, the fund may purchase individual securities to maintain its allocations. The fund bears its share of allocable expenses of the underlying funds in which it invests. The financial statements of the fund should be read in conjunction with the underlying funds’ financial statements.

The fund offers one share class. Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, the fund may also keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

       (All dollar amounts are x 1,000)

The following is a summary of the significant accounting policies the fund uses in the preparation of its financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America. For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the SEC.

(a) Security Valuation:

The fund values the investment in underlying funds every business day. The fund uses the following policies to value various types of securities:

•  Underlying funds: valued at their respective net asset values as determined by the fund in accordance with the 1940 Act for a given day.

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

14 

 Schwab Balanced Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(b) Portfolio Investments:

Repurchase Agreements: The fund may enter into repurchase agreements. In a repurchase agreement, the fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created.

The fund’s repurchase agreements will be fully collateralized by U.S. government securities or U.S. government agency securities. All collateral is held by the fund’s custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the fund records certain foreign security dividends on the day it learns of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underling funds.

(e) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

(f) Distributions to Shareholders:

The fund declares and pays dividends from net investment income to shareholders once a month. The fund may make distributions from any net realized capital gains once a year.

(g) Custody Credit:

The fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the fund’s operating expenses.

(h) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It is possible that once the results are known, they may turn out to be different from these estimates.

(i) Federal Income Taxes:

The fund intends to meet federal income and excise tax requirements for regulated investment companies.

Accordingly, the fund distributes substantially all of its net investment income and realized net capital gains (if any) to its respective shareholders each year. As long as the fund meets the tax requirements, it is not required to pay federal income tax.

(j) Indemnification:

Under the fund’s organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business the fund enters into contracts with its vendors and others that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown

15

 Schwab Balanced Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

as this would involve future claims that may be made against the fund. However, based on experience, the fund expects the risk of loss to be remote.

(k) Accounting Pronouncements:

The fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.

Various inputs are used in determining the value of the fund’s investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments)

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 April 30, 2009:

Valuation Inputs	Investments in Securities		Other Financial Instruments*
Level 1		$77,827		$—
Level 2		—		—
Level 3		—		—
Total		$77,827		$—

* The fund had no Other Financial Instruments.

In April 2009, the FASB issued FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the fund’s or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about fund’s derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the fund’s financial statement disclosures.

3. Risk Factors

Investing in the funds and the underlying funds involve certain risks as described in the prospectus including, but not limited to, those described below:

The fund’s particular asset allocation can have a significant effect on performance. The fund manages its allocation with long-term performance in mind, and does not seek any particular type of performance in the short-term. Because the risks and returns of different asset classes can vary widely over any given time period, the fund’s performance could suffer if a particular asset class does not perform as expected.

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.

16 

 Schwab Balanced Fund

Financial Notes (continued)

3. Risk Factors (continued):

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. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments. The prices of securities issued by such companies may suffer a decline in response. In addition, the equity market tends to move in cycles which may cause stock prices to fall over short or extended periods of time.

Historically, small-cap stocks have been riskier than large-and mid-cap stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Small-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies.

The fund invests in securities which are guaranteed by the full faith and credit of the U.S. Government, as well as securities that are not guaranteed or insured by the U.S. Government. For example, securities such as those issued by Fannie Mae, Freddie Mac, the Student Loan Marketing Association and the FHLB are supported by limited lines of credit maintained by their issuers with the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding corporation, are supported solely by the credit of their issuer. There can be no assurance that the U.S. Government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Therefore, the fund could lose money if an issuer or guarantor of these investments fails to make timely principal or interest payments or otherwise honor its obligations. Also, any government guarantees on securities the fund owns do not extend to shares of the fund themselves. On September 7, 2008, the U.S. Treasury announced a federal takeover of Fannie Mae and Freddie Mac, placing the two federal instrumentalities in conservatorship. Under the takeover, the U.S. Treasury agreed to acquire $1 billion of senior preferred stock of each instrumentality and obtained warrants for the purchase of common stock of each instrumentality. Under this agreement, the U.S. Treasury has pledged to provide up to $100 billion per instrumentality as needed, including the contribution of cash capital to the instrumentalities in the event their liabilities exceed their assets. This is intended to ensure that the instrumentalities maintain a positive net worth and meet their financial obligations, preventing mandatory triggering of receivership. No assurance can be given that the U.S. Treasury initiatives will be successful.

The fund is subject to the risk that a decline in the credit quality of a portfolio investment could cause the fund’s share price to fall. Although the fund invests primarily in investment-grade securities, the fund could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations. Securities rated below investment-grade (junk bonds) involve greater risks of default or downgrade and are more volatile than investment-grade securities. Below investment-grade securities involve greater risk of price declines than investment-grade securities due to actual or perceived changes in an issuer’s creditworthiness. In addition, issuers of below investment-grade securities may be more susceptible than other issuers to economic downturns. Such securities are subject to the risk that the issuer may not be able to pay interest or dividends and ultimately to repay principal upon maturity. Discontinuation of these payments could substantially adversely affect the marker value of the security.

The fund’s investments in securities of foreign issuers 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, or changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges). In certain countries, legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and, at times, more volatile than securities of comparable U.S. companies. The fund may also experience more rapid or extreme changes in value as compared to a fund that invests solely in securities of U.S. companies because the securities’ markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries.

Emerging market countries are countries that the World Bank or the United Nations considers to be emerging or developing. Emerging markets may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and unreliable securities valuation. It is sometimes difficult to obtain and enforce court judgments in such countries and there is often a greater potential for nationalization and/or expropriation of assets by the government of an emerging market country. 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 fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar.

17

 Schwab Balanced Fund

Financial Notes (continued)

3. Risk Factors (continued):

Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser) will make poor stock selections. An 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. In addition, the investment adviser makes investment decisions for certain of the funds using a strategy based largely on historical information. There is no guarantee that a strategy based on historical information will produce the desired results in the future. In addition, if market dynamics change, the effectiveness of this strategy may be limited.

The performance of the underlying funds will impact the performance of the fund. Please refer to Funds’ prospectus for a complete description of the principal risks of investing in the Fund.

4. Affiliates and Affiliated Transactions:

       (All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

The underlying funds pay fees to the investment adviser for advisory and administrative services and to Schwab for transfer agent and shareholder services. The fund is not charged such fees directly. These fees are included in the net asset value of the underlying funds. CSIM and Schwab have made agreements with the fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses to 0.00%, through February 27, 2011.

The fund may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2009, there were no security transactions with other Schwab Funds.

The fund may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the fund may invest in other related funds. As of April 30, 2009, the percentages of shares of other related funds owned by the Balanced Fund are:

Schwab Active Equity Funds:
Core Equity Fund	2.6%
Laudus MarketMaster Funds:
Small-Cap MarketMaster Fund	4.4%
Schwab Bond Funds:
Total Bond Market Fund	2.9%

Below is a summary of the affiliated transactions for each underlying fund during the period ended April 30, 2009.

											Realized			Distribution
	Balance of						Balance of		Market		Gain (Loss)			Received*
	Shares						Shares		Value		10/31/08			10/31/08
	Held at		Gross		Gross		Held at		at		to			to
Underlying Fund	10/31/08		Additions		Sales		04/30/09		04/30/09		04/30/09			04/30/08
Core Equity Fund		3,357		61		610		2,808		33,888		(4,210	)		738
Small-Cap MarketMaster Fund		663		1,205		—		1,868		15,695		—			9
Total Bond Market Fund		3,689		319		849		3,159		27,607		(718	)		632
Total										77,190		(4,928	)		1,379

*   Distributions received include distributions from net investment income and from capital gains from the underling funds.

18 

 Schwab Balanced Fund

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Pursuant to an exemptive order issued by the SEC, the fund may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity by the fund during the period.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in the fund’s Statement of Operations.

6. Borrowing from Banks:

The fund may borrow money from banks and custodians. The fund covered in this report has custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The fund pays interest on the amounts it borrows at rates that are negotiated periodically.

There were no borrowings from the line of credit for the Funds during the period. However, the Funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

7. Purchases and Sales of Investment Securities:

       (All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

Purchase of		Sales/Maturities of
Securities		Securities
	$13,072		$14,500

8. Redemption Fee:

       (All dollar amounts are x 1,000)

The fund charges a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are $0* and $4, respectively.

*   Less than $1,000.

9. Federal Income Taxes:

       (All dollar amounts are x 1,000)

For tax purposes, net realized capital losses occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of October 31, 2008, the fund had no aggregate deferred realized net capital losses.

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and State purposes, four years from the date of filing) as applicable to the fund, and has determined that no provision for income tax is required in the fund’s financial statements. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2008, the fund did not incur any interest or penalties.

19

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the fund covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

20 

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

21

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

22 

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

23

Notes

Schwab Funds^® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.

Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large^* Company Index Fund

Schwab Fundamental US Small-Mid^* Company Index Fund

Schwab Fundamental International^* Large Company Index Fund

Schwab Fundamental International^* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets^* Index Fund

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity¹. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.

^* SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

¹ Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC^®

Printed on recycled paper.

MFR34721-03

Semiannual report dated April 30, 2009 enclosed.

Schwab Target Funds

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

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This wrapper is not part of the shareholder report.

Schwab Target Funds

Semiannual Report

April 30, 2009

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

A suite of eight mutual funds to help keep your retirement

investments properly allocated over your lifetime.

In This Report
Performance at a Glance	1
From the President	3
The Investment Environment	4
Fund Management	5
Schwab Target 2010 Fund	6
Schwab Target 2015 Fund	8
Schwab Target 2020 Fund	10
Schwab Target 2025 Fund	12
Schwab Target 2030 Fund	14
Schwab Target 2035 Fund	16
Schwab Target 2040 Fund	18
Schwab Retirement Income Fund	20
Fund Expenses	22
Financial Statements	23
Financial Notes	63
Trustees and Officers	79
Glossary	82

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for the Report Period
Schwab Target 2010 Fund (Ticker Symbol: SWBRX)	-0.93%
Benchmark: Target 2010 Composite Index	0.72%
Fund Category: Morningstar Target-Date 2000-2010	0.01%
Performance Details	pages 6-7
Schwab Target 2015 Fund (Ticker Symbol: SWGRX)	-1.33%
Benchmark: Target 2015 Composite Index	-0.08%
Fund Category: Morningstar Target-Date 2011-2015	-1.13%
Performance Details	pages 8-9
Schwab Target 2020 Fund (Ticker Symbol: SWCRX)	-1.20%
Benchmark: Target 2020 Composite Index	-0.43%
Fund Category: Morningstar Target-Date 2016-2020	-1.22%
Performance Details	pages 10-11
Schwab Target 2025 Fund (Ticker Symbol: SWHRX)	-0.78%
Benchmark: Target 2025 Composite Index	-0.99%
Fund Category: Morningstar Target-Date 2021-2025	-2.75%
Performance Details	pages 12-13

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results for less than one year are not annualized.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Source for category information: Morningstar, Inc.

The Target 2010 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 36.4% Dow Jones U.S. Total Stock Market Index, 10.8% MSCI EAFE (Gross) Index, 30.8% Barclays Capital U.S. Aggregate Bond Index, 2.6% FTSE EPRA/NAREIT Global Index, 2.2% MSCI Emerging Markets (Gross) Index, 4.1% Barclays Capital U.S. TIPS Index, 4.1% Citigroup Non-U.S. Dollar World Government Bond Index, 2% Barclays Capital U.S. Government/Credit: 1-5 Years, and 7% Barclays Capital U.S. Treasury Bills: 1-3 Months.

The Target 2015 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 42.4% Dow Jones U.S. Total Stock Market Index, 12.5% MSCI EAFE (Gross) Index, 27% Barclays Capital U.S. Aggregate Bond Index, 3.6% FTSE EPRA/NAREIT Global Index, 2.5% MSCI Emerging Markets (Gross) Index, 3.5% Barclays Capital U.S. TIPS Index, 3.5% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 4% Barclays Capital U.S. Treasury Bills: 1-3 Months.

The Target 2020 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 44.4% Dow Jones U.S. Total Stock Market Index, 13.3% MSCI EAFE (Gross) Index, 26.2% Barclays Capital U.S. Aggregate Bond Index, 3.6% FTSE EPRA/NAREIT Global Index, 2.7% MSCI Emerging Markets (Gross) Index, 3.4% Barclays Capital U.S. TIPS Index, 3.4% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.

The Target 2025 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 47% Dow Jones U.S. Total Stock Market Index, 14.2% MSCI EAFE (Gross) Index, 23% Barclays Capital U.S. Aggregate Bond Index, 4% FTSE EPRA/NAREIT Global Index, 2.8% MSCI Emerging Markets (Gross) Index, 3% Barclays Capital U.S. TIPS Index, 3% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.

Schwab Target Funds 1

Performance at a Glance continued

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds..

Total Return for the Report Period
Schwab Target 2030 Fund (Ticker Symbol: SWDRX)	-1.69%
Benchmark: Target 2030 Composite Index	-1.36%
Fund Category: Morningstar Target-Date 2026-2030	-3.23%
Performance Details	pages 14-15
Schwab Target 2035 Fund (Ticker Symbol: SWIRX)	-1.75%
Benchmark: Target 2035 Composite Index	-1.91%
Fund Category: Morningstar Target-Date 2031-2035	-3.63%
Performance Details	pages 16-17
Schwab Target 2040 Fund (Ticker Symbol: SWERX)	-2.58%
Benchmark: Target 2040 Composite Index	-2.33%
Fund Category: Morningstar Target-Date 2036-2040	-3.99%
Performance Details	pages 18-19
Schwab Retirement Income Fund (Ticker Symbol: SWARX)	1.28%
Benchmark: Target Income Composite Index	2.97%
Fund Category: Morningstar Retirement Income	1.46%
Performance Details	pages 20-21
Minimum Initial Investment1	$ 100

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results for less than one year are not annualized.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Source for category information: Morningstar, Inc.

The Target 2030 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 48.7% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE (Gross) Index, 20.6% Barclays Capital U.S. Aggregate Bond Index, 4.3% FTSE EPRA/NAREIT Global Index, 3% MSCI Emerging Markets (Gross) Index, 2.7% Barclays Capital U.S. TIPS Index, 2.7% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.

The Target 2035 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 51.4% Dow Jones U.S. Total Stock Market Index, 15.8% MSCI EAFE (Gross) Index, 17.4% Barclays Capital U.S. Aggregate Bond Index, 4.6% FTSE EPRA/NAREIT Global Index, 3.2% MSCI Emerging Markets (Gross) Index, 2.3% Barclays Capital U.S. TIPS Index, 2.3% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.

The Target 2040 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 54.1% Dow Jones U.S. Total Stock Market Index, 16.6% MSCI EAFE (Gross) Index, 14.2% Barclays Capital U.S. Aggregate Bond Index, 5% FTSE EPRA/NAREIT Global Index, 3.3% MSCI Emerging Markets (Gross) Index, 1.9% Barclays Capital U.S. TIPS Index, 1.9% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.

The Target Income Composite Index is based on a fixed asset allocation. The composite is derived using the following portion allocations: 15% Dow Jones U.S. Total Stock Market Index, 5% MSCI EAFE (Gross) Index, 20% Barclays Capital U.S. Aggregate Bond Index, 20% Barclays Capital U.S. Aggregate Intermediate Bond Index, 5% Barclays Capital U.S. TIPS Index, 5% Citigroup Non-U.S. Dollar World Government Bond Index, 10% Barclays Capital U.S. Government/Credit: 1-5 Years, and 20% Barclays Capital U.S. Treasury Bills: 1-3 Months.

¹  Please see prospectus for further detail and eligibility requirements.

2 Schwab Target Funds

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

With this in mind, we’ve made a number of enhancements to the Schwab Target Funds by reducing expenses and expanding the universe of underlying funds. I am pleased to announce that as of April 20, 2009:

•	Net Operating Expenses were reduced for each fund
	The funds experienced expense reductions ranging from 13 to 23 basis points
•	Allocations become more conservative in and near retirement
	As clients near or enter retirement, the funds will have a higher allocation to cash and fixed income to protect principle and generate income
•	Passive index funds were added to the universe of underlying funds
	Passive index funds carry lower management fees
•	Third-party funds were added to the universe of underlying funds
	Funds managed by independent third-party investment advisers increase the depth and breadth of investment styles and disciplines

These enhancements are intended to help our clients continue to invest no matter what the market conditions may be. We hope that each and every client feels more comfortable planning for a financially secure future knowing that we are constantly working to make investing easier and more affordable.

Thank you for investing with us.

Sincerely,

Schwab Target Funds 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Schwab Target Funds

Fund Management

Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the funds. He was appointed portfolio manager in 2008. Prior to joining the firm in 2003, he worked for more than 13 years in the investment management industry, with more than 6 of those years spent in portfolio management.

Schwab Target Funds 5

Schwab Target 2010 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third-party mutual funds (the underlying funds)*. These underlying funds include stock, bond, and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2010 Fund (the fund) returned -0.93% for the period, underperforming the benchmark Target 2010 Composite Index, which returned 0.72%. Relative to the benchmark, underperformance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at the start of the period were 54% equity securities, 40% fixed income securities, and 6% money market funds; as of April 20, 2009, the allocations were modified to 43% equity securities, 50% fixed income securities, and 7% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 23

Weighted Average Market

  Cap ($ x 1,000,000) $42,257

Price/Earnings Ratio (P/E) 20.5

Price/Book Ratio (P/B) 1.9

Portfolio Turnover Rate¹ 40%

 Asset Class Weightings % of Investments

Fixed-Income Funds 46.6%

Equity Funds - Domestic 32.4%

Equity Funds - International 14.2%

Short-Term Investments 6.8%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Total Bond Market Fund 23.8%

Schwab Core Equity Fund 9.4%

Schwab Short Term Bond Market Fund 9.2%

Schwab Institutional Select

  S&P 500 Fund 8.0%

Schwab Value Advantage Money

  Fund, Institutional Shares 6.0%

iShares Russell 1000 Growth

  Index Fund 5.2%

Laudus International MarketMasters

  Fund, Select Shares 4.6%

PIMCO Total Return Fund, Institutional

  Shares 4.1%

Schwab Premier Income Fund,

  Institutional Shares 3.9%

Schwab Small-Cap Equity Fund,

  Select Shares 3.8%

Total 78.0%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

6 Schwab Target Funds

 Schwab Target 2010 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		3 Years		Since Inception
Fund: Schwab Target 2010 Fund (7/1/05)		-0.93%		-21.17%		-5.81%		-1.66%
Benchmark: Target 2010 Composite Index3		0.72%		-20.33%		-3.22%		0.12%
Fund Category: Morningstar Target-Date 2000-2010		0.01%		-22.51%		-4.69%		-1.84%

Fund Expense Ratios⁴: Net 0.61%; Gross 0.72%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2010 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 36.4% Dow Jones U.S. Total Stock Market Index, 10.8% MSCI EAFE (Gross) Index, 30.8% Barclays Capital U.S. Aggregate Bond Index, 2.6% FTSE EPRA/NAREIT Global Index, 2.2% MSCI Emerging Markets (Gross) Index, 4.1% Barclays Capital U.S. TIPS Index, 4.1% Citigroup Non-U.S. Dollar World Government Bond Index, 2% Barclays Capital U.S. Government/Credit: 1-5 Years, and 7% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.61%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 7

Schwab Target 2015 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third-party mutual funds (the underlying funds)*. These underlying funds include stock, bond, and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2015 Fund (the fund) returned -1.33% for the period, while the benchmark Target 2015 Composite Index returned -0.08%. Relative to the benchmark, underperformance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at beginning of the period were 61% equity securities, 35% fixed income securities, and 4% money market funds; as of April 20, 2009, the allocations were modified to 57% equity securities, 39% fixed income securities, and 4% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 21

Weighted Average Market

  Cap ($ x 1,000,000) $42,136

Price/Earnings Ratio (P/E) 23.0

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 42%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 39.6%

Fixed-Income Funds 38.9%

Equity Funds - International 17.1%

Short-Term Investments 4.4%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Total Bond Market Fund 20.6%

Schwab Core Equity Fund 12.0%

Schwab Institutional Select

  S&P 500 Fund 10.0%

Schwab Short-Term Bond Market 6.0%

iShares Russell 1000 Growth Fund 5.4%

Laudus International MarketMasters

  Fund, Select Shares 4.8%

Schwab Small-Cap Equity Fund,

  Select Shares 4.5%

PIMCO Total Return Fund, Institutional

  Shares 4.0%

Schwab Value Advantage Money

  Fund, Institutional Shares 3.4%

Schwab Global Real Estate

  Fund, Select Shares 3.3%

Total 74.0%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

8 Schwab Target Funds

 Schwab Target 2015 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		Since Inception
Fund: Schwab Target 2015 Fund (3/12/08)		-1.33%		-21.77%		-17.41%
Benchmark: Target 2015 Composite Index3		-0.08%		-23.17%		-17.73%
Fund Category: Morningstar Target-Date 2011-2015		-1.13%		-25.76%		-20.26%

Fund Expense Ratios⁴: Net 0.67%; Gross 2.57%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2015 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 42.4% Dow Jones U.S. Total Stock Market Index, 12.5% MSCI EAFE (Gross) Index, 27% Barclays Capital U.S. Aggregate Bond Index, 3.6% FTSE EPRA/NAREIT Global Index, 2.5% MSCI Emerging Markets (Gross) Index, 3.5% Barclays Capital U.S. TIPS Index, 3.5% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 4% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.67%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 9

Schwab Target 2020 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third-party mutual funds (the underlying funds)*. These underlying funds include stock, bond, and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2020 Fund (the fund) returned -1.20% for the period, while the benchmark Target 2020 Composite Index returned -0.43%. Relative to the benchmark, underperformance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at the start of the period were 65% equity securities, 33% fixed income securities, and 2% money market funds; as of April 20, 2009, the allocations were modified to 67% equity securities, 31% fixed income securities, and 2% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 22

Weighted Average Market

  Cap ($ x 1,000,000) $41,858

Price/Earnings Ratio (P/E) 22.8

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 40%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 46.4%

Fixed-Income Funds 30.4%

Equity Funds - International 21.2%

Short-Term Investments 2.0%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Total Bond Market Fund 19.5%

Schwab Core Equity Fund 14.1%

Schwab Institutional Select

  S&P 500 Fund 12.0%

iShares Russell 1000 Growth

  Index Fund 6.4%

Laudus International MarketMasters

  Fund, Select Shares 6.1%

Schwab Small-Cap Equity Fund,

  Select Shares 5.0%

Schwab Global Real Estate

  Fund, Select Shares 4.0%

Laudus Rosenberg U.S. Large

  Capitalization Value Fund,

  Select Shares 3.2%

Schwab Dividend Equity Fund,

  Select Shares 3.2%

American Century International

  Growth Fund, Institutional

  Shares 2.8%

Total 76.3%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

10 Schwab Target Funds

 Schwab Target 2020 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		3 Years		Since Inception
Fund: Schwab Target 2020 Fund (7/1/05)		-1.20%		-23.82%		-6.99%		-2.30%
Benchmark: Target 2020 Composite Index3		-0.43%		-24.76%		-5.22%		-1.19%
Fund Category: Morningstar Target-Date 2016-2020		-1.22%		-27.55%		-7.76%		-3.54%

Fund Expense Ratios⁴: Net 0.69%; Gross 0.77%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2020 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 44.4% Dow Jones U.S. Total Stock Market Index, 13.3% MSCI EAFE (Gross) Index, 26.2% Barclays Capital U.S. Aggregate Bond Index, 3.6% FTSE EPRA/NAREIT Global Index, 2.7% MSCI Emerging Markets (Gross) Index, 3.4% Barclays Capital U.S. TIPS Index, 3.4% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.69%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 11

Schwab Target 2025 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third-party mutual funds (the underlying funds)*. These underlying funds include stock, bond, and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2025 Fund (the fund) returned -0.78% for the period, while the benchmark Target 2025 Composite Index returned -0.99%. The fund’s negative performance was primarily attributable to the fund’s U.S. Equity and Fixed Income component. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at the beginning of the period were 69% equity securities, 29% fixed income securities, and 2% money market funds; as of April 20, 2009, the allocations were modified to 75% equity securities, 23% fixed income securities, and 2% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 19

Weighted Average Market

  Cap ($ x 1,000,000) $41,782

Price/Earnings Ratio (P/E) 22.7

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 43%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 52.1%

Equity Funds - International 23.5%

Fixed-Income Funds 22.4%

Short-Term Investments 2.0%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Total Bond Market Fund 16.1%

Schwab Core Equity Fund 15.7%

Schwab Institutional Select

  S&P 500 Fund 13.2%

iShare Russell 1000 Growth

  Index Fund 6.8%

Laudus International MarketMasters

  Fund, Select Shares 6.6%

Schwab Small-Cap Equity Fund,

  Select Shares 6.1%

Schwab Global Real Estate

  Fund, Select Shares 4.0%

Laudus Rosenberg U.S. Large

  Cap Value Fund, Select Fund 3.6%

Schwab Dividend Equity Fund,

  Select Shares 3.6%

American Century International

  Growth Fund, Institutional

  Shares 3.4%

Total 79.1%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

12 Schwab Target Funds

 Schwab Target 2025 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		Since Inception
Fund: Schwab Target 2025 Fund (3/12/08)		-0.78%		-23.55%		-18.43%
Benchmark: Target 2025 Composite Index3		-0.99%		-26.19%		-20.27%
Fund Category: Morningstar Target-Date 2021-2025		-2.75%		-31.46%		-25.13%

Fund Expense Ratios⁴: Net 0.72%; Gross 1.99%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2025 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 47% Dow Jones U.S. Total Stock Market Index, 14.2% MSCI EAFE (Gross) Index, 23% Barclays Capital U.S. Aggregate Bond Index, 4% FTSE EPRA/NAREIT Global Index, 2.8% MSCI Emerging Markets (Gross) Index, 3% Barclays Capital U.S. TIPS Index, 3% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.72%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 13

Schwab Target 2030 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third-party mutual funds (the underlying funds)*. These underlying funds include stock, bond, and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2030 Fund (the fund) returned –1.69% for the period, while the benchmark Target 2030 Composite Index returned -1.36%. Relative to the benchmark, underperformance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at the beginning of the period were 72% equity securities, 26% fixed income securities, and 2% money market funds; as of April 20, 2009, the allocations were modified to 82% equity securities, 16% fixed income securities, and 2% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 20

Weighted Average Market

  Cap ($ x 1,000,000) $40,982

Price/Earnings Ratio (P/E) 24.6

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 44%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 56.9%

Equity Funds - International 24.6%

Fixed Income 16.1%

Short-Term Investments 2.4%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Core Equity Fund 16.8%

Schwab Institutional Select

  S&P 500 Fund 13.9%

Schwab Total Bond Market Fund 12.0%

iShares Russell 1000 Growth

  Index Fund 7.6%

Schwab Small-Cap Equity Fund,

  Select Shares 7.3%

Laudus International MarketMasters

  Fund, Select Shares 6.9%

Schwab Global Real Estate

  Fund, Select Shares 4.5%

Laudus Small-Cap MarketMasters

  Fund, Select Shares 4.0%

Schwab Dividend Equity Fund,

  Select Shares 3.7%

Laudus Rosenberg U.S. Large

  Cap. Value Fund, Select Shares 3.7%

Total 80.4%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

14 Schwab Target Funds

 Schwab Target 2030 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		3 Years		Since Inception
Fund: Schwab Target 2030 Fund (7/1/05)		-1.69%		-26.16%		-7.93%		-2.82%
Benchmark: Target 2030 Composite Index3		-1.36%		-27.47%		-6.48%		-1.93%
Fund Category: Morningstar Target-Date 2026-2030		-3.23%		-32.86%		-10.33%		-4.94%

Fund Expense Ratios⁴: Net 0.74%; Gross 0.84%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2030 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 48.7% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE (Gross) Index, 20.6% Barclays Capital U.S. Aggregate Bond Index, 4.3% FTSE EPRA/NAREIT Global Index, 3% MSCI Emerging Markets (Gross) Index, 2.7% Barclays Capital U.S. TIPS Index, 2.7% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.74%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 15

Schwab Target 2035 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third-party mutual funds (the underlying funds)*. These underlying funds include stock, bond, and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2035 Fund (the fund) returned -1.75% for the period, while the benchmark Target 2035 Composite Index returned -1.91%. The fund’s negative performance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at the beginning of the period were 76% equity securities, 22% fixed income securities, and 2% money market funds; as of April 20, 2009, the allocations were modified to 87% equity securities, 11% fixed income securities, and 2% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 19

Weighted Average Market

  Cap ($ x 1,000,000) $41,308

Price/Earnings Ratio (P/E) 23.7

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 51%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 60.4%

Equity Funds - International 26.7%

Fixed Income Funds 11.0%

Short-Term Investments 1.9%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Core Equity Fund 17.6%

Schwab Institutional Select

  S&P 500 Fund 15.2%

Schwab Total Bond Market Fund 8.5%

iShares Russell 1000 Growth

  Index Fund 8.1%

Schwab Small-Cap Equity Fund,

  Select Shares 7.5%

Laudus International MarketMasters

  Fund, Select Shares 7.5%

Schwab Global Real Estate

  Fund, Select Shares 4.6%

Laudus Rosenberg U.S. Large

  Capitalization Value Fund,

  Select Shares 4.1%

Schwab Dividend Equity Fund,

  Select Shares 4.1%

Laudus Mondrian International

  Equity Fund, Institutional

  Shares 3.9%

Total 81.1%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

16 Schwab Target Funds

 Schwab Target 2035 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		Since Inception
Fund: Schwab Target 2035 Fund (3/12/08)		-1.75%		-26.48%		-21.18%
Benchmark: Target 2035 Composite Index3		-1.91%		-28.86%		-22.55%
Fund Category: Morningstar Target-Date 2031-2035		-3.63%		-33.94%		-27.13%

Fund Expense Ratios⁴: Net 0.76%; Gross 2.33%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2035 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 51.4% Dow Jones U.S. Total Stock Market Index, 15.8% MSCI EAFE (Gross) Index, 17.4% Barclays Capital U.S. Aggregate Bond Index, 4.6% FTSE EPRA/NAREIT Global Index, 3.2% MSCI Emerging Markets (Gross) Index, 2.3% Barclays Capital U.S. TIPS Index, 2.3% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.76%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 17

Schwab Target 2040 Fund

The Schwab Target Funds (the funds) invest in a combination of other Schwab Funds, Laudus Funds and unaffiliated, third party mutual funds (the underlying funds)*. These underlying funds include stock, bond and money market mutual funds and are used by the funds to meet their various target asset allocations and investment styles. Performance of the funds thus reflects a blend of the results of their underlying funds. The target asset allocation will be adjusted annually based on the adviser’s asset allocation strategy. In general, each of the Target fund’s allocation to equity securities will decrease and its allocation to fixed income securities will increase as the fund approaches its targeted retirement date.

The Schwab Target 2040 Fund (the fund) returned -2.58% for the period, while the benchmark Target 2040 Composite Index returned -2.33%. Relative to the benchmark, underperformance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Core Equity Fund, and the Laudus Rosenberg U.S. Large Cap Value Fund were the leading detractors. The fund’s target allocations at the beginning of the period were 79% equity securities, 19% fixed income securities, and 2% money market funds; as of April 20, 2009, the allocations were modified to 91% equity securities, 7% fixed income securities, and 2% money market funds. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Core Equity Fund returning -8.49% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the international equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%, while the Laudus Mondrian Emerging Market Fund Institutional Shares returned 16.35%. The MSCI EAFE Index (Gross) returned -2.35% and the MSCI Emerging Markets Index (Gross) returned 17.52%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Laudus Mondrian International Fixed Income Fund Institutional Shares returned 5.46%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 20

Weighted Average Market

  Cap ($ x 1,000,000) $41,118

Price/Earnings Ratio (P/E) 24.0

Price/Book Ratio (P/B) 1.8

Portfolio Turnover Rate¹ 45%

 Asset Class Weightings % of Investments

Equity Funds - Domestic 62.9%

Equity Funds - International 27.8%

Fixed-Income Funds 7.2%

Short-Term Investments 2.1%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Core Equity Fund 19.0%

Schwab Institutional Select

  S&P 500 Fund 15.0%

iShares Russell 1000 Growth

  Index Fund 8.3%

Schwab Small-Cap Equity Fund,

  Select Shares 7.7%

Laudus International MarketMasters

  Fund, Select Shares 7.7%

Schwab Total Bond Market Fund 5.3%

Schwab Global Real Estate

  Fund, Select Shares 4.9%

Schwab Dividend Equity Fund,

  Select Shares 4.3%

Laudus Rosenberg U.S. Large

  Cap. Value Fund, Select Shares 4.2%

Laudus Small-Cap MarketMasters

  Fund, Select Shares 4.2%

Total 80.6%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

*	Each fund intends to invest in a combination of the underlying funds; however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures.
1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

18 Schwab Target Funds

 Schwab Target 2040 Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		3 Years		Since Inception
Fund: Schwab Target 2040 Fund (7/1/05)		-2.58%		-28.29%		-8.83%		-3.18%
Benchmark: Target 2040 Composite Index3		-2.33%		-30.01%		-7.66%		-2.59%
Fund Category: Morningstar Target-Date 2036-2040		-3.99%		-34.94%		-11.38%		-5.44%

Fund Expense Ratios⁴: Net 0.76%; Gross 0.91%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target 2040 Composite Index is based on an asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 54.1% Dow Jones U.S. Total Stock Market Index, 16.6% MSCI EAFE (Gross) Index, 14.2% Barclays Capital U.S. Aggregate Bond Index, 5% FTSE EPRA/NAREIT Global Index, 3.3% MSCI Emerging Markets (Gross) Index, 1.9% Barclays Capital U.S. TIPS Index, 1.9% Citigroup Non-U.S. Dollar World Government Bond Index, 1% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.76%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 19

Schwab Retirement Income Fund

The Schwab Retirement Income Fund (the fund) returned 1.28% during the period, while the benchmark Target Income Composite Index returned 2.97%. Relative to the benchmark, underperformance was primarily attributable to the fund’s U.S. Equity and Fixed Income components. The fund’s International Equity component, which performed well, was a positive contributor. When looking at the fund’s sub-holdings, the Schwab Total Bond Market Fund, the Schwab Premier Income Fund Select Shares, and the Laudus Rosenberg U.S. Large Cap Value Fund Select Shares were the leading detractors. Among the fund’s holdings, equity funds experienced the largest declines, with the Schwab Dividend Equity Fund Select Shares returning -11.03% and the Laudus Rosenberg U.S. Large Capitalization Value Fund Select Shares returning -13.97%. For the same period, the S&P 500 Index returned -8.53%. On the International equity side, the Laudus International MarketMasters Fund Select Shares returned -0.41%. The MSCI EAFE Index (Net) returned -2.64%. On the fixed income side, the Schwab Total Bond Market Fund returned 4.07%, the Schwab Premier Income Fund Select Shares returned 3.76%, and the Schwab Value Advantage Money Fund Institutional Shares returned 0.55%. For the same period, the Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

As of 04/30/09:

 Statistics

Number of Holdings 12

Weighted Average Market

  Cap ($ x 1,000,000) $45,383

Price/Earnings Ratio (P/E) 17.9

Price/Book Ratio (P/B) 1.6

Portfolio Turnover Rate¹ 18%

 Asset Class Weightings % of Investments

Fixed-Income Funds 59.0%

Short-Term Investments 19.7%

Equity Funds - Domestic 15.8%

Equity Funds - International 5.5%

Total 100.0%

 Top Holdings % of Net Assets²

Schwab Premier Income Fund,

  Institutional Shares 19.7%

Schwab Total Bond Market Fund 19.6%

Schwab Value Advantage Money

  Fund, Institutional Shares 19.0%

Schwab Short Term Bond Market Fund 9.8%

Schwab Dividend Equity Fund,

  Select Shares 7.9%

Laudus Rosenberg U.S. Large

  Capitalization Value Fund,

  Select Shares 7.9%

Laudus International MarketMasters

  Fund, Select Shares 5.5%

Laudus Mondrian International

  Fixed Income Fund, Institutional

  Shares 4.9%

Schwab Inflation Protected

  Fund, Select Shares 4.8%

Total 99.1%

Manager views and portfolio holdings may have changed since the report date.

The Laudus Group of Funds includes the Laudus Rosenberg Funds and Laudus Mondrian Funds, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc., and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

20 Schwab Target Funds

 Schwab Retirement Income Fund

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment^1,3

 Average Annual Total Returns^1,2

Fund and Inception Date	6 Months		1 Year		3 Years		Since Inception
Fund: Schwab Retirement Income Fund (7/1/05)		1.28%		-8.56%		-1.41%		-0.20%
Benchmark: Target Income Composite Index3		2.97%		-6.25%		1.97%		2.55%
Fund Category: Morningstar Retirement Income		1.46%		-15.43%		-2.62%		-1.04%

Fund Expense Ratios⁴: Net 0.68%; Gross 0.73%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	The Target Income Composite Index is based on a fixed asset allocation. The composite is derived using the following portion allocations: 15% Dow Jones U.S. Total Stock Market Index, 5% MSCI EAFE (Gross) Index, 20% Barclays Capital U.S. Aggregate Bond Index, 20% Barclays Capital U.S. Aggregate Intermediate Bond Index, 5% Barclays Capital U.S. TIPS Index, 5% Citigroup Non-U.S. Dollar World Government Bond Index, 10% Barclays Capital U.S. Government/Credit: 1-5 Years, and 20% Barclays Capital U.S. Treasury Bills: 1-3 Months.
4	As stated in the prospectus. Includes expenses of the Underlying Funds in which the fund invests. The annualized weighted average expense ratio of the Underlying Funds was 0.58%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Schwab Target Funds 21

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Schwab Target 2010 Fund*
Actual Return		0.06%	$	1,000	$	990.70	$	0.30
Hypothetical 5% Return		0.06%	$	1,000	$	1,024.50	$	0.30
Schwab Target 2015 Fund*
Actual Return		0.05%	$	1,000	$	986.70	$	0.25
Hypothetical 5% Return		0.05%	$	1,000	$	1,024.55	$	0.25
Schwab Target 2020 Fund*
Actual Return		0.04%	$	1,000	$	988.00	$	0.20
Hypothetical 5% Return		0.04%	$	1,000	$	1,024.60	$	0.20
Schwab Target 2025 Fund*
Actual Return		0.04%	$	1,000	$	992.20	$	0.20
Hypothetical 5% Return		0.04%	$	1,000	$	1,024.60	$	0.20
Schwab Target 2030 Fund*
Actual Return		0.03%	$	1,000	$	983.10	$	0.15
Hypothetical 5% Return		0.03%	$	1,000	$	1,024.65	$	0.15
Schwab Target 2035 Fund*
Actual Return		0.02%	$	1,000	$	982.50	$	0.10
Hypothetical 5% Return		0.02%	$	1,000	$	1,024.70	$	0.10
Schwab Target 2040 Fund*
Actual Return		0.01%	$	1,000	$	974.20	$	0.05
Hypothetical 5% Return		0.01%	$	1,000	$	1,024.74	$	0.05
Schwab Retirement Income Fund
Actual Return		0.10%	$	1,000	$	1,012.80	$	0.50
Hypothetical 5% Return		0.10%	$	1,000	$	1,024.30	$	0.50

*  Effective April 20, 2009, the expense limitations for all classes have been reduced. See Financial Note 4 for more information.

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights; does not include expenses of underlying funds in which the Target Funds invest.
2	Except as otherwise noted, expenses for each fund or share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

22 Schwab Target Funds

Schwab Target 2010 Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			7/1/051–
	4/30/2009*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.76			12.65			11.42			10.24			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.17			0.32			0.23			0.22			0.04
Net realized and unrealized gains (losses)		(0.25	)		(3.73	)		1.24			1.13			0.20
Total from investment operations		(0.08	)		(3.41	)		1.47			1.35			0.24
Less distributions:
Distributions from net investment income		(0.33	)		(0.38	)		(0.21	)		(0.17	)		—
Distributions from net realized gains		—			(0.10	)		(0.03	)		—			—
Total distributions		(0.33	)		(0.48	)		(0.24	)		(0.17	)		—
Net asset value at end of period		8.35			8.76			12.65			11.42			10.24
Total return (%)		(0.93	)2		(27.87	)		13.02			13.39			2.40	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.06	4		0.06			0.06			0.06			0.06	4
Gross operating expenses3		0.18	4		0.11			0.09			0.27			0.37	4
Net investment income (loss)		3.87	4		2.89			2.10			2.12			1.51	4
Portfolio turnover rate		40	2		50			1			0	5		—
Net assets, end of period ($ x 1,000,000)		72			80			138			62			32

* Unaudited

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

⁵ Less than 1%.

See financial notes 23

 Schwab Target 2010 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.0%	Other Investment Companies		78,900		70,932
	0	.7%	Short-Term Investments		520		520
	99	.7%	Total Investments		79,420		71,452
	0	.3%	Other Assets and Liabilities, Net				183
	100	.0%	Total Net Assets				71,635

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.0% of net assets
Equity Funds 46.5%
American Century International Growth Fund, Institutional Shares		198,632		1,436
iShares Russell 1000 Growth Index Fund		96,600		3,733
Laudus International MarketMasters Fund, Select Shares (a)		292,620		3,277
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		204,560		1,248
Laudus Mondrian International Equity Fund, Institutional Shares (a)		241,583		1,411
Laudus Rosenberg International Small Capitalization Fund, Select Shares (a)		129,763		1,146
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		255,580		1,679
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		107,143		900
Schwab Core Equity Fund (a)		556,149		6,713
Schwab Dividend Equity Fund, Select Shares (a)		176,909		1,647
Schwab Global Real Estate Fund, Select Shares (a)		385,995		1,629
Schwab Institutional Select S&P 500 Fund (a)		830,276		5,745
Schwab Small-Cap Equity Fund, Select Shares (a)		282,104		2,742
				33,306
Fixed-Income Funds 46.5%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		171,549		1,796
PIMCO Total Return Fund, Institutional Shares		284,748		2,910
Schwab Inflation Protected Fund, Select Shares (a)		220,926		2,154
Schwab Premier Income Fund, Institutional Shares (a)		299,328		2,808
Schwab Short-Term Bond Market Fund (a)		744,804		6,584
Schwab Total Bond Market Fund (a)		1,951,399		17,055
				33,307
Money Fund 6.0%
Schwab Value Advantage Money Fund, Institutional Shares (a)		4,318,431		4,319
Total Other Investment Companies (Cost $78,900)				70,932
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 0.7% of net assets
Commercial Paper & Other Obligations 0.7%
Bank of America, Charlotte Time Deposit
0.03%, 05/01/09		120		120
Citibank, New York Time Deposit
0.03%, 05/01/09		200		200
Wells Fargo, San Francisco Time Deposit
0.03%, 05/01/09		200		200
Total Short-Term Investments (Cost $520)				520
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $80,396 and the unrealized appreciation and depreciation were $0 and ($8,944), respectively, with a net unrealized depreciation of ($8,944).

(a) Issuer is affiliated with the fund’s adviser.

24 See financial notes

 Schwab Target 2010 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $71,336)		$62,853
Investments in unaffiliated issuers, at value (cost $8,084)	+	8,599
Total investments, at value (cost $79,420)		71,452
Receivables:
Fund shares sold		169
Dividends		94
Due from investment adviser	+	1
Total assets		71,716
Liabilities
Payables:
Fund shares redeemed		54
Accrued expenses	+	27
Total liabilities		81
Net Assets
Total assets		71,716
Total liabilities	−	81
Net assets		$71,635
Net Assets by Source
Capital received from investors		100,952
Net investment income not yet distributed		364
Net realized capital losses		(21,713	)
Net unrealized capital losses		(7,968	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$71,635		8,577			$8.35

See financial notes 25

 Schwab Target 2010 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$1,379
Dividends received from unaffiliated underlying funds	+	20
Total investment income		1,399
Net Realized Gains and Losses
Realized capital gain distributions received from affiliated underlying funds		66
Net realized losses on sales of affiliated underlying funds	+	(12,850	)
Net realized losses		(12,784	)
Net Unrealized Gains and Losses
Net unrealized gains from affiliated underlying funds		9,685
Net unrealized gains from unaffiliated underlying funds	+	515
Net unrealized gains		10,200
Expenses
Professional fees		19
Shareholder reports		12
Registration fees		10
Portfolio accounting fees		8
Custodian fees		8
Trustees’ fees		4
Other expenses	+	2
Total expenses		63
Expense reduction by adviser	−	43
Net expenses		20
Increase (Decrease) in Net Assets from Operations
Total investment income		1,399
Net expenses	−	20
Net investment income		1,379
Net realized losses		(12,784	)
Net unrealized gains	+	10,200
Decrease in net assets from operations		($1,205	)

26 See financial notes

 Schwab Target 2010 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$1,379			$3,389
Net realized losses			(12,784	)		(7,835	)
Net unrealized gains (losses)	+		10,200			(31,198	)
Decrease in net assets from operations			(1,205	)		(35,644	)
Distributions to Shareholders
Distributions from net investment income			2,875			4,243
Distributions from net realized gains	+		—			1,117
Total distributions			$2,875			$5,360

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			754			$6,194			2,953			$32,660
Shares Reinvested			317			2,679			437			5,033
Shares Redeemed	+		(1,604	)		(12,987	)		(5,174	)		(54,628	)
Net transactions in fund shares			(533	)		($4,114	)		(1,784	)		($16,935	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			9,110			$79,829			10,894			$137,768
Total decrease	+		(533	)		(8,194	)		(1,784	)		(57,939	)
End of period			8,577			$71,635			9,110			$79,829
Net investment income not yet distributed						$364						$1,860

See financial notes 27

Schwab Target 2015 Fund

Financial Statements

Financial Highlights

	11/1/08–			3/12/081–
	4/30/2009*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		8.15			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.13			0.06
Net realized and unrealized gains (losses)		(0.24	)		(1.91	)
Total from investment operations		(0.11	)		(1.85	)
Less distributions:
Distributions from net investment income		(0.16	)		—
Distributions from net realized gains		0.00	2		—
Total distributions		(0.16	)		—
Net asset value at end of period		7.88			8.15
Total return (%)		(1.33	)3		(18.50	)3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses4		0.05	5		0.05	5
Gross operating expenses4		1.19	5		1.90	5
Net investment income (loss)		3.62	5		1.87	5
Portfolio turnover rate		42	3		35	3
Net assets, end of period ($ x 1,000,000)		9			6

* Unaudited.

¹ Commencement of operations.

² Per-share amount was less than $0.01.

³ Not annualized.

⁴ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁵ Annualized.

28 See financial notes

 Schwab Target 2015 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.8%	Other Investment Companies		8,858		8,561
	1	.1%	Short-Term Investment		93		93
	99	.9%	Total Investments		8,951		8,654
	0	.1%	Other Assets and Liabilities, Net				10
	100	.0%	Total Net Assets				8,664

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 98.8% of net assets
Equity Funds 56.6%
American Century International Growth Fund, Institutional Shares		28,600		207
iShares Russell 1000 Growth Index Fund		12,000		464
Laudus International MarketMasters Fund, Select Shares (a)		37,014		415
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		30,201		184
Laudus Mondrian International Equity Fund, Institutional Shares (a)		35,700		209
Laudus Rosenberg International Discovery Fund, Select Shares (a)		26,675		179
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		36,661		241
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		23,214		195
Schwab Core Equity Fund (a)		85,802		1,036
Schwab Dividend Equity Fund, Select Shares (a)		25,331		236
Schwab Global Real Estate Fund, Select Shares (a)		67,751		286
Schwab Institutional Select S&P 500 Fund (a)		125,317		867
Schwab Small-Cap Equity Fund, Select Shares (a)		39,759		386
				4,905
Fixed-Income Funds 38.8%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		20,081		210
PIMCO Total Return Fund, Institutional Shares		33,847		346
Schwab Inflation Protected Fund, Select Shares (a)		26,071		254
Schwab Premier Income Fund, Institutional Shares (a)		27,254		256
Schwab Short-Term Bond Market Fund (a)		58,644		518
Schwab Total Bond Market Fund (a)		203,722		1,781
				3,365
Money Fund 3.4%
Schwab Value Advantage Money Fund, Institutional Shares (a)		291,651		291
Total Other Investment Companies (Cost $8,858)				8,561
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 1.1% of net assets
Commercial Paper & Other Obligations 1.1%
Citibank, New York Time Deposit
0.03%, 05/01/09		93		93
Total Short-Term Investment (Cost $93)				93
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $9,150 and the unrealized appreciation and depreciation were $0 and ($496) respectively, with a net unrealized depreciation of ($496).

(a) Issuer is affiliated with the fund’s adviser.

See financial notes 29

 Schwab Target 2015 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $7,901)		$7,544
Investments in unaffiliated issuers, at value (cost $1,050)	+	1,110
Total investments, at value (cost $8,951)		8,654
Receivables:
Fund shares sold		87
Dividends		9
Due from investment adviser	+	1
Total assets		8,751
Liabilities
Payables:
Investments bought		50
Fund shares redeemed		25
Accrued expenses	+	12
Total liabilities		87
Net Assets
Total assets		8,751
Total liabilities	−	87
Net assets		$8,664
Net Assets by Source
Capital received from investors		9,964
Net investment income not yet distributed		32
Net realized capital losses		(1,035	)
Net unrealized capital lossess		(297	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$8,664		1,099			$7.88

30 See financial notes

 Schwab Target 2015 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$115
Dividends received from unaffiliated underlying funds	+	2
Total investment income		117
Net Realized Gains and Losses
Realized capital gain distributions received from affiliated underlying funds		6
Net realized losses on sales of affiliated underlying funds	+	(975	)
Net realized losses		(969	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds		780
Net unrealized gains on unaffiliated underlying funds	+	60
Net unrealized gains		840
Expenses
Professional fees		19
Custodian fees		7
Portfolio accounting fees		7
Trustees’ fees		3
Registration fees		1
Other expenses	+	1
Total expenses		38
Expense reduction by adviser	−	37
Net expenses		1
Increase (Decrease) in Net Assets from Operations
Total investment income		117
Net expenses	−	1
Net investment income		116
Net realized losses		(969	)
Net unrealized gains	+	840
Decrease in net assets from operations		($13	)

See financial notes 31

 Schwab Target 2015 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			3/12/08*-10/31/08
Net investment income			$116			$40
Net realized losses			(969	)		(64	)
Net unrealized gains (losses)	+		840			(1,137	)
Decrease in net assets from operations			(13	)		(1,161	)
Distributions to Shareholders
Distributions from net investment income			124			—
Distributions from net realized gains	+		2			—
Total distributions			$126			$-

Transactions in Fund Shares

		11/1/08-4/30/09						3/12/08*-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			570			$4,335			900			$8,772
Shares Reinvested			15			124			—			—
Shares Redeemed	+		(212	)		(1,575	)		(174	)		(1,692	)
Net transactions in fund shares			373			$2,884			726			$7,080
Shares Outstanding and Net Assets
		11/1/08-4/30/09						3/12/08*-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			726			$5,919			—			$-
Total increase	+		373			2,745			726			5,919
End of period			1,099			$8,664			726			$5,919
Net investment income not yet distributed						$32						$40

*  Commencement of operations.

32 See financial notes

Schwab Target 2020 Fund

Financial Statements

Financial Highlights

	11/1/08			11/1/07–			11/1/06–			11/1/05–			7/1/051 –
	04/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.59			12.88			11.56			10.28			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.16			0.30			0.21			0.21			0.04
Net realized and unrealized gains (losses)		(0.26	)		(4.11	)		1.33			1.25			0.24
Total from investment operations		(0.10	)		(3.81	)		1.54			1.46			0.28
Less distributions:
Distributions from net investment income		(0.28	)		(0.38	)		(0.19	)		(0.18	)		—
Distributions from net realized gains		—			(0.10	)		(0.03	)		—			—
Total distributions		(0.28	)		(0.48	)		(0.22	)		(0.18	)		—
Net asset value at end of period		8.21			8.59			12.88			11.56			10.28
Total return (%)		(1.20	)2		(30.59	)		13.47			14.36			2.80	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.04	4		0.04			0.04			0.04			0.04	4
Gross operating expenses3		0.11	4		0.08			0.07			0.22			0.36	4
Net investment income (loss)		3.95	4		2.67			1.84			1.84			1.29	4
Portfolio turnover rate		40	2		34	5		—			—			—
Net assets, end of period ($ x 1,000,000)		159			163			225			84			35

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

⁵ The portfolio turnover rate increased due to additional rebalancing activity of the underlying funds during the period.

See financial notes 33

 Schwab Target 2020 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.6%	Other Investment Companies		182,301		157,952
	0	.3%	Short-Term Investment		471		471
	99	.9%	Total Investments		182,772		158,423
	0	.1%	Other Assets and Liabilities, Net				187
	100	.0%	Total Net Assets				158,610

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.6% of net assets
Equity Funds 67.5%
American Century International Growth Fund, Institutional Shares		624,428		4,515
iShares Russell 1000 Growth Index Fund		260,700		10,073
Laudus International MarketMasters Fund, Select Shares (a)		870,613		9,751
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		729,978		4,453
Laudus Mondrian International Equity Fund, Institutional Shares (a)		760,687		4,442
Laudus Rosenberg International Discovery Fund, Select Shares (a)		158,028		1,062
Laudus Rosenberg International Small Capitalization Fund, Select Shares (a)		349,180		3,083
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		772,722		5,077
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		446,429		3,750
Schwab Core Equity Fund (a)		1,854,569		22,385
Schwab Dividend Equity Fund, Select Shares (a)		542,406		5,050
Schwab Global Real Estate Fund, Select Shares (a)		1,504,994		6,351
Schwab Institutional Select S&P 500 Fund (a)		2,749,769		19,028
Schwab Small-Cap Equity Fund, Select Shares (a)		823,630		8,006
				107,026
Fixed-Income Funds 30.4%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		387,829		4,060
PIMCO Total Return Fund, Institutional Shares		417,202		4,264
Schwab Inflation Protected Fund, Select Shares (a)		414,012		4,037
Schwab Premier Income Fund, Institutional Shares (a)		219,395		2,058
Schwab Short-Term Bond Market Fund (a)		323,858		2,863
Schwab Total Bond Market Fund (a)		3,541,900		30,956
				48,238
Money Funds 1.7%
Schwab Value Advantage Money Fund, Institutional Shares (a)		2,687,964		2,688
Total Other Investment Companies (Cost $182,301)				157,952
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.3% of net assets
Commercial Paper & Other Obligations 0.3%
Citibank, New York Time Deposit
0.03%, 05/01/09		471		471
Total Short-Term Investment(Cost $471)				471
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $185,059 and the unrealized appreciation and depreciation were $223 and ($26,859), respectively, with a net unrealized depreciation of ($26,636).

(a) Issuer is affiliated with the fund’s adviser.

34 See financial notes

 Schwab Target 2020 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $164,858)		$139,100
Investment in unaffiliated issuers, at value (cost $17,914)	+	19,323
Total Investments, at value (cost $182,772)		158,423
Receivables:
Dividends		145
Fund shares sold		145
Due from investment adviser	+	1
Total assets		158,714
Liabilities
Payables:
Fund shares redeemed		70
Trustees’ fees		1
Accrued expenses	+	33
Total liabilities		104
Net Assets
Total assets		158,714
Total liabilities	−	104
Net assets		$158,610
Net Assets by Source
Capital received from investors		223,329
Net investment income not yet distributed		645
Net realized capital losses		(41,015	)
Net unrealized capital losses		(24,349	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$158,610		19,327			$8.21

See financial notes 35

 Schwab Target 2020 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$2,954
Dividends received from unaffiliated issuers	+	49
Total investment income		3,003
Net Realized Gains and Losses
Realized capital gain distributions received from affiliated underlying funds		145
Net realized losses on sales of affiliated underlying funds	+	(27,605	)
Net realized losses		(27,460	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds		20,696
Net unrealized gains on unaffiliated investments	+	1,409
Net unrealized gains		22,105
Expenses
Shareholder reports		29
Professional fees		20
Registration fees		16
Portfolio accounting fees		9
Trustees’ fees		4
Custodian fees		4
Other expenses	+	2
Total expenses		84
Expense reduction by adviser	−	56
Net expenses		28
Increase (Decrease) in Net Assets from Operations
Total investment income		3,003
Net expenses	−	28
Net investment income		2,975
Net realized losses		(27,460	)
Net unrealized gains	+	22,105
Decrease in net assets from operations		($2,380	)

36 See financial notes

 Schwab Target 2020 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$2,975			$5,541
Net realized losses			(27,460	)		(11,630	)
Net unrealized gains (losses)	+		22,105			(66,226	)
Decrease in net assets from operations			(2,380	)		(72,315	)
Distributions to Shareholders
Distributions from net investment income			5,224			6,771
Distributions from net realized gains	+		—			1,775
Total distributions			$5,224			$8,546

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			1,898			$15,016			6,200			$68,386
Shares Reinvested			614			5,079			716			8,346
Shares Redeemed	+		(2,131	)		(16,621	)		(5,403	)		(57,658	)
Net transactions in fund shares			381			$3,474			1,513			$19,074
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			18,946			$162,740			17,433			$224,527
Total increase or decrease	+		381			(4,130	)		1,513			(61,787	)
End of period			19,327			$158,610			18,946			$162,740
Net investment income not yet distributed						$645						$2,894

See financial notes 37

Schwab Target 2025 Fund

Financial Statements

Financial Highlights

	11/1/08–			3/12/081–
	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		7.99			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.13			0.05
Net realized and unrealized gains (losses)		(0.19	)		(2.06	)
Total from investment operations		(0.06	)		(2.01	)
Less distributions:
Distributions from net investment income		(0.16	)		—
Net asset value at end of period		7.77			7.99
Total return (%)		(0.78	)2		(20.10	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.04	4		0.04	4
Gross operating expenses3		0.77	4		1.27	4
Net investment income (loss)		3.49	4		1.60	4
Portfolio turnover rate		43	2		3	2
Net assets, end of period ($ x 1,000,000)		14			8

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

38 See financial notes

 Schwab Target 2025 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.0%	Other Investment Companies		13,974		13,724
	0	.6%	Short-Term Investment		81		81
	99	.6%	Total Investments		14,055		13,805
	0	.4%	Other Assets and Liabilities, Net				52
	100	.0%	Total Net Assets				13,857

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.0% of net assets
Equity Funds 75.3%
American Century International Growth Fund, Institutional Shares		64,506		466
iShares Russell 1000 Growth Index Fund		24,500		947
Laudus International MarketMasters Fund, Select Shares (a)		81,563		913
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		69,942		427
Laudus Mondrian International Equity Fund, Institutional Shares (a)		79,520		464
Laudus Rosenberg International Discovery Fund, Select Shares (a)		62,761		422
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		76,260		501
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		46,088		387
Schwab Core Equity Fund (a)		180,341		2,177
Schwab Dividend Equity Fund, Select Shares (a)		53,408		497
Schwab Global Real Estate Fund, Select Shares (a)		131,773		556
Schwab Institutional Select S&P 500 Fund (a)		264,976		1,834
Schwab Small-Cap Equity Fund, Select Shares (a)		86,763		843
				10,434
Fixed-Income Funds 22.3%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		25,619		268
PIMCO Total Return Fund, Institutional Shares		30,907		316
Schwab Inflation Protected Fund, Select Shares (a)		27,766		271
Schwab Total Bond Market Fund (a)		255,908		2,237
				3,092
Money Funds 1.4%
Schwab Value Advantage Money Fund, Institutional Shares (a)		198,128		198
Total Other Investment Companies (Cost $13,974)				13,724
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.6% of net assets
Commercial Paper & Other Obligation 0.6%
Citibank, New York Time Deposit
0.03%, 05/01/09		81		81
Total Short-Term Investment(Cost $81)				81
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $14,704 and the unrealized appreciation and depreciation were $325 and ($1,224), respectively, with a net unrealized depreciation of ($899).

(a) Issuer is affiliated with the fund’s adviser.

See financial notes 39

 Schwab Target 2025 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $12,366)		$11,995
Investments in unaffiliated issuers, at value (cost $1,689)	+	1,810
Total Investments, at value (cost $14,055)		13,805
Receivables:
Fund shares sold		157
Dividends		9
Due from investment adviser	+	1
Total assets		13,972
Liabilities
Payables:
Investments bought		105
Accrued expenses	+	10
Total liabilities		115
Net Assets
Total assets		13,972
Total liabilities	−	115
Net assets		$13,857
Net Assets by Source
Capital received from investors		15,714
Net investment income not yet distributed		40
Net realized capital losses		(1,647	)
Net unrealized capital losses		(250	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$13,857		1,784			$7.77

40 See financial notes

 Schwab Target 2025 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$163
Dividends received from unaffiliated issuers	+	3
Total investment income		166
Net Realized Gains and Losses
Realized capital gain distributions received from affiliated underlying funds		8
Net realized losses on sales of affiliated underlying funds	+	(1,639	)
Net realized losses		(1,631	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds		1,546
Net unrealized gains on unaffiliated issuers	+	121
Net unrealized gains		1,667
Expenses
Professional fees		19
Portfolio accounting fees		7
Custodian fees		5
Trustees’ fees		3
Other expenses	+	2
Total expenses		36
Expense reduction by adviser	−	35
Net expenses		1
Increase (Decrease) in Net Assets from Operations
Total investment income		166
Net expenses	−	1
Net investment income		165
Net realized losses		(1,631	)
Net unrealized gains	+	1,667
Increase in net assets from operations		$201

See financial notes 41

 Schwab Target 2025 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/01/08-04/30/09			3/12/08*-10/31/08
Net investment income			$165			$51
Net realized losses			(1,631	)		(16	)
Net unrealized gain (losses)	+		1,667			(1,917	)
Increase (Decrease) in net assets from operations			201			(1,882	)
Distributions to Shareholders
Distributions from net investment income			$176			$-

Transactions in Fund Shares

			��
		11/01/08-04/30/09						3/12/08*-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			1,003			$7,492			1,041			$10,308
Shares Reinvested			22			174			—			—
Shares Redeemed	+		(187	)		(1,397	)		(95	)		(863	)
Net transactions in fund shares			838			$6,269			946			$9,445
Shares Outstanding and Net Assets
		11/01/08-04/30/09						3/12/08*-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			946			$7,563			—			$-
Total increase	+		838			6,294			946			7,563
End of period			1,784			$13,857			946			$7,563
Net investment income not yet distributed						$40						$51

*  Commencement of operations.

42 See financial notes

Schwab Target 2030 Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			7/1/051–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.51			13.15			11.67			10.31			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.15			0.28			0.18			0.19			0.03
Net realized and unrealized gains (losses)		(0.29	)		(4.47	)		1.48			1.34			0.28
Total from investment operations		(0.14	)		(4.19	)		1.66			1.53			0.31
Less distributions:
Distributions from net income		(0.25	)		(0.35	)		(0.16	)		(0.17	)		—
Distributions from net realized gains		—			(0.10	)		(0.02	)		—			—
Total distributions		(0.25	)		(0.45	)		(0.18	)		(0.17	)		—
Net asset value at end of period		8.12			8.51			13.15			11.67			10.31
Total return (%)		(1.69	)2		(32.83	)		14.45			14.99			3.10	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.03	4		0.03			0.03			0.03			0.03	4
Gross operating expenses3		0.13	4		0.10			0.09			0.32			0.58	4
Net investment income (loss)		3.85	4		2.35			1.50			1.54			1.05	4
Portfolio turnover rate		44	2		31	5		—			—			—
Net assets, end of period ($ x 1,000,000)		141			129			162			56			19

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

⁵ The portfolio turnover rate increased due to additional rebalancing activity of the underlying funds during the period.

See financial notes 43

 Schwab Target 2030 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.5%	Other Investment Companies		159,666		139,810
	0	.5%	Short-Term Investment		763		763
	100	.0%	Total Investments		160,429		140,573
	0	.0%	Other Assets and Liabilities, Net				(66	)
	100	.0%	Total Net Assets				140,507

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.5% of net assets
Equity Funds 81.6%
American Century International Growth Fund, Institutional Shares		675,375		4,883
iShares Russell 1000 Growth Index Fund		276,000		10,665
Laudus International MarketMasters Fund, Select Shares (a)		863,265		9,669
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		735,500		4,487
Laudus Mondrian International Equity Fund, Institutional Shares (a)		823,411		4,809
Laudus Rosenberg International Discovery Fund, Select Shares (a)		265,372		1,783
Laudus Rosenberg International Small Capitalization Fund, Select Shares (a)		288,700		2,549
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		788,466		5,180
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		665,851		5,593
Schwab Core Equity Fund (a)		1,957,447		23,626
Schwab Dividend Equity Fund, Select Shares (a)		559,506		5,209
Schwab Global Real Estate Fund, Select Shares (a)		1,504,444		6,349
Schwab Institutional Select S&P 500 Fund (a)		2,831,999		19,597
Schwab Small-Cap Equity Fund, Select Shares (a)		1,056,115		10,265
				114,664
Fixed-Income Funds 16.1%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		183,715		1,923
PIMCO Total Return Fund, Institutional Shares		196,368		2,007
Schwab Inflation Protected Fund, Select Shares (a)		183,140		1,786
Schwab Total Bond Market Fund (a)		1,930,270		16,871
				22,587
Money Fund 1.8%
Schwab Value Advantage Money Fund, Institutional Shares (a)		2,558,910		2,559
Total Other Investment Companies (Cost $159,666)				139,810
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.5% of net assets
Commercial Paper & Other Obligations 0.5%
Citibank, New York Time Deposit
0.03%, 05/01/09		763		763
Total Short-Term Investment (Cost $763)				763
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $164,022 and the unrealized appreciation and depreciation were $0 and ($23,449), respectively, with a net unrealized depreciation of ($23,449).

(a) Issuer is affiliated with the fund’s adviser.

44 See financial notes

 Schwab Target 2030 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $143,507)		$122,255
Investments in unaffiliated issuers, at value (cost $16,922)	+	18,318
Total investments, at value (cost $160,429)		140,573
Receivables:
Fund shares sold		483
Dividends		83
Due from investment adviser	+	1
Total assets		141,140
Liabilities
Payables:
Investments bought		500
Fund shares redeemed		99
Trustees’ fees		1
Accrued expenses	+	33
Total liabilities		633
Net Assets
Total assets		141,140
Total liabilities	−	633
Net assets		140,507
Net Assets by Source
Capital received from investors		194,105
Net investment income not yet distributed		443
Net realized capital losses		(34,185	)
Net unrealized capital losses		(19,856	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$140,507		17,298			$8.12

See financial notes 45

 Schwab Target 2030 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$2,364
Dividends received from unaffiliated underlying funds	+	41
Total investment income		2,405
Net Realized Gains and Losses
Net realized gains received from affiliated underlying funds		119
Net realized losses on sales of affiliated underlying funds	+	(25,334	)
Net realized losses		(25,215	)
Net Unrealized Gains and Losses
Net unrealized gains from affiliated underlying funds		19,908
Net unrealized gains from unaffiliated underlying funds	+	1,396
Net unrealized gains		21,304
Expenses
Professional fees		19
Shareholder reports		30
Registration fees		15
Portfolio accounting fees		9
Trustees’ fees		4
Custodian fees		3
Other expenses	+	2
Total expenses		82
Expense reduction by adviser	−	65
Net expenses		17
Increase (Decrease) in Net Assets from Operations
Total investment income		2,405
Net expenses	−	17
Net investment income		2,388
Net realized losses		(25,215	)
Net unrealized gains	+	21,304
Decrease in net assets from operations		($1,523	)

46 See financial notes

 Schwab Target 2030 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$2,388			$3,728
Net realized gains (losses)			(25,215	)		(7,462	)
Net unrealized gains (losses)	+		21,304			(56,219	)
Decrease in net assets from operations			(1,523	)		(59,953	)
Distributions to Shareholders
Distributions from net investment income			3,827			4,582
Distributions from net realized gains	+		—			1,299
Total distributions			$3,827			$5,881

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			3,195			$24,797			5,714			$63,457
Shares Reinvested			458			3,740			483			5,740
Shares Redeemed	+		(1,464	)		(11,276	)		(3,426	)		(37,045	)
Net transactions in fund shares			2,189			$17,261			2,771			$32,152
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			15,109			$128,596			12,338			$162,278
Total increase or decrease	+		2,189			11,911			2,771			(33,682	)
End of period			17,298			$140,507			15,109			$128,596
Net investment income not yet distributed						$443						$1,882

See financial notes 47

Schwab Target 2035 Fund

Financial Statements

Financial Highlights

	11/1/08–			3/12/081–
	4/30/09*			10/31/08
Per-Share Data ($)
Net asset value at beginning of period		7.76			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.12			0.04
Net realized and unrealized gains (losses)		(0.26	)		(2.28	)
Total from investment operations		(0.14	)		(2.24	)
Less distributions:
Distributions from net investment income		(0.14	)		—
Net asset value at end of period		7.48			7.76
Total return (%)		(1.75	)2		(22.40	)2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.02	4		0.02	4
Gross operating expenses3		0.91	4		1.57	4
Net investment income (loss)		3.46	4		1.32	4
Portfolio turnover rate		51	2		7	2
Net assets, end of period ($ x 1,000,000)		12			6

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

48 See financial notes

 Schwab Target 2035 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.8%	Other Investment Companies		11,505		11,454
	0	.6%	Short-Term Investment		72		72
	99	.4%	Total Investments		11,577		11,526
	0	.6%	Other Assets and Liabilities, Net				64
	100	.0%	Total Net Assets				11,590

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 98.8% of net assets
Equity Funds 86.6%
American Century International Growth Fund, Institutional Shares		61,545		445
iShares Russell 1000 Growth Index Fund		24,200		935
Laudus International MarketMasters Fund, Select Shares (a)		76,897		861
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		65,249		398
Laudus Mondrian International Equity Fund, Institutional Shares (a)		76,003		444
Laudus Rosenberg International Discovery Fund, Select Shares (a)		59,173		398
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		72,583		477
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		51,101		429
Schwab Core Equity Fund (a)		168,425		2,033
Schwab Dividend Equity Fund, Select Shares (a)		50,694		472
Schwab Global Real Estate Fund, Select Shares (a)		125,922		531
Schwab Institutional Select S&P 500 Fund (a)		253,416		1,754
Schwab Small-Cap Equity Fund, Select Shares (a)		88,933		865
				10,042
Fixed-Income Funds 10.9%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		8,063		85
PIMCO Total Return Fund, Institutional Shares		11,276		115
Schwab Inflation Protected Fund, Select Shares (a)		8,728		85
Schwab Total Bond Market Fund (a)		112,269		981
				1,266
Money Funds 1.3%
Schwab Value Advantage Money Fund, Institutional Shares (a)		146,451		146
Total Other Investment Companies (Cost $11,505)				11,454
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.6% of net assets
Commercial Paper & Other Obligation 0.6%
Bank of America, Charlotte Time Deposit
0.03%, 05/01/09		72		72
Total Short-Term Investment (Cost $72)				72
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $12,322 and the unrealized appreciation and depreciation were $0 and ($796), respectively, with a net unrealized depreciation of ($796).

(a) Issuer is affiliated with the fund’s adviser.

See financial notes 49

 Schwab Target 2035 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $10,121)		$9,958
Investments in unaffiliated issuers, at value (cost $1,456)	+	1,568
Total Investments, at value (cost $11,577)		11,526
Receivables:
Fund shares sold		99
Dividends		5
Due from investment adviser	+	1
Total assets		11,631
Liabilities
Payables:
Investments bought		30
Fund shares redeemed		2
Accrued expenses	+	9
Total liabilities		41
Net Assets
Total assets		11,631
Total liabilities	−	41
Net assets		$11,590
Net Assets by Source
Capital received from investors		13,201
Net investment income not yet distributed		27
Net realized capital losses		(1,587	)
Net unrealized capital losses		(51	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$11,590		1,549			$7.48

50 See financial notes

 Schwab Target 2035 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$134
Dividends received from unaffiliated underlying funds	+	3
Total investment income		137
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds		(1,498	)
Realized capital gain distributions on affiliated underlying funds		7
Net realized gains on unaffiliated underlying funds	+	1
Net realized losses		(1,490	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds		1,418
Net unrealized gains on unaffiliated underlying funds	+	112
Net unrealized gains		1,530
Expenses
Professional fees		19
Portfolio accounting fees		7
Custodian fees		5
Trustees’ fees		3
Shareholder reports		1
Other expenses	+	1
Total expenses		36
Expense reduction by adviser	−	35
Net expenses		1
Increase (Decrease) in Net Assets from Operations
Total investment income		137
Net expenses	−	1
Net investment income		136
Net realized losses		(1,490	)
Net unrealized gains	+	1,530
Increase in net assets from operations		$176

See financial notes 51

 Schwab Target 2035 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			3/12/08*-10/31/08
Net investment income			$136			$34
Net realized losses			(1,490	)		(97	)
Net unrealized gains (losses)	+		1,530			(1,581	)
Increase (Decrease) in net assets from operations			176			(1,644	)
Distributions to Shareholders
Distributions from net investment income			$143			$-

Transactions in Fund Shares

		11/1/08-4/30/09						3/12/08*-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			815			$5,811			911			$8,843
Shares Reinvested			19			141			—			—
Shares Redeemed	+		(79	)		(554	)		(117	)		(1,040	)
Net transactions in fund shares			755			$5,398			794			$7,803
Shares Outstanding and Net Assets
		11/1/08-4/30/09						3/12/08*-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			794			$6,159			—			$-
Total increase	+		755			5,431			794			6,159
End of period			1,549			$11,590			794			$6,159
Net investment income not yet distributed						$27						$34

*  Commencement of operations.

52 See financial notes

Schwab Target 2040 Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			7/1/051–
	4/30/09*			11/30/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.48			13.45			11.83			10.36			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.15			0.28			0.17			0.19			0.02
Net realized and unrealized gains (losses)		(0.37	)		(4.80	)		1.62			1.45			0.34
Total from investment operations		(0.22	)		(4.52	)		1.79			1.64			0.36
Less distributions:
Distributions from net investment income		(0.22	)		(0.36	)		(0.15	)		(0.17	)		—
Distributions from net realized gains		—			(0.09	)		(0.02	)		—			—
Total distributions		(0.22	)		(0.45	)		(0.17	)		(0.17	)		—
Net asset value at end of period		8.04			8.48			13.45			11.83			10.36
Total return (%)		(2.58	)2		(34.60	)		15.32			16.06			3.60	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.01	4		0.01			0.01			0.01			0.01	4
Gross operating expenses3		0.19	4		0.15			0.13			0.48			1.10	4
Net investment income (loss)		3.79	4		2.22			1.19			1.26			0.80	4
Portfolio turnover rate		45	2		36	5		—			1			—
Net assets, end of period ($ x 1,000,000)		110			94			118			34			9

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

⁵ The portfolio turnover rate increased due to additional rebalancing activity of the underlying funds during the period.

See financial notes 53

 Schwab Target 2040 Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.3%	Other Investment Companies		124,906		109,383
	0	.3%	Short-Term Investment		343		343
	99	.6%	Total Investments		125,249		109,726
	0	.4%	Other Assets and Liabilities, Net				433
	100	.0%	Total Net Assets				110,159

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.3% of net assets
Equity Funds 90.4%
American Century International Growth Fund, Institutional Shares		615,083		4,447
iShares Russell 1000 Growth Index Fund		236,800		9,150
Laudus International MarketMasters Fund, Select Shares (a)		757,334		8,482
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a)		645,201		3,936
Laudus Mondrian International Equity Fund, Institutional Shares (a)		750,862		4,385
Laudus Rosenberg International Discovery Fund, Select Shares (a)		263,379		1,770
Laudus Rosenberg International Small Capitalization Fund, Select Shares (a)		229,358		2,025
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		705,004		4,632
Laudus Small-Cap MarketMasters Fund, Select Shares (a)		550,565		4,625
Schwab Core Equity Fund (a)		1,730,423		20,886
Schwab Dividend Equity Fund, Select Shares (a)		503,040		4,683
Schwab Global Real Estate Fund, Select Shares (a)		1,290,578		5,446
Schwab Institutional Select S&P 500 Fund (a)		2,389,802		16,538
Schwab Small-Cap Equity Fund, Select Shares (a)		877,092		8,525
				99,530
Fixed-Income Funds 7.1%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		55,738		584
PIMCO Total Return Fund, Institutional Shares		78,576		803
Schwab Inflation Protected Fund, Select Shares (a)		63,365		618
Schwab Total Bond Market Fund (a)		670,170		5,857
				7,862
Money Funds 1.8%
Schwab Value Advantage Money Fund, Institutional Shares (a)		1,990,619		1,991
Total Other Investment Companies (Cost $124,906)				109,383
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.3% of net assets
Other Investment Company 0.3%
Citibank, New York Time Deposit
0.03%, 05/01/09		343		343
Total Short-Term Investment (Cost $343)				343
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09 the tax basis cost of the fund’s investments was $129,019 and the unrealized appreciation and depreciation were $2,168 and ($21,461) respectively, with a net unrealized depreciation of ($19,293).

(a) Issuer is affiliated with the fund’s adviser.

54 See financial notes

 Schwab Target 2040 Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $111,700)		$94,983
Investments in unaffiliated issuers, at value (cost $13,549)	+	14,743
Total Investments, at value (cost $125,249)		109,726
Receivables:
Fund shares sold		648
Dividends		39
Due from investment adviser	+	1
Total assets		110,414
Liabilities
Payables:
Investments bought		200
Fund shares redeemed		14
Accrued expenses	+	41
Total liabilities		255
Net Assets
Total assets		110,414
Total liabilities	−	255
Net assets		$110,159
Net Assets by Source
Capital received from investors		153,180
Net investment income not yet distributed		261
Net realized capital losses		(27,759	)
Net unrealized capital losses		(15,523	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$110,159		13,696			$8.04

See financial notes 55

 Schwab Target 2040 Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$1,713
Dividends received from unaffiliated underlying funds	+	32
Total investment income		1,745
Net Realized Gains and Losses
Realized capital gain distributions received from affiliated underlying funds		88
Net realized losses on sales of affiliated underlying funds	+	(19,860	)
Net realized losses		(19,772	)
Net Unrealized Gains and Losses
Net unrealized gains on affiliated underlying funds		15,474
Net unrealized gains on unaffiliated underlying funds	+	1,194
Net unrealized gains		16,668
Expenses
Shareholder reports		40
Professional fees		19
Registration fees		13
Portfolio accounting fees		8
Trustees’ fees		4
Custodian fees		3
Other expenses	+	2
Total expenses		89
Expense reduction by adviser	−	85
Net expenses		4
Increase (Decrease) in Net Assets from Operations
Total investment income		1,745
Net expenses	−	4
Net investment income		1,741
Net realized losses		(19,772	)
Net unrealized gains	+	16,668
Decrease in net assets from operations		($1,363	)

56 See financial notes

 Schwab Target 2040 Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$1,741			$2,540
Net realized losses			(19,772	)		(6,815	)
Net unrealized gains (losses)	+		16,668			(42,552	)
Decrease in net assets from operations			(1,363	)		(46,827	)
Distributions to Shareholders
Distributions from net investment income			2,541			3,281
Distributions from net realized gains	+		—			851
Total distributions			$2,541			$4,132

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			3,180			$24,283			4,826			$54,153
Shares Reinvested			308			2,487			336			4,043
Shares Redeemed	+		(836	)		(6,327	)		(2,902	)		(31,780	)
Net transactions in fund shares			2,652			$20,443			2,260			$26,416
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			11,044			$93,620			8,784			$118,163
Total increase or decrease	+		2,652			16,539			2,260			(24,543	)
End of period			13,696			$110,159			11,044			$93,620
Net investment income not yet distributed						$261						$1,061

See financial notes 57

Schwab Retirement Income Fund

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			7/1/051–
	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05
Per-Share Data ($)
Net asset value at beginning of period		8.49			10.44			10.19			9.90			10.00
Income (loss) from investment operations:
Net investment income (loss)		0.16			0.38			0.45			0.41			0.11
Net realized and unrealized gains (losses)		(0.05	)		(1.89	)		0.25			0.32			(0.09	)
Total from investment operations		0.11			(1.51	)		0.70			0.73			0.02
Less distributions:
Distributions from net investment income		(0.17	)		(0.40	)		(0.45	)		(0.41	)		(0.12	)
Distributions from net realized gains		—			(0.04	)		—			(0.03	)		—
Total distributions		(0.17	)		(0.44	)		(0.45	)		(0.44	)		(0.12	)
Net asset value at end of period		8.43			8.49			10.44			10.19			9.90
Total return (%)		1.28	2		(14.96	)		6.98			7.52			0.16	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses3		0.10	4		0.10			0.10			0.10			0.10	4
Gross operating expenses3		0.21	4		0.15			0.15			0.36			0.64	4
Net investment income (loss)		3.95	4		3.98			4.43			4.20			3.40	4
Portfolio turnover rate		18	2		95	5		—			1			—
Net assets, end of period ($ x 1,000,000)		51			53			68			36			14

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

⁴ Annualized.

⁵ The portfolio turnover rate increased due to additional rebalancing activity of the underlying funds during the period.

58 See financial notes

 Schwab Retirement Income Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.1%	Other Investment Companies		56,085		50,851
	0	.7%	Short-Term Investment		353		353
	99	.8%	Total Investments		56,438		51,204
	0	.2%	Other Assets and Liabilities, Net				100
	100	.0%	Total Net Assets				51,304

	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Companies 99.1% of net assets
Equity Funds 21.3%
Laudus International MarketMasters Fund, Select Shares (a)		251,673		2,819
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares (a)		612,765		4,026
Schwab Dividend Equity Fund, Select Shares (a)		436,860		4,067
				10,912
Fixed-Income Funds 58.8%
Laudus Mondrian International Fixed Income Fund, Institutional Shares (a)		241,969		2,533
Schwab Inflation Protected Fund, Select Shares (a)		251,139		2,449
Schwab Premier Income Fund, Institutional Shares (a)		1,079,774		10,128
Schwab Short Term Bond Market Fund (a)		567,950		5,021
Schwab Total Bond Market Fund (a)		1,151,441		10,063
				30,194
Money Funds 19.0%
Schwab Value Advantage Money Fund, Institutional Shares (a)		9,744,689		9,745
Total Other Investment Companies (Cost $56,085)				50,851
Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 0.7% of net assets
Commercial Paper & Other Obligations 0.7%
Bank of America, Charlotte Time Deposit
0.03%, 05/01/09		53		53
Citbank, New York Time Deposit
0.03%, 05/01/09		150		150
Wells Fargo, San Francisco Time Deposit
0.03%, 05/01/09		150		150
Total Short-Term Investments (Cost $353)				353
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $56,579, and the unrealized appreciation and depreciation were $114 and ($5,489), respectively, with a net unrealized depreciation of ($5,375).

(a) Issuer is affiliated with the fund’s adviser.

See financial notes 59

 Schwab Retirement Income Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments in affiliated underlying funds, at value (cost $56,085)		$50,851
Investments in unaffiliated issuers, at value (cost $353)	+	353
Total investments, at value (cost $56,438)		51,204
Receivables:
Dividends		114
Fund shares sold		83
Due from investment adviser	+	1
Total assets		51,402
Liabilities
Payables:
Fund shares redeemed		44
Distributions to shareholders		35
Accrued expenses	+	19
Total liabilities		98
Net Assets
Total assets		51,402
Total liabilities	−	98
Net assets		$51,304
Net Assets by Source
Capital received from investors		63,306
Distributions in excess of net investment income		(15	)
Net realized capital losses		(6,753	)
Net unrealized capital losses		(5,234	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$51,304		6,088			$8.43

60 See financial notes

 Schwab Retirement Income Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends received from affiliated underlying funds		$1,033
Net Realized Gains and Losses
Net realized losses on sales of affiliated underlying funds		(766	)
Realized capital gain distributions received from affiliated underlying funds	+	24
Net realized losses		(742	)
Net Unrealized Gains and Losses
Net unrealized gains from affiliated underlying funds		247
Expenses
Professional fees		19
Registration fees		11
Portfolio accounting fees		8
Shareholder reports		6
Trustees’ fees		4
Custodian fees		4
Other expenses	+	1
Total expenses		53
Expense reduction by adviser	−	27
Net expenses		26
Increase (Decrease) in Net Assets from Operations
Total investment income		1,033
Net expenses	−	26
Net investment income		1,007
Net realized losses		(742	)
Net unrealized gains	+	247
Increase in net assets from operations		$512

See financial notes 61

 Schwab Retirement Income Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08 -4/30/09			11/1/07 -10/31/08
Net investment income			$1,007			$2,638
Net realized losses			(742	)		(5,921	)
Net unrealized gains (losses)	+		247			(6,932	)
Increase (Decrease) in net assets from operations			512			(10,215	)
Distributions to Shareholders
Distributions from net investment income			1,026			2,719
Distributions from net realized gains	+		—			270
Total distributions			$1,026			$2,989

Transactions in Fund Shares

		11/1/08 -4/30/09						11/1/07 -10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold			1,429			$11,990			3,588			$35,115
Shares Reinvested			84			704			224			2,173
Shares Redeemed	+		(1,637	)		(13,628	)		(4,137	)		(39,548	)
Net transactions in fund shares			(124	)		($934	)		(325	)		($2,260	)
Shares Outstanding and Net Assets
		11/1/08 -4/30/09						11/1/07 -10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			6,212			$52,752			6,537			$68,216
Total decrease	+		(124	)		(1,448	)		(325	)		(15,464	)
End of period			6,088			$51,304			6,212			$52,752
Distributions in excess of net investment income/						($15	)					$4
Net investment income not yet distributed

62 See financial notes

 Schwab Target Funds

Financial Notes, unaudited

1. Business Structure of the Funds

Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

Schwab Capital Trust (organized May 7, 1993)
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund Laudus International MarketMasters Fund
Schwab Balanced Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund—Moderate Payout
Schwab Monthly Income Fund—Enhanced Payout
Schwab Monthly Income Fund—Maximum Payout

The Schwab Target Funds are “fund of funds”. Each of the funds seeks to achieve its investment objective by investing in a combination of other Schwab Funds and Laudus Funds (underlying funds) in accordance with its target portfolio allocation (however, each fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures). Each fund bears its share of the allocable expenses of the underlying funds in which they invest.

The funds offer one share class. Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares of a fund or share class. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

       (All dollar amounts are x 1,000)

The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America. For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports which are filed with the SEC.

(a) Security Valuation:

The funds value the investment in underlying funds every business day. The funds use the following policies to value these investments:

•  Underlying funds: valued at their respective net asset values as determined by those funds, in accordance with the 1940 Act for a given day.

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

63

 Schwab Target Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(b) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

(c) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds .

(d) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

(e) Distributions to Shareholders:

The funds make distributions from net investment income and net realized capital gains once a year, except for the Retirement Income Fund, which makes income distributions monthly.

(f) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.

(g) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(h) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.

(i) Accounting Pronouncements:

The funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.

64 

 Schwab Target Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments)

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 funds’ investments as of April 30, 2009:

	Target 2010 Fund				Target 2015 Fund				Target 2020 Fund
			Other				Other				Other
	Investments		Financial		Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments*		in Securities		Instruments*
Level 1		$70,932		$—		$8,561		$—		$157,952		$—
Level 2		520		—		93		—		471		—
Level 3		—		—		—		—		—		—
Total		$71,452		$—		$8,654		$—		$158,423		$—

	Target 2025 Fund				Target 2030 Fund				Target 2035 Fund
			Other				Other				Other
	Investments		Financial		Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments*		in Securities		Instruments*
Level 1		$13,724		$—		$139,810		$—		$11,454		$—
Level 2		81		—		763		—		72		—
Level 3		—		—		—		—		—		—
Total		$13,805		$—		$140,573		$—		$11,526		$—

	Target 2040 Fund				Retirement Income Fund
			Other				Other
	Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments*
Level 1		$109,383		$—		$50,851		$—
Level 2		343		—		353		—
Level 3		—		—		—		—
Total		$109,726		$—		$51,204		$—

*  The funds had no Other Financial Instruments.

In April 2009, the FASB issued FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the funds’ or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning

65

 Schwab Target Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

after November 15, 2008. SFAS No. 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the funds’ financial statement disclosures.

3. Risk factors:

Investing in the funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below:

The prices of common stocks and other equity-type securities held by the funds may decline in response to certain events, including those directly involving issuers of these securities; adverse conditions affecting the general economy; overall market declines; world political, social, and economic instability; and currency fluctuations.

The values of, and the income generated by, most debt securities held by the funds, if any, may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the values of debt securities in the funds’ portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, “call” or refinance a security before its stated maturity, which may result in the funds having to reinvest the proceeds in lower yielding securities.

Investments in securities issued by entities based outside the United States may be subject to the risks described above to a greater extent and may also be affected by changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges). In certain countries, legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and, at times, more volatile than securities of comparable U.S. companies. An underlying fund with foreign investments may also experience more rapid or extreme changes in value than a fund that invests solely in securities of U.S. companies because the securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. There also is the risk that the cost of buying, selling, and holding foreign securities, including brokerage, tax, and custody costs may be higher than those involved in domestic transactions. Emerging markets may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and unreliable securities valuation. It is sometimes difficult to obtain and enforce court judgments in such countries and there is often a greater potential for nationalization and/or expropriation of assets by the government of an emerging market country. 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 an underlying fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar.

Please refer to the Funds’ prospectus for a complete description of the principal risks of investing in the Funds.

4. Affiliates and Affiliated Transactions:

       (All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

The underlying funds pay fees to the investment adviser for advisory and administrative services and to Schwab for transfer agent and shareholder services. The funds are not charged such fees directly. These fees are included in the net asset value of the

66 

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

underlying funds. CSIM and Schwab have made agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses through February 27, 2011, as follows:

Target 2010 Fund	0.00%
Target 2015 Fund	0.00%
Target 2020 Fund	0.00%
Target 2025 Fund	0.00%
Target 2030 Fund	0.00%
Target 2035 Fund	0.00%
Target 2040 Fund	0.00%
Retirement Income Fund	0.10%

Prior to April 20, 2009, the net operating expense limitation (excluding interest, taxes, and certain non-routine expenses) for each of the funds listed below was:

Target 2010 Fund	0.06%
Target 2015 Fund	0.05%
Target 2020 Fund	0.04%
Target 2025 Fund	0.04%
Target 2030 Fund	0.03%
Target 2035 Fund	0.02%
Target 2040 Fund	0.01%

The agreement to limit the funds’ total expenses charged is limited to each fund’s direct operating expenses and, therefore, does not apply to acquired fund fees and expense, which are indirect expenses incurred by a fund through its investments in the underlying funds.

67

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

The funds may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the funds may invest in other related funds. As of April 30, 2009, the percentages of shares of other related funds owned by each Target Fund are:

	Target		Target		Target		Target		Target		Target		Target		Retirement
	2010		2015		2020		2025		2030		2035		2040		Income
	Fund		Fund		Fund		Fund		Fund		Fund		Fund		Fund
Schwab Active Equity Funds:
Core Equity Fund		0.5%		0.1%		1.7%		0.2%		1.8%		0.2%		1.6%		—
Dividend Equity Fund		0.1%	—*			0.5%	—*			0.5%	—*			0.4%		0.4%
Small-Cap Equity Fund		1.5%		0.2%		4.3%		0.5%		5.6%		0.5%		4.6%		—
Schwab Equity Index Fund:
Institutional Select S&P 500 Fund		0.2%	—*			0.8%		0.1%		0.8%		0.1%		0.7%		—
Laudus MarketMasters Funds:
International MarketMasters Fund		0.3%	—*			0.8%		0.1%		0.8%		0.1%		0.7%		0.2%
Small-Cap MarketMasters Fund		0.3%		0.1%		1.0%		0.1%		1.6%		0.1%		1.3%		—
Laudus Rosenberg Funds:
U.S. Large Capitalization Value Fund		7.3%		1.0%		22.1%		2.2%		22.5%		2.1%		20.1%		17.5%
International Discovery Fund		—		0.1%		0.4%		0.2%		0.7%		0.2%		0.7%		—
International Small Capitalization Fund		0.3%		—		0.8%		—		0.7%		—		0.5%		—
Mondrian Emerging Markets Fund		3.7%		0.5%		13.2%		1.3%		13.3%		1.2%		11.7%		—
Mondrian International Fixed Income Fund		1.7%		0.2%		3.8%		0.2%		1.8%		0.1%		0.5%		2.4%
Mondrian International Equity Fund		3.8%		0.6%		12.0%		1.3%		13.0%		1.2%		11.9%		—
Schwab Bond Funds:
Premier Income Fund		1.4%		0.1%		1.0%		—		—		—		—		5.0%
Short-Term Bond Market Fund		2.5%		0.2%		1.1%		—		—		—		—		1.9%
Total Bond Market Fund		1.8%		0.2%		3.3%		0.2%		1.8%		0.1%		0.6%		1.1%
Inflation Protected Fund		0.8%		0.1%		1.6%		0.1%		0.7%	—*			0.2%		1.0%
Global Real Estate Fund		1.7%		0.3%		6.6%		0.6%		6.6%		0.5%		5.6%		—
Schwab Money Funds:
Value Advantage Money Fund	—*		—*		—*		—*		—*		—*		—*		—*

* Less than 0.05%

68 

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Below is a summary of the affiliated transactions for each underlying fund during the period ended April 30, 2009:

Target 2010 Fund:

												Realized			Distribution
	Balance of				��			Balance of				Gain (Loss)			Received*
	Shares Held		Gross			Gross		Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions			Sales		at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		550,465		72,880			330,725		292,620		$3,277		($2,821	)		$320
Laudus Mondrian Emerging Markets Fund, Institutional Shares		239,842		35,230			70,512		204,560		1,248		(300	)		22
Laudus Mondrian International Equity Fund, Institutional Shares		—		241,583			—		241,583		1,411		—			—
Laudus Rosenberg International Small Capitalization Fund, Institutional Shares		147,397		4,519			22,153		129,763		1,146		(216	)		42
Laudus Rosenberg U.S. Discovery Fund, Institutional Shares		132,319		13,142			145,461		—		—		(879	)		21
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Institutional Shares		601,215		44,866			646,081		—		—		(1,939	)		56
Laudus Rosenberg U.S. Large Capitalization Value Fund, Institutional Shares		143,791		127,587			15,798		255,580		1,679		(26	)		19
Laudus Small-Cap MarketMasters Fund, Select Shares		—		107,143			—		107,143		900		—			—
Schwab Core Equity Fund		1,275,440		61,717			781,008		556,149		6,713		(4,241	)		283
Schwab Dividend Equity Fund, Select Shares		319,820		1,926			144,837		176,909		1,647		(438	)		31
Schwab Global Real Estate Fund, Select Shares		434,675		54,519			103,199		385,995		1,629		(367	)		19
Schwab Institutional Select S&P 500 Fund		—		830,276			—		830,276		5,745		—			—
Schwab Small-Cap Equity Fund, Select Shares		288,597		12,378			28,871		282,104		2,742		(234	)		1
Laudus Mondrian International Fixed Income Fund, Institutional Shares		383,905		6,459			218,815		171,549		1,796		63			80
Schwab Inflation Protected Fund, Select Shares		404,494		2,470			186,038		220,926		2,154		(233	)		22
Schwab Premier Income Fund, Institutional Shares		—		299,328			—		299,328		2,808		—			5
Schwab Short-Term Bond Market Fund		99,635		661,799			16,630		744,804		6,584		(5	)		22
Schwab Total Bond Market Fund		2,944,018		74,100			1,066,719		1,951,399		17,055		(1,214	)		477
Schwab Value Advantage Money Fund, Institutional Shares		4,757,731		525,700			965,000		4,318,431		4,319		—			25
Total											$62,853		($12,850	)		$1,445

69

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Target 2015 Fund:

											Realized			Distribution
	Balance of						Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross		Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales		at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		49,320		21,006		33,312		37,014		$415		($260	)		$29
Laudus Mondrian Emerging Markets Fund, Institutional Shares		27,973		5,670		3,442		30,201		184		(15	)		2
Laudus Mondrian International Equity Fund, Institutional Shares		—		35,700		—		35,700		209		—			—
Laudus Rosenberg International Discovery Fund, Institutional Shares		20,202		9,517		3,044		26,675		179		(17	)		3
Laudus Rosenberg U.S. Discovery Fund, Institutional Shares		12,775		4,902		17,677		—		—		(55	)		2
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Institutional Shares		50,765		18,697		69,842		—		—		(148	)		5
Laudus Rosenberg U.S. Large Capitalization Value Fund, Institutional Shares		21,238		15,423		—		36,661		241		—			2
Laudus Small-Cap MarketMasters Fund, Select Shares		—		23,214		—		23,214		195		—			—
Schwab Core Equity Fund		103,207		48,520		65,925		85,802		1,036		(400	)		24
Schwab Dividend Equity Fund, Select Shares		15,600		9,731		—		25,331		236		—			3
Schwab Global Real Estate Fund, Select Shares		43,919		23,832		—		67,751		286		—			2
Schwab Institutional Select S&P 500 Fund		—		125,317		—		125,317		867		—			—
Schwab Small-Cap Equity Fund, Select Shares		27,239		15,725		3,205		39,759		386		(18	)		—
Laudus Mondrian International Fixed Income Fund, Institutional Shares		20,812		5,100		5,831		20,081		210		(4	)		5
Schwab Inflation Protected Fund, Select Shares		21,813		7,437		3,179		26,071		254		(4	)		2
Schwab Premier Income Fund, Institutional Shares		—		27,254		—		27,254		256		—			1
Schwab Short-Term Bond Market Fund		8,719		56,154		6,229		58,644		518		(3	)		2
Schwab Total Bond Market Fund		178,165		107,728		82,171		203,722		1,781		(51	)		37
Schwab Value Advantage Money Fund, Institutional Shares		241,389		156,262		106,000		291,651		291		—			2
Total										$7,544		($975	)		$121

70 

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Target 2020 Fund:

												Realized			Distribution
	Balance of							Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		1,379,210		250,248		(758,845	)		870,613		$9,751		($7,207	)		$798
Laudus Small Cap MarketMasters Fund, Select Shares		—		446,429		—			446,429		3,750		—			—
Laudus Mondrian Emerging Markets Fund, Institutional Shares		638,581		143,032		(51,635	)		729,978		4,453		(216	)		60
Laudus Mondrian International Equity Fund, Institutional Shares		—		760,687		—			760,687		4,442		—			—
Laudus Rosenberg International Discovery Fund, Select Shares		44,834		113,194		—			158,028		1,062		—			13
Laudus Rosenberg International Small Capitalization Fund, Select Shares		315,819		33,361		—			349,180		3,083		—			90
Laudus Rosenberg U.S. Discovery Fund, Select Shares		324,865		68,073		(392,938	)		—		—		(2,180	)		48
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Select Shares		1,382,380		216,758		(1,599,138	)		—		—		(5,098	)		137
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares		326,797		445,925		—			772,722		5,077		—			45
Schwab Core Equity Fund		3,049,538		272,751		(1,467,720	)		1,854,569		22,385		(9,195	)		700
Schwab Dividend Equity Fund, Select Shares		742,750		36,666		(237.010	)		542,406		5,050		(755	)		75
Schwab Institutional Select S&P 500 Fund		—		2,749,769		—			2,749,769		19,028		—			—
Schwab Global Real Estate Fund, Select Shares		1,519,811		7,554		(22,371	)		1,504,994		6,351		(87	)		60
Schwab Small-Cap Equity Fund, Select Shares		672,043		226,034		(74,447	)		823,630		8,006		(695	)		4
Laudus Mondrian International Fixed Income Fund, Institutional Shares		621,052		12,290		(245,513	)		387,629		4,060		(83	)		151
Schwab Inflation Protected Fund, Select Shares		660,447		4,571		(251,006	)		414,012		4,037		(305	)		41
Schwab Short-Term Bond Market Fund		108,268		215,590		—			323,858		2,863		—			19
Schwab Total Bond Market Fund		5,036,056		49,708		(1,543,864	)		3,541,900		30,956		(1,784	)		837
Schwab Premier Income Fund, Institutional Shares		—		219,395		—			219,395		2,058		—			4
Schwab Value Advantage Money Fund, Institutional Shares		4,088,037		19,927		(1,420,000	)		2,687,964		2,688		—			17
Total											$139,100		($27,605	)		$3,099

71

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Target 2025 Fund:

												Realized			Distribution
	Balance of							Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		67,350		79,529		(65,316	)		81,563		$913		($459	)		$46
Laudus Small Cap MarketMasters Fund, Select Shares		—		46,088		—			46,088		387		—			—
Laudus Mondrian International Equity Fund, Institutional Shares		—		81,277		(1,757	)		79,520		464	—*	*			—
Laudus Mondrian Emerging Markets Fund, Institutional Shares		34,640		37,844		(2,542	)		69,942		427		(11	)		3
Laudus Rosenberg International Discovery Fund, Institutional Shares		26,388		40,178		(3,805	)		62,761		422		(22	)		5
Laudus Rosenberg U.S. Discovery Fund, Institutional Shares		16,763		11,770		(28,533	)		—		—		(91	)		3
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Institutional Shares		72,177		42,469		(114,646	)		—		—		(254	)		8
Laudus Rosenberg U.S. Large Capitalization Value Fund, Institutional Shares		26,790		49,470		—			76,260		501		—			3
Schwab Core Equity Fund		149,066		153,168		(121,893	)		180,341		2,177		(721	)		38
Schwab Institutional Select S&P 500 Fund		—		272,372		(7,396	)		264,976		1,834		1
Schwab Dividend Equity Fund, Select Shares		23,787		29,821		—			53,408		497		—			5
Schwab Global Real Estate Fund, Select Shares		55,837		78,357		(2,421	)		131,773		556		(10	)		4
Schwab Small-Cap Equity Fund, Select Shares		36,649		52,785		(2,671	)		86,763		843		(16	)	—*	*
Laudus Mondrian International Fixed Income Fund, Institutional Shares		23,671		6,753		(4,805	)		25,619		268		(4	)		7
Schwab Inflation Protected Fund, Select Shares		24,844		8,535		(5,613	)		27,766		271		(5	)		2
Schwab Short-Term Bond Market Fund		15,715		11,274		(26,989	)		—		—		(7	)		2
Schwab Total Bond Market Fund		187,597		130,148		(61,837	)		255,908		2,237		(40	)		44
Schwab Value Advantage Money Fund, Institutional Shares		165,598		82,530		(50,000	)		198,128		198		—			1
Total											$11,995		($1,639	)		$171

** Less than $1.

72 

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Target 2030 Fund:

												Realized			Distribution
	Balance of							Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		1,246,584		349,841		(733,160	)		863,265		$9,669		($7,813	)		$727
Laudus Small-Cap MarketMasters Fund, Select Shares		—		665,851		—			665,851		5,593		—			—
Laudus Mondrian Emerging Markets Fund, Institutional Shares		558,030		177,470		—			735,500		4,487		—			56
Laudus Rosenberg International Discovery Fund, Select Shares		46,133		219,239		—			265,372		1,783		—			16
Laudus Rosenberg International Small Capitalization Fund, Select Shares		280,079		8,621		—			288,700		2,549		—			80
Laudus Rosenberg U.S. Discovery Fund, Select Shares		313,747		69,315		(383,062	)		—		—		(2,226	)		54
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Select Shares		1,141,620		285,150		(1,426,770	)		—		—		(4,333	)		117
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares		235,294		553,172		—			788,466		5,180		—			38
Schwab Core Equity Fund		2,495,466		741,936		(1,279,955	)		1,957,447		23,626		(8,370	)		583
Schwab Dividend Equity Fund, Select Shares		602,438		148,499		(191,431	)		559,506		5,209		(655	)		65
Schwab Global Real Estate Fund, Select Shares		1,527,899		31,130		(54,585	)		1,504,444		6,349		(181	)		59
Schwab Small-Cap Equity Fund, Select Shares		682,647		373,468		—			1,056,115		10,265		—			4
Laudus Mondrian International Equity Fund, Institutional Shares		—		823,411		—			823,411		4,809		—			—
Laudus Mondrian International Fixed Income Fund, Institutional Shares		369,106		7,909		(193,300	)		183,715		1,923		(32	)		97
Schwab Inflation Protected Fund, Select Shares		386,869		2,753		(206,482	)		183,140		1,786		(175	)		25
Schwab Short-Term Bond Market Fund		53,997		78,775		(132,772	)		—		—		(35	)		14
Schwab Total Bond Market Fund		3,262,393		54,617		(1,386,740	)		1,930,270		16,871		(1,514	)		534
Schwab Value Advantage Money Fund, Institutional Shares		3,752,916		415,994		(1,610,000	)		2,558,910		2,559		—			14
Schwab Institutional Select S&P 500 Fund		—		2,831,999		—			2,831,999		19,597		—			—
Total											$122,255		($25,334	)		$2,483

73

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Target 2035 Fund:

												Realized			Distribution
	Balance of							Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales			at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		63,586		65,144		(51,833	)		76,897		$861		($395	)		$42
Laudus Small-Cap MarketMasters Fund, Select Shares		—		51,101		—			51,101		429		—			—
Laudus Mondrian Emerging Markets Fund, Institutional Shares		31,082		38,404		(4,237	)		65,249		398		(18	)		4
Laudus Rosenberg International Discovery Fund, Select Shares		25,048		38,691		(4,566	)		59,173		398		(26	)		5
Laudus Rosenberg U.S. Discovery Fund, Select Shares		14,559		14,575		(29,134	)		—		—		(79	)		3
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Select Shares		64,994		36,195		(101,189	)		—		—		(215	)		7
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares		26,913		51,105		(5,435	)		72,583		477		(23	)		2
Schwab Institutional Select S&P 500		—		275,605		(22,189	)		253,416		1,754		2			—
Schwab Core Equity Fund		132,207		131,902		(95,884	)		168,425		2,033		(573	)		35
Schwab Dividend Equity Fund, Select Shares		20,696		34,341		(4,343	)		50,694		472		(22	)		5
Schwab Global Real Estate Fund, Select Shares		53,583		82,024		(9,685	)		125,922		531		(41	)		4
Schwab Small-Cap Equity Fund, Select Shares		35,369		61,042		(7,478	)		88,933		865		(43	)	—*	*
Laudus Mondrian International Fixed Income Fund, Institutional Shares		13,912		4,569		(10,418	)		8,063		85		(5	)		4
Laudus Mondrian International Equity Fund, Institutional Shares		—		80,397		(4,394	)		76,003		444		—			—
Schwab Inflation Protected Fund, Select Shares		14,590		5,379		(11,241	)		8,728		85		(8	)		1
Schwab Short-Term Bond Market Fund		9,952		2,351		(12,303	)		—		—		(5	)		1
Schwab Total Bond Market Fund		116,399		76,408		(80,538	)		112,269		981		(47	)		27
Schwab Value Advantage Money Fund, Institutional Shares		136,704		80,747		(71,000	)		146,451		146		—			1
Total											$9,959		($1,498	)		$141

**  Less than $1.

74 

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Target 2040 Fund:

											Realized			Distribution
	Balance of						Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross		Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales		at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		1,016,324		353,912		612,902		757,334		$8,482		($6,033	)		$582
Laudus Mondrian Emerging Markets Fund, Institutional Shares		476,641		168,560		—		645,201		3,936		—			44
Laudus Rosenberg International Discovery Fund, Select Shares		63,963		199,416		—		263,379		1,770		—			14
Laudus Rosenberg International Small Capitalization Fund, Select Shares		222,510		6,848		—		229,358		2,025		—			63
Laudus Rosenberg U.S., Discovery Fund, Select Shares		244,185		86,069		330,254		—		—		(1,655	)		41
Laudus Rosenberg U.S. Large Capitalization Growth Fund, Select Shares		998,871		167,270		1,166,141		—		—		(3,500	)		95
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares		265,523		439,481		—		705,004		4,632		—			30
Schwab Core Equity Fund		2,057,732		654,549		981,858		1,730,423		20,886		(6,932	)		466
Schwab Dividend Equity Fund, Select Shares		487,698		133,847		118,505		503,040		4,683		(405	)		57
Schwab Global Real Estate Fund, Select Shares		1,152,945		158,775		21,142		1,290,578		5,446		(74	)		48
Schwab Small-Cap Equity Fund, Select Shares		567,786		309,306		—		877,092		8,525		—			3
Laudus Mondrian International Fixed Income Fund, Institutional Shares		196,215		4,218		144,695		55,738		584		(10	)		52
Schwab Inflation Protected Fund, Select Shares		206,047		1,472		144,154		63,365		618		(124	)		13
Schwab Short-Term Bond Market Fund		108,268		905		109,173		—		—		(51	)		15
Schwab Total Bond Market Fund		1,580,662		67,032		977,524		670,170		5,857		(1,076	)		268
Schwab Value Advantage Money Fund, Institutional Shares		2,379,499		411,120		800,000		1,990,619		1,991		—			10
Schwab Institutional Select S&P 500 Fund		—		2,389,802		—		2,389,602		16,538		—			—
Laudus Small-Cap MarketMasters Fund, Select Shares		—		550,565		—		550,565		4,625		—			—
Laudus Mondrian International Equity Fund, Institutional Shares		—		750,862		—		750,862		4,385		—			—
Total										$94,983		($19,860	)		$1,801

75

 Schwab Target Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

Retirement Income Fund:

											Realized			Distribution
	Balance of						Balance of				Gain (Loss)			Received*
	Shares Held		Gross		Gross		Shares Held		Market Value		11/01/2008			11/01/2008
Underlying Fund	at 10/31/08		Additions		Sales		at 04/30/2009		at 04/30/2009		to 04/30/2009			to 04/30/2009
Laudus International MarketMasters Fund, Select Shares		171,976		79,697		—		251,673		$2,819		$—			$124
Laudus Rosenberg U.S. Large Capitalization Value Fund, Select Shares		274,510		338,255		—		612,765		4,026		—			37
Schwab Dividend Equity Fund, Select Shares		503,864		60,617		127,621		436,860		4,067		(341	)		60
Laudus Mondrian International Fixed Income Fund, Institutional Shares		331,778		7,507		97,316		241,969		2,533		68			91
Schwab Inflation Protected Fund, Select Shares		342,186		2,580		93,627		251,139		2,449		(99	)		23
Schwab Premier Income Fund, Institutional Shares		1,241,778		58,338		220,342		1,079,774		10,128		(180	)		376
Schwab Short-Term Bond Market Fund		162,432		405,518		—		567,950		5,021		—			61
Schwab Total Bond Market Fund		1,291,455		59,361		199,375		1,151,441		10,063		(214	)		227
Schwab Value Advantage Money Fund, Institutional Shares		11,610,636		459,053		2,325,000		9,744,689		9,745		—			58
Total										$50,851		($766	)		$1,057

* Distribution received include distributions from net investment income and from capital gains from the underlying funds.

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for any fund during the period.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.

6. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.

There were no borrowings from the line of credit for the funds during the period. However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

76 

 Schwab Target Funds

Financial Notes, unaudited (continued)

7.  Purchases and Sales of Investment Securities:

(All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
Target 2010 Fund		$28,684		$35,141
Target 2015 Fund		5,604		2,728
Target 2020 Fund		63,059		61,803
Target 2025 Fund		10,524		4,151
Target 2030 Fund		72,218		55,952
Target 2035 Fund		9,498		4,090
Target 2040 Fund		61,488		42,575
Retirement Income Fund		9,092		9,475

8. Redemption Fee:

       (All dollar amounts are x 1,000)

The funds, except the Schwab Retirement Income Fund, charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior period are:

	Current Period		Prior Period
	(11/01/08-04/30/09)		(11/01/07-10/31/08)*
Target 2010 Fund		$6		$24
Target 2015 Fund		3		4
Target 2020 Fund		5		16
Target 2025 Fund		2		4
Target 2030 Fund		11		9
Target 2035 Fund		1		2
Target 2040 Fund		7		18

* (3/12/08-10/31/08) for the Target 2015, Target 2025 and Target 2035 Funds

9. Federal Income Taxes:

       (All dollar amounts are x 1,000)

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2008, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

	Target		Target		Target		Target		Target		Target		Target
	2010		2015		2020		2025		2030		2035		2040		Retirement
Expire	Fund		Fund		Fund		Fund		Fund		Fund		Fund		Income Fund
2016		$7,968		$—		$10,682		$—		$6,716		$—		$6,366		$5,956
Total		$7,968		$—		$10,682		$—		$6,716		$—		$6,366		$5,956

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and State purposes, four years from the date of filing), as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2008, the funds did not incur any interest or penalties.

77

 Schwab Target Funds

Financial Notes, unaudited (continued)

10. Subsequent Event:

The Board of Trustees of the Trust (the “Board”) has approved an Agreement and Plan of Reorganization (the “Plan of Reorganization”) that would provide for the reorganization of the Schwab Retirement Income Fund into the Schwab Monthly Income Enhanced Payout Fund. On or about June 16, 2009, the Retirement Income Fund will transfer its assets and liabilities to the Monthly Income Enhanced Payout Fund, and subsequently distribute those Monthly Income Enhanced Payout Fund shares to shareholders of the Retirement Income Fund (the “Reorganization”). After the Reorganization is completed, shareholders of the Retirement Income Fund will become shareholders of the Monthly Income Enhanced Payout Fund. The Reorganization is intended to be tax-free: this means that it is intended that the Retirement Income Fund’s shareholders will become shareholders of the Monthly Income Enhanced Payout Fund without realizing any gain or loss for federal income tax purposes.

78 

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

79

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

80 

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

81

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

82 

Notes

Notes

Schwab Funds^® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.

Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large^* Company Index Fund

Schwab Fundamental US Small-Mid^* Company Index Fund

Schwab Fundamental International^* Large Company Index Fund

Schwab Fundamental International^* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets^* Index Fund

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity¹. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.

^* SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.

¹ Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC^®

Printed on recycled paper.

MFR34720-03

Semiannual report dated April 30, 2009 enclosed.

COMMAND PERFORMANCE^TM

Laudus MarketMasters Funds^tm

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Save paper. Sign up for electronic delivery at www.schwab.com/edelivery.

This wrapper is not part of the shareholder report.

Semiannual Report
April 30, 2009

COMMAND PERFORMANCE^TM

Laudus MarketMasters Funds^tm

Laudus U.S. MarketMasters Fund^tm

Laudus Small-Cap MarketMasters Fund^tm

Laudus International MarketMasters Fund^tm

This page is intentionally left blank.

Three distinct Funds, each combining the expertise of leading

investment managers with Schwab’s overall supervision.

In This Report
Performance at a Glance	2
From the President	3
The Investment Environment	4
Fund Management	5
Laudus U.S. MarketMasters Fundtm	6
Laudus Small-Cap MarketMasters Fundtm	8
Laudus International MarketMasters Fundtm	10
Fund Expenses	12
Financial Statements	13
Financial Notes	44
Trustees and Officers	52
Glossary	55

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor and transfer agent: Charles Schwab & Co., Inc. (Schwab).

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Total Return for the Report Period
Laudus U.S. MarketMasters Fundtm
Investor Shares (Ticker Symbol: SWOGX)	-2.38%
Select Shares® (Ticker Symbol: SWMGX)	-2.21%
Benchmark: S&P 500® Index	-8.53%
Fund Category: Morningstar Large-Cap Blend	-6.73%
Performance Details	pages 6-7
Laudus Small-Cap MarketMasters Fundtm
Investor Shares (Ticker Symbol: SWOSX)	-5.09%
Select Shares® (Ticker Symbol: SWMSX)	-5.03%
Benchmark: Russell 2000® Index	-8.40%
Fund Category: Morningstar Small-Cap Growth	-3.20%
Performance Details	pages 8-9
Laudus International MarketMasters Fundtm
Investor Shares (Ticker Symbol: SWOIX)1	-0.48%
Select Shares® (Ticker Symbol: SWMIX)1	-0.41%
Benchmark: MSCI EAFE® Index (Gross)*	-2.35%
Fund Category: Morningstar Foreign Large-Cap Growth	-0.06%
Performance Details	pages 10-11
Minimum Initial Investment2
Investor Shares	$    100
Select Shares®	$ 50,000

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.

Source for category information: Morningstar, Inc.

1	The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.
2	Please see prospectus for further detail and eligibility requirements.

2 Laudus MarketMasters Funds

From the President

Randall W. Merk is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. He joined the firm in 2002 and has held a variety of executive positions at Schwab.

Dear Shareholder,

The past six months brought little respite from the effects of the economic recession. Eroding equity prices and financial instability continue to weigh on the minds of investors both personally and professionally; losses have been tough to bear, and achieving a sense of individual financial well-being has been a frustrating task.

Despite these difficulties it is important to keep planning for the future, and even if short-term and long-term financial goals have changed we must still aim to achieve them.

For the reporting period, the Laudus MarketMasters Funds^® posted negative returns, but performed well compared to their respective benchmarks. On a total return basis, the International MarketMasters Fund performed the best, returning -0.48%. The U.S. MarketMasters Fund returned -2.38% and the Small-Cap MarketMasters Fund returned -5.09%.

The Laudus MarketMasters Funds^® follow a multi-manager strategy, combining the skills and expertise of leading investment managers with Schwab’s ongoing oversight. Jeffrey Mortimer, Chief Investment Officer, Charles Schwab Investment Management (CSIM) and Caroline Lee, Managing Director & Portfolio Manager, CSIM oversee the investment process with over 31 years of combined experience and ensure that each sub-adviser has passed a rigorous screening and selection process.

Thank you for investing with us.

Sincerely,

Laudus MarketMasters Funds 3

The Investment Environment

Investment conditions in the U.S. financial marketplace remained tenuous as volatility and economic recession weighed on investors’ decision making, but improved during the last few months of the reporting period. The first four months of the period were generally bearish; equity prices were driven down across the board as investors pulled back from the markets amidst poor macroeconomic data and pessimism over the markets’ ability to mount a swift recovery. The last two months of the period were more bullish, helping to reduce earlier losses and, in some cases, pulling sectors and indices into positive territory. In the U.S., fixed income markets generally outperformed equities for the period as a whole, although yields on short-term Treasuries and other government-backed debt remained low.

Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence continued to reflect broad-based economic difficulty. GDP—the output of goods and services produced by labor and property located in the United States—contracted -6.3% in the fourth quarter of 2008 and -6.1% in the first quarter of 2009, according to advanced estimates. The first-quarter decline in GDP was primarily due to negative contributions from exports, private inventory investment, and equipment and software, according to the Bureau of Economic Analysis. The U.S. unemployment rate increased from 6.7% in November 2008 to 8.9% in April of 2009. Consumer confidence improved in the last two months of the period, rising slightly in March to 26.9, and then to 39.2 in April. The increase was primarily driven by a more optimistic short-term economic outlook. Despite this improvement, consumer confidence remains relatively low.

When looking at the S&P 500 Index, which is usually seen as a bellwether for financial markets, returns were negative overall, but some sectors showed signs of improving. For the six-month period ending April 30, 2009, the S&P 500 Index returned -8.53%. By comparison, the Russell 1000 Index returned -7.39%. In the S&P 500, Financials declined the most, returning -29.13%, followed by Industrials and Energy, which returned -12.56% and -10.30%, respectively. Relatively better performing sectors were Information Technology and Consumer Discretionary, which returned 5.61% and 4.07%, respectively. In general, small and mid-sized corporations in the S&P 500 outperformed their larger counterparts. From a broad-market standpoint, growth stocks generally outperformed value, with the Russell 1000 Growth Index returning -1.52%, while the Russell 1000 Value Index returned -13.27%. Internationally, the MSCI EAFE Index (Gross) returned -2.35%, while the MSCI Emerging Markets Index (Net) returned 17.38%.

On the fixed income side, markets continued to be shaken by turmoil surrounding major financial and financial insurance corporations, but generally outperformed equity markets during the period. The Barclays Capital U.S. Aggregate Bond Index returned 7.74%, while the Barclays Capital General Muni Bond Index returned 8.20%. TIPS and GNMA securities were also strong, with the Barclays Capital GNMA Index up 8.03% and the Barclays Capital U.S. TIPS Index up 9.46%. Short-term Treasury securities were also positive, but yields remained low as investors continued to see Treasuries as a safe haven. The Barclays Capital U.S. Treasury Bills: 1-3 Months returned 0.13%.

 Asset Class Performance Comparison % returns during the report period

This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.

-8.53%	S&P 500® Index: measures U.S. large-cap stocks
-8.40%	Russell 2000® Index: measures U.S. small-cap stocks
-2.35%	MSCI EAFE® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

7.74%	Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market
0.13%	Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.

Data source: Charles Schwab & Co., Inc.

Nothing in this report represents a recommendation of a security by the investment adviser.

Manager views and portfolio holdings may have changed since the report date.

4 Laudus MarketMasters Funds

Fund Management

	Jeffrey Mortimer, CFA, Chief Investment Officer, Charles Schwab Investment Management, is responsible for the overall management of the funds. Prior to joining the firm in October 1997, he worked for more than 8 years in asset management.
	Caroline Lee, a managing director and portfolio manager of the investment adviser, co-manages the funds. Prior to joining the firm in November 2005, she worked in asset management for over 4 years overseeing subadvisor relationships in the pension group of a major corporation. She has also had 3 years of previous experience in investment management at another financial services firm.

Laudus MarketMasters Funds 5

Laudus U.S. MarketMasters Fund^tm

The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, the funds’ investment adviser, uses rigorous criteria to select investment managers with proven long-term track records to manage a portion of each fund’s assets. In addition to selecting the investment managers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages their respective portfolio to a benchmark that reflects their individual process and philosophy. The sub-adviser benchmarks may differ from the benchmark of the overall fund.

The Laudus U.S. MarketMasters Fund Investor Shares returned -2.38% for the period, outperforming the benchmark S&P 500 Index, which returned -8.53%. Relative to the benchmark, security selection in Financials, Consumer Discretionary, and Health Care drove outperformance. Sector allocation was also a positive performance contributor overall, with an overweight to the well performing Consumer Discretionary sector and an overweight to Information Technology adding the most. From a price-to-earnings (P/E) standpoint, security selection in companies with negative and low P/E ratios contributed to outperformance. In the fund, Consumer Discretionary was the best performing sector, up 12.26%, followed by Health Care, up 4.11%. Poorly performing sectors included Consumer Staples and Utilities, which returned -19.45% and -16.99%, respectively. Financials also declined, returning -15.40%; however, as a result of stock selection, this return was far improved over the benchmark return of -29.13%. When looking at the fund’s sub-advisers, the Harris Associates and Thornburg Investment Management portfolios were better relative and absolute performers, returning 2.04% and 1.40%, respectively. The Gardner Lewis Asset Management and TCW Investment Management Company portfolios detracted from performance, returning -6.35% and -4.44%, respectively.

As of 04/30/09:

 Statistics

Number of Holdings 181

Weighted Average Market

  Cap ($ x 1,000,000) $28,881

Price/Earnings Ratio (P/E) 50.9

Price/Book Ratio (P/B) 1.6

Portfolio Turnover Rate¹ 32%

 Sector Weightings % of Investments

Information Technology 20.7%

Financials 19.9%

Consumer Discretionary 14.3%

Health Care 10.9%

Industrials 7.7%

Energy 6.9%

Consumer Staples 5.5%

Materials 2.5%

Utilities 2.5%

Telecommunication Services 2.4%

Other 6.7%

Total 100.0%

 Top Holdings % of Net Assets²

State Street Institutional

  Liquid Reserves Fund - Institutional

  Class 6.2%

JPMorgan Chase & Co. 2.3%

Hewlett-Packard Co. 2.0%

Intel Corp. 1.9%

Dr. Pepper Snapple Group, Inc. 1.8%

Gilead Sciences, Inc. 1.8%

Apple, Inc. 1.6%

Carnival Corp. 1.5%

Marathon Oil Corp. 1.3%

Comcast Corp., Special Class A 1.3%

Total 21.7%

The Laudus U.S. MarketMasters Fund closed to new investors on January 30, 2009 and was reorganized into the Schwab Core Equity Fund on May 21, 2009.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

6 Laudus MarketMasters Funds

 Laudus U.S. MarketMasters Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception
Investor Shares (11/18/96)		-2.38%		-33.92%		-3.09%		-1.14%		2.27%
Select Shares (6/4/04)		-2.21%		-33.76%		n/a		n/a		-3.00%
Benchmark: S&P 500® Index		-8.53%		-35.31%		-2.70%		-2.48%		(11/18/96) 3.11%
										(6/4/04) -2.96%
Fund Category: Morningstar Large-Cap Blend		-6.73%		-35.10%		-2.69%		-1.75%		(11/18/96) 3.01%
										(6/4/04) -2.86%

Fund Expense Ratios³: Investor Shares: Net 1.25%; Gross 1.34% / Select Shares: Net 1.07%; Gross 1.29%

 Style Assessment⁴

 Investment Managers and Allocations

		% of
Investment Manager	Investment Style	Net Assets
Gardner Lewis Asset Management L.P.	Large-Cap Growth		19.6%
Harris Associates L.P.	Mid/Large-Cap Value		24.4%
TCW Investment Management Company	Small/Mid-Cap Value		25.4%
Thornburg Investment Management, Inc.	Large-Cap Blend		29.1%
Cash and other assets	-		1.5%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Because the fund was originally an asset allocation fund with a multi-fund strategy, its performance prior to June 3, 2002 does not reflect the current strategy and may have been different if it did.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Laudus MarketMasters Funds 7

Laudus Small-Cap MarketMasters Fund^tm

The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, the funds’ investment adviser, uses rigorous criteria to select investment managers with proven long-term track records to manage a portion of each fund’s assets. In addition to selecting the investment managers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages their respective portfolio to a benchmark that reflects their individual process and philosophy. The sub-adviser benchmarks may differ from the benchmark of the overall fund.

The Laudus Small-Cap MarketMasters Fund Investor Shares returned -5.09% for the period, outperforming the benchmark Russell 2000 Index, which returned -8.40%. Relative to the benchmark, both security selection and sector allocation drove outperformance when looking at market sectors. From a sector allocation standpoint, an underweight to Financials and an overweight to Consumer Discretionary contributed the most to outperformance. Sector stock selection was also a positive contributor led by selection in Energy, Industrials, and Financials. However, selection in Information Technology and Consumer Discretionary, among others, acted to offset. When looking at price-to-earnings, price-to-book, and market capitalization, security selection was the primary performance driver, while allocation acted to offset. Security selection was strongest in companies with low price-to-earnings ratios and among companies with market caps of $750 million to $1.5 billion. In the fund, Telecomm Service was the best performing sector, up 25.32%, followed by Energy, up 7.56%. Poorly performing sectors included Utilities and Consumer Staples, which returned -17.49% and -15.22%, respectively. When looking at the funds sub-advisers, value and core managers posted better returns relative to growth oriented managers. The Tocqueville Asset Management and TAMRO Capital Partners portfolios returned -2.03% and -2.72%, respectively. The TCW Investment Company and Neuberger Berman portfolios also declined, returning -3.46% and -10.59%, respectively.

As of 04/30/09:

 Statistics

Number of Holdings 232

Weighted Average Market

  Cap ($ x 1,000,000) $1,826

Price/Earnings Ratio (P/E) 233.8

Price/Book Ratio (P/B) 1.7

Portfolio Turnover Rate¹ 58%

 Sector Weightings % of Investments

Information Technology 22.5%

Health Care 17.0%

Consumer Discretionary 15.6%

Financials 12.2%

Industrials 8.6%

Energy 6.9%

Consumer Staples 6.2%

Materials 3.4%

Telecommunication Services 1.5%

Utilities 0.9%

Other 5.2%

Total 100.0%

 Top Holdings % of Net Assets²

State Street Institutional

  Liquid Reserves Fund-Institutional

  Class 4.7%

Cerner Corp. 1.4%

Analogic Corp. 1.3%

Ultratech, Inc. 1.2%

Oceaneering International, Inc. 1.0%

ValueClick, Inc. 1.0%

EnergySolutions, Inc. 1.0%

Cbeyond, Inc. 0.9%

The Hain Celestial Group, Inc. 0.9%

NBTY, Inc. 0.9%

Total 14.3%

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Small-company stocks are subject to greater volatility than other asset categories.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

8 Laudus MarketMasters Funds

 Laudus Small-Cap MarketMasters Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception
Investor Shares (9/16/97)		-5.09%		-27.79%		-1.30%		2.09%		2.45%
Select Shares (6/9/04)		-5.03%		-27.78%		n/a		n/a		-1.88%
Benchmark: Russell 2000® Index		-8.40%		-30.74%		-1.45%		2.53%		(9/16/97) 2.18%
										(6/9/04) -2.14%
Fund Category: Morningstar Small-Cap Growth		-3.20%		-32.63%		-2.62%		1.68%		(9/16/97) 1.50%
										(6/9/04) -3.31%

Fund Expense Ratios³: Investor Shares: Net 1.46% ; Gross 1.48%/ Select Shares: Net 1.31%; Gross 1.44%

 Style Assessment⁴

 Investment Managers and Allocations

		% of
Investment Manager	Investment Style	Net Assets
TAMRO Capital Partners LLC	Small-Cap Value/Blend		35.4%
TCW Investment Management Company	Small/Mid-Cap Value		16.4%
Tocqueville Asset Management LP	Small-Cap Blend		27.3%
Neuberger Berman Management LLC	Small-Cap Growth		15.0%
Cash and other assets	-		5.9%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Because the fund originally used a multi-fund strategy, its performance prior to June 3, 2002 does not reflect the current strategy and may have been different if it did.

1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.
4	Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 04/30/09, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

Laudus MarketMasters Funds 9

Laudus International MarketMasters Fund^tm

The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, the funds’ investment adviser, uses rigorous criteria to select investment managers with proven long-term track records to manage a portion of each fund’s assets. In addition to selecting the investment managers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages their respective portfolio to a benchmark that reflects their individual process and philosophy. The sub-adviser benchmarks may differ from the benchmark of the overall fund.

The Laudus International MarketMasters Fund Investor Shares returned -0.48% for the period, outperforming the benchmark MSCI EAFE Index (Gross), which returned -2.35%. Relative to the benchmark, both sector allocation and security selection benefitted the fund. On a regional level, selection in Europe contributed the most, while an overweight to Latin America and an overweight to Africa & the Middle East also benefitted the fund. In terms of sector allocation, an overweight to Industrials, Information Technology, and Consumer Discretionary contributed the most to outperformance. Security selection in Consumer Discretionary, Information Technology, and Health Care led positive contributors, while selection in Materials and Financials acted to offset. From a price-to-earnings and price-to-book standpoint, security selection accounted for outperformance, while allocation acted to offset. When looking at market capitalization, allocation to companies below the $5 billion mark was particularly good; however, security selection in this space acted to mitigate the overall effect on performance. In the fund, Information Technology was the best performing sector, up 10.97%, followed by Consumer Discretionary, up 8.81%. Poorly performing sectors included Health Care and Financials, which returned -9.37% and -7.01%, respectively. When looking at the fund’s sub-advisers, Harris Associates performed well, returning 5.70%, as did William Blair & Company, which returned 1.58%. The Mondrian Investment Partners portfolio declined slightly, returning -0.76%, followed by the American Century portfolio which returned -2.41%, and the Wentworth, Hauser and Violich portfolio, which returned -3.24%.

As of 04/30/09:

 Country Weightings % of Investments

United Kingdom 17.5%

Switzerland 10.5%

Japan 10.3%

France 7.1%

Germany 7.1%

United States 5.6%

Canada 4.7%

Netherlands 3.6%

Australia 3.2%

Singapore 2.6%

Other Countries 27.8%

Total 100.0%

 Statistics

Number of Holdings 573

Weighted Average Market

  Cap ($ x 1,000,000) $15,600

Price/Earnings Ratio (P/E) 16.5

Price/Book Ratio (P/B) 1.5

Portfolio Turnover Rate¹ 54%

 Sector Weightings % of Investments

Industrials 21.7%

Consumer Discretionary 17.8%

Financials 13.2%

Information Technology 10.3%

Materials 9.9%

Energy 8.5%

Consumer Staples 5.8%

Health Care 4.6%

Telecommunication Services 1.7%

Utilities 1.0%

Other 5.5%

Total 100.0%

 Top Holdings % of Net Assets²

State Street Institutional

  Liquid Reserves Fund - Institutional

  Class 4.0%

Credit Suisse Group AG - Reg’d 1.3%

Potash Corp. of Saskatchewan, Inc. 1.1%

Daiwa Securities Group, Inc. 1.0%

British Sky Broadcasting Group plc 0.9%

Signet Jewelers Ltd. 0.9%

Daimler AG - Reg’d 0.9%

iShares MSCI Emerging Markets

  Index Fund 0.8%

Koninklijke Vopak N.V. 0.8%

Adecco S.A. - Reg’d 0.8%

Total 12.5%

The fund’s performance relative to the index may be affected by fair-value pricing, see Financial Note 2 for more information.

Manager views and portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.

1	Not annualized.
2	This list is not a recommendation of any security by the investment adviser.

10 Laudus MarketMasters Funds

 Laudus International MarketMasters Fund^tm

Performance Summaryas of 04/30/09

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwab.com/schwabfunds.

Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

Performance of a Hypothetical
$50,000 Investment in Select Shares¹

 Average Annual Total Returns^1,2

Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception
Investor Shares (10/16/96)		-0.48%		-43.31%		1.50%		4.28%		6.09%
Select Shares (4/2/04)		-0.41%		-43.23%		1.65%		n/a		0.94%
Benchmark: MSCI EAFE Index® (Gross)*		-2.35%		-42.42%		1.12%		0.35%		(10/16/96) 2.52%
										(4/2/04) 0.41%
Fund Category: Morningstar Foreign Large-Cap Growth		-0.06%		-44.08%		0.20%		0.14%		(10/16/96) 2.52%
										(4/2/04) -0.75%

Fund Expense Ratios³: Investor Shares: 1.59% / Select Shares: Net 1.48%; Gross 1.54%

 Style Assessment⁴

 Investment Managers and Allocations

		% of
Investment Manager	Investment Style	Net Assets
American Century Global Investment Management, Inc.	International Small/Mid-Cap Growth		20.4%
Wentworth, Hauser and Violich, Inc./Hirayama Investments, LLC	International Large-Cap Growth		10.0%
Harris Associates L.P.	International Large-Cap Value		24.8%
William Blair & Company, LLC	International Multi-Cap Growth		20.2%
Mondrian Investment Partners Limited	International Small-Cap Value		21.1%
Cash and other assets	-		3.5%

All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

Because the fund originally used a multi-fund strategy, its performance prior to June 3, 2002 does not reflect the current strategy and may have been different if it did.

*	The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs.
1	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
2	Source for category information: Morningstar, Inc.
3	As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/11. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements.

Laudus MarketMasters Funds 11

Fund Expenses(Unaudited)

 Examples for a $1,000 Investment

As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2008 and held through April 30, 2009.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 11/1/08		at 4/30/09		11/1/08–4/30/09
Laudus U.S. MarketMasters Fundtm
Investor Shares
Actual Return		1.84%	$	1,000	$	976.20	$	9.02
Hypothetical 5% Return		1.84%	$	1,000	$	1,015.67	$	9.20
Select Shares®
Actual Return		1.62%	$	1,000	$	977.90	$	7.94
Hypothetical 5% Return		1.62%	$	1,000	$	1,016.76	$	8.10
Laudus Small-Cap MarketMasters Fundtm
Investor Shares
Actual Return		1.51%	$	1,000	$	949.10	$	7.30
Hypothetical 5% Return		1.51%	$	1,000	$	1,017.31	$	7.55
Select Shares
Actual Return		1.35%	$	1,000	$	949.70	$	6.53
Hypothetical 5% Return		1.35%	$	1,000	$	1,018.10	$	6.76
Laudus International MarketMasters Fundtm
Investor Shares
Actual Return		1.64%	$	1,000	$	995.20	$	8.11
Hypothetical 5% Return		1.64%	$	1,000	$	1,016.66	$	8.20
Select Shares
Actual Return		1.47%	$	1,000	$	995.90	$	7.27
Hypothetical 5% Return		1.47%	$	1,000	$	1,017.50	$	7.35

1	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.
2	Expenses for each fund or share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by the 365 days of the fiscal year.

12 Laudus MarketMasters Funds

Laudus U.S. MarketMasters Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–		11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05		10/31/04
Per-Share Data ($)
Net asset value at beginning of period		9.03			15.02			12.90			11.26			10.30		9.94
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.05			0.03			0.03			0.02		(0.03	)
Net realized and unrealized gains (losses)		(0.23	)		(6.01	)		2.14			1.63			0.94		0.39
Total from investment operations		(0.22	)		(5.96	)		2.17			1.66			0.96		0.36
Less distributions:
Distributions from net investment income		(0.05	)		(0.03	)		(0.05	)		(0.02	)		—		—
Net asset value at end of period		8.76			9.03			15.02			12.90			11.26		10.30
Total return (%)		(2.38	)1		(39.74	)		16.90			14.71			9.32		3.62
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.84	2,3		1.25			1.22	4		1.20	4		1.25		1.25
Gross operating expenses		2.09	2		1.34			1.27			1.37			1.38		1.39
Net investment income (loss)		0.17	2		0.36			0.25			0.18			0.14		(0.25	)
Portfolio turnover rate		32	1		74			60			65			83		72
Net assets, end of period ($ x 1,000,000)		64			71			137			134			150		180

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–		6/4/045–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05		10/31/04
Per-Share Data ($)
Net asset value at beginning of period		9.05			15.06			12.93			11.30			10.32		10.42
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.07			0.06			0.04			0.02		(0.00	)6
Net realized and unrealized gains (losses)		(0.21	)		(6.02	)		2.15			1.63			0.96		(0.10	)
Total from investment operations		(0.20	)		(5.95	)		2.21			1.67			0.98		(0.10	)
Less distributions:
Distributions from net investment income		(0.08	)		(0.06	)		(0.08	)		(0.04	)		—		—
Net asset value at end of period		8.77			9.05			15.06			12.93			11.30		10.32
Total return (%)		(2.21	)1		(39.65	)		17.19			14.81			9.50		(0.96	)1
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.62	2,7		1.07			1.04	8		0.97	8		1.07		1.07	2
Gross operating expenses		2.00	2		1.29			1.22			1.33			1.33		1.37	2
Net investment income (loss)		0.40	2		0.53			0.44			0.43			0.25		(0.08	)2
Portfolio turnover rate		32	1		74			60			65			83		72	1
Net assets, end of period ($ x 1,000,000)		5			6			10			8			2		1

* Unaudited.

¹ Not annualized.

² Annualized.

³ The ratio of net operating expenses would have been 1.25%, if merger expenses had not been included.

⁴ The ratio of net operating expenses would have been 1.25% and 1.25% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been included.

⁵ Commencement of operations.

⁶ Per-share amount is less than $0.01.

⁷ The ratio of net operating expenses would have been 1.07%, if merger expenses had not been included.

⁸ The ratio of net operating expenses would have been 1.07% and 1.07% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been included.

See financial notes 13

 Laudus U.S. MarketMasters Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	90	.1%	Common Stock		74,827		61,923
	3	.3%	Foreign Common Stock		2,590		2,302
	6	.2%	Other Investment Company		4,247		4,247
	0	.6%	Short-Term Investment		386		386
	100	.2%	Total Investments		82,050		68,858
	(0	.2)%	Other Assets and Liabilities, Net				(120	)
	100	.0%	Net Assets				68,738

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 90.1% of net assets
Automobiles & Components 0.4%
WABCO Holdings, Inc.		16,950		271
Banks 3.4%
Fifth Third Bancorp		101,027		414
First Horizon National Corp.		17,175		198
Hudson City Bancorp, Inc.		19,005		239
KeyCorp		17,400		107
New York Community Bancorp, Inc.		25,295		286
People’s United Financial, Inc.		18,382		287
Synovus Financial Corp.		18,099		58
U.S. Bancorp		32,700		596
Wells Fargo & Co.		7,400		148
				2,333
Capital Goods 5.4%
Alliant Techsystems, Inc. *		3,550		283
Dover Corp.		10,750		331
Fluor Corp.		6,100		231
Hexcel Corp. *		41,850		401
Illinois Tool Works, Inc.		13,100		430
Jacobs Engineering Group, Inc. *		5,355		204
Joy Global, Inc.		10,500		268
McDermott International, Inc. *		13,180		213
Precision Castparts Corp.		3,405		255
Rockwell Collins, Inc.		8,700		333
SPX Corp.		7,090		327
The Boeing Co.		6,900		276
URS Corp. *		3,050		134
				3,686
Commercial & Professional Supplies 1.2%
Robert Half International, Inc.		35,000		841
Consumer Durables & Apparel 0.9%
Lennar Corp., Class A		16,600		162
Snap-on, Inc.		7,385		250
Toll Brothers, Inc. *		9,700		197
				609
Consumer Services 4.6%
Burger King Holdings, Inc.		17,350		284
Carnival Corp.		38,000		1,021
Life Time Fitness, Inc. *		10,000		188
Starwood Hotels & Resorts Worldwide, Inc.		40,000		834
Yum! Brands, Inc.		25,500		850
				3,177
Diversified Financials 11.0%
Bank of America Corp.		86,501		773
Bank of New York Mellon Corp.		32,000		815
CME Group, Inc.		1,193		264
Discover Financial Services		72,050		586
Federated Investors, Inc., Class B		13,995		320
Franklin Resources, Inc.		11,500		696
JPMorgan Chase & Co.		48,740		1,608
Knight Capital Group, Inc., Class A *		20,575		319
Legg Mason, Inc.		39,100		785
Morgan Stanley		26,700		631
The Goldman Sachs Group, Inc.		5,979		768
				7,565
Energy 6.9%
Anadarko Petroleum Corp.		6,100		263
Apache Corp.		8,681		633
Cameron International Corp. *		10,400		266
Chevron Corp.		3,030		200
ConocoPhillips		8,360		343
CONSOL Energy, Inc.		5,600		175
Gazprom - Reg’d ADR		6,300		113
Marathon Oil Corp.		30,610		909
Murphy Oil Corp.		6,865		328
National-Oilwell Varco, Inc. *		11,900		360
Petrohawk Energy Corp. *		5,750		136
Transocean Ltd. *		10,157		685
Weatherford International Ltd. *		21,850		363
				4,774
Food & Staples Retailing 0.8%
CVS Caremark Corp.		12,060		383
Rite Aid Corp. *		176,200		159
				542

14 See financial notes

 Laudus U.S. MarketMasters Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Food, Beverage & Tobacco 4.7%
Dean Foods Co. *		13,760		285
Dr. Pepper Snapple Group, Inc. *		61,011		1,264
General Mills, Inc.		3,610		183
H.J. Heinz Co.		8,350		287
Molson Coors Brewing Co., Class B		7,800		298
The Coca-Cola Co.		14,000		603
The J.M. Smucker Co.		7,450		293
				3,213
Health Care Equipment & Services 5.8%
Baxter International, Inc.		5,095		247
Beckman Coulter, Inc.		4,650		245
Boston Scientific Corp. *		29,633		249
Cerner Corp. *		8,000		430
Community Health Systems, Inc. *		11,880		271
Eclipsys Corp. *		23,870		315
Edwards Lifesciences Corp. *		3,800		241
Express Scripts, Inc. *		4,839		310
Humana, Inc. *		16,355		471
McKesson Corp.		7,150		265
Medtronic, Inc.		15,700		502
Teleflex, Inc.		4,265		183
Varian Medical Systems, Inc. *		7,540		252
				3,981
Insurance 4.1%
ACE Ltd.		15,318		709
Aon Corp.		6,490		274
Arch Capital Group Ltd. *		8,035		464
Assurant, Inc.		10,010		245
MetLife, Inc.		6,820		203
PartnerRe Ltd.		3,950		269
The Allstate Corp.		17,050		398
The Hartford Financial Services Group, Inc.		22,294		256
				2,818
Materials 2.5%
Commercial Metals Co.		32,750		487
Cytec Industries, Inc.		17,325		344
Freeport-McMoRan Copper & Gold, Inc.		3,140		134
International Flavors & Fragrances, Inc.		11,750		367
Pactiv Corp. *		18,300		400
				1,732
Media 3.1%
Comcast Corp., Special Class A		59,950		880
DISH Network Corp., Class A *		33,790		448
Liberty Media Corp - Entertainment, Series A *		14,580		355
The DIRECTV Group, Inc. *		18,770		464
				2,147
Pharmaceuticals, Biotechnology & Life Sciences 5.2%
Celgene Corp. *		5,020		214
Eli Lilly & Co.		22,505		741
Gilead Sciences, Inc. *		26,420		1,210
Teva Pharmaceutical Industries Ltd. ADR		7,845		344
Thermo Fisher Scientific, Inc. *		20,400		716
Varian, Inc. *		9,635		318
				3,543
Retailing 5.3%
American Eagle Outfitters, Inc.		21,000		311
Bed Bath & Beyond, Inc. *		6,800		207
Best Buy Co., Inc.		21,715		833
Macy’s, Inc.		23,751		325
Priceline.com, Inc. *		5,046		490
The TJX Cos., Inc.		18,335		513
Tiffany & Co.		27,700		802
Urban Outfitters, Inc. *		7,985		155
				3,636
Semiconductors & Semiconductor Equipment 5.9%
Analog Devices, Inc.		14,350		305
Applied Materials, Inc.		11,400		139
Broadcom Corp., Class A *		19,450		451
Intel Corp.		81,665		1,289
Lam Research Corp. *		6,680		186
Maxim Integrated Products, Inc.		29,190		396
MEMC Electronic Materials, Inc. *		14,375		233
National Semiconductor Corp.		70,000		866
ON Semiconductor Corp. *		41,011		222
				4,087
Software & Services 6.3%
Activision Blizzard, Inc. *		28,420		306
Amdocs Ltd. *		22,560		472
ANSYS, Inc. *		7,200		199
Google, Inc., Class A *		1,892		749
Infosys Technologies Ltd. ADR		10,200		314
MasterCard, Inc., Class A		2,353		432
Microsoft Corp.		38,050		771
Oracle Corp.		14,800		286
Paychex, Inc.		13,420		363
Salesforce.com, Inc. *		3,680		158
Visa, Inc., Class A		3,900		253
				4,303
Technology Hardware & Equipment 7.0%
Agilent Technologies, Inc. *		15,250		278
Apple, Inc. *		8,470		1,066
Avnet, Inc. *		11,050		242
Corning, Inc.		40,777		596
Dell, Inc. *		57,060		663
Hewlett-Packard Co.		37,235		1,340
International Business Machines Corp.		2,550		263
Nortel Networks Corp. *		2,696		1

See financial notes 15

 Laudus U.S. MarketMasters Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
QUALCOMM, Inc.		8,455		358
				4,807
Telecommunication Services 2.0%
AT&T, Inc.		22,420		574
Crown Castle International Corp. *		33,258		816
				1,390
Transportation 1.1%
FedEx Corp.		5,300		297
Union Pacific Corp.		9,800		481
				778
Utilities 2.5%
Consolidated Edison, Inc.		9,145		340
Entergy Corp.		8,520		552
Hawaiian Electric Industries, Inc.		14,240		221
PG&E Corp.		6,300		234
Wisconsin Energy Corp.		8,595		343
				1,690
Total Common Stock (Cost $74,827)				61,923
Foreign Common Stock 3.3% of net assets
Bermuda 0.3%
Diversified Financials 0.3%
Invesco Ltd.		14,704		216
Canada 1.1%
Technology Hardware & Equipment 1.1%
Research In Motion Ltd. *		11,097		771
Hong Kong 0.4%
Telecommunication Services 0.4%
China Mobile Ltd.		31,900		278
Singapore 0.4%
Semiconductors & Semiconductor Equipment 0.4%
Verigy Ltd. *		26,532		292
Switzerland 0.3%
Insurance 0.3%
Swiss Re - Reg’d		8,990		217
United Kingdom 0.8%
Insurance 0.8%
Willis Group Holdings Ltd.		19,180		528
Total Foreign Common Stock (Cost $2,590)				2,302
	Number		Value
Security	of Shares		($ x 1,000)
Other Investment Company 6.2% of net assets
State Street Institutional Liquid Reserves Fund - Institutional Class		4,247,137		4,247
Total Other Investment Company (Cost $4,247)				4,247
	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.6% of net assets
U.S. Treasury Bill 0.6%
U.S. Treasury Bill
0.16%, 06/18/09(a)		386		386
Total Short-Term Investment (Cost $386)				386
End of Investments.
(All dollar amounts are x1,000)
At 04/30/2009, the tax basis cost of the fund’s investments was $84,274 and the unrealized appreciation and depreciation were $2,071 and ($17,487), respectively, with a net unrealized depreciation of ($15,416).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.

ADR — American Depositary Receipt

Reg’d — Registered

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

��

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S&P 500 Index, Long, expires 06/18/09		10		2,175		304

16 See financial notes

 Laudus U.S. MarketMasters Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $82,050)		$68,858
Receivables:
Investments sold		260
Dividends		36
Foreign tax reclaims		6
Due from brokers for futures		2
Interest	+	2
Total assets		69,164
Liabilities
Payables:
Investments bought		204
Investment adviser and administrator fees		4
Transfer agent and shareholder services fees		1
Merger expenses		187
Fund shares redeemed		8
Accrued expenses	+	22
Total liabilities		426
Net Assets
Total assets		69,164
Total liabilities	−	426
Net assets		$68,738
Net Assets by Source
Capital received from investors		102,247
Distributions in excess of net investment income		(229	)
Net realized capital losses		(20,392	)
Net unrealized capital losses		(12,888	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$63,743		7,275			$8.76
Select Shares	$4,995		570			$8.77	*

*  Due to rounding, net assets divided by shares outstanding does not equal net asset value.

See financial notes 17

 Laudus U.S. MarketMasters Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $4)		$632
Interest	+	11
Total Investment Income		643
Net Realized Gains and Losses
Net realized losses on investments		(9,996	)
Net realized losses on foreign currency transactions		(2	)
Net realized losses on futures contracts	+	(383	)
Net realized losses		(10,381	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		7,436
Net unrealized losses on foreign currency translations		(1	)
Net unrealized gains on futures contracts	+	304
Net unrealized gains		7,739
Expenses
Investment adviser and administrator fees		296
Transfer agent and shareholder service fees:
Investor Shares		74
Select Shares		5
Merger expenses		188
Portfolio accounting fees		31
Professional fees		24
Registration fees		16
Shareholder reports		14
Custodian fees		13
Trustees’ fees		4
Other expenses	+	2
Total expenses		667
Expense reduction by adviser and Schwab	−	83
Net expenses		584
Increase (Decrease) in Net Assets from Operations
Total investment income		643
Net expenses	−	584
Net investment income		59
Net realized losses		(10,381	)
Net unrealized gains	+	7,739
Decrease in net assets from operations		($2,583	)

18 See financial notes

 Laudus U.S. MarketMasters Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$59			$445
Net realized losses			(10,381	)		(4,983	)
Net unrealized gains (losses)	+		7,739			(50,031	)
Decrease in net assets from operations			(2,583	)		(54,569	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			404			294
Select Shares	+		51			39
Total distributions from net investment income			$455			$333

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			76			$591			208			$2,695
Select Shares	+		15			122			221			2,845
Total shares sold			91			$713			429			$5,540
Shares Reinvested
Investor Shares			47			$387			21			$282
Select Shares	+		5			46			2			34
Total shares reinvested			52			$433			23			$316
Shares Redeemed
Investor Shares			(711	)		($5,511	)		(1,495	)		($18,325	)
Select Shares	+		(138	)		(1,075	)		(185	)		(2,339	)
Total shares redeemed			(849	)		($6,586	)		(1,680	)		($20,664	)
Net transactions in fund shares			(706	)		($5,440	)		(1,228	)		($14,808	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			8,551			$77,216			9,779			$146,926
Total decrease	+		(706	)		(8,478	)		(1,228	)		(69,710	)
End of period			7,845			$68,738			8,551			$77,216
Distribution in excess of net investment income/						($229	)					$167
Net investment income not yet distributed

See financial notes 19

Laudus Small-Cap MarketMasters Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		8.78			13.74			14.20			13.38			12.18			11.08
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)1		(0.04	)1		(0.08	)1		(0.13	)		(0.14	)		(0.14	)
Net realized and unrealized gain (losses)		(0.43	)1		(4.59	)1		1.81	1		2.08			1.34			1.24
Total income from investment operations		(0.45	)		(4.63	)		1.73			1.95			1.20			1.10
Less distributions:
Distributions from net realized gains		0.00	2		(0.33	)		(2.19	)		(1.13	)		—			—
Net asset value at end of period		8.33			8.78			13.74			14.20			13.38			12.18
Total return (%)		(5.09	)3		(34.34	)		13.79			15.33			9.85			9.93
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.51	4		1.48			1.51	5		1.48	5		1.55			1.55
Gross operating expenses		1.54	4		1.48			1.59			1.63			1.69			1.77
Net investment income (loss)		(0.49	)4		(0.38	)		(0.60	)		(0.82	)		(0.95	)		(1.08	)
Portfolio turnover rate		58	3		134			83			105			94			140
Net assets, end of period ($ x 1,000,000)		59			64			99			95			108			129

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			6/9/046–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		8.86			13.85			14.27			13.41			12.19			12.11
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)1		(0.04	)1		(0.04	)1		(0.02	)		(0.11	)		(0.03	)
Net realized and unrealized gains (losses)		(0.44	)1		(4.62	)1		1.81	1		2.01			1.33			0.11
Total income from investment operations		(0.45	)		(4.66	)		1.77			1.99			1.22			0.08
Less distributions:
Distributions from net realized gains		(0.01	)		(0.33	)		(2.19	)		(1.13	)		—			—
Net asset value at end of period		8.40			8.86			13.85			14.27			13.41			12.19
Total return (%)		(5.03	)3		(34.28	)		14.04			15.61			10.01			0.66	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.35	4		1.37			1.36	7		1.16	7		1.37			1.37	4
Gross operating expenses		1.49	4		1.44			1.66			1.55			1.63			1.79	4
Net investment income (loss)		(0.33	)4		(0.31	)		(0.29	)		(0.43	)		(0.76	)		(0.91	)4
Portfolio turnover rate		58	3		134			83			105			94			140	3
Net assets, end of period ($ x 1,000,000)		300			260			437			7			1			0.32

* Unaudited.

¹ Calculated based on average shares outstanding during the period.

² Per share amount was less than $0.01.

³ Not annualized.

⁴ Annualized.

⁵ The ratio of net operating expenses would have been 1.55% and 1.55% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been included.

⁶ Commencement of operations.

⁷ The ratio of net operating expenses would have been 1.36% and 1.37% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been included.

20 See financial notes

 Laudus Small-Cap MarketMasters Fund

Portfolio Holdingsas of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	89	.6%	Common Stock		332,525		321,011
	1	.4%	Foreign Common Stock		6,078		5,134
	4	.7%	Other Investment Company		16,728		16,728
	0	.3%	Short-Term Investment		1,200		1,200
	96	.0%	Total Investments		356,531		344,073
	4	.0%	Other Assets and Liabilities				14,353
	100	.0%	Net Assets				358,426

	Number		Value
Security	of Shares		($ x 1,000)
Common Stock 89.6% of net assets
Automobiles & Components 0.3%
WABCO Holdings, Inc.		57,100		913
Banks 3.3%
Bank of the Ozarks, Inc.		113,197		2,811
First Horizon National Corp.		52,273		602
Glacier Bancorp, Inc.		162,481		2,489
Hudson City Bancorp, Inc.		61,000		766
KeyCorp		58,400		359
New York Community Bancorp, Inc.		85,116		963
People’s United Financial, Inc.		59,196		924
Signature Bank *		29,000		788
Synovus Financial Corp.		60,940		197
TCF Financial Corp.		137,647		1,915
				11,814
Capital Goods 4.9%
Alliant Techsystems, Inc. *		11,795		939
Argon ST, Inc. *		124,178		2,532
Baldor Electric Co.		57,500		1,334
Beacon Roofing Supply, Inc. *		53,500		851
Dover Corp.		35,200		1,083
EMCOR Group, Inc. *		96,029		1,996
General Cable Corp. *		96,284		2,613
HEICO Corp.		27,100		778
Hexcel Corp. *		138,700		1,330
Jacobs Engineering Group, Inc. *		17,707		674
Joy Global, Inc.		34,400		877
Rockwell Collins, Inc.		28,800		1,105
SPX Corp.		23,560		1,088
Textron, Inc.		46,800		502
				17,702
Commercial & Professional Supplies 2.3%
Cornell Cos., Inc. *		34,830		633
EnergySolutions, Inc.		348,000		3,376
FTI Consulting, Inc. *		14,800		812
Tetra Tech, Inc. *		23,600		580
The Geo Group, Inc. *		48,920		814
Watson Wyatt Worldwide, Inc., Class A		36,032		1,911
				8,126
Consumer Durables & Apparel 2.6%
Carter’s, Inc. *		83,165		1,778
Columbia Sportswear Co.		29,000		891
Lennar Corp., Class A		56,900		554
M.D.C. Holdings, Inc.		82,830		2,831
Pool Corp.		61,687		1,102
Snap-on, Inc.		25,615		869
The Warnaco Group, Inc. *		19,400		559
Toll Brothers, Inc. *		33,200		673
				9,257
Consumer Services 5.0%
Ameristar Casinos, Inc.		56,300		1,155
BJ’s Restaurants, Inc. *		106,881		1,763
Boyd Gaming Corp.		109,900		1,010
Burger King Holdings, Inc.		61,100		998
Career Education Corp. *		99,589		2,195
Chipotle Mexican Grill, Inc., Class A *		11,275		914
Choice Hotels International, Inc.		80,666		2,414
Corinthian Colleges, Inc. *		157,442		2,425
Cracker Barrel Old Country Store, Inc.		17,900		584
Domino’s Pizza, Inc. *		202,421		1,911
Penn National Gaming, Inc. *		27,600		939
Royal Caribbean Cruises Ltd.		68,500		1,009
Strayer Education, Inc.		2,550		483
				17,800
Diversified Financials 3.2%
CIT Group, Inc.		261,500		581
Federated Investors, Inc., Class B		47,700		1,091
GAMCO Investors, Inc., Class A		56,775		2,847
GFI Group, Inc.		111,353		454
Greenhill & Co., Inc.		8,600		667
Janus Capital Group, Inc.		91,500		918
Knight Capital Group, Inc., Class A *		69,260		1,073
Raymond James Financial, Inc.		131,353		2,061
Stifel Financial Corp. *		20,600		1,014
Teton Advisors, Inc. *		1,198		—
Waddell & Reed Financial, Inc., Class A		33,300		746
				11,452

See financial notes 21

 Laudus Small-Cap MarketMasters Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Energy 6.6%
Alpha Natural Resources, Inc. *		68,936		1,412
Arena Resources, Inc. *		35,560		1,020
Bill Barrett Corp. *		81,564		2,119
Cameron International Corp. *		34,100		872
CARBO Ceramics, Inc.		38,500		1,182
Concho Resources, Inc. *		47,700		1,308
CONSOL Energy, Inc.		17,400		544
Global Industries Ltd. *		345,000		2,232
Holly Corp.		91,514		1,918
Murphy Oil Corp.		23,050		1,100
Oceaneering International, Inc. *		81,500		3,714
Petrohawk Energy Corp. *		21,700		512
Pioneer Natural Resources Co.		31,422		727
TETRA Technologies, Inc. *		279,500		1,599
Weatherford International Ltd. *		72,400		1,204
Willbros Group, Inc. *		183,690		2,105
				23,568
Food & Staples Retailing 1.5%
Casey’s General Stores, Inc.		57,914		1,541
United Natural Foods, Inc. *		139,258		3,172
Whole Foods Market, Inc.		26,500		550
				5,263
Food, Beverage & Tobacco 3.0%
H.J. Heinz Co.		23,900		823
Lance, Inc.		100,651		2,331
Molson Coors Brewing Co., Class B		26,200		1,002
The Hain Celestial Group, Inc. *		197,500		3,296
The J.M. Smucker Co.		25,000		985
TreeHouse Foods, Inc. *		89,884		2,390
				10,827
Health Care Equipment & Services 11.2%
Air Methods Corp. *		24,600		653
Align Technology, Inc. *		233,807		2,901
Allscripts Healthcare Solutions, Inc.		254,500		3,161
Analogic Corp.		129,359		4,709
Beckman Coulter, Inc.		14,700		773
Cerner Corp. *		91,954		4,947
Edwards Lifesciences Corp. *		11,800		748
Emergency Medical Services Corp., Class A *		23,600		822
Greatbatch, Inc. *		127,500		2,682
ICU Medical, Inc. *		50,800		1,910
IMS Health, Inc.		135,000		1,695
Inverness Medical Innovations, Inc. *		32,900		1,062
IPC The Hospitalist Co Inc *		25,300		464
Masimo Corp. *		22,100		639
MedAssets, Inc. *		33,100		571
Teleflex, Inc.		69,913		3,005
Thoratec Corp. *		97,000		2,819
Universal Health Services, Inc., Class B		43,020		2,168
VCA Antech, Inc. *		29,300		733
Vnus Medical Technologies, Inc. *		25,900		574
Wright Medical Group, Inc. *		233,500		3,211
				40,247
Household & Personal Products 1.4%
NBTY, Inc. *		126,762		3,285
WD-40 Co.		70,000		1,894
				5,179
Insurance 2.3%
Arch Capital Group Ltd. *		29,654		1,713
Assurant, Inc.		34,410		841
eHealth, Inc. *		31,400		603
First American Corp.		59,177		1,662
Markel Corp. *		8,457		2,427
PartnerRe Ltd.		12,800		873
				8,119
Materials 3.3%
Brush Engineered Materials, Inc. *		114,000		1,929
Calgon Carbon Corp. *		56,400		958
Commercial Metals Co.		107,600		1,601
Cytec Industries, Inc.		58,350		1,159
International Flavors & Fragrances, Inc.		40,400		1,261
Landec Corp. *		150,500		1,017
Minerals Technologies, Inc.		24,500		911
Pactiv Corp. *		57,700		1,261
Schnitzer Steel Industries, Inc., Class A		35,006		1,735
				11,832
Media 0.8%
DreamWorks Animation SKG, Inc., Class A *		37,000		888
Morningstar, Inc. *		39,411		1,564
Regal Entertainment Group, Class A		37,000		483
				2,935
Pharmaceuticals, Biotechnology & Life Sciences 5.1%
Alexion Pharmaceuticals, Inc. *		16,000		535
Alkermes, Inc. *		264,500		2,023
Illumina, Inc. *		15,500		579
King Pharmaceuticals, Inc. *		123,000		969
Life Technologies Corp. *		37,500		1,399
Martek Biosciences Corp. *		34,000		620
Myriad Genetics, Inc. *		16,600		644
Optimer Pharmaceuticals, Inc. *		34,600		483
Perrigo Co.		114,253		2,961
Pharmaceutical Product Development, Inc.		59,998		1,177
Salix Pharmaceuticals Ltd. *		234,500		2,580
The Medicines Co. *		92,500		923
Thermo Fisher Scientific, Inc. *		27,800		975
United Therapeutics Corp. *		22,630		1,421

22 See financial notes

 Laudus Small-Cap MarketMasters Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Varian, Inc. *		33,398		1,103
				18,392
Real Estate 2.2%
LaSalle Hotel Properties		78,995		945
Redwood Trust, Inc.		159,858		2,601
The St. Joe Co. *		80,500		2,003
Washington Real Estate Investment Trust		111,971		2,388
				7,937
Retailing 6.2%
1-800-FLOWERS.COM, Inc., Class A *		442,000		1,291
Aaron Rents, Inc.		86,144		2,891
Abercrombie & Fitch Co., Class A		56,817		1,537
American Eagle Outfitters, Inc.		70,700		1,048
bebe stores, Inc.		270,500		2,489
Bed Bath & Beyond, Inc. *		22,300		678
Blue Nile, Inc. *		31,453		1,339
CarMax, Inc. *		212,795		2,715
hhgregg, Inc. *		37,800		627
Macy’s, Inc.		82,524		1,129
Monro Muffler Brake, Inc.		24,500		612
Nordstrom, Inc.		29,100		658
PetMed Express, Inc. *		89,875		1,461
The TJX Cos., Inc.		23,735		664
Tractor Supply Co. *		56,700		2,290
Williams-Sonoma, Inc.		55,300		774
				22,203
Semiconductors & Semiconductor Equipment 5.7%
Analog Devices, Inc.		46,400		987
Broadcom Corp., Class A *		66,900		1,551
Cymer, Inc. *		97,000		2,756
FEI Co. *		88,000		1,512
Hittite Microwave Corp. *		21,300		791
Kopin Corp. *		586,500		1,613
Maxim Integrated Products, Inc.		100,875		1,367
Netlogic Microsystems, Inc. *		25,400		828
Semtech Corp. *		51,800		747
Silicon Image, Inc. *		861,000		2,342
Silicon Laboratories, Inc. *		21,200		705
Ultratech, Inc. *		319,000		4,313
Varian Semiconductor Equipment Associates, Inc. *		38,800		993
				20,505
Software & Services 11.6%
Advent Software, Inc. *		14,100		469
Aspen Technology, Inc. *		370,500		2,875
Blackboard, Inc. *		47,737		1,625
Epicor Software Corp. *		378,500		2,089
Equinix, Inc. *		15,200		1,068
FactSet Research Systems, Inc.		42,778		2,292
Fair Isaac Corp.		152,000		2,557
Informatica Corp. *		27,500		437
Lionbridge Technologies, Inc. *		746,000		1,007
Macrovision Solutions Corp. *		32,800		663
ManTech International Corp., Class A *		52,377		1,896
Mercadolibre, Inc. *		25,500		697
Nuance Communications, Inc. *		54,370		726
Parametric Technology Corp. *		255,000		2,843
Perficient, Inc. *		174,500		1,216
Quality Systems, Inc.		57,411		3,078
RealNetworks, Inc. *		497,000		1,223
RightNow Technologies, Inc. *		213,688		1,613
Solera Holdings, Inc. *		22,000		502
Sybase, Inc. *		23,600		801
Symyx Technologies, Inc. *		267,500		1,295
TeleCommunication Systems, Inc., Class A *		65,300		641
The Ultimate Software Group, Inc. *		33,500		627
TIBCO Software, Inc. *		501,500		3,170
ValueClick, Inc. *		321,403		3,407
VASCO Data Security International, Inc. *		219,279		1,517
Websense, Inc. *		70,000		1,248
				41,582
Technology Hardware & Equipment 3.7%
Agilent Technologies, Inc. *		52,400		957
Avnet, Inc. *		38,300		838
Data Domain, Inc. *		101,998		1,691
DG FastChannel, Inc. *		50,500		1,178
Electro Scientific Industries, Inc. *		167,000		1,436
F5 Networks, Inc. *		106,624		2,908
L-1 Identity Solutions, Inc. *		245,885		1,800
Riverbed Technology, Inc. *		34,600		634
SeaChange International, Inc. *		105,876		664
Starent Networks Corp. *		27,800		548
ViaSat, Inc. *		28,400		653
				13,307
Telecommunication Services 1.4%
Cbeyond, Inc. *		161,818		3,298
SBA Communications Corp., Class A *		69,860		1,760
				5,058
Transportation 1.1%
AirTran Holdings, Inc. *		224,871		1,563
Arkansas Best Corp.		41,000		946
Old Dominion Freight Line, Inc. *		48,300		1,360
				3,869
Utilities 0.9%
Consolidated Edison, Inc.		24,485		909
Hawaiian Electric Industries, Inc.		47,435		737
PG&E Corp.		7,300		271
Wisconsin Energy Corp.		30,200		1,207
				3,124
Total Common Stock (Cost $332,525)				321,011

See financial notes 23

 Laudus Small-Cap MarketMasters Fund

Portfolio Holdings (Unaudited) continued

	Number		Value
Security	of Shares		($ x 1,000)
Foreign Common Stock 1.4% of net assets
Bermuda 0.6%
Consumer Services 0.2%
Orient-Express Hotels Ltd., Class A		106,200		687
Diversified Financials 0.2%
Invesco Ltd.		48,705		717
Software & Services 0.2%
VistaPrint Ltd. *		26,100		896
				2,300
Singapore 0.3%
Semiconductors & Semiconductor Equipment 0.3%
Verigy Ltd. *		92,057		1,013
United Kingdom 0.5%
Insurance 0.5%
Willis Group Holdings, Ltd.		66,203		1,821
Total Foreign Common Stock (Cost $6,078)				5,134
Other Investment Company 4.7% of net assets
State Street Institutional Liquid Reserves Fund - Institutional Class		16,728,210		16,728
Total Other Investment Company (Cost $16,728)				16,728
	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.3% of net assets
U.S. Treasury Obligation 0.3%
U.S. Treasury Bill
0.16%, 06/18/09 (a)		1,200		1,200
Total Short-Term Investment (Cost $1,200)				1,200
End of Investments.
(All dollar amounts are x 1,000)
At 04/30/09, the tax basis cost of the fund’s investments was $366,356, and the unrealized appreciation and depreciation were $25,939 and ($48,222), respectively, with a net depreciation of ($22,283).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.

In addition to the above, the fund held the following at

04/30/09. All numbers are x1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
Russell 2000 Mini Index, Long, expires 06/19/09		240		11,681		2,360

24 See financial notes

 Laudus Small-Cap MarketMaster Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $356,531)		$344,073
Receivables:
Investments sold		8,749
Fund shares sold		13,143
Dividends		86
Interest		7
Prepaid expenses	+	1
Total assets		366,059
Liabilities
Payables:
Investments bought		7,215
Investment advisers and administrator fees		43
Fund shares redeemed		247
Due to brokers for futures		50
Trustees’ fees		1
Accrued expenses	+	77
Total liabilities		7,633
Net Assets
Total assets		366,059
Total liabilities	−	7,633
Net assets		$358,426
Net Assets by Source
Capital received from investors		545,045
Distribution in excess of net investment income		(935	)
Net realized capital losses		(175,586	)
Net unrealized capital losses		(10,098	)

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$58,792		7,059			$8.33
Select Shares	$299,634		35,668			$8.40

See financial notes 25

 Laudus Small-Cap MarketMaster Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends		$1,406
Interest	+	66
Total investment income		1,472
Net Realized Gains and Losses
Net realized losses on investments		(67,245	)
Net realized losses on futures contracts	+	(4,140	)
Net realized losses		(71,385	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		57,111
Net unrealized gains on futures contracts	+	2,910
Net unrealized gains		60,021
Expenses
Investment adviser and administrator fees		1,692
Transfer agent and shareholder service fees:
Investor Shares		67
Select Shares		236
Shareholder reports		57
Portfolio accounting fees		35
Professional fees		24
Custodian fees		20
Registration fees		20
Trustees’ fees		6
Other expenses	+	5
Total expenses		2,162
Expense reduction by adviser and Schwab	−	168
Net expenses		1,994
Increase (Decrease) in Net Assets from Operations
Total investment income		1,472
Net expenses	−	1,994
Net investment loss		(522	)
Net realized losses		(71,385	)
Net unrealized gains	+	60,021
Decrease in net assets from operations		($11,886	)

26 See financial notes

 Laudus Small-Cap MarketMaster Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment losses			($522	)		($1,604	)
Net realized losses			(71,385	)		(102,682	)
Net unrealized gains (losses)	+		60,021			(96,282	)
Decrease in net assets from operations			(11,886	)		(200,568	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			22			—
Select Shares	+		409			—
Total distributions from net investment income			431			—
Distributions from net realized gains
Investor Shares			—			2,435
Select Shares	+		—			10,845
Total distributions from net realized gains			—			13,280
Total distributions			$431			$13,280

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			574			$4,349			1,337	��		$15,389
Select Shares	+		9,930			74,826			14,764			169,600
Total shares sold			10,504			$79,175			16,101			$184,989
Shares Reinvested
Investor Shares			3			$21			188			$2,278
Select Shares	+		15			122			285			3,475
Total shares reinvested			18			$143			473			$5,753
Shares Redeemed
Investor Shares			(828	)		($6,081	)		(1,434	)		($15,902	)
Select Shares	+		(3,629	)		(26,725	)		(17,259	)		(173,104	)
Total shares redeemed			(4,457	)		($32,806	)		(18,693	)		($189,006	)
Net transactions in fund shares			6,065			$46,512			(2,119	)		$1,736
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			36,662			$324,231			38,781			$536,343
Total increase or decrease	+		6,065			34,195			(2,119	)		(212,112	)
End of period			42,727			$358,426			36,662			$324,231
Distribution in excess of net investment income/
Net investment income not yet distributed						($935	)					$18

See financial notes 27

Laudus International MarketMasters Fund^tm

Financial Statements

Financial Highlights

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			11/1/03–
Investor Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		11.78			25.96			20.73			16.78			13.58			11.95
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.20			0.14			0.13			0.06			0.02
Net realized and unrealized gains (losses)		(0.16	)		(12.25	)		6.84			3.98			3.16			1.65
Total from investment operations		(0.07	)		(12.05	)		6.98			4.11			3.22			1.67
Less distributions:
Distributions from net investment income		(0.51	)		(0.10	)		(0.16	)		(0.16	)		(0.02	)		(0.04	)
Distributions from net realized gains		—			(2.03	)		(1.59	)		—			—			—
Total distributions		(0.51	)		(2.13	)		(1.75	)		(0.16	)		(0.02	)		(0.04	)
Net asset value at end of period		11.20			11.78			25.96			20.73			16.78			13.58
Total return (%)		(0.48	)1		(49.97	)		36.01			24.66			23.75			13.98
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.64	2		1.59			1.56	3		1.57	3		1.65			1.65
Gross operating expenses		1.66	2		1.59			1.59			1.64			1.74			1.89
Net investment income (loss)		1.23	2		0.95			0.62			0.52			0.37			0.15
Portfolio turnover rate		54	1		88			71			90			53			69
Net assets, end of period ($ x 1,000,000)		746			918			2,297			1,320			794			552

	11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–			4/2/044–
Select Shares	4/30/09*			10/31/08			10/31/07			10/31/06			10/31/05			10/31/04
Per-Share Data ($)
Net asset value at beginning of period		11.80			26.00			20.77			16.81			13.61			13.64
Income (loss) from investment operations:
Net investment income (loss)		0.09			0.23			0.15			0.19			0.08			0.02
Net realized and unrealized gains (losses)		(0.15	)		(12.27	)		6.86			3.96			3.17			(0.05	)
Total from investment operations		(0.06	)		(12.04	)		7.01			4.15			3.25			(0.03	)
Less distributions:		��
Distributions from net investment income		(0.54	)		(0.13	)		(0.19	)		(0.19	)		(0.05	)		—
Distributions from net realized gains		—			(2.03	)		(1.59	)		—			—			—
Total distributions		(0.54	)		(2.16	)		(1.78	)		(0.19	)		(0.05	)		—
Net asset value at end of period		11.20			11.80			26.00			20.77			16.81			13.61
Total return (%)		(0.41	)1		(49.91	)		36.16			24.88			23.90			(0.22	)1
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		1.47	2		1.48	5		1.44	6		1.39	6		1.47			1.47	2
Gross operating expenses		1.61	2		1.54			1.55			1.60			1.68			1.86	2
Net investment income (loss)		1.41	2		1.08			0.73			0.72			0.59			0.37	2
Portfolio turnover rate		54	1		88			71			90			53			69	1
Net assets, end of period ($ x 1,000,000)		459			540			1,255			628			274			81

* Unaudited.

¹ Not annualized.

² Annualized.

³ The ratio of net operating expenses would have been 1.64% and 1.59% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been included.

⁴ Commencement of operations.

⁵ The ratio of net operating expenses would have been 1.47% if tax and inerest expense had not been included.

⁶ The ratio of net operating expenses would have been 1.47% and 1.47% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been included.

28 See financial notes

 Laudus International MarketMasters Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	93	.2%	Common Stock		1,364,533		1,123,136
	0	.5%	Preferred Stock		5,319		6,277
	5	.0%	Other Investment Companies		68,484		59,581
		—%	Rights		224		271
	0	.4%	Short-Term Investments		4,849		4,849
	99	.1%	Total Investments		1,443,409		1,194,114
	0	.9%	Other Assets and Liabilities				10,781
	100	.0%	Net Assets				1,204,895

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 93.2% of net assets
Australia 3.1%
Commercial & Professional Supplies 0.2%
Transfield Services Ltd.		1,191,912		2,151
Consumer Services 0.1%
Tatts Group Ltd.		373,100		748
Energy 0.2%
Arrow Energy Ltd. *		164,694		397
Energy Resources of Australia Ltd.		27,100		409
WorleyParsons Ltd.		114,432		1,509
				2,315
Food & Staples Retailing 0.2%
Metcash Ltd.		60,500		183
Woolworths Ltd.		162,249		3,147
				3,330
Food, Beverage & Tobacco 0.0%
Lion Nathan Ltd.		23,809		203
Health Care Equipment & Services 0.1%
Cochlear Ltd.		18,084		653
Insurance 0.2%
QBE Insurance Group Ltd.		162,649		2,572
Materials 1.3%
BHP Billiton Ltd.		139,006		3,358
BHP Billiton Ltd. ADR		193,725		9,326
PanAust Ltd. *		4,628,272		1,111
Sino Gold Mining Ltd. *		277,053		1,093
St. Barbara Ltd. *		4,339,005		877
				15,765
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
CSL Ltd.		57,392		1,430
Real Estate 0.4%
Commonwealth Property Office Fund		8,927,252		5,281
Retailing 0.3%
David Jones Ltd.		1,104,861		2,422
JB Hi-Fi Ltd.		99,103		979
				3,401
				37,849
Austria 0.1%
Capital Goods 0.0%
Andritz AG		13,800		469
Consumer Services 0.1%
BWIN Interactive Entertainment AG *		24,955		788
				1,257
Bahamas 0.1%
Energy 0.1%
Petrominerales Ltd. *		84,548		759
Belgium 0.4%
Capital Goods 0.0%
Bekaert N.V.		5,500		511
Food & Staples Retailing 0.1%
Colruyt S.A.		4,247		965
Food, Beverage & Tobacco 0.2%
Anheuser-Busch InBev N.V.		60,575		1,854
Telecommunication Services 0.1%
Telenet Group Holding N.V. *		67,897		1,314
				4,644
Bermuda 2.3%
Banks 0.1%
Credicorp Ltd.		33,430		1,672
Capital Goods 0.5%
Cooper Industries Ltd., Class A		94,600		3,102
Ingersoll-Rand Co., Ltd., Class A		27,625		601
Noble Group Ltd.		2,304,760		1,997
				5,700
Energy 0.2%
Seadrill Ltd.		215,000		2,295
Insurance 0.2%
Catlin Group Ltd.		153,424		794

See financial notes 29

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Lancashire Holdings Ltd. *		53,407		377
PartnerRe Ltd.		26,225		1,788
				2,959
Materials 0.2%
Aquarius Platinum Ltd. (b)		477,973		1,802
Huabao International Holdings Ltd. (b)		525,000		371
Nine Dragons Paper Holdings Ltd.		666,000		301
				2,474
Retailing 1.1%
Li & Fung Ltd.		544,000		1,528
Signet Jewelers Ltd.		702,260		11,145
				12,673
				27,773
Brazil 1.8%
Banks 0.1%
Itau Unibanco Banco Multiplo S.A.		72,219		992
Capital Goods 0.0%
Lupatech S.A. *		44,900		565
Consumer Services 0.0%
Anhanguera Educacional Participacoes S.A. *		49,200		344
Diversified Financials 0.3%
BM&F BOVESPA S.A.		676,200		2,740
GP Investments Ltd. BDR *		180,800		620
				3,360
Food, Beverage & Tobacco 0.0%
SLC Agricola S.A.		58,000		395
Household & Personal Products 0.2%
Natura Cosmeticos S.A.		157,300		1,868
Materials 0.7%
Aracruz Celulose S.A. ADR		15,900		190
Companhia Vale do Rio Doce ADR		435,650		7,192
MMX Mineracao e Metalicos S.A. *		171,500		523
				7,905
Real Estate 0.1%
BR Malls Participacoes S.A. *		162,000		1,212
Software & Services 0.2%
Redecard S.A.		224,100		2,820
Telecommunication Services 0.2%
GVT Holding S.A. *		149,300		1,978
				21,439
Canada 4.7%
Capital Goods 0.0%
SNC-Lavalin Group, Inc.		18,157		529
Commercial & Professional Supplies 0.1%
Stantec, Inc. *		69,593		1,524
Diversified Financials 0.0%
TMX Group, Inc.		13,035		351
Energy 0.9%
Calfrac Well Services Ltd.		4,200		34
Canadian Natural Resources Ltd.		55,150		2,543
Crescent Point Energy Trust		11,300		266
EnCana Corp.		105,800		4,838
Ensign Energy Services, Inc.		13,000		150
Precision Drilling Trust		145,900		687
Suncor Energy, Inc.		99,950		2,535
				11,053
Food & Staples Retailing 0.3%
Metro, Inc., Class A		33,075		1,025
Shoppers Drug Mart Corp.		60,800		2,199
				3,224
Health Care Equipment & Services 0.1%
SXC Health Solutions Corp. *		40,793		811
Insurance 0.1%
Manulife Financial Corp.		56,475		966
Materials 1.5%
Agnico-Eagle Mines Ltd.		11,900		526
Eldorado Gold Corp. *		38,600		306
Equinox Minerals Ltd. *		718,711		1,253
First Quantum Minerals Ltd.		40,000		1,547
HudBay Minerals, Inc. *		161,182		1,082
Potash Corp. of Saskatchewan, Inc.		149,417		12,923
				17,637
Real Estate 0.7%
Brookfield Asset Management, Inc., Class A		171,384		2,662
Morguard Real Estate Investment Trust		252,790		1,989
Northern Property Real Estate Investment Trust (b)		288,700		4,270
				8,921
Software & Services 0.1%
Open Text Corp. *		31,657		1,039
Transportation 0.9%
Canadian National Railway Co.		156,300		6,318

30 See financial notes

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Canadian Pacific Railway Ltd.		112,925		4,049
WestJet Airlines Ltd. *		19,900		195
				10,562
				56,617
Cayman Islands 1.7%
Automobiles & Components 0.1%
Xinyi Glass Holdings Co., Ltd.		1,814,000		1,126
Capital Goods 0.2%
China High Speed Transmission Equipment Group Co., Ltd.		1,108,000		1,979
Suntech Power Holdings Co., Ltd. ADR *		18,000		269
				2,248
Consumer Durables & Apparel 0.2%
Li Ning Co., Ltd.		895,000		1,832
Consumer Services 0.2%
Melco Crown Entertainment Ltd. ADR *		266,963		1,215
New Oriental Education & Technology Group, Inc. ADR *		15,426		817
				2,032
Food, Beverage & Tobacco 0.1%
Want Want China Holdings Ltd.		2,553,000		1,273
Household & Personal Products 0.2%
Hengan International Group Co., Ltd.		601,000		2,506
Software & Services 0.5%
Baidu, Inc. ADR *		10,415		2,426
Shanda Interactive Entertainment Ltd. ADR *		29,600		1,416
Tencent Holdings Ltd.		286,200		2,529
				6,371
Technology Hardware & Equipment 0.2%
Comba Telecom Systems Holdings Ltd.		3,456,000		1,479
Foxconn International Holdings Ltd. *		1,034,000		637
Ju Teng International Holdings Ltd. *		2,012,000		872
				2,988
				20,376
China 2.3%
Automobiles & Components 0.2%
Dongfeng Motor Group Co., Ltd., Class H		3,150,000		2,344
Banks 0.2%
China Merchants Bank Co., Ltd., Class H		485,500		868
Industrial & Commercial Bank of China Ltd., Class H		3,131,472		1,781
				2,649
Capital Goods 0.2%
China South Locomotive & Rolling Stock Corp., Ltd., Class H *		922,125		414
Zhuzhou CSR Times Electric Co., Ltd., Class H		1,078,000		1,477
				1,891
Energy 0.1%
China Oilfield Services Ltd., Class H		1,636,000		1,337
Food, Beverage & Tobacco 0.1%
China Yurun Food Group Ltd.		618,674		733
Health Care Equipment & Services 0.1%
Shandong Weigao Group Medical Polymer Co., Ltd., Class H		596,000		1,122
Insurance 0.3%
China Life Insurance Co., Ltd., Class H		1,102,000		3,870
Materials 0.9%
AMVIG Holdings Ltd. (b)		10,918,000		6,794
Anhui Conch Cement Co., Ltd., Class H *		166,000		1,100
China National Building Material Co., Ltd., Class H		1,160,000		2,425
				10,319
Real Estate 0.0%
Guangzhou R&F Properties Co., Ltd.		312,400		502
Transportation 0.2%
Cosco Pacific Ltd.		2,700,000		2,562
				27,329
Denmark 0.8%
Capital Goods 0.3%
Rockwool International A/S, B Shares		14,169		1,094
Vestas Wind Systems A/S *		44,675		2,900
				3,994
Insurance 0.1%
Topdanmark A/S *		5,800		685
Materials 0.1%
Novozymes A/S, Class B		22,757		1,534

See financial notes 31

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Genmab A/S *		12,600		486
Novo Nordisk A/S, Class B		56,075		2,668
				3,154
				9,367
Finland 0.2%
Capital Goods 0.2%
Kone Oyj, Class B		72,900		1,991
France 7.1%
Banks 0.7%
BNP Paribas		169,200		8,907
Capital Goods 1.4%
Alstom S.A.		67,730		4,222
Carbone Lorraine S.A.		207,408		5,398
Nexans S.A.		39,728		1,841
Schneider Electric S.A.		24,264		1,846
Societe Industrielle D’Aviations Latecoere S.A. (b)*		248,348		1,385
Vinci S.A.		63,011		2,823
				17,515
Commercial & Professional Supplies 0.1%
Teleperformance		38,518		1,110
Consumer Durables & Apparel 0.7%
Hermes International		4,478		594
LVMH Moet Hennessy Louis Vuitton S.A.		77,900		5,881
Nexity		61,307		1,978
				8,453
Diversified Financials 0.2%
Financiere Marc de Lacharriere S.A.		54,648		2,591
Food, Beverage & Tobacco 0.1%
Groupe Danone ADR		83,200		786
Health Care Equipment & Services 0.1%
Orpea *		24,329		995
Insurance 0.4%
April Group		28,873		859
Euler Hermes S.A.		71,260		3,477
				4,336
Media 1.7%
Ipsos		137,753		3,126
Publicis Groupe		318,800		9,744
Societe Television Francaise 1		880,400		8,245
				21,115
Pharmaceuticals, Biotechnology & Life Sciences 0.2%
Boiron S.A. (b)		119,729		3,029
Semiconductors & Semiconductor Equipment 0.1%
STMicroelectronics N.V.		136,100		897
Software & Services 0.1%
Groupe Steria S.C.A.		47,681		909
Technology Hardware & Equipment 0.8%
Neopost S.A.		112,767		9,549
Telecommunication Services 0.3%
Iliad S.A.		30,103		3,162
Utilities 0.2%
EDF Energies Nouvelles S.A.		54,210		1,920
				85,274
Germany 7.0%
Automobiles & Components 1.6%
Bayerische Motoren Werke AG		173,200		6,001
Daimler AG - Reg’d		288,300		10,336
ElringKlinger AG		169,697		2,457
				18,794
Capital Goods 1.4%
Bilfinger Berger AG		177,907		8,448
Centrotherm Photovoltaics AG *		41,646		1,613
MTU Aero Engines Holding AG		80,443		2,709
Phoenix Solar AG		35,435		1,561
Rheinmetall AG		41,579		1,761
Vossloh AG		7,438		765
				16,857
Commercial & Professional Supplies 0.2%
GfK SE (b)		118,906		2,789
Consumer Durables & Apparel 0.2%
Rational AG		22,104		2,249
Household & Personal Products 0.1%
Beiersdorf AG		39,275		1,618
Insurance 0.8%
Allianz SE - Reg’d		104,000		9,597
Hannover Rueckversicherung AG - Reg’d		14,700		476
				10,073
Materials 0.8%
BASF SE ADR		82,250		2,904
Symrise AG		474,484		6,490
Wacker Chemie AG		920		95
				9,489
Media 0.0%
CTS Eventim AG		429		12
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
QIAGEN N.V. *		217,125		3,592
Retailing 0.3%
Fielmann AG		56,511		3,464
Semiconductors & Semiconductor Equipment 0.1%
Infineon Technologies AG *		118,300		314
Kontron AG		51,278		563
				877
Software & Services 0.8%
SAP AG		177,700		6,832

32 See financial notes

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Software AG		5,911		369
United Internet AG - Reg’d		79,482		834
Wirecard AG *		147,216		1,222
				9,257
Technology Hardware & Equipment 0.3%
Wincor Nixdorf AG		74,760		3,753
Utilities 0.1%
RWE AG ADR		24,425		1,759
				84,583
Greece 0.1%
Banks 0.1%
Piraeus Bank S.A. *		79,800		732
Consumer Services 0.0%
OPAP S.A.		19,700		608
Utilities 0.0%
Public Power Corp. S.A.		20,600		397
				1,737
Hong Kong 2.2%
Banks 0.2%
HSBC Holdings plc		342,000		2,397
Wing Hang Bank Ltd.		47,500		281
				2,678
Capital Goods 0.2%
Fong’s Industries Co., Ltd. (b)		12,208,000		1,414
Melco International Development Ltd. *		3,038,000		1,490
				2,904
Commercial & Professional Supplies 0.1%
China Everbright International Ltd.		2,979,000		681
Consumer Durables & Apparel 0.3%
Arts Optical International Holdings Ltd. (b)		7,676,000		1,972
Techtronic Industries Co., Ltd.		2,761,500		1,633
				3,605
Diversified Financials 0.1%
China Everbright Ltd.		406,000		786
Energy 0.4%
CNOOC Ltd.		3,975,000		4,437
Materials 0.1%
China Shanshui Cement Group *		2,819,000		1,570
Real Estate 0.4%
China Overseas Land & Investment Ltd.		1,054,560		1,837
Shenzhen Investment Ltd.		5,110,000		1,473
Sino-Ocean Land Holdings Ltd.		1,092,500		803
The Link REIT		442,000		859
				4,972
Semiconductors & Semiconductor Equipment 0.3%
ASM Pacific Technology Ltd.		758,100		3,390
Transportation 0.1%
Pacific Basin Shipping Ltd.		3,675,000		1,817
				26,840
India 1.3%
Automobiles & Components 0.2%
Bajaj Auto Ltd.		85,900		1,098
Hero Honda Motors Ltd.		35,605		848
Maruti Suzuki India Ltd.		22,785		376
				2,322
Banks 0.1%
Housing Development Finance Corp., Ltd.		57,290		2,004
Capital Goods 0.3%
Bharat Heavy Electricals Ltd.		93,561		3,138
Larsen & Toubro Ltd.		52,458		931
				4,069
Energy 0.2%
Reliance Industries Ltd.		65,789		2,402
Household & Personal Products 0.1%
Dabur India Ltd.		345,273		715
Real Estate 0.1%
Housing Development & Infrastructure Ltd.		342,872		1,015
Telecommunication Services 0.2%
Bharti Airtel Ltd. *		141,336		2,144
Utilities 0.1%
GVK Power & Infrastructure Ltd. *		2,652,233		1,510
				16,181
Indonesia 0.3%
Banks 0.1%
PT Bank Rakyat Indonesia		3,026,500		1,642
Food, Beverage & Tobacco 0.2%
PT Astra Agro Lestari Tbk		837,000		1,237
PT Perusahaan Perkebunan London Sumatra Indonesia Tbk *		2,330,500		1,073
				2,310
				3,952

See financial notes 33

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Ireland 1.5%
Banks 0.3%
Bank of Ireland *		2,595,300		2,615
The Governor & Company of the Bank of Ireland	��	904,500		901
				3,516
Commercial & Professional Supplies 0.4%
Experian plc		816,100		5,374
Consumer Services 0.1%
Paddy Power plc		57,422		1,058
Food, Beverage & Tobacco 0.2%
Glanbia plc		947,340		2,766
Health Care Equipment & Services 0.2%
United Drug plc		642,334		1,801
Materials 0.2%
CRH plc		96,428		2,488
Transportation 0.1%
Ryanair Holdings plc ADR *		27,400		749
				17,752
Israel 0.3%
Capital Goods 0.2%
Elbit Systems Ltd.		45,646		2,308
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Teva Pharmaceutical Industries Ltd. ADR		31,479		1,382
Technology Hardware & Equipment 0.0%
Orbotech Ltd. *		25,000		127
				3,817
Italy 1.1%
Consumer Durables & Apparel 0.5%
Luxottica Group S.p.A.		315,300		5,786
Diversified Financials 0.1%
Azimut Holding S.p.A.		268,124		1,874
Health Care Equipment & Services 0.1%
Amplifon S.p.A.		319,628		811
DiaSorin S.p.A.		31,185		692
				1,503
Media 0.1%
Gruppo Editoriale L’Espresso S.p.A. *		557,924		787
Transportation 0.3%
Ansaldo STS S.p.A.		199,205		3,175
				13,125
Japan 10.2%
Automobiles & Components 1.9%
Aisin Seiki Co., Ltd.		53,300		1,095
EXEDY Corp.		68,700		1,278
F.C.C. Co., Ltd.		481,300		6,098
Honda Motor Co., Ltd.		278,100		8,150
NGK Spark Plug Co., Ltd.		26,000		251
Toyota Motor Corp.		136,800		5,414
				22,286
Banks 0.1%
Seven Bank Ltd.		312		737
Capital Goods 1.4%
JGC Corp.		30,000		393
Marubeni Corp.		152,000		553
Miura Co., Ltd.		124,100		2,724
Nabtesco Corp.		229,000		1,861
NGK Insulators Ltd.		64,000		982
Nippo Corp.		151,000		1,135
NSK Ltd.		60,000		267
The Japan Steel Works Ltd.		76,000		823
THK Co., Ltd.		52,600		729
Toyo Engineering Corp.		478,000		1,521
Toyota Tsusho Corp.		37,400		442
Union Tool Co.		51,100		1,224
Ushio, Inc.		288,100		3,738
				16,392
Commercial & Professional Supplies 0.2%
Aeon Delight Co., Ltd.		72,600		924
Meitec Corp.		120,000		1,625
				2,549
Consumer Durables & Apparel 0.3%
Asics Corp.		27,000		176
Atsugi Co., Ltd.		526,000		719
Shimano, Inc.		91,000		2,692
				3,587
Consumer Services 0.1%
Benesse Corp.		13,900		532
McDonald’s Holdings Co., (Japan) Ltd.		24,300		419
				951
Diversified Financials 1.1%
Credit Saison Co., Ltd.		67,500		758
Daiwa Securities Group, Inc.		2,349,300		12,308
				13,066
Energy 0.1%
Shinko Plantech Co., Ltd.		256,200		1,705
Food, Beverage & Tobacco 0.3%
Ariake Japan Co., Ltd.		82,900		1,139
Hokuto Corp.		21,300		375
Toyo Suisan Kaisha Ltd.		23,000		450
Unicharm Petcare Corp.		49,153		1,311
				3,275
Health Care Equipment & Services 0.2%
Nichii Gakkan Co.		123,500		1,054
So-net M3, Inc.		78		254
Terumo Corp.		36,700		1,388
				2,696

34 See financial notes

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Household & Personal Products 0.0%
Kobayashi Pharmaceutical Co., Ltd.		6,000		195
Materials 0.7%
Nifco, Inc.		428,400		5,682
Taiyo Ink Mfg. Co., Ltd.		182,900		2,949
Tokyo Steel Manufacturing Co., Ltd.		31,000		317
				8,948
Media 0.2%
Jupiter Telecommunications Co., Ltd.		3,186		2,242
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Shionogi & Co., Ltd.		176,000		3,028
Tsumura & Co.		27,200		745
				3,773
Real Estate 0.0%
AEON Mall Co., Ltd.		10,600		139
Retailing 0.7%
Autobacs Seven Co., Ltd.		48,200		1,318
Fast Retailing Co., Ltd.		21,400		2,249
Nitori Co., Ltd.		21,710		1,221
Point, Inc.		34,020		1,516
Rakuten, Inc.		1,971		1,003
Yamada Denki Co., Ltd.		10,200		470
				7,777
Semiconductors & Semiconductor Equipment 0.9%
Disco Corp.		38,100		1,147
Rohm Co., Ltd.		122,200		7,494
Shinko Electric Industries Co., Ltd.		4,000		39
Sumco Corp.		53,800		790
Trend Micro, Inc.		24,000		731
ULVAC, Inc.		56,000		1,044
				11,245
Software & Services 0.3%
Access Co., Ltd. *		190		393
Capcom Co., Ltd.		96,300		1,680
Kakaku.com, Inc.		566		1,937
				4,010
Technology Hardware & Equipment 1.4%
Canon, Inc.		208,400		6,237
Horiba Ltd.		80,900		1,476
Nippon Electric Glass Co., Ltd.		91,000		740
OMRON Corp.		597,000		8,923
				17,376
Utilities 0.0%
Osaka Gas Co., Ltd.		142,000		450
				123,399
Luxembourg 0.6%
Energy 0.5%
Acergy S.A.		105,138		812
Tenaris S.A. ADR		224,425		5,615
				6,427
Telecommunication Services 0.1%
Millicom International Cellular S.A.		17,436		845
				7,272
Malaysia 0.2%
Capital Goods 0.1%
IJM Corp. Berhad		856,500		1,198
Food, Beverage & Tobacco 0.1%
IOI Corp., Berhad		595,800		714
Kuala Lumpur Kepong Berhad		149,300		485
				1,199
				2,397
Mexico 1.2%
Capital Goods 0.0%
Empresas ICA S.A.B. de C.V. *		274,400		499
Diversified Financials 0.0%
Banco Compartamos S.A. de C.V.		155,700		388
Food, Beverage & Tobacco 0.5%
Fomento Economico Mexicano S.A.B. de C.V.		188,700		5,342
Household & Personal Products 0.0%
Kimberly-Clark de Mexico S.A.B. de C.V., Class A		142,500		520
Media 0.7%
Grupo Televisa S.A. ADR		473,900		7,336
Megacable Holdings S.A.B. de C.V. *		390,500		494
				7,830
				14,579
Netherlands 3.5%
Capital Goods 0.7%
Arcadis N.V.		56,898		838
Koninklijke (Royal) Philips Electronics N.V.		147,200		2,656
Koninklijke BAM Groep N.V.		204,537		2,011
Koninklijke Boskalis Westminster N.V., CVA		137,609		3,209
				8,714
Diversified Financials 0.1%
BinckBank N.V.		112,869		1,252

See financial notes 35

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of			Value
Security	Shares			($ x 1,000)
Energy 0.9%
Core Laboratories N.V.		22,000			1,831
Fugro N.V., CVA		54,795			1,962
Schlumberger Ltd.		147,575			7,230
					11,023
Food, Beverage & Tobacco 0.1%
Unilever N.V.		47,000			930
Materials 0.5%
Akzo Nobel N.V.		155,400			6,499
Media 0.0%
Wolters Kluwer N.V.		16,400			270
Semiconductors & Semiconductor Equipment 0.3%
ASML Holding N.V.		153,900			3,229
Technology Hardware & Equipment 0.1%
Gemalto N.V. *		15,700			494
Smartrac N.V. *		10,997			133
					627
Transportation 0.8%
Koninklijke Vopak N.V.		228,422			10,059
					42,603
New Zealand 1.0%
Consumer Services 0.2%
Sky City Entertainment Group Ltd.		1,917,058			2,968
Health Care Equipment & Services 0.5%
Fisher & Paykel Healthcare Corp., Ltd.		3,580,022			6,151
Materials 0.1%
Nufarm Ltd.		95,686			919
Transportation 0.2%
Auckland International Airport Ltd.		2,474,582			2,321
					12,359
Norway 0.5%
Energy 0.2%
Farstad Shipping A.S.A. (b)		170,950			2,558
TGS Nopec Geophysical Co., A.S.A. *		90,126			665
					3,223
Food, Beverage & Tobacco 0.1%
Marine Harvest *		2,326,011			1,048
Materials 0.0%
Yara International A.S.A. ADR		7,975			214
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Pronova BioPharma A/S *		337,846			848
Software & Services 0.0%
Opera Software A.S.A. *		68,076			272
Technology Hardware & Equipment 0.1%
Tandberg A.S.A.		48,685			685
					6,290
Panama 0.0%
Transportation 0.0%
Copa Holdings S.A., Class A		14,110			432
Republic of Korea 1.6%
Automobiles & Components 0.0%
Kia Motors Corp. *		41,500			364
Capital Goods 0.1%
Taewoong Co., Ltd.		15,619			1,150
Consumer Durables & Apparel 0.1%
Humax Co., Ltd.		126,176			1,484
Consumer Services 0.2%
MegaStudy Co., Ltd.		15,060			2,550
Diversified Financials 0.1%
KIWOOM Securities Co., Ltd.		17,909			769
Household & Personal Products 0.1%
LG Household & Health Care Ltd.		10,299			1,417
Insurance 0.1%
Samsung Fire & Marine Insurance Co., Ltd.		7,697			1,050
Media 0.1%
CJ Internet Corp.		60,413			801
Retailing 0.2%
CJ Home Shopping		29,442			1,853
Semiconductors & Semiconductor Equipment 0.5%
Hynix Semiconductor, Inc. *		33,300			374
Samsung Electronics Co., Ltd.		12,140			5,606
					5,980
Software & Services 0.0%
NHN Corp. *		3,100			375
Technology Hardware & Equipment 0.1%
Digitech Systems Co., Ltd. *		65,583			1,343
					19,136
Singapore 2.6%
Capital Goods 0.3%
SembCorp Marine Ltd.		2,165,000			3,048
Food & Staples Retailing 0.1%
Olam International Ltd.		1,411,300			1,664
Food, Beverage & Tobacco 0.2%
Wilmar International Ltd.		1,082,000			2,585
Health Care Equipment & Services 0.2%
Parkway Holdings Ltd.		2,529,780			2,046
Real Estate 0.6%
Capitaland Ltd.		1,024,000			1,889
CapitaMall Trust		5,886,200			4,926
			��
					6,815

36 See financial notes

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Telecommunication Services 0.3%
StarHub Ltd.		3,322,000		4,089
Transportation 0.7%
SIA Engineering Co., Ltd.		2,655,000		3,515
Singapore Airport Terminal Services Ltd.		2,326,000		2,051
SMRT Corp., Ltd.		2,582,000		2,695
				8,261
Utilities 0.2%
Hyflux Ltd.		1,920,000		2,346
				30,854
South Africa 0.6%
Capital Goods 0.1%
Wilson Bayly Holmes-Ovcon Ltd.		66,901		784
Food & Staples Retailing 0.1%
Shoprite Holdings Ltd.		160,288		960
Media 0.2%
Naspers Ltd., Class N		121,700		2,480
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Aspen Pharmacare Holdings Ltd. *		118,518		602
Telecommunication Services 0.2%
MTN Group Ltd.		203,938		2,648
				7,474
Spain 2.0%
Capital Goods 0.1%
Construcciones Y Auxiliar De Ferrocarriles S.A.		2,157		783
Commercial & Professional Supplies 0.3%
Prosegur, Compania de Seguridad S.A. - Reg’d		142,580		4,072
Energy 0.2%
Tecnicas Reunidas S.A.		53,287		1,879
Food, Beverage & Tobacco 0.0%
Viscofan S.A.		10,709		199
Media 0.5%
Gestevision Telecinco S.A.		629,000		5,930
Retailing 0.2%
Industria de Diseno Textil S.A.		55,399		2,362
Software & Services 0.1%
Indra Sistemas S.A.		38,409		760
Telecommunication Services 0.3%
Telefonica S.A.		188,032		3,562
Utilities 0.3%
Acciona S.A.		2,200		225
EDP Renovaveis S.A. *		79,400		647
Enagas		24,300		422
Iberdrola Renovables S.A. *		649,324		2,637
				3,931
				23,478
Sweden 1.2%
Capital Goods 0.7%
Assa Abloy AB, B Shares		740,700		8,720
Commercial & Professional Supplies 0.1%
Loomis AB, Class B		95,583		817
Consumer Services 0.1%
Betsson AB *		64,606		741
Food, Beverage & Tobacco 0.1%
Swedish Match AB		53,200		759
Media 0.0%
Modern Times Group MTG AB, B Shares		18,369		497
Retailing 0.2%
Hennes & Mauritz AB, B Shares		55,351		2,464
				13,998
Switzerland 10.4%
Capital Goods 0.7%
ABB Ltd. - Reg’d *		161,700		2,289
Geberit AG - Reg’d		55,100		5,872
Schindler Holding AG - Reg’d		9,700		502
				8,663
Commercial & Professional Supplies 1.0%
Adecco S.A. - Reg’d		251,000		9,879
SGS S.A. - Reg’d		1,653		1,854
				11,733
Consumer Durables & Apparel 1.4%
Compagnie Financiere Richemont S.A., Series A		538,000		9,631
Swatch Group AG		49,500		6,887
				16,518
Diversified Financials 2.1%
Credit Suisse Group AG - Reg’d		396,206		15,482
Partners Group Holding AG		16,614		1,452
UBS AG - Reg’d *		584,211		8,025
				24,959
Energy 1.9%
Noble Corp.		291,600		7,969
Transocean Ltd. *		121,646		8,209
Weatherford International Ltd. *		394,500		6,561
				22,739

See financial notes 37

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Food, Beverage & Tobacco 0.9%
Nestle S.A. - Reg’d		134,136		4,372
Nestle S.A. - Reg’d ADR		222,162		7,209
				11,581
Materials 0.6%
Givaudan S.A. - Reg’d		9,200		5,824
Syngenta AG - Reg’d		7,732		1,651
				7,475
Pharmaceuticals, Biotechnology & Life Sciences 1.2%
Actelion Ltd. - Reg’d *		26,200		1,194
Lonza Group AG - Reg’d		22,137		2,031
Novartis AG - Reg’d		151,800		5,745
Novartis AG ADR		63,850		2,420
Roche Holding AG		23,955		3,021
				14,411
Transportation 0.6%
Kuehne & Nagel International AG - Reg’d		101,064		7,596
				125,675
Taiwan 1.3%
Automobiles & Components 0.1%
Cheng Shin Rubber Industry Co., Ltd.		965,000		1,451
Capital Goods 0.1%
Shin Zu Shing Co., Ltd.		304,000		1,254
Materials 0.2%
Asia Cement Corp.		279,000		287
Goldsun Development & Construction Co., Ltd.		3,888,000		1,512
				1,799
Real Estate 0.1%
Huaku Development Co., Ltd.		694,000		1,204
Semiconductors & Semiconductor Equipment 0.3%
Kinsus Interconnect Technology Corp.		902,000		1,628
Radiant Opto-Electronics Corp.		1,174,000		1,405
Siliconware Precision Industries Co.		30,747		230
				3,263
Technology Hardware & Equipment 0.5%
Acer, Inc.		852,000		1,628
Catcher Technology Co., Ltd.		462,000		1,162
HTC Corp.		108,000		1,463
Wistron Corp.		775,000		980
WPG Holdings Co., Ltd.		1,487,000		1,233
				6,466
				15,437
Turkey 0.3%
Automobiles & Components 0.1%
Tofas Turk Otomobil Fabrikasi A/S		978,213		1,185
Banks 0.2%
Asya Katilim Bankasi A/S *		440,900		421
Turkiye Vakiflar Bankasi T.A.O., Class D		1,783,809		2,019
				2,440
				3,625
United Kingdom 17.3%
Banks 0.5%
Lloyds TSB Group plc		753,000		1,221
Standard Chartered plc		291,933		4,516
				5,737
Capital Goods 3.7%
BAE Systems plc		349,088		1,836
BAE Systems plc ADR		27,050		566
Balfour Beatty plc		89,500		442
Bodycote plc		1,462,433		3,087
Charter International plc		206,139		1,696
Chemring Group plc		55,232		1,714
Chloride Group plc		2,771,535		6,673
Cobham plc		1,185,312		3,071
Invensys plc *		320,400		936
Rolls-Royce Group plc *		785,788		3,895
Rolls-Royce Group plc, C Shares (c) *		67,420,610		100
Spirax-Sarco Engineering plc		152,066		1,916
The Weir Group plc		1,264,774		8,972
Travis Perkins plc		121,844		1,258
Ultra Electronics Holdings plc		316,046		5,541
VT Group plc		356,509		2,426
				44,129
Commercial & Professional Supplies 1.8%
Babcock International Group plc		134,920		865
Capita Group plc		356,856		3,598
Connaught plc		143,940		757
De La Rue plc		241,534		3,424
G4S plc		2,017,881		5,595
Intertek Group plc		108,895		1,633
Michael Page International plc		277,715		1,126
Serco Group plc		843,861		4,553
				21,551
Consumer Durables & Apparel 0.2%
Bellway plc		123,485		1,301
The Berkeley Group Holdings plc *		83,605		1,202
				2,503

38 See financial notes

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Consumer Services 0.2%
Compass Group plc		264,600		1,258
Greene King plc		197,169		1,810
				3,068
Diversified Financials 1.1%
Aberdeen Asset Management plc		663,218		1,286
Ashmore Group plc		336,394		1,118
BlueBay Asset Management plc		217,738		584
Man Group plc		446,100		1,649
Schroders plc		594,500		7,200
Tullett Prebon plc		287,814		1,128
				12,965
Energy 1.9%
Afren plc (b) *		1,860,375		1,048
AMEC plc		268,803		2,447
BG Group plc		339,548		5,422
Cairn Energy plc *		42,860		1,344
Dana Petroleum plc *		121,123		2,239
Petrofac Ltd.		267,381		2,255
Premier Oil plc (b) *		106,355		1,629
Tullow Oil plc		334,933		3,954
Wellstream Holdings plc		326,217		2,480
				22,818
Food, Beverage & Tobacco 0.9%
British American Tobacco plc ADR		68,775		3,344
Cadbury plc ADR		11,616		350
Diageo plc		408,500		4,873
Diageo plc ADR		45,925		2,197
				10,764
Household & Personal Products 0.3%
Reckitt Benckiser Group plc		93,641		3,676
Insurance 0.4%
Admiral Group plc		75,247		1,007
Amlin plc		616,964		3,265
Jardine Lloyd Thompson Group plc		117,676		766
				5,038
Materials 1.9%
Croda International plc		515,444		4,113
Johnson Matthey plc		15,400		272
Rexam plc		1,077,345		4,990
Rio Tinto plc ADR		45,075		7,345
Vedanta Resources plc		93,100		1,456
Victrex plc		601,535		4,753
				22,929
Media 1.4%
British Sky Broadcasting Group plc		1,565,831		11,147
Johnston Press plc *		2,955,100		532
Rightmove plc		244,606		1,168
Thomson Reuters plc		185,300		4,766
				17,613
Pharmaceuticals, Biotechnology & Life Sciences 0.4%
GlaxoSmithKline plc		326,900		5,035
Retailing 0.4%
ASOS plc *		64,306		366
Debenhams plc		269,593		363
Mothercare plc		43,425		245
Next plc		113,053		2,704
The Carphone Warehouse Group plc		611,500		1,339
				5,017
Software & Services 0.5%
Autonomy Corp. plc (b) *		210,165		4,409
Blinkx plc *		499,831		129
Micro Focus International plc		255,048		1,198
				5,736
Technology Hardware & Equipment 1.6%
Halma plc		1,008,051		2,645
Laird plc		1,577,793		3,602
Rotork plc		653,296		7,813
Spectris plc		388,174		3,368
TT electronics plc (b)		3,535,210		1,480
				18,908
Telecommunication Services 0.1%
Inmarsat plc		130,400		930
				208,417
United States 0.3%
Automobiles & Components 0.1%
Autoliv, Inc.		43,280		1,050
Consumer Services 0.1%
Tim Hortons, Inc.		45,687		1,111
Energy 0.1%
Gran Tierra Energy, Inc. *		358,159		888
				3,049
Total Common Stock (Cost $1,364,533)				1,123,136
Preferred Stock 0.5% of net assets
Brazil 0.5%
Banks 0.0%
Banco Sofisa S.A.		45,108		83
Energy 0.5%
Petroleo Brasileiro S.A.		459,014		6,194
Total Preferred Stock (Cost $5,319)				6,277
Other Investment Companies 5.0% of net assets
iShares MSCI Emerging Markets Index Fund		354,000		10,142

See financial notes 39

 Laudus International MarketMasters Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
iShares MSCI Japan Index Fund		173,179		1,474
State Street Institutional Liquid Reserves Fund - Institutional Class		47,964,742		47,965
Total Other Investment Companies (Cost $68,484)				59,581
Rights 0.0% of net assets
United Kingdom 0.0%
Premier Oil plc *		32,934		271
Total Rights (Cost $224)				271
Issuer	Face/Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 0.4% of net assets
U.S. Treasury Obligations 0.4%
U.S. Treasury Bills
0.07%, 06/18/09 (a)		650		650
0.16%, 06/18/09 (a)		4,200		4,199
Total Short-Term Investments (Cost $4,849)				4,849
End of Investments.

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $1,512,413 and the unrealized appreciation and depreciation were $14,391 and ($332,690), respectively, with a net unrealized depreciation of ($318,299).

At 04/30/09, the values of certain foreign securities held by the fund aggregating $896,767 were adjusted from their closing market values following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.
(b)	Illiquid security. At the period end, the value of these amounted to $34,950 or 2.9% of net assets.
(c)	Fair-valued by Management.

ADR — American Depositary Receipt

BDR — Brazilian Depositary receipt

CVA — Dutch Certificate

Reg’d — Registered

REIT — Real Estate Investment Trust

SDR — Swedish Depositary Receipt

In addition to the above the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contracts
Russell 2000 Mini Index, Long, expires 06/19/09		515		25,065		4,275
S & P 500 Index, e-mini, Long, expires 06/19/09		295		12,833		574
Net unrealized gains						4,849

	Currency		Amount of		Currency		Amount of
Expiration	to be		Currency to be		to be		Currency to be		Unrealized
Date	Received		Received		Delivered		Delivered		Gains / Losses
Forward Foreign Currency Contracts
05/04/2009		EUR		182		USD		241		1
05/05/2009		EUR		223		USD		295		—
05/06/2009		EUR		189		USD		250		(1	)
05/01/2009		USD		11		JPY		1,042		—
05/01/2009		JPY		20,141		USD		204		(4	)
05/07/2009		JPY		14,841		USD		150		(4	)
03/03/2010		USD		6,152		JPY		603,000		98
05/08/2009		JPY		20,347		USD		206		—
05/05/2009		GBP		178		USD		264		—
05/06/2009		GBP		1,103		USD		1,631		—
05/06/2009		USD		1,169		GBP		790		1
05/04/2009		CHF		44		USD		38		—
05/05/2009		CHF		127		USD		112		—
05/06/2009		CHF		400		USD		351		—
03/03/2010		USD		7,054		CHF		8,000		(120	)
Total net unrealized losses on Forward Foreign Currency Contracts										(29	)

40 See financial notes

 Laudus International MarketMasters Fund

Statement of

Assets and Liabilities

As of April 30, 2009; unaudited. All numbers are x 1,000 except NAV.

Assets
Investments, at value (cost $1,443,409)		$1,194,114
Foreign currency, at value (cost $4,319)		4,342
Receivables:
Investments sold		22,783
Dividends		5,511
Foreign tax reclaims		1,296
Fund shares sold		657
Interest		18
Unrealized gains on forward foreign currency contracts		102
Prepaid expenses	+	6
Total assets		1,228,829
Liabilities
Payables:
Investments bought		22,182
Investment advisers and administrator fees		83
Transfer agent and shareholder services fees		57
Fund shares redeemed		1,103
Due to brokers for futures		95
Trustees’ fees		2
Unrealized losses on forward foreign currency contracts		132
Accrued expenses	+	280
Total liabilities		23,934
Net Assets
Total assets		1,228,829
Total liabilities	−	23,934
Net assets		$1,204,895
Net Assets by Source
Capital received from investors		2,109,991
Distribution in excess of net investment income		(3,871	)
Net realized capital losses		(656,710	)
Net unrealized capital losses		(244,515	)
Net Assets

Net Asset Value (NAV) by Shares Class

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$745,819		66,599			$11.20
Select Shares	$459,076		40,987			$11.20

See financial notes 41

 Laudus International MarketMasters Fund

Statement of

Operations

For November 1, 2008 through April 30, 2009; unaudited. All numbers are x 1,000.

Investment Income
Dividends (net of foreign withholding tax of $1,282)		$17,029
Interest	+	147
Total investment income		17,176
Net Realized Gains and Losses
Net realized losses on investments		(384,873	)
Net realized gains on foreign currency transactions		9,702
Net realized losses on futures contracts	+	(9,677	)
Net realized losses		(384,848	)
Net Unrealized Gains and Losses
Net unrealized gains on investments		352,772
Net unrealized losses on foreign currency translations		(9,395	)
Net unrealized gains on futures contracts	+	5,124
Net unrealized gains		348,501
Expenses
Investment adviser and administrator fees		7,630
Transfer agent and shareholder service fees:
Investor Shares		926
Select Shares		454
Custodian fees		493
Shareholder reports		112
Portfolio accounting fees		71
Professional fees		49
Registration fees		36
Trustees’ fees		13
Interest expense		1
Other expenses	+	23
Total expenses		9,808
Expense reduction by adviser and Schwab	−	392
Net expenses		9,416
Increase (Decrease) in Net Assets from Operations
Total investment income		17,176
Net expenses	−	9,416
Net investment income		7,760
Net realized losses		(384,848	)
Net unrealized gains	+	348,501
Decrease in net assets from operations		($28,587	)

42 See financial notes

 Laudus International MarketMasters Fund

Statements of

Changes in Net Assets

For the current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.

Operations

		11/1/08-4/30/09			11/1/07-10/31/08
Net investment income			$7,760			$27,078
Net realized losses			(384,848	)		(233,170	)
Net unrealized gains (losses)	+		348,501			(1,417,901	)
Decrease in net assets from operations			(28,587	)		(1,623,993	)
Distributions to Shareholders
Distributions from net investment income
Investor Shares			37,144			9,137
Select Shares	+		23,588			6,366
Total distributions from net investment income			60,732			15,503
Distributions from net realized gains
Investor Shares			-			178,846
Select Shares	+		-			99,234
Total distributions from net realized gains			-			278,080
Total distributions			$60,732			$293,583

Transactions in Fund Shares

		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			3,713			$38,167			18,491			$371,099
Select Shares	+		5,224			53,548			15,523			287,578
Total shares sold			8,937			$91,715			34,014			$658,677
Shares Reinvested
Investor Shares			2,584			$28,368			7,243			$150,710
Select Shares	+		1,696			18,609			4,054			84,409
Total shares reinvested			4,280			$46,977			11,297			$235,119
Shares Redeemed
Investor Shares			(17,650	)		($181,665	)		(36,259	)		($677,223	)
Select Shares	+		(11,725	)		(121,071	)		(22,057	)		(392,324	)
Total shares redeemed			(29,375	)		($302,736	)		(58,316	)		($1,069,547	)
Net transactions in fund shares			(16,158	)		($164,044	)		(13,005	)		($175,751	)
Shares Outstanding and Net Assets
		11/1/08-4/30/09						11/1/07-10/31/08
		SHARES			NET ASSETS			SHARES			NET ASSETS
Beginning of period			123,744			$1,458,258			136,749			$3,551,585
Total decrease	+		(16,158	)		(253,363	)		(13,005	)		(2,093,327	)
End of period			107,586			$1,204,895			123,744			$1,458,258
Distributions in excess of net investment income						($3,871	)					$49,101
Net Investment income not yet distributed/

See financial notes 43

 Laudus MarketMasters Funds

Financial Notes, unaudited

1. Business Structure of the Funds:

Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

Schwab Capital Trust (organized May 7, 1993)
Laudus U.S. MarketMasters Fund
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab S&P 500 Index Fund
Schwab Institutional Select S&P 500 Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MartketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab Balanced Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund Schwab Financial Services Fund
Schwab International Core Equity Fund
Schwab Health Care Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Retirement Income Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company
  Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout

Each of the Laudus MarketMasters funds offer two share classes: Investor Shares and Select Shares^®. Shares of each class represent interest in the same portfolio, but each class has different expenses.

Shares are bought and sold (subject to a redemption fee, see Note 8) at net asset value, or closing NAV, which is the price for all outstanding shares of a share class. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

       (All dollar amounts are x 1,000)

The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America.

(a) Security Valuation:

The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:

•  Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate.

•  Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when a security 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. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

44 

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

•  International Fair Valuation: The Board of Trustees has adopted procedures to fair value foreign securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. 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 of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures.

•  Bonds and notes: valued at halfway between the most recent bid and asked quotes or, if such quotes are unavailable, at prices for securities of comparable maturity, credit quality and type. Valuations for bonds and notes are provided by an independent bond-pricing service.

•  Futures and Forwards: valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day’s exchange rates (for forwards).

•  Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value.

•  Underlying funds: valued at their respective net asset values as determined by those funds in accordance with the 1940 Act for a given day.

(b) Portfolio Investments:

Futures Contract: The funds may invest in futures contracts. Futures contracts involve certain risks because they can be very sensitive to market movements.

One risk is that the price of a futures contract may not move in perfect correlation with the price of the underlying securities. Another risk is that, at certain times, it may be impossible for a fund to close out a position in a futures contract, due to a difference in trading hours or to market conditions that may reduce the liquidity for a futures contract or its underlying securities. The potential for losses associated with futures contracts may exceed amounts recorded in the Statement of Assets and Liabilities.

Because futures contracts carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Futures are traded publicly on exchanges, and their market value changes daily.

Forward Currency Contract: The Laudus International MarketMaster Fund may invest in forward currency contracts in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange rates. “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. Forwards are similar to futures except that they are not publicly traded, but are agreements directly between two parties.

As with futures, forwards involve certain risks that are not fully reflected in the fund’s financials statements. If counter-parties to the contracts or if the value of the foreign currency changes unfavorably, the funds could sustain a loss.

Repurchase Agreements: The funds may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created.

The funds’ repurchase agreements will be fully collateralized by U.S. government securities or U.S. government agency securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

45

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. The funds do not isolate the portion of the fluctuations on investment resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Gains realized by the funds on the sale of securities in certain foreign countries are subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

When a fund closes out a futures or forward position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to/from broker”).

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying mutual funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date.

(e) Expenses:

Expenses that are specific to a fund or a class within the trust are charged directly to that fund or class. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.

For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to its average daily net assets.

(f) Distributions to Shareholders:

The funds make distributions from net investment income and net realized capital gains once a year.

(g) Custody Credit:

Certain funds have an arrangement with their custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.

(i) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

46 

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

(j) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.

(k) Accounting Pronouncements:

The Funds adopted Financial Accounting Standard Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective November 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:

•  Level 1 — quoted prices in active markets for identical securities

•  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 — significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

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 Funds’ investments as of April 30, 2009:

	U.S. MarketMaster				Small-Cap				International
	Fund				MarketMaster Fund				MarketMaster Fund
			Other				Other				Other
	Investments		Financial		Investments		Financial		Investments		Financial
Valuation Inputs	in Securities		Instruments*		in Securities		Instruments*		in Securities		Instruments*
Level 1		$68,472		$304		$342,873		$2,360		$292,396		$4,820
Level 2		386		—		1,200		—		901,618		—
Level 3		—		—		—		—		100		—
Total		$68,858		$304		$344,073		$2,360		$1,194,114		$4,820

* Other Financial Instruments are forward or future contracts which are not included in Portfolio Holdings and are valued at unrealized appreciation or depreciation.

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

	Investments in Securities
	International
	MarketMasters Fund
Balance as of 10/31/08
Accrued discount/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		102
Net purchase (sales)		(2	)
Transfer in and/or out of Level 3		—
Balance as of 04/30/09		100

47

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)

All net realized and unrealized gains (losses) in the table above are reflected in the accompanying statement of operations. Net unrealized gains (losses) relate to those financial instruments held by the Fund at April 30, 2009.

In April 2009, the FASB issued FASB Staff Position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FSP No. 157-4 on the funds’ or Investment Company’s financial statement disclosures.

In March 2008, the FASB issued Statements of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact of the adoption of SFAS No. 161 on the funds’ financial statement disclosures.

3. Risk factors:

Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below:

Stock markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of your investment in the funds will fluctuate, which means that you could lose money.

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. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments. The prices of securities issued by such companies may suffer a decline in response. In addition, the equity market tends to move in cycles which may cause stock prices to fall over short or extended periods of time.

Historically, small-cap stocks have been riskier than large and mid-cap stocks. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. Small-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — bonds or large-cap stocks, for instance — the funds’ performance also will lag those investments.

As with all actively managed funds, the strategies of the funds’ managers — its investment adviser and investment managers — may not achieve their desired results. For example, with value stocks, the market might fail to recognize the true worth of an undervalued company, or a manager might misjudge that worth. With growth stocks, whose prices depend largely on expectations of companies’ future growth, a manager’s expectations may prove to be unfounded.

A fund’s investment in securities of foreign issuers 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, or changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges). In certain countries, legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and, at times, more volatile than securities of comparable U.S. companies. A fund may also experience more rapid or extreme changes in value as compared to a fund that invests solely in securities of U.S. companies because the securities’ markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries.

Emerging market countries are countries that the World Bank or the United Nations considers to be emerging or developing. Emerging markets may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and unreliable securities valuation. It is sometimes difficult to obtain and enforce court judgments in such countries and there is often a greater potential for nationalization and/or expropriation of assets by the government of an emerging market country. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in

48 

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

3. Risk factors (continued):

other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investment in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar.

Please refer to the funds’ prospectus for a complete description of the principal risks of investing in the funds.

4. Affiliates and Affiliated Transactions:

       (All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust.

For its advisory and administrative services to each fund, the investment adviser is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:

	U.S.		Small-Cap		International
	MarketMasters		MarketMasters		MarketMasters
Average daily net assets	Fund		Fund		Fund
First $500 million		0.925%		1.17%		1.29%
$500 million to $1 billion		0.92%		1.13%		1.275%
over $1 billion		0.91%		1.07%		1.25%

CSIM pays a portion of the advisory fees it receives to each sub-adviser in return for their services.

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

For its transfer agent and shareholder services, Schwab is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:

	Transfer Agent Fees		Shareholder Service Fees
Investor Shares		0.05%		0.20%
Select Shares		0.05%		0.15%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses, through February 27, 2011, as follows:

	U.S.		Small-Cap		International
	MarketMasters		MarketMasters		MarketMasters
	Fund		Fund		Fund
Investor Shares		1.25%		1.46%		1.65%
Select Shares		1.07%		1.31%		1.47%

Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentage of each Laudus MarketMasters Funds owned by other Schwab Funds as of April 30, 2009.

49

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)

	Small-Cap		International
	MarketMasters Fund		MarketMasters Fund
Schwab Target Funds:
Target 2010		0.3%		0.3%
Target 2015		0.1%		—	*
Target 2020		1.0%		0.8%
Target 2025		0.1%		0.1%
Target 2030		1.6%		0.8%
Target 2035		0.1%		0.1%
Target 2040		1.3%		0.7%
Retirement Income		—		0.2%
Schwab Balanced Fund		4.4%		—

* Less than 0.05%

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2009, each fund’s total aggregate security transactions with other Schwab Funds were as follows:

U.S. MarketMasters Fund	$—
Small-Cap MarketMasters Fund	—
International MarketMasters Fund	170

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for any fund during the period.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.

6. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.

There were no borrowings from the line of credit for the funds during the period. However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

50 

 Laudus MarketMasters Funds

Financial Notes, unaudited (continued)

7.  Purchases and Sales of Investment Securities:

(All dollar amounts are x 1,000)

For the period ended April 30, 2009, purchases and sales of securities (excluding short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
U.S. MarketMasters Fund		$19,934		$24,771
Small-Cap MarketMasters Fund		203,748		160,271
International MarketMasters Fund		614,044		747,500

8. Redemption Fee:

       (All dollar amounts are x 1,000)

The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior report periods are:

	Current Period		Prior Period
	(11/01/08-04/30/09)		(11/01/07-10/31/08)
U.S. MarketMasters Fund		$—		$3
Small-Cap MarketMasters Fund		4		15
International MarketMasters Fund		19		118

9. Federal Income Taxes:

       (All dollar amounts are x 1,000)

As of October 31,2008, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

	U.S.		Small-Cap		International
	MarketMasters		MarketMasters		MarketMasters
Expire	Fund		Fund		Fund
2010		$3,736		$—		$—
2011		604		—		—
2012		—		—		—
2013		—		—		—
2014		—		—		—
2015		—		—		—
2016		4,321		96,182		222,918
Total		$8,661		$96,182		$222,918

As of October 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2008, the funds did not incur any interest or penalties.

10. Subsequent Event:

The Board of Trustees of the Trust (the “Board”) has approved an Agreement and Plan of Reorganization that would provide for the reorganization of the Laudus U.S. MarketMasters Fund into the Schwab Core Equity Fund. The reorganization was approved by shareholders of the U.S. MarketMasters Fund. Effective May 21, 2009, the U.S. MarketMasters Fund transferred its assets and liabilities to the Core Equity Fund in exchange for Investor Shares of the Core Equity Fund, and subsequently distributed those Core Equity Fund shares to shareholders of the U.S. MarketMasters Fund (the “Reorganization‘). The Reorganization is intended to be tax-free, meaning that the U.S. MarketMasters Fund’s shareholders will become shareholders of the Core Equity Fund without realizing any gain or loss for federal income tax purposes.

51

Trustees and Officers

The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of April 30, 2009, the Fund Complex included 83 funds.

The address for all trustees and officers is 101 Montgomery Street, San Francisco, CA 94104. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served1)	During the Past Five Years	the Trustee		Other Directorships
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC.		83	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		69	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		83	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5– Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).		69	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		69	Not Applicable.
Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007; General Partner, Goldman Sachs & Co., until June 2005.		69	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		69	Not Applicable.

52 

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.		69	Not Applicable.
Walter W. Bettinger II2 1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		69	Not Applicable.

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
Randall W. Merk 1954 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.

53

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
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer (Officer of Schwab Capital Trust since 2004.)	Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
Bari Havlik 1961 Chief Compliance Officer (Officer of Schwab Capital Trust since 2009.)	Senior Vice President, Chief Compliance Officer for Charles Schwab & Co. Inc. and head of Global Compliance for the Charles Schwab Corporation since 2004. Chief Compliance Officer for Charles Schwab Investment Management, Inc since 2009.
Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Institutional Trust; since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
3	The President, Treasurer and Secretary 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.

54 

Glossary

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.

cap, capitalization See “market cap.”

capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.

earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.

expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.

stock A share of ownership, or equity, in the issuing company.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

55

Notes

An investor should consider a funds investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1.800.435.4000 for a prospectus and brochure. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com/marketmasters, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .

The Laudus Funds^tm

Laudus MarketMasters Funds^tm

Laudus U.S. MarketMasters Fund^tm

Laudus Small-Cap MarketMasters Fund^tm

Laudus International MarketMasters Fund^tm

Laudus Mondrian Funds^tm

Laudus Mondrian Emerging Markets Fund

Laudus Mondrian International Fixed Income Fund

Laudus Mondrian International Equity Fund

Laudus Mondrian Global Equity Fund

Laudus Mondrian Institutional Funds^tm

Laudus Mondrian Institutional Emerging Markets Fund

Laudus Mondrian Institutional International Equity Fund

Laudus Rosenberg U.S. Equity Funds

Laudus Rosenberg U.S. Large Capitalization Fund

Laudus Rosenberg U.S. Large Capitalization Growth Fund

Laudus Rosenberg U.S. Large Capitalization Value Fund

Laudus Rosenberg U.S. Discovery Fund

Laudus Rosenberg U.S. Small Capitalization Growth Fund

Laudus Rosenberg Equity Funds

Laudus Rosenberg International Equity Fund

Laudus Rosenberg International Discovery Fund

Laudus Rosenberg International Small Capitalization Fund

Laudus Rosenberg Long/Short Funds

Laudus Rosenberg Long/Short Equity Fund

The Laudus Funds includes the Laudus Rosenberg Funds and the Laudus Mondrian Funds, which are part of the Laudus Trust and Laudus Institutional Trust and distributed by ALPS Distributors Inc.; and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust, and distributed by Charles Schwab & Co., Inc. Charles Schwab»& Co., Inc. and ALPS Distributors Inc. are unaffiliated entities.

For More Information about the Funds:

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Laudus MarketMasters Funds

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

^© 2008 Charles Schwab & Co., Inc. All rights reserved. Member SIPC^®. Printed on recycled paper. MFR13563-12

COMMAND PERFORMANCE^TM

Item 2: Code of Ethics.

Not applicable to this semi-annual report.

Item 3: Audit Committee Financial Expert.

Not applicable to this semi-annual report.

Item 4: Principal Accountant Fees and Services.

Not applicable to this semi-annual report.

Item 5: Audit Committee of Listed Registrants.

Not applicable.

Item 6: Schedule of Investments.

Except as noted below, the schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form. The schedules of investments for the Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, and Schwab International Index Fund are filed under this Item.

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99.2	%	Common Stock		526,777		358,991
	0.2	%	Foreign Common Stock		460		524
	0.2	%	Other Investment Company		723		723
	0.2	%	Short-Term Investments		846		846
	99.8	%	Total Investments		528,806		361,084
	0.2	%	Other Assets and Liabilities, Net				798
	100.0	%	Net Assets				361,882

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 99.2% of net assets
Automobiles & Components 3.5%
American Axle & Manufacturing Holdings, Inc.		60,660		61
ArvinMeritor, Inc.		134,835		167
Autoliv, Inc.		7,300		180
BorgWarner, Inc.		5,750		167
Exide Technologies *		7,700		42
Federal-Mogul Corp. *		21,200		235
Ford Motor Co. *		1,166,774		6,977
General Motors Corp.		725,810		1,394
Harley-Davidson, Inc.		18,760		416
Johnson Controls, Inc.		44,510		846
Lear Corp. *		276,715		221
Tenneco, Inc. *		56,460		173
The Goodyear Tire & Rubber Co. *		65,590		721
Thor Industries, Inc.		4,500		103
TRW Automotive Holdings Corp. *		95,250		821
WABCO Holdings, Inc.		2,886		46
				12,570
Banks 3.8%
Associated Banc-Corp.		3,960		61
Astoria Financial Corp.		5,855		48
BancorpSouth, Inc.		3,545		82
Bank of Hawaii Corp.		420		15
BB&T Corp.		37,575		877
BOK Financial Corp.		920		35
CapitalSource, Inc.		74,400		230
City National Corp.		1,720		63
Comerica, Inc.		14,700		308
Commerce Bancshares, Inc.		1,004		33
Downey Financial Corp.		600		—
Fifth Third Bancorp		218,090		894
First Horizon National Corp.		9,872		114
FirstMerit Corp.		3,260		63
Fulton Financial Corp.		12,380		82
Guaranty Financial Group, Inc. *		60,000		35
Hudson City Bancorp, Inc.		14,790		186
Huntington Bancshares, Inc.		120,127		335
KeyCorp		52,490		323
M&T Bank Corp.		5,286		277
Marshall & Ilsley Corp.		27,585		160
MGIC Investment Corp.		23,880		61
New York Community Bancorp, Inc.		14,765		167
People’s United Financial, Inc.		6,352		99
PNC Financial Services Group, Inc.		18,045		716
Popular, Inc.		42,780		122
Radian Group, Inc.		24,230		42
Regions Financial Corp.		135,425		608
SunTrust Banks, Inc.		54,260		784
Susquehanna Bancshares, Inc.		4,900		40
Synovus Financial Corp.		40,510		131
TCF Financial Corp.		5,465		76
The Colonial BancGroup, Inc.		101,860		77
The PMI Group, Inc.		117,335		74
U.S. Bancorp		87,500		1,594
Valley National Bancorp		7,425		108
Washington Federal, Inc.		5,350		70
Webster Financial Corp.		14,625		77
Wells Fargo & Co.		229,825		4,599
Wilmington Trust Corp.		5,730		83
Zions Bancorp		18,135		198
				13,947
Capital Goods 8.6%
3M Co.		18,775		1,081
Acuity Brands, Inc.		1,220		35
Aecom Technology Corp. *		2,900		75
AGCO Corp. *		6,340		154
Aircastle Ltd.		14,800		98
Alliant Techsystems, Inc. *		1,120		89

See financial notes.       1

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
AMETEK, Inc.		1,210		39
Armstrong World Industries, Inc. *		7,500		136
BlueLinx Holdings, Inc. *		4,500		14
Briggs & Stratton Corp.		5,535		82
Carlisle Cos., Inc.		2,475		56
Caterpillar, Inc.		33,245		1,183
China BAK Battery, Inc. *		20,000		43
Cooper Industries Ltd., Class A		6,870		225
Crane Co.		4,995		115
Cummins, Inc.		8,284		282
Danaher Corp.		5,950		348
Deere & Co.		16,986		701
Donaldson Co., Inc.		2,000		66
Dover Corp.		7,375		227
Eaton Corp.		8,260		362
EMCOR Group, Inc. *		6,240		130
Emerson Electric Co.		21,950		747
Fastenal Co.		2,020		78
Flowserve Corp.		925		63
Fluor Corp.		4,070		154
Foster Wheeler AG *		3,770		81
Gardner Denver, Inc. *		2,200		59
GATX Corp.		2,935		88
GenCorp, Inc. *		40,000		96
General Cable Corp. *		3,400		92
General Dynamics Corp.		10,825		559
General Electric Co.		757,075		9,577
Goodrich Corp.		4,655		206
Granite Construction, Inc.		500		20
Harsco Corp.		4,435		122
Honeywell International, Inc.		24,740		772
Hubbell, Inc., Class B		3,830		127
Illinois Tool Works, Inc.		14,270		468
Ingersoll-Rand Co., Ltd., Class A		18,342		399
ITT Corp.		4,855		199
Jacobs Engineering Group, Inc. *		4,640		177
Joy Global, Inc.		2,000		51
KBR, Inc.		11,900		186
Kennametal, Inc.		4,440		91
L-3 Communications Holdings, Inc.		3,335		254
Lennox International, Inc.		2,435		78
Lincoln Electric Holdings, Inc.		1,100		49
Lockheed Martin Corp.		10,135		796
Masco Corp.		56,450		500
McDermott International, Inc. *		5,810		94
MSC Industrial Direct Co., Inc., Class A		2,125		87
Mueller Industries, Inc.		2,830		62
Mueller Water Products, Inc., Class A		9,200		39
Navistar International Corp. *		5,500		208
Northrop Grumman Corp.		18,695		904
Oshkosh Corp.		12,220		117
Owens Corning, Inc. *		18,800		337
PACCAR, Inc.		15,242		540
Pall Corp.		2,540		67
Parker Hannifin Corp.		6,317		287
Pentair, Inc.		4,850		129
Precision Castparts Corp.		1,716		128
Quanta Services, Inc. *		3,700		84
Raytheon Co.		10,910		493
Rockwell Automation, Inc.		6,750		213
Rockwell Collins, Inc.		4,230		162
Roper Industries, Inc.		2,000		91
RSC Holdings, Inc. *		12,400		89
Seaboard Corp.		57		53
Spirit AeroSystems Holdings, Inc., Class A *		7,300		93
SPX Corp.		1,835		85
Terex Corp. *		15,225		210
Textron, Inc.		38,120		409
The Boeing Co.		27,940		1,119
The Manitowoc Co. , Inc.		14,700		87
The Shaw Group, Inc. *		4,140		139
The Timken Co.		7,665		123
Thomas & Betts Corp. *		2,200		68
Trinity Industries, Inc.		7,925		116
Tyco International Ltd.		36,265		862
United Rentals, Inc. *		30,500		185
United Technologies Corp.		25,615		1,251
URS Corp. *		3,993		176
USG Corp. *		19,925		296
W.W. Grainger, Inc.		1,035		87
WESCO International, Inc. *		5,000		130
				31,250
Commercial & Professional Supplies 0.8%
Avery Dennison Corp.		7,450		214
Cintas Corp.		4,450		114
Corrections Corp. of America *		3,690		52
Covanta Holding Corp. *		2,115		30
Deluxe Corp.		5,245		76
Equifax, Inc.		3,630		106
HNI Corp.		3,020		47
Iron Mountain, Inc. *		4,955		141
Kelly Services, Inc., Class A		5,340		60
Manpower, Inc.		6,245		269
MPS Group, Inc. *		7,800		63
Pitney Bowes, Inc.		8,705		213
R.R. Donnelley & Sons Co.		26,840		313
Republic Services, Inc.		4,324		91
Robert Half International, Inc.		5,910		142
Steelcase, Inc., Class A		16,375		74
The Brink’s Co.		2,820		80
United Stationers, Inc. *		2,925		96

2     See financial notes.

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Volt Information Sciences, Inc. *		23,500		169
Waste Management, Inc.		14,555		388
				2,738
Consumer Durables & Apparel 2.0%
Beazer Homes USA, Inc. *		106,135		267
Brunswick Corp.		27,070		162
Centex Corp.		20,290		222
Coach, Inc. *		5,475		134
D.R. Horton, Inc.		25,490		333
Eastman Kodak Co.		61,140		187
Fortune Brands, Inc.		9,600		377
Furniture Brands International, Inc.		7,900		25
Garmin Ltd.		4,770		120
Hanesbrands, Inc. *		9,600		158
Harman International Industries, Inc.		5,820		106
Hasbro, Inc.		3,365		90
Hovnanian Enterprises, Inc., Class A *		73,570		204
Jarden Corp. *		6,777		136
Jones Apparel Group, Inc.		34,875		322
KB HOME		12,960		234
Leggett & Platt, Inc.		10,020		144
Lennar Corp., Class A		22,400		218
Liz Claiborne, Inc.		29,245		139
M.D.C. Holdings, Inc.		2,635		90
Mattel, Inc.		16,235		243
Mohawk Industries, Inc. *		8,635		409
Newell Rubbermaid, Inc.		22,950		240
NIKE, Inc., Class B		10,028		526
NVR, Inc. *		703		355
Polo Ralph Lauren Corp.		2,720		146
Pulte Homes, Inc.		18,570		214
Quiksilver, Inc. *		8,550		14
Snap-on, Inc.		2,230		76
Standard Pacific Corp. *		59,055		110
The Black & Decker Corp.		4,030		162
The Ryland Group, Inc.		2,735		57
The Stanley Works		3,840		146
Toll Brothers, Inc. *		8,695		176
VF Corp.		2,545		151
Whirlpool Corp.		11,455		517
				7,210
Consumer Services 1.5%
Apollo Group, Inc., Class A *		225		14
Boyd Gaming Corp.		14,225		131
Brinker International, Inc.		6,855		122
Burger King Holdings, Inc.		3,740		61
Career Education Corp. *		2,035		45
Carnival Corp.		33,445		899
Darden Restaurants, Inc.		3,745		139
Domino’s Pizza, Inc. *		10,300		97
H&R Block, Inc.		6,365		96
International Game Technology		12,455		154
Jack in the Box, Inc. *		3,240		80
Las Vegas Sands Corp. *		43,470		340
Marriott International, Inc., Class A		10,460		246
McDonald’s Corp.		13,780		734
MGM MIRAGE *		73,315		614
Penn National Gaming, Inc. *		2,140		73
Regis Corp.		3,375		65
Royal Caribbean Cruises Ltd.		19,905		293
Service Corp. International		17,000		77
Starbucks Corp. *		20,290		293
Starwood Hotels & Resorts Worldwide, Inc.		12,770		266
Tim Hortons, Inc.		2,000		49
Wyndham Worldwide Corp.		29,740		347
Wynn Resorts Ltd. *		2,500		98
Yum! Brands, Inc.		7,330		245
				5,578
Diversified Financials 13.4%
Affiliated Managers Group, Inc. *		2,000		114
Allied Capital Corp.		119,900		295
American Capital Ltd.		138,355		428
American Express Co.		69,425		1,751
AmeriCredit Corp. *		29,520		300
Ameriprise Financial, Inc.		4,500		119
Apollo Investment Corp.		8,514		41
Bank of America Corp.		1,493,860		13,340
Bank of New York Mellon Corp.		31,852		812
Capital One Financial Corp.		51,910		869
CIT Group, Inc.		81,005		180
Citigroup, Inc.		3,373,835		10,290
CME Group, Inc.		1,420		314
CompuCredit Corp. *		19,000		61
Discover Financial Services		42,422		345
E*TRADE Financial Corp. *		118,175		169
Federated Investors, Inc., Class B		4,030		92
Franklin Resources, Inc.		6,040		365
Interactive Brokers Group, Inc., Class A *		4,800		71
Invesco Ltd.		260,000		3,827
Janus Capital Group, Inc.		9,865		99
JPMorgan Chase & Co.		199,042		6,568
Legg Mason, Inc.		12,920		259
Leucadia National Corp. *		6,100		130
MF Global Ltd. *		19,200		117
Moody’s Corp.		3,670		108
Morgan Stanley		74,735		1,767
MSCI, Inc., Class A *		5,200		109

See financial notes.      3

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Northern Trust Corp.		3,760		204
NYSE Euronext		11,520		267
Och-Ziff Capital Management Group, Class A		24,300		181
PHH Corp. *		15,390		258
Raymond James Financial, Inc.		5,535		87
SLM Corp. *		48,335		234
State Street Corp.		14,836		506
T. Rowe Price Group, Inc.		5,745		221
TD Ameritrade Holding Corp. *		35,970		572
The Charles Schwab Corp.(b)		16,315		302
The Goldman Sachs Group, Inc.		18,911		2,430
The NASDAQ OMX Group, Inc. *		3,830		74
The Student Loan Corp.		2,208		106
				48,382
Energy 8.7%
Alon USA Energy, Inc.		1,400		18
Anadarko Petroleum Corp.		15,415		664
Apache Corp.		8,620		628
Arch Coal, Inc.		3,900		55
Baker Hughes, Inc.		9,475		337
BJ Services Co.		13,570		189
Cameron International Corp. *		5,480		140
Chesapeake Energy Corp.		21,320		420
Chevron Corp.		72,655		4,803
Cimarex Energy Co.		3,845		103
CNX Gas Corp. *		500		13
ConocoPhillips		83,310		3,416
CONSOL Energy, Inc.		2,135		67
Continental Resources, Inc. *		2,400		56
CVR Energy, Inc. *		4,100		30
Delek US Holdings, Inc.		2,000		21
Denbury Resources, Inc. *		4,500		73
Devon Energy Corp.		15,170		787
Diamond Offshore Drilling, Inc.		1,220		88
El Paso Corp.		31,120		215
ENSCO International, Inc.		4,530		128
EOG Resources, Inc.		4,950		314
Exterran Holdings, Inc. *		6,100		126
Exxon Mobil Corp.		116,670		7,778
FMC Technologies, Inc. *		2,040		70
Forest Oil Corp. *		6,050		97
Foundation Coal Holdings, Inc.		2,000		33
Frontier Oil Corp.		4,830		61
General Maritime Corp.		8,384		83
Halliburton Co.		26,965		545
Helix Energy Solutions Group, Inc. *		20,300		185
Helmerich & Payne, Inc.		2,495		77
Hercules Offshore, Inc. *		34,000		109
Hess Corp.		8,550		468
Holly Corp.		2,000		42
Key Energy Services, Inc. *		18,600		82
Linn Energy L.L.C.		3,300		55
Marathon Oil Corp.		41,090		1,220
Mariner Energy, Inc. *		5,900		67
Massey Energy Co.		2,440		39
Murphy Oil Corp.		4,675		223
Nabors Industries Ltd. *		18,300		278
National-Oilwell Varco, Inc. *		8,023		243
Newfield Exploration Co. *		8,000		249
Noble Corp.		7,120		195
Noble Energy		3,735		212
Occidental Petroleum Corp.		11,370		640
Oil States International, Inc. *		1,500		28
Overseas Shipholding Group, Inc.		1,320		38
Patterson-UTI Energy, Inc.		8,600		109
Peabody Energy Corp.		5,445		144
Petrohawk Energy Corp. *		3,300		78
Pioneer Drilling Co. *		19,300		97
Pioneer Natural Resources Co.		6,450		149
Plains Exploration & Production Co. *		5,100		96
Pride International, Inc. *		7,165		163
Range Resources Corp.		2,000		80
Rowan Cos., Inc.		5,400		84
Schlumberger Ltd.		19,070		934
SEACOR Holdings, Inc. *		100		7
Ship Finance International Ltd.		6,740		58
Smith International, Inc.		8,140		210
Southern Union Co.		4,780		76
Southwestern Energy Co. *		2,840		102
Spectra Energy Corp.		26,560		385
Sunoco, Inc.		10,690		283
Superior Energy Services, Inc. *		3,300		63
Teekay Corp.		5,840		84
Tesoro Corp.		14,360		219
The Williams Cos., Inc.		26,275		371
Tidewater, Inc.		2,120		92
Unit Corp. *		2,010		55
Valero Energy Corp.		50,625		1,004
Weatherford International Ltd. *		14,990		249
Western Refining , Inc. *		4,400		55
Whiting Petroleum Corp. *		1,200		39
World Fuel Services Corp.		2,400		92
XTO Energy, Inc.		7,825		271
				31,457
Food & Staples Retailing 2.7%
BJ’s Wholesale Club, Inc. *		3,770		126
Casey’s General Stores, Inc.		2,300		61
Costco Wholesale Corp.		16,815		817
CVS Caremark Corp.		34,135		1,085
Nash Finch Co.		1,830		54
Ruddick Corp.		2,335		60

4      See financial notes.

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Safeway, Inc.		27,140		536
SUPERVALU, Inc.		24,820		406
Sysco Corp.		21,540		502
The Great Atlantic & Pacific Tea Co., Inc. *		18,500		136
The Kroger Co.		35,120		759
The Pantry, Inc. *		3,920		93
Wal-Mart Stores, Inc.		78,325		3,947
Walgreen Co.		30,570		961
Whole Foods Market, Inc.		10,550		219
Winn-Dixie Stores, Inc. *		9,800		112
				9,874
Food, Beverage & Tobacco 4.0%
Altria Group, Inc.		143,680		2,346
Archer-Daniels-Midland Co.		25,105		618
Brown-Forman Corp., Class B		2,100		98
Bunge Ltd.		7,675		368
Campbell Soup Co.		7,630		196
Chiquita Brands International, Inc. *		9,900		75
Coca-Cola Enterprises, Inc.		30,195		515
ConAgra Foods, Inc.		21,405		379
Constellation Brands, Inc., Class A *		10,105		117
Corn Products International, Inc.		2,800		67
Cosan Ltd., Class A *		8,500		30
Dean Foods Co. *		27,290		565
Del Monte Foods Co.		10,030		76
Dr. Pepper Snapple Group, Inc. *		13,500		280
Fresh Del Monte Produce, Inc. *		3,340		49
General Mills, Inc.		7,205		365
H.J. Heinz Co.		7,875		271
Hormel Foods Corp.		2,660		83
Kellogg Co.		5,980		252
Kraft Foods, Inc., Class A		52,092		1,219
Lorillard, Inc.		5,618		355
McCormick & Co., Inc.		2,440		72
Molson Coors Brewing Co., Class B		4,680		179
PepsiAmericas, Inc.		4,080		100
PepsiCo, Inc.		24,230		1,206
Philip Morris International, Inc.		30,420		1,101
Ralcorp Holdings, Inc. *		1,000		57
Reynolds American, Inc.		8,475		322
Sara Lee Corp.		42,050		350
Smithfield Foods, Inc. *		25,106		217
The Coca-Cola Co.		33,665		1,449
The Hershey Co.		3,950		143
The J.M. Smucker Co.		1,725		68
The Pepsi Bottling Group, Inc.		11,335		354
Tyson Foods, Inc., Class A		37,980		400
Universal Corp., VA		2,120		64
				14,406
Health Care Equipment & Services 3.7%
Aetna, Inc.		15,760		347
Alcon, Inc.		5,795		533
AMERIGROUP Corp. *		2,200		66
AmerisourceBergen Corp.		16,470		554
Baxter International, Inc.		7,160		347
Beckman Coulter, Inc.		820		43
Becton, Dickinson & Co.		2,755		167
Boston Scientific Corp. *		59,065		497
Brookdale Senior Living, Inc.		16,600		171
Cardinal Health, Inc.		25,820		872
Cerner Corp. *		2,105		113
CIGNA Corp.		18,509		365
Community Health Systems, Inc. *		6,550		150
Coventry Health Care, Inc. *		14,750		235
Covidien Ltd.		10,070		332
DaVita, Inc. *		1,580		73
DENTSPLY International, Inc.		3,035		87
Express Scripts, Inc. *		4,420		283
Health Management Associates, Inc., Class A *		80,195		374
Health Net, Inc. *		13,470		194
Henry Schein, Inc. *		2,130		87
Hill-Rom Holdings, Inc.		6,000		78
Hologic, Inc. *		8,200		122
Hospira, Inc. *		3,850		127
Humana, Inc. *		12,170		350
IMS Health, Inc.		3,640		46
Inverness Medical Innovations, Inc. *		2,200		71
Kindred Healthcare, Inc. *		4,600		60
Kinetic Concepts, Inc. *		2,300		57
Laboratory Corp. of America Holdings *		2,930		188
LifePoint Hospitals, Inc. *		4,830		125
Lincare Holdings, Inc. *		2,935		71
Magellan Health Services, Inc. *		2,000		59
McKesson Corp.		19,700		729
Medco Health Solutions, Inc. *		14,410		628
Medtronic, Inc.		17,365		556
Omnicare, Inc.		4,110		106
Owens & Minor, Inc.		1,335		46
Patterson Cos., Inc. *		5,475		112
Quest Diagnostics, Inc.		4,355		223
St. Jude Medical, Inc. *		4,360		146
Stryker Corp.		5,845		226
Sunrise Senior Living, Inc. *		45,000		115
Teleflex, Inc.		220		9
Tenet Healthcare Corp. *		122,175		275
UnitedHealth Group, Inc.		50,175		1,180

See financial notes.      5

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Universal American Financial Corp. *		6,000		62
Universal Health Services, Inc., Class B		2,825		142
Varian Medical Systems, Inc. *		2,120		71
WellPoint, Inc. *		31,670		1,354
Zimmer Holdings, Inc. *		6,040		266
				13,490
Household & Personal Products 1.3%
Alberto-Culver Co.		1,870		42
Avon Products, Inc.		10,225		233
Bare Escentuals, Inc. *		27,600		255
Colgate-Palmolive Co.		5,930		350
Energizer Holdings, Inc. *		2,720		156
Kimberly-Clark Corp.		10,120		497
NBTY, Inc. *		3,500		91
The Clorox Co.		2,710		152
The Estee Lauder Cos., Inc., Class A		6,460		193
The Procter & Gamble Co.		57,895		2,862
				4,831
Insurance 6.5%
Aflac, Inc.		21,540		622
Alleghany Corp. *		204		52
Allied World Assurance Co. Holdings Ltd.		1,540		57
American Financial Group, Inc.		7,140		125
American International Group, Inc.		1,689,600		2,332
American National Insurance Co.		2,700		183
Aon Corp.		6,060		256
Arch Capital Group Ltd. *		2,225		129
Arthur J. Gallagher & Co.		2,540		57
Aspen Insurance Holdings Ltd.		3,225		76
Assurant, Inc.		7,755		190
Axis Capital Holdings Ltd.		5,950		147
Baldwin & Lyons, Inc., Class B		1,700		34
Berkshire Hathaway, Inc., Class A *		28		2,632
Berkshire Hathaway, Inc., Class B *		390		1,195
Cincinnati Financial Corp.		9,080		217
CNA Financial Corp.		16,650		199
Conseco, Inc. *		128,700		206
Endurance Specialty Holdings Ltd.		2,330		61
Erie Indemnity Co., Class A		825		29
Everest Re Group Ltd.		525		39
Fidelity National Financial, Inc., Class A		17,125		310
First American Corp.		6,360		179
Genworth Financial, Inc., Class A		326,600		771
Hanover Insurance Group, Inc.		2,030		61
HCC Insurance Holdings, Inc.		2,735		65
IPC Holdings Ltd.		600		16
Lincoln National Corp.		37,880		426
Loews Corp.		25,282		629
Markel Corp. *		613		176
Marsh & McLennan Cos., Inc.		20,250		427
MBIA, Inc. *		37,710		178
Mercury General Corp.		2,430		82
MetLife, Inc.		57,905		1,723
Montpelier Re Holdings Ltd.		4,880		61
Odyssey Re Holdings Corp.		2,000		77
Old Republic International Corp.		13,960		131
OneBeacon Insurance Group Ltd., Class A		6,900		80
PartnerRe Ltd.		2,930		200
Principal Financial Group, Inc.		33,785		552
Protective Life Corp.		23,265		199
Prudential Financial, Inc.		47,640		1,376
Reinsurance Group of America, Inc.		3,300		105
RenaissanceRe Holdings Ltd.		2,725		133
StanCorp Financial Group, Inc.		4,225		116
The Allstate Corp.		46,355		1,081
The Chubb Corp.		8,075		315
The Hartford Financial Services Group, Inc.		131,310		1,506
The Phoenix Cos., Inc.		130,180		203
The Progressive Corp. *		27,245		416
The Travelers Cos., Inc.		28,295		1,164
Torchmark Corp.		6,040		177
Transatlantic Holdings, Inc.		3,825		145
Unitrin, Inc.		10,050		171
Unum Group		23,625		386
W. R. Berkley Corp.		6,560		157
Wesco Financial Corp.		57		17
White Mountains Insurance Group Ltd.		529		101
XL Capital Ltd., Class A		85,485		813
				23,563
Materials 4.7%
AbitibiBowater, Inc. *		36,917		6
Air Products & Chemicals, Inc.		6,075		400
Airgas, Inc.		1,600		69
AK Steel Holding Corp.		18,545		241
Albemarle Corp.		2,000		54
Alcoa, Inc.		134,905		1,224
Allegheny Technologies, Inc.		5,211		171
Ashland, Inc.		27,935		613
Ball Corp.		2,240		84
Bemis Co., Inc.		4,355		105
Boise, Inc. *		22,000		19
Cabot Corp.		4,030		59

6     See financial notes.

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Celanese Corp., Series A		11,000		229
Chemtura Corp.		15,430		1
Commercial Metals Co.		10,345		154
Crown Holdings, Inc. *		5,620		124
Cytec Industries, Inc.		1,720		34
Domtar Corp. *		206,300		375
E.I. du Pont de Nemours & Co.		43,045		1,201
Eastman Chemical Co.		4,960		197
Ecolab, Inc.		4,560		176
FMC Corp.		1,640		80
Freeport-McMoRan Copper & Gold, Inc.		12,885		550
Graphic Packaging Holding Co. *		43,695		75
Greif, Inc., Class A		1,212		55
Huntsman Corp.		59,465		319
International Flavors & Fragrances, Inc.		3,535		110
International Paper Co.		80,195		1,015
Louisiana-Pacific Corp.		44,685		182
Martin Marietta Materials, Inc.		1,110		93
MeadWestvaco Corp.		17,140		268
Monsanto Co.		4,795		407
Nalco Holding Co.		8,370		137
Newmont Mining Corp.		6,110		246
Nucor Corp.		12,680		516
Olin Corp.		4,855		61
Owens-Illinois, Inc. *		10,745		262
Packaging Corp. of America		5,445		86
Pactiv Corp. *		6,060		132
PolyOne Corp. *		25,500		70
PPG Industries, Inc.		6,900		304
Praxair, Inc.		4,485		335
Reliance Steel & Aluminum Co.		4,120		145
Rockwood Holdings, Inc. *		12,300		151
RPM International, Inc.		7,465		103
Sealed Air Corp.		8,875		169
Sigma-Aldrich Corp.		2,530		111
Silgan Holdings, Inc.		1,220		57
Sonoco Products Co.		6,255		153
Southern Copper Corp.		18,265		339
Steel Dynamics, Inc.		11,150		139
Temple-Inland, Inc.		28,645		342
Terra Industries, Inc.		2,000		53
The Dow Chemical Co.		154,900		2,478
The Lubrizol Corp.		4,135		179
The Mosaic Co.		5,910		239
The Scotts Miracle-Gro Co., Class A		2,420		82
The Valspar Corp.		4,050		97
United States Steel Corp.		15,095		401
Vulcan Materials Co.		2,223		106
Westlake Chemical Corp.		4,000		75
Weyerhaeuser Co.		20,380		719
Worthington Industries, Inc.		7,065		105
				17,082
Media 3.7%
Belo Corp., Class A		60,480		103
Cablevision Systems Corp., Class A		4,865		84
CBS Corp., Class B		155,290		1,093
Cinemark Holdings, Inc.		5,400		48
Clear Channel Outdoor Holdings, Inc., Class A *		27,170		104
Comcast Corp., Class A		79,540		1,230
Comcast Corp., Special Class A		31,320		460
Discovery Communications, Inc., Series A *		2,767		53
Discovery Communications, Inc., Series C *		4,407		77
DISH Network Corp., Class A *		18,570		246
Gannett Co., Inc.		100,830		394
Hearst-Argyle Television, Inc.		23,140		104
Interactive Data Corp.		2,000		45
Lamar Advertising Co., Class A *		15,920		269
Liberty Global, Inc., Series A *		11,610		192
Liberty Global, Inc., Series C *		11,270		184
Liberty Media Corp. — Capital, Series A *		41,217		482
Live Nation, Inc. *		16,545		65
Meredith Corp.		3,300		83
News Corp., Class A		108,620		897
News Corp., Class B		35,840		327
Omnicom Group, Inc.		10,804		340
RCN Corp. *		10,000		41
Regal Entertainment Group, Class A		17,685		231
Scholastic Corp.		4,500		89
Scripps Networks Interactive, Class A		3,245		89
The DIRECTV Group, Inc. *		18,140		449
The E.W. Scripps Co., Class A		61,515		121
The Interpublic Group of Cos., Inc. *		32,005		200
The McClatchy Co., Class A		44,080		23
The McGraw-Hill Cos., Inc.		11,180		337
The New York Times Co., Class A		16,600		89
The Walt Disney Co.		64,150		1,405
The Washington Post Co., Class B		100		42
Time Warner Cable, Inc.		22,659		730
Time Warner, Inc.		78,188		1,707
Viacom, Inc., Class B *		23,700		456
Virgin Media, Inc.		38,310		296
Warner Music Group Corp. *		27,960		150
				13,335

See financial notes.     7

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Pharmaceuticals, Biotechnology & Life Sciences 3.7%
Abbott Laboratories		18,645		780
Allergan, Inc.		3,130		146
Amgen, Inc. *		16,655		807
Biogen Idec, Inc. *		3,450		167
Bristol-Myers Squibb Co.		47,050		903
Cephalon, Inc. *		935		61
Charles River Laboratories International, Inc. *		3,420		95
Covance, Inc. *		1,220		48
Eli Lilly & Co.		26,355		868
Forest Laboratories, Inc. *		6,455		140
Genzyme Corp. *		2,750		147
Gilead Sciences, Inc. *		3,860		177
Johnson & Johnson		42,095		2,204
King Pharmaceuticals, Inc. *		16,900		133
Life Technologies Corp. *		2,019		75
Merck & Co., Inc.		62,815		1,523
Mettler-Toledo International, Inc. *		1,500		93
Mylan, Inc. *		4,475		59
Pfizer, Inc.		253,420		3,386
Schering-Plough Corp.		17,090		393
Thermo Fisher Scientific, Inc. *		9,445		331
Warner Chilcott Ltd., Class A *		3,000		29
Waters Corp. *		2,000		88
Watson Pharmaceuticals, Inc. *		2,665		83
Wyeth		18,040		765
				13,501
Real Estate 1.9%
Alexandria Real Estate Equities, Inc.		1,264		46
AMB Property Corp.		6,240		119
Annaly Capital Management, Inc.		9,085		128
Apartment Investment & Management Co., Class A		20,454		149
AvalonBay Communities, Inc.		2,399		136
Boston Properties, Inc.		5,290		261
Brandywine Realty Trust		7,625		47
BRE Properties, Inc.		1,720		42
Camden Property Trust		3,720		101
CB Richard Ellis Group, Inc., Class A *		26,630		200
CBL & Associates Properties, Inc.		20,436		162
Colonial Properties Trust		17,525		127
Cousins Properties, Inc.		5,420		46
DCT Industrial Trust, Inc.		13,300		59
Developers Diversified Realty Corp.		38,701		160
Douglas Emmett, Inc.		5,900		56
Duke Realty Corp.		12,475		122
Equity One, Inc.		1,880		28
Equity Residential		12,445		285
Federal Realty Investment Trust		1,870		103
First Industrial Realty Trust, Inc.		19,930		75
HCP, Inc.		6,665		146
Health Care REIT, Inc.		2,430		83
Healthcare Realty Trust, Inc.		3,435		58
Highwoods Properties, Inc.		3,535		85
Hospitality Properties Trust		6,155		75
Host Hotels & Resorts, Inc.		48,985		377
HRPT Properties Trust		26,850		116
iStar Financial, Inc.		74,370		251
Kimco Realty Corp.		15,460		186
Liberty Property Trust		4,850		118
Mack-Cali Realty Corp.		3,950		106
Nationwide Health Properties, Inc.		3,435		85
Plum Creek Timber Co., Inc.		4,595		159
Potlatch Corp.		3,220		95
ProLogis		65,360		595
Public Storage		3,330		223
Rayonier, Inc.		3,335		129
Realty Income Corp.		2,740		61
Redwood Trust, Inc.		4,125		67
Regency Centers Corp.		3,020		113
Senior Housing Properties Trust		3,440		56
Simon Property Group, Inc.		7,960		411
SL Green Realty Corp.		7,307		129
The Macerich Co.		6,070		106
UDR, Inc.		7,187		72
Ventas, Inc.		4,725		135
Vornado Realty Trust		5,991		293
Weingarten Realty Investors		4,035		63
				6,845
Retailing 4.7%
Abercrombie & Fitch Co., Class A		3,810		103
Advance Auto Parts, Inc.		1,045		46
Amazon.com, Inc. *		2,450		197
American Eagle Outfitters, Inc.		6,935		103
AnnTaylor Stores Corp. *		3,430		25
Asbury Automotive Group, Inc.		21,445		207
AutoNation, Inc. *		22,815		404
Autozone, Inc. *		723		120
Barnes & Noble, Inc.		5,240		137
Bed Bath & Beyond, Inc. *		7,265		221
Best Buy Co., Inc.		14,950		574
Big Lots, Inc. *		4,465		123
Blockbuster, Inc., Class A *		109,375		87
Borders Group, Inc. *		62,360		170
CarMax, Inc. *		11,440		146
Charming Shoppes, Inc. *		73,190		255
Chico’s FAS, Inc. *		8,400		64
Collective Brands, Inc. *		6,340		92
Core-Mark Holding Co., Inc. *		5,100		98

8      See financial notes.

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Dick’s Sporting Goods, Inc. *		3,200		61
Dillard’s, Inc., Class A		31,275		241
Dollar Tree, Inc. *		2,045		87
Expedia, Inc. *		18,030		245
Family Dollar Stores, Inc.		3,675		122
Foot Locker, Inc.		12,295		146
GameStop Corp., Class A *		3,190		96
Genuine Parts Co.		6,900		234
Group 1 Automotive, Inc.		4,335		92
Home Depot, Inc.		69,696		1,834
HSN, Inc. *		21,700		150
J.C. Penney Co., Inc.		21,300		654
Kohl’s Corp. *		9,795		444
Liberty Media Corp. — Interactive Class A *		95,920		508
Limited Brands, Inc.		28,820		329
Lowe’s Cos., Inc.		50,355		1,083
Macy’s, Inc.		56,720		776
Nordstrom, Inc.		10,055		228
O’Reilly Automotive, Inc. *		2,130		83
Office Depot, Inc. *		231,250		599
OfficeMax, Inc.		34,455		257
Penske Auto Group, Inc.		20,495		272
PetSmart, Inc.		5,140		118
RadioShack Corp.		8,880		125
Rent-A-Center, Inc. *		5,170		100
Ross Stores, Inc.		2,545		97
Saks, Inc. *		56,235		293
Sears Holdings Corp. *		17,321		1,082
Sonic Automotive, Inc., Class A		60,360		311
Staples, Inc.		18,550		383
Target Corp.		32,795		1,353
The Gap, Inc.		28,875		449
The Sherwin-Williams Co.		2,845		161
The TJX Cos., Inc.		10,830		303
Ticketmaster Entertainment, Inc. *		11,849		62
Tiffany & Co.		3,535		102
Tractor Supply Co. *		2,000		81
TravelCenters of America LLC *		12,600		31
Williams-Sonoma, Inc.		8,045		113
Zale Corp. *		4,745		18
				16,895
Semiconductors & Semiconductor Equipment 1.6%
Advanced Micro Devices, Inc. *		58,730		212
Altera Corp.		2,950		48
Amkor Technology, Inc. *		35,680		154
Analog Devices, Inc.		5,965		127
Applied Materials, Inc.		33,425		408
Atmel Corp. *		12,090		46
Broadcom Corp., Class A *		6,745		156
Fairchild Semiconductor International, Inc. *		13,760		85
Intel Corp.		148,110		2,337
International Rectifier Corp. *		3,825		65
KLA-Tencor Corp.		6,280		174
Lam Research Corp. *		4,000		111
Linear Technology Corp.		2,555		56
LSI Corp. *		23,040		88
Marvell Technology Group Ltd. *		10,430		115
MEMC Electronic Materials, Inc. *		5,800		94
Microchip Technology, Inc.		4,480		103
Micron Technology, Inc. *		73,375		358
National Semiconductor Corp.		3,950		49
Novellus Systems, Inc. *		4,000		72
NVIDIA Corp. *		12,537		144
Teradyne, Inc. *		6,550		39
Texas Instruments, Inc.		31,870		576
Xilinx, Inc.		3,860		79
				5,696
Software & Services 3.7%
Accenture Ltd., Class A		11,995		353
ACI Worldwide, Inc. *		5,500		95
Activision Blizzard, Inc. *		9,100		98
Adobe Systems, Inc. *		6,240		171
Affiliated Computer Services, Inc., Class A *		3,055		148
Alliance Data Systems Corp. *		1,580		66
Autodesk, Inc. *		2,300		46
Automatic Data Processing, Inc.		9,380		330
BMC Software, Inc. *		3,040		105
Broadridge Financial Solutions, Inc.		5,737		111
CA, Inc.		9,105		157
CACI International, Inc., Class A *		1,700		67
Cadence Design Systems, Inc. *		16,375		91
Citrix Systems, Inc. *		2,470		70
Cognizant Technology Solutions Corp., Class A *		2,600		64
Computer Sciences Corp. *		10,545		390
Convergys Corp. *		10,165		103
DST Systems, Inc. *		2,000		72
eBay, Inc. *		33,575		553
Electronic Arts, Inc. *		8,150		166
Fidelity National Information Services, Inc.		6,920		124
Fiserv, Inc. *		5,050		188
Google, Inc., Class A *		2,341		927
Hewitt Associates, Inc., Class A *		3,150		99
IAC/InterActiveCorp. *		17,162		275
InfoSpace, Inc. *		9,900		66
Intuit, Inc. *		4,455		103
Lender Processing Services, Inc.		1,860		53
MasterCard, Inc., Class A		868		159
McAfee, Inc. *		2,135		80

See financial notes.       9

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Metavante Technologies, Inc. *		2,595		61
Microsoft Corp.		242,315		4,909
Oracle Corp.		57,060		1,104
Paychex, Inc.		5,360		145
Perot Systems Corp., Class A *		4,455		63
SAIC, Inc. *		8,300		150
Symantec Corp. *		20,445		353
Synopsys, Inc. *		2,100		46
Total System Services, Inc.		6,070		76
VeriSign, Inc. *		3,160		65
Visa, Inc., Class A		6,400		416
VMware, Inc., Class A *		3,000		78
Western Union Co.		7,710		129
Wright Express Corp. *		5,400		124
Yahoo!, Inc. *		24,355		348
				13,397
Technology Hardware & Equipment 5.1%
Agilent Technologies, Inc. *		9,905		181
Amphenol Corp., Class A		2,300		78
Anixter International, Inc. *		2,620		104
Apple, Inc. *		8,865		1,115
Arrow Electronics, Inc. *		12,895		293
Avnet, Inc. *		14,280		313
AVX Corp.		5,380		54
Benchmark Electronics, Inc. *		5,140		62
Brocade Communications Systems, Inc. *		15,400		89
Cisco Systems, Inc. *		96,465		1,864
CommScope, Inc. *		5,000		125
Corning, Inc.		30,560		447
Dell, Inc. *		98,710		1,147
Diebold, Inc.		2,630		69
EMC Corp. *		44,710		560
Harris Corp.		2,725		83
Hewlett-Packard Co.		62,475		2,248
Ingram Micro, Inc., Class A *		34,555		502
Insight Enterprises, Inc. *		21,200		121
International Business Machines Corp.		22,395		2,311
Jabil Circuit, Inc.		34,995		283
JDS Uniphase Corp. *		14,700		68
Juniper Networks, Inc. *		9,770		212
Lexmark International, Inc., Class A *		5,745		113
Molex, Inc.		2,930		49
Molex, Inc., Class A		2,930		45
Motorola, Inc.		198,520		1,098
NCR Corp. *		13,845		141
NetApp, Inc. *		5,230		96
QUALCOMM, Inc.		16,985		719
SanDisk Corp. *		15,065		237
Sanmina-SCI Corp. *		504,495		283
Seagate Technology		54,135		442
Sun Microsystems, Inc. *		56,753		520
SYNNEX Corp. *		5,770		124
Tech Data Corp. *		15,240		439
Tellabs, Inc. *		22,760		119
Teradata Corp. *		2,900		48
Tyco Electronics Ltd.		38,615		673
Vishay Intertechnology, Inc. *		40,040		235
Western Digital Corp. *		9,600		226
Xerox Corp.		59,550		364
				18,300
Telecommunication Services 3.3%
American Tower Corp., Class A *		3,265		104
AT&T, Inc.		192,085		4,921
CenturyTel, Inc.		4,665		127
Crown Castle International Corp. *		4,180		103
Embarq Corp.		6,340		232
Frontier Communications Corp.		26,160		186
iBasis, Inc. *		4,500		5
iPCS, Inc. *		5,700		83
Leap Wireless International, Inc. *		2,000		72
Level 3 Communications, Inc. *		109,000		122
MetroPCS Communications, Inc. *		5,000		85
NII Holdings, Inc. *		6,770		109
Qwest Communications International, Inc.		91,580		356
Sprint Nextel Corp. *		313,000		1,365
Telephone & Data Systems, Inc.		4,600		132
United States Cellular Corp. *		3,335		113
Verizon Communications, Inc.		121,430		3,684
Windstream Corp.		15,900		132
				11,931
Transportation 2.4%
Alaska Air Group, Inc. *		2,225		37
Alexander & Baldwin, Inc.		2,820		75
AMERCO *		1,820		59
AMR Corp. *		74,820		356
Avis Budget Group, Inc. *		401,490		839
Burlington Northern Santa Fe Corp.		7,820		528
C.H. Robinson Worldwide, Inc.		3,180		169
Con-way, Inc.		3,830		95
Continental Airlines, Inc., Class B *		16,470		173
CSX Corp.		13,670		405
Delta Air Lines, Inc. *		63,800		394
Expeditors International of Washington, Inc.		3,325		115
FedEx Corp.		14,662		821
Hertz Global Holdings, Inc. *		95,700		651
J.B. Hunt Transport Services, Inc.		2,845		80

10      See financial notes.

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
JetBlue Airways Corp. *		18,040		89
Kansas City Southern *		5,390		82
Norfolk Southern Corp.		12,250		437
Ryder System, Inc.		5,710		158
SkyWest, Inc.		3,700		45
Southwest Airlines Co.		31,575		220
UAL Corp. *		48,900		241
Union Pacific Corp.		14,756		725
United Parcel Service, Inc., Class B		25,980		1,360
US Airways Group, Inc. *		45,400		172
Werner Enterprises, Inc.		3,940		64
YRC Worldwide, Inc. *		58,555		177
				8,567
Utilities 3.9%
AGL Resources, Inc.		2,640		82
Allegheny Energy, Inc.		4,055		105
Alliant Energy Corp.		5,075		113
Ameren Corp.		13,690		315
American Electric Power Co., Inc.		12,845		339
American Water Works Co., Inc.		7,600		137
Aqua America, Inc.		4,200		77
Atmos Energy Corp.		5,160		128
Black Hills Corp.		2,825		56
Calpine Corp. *		12,900		105
CenterPoint Energy, Inc.		19,370		206
CMS Energy Corp.		11,310		136
Consolidated Edison, Inc.		8,825		328
Constellation Energy Group, Inc.		15,980		385
Dominion Resources, Inc.		15,710		474
DPL, Inc.		4,020		90
DTE Energy Co.		10,665		315
Duke Energy Corp.		63,945		883
Dynegy, Inc., Class A *		96,200		171
Edison International		14,890		425
Energen Corp.		1,210		44
Entergy Corp.		5,917		383
EQT Corp.		2,180		73
Exelon Corp.		13,955		644
FirstEnergy Corp.		11,890		486
FPL Group, Inc.		11,180		601
Great Plains Energy, Inc.		6,270		91
Hawaiian Electric Industries, Inc.		5,170		80
IDACORP, Inc.		1,840		44
Integrys Energy Group, Inc.		4,935		130
MDU Resources Group, Inc.		8,680		153
Mirant Corp. *		12,345		157
National Fuel Gas Co.		3,845		126
New Jersey Resources Corp.		1,380		45
Nicor, Inc.		2,240		72
NiSource, Inc.		27,735		305
Northeast Utilities		6,415		135
NRG Energy, Inc. *		10,860		195
NSTAR		2,580		81
NV Energy, Inc.		13,500		138
OGE Energy Corp.		4,965		128
ONEOK, Inc.		6,510		170
Pepco Holdings, Inc.		13,565		162
PG&E Corp.		12,115		450
Piedmont Natural Gas Co., Inc.		2,150		53
Pinnacle West Capital Corp.		5,785		158
PNM Resources, Inc.		12,545		107
Portland General Electric Co.		5,045		92
PPL Corp.		10,555		316
Progress Energy, Inc.		12,365		422
Public Service Enterprise Group, Inc.		15,880		474
Questar Corp.		3,650		108
Reliant Energy, Inc. *		61,240		304
SCANA Corp.		5,085		154
Sempra Energy		8,115		373
Southern Co.		16,935		489
Southwest Gas Corp.		2,425		49
TECO Energy, Inc.		11,825		125
The AES Corp. *		59,940		424
UGI Corp.		4,220		97
Unisource Energy Corp.		1,500		39
Vectren Corp.		3,165		70
Westar Energy, Inc.		4,370		77
WGL Holdings, Inc.		1,945		61
Wisconsin Energy Corp.		3,320		133
Xcel Energy, Inc.		13,990		258
				14,146
Total Common Stock
(Cost $526,777)				358,991
Foreign Common Stock 0.2% of net assets
Bermuda 0.1%
Capital Goods 0.0%
China Yuchai International Ltd.		14,000		110
Insurance 0.1%
Platinum Underwriters Holdings, Ltd.		2,100		60
Validus Holdings Ltd.		2,000		45
Willis Group Holdings, Ltd.		3,945		109
				214
Media 0.0%
Central European Media Enterprises, Ltd., Class A *		6,300		103
				427

See financial notes.     11

Schwab Fundamental US Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Luxembourg 0.0%
Telecommunication Services 0.1%
Millicom International Cellular S.A. *		2,000		97
Total Foreign Common Stock
(Cost $460)				524
Other Investment Company 0.2% of net assets
State Street Institutional Liquid Reserves Fund — Institutional Class		723,360		723
Total Other Investment Company
(Cost $723)				723

	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 0.2% of net assets
U.S. Treasury Obligations 0.2%
U.S. Treasury Bill
0.09%, 06/18/09 (a)		2		2
0.14%, 06/18/09 (a)		124		124
0.15%, 06/18/09 (a)		220		220
0.16%, 06/18/09 (a)		500		500
Total Short-Term Investments
(Cost $846)				846

End of Investments.

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $542,954 and the unrealized appreciation and depreciation were $7,624 and ($189,494), respectively, with a net depreciation of ($181,870).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.
(b)	Issuer is affiliated with the fund’s adviser.
REIT	— Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of	Contract	Unrealized
	Contracts	Value	Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09	50	2,175	47

12     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97.7	%	Common Stock		210,253		181,038
	2.2	%	Foreign Common Stock		5,030		4,060
	—	%	Preferred Stock		42		29
	—	%	Rights		3		1
	0.1	%	Short-Term Investments		205		205
	100.0	%	Total Investments		215,533		185,333
	0.0	%	Other Assets and Liabilities, Net				49
	100.0	%	Net Assets				185,382

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 97.7% of net assets
Automobiles & Components 1.3%
Drew Industries, Inc. *		14,115		201
Gentex Corp.		25,270		338
Hayes Lemmerz International, Inc. *		58,800		10
Modine Manufacturing Co.		193,515		739
Spartan Motors, Inc.		25,200		203
Standard Motor Products, Inc.		51,400		206
Stoneridge, Inc. *		71,600		165
Superior Industries International, Inc.		16,360		247
Winnebago Industries, Inc.		34,465		304
				2,413
Banks 8.2%
1st Source Corp.		6,440		126
AMCORE Financial, Inc.		66,081		97
Anchor BanCorp Wisconsin, Inc.		3,545		6
Arrow Financial Corp.		821		22
BancFirst Corp.		1,775		76
BancTrust Financial Group, Inc.		500		3
Bank Mutual Corp.		6,760		69
Bank of Granite Corp.		13,000		27
BankAtlantic Bancorp, Inc., Class A		87,900		204
BankFinancial Corp.		4,200		45
Banner Corp.		22,560		105
Beneficial Mutual Bancorp, Inc. *		7,950		80
Berkshire Hills Bancorp, Inc.		3,250		73
Boston Private Financial Holdings, Inc.		21,540		99
Brookline Bancorp, Inc.		11,910		118
Capital City Bank Group, Inc.		4,895		74
Capitol Bancorp Ltd.		15,880		58
Cathay General Bancorp		19,200		215
Central Pacific Financial Corp.		17,345		102
Chemical Financial Corp.		7,130		152
Citizens Republic Bancorp, Inc. *		295,700		497
City Bank		45,380		142
City Holding Co.		4,390		129
CoBiz Financial, Inc.		3,000		18
Columbia Banking System, Inc.		4,055		40
Community Bancorp *		26,000		58
Community Bank System, Inc.		10,750		177
Community Trust Bancorp, Inc.		1,895		57
Corus Bankshares, Inc. *		10,625		2
Cullen/Frost Bankers, Inc.		1,500		71
CVB Financial Corp.		25,480		153
Dime Community Bancshares		10,850		90
East West Bancorp, Inc.		29,265		200
F.N.B. Corp.		39,803		299
Farmers Capital Bank Corp.		3,270		69
Federal Agricultural Mortgage Corp., Class C		21,600		68
Financial Institutions, Inc.		5,900		88
First BanCorp Puerto Rico		44,230		244
First Busey Corp.		10,815		85
First Citizens BancShares, Inc., Class A		1,658		198
First Commonwealth Financial Corp.		23,890		207
First Community Bancshares, Inc.		3,175		46
First Financial Bancorp		13,790		149
First Financial Holdings, Inc.		5,585		50
First Merchants Corp.		7,265		88
First Midwest Bancorp, Inc.		24,055		213
First Niagara Financial Group, Inc.		9,155		124
First Place Financial Corp.		12,900		73
First State Bancorp		34,100		74
Flushing Financial Corp.		5,535		51
Frontier Financial Corp.		51,655		73
Glacier Bancorp, Inc.		7,680		118
Greene Bancshares, Inc.		4,016		34
Guaranty Bancorp *		22,530		50
Hancock Holding Co.		7,430		281
Hanmi Financial Corp.		41,970		65
Harleysville National Corp.		16,825		148
Heartland Financial USA, Inc.		5,450		81

See financial notes.     1

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
IBERIABANK Corp.		2,150		98
Independent Bank Corp.		5,595		112
Independent Bank Corp., Michigan		40,960		74
Integra Bank Corp.		66,545		144
International Bancshares Corp.		15,112		204
Intervest Bancshares Corp., Class A		4,000		16
Investors Bancorp, Inc. *		10,065		92
Irwin Financial Corp. *		43,575		55
Lakeland Bancorp, Inc.		7,837		67
Macatawa Bank Corp.		15,700		50
MainSource Financial Group, Inc.		7,000		61
MB Financial, Inc.		9,845		134
Midwest Banc Holdings, Inc.		8,220		13
Nara Bancorp, Inc.		6,080		23
NASB Financial, Inc.		1,303		29
National Penn Bancshares, Inc.		15,323		124
NBT Bancorp, Inc.		5,455		129
NewAlliance Bancshares, Inc.		14,875		192
Northwest Bancorp, Inc.		3,330		59
OceanFirst Financial Corp.		3,700		45
Ocwen Financial Corp. *		3,205		36
Old National Bancorp		18,125		247
Old Second Bancorp, Inc.		3,375		18
Oriental Financial Group, Inc.		34,855		324
Oritani Financial Corp. *		7,100		101
Pacific Capital Bancorp		25,970		180
PacWest Bancorp		10,480		153
Park National Corp.		4,510		302
Peoples Bancorp, Inc.		3,475		58
PrivateBancorp, Inc.		3,855		78
Prosperity Bancshares, Inc.		4,500		125
Provident Bankshares Corp.		25,630		225
Provident Financial Services, Inc.		21,290		227
Provident New York Bancorp		10,185		86
Renasant Corp.		7,200		101
Republic Bancorp, Inc., Class A		6,100		136
Royal Bancshares of Pennsylvania, Inc., Class A *		13,400		31
S&T Bancorp, Inc.		6,590		118
S.Y. Bancorp, Inc.		1,115		28
Sandy Spring Bancorp, Inc.		5,795		94
Santander BanCorp		7,640		51
SCBT Financial Corp.		4,000		92
Seacoast Banking Corp. of Florida		4,890		21
Simmons First National Corp., Class A		3,800		99
Southwest Bancorp, Inc.		5,100		35
StellarOne Corp.		8,042		103
Sterling Bancorp		8,495		97
Sterling Bancshares, Inc.		16,525		110
Sterling Financial Corp., Washington		91,540		292
Suffolk Bancorp		2,315		59
Sun Bancorp, Inc. *		5,432		36
Superior Bancorp *		12,900		55
SVB Financial Group *		10,435		217
Taylor Capital Group, Inc. *		9,900		42
Texas Capital Bancshares, Inc. *		6,900		97
The South Financial Group, Inc.		121,600		202
TierOne Corp.		20,885		44
Tompkins Financial Corp.		1,665		70
Tree.com, Inc. *		2,200		14
Triad Guaranty, Inc. *		6,705		2
TriCo Bancshares		5,900		94
TrustCo Bank Corp. NY		31,070		186
Trustmark Corp.		4,000		87
UCBH Holdings, Inc.		103,100		132
UMB Financial Corp.		3,201		146
Umpqua Holdings Corp.		19,390		186
Union Bankshares Corp.		4,900		84
United Bankshares, Inc.		15,595		405
United Community Banks, Inc.		30,790		199
United Community Financial Corp.		21,581		45
Univest Corp. of Pennsylvania		4,600		96
Washington Trust Bancorp, Inc.		4,885		89
Waterstone Financial, Inc. *		3,716		11
WesBanco, Inc.		8,970		178
West Bancorp		5,700		50
West Coast Bancorp		48,465		137
Westamerica Bancorp		3,270		175
Western Alliance Bancorp *		13,665		89
Whitney Holding Corp.		5,000		60
Wintrust Financial Corp.		9,600		163
WSFS Financial Corp.		2,135		58
				15,158
Capital Goods 8.7%
A.O. Smith Corp.		6,560		204
AAR CORP. *		8,440		127
Aceto Corp.		9,100		65
Actuant Corp., Class A		9,720		119
Alamo Group, Inc.		3,400		38
Albany International Corp., Class A		8,530		79
Altra Holdings, Inc. *		16,200		89
American Railcar Industries, Inc.		7,250		66
American Woodmark Corp.		5,595		116
Ameron International Corp.		1,940		115
Ampco-Pittsburgh Corp.		2,460		60
Apogee Enterprises, Inc.		9,895		133
Applied Industrial Technologies, Inc.		12,420		279
Argon ST, Inc. *		1,165		24

2     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Astec Industries, Inc. *		4,550		140
Baldor Electric Co.		8,070		187
Barnes Group, Inc.		10,225		145
Beacon Roofing Supply, Inc. *		4,080		65
Belden, Inc.		18,360		296
Blount International, Inc. *		12,005		77
Brady Corp., Class A		13,115		276
Bucyrus International, Inc.		4,110		89
Builders FirstSource, Inc. *		94,255		312
Cascade Corp.		3,755		91
Ceradyne, Inc. *		5,350		92
Chart Industries, Inc. *		13,150		182
China Technology Development Group Corp. *		22,000		51
CIRCOR International, Inc.		3,590		92
CLARCOR, Inc.		6,025		187
Coleman Cable, Inc. *		25,300		63
Colfax Corp. *		2,500		22
Columbus McKinnon Corp. *		5,100		66
Commercial Vehicle Group, Inc. *		9,300		9
Cubic Corp.		3,690		106
Curtiss-Wright Corp.		7,905		253
Ducommun, Inc.		3,200		55
Dycom Industries, Inc. *		26,710		225
DynCorp International, Inc., Class A *		11,585		177
Encore Wire Corp.		5,040		110
Energy Conversion Devices, Inc. *		4,630		85
EnerSys *		18,375		313
EnPro Industries, Inc. *		8,590		137
ESCO Technologies, Inc. *		3,900		162
Esterline Technologies Corp. *		5,670		149
Evergreen Solar, Inc. *		28,700		70
Federal Signal Corp.		26,500		206
First Solar, Inc. *		440		82
Franklin Electric Co., Inc.		4,080		97
FreightCar America, Inc.		3,235		62
Gibraltar Industries, Inc.		17,055		114
Graco, Inc.		12,240		289
GrafTech International Ltd. *		12,310		108
Great Lakes Dredge & Dock Co.		36,100		143
Griffon Corp. *		25,768		223
H&E Equipment Services, Inc. *		16,920		127
Hardinge, Inc.		13,700		66
HEICO Corp.		1,100		32
HEICO Corp., Class A		3,195		80
Herley Industries, Inc. *		5,600		58
Hexcel Corp. *		14,105		135
Houston Wire & Cable Co.		8,200		79
Hurco Cos., Inc. *		700		11
IDEX Corp.		10,842		274
II-VI, Inc. *		3,165		76
Insituform Technologies, Inc., Class A *		12,315		189
Insteel Industries, Inc.		6,400		48
Integrated Electrical Services, Inc. *		11,600		111
Interline Brands, Inc. *		12,560		163
John Bean Technologies Corp.		5,400		60
Kadant, Inc. *		4,100		51
Kaman Corp.		8,320		141
Kaydon Corp.		5,615		179
Ladish Co., Inc. *		3,400		26
Lawson Products, Inc.		1,930		22
Layne Christensen Co. *		5,100		110
LSI Industries, Inc.		7,400		42
Lydall, Inc. *		29,200		125
MasTec, Inc. *		10,610		133
Michael Baker Corp. *		3,400		114
NACCO Industries, Inc., Class A		9,700		371
NCI Building Systems, Inc. *		29,545		117
NN, Inc.		79,300		104
Nordson Corp.		4,455		162
Northwest Pipe Co. *		2,600		99
Orbital Sciences Corp. *		9,155		142
Orion Marine Group, Inc. *		700		10
Otter Tail Corp.		10,880		241
Perini Corp. *		11,780		204
Pike Electric Corp. *		6,820		71
Polypore International, Inc. *		26,400		199
Powell Industries, Inc. *		1,770		64
Quanex Building Products Corp.		7,550		77
Raven Industries, Inc.		4,265		102
RBC Bearings, Inc. *		3,000		56
Regal-Beloit Corp.		6,865		279
Robbins & Myers, Inc.		7,300		138
Rush Enterprises, Inc., Class A *		10,960		144
Rush Enterprises, Inc., Class B *		3,000		33
Sauer-Danfoss, Inc.		15,740		65
Simpson Manufacturing Co., Inc.		9,485		211
Standex International Corp.		7,950		110
Stanley, Inc. *		3,000		77
SunPower Corp., Class A *		2,100		58
SunPower Corp., Class B *		5,269		134
TAL International Group, Inc.		7,690		74
Tecumseh Products Co., Class A *		28,670		293
Teledyne Technologies, Inc. *		6,570		210
Tennant Co.		4,460		66
The Gorman-Rupp Co.		2,600		55
The Greenbrier Cos., Inc.		34,020		290
The L.S. Starrett Co., Class A		1,400		14
The Middleby Corp. *		1,508		66
The Toro Co.		6,870		209
Thermadyne Holdings Corp. *		36,000		115

See financial notes.     3

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Titan International, Inc.		17,275		105
Titan Machinery, Inc. *		600		6
TransDigm Group, Inc. *		3,030		106
Tredegar Corp.		7,975		140
Trex Co., Inc. *		3,300		36
TriMas Corp. *		30,300		76
Triumph Group, Inc.		3,830		158
Twin Disc, Inc.		6,400		44
Universal Forest Products, Inc.		7,470		251
Valmont Industries, Inc.		2,310		147
Wabash National Corp.		28,245		35
Wabtec Corp.		6,160		235
Watsco, Inc.		4,945		212
Watts Water Technologies, Inc., Class A		10,175		226
Willis Lease Finance Corp. *		200		2
Woodward Governor Co.		9,000		180
Xerium Technologies, Inc. *		13,455		11
				16,204
Commercial & Professional Supplies 4.7%
ABM Industries, Inc.		16,310		286
Acco Brands Corp. *		197,770		413
Administaff, Inc.		8,460		226
American Reprographics Co. *		7,410		48
AMREP Corp. *		1,000		19
ATC Technology Corp. *		6,785		108
Bowne & Co., Inc.		66,332		339
Casella Waste Systems, Inc., Class A *		54,800		113
CBIZ, Inc. *		14,595		115
CDI Corp.		8,720		104
Cenveo, Inc. *		32,175		152
Clean Harbors, Inc. *		3,265		164
Comfort Systems USA, Inc.		11,300		122
CompX International, Inc.		1,000		6
COMSYS IT Partners, Inc. *		25,000		132
Consolidated Graphics, Inc. *		11,520		224
Copart, Inc. *		6,265		197
Cornell Cos., Inc. *		5,300		96
CoStar Group, Inc. *		2,140		79
Courier Corp.		1,755		28
CRA International, Inc. *		2,745		64
Diamond Management & Technology Consultants, Inc.		3,500		10
EnergySolutions, Inc.		36,300		352
Ennis, Inc.		10,440		94
First Advantage Corp., Class A *		10,700		153
FTI Consulting, Inc. *		4,965		273
G & K Services, Inc., Class A		5,450		136
Healthcare Services Group, Inc.		5,270		94
Heidrick & Struggles International, Inc.		5,170		87
Herman Miller, Inc.		9,330		139
Hudson Highland Group, Inc. *		23,085		38
ICT Group, Inc. *		4,500		32
IHS, Inc., Class A *		2,710		112
Interface, Inc., Class A		35,625		206
Intersections, Inc. *		2,000		7
Kforce, Inc. *		16,700		182
Kimball International, Inc., Class B		29,325		161
Knoll, Inc.		15,100		107
Korn/Ferry International *		10,330		109
LECG Corp. *		21,755		63
M&F Worldwide Corp. *		7,900		126
McGrath Rentcorp		6,625		140
Metalico, Inc. *		29,700		68
Mine Safety Appliances Co.		5,685		140
Mobile Mini, Inc. *		11,625		159
Monster Worldwide, Inc. *		15,120		209
Navigant Consulting, Inc. *		12,725		187
Resources Connection, Inc. *		10,500		205
Rollins, Inc.		1,915		34
Schawk, Inc.		2,660		19
School Specialty, Inc. *		8,600		161
Spherion Corp. *		149,790		538
Standard Parking Corp. *		1,600		24
Stericycle, Inc. *		90		4
Sykes Enterprises, Inc. *		8,030		158
Team, Inc. *		2,700		39
Tetra Tech, Inc. *		1,355		33
The Advisory Board Co. *		2,530		47
The Corporate Executive Board Co.		4,150		72
The Geo Group, Inc. *		5,990		100
The Standard Register Co.		21,850		114
TrueBlue, Inc. *		19,930		194
Viad Corp.		8,565		163
Waste Connections, Inc. *		9,130		235
Waste Services, Inc. *		5,100		28
Watson Wyatt Worldwide, Inc., Class A		2,695		143
WCA Waste Corp. *		9,700		20
				8,750
Consumer Durables & Apparel 4.9%
American Greetings Corp., Class A		57,600		452
Arctic Cat, Inc.		18,300		73
Bassett Furniture Industries, Inc.		4,900		11
Blyth, Inc.		5,972		263
Brookfield Homes Corp.		70,400		370
Callaway Golf Co.		18,555		140
Carter’s, Inc. *		8,825		189
Champion Enterprises, Inc. *		13,605		8
Cherokee, Inc.		2,400		44

4     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Columbia Sportswear Co.		2,880		88
Crocs, Inc. *		126,360		284
CSS Industries, Inc.		2,675		53
Deckers Outdoor Corp. *		1,630		92
Ethan Allen Interiors, Inc.		13,885		187
Fossil, Inc. *		6,805		137
G-III Apparel Group Ltd. *		19,900		160
Hooker Furniture Corp.		5,200		61
Iconix Brand Group, Inc. *		8,550		122
JAKKS Pacific, Inc. *		9,325		118
K-Swiss, Inc., Class A		10,630		107
Kenneth Cole Productions, Inc., Class A		8,240		57
La-Z-Boy, Inc.		225,100		599
Leapfrog Enterprises, Inc. *		57,335		103
Lifetime Brands, Inc.		49,700		140
Lululemon Athletica, Inc. *		13,300		185
M/I Homes, Inc.		19,800		302
Maidenform Brands, Inc. *		3,600		46
Marine Products Corp.		3,180		15
Meritage Homes Corp. *		16,400		341
Movado Group, Inc.		6,100		56
National Presto Industries, Inc.		1,645		117
Nautilus, Inc. *		23,375		23
Orleans Homebuilders, Inc.		13,000		27
Oxford Industries, Inc.		31,110		303
Palm Harbor Homes, Inc. *		24,900		76
Perry Ellis International, Inc. *		27,600		202
Phillips-Van Heusen Corp.		10,770		313
Polaris Industries, Inc.		11,800		395
Pool Corp.		14,880		266
RC2 Corp. *		23,120		261
Russ Berrie & Co., Inc. *		83,055		159
Sealy Corp. *		5,130		18
Skechers U.S.A., Inc., Class A *		15,885		186
Skyline Corp.		4,085		85
Stanley Furniture Co., Inc.		200		2
Steinway Musical Instruments, Inc. *		3,700		50
Steven Madden Ltd. *		5,675		167
Tempur-Pedic International, Inc.		15,515		199
The Timberland Co., Class A *		9,700		157
The Warnaco Group, Inc. *		10,260		296
Tupperware Brands Corp.		13,000		325
Under Armour, Inc., Class A *		3,055		72
Unifi, Inc. *		64,400		58
UniFirst Corp.		5,625		210
Volcom, Inc. *		1,700		23
Weyco Group, Inc.		3,700		102
Wolverine World Wide, Inc.		9,550		199
				9,094
Consumer Services 6.1%
Ameristar Casinos, Inc.		9,075		186
Bally Technologies, Inc. *		5,575		146
Benihana, Inc. *		15,300		83
Benihana, Inc., Class A *		24,800		130
Bluegreen Corp. *		75,870		145
Bob Evans Farms, Inc.		12,715		308
Brink’s Home Security Holdings, Inc. *		2,200		59
California Pizza Kitchen, Inc. *		7,900		124
Carriage Services, Inc. *		21,100		56
Carrols Restaurant Group, Inc. *		34,600		205
CEC Entertainment, Inc. *		8,880		271
Chipotle Mexican Grill, Inc., Class A *		1,060		86
Chipotle Mexican Grill, Inc., Class B *		1,900		125
Choice Hotels International, Inc.		6,440		193
Churchill Downs, Inc.		2,295		80
CKE Restaurants, Inc.		24,865		238
Coinstar, Inc. *		5,625		200
Corinthian Colleges, Inc. *		3,665		56
CPI Corp.		9,800		100
Cracker Barrel Old Country Store, Inc.		12,120		395
Denny’s Corp. *		20,300		54
DeVry, Inc.		1,185		50
DineEquity, Inc.		12,590		403
Dover Downs Gaming & Entertainment, Inc.		3,900		17
Einstein Noah Restaurant Group, Inc. *		10,600		114
Gaylord Entertainment Co. *		23,040		321
Great Wolf Resorts, Inc. *		44,400		164
Hillenbrand, Inc.		7,500		136
International Speedway Corp., Class A		10,090		239
Interval Leisure Group, Inc. *		10,100		81
Isle of Capri Casinos, Inc. *		43,375		466
ITT Educational Services, Inc. *		455		46
Jackson Hewitt Tax Service, Inc.		6,505		32
Krispy Kreme Doughnuts, Inc. *		30,175		119
Landry’s Restaurants, Inc. *		19,340		177
LIFE TIME FITNESS, Inc. *		9,585		180
Lincoln Educational Services *		1,400		23
Lodgian, Inc. *		19,300		50
Luby’s, Inc. *		4,700		25
Matthews International Corp., Class A		4,515		141
McCormick & Schmick’s Seafood Restaurants, Inc. *		23,500		166
Morgans Hotel Group *		36,400		156

See financial notes.     5

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Morton’s Restaurant Group, Inc. *		22,800		106
MTR Gaming Group, Inc. *		7,005		14
Multimedia Games, Inc. *		27,380		58
O’Charley’s, Inc.		47,175		329
P.F. Chang’s China Bistro, Inc. *		7,155		216
Panera Bread Co., Class A *		2,575		144
Papa John’s International, Inc. *		6,310		167
Pinnacle Entertainment, Inc. *		20,835		260
Pre-Paid Legal Services, Inc. *		1,460		54
Red Lion Hotels Corp. *		16,800		77
Red Robin Gourmet Burgers, Inc. *		3,280		81
Ruby Tuesday, Inc. *		136,170		1,046
Ruth’s Hospitality Group, Inc. *		33,200		120
Scientific Games Corp., Class A *		12,430		217
Sonic Corp. *		8,000		87
Sotheby’s		20,700		240
Speedway Motorsports, Inc.		5,915		89
Steiner Leisure Ltd. *		3,060		97
Stewart Enterprises, Inc., Class A		30,760		107
Texas Roadhouse, Inc., Class A *		11,610		132
The Cheesecake Factory, Inc. *		14,135		246
The Marcus Corp.		12,230		155
The Steak n Shake Co. *		16,470		190
Town Sports International Holdings, Inc. *		37,400		129
Universal Technical Institute, Inc. *		5,380		77
Vail Resorts, Inc. *		3,960		116
Weight Watchers International, Inc.		3,180		79
Wendy’s/Arby’s Group, Inc., Class A		26,200		131
WMS Industries, Inc. *		4,232		136
				11,246
Diversified Financials 4.3%
Advance America Cash Advance Centers, Inc.		126,015		504
Advanta Corp., Class A		352		—
Advanta Corp., Class B		17,042		20
Ares Capital Corp.		46,695		274
Asset Acceptance Capital Corp. *		20,360		169
ASTA Funding, Inc.		34,400		99
BGC Partners, Inc., Class A		37,620		97
BlackRock Kelso Capital Corp.		32,500		190
Calamos Asset Management, Inc., Class A		26,975		308
Capital Southwest Corp.		866		67
Cardtronics, Inc. *		20,100		49
Cash America International, Inc.		5,305		119
Cohen & Steers, Inc.		3,340		49
Compass Diversified Holdings		6,660		60
Cowen Group, Inc. *		7,500		43
Credit Acceptance Corp. *		2,675		62
Dollar Financial Corp. *		8,265		84
Eaton Vance Corp.		14,065		385
Encore Capital Group, Inc. *		16,255		142
Evercore Partners, Inc., Class A		5,400		102
EZCORP, Inc., Class A *		10,300		128
FBR Capital Markets Corp. *		42,000		174
FCStone Group, Inc. *		99,500		307
Financial Federal Corp.		6,110		150
First Cash Financial Services, Inc. *		1,090		18
GAMCO Investors, Inc., Class A		3,535		177
GFI Group, Inc.		44,720		182
Gladstone Capital Corp.		6,600		44
Gladstone Investment Corp.		4,200		15
Greenhill & Co., Inc.		835		65
Hercules Technology Growth Capital, Inc.		4,700		28
HFF, Inc., Class A *		16,000		43
IntercontinentalExchange, Inc. *		1,425		125
Investment Technology Group, Inc. *		5,555		127
Jefferies Group, Inc.		1,100		22
KBW, Inc. *		4,000		97
Knight Capital Group, Inc., Class A *		12,745		197
Kohlberg Capital Corp.		40,400		144
LaBranche & Co., Inc. *		24,575		103
Marlin Business Services Corp. *		8,800		28
MCG Capital Corp.		255,405		450
Nelnet, Inc., Class A *		28,800		174
NewStar Financial, Inc. *		48,900		111
NGP Capital Resources Co.		3,200		22
optionsXpress Holdings, Inc.		4,890		81
Patriot Capital Funding, Inc.		38,200		86
Penson Worldwide, Inc. *		13,900		141
PICO Holdings, Inc. *		2,695		81
Piper Jaffray Cos., Inc. *		9,705		336
Portfolio Recovery Associates, Inc. *		3,645		127
Prospect Capital Corp.		4,800		44
Rewards Network, Inc. *		7,355		27
Sanders Morris Harris Group, Inc.		1,800		8
Stifel Financial Corp. *		2,650		130
SWS Group, Inc.		8,120		104
Teton Advisors, Inc. *		52		—
The First Marblehead Corp. *		134,400		258
Thomas Weisel Partners Group, Inc. *		4,600		21
TICC Capital Corp.		11,400		45
United PanAm Financial Corp. *		13,000		24
W.P. Carey & Co., L.L.C.		10,425		222

6     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Waddell & Reed Financial, Inc., Class A		12,100		271
World Acceptance Corp. *		5,560		165
				7,925
Energy 5.6%
Adams Resources & Energy, Inc.		4,200		62
Allis-Chalmers Energy, Inc. *		57,400		111
Alpha Natural Resources, Inc. *		10,045		206
Approach Resources, Inc. *		10,300		73
Atlas America, Inc.		10,648		166
Atlas Energy Resources LLC		9,300		165
ATP Oil & Gas Corp. *		43,945		315
Atwood Oceanics, Inc. *		4,240		95
Basic Energy Services, Inc. *		17,745		181
Berry Petroleum Co., Class A		20,060		331
Bill Barrett Corp. *		3,540		92
Brigham Exploration Co. *		58,715		137
Bristow Group, Inc. *		8,185		186
Bronco Drilling Co., Inc. *		5,205		29
Cabot Oil & Gas Corp.		10,250		309
Cal Dive International, Inc. *		20,043		159
Callon Petroleum Co. *		2,800		5
CARBO Ceramics, Inc.		3,080		95
Carrizo Oil & Gas, Inc. *		5,205		64
Clayton Williams Energy, Inc. *		1,705		51
Comstock Resources, Inc. *		9,475		326
Copano Energy LLC		5,500		86
Crosstex Energy, Inc.		108,260		213
Dawson Geophysical Co. *		4,600		90
Delta Petroleum Corp. *		68,315		201
DHT Maritime, Inc.		11,900		50
Dresser-Rand Group, Inc. *		11,050		272
Dril-Quip, Inc. *		3,485		120
Edge Petroleum Corp. *		12,500		2
Encore Acquisition Co. *		7,205		210
EXCO Resources, Inc. *		29,205		344
Global Industries Ltd. *		58,405		378
Gulf Island Fabrication, Inc.		6,900		89
GulfMark Offshore, Inc. *		3,985		107
Gulfport Energy Corp. *		24,400		72
Harvest Natural Resources, Inc. *		19,150		98
Hornbeck Offshore Services, Inc. *		5,440		126
International Coal Group, Inc. *		85,855		171
ION Geophysical Corp. *		109,405		274
James River Coal Co. *		8,200		117
Lufkin Industries, Inc.		2,155		75
Matrix Service Co. *		9,900		95
McMoRan Exploration Co. *		26,100		143
NATCO Group, Inc., Class A *		2,400		58
Newpark Resources, Inc. *		33,940		95
Oceaneering International, Inc. *		6,000		273
Parker Drilling Co. *		85,750		237
Patriot Coal Corp. *		17,100		108
Penn Virginia Corp.		6,240		88
Petroleum Development Corp. *		8,855		144
PetroQuest Energy, Inc. *		31,285		94
PHI, Inc. *		7,425		84
Quicksilver Resources, Inc. *		31,100		253
Rosetta Resources, Inc. *		28,930		204
RPC, Inc.		8,965		96
St. Mary Land & Exploration Co.		13,000		232
StealthGas, Inc.		17,800		90
Superior Well Services, Inc. *		11,000		118
Swift Energy Co. *		29,105		315
T-3 Energy Services, Inc. *		3,500		47
Teekay Tankers Ltd., Class A		2,600		31
TETRA Technologies, Inc. *		50,880		291
Trico Marine Services, Inc. *		52,600		204
Ultra Petroleum Corp. *		6,240		267
Union Drilling, Inc. *		16,100		96
Venoco, Inc. *		35,300		154
Walter Industries, Inc.		4,195		96
Willbros Group, Inc. *		12,000		138
				10,304
Food & Staples Retailing 0.8%
Arden Group, Inc., Class A		100		12
Ingles Markets, Inc., Class A		10,900		170
PriceSmart, Inc.		6,540		117
Spartan Stores, Inc.		13,000		212
Susser Holdings Corp. *		15,100		218
The Andersons, Inc.		7,105		114
United Natural Foods, Inc. *		22,155		505
Village Super Market, Inc., Class A		2,102		65
Weis Markets, Inc.		2,200		81
				1,494
Food, Beverage & Tobacco 1.4%
Alliance One International, Inc. *		31,330		118
B&G Foods, Inc., Class A		10,500		64
Cal-Maine Foods, Inc.		3,200		85
Central European Distribution Corp. *		4,260		95
Coca-Cola Bottling Co.		3,800		198
Darling International, Inc. *		14,900		85
Diamond Foods, Inc.		2,100		55
Farmer Brothers Co.		2,025		40
Flowers Foods, Inc.		7,337		170
Hansen Natural Corp. *		2,355		96
Imperial Sugar Co.		14,400		94
J & J Snack Foods Corp.		75		3
Lancaster Colony Corp.		7,365		323
Lance, Inc.		2,160		50

See financial notes.     7

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
National Beverage Corp. *		5,000		53
Reddy Ice Holdings, Inc.		81,610		184
Sanderson Farms, Inc.		5,200		207
Synutra International, Inc. *		9,100		77
The Boston Beer Co., Inc., Class A *		3,000		80
The Hain Celestial Group, Inc. *		9,790		163
Tootsie Roll Industries, Inc.		5,888		143
TreeHouse Foods, Inc. *		3,845		102
Vector Group Ltd.		12,380		167
				2,652
Health Care Equipment & Services 4.6%
Air Methods Corp. *		2,700		72
Align Technology, Inc. *		1,800		22
Alliance Imaging, Inc. *		9,175		72
Amedisys, Inc. *		3,470		116
America Service Group, Inc. *		4,300		61
American Dental Partners, Inc. *		3,100		22
American Medical Systems Holdings, Inc. *		8,315		103
AMN Healthcare Services, Inc. *		11,165		77
AmSurg Corp. *		9,225		189
Analogic Corp.		2,365		86
AngioDynamics, Inc. *		4,700		60
Animal Health International, Inc. *		60,000		107
Assisted Living Concepts, Inc., Class A *		1,620		32
BioScrip, Inc. *		67,100		213
Cantel Medical Corp. *		4,500		64
Capital Senior Living Corp. *		5,000		20
Cardiac Science Corp. *		8,200		24
Catalyst Health Solutions, Inc. *		6,000		135
Centene Corp. *		12,340		227
Chemed Corp.		3,095		131
CONMED Corp. *		8,335		111
CorVel Corp. *		1,865		42
Cross Country Healthcare, Inc. *		16,265		143
Eclipsys Corp. *		3,780		50
Edwards Lifesciences Corp. *		3,010		191
Emergency Medical Services Corp., Class A *		6,900		240
Emeritus Corp. *		14,600		132
Ensign Group, Inc.		100		2
ev3, Inc. *		10,000		84
Five Star Quality Care, Inc. *		52,800		89
Gen-Probe, Inc. *		3,695		178
Gentiva Health Services, Inc. *		8,225		131
Greatbatch, Inc. *		1,320		28
Haemonetics Corp. *		2,500		129
Hanger Orthopedic Group, Inc. *		1,500		21
HEALTHSOUTH Corp. *		18,300		171
Healthspring, Inc. *		13,550		125
HealthTronics, Inc. *		56,824		83
Healthways, Inc. *		13,460		140
Hlth Corp. *		15,995		176
ICU Medical, Inc. *		2,250		85
IDEXX Laboratories, Inc. *		4,340		171
Immucor, Inc. *		3,600		59
Integra LifeSciences Holdings *		3,020		78
Intuitive Surgical, Inc. *		975		140
Invacare Corp.		11,065		170
inVentiv Health, Inc. *		5,290		59
Landauer, Inc.		1,450		77
LCA-Vision, Inc.		25,130		144
MedCath Corp. *		13,080		132
Medical Action Industries, Inc. *		4,700		46
MEDNAX, Inc. *		6,755		243
Meridian Bioscience, Inc.		2,285		40
Merit Medical Systems, Inc. *		4,520		70
Molina Healthcare, Inc. *		4,205		91
MWI Veterinary Supply, Inc. *		3,300		103
National Healthcare Corp.		2,250		89
Odyssey HealthCare, Inc. *		6,800		70
PDI, Inc. *		700		2
Providence Service Corp. *		15,500		152
PSS World Medical, Inc. *		13,670		198
Psychiatric Solutions, Inc. *		6,395		124
RehabCare Group, Inc. *		6,945		116
Res-Care, Inc. *		8,125		130
Sirona Dental Systems, Inc. *		4,690		77
Skilled Healthcare Group, Inc., Class A *		16,500		144
STERIS Corp.		9,610		232
Sun Healthcare Group, Inc. *		10,800		91
Symmetry Medical, Inc. *		4,770		35
The Cooper Cos., Inc.		9,585		276
TomoTherapy, Inc. *		29,600		76
Triple-S Management Corp., Class B *		14,700		188
VCA Antech, Inc. *		9,375		235
WellCare Health Plans, Inc. *		15,085		226
West Pharmaceutical Services, Inc.		4,820		157
Wright Medical Group, Inc. *		2,800		39
Zoll Medical Corp. *		4,725		76
				8,540
Household & Personal Products 0.6%
Central Garden & Pet Co. *		6,000		58
Central Garden & Pet Co., Class A *		16,030		145
Chattem, Inc. *		755		41
Elizabeth Arden, Inc. *		13,570		118
Herbalife Ltd.		5,905		117
Inter Parfums, Inc.		5,050		39

8     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Mannatech, Inc.		9,900		43
Nu Skin Enterprises, Inc., Class A		13,910		178
Prestige Brands Holdings, Inc. *		13,310		86
USANA Health Sciences, Inc. *		2,530		61
WD-40 Co.		4,415		120
				1,006
Insurance 2.7%
Affirmative Insurance Holdings, Inc.		19,800		66
American Equity Investment Life Holding Co.		22,935		129
American Physicians Capital, Inc.		1,450		60
Amerisafe, Inc. *		5,600		86
AmTrust Financial Services, Inc.		6,680		61
Argo Group International Holdings Ltd. *		1,959		55
Brown & Brown, Inc.		9,090		177
CNA Surety Corp. *		4,320		83
Crawford & Co., Class B *		12,515		75
Delphi Financial Group, Inc., Class A		14,820		256
Donegal Group, Inc., Class A		5,800		85
EMC Insurance Group, Inc.		200		5
Employers Holdings, Inc.		13,800		115
FBL Financial Group, Inc., Class A		58,700		338
First Acceptance Corp. *		11,499		29
First Mercury Financial Corp. *		3,800		50
FPIC Insurance Group, Inc. *		2,750		84
Greenlight Capital Re, Ltd., Class A *		2,400		37
Harleysville Group, Inc.		9,035		261
Hilltop Holdings, Inc. *		5,570		63
Horace Mann Educators Corp.		16,870		148
Independence Holding Co.		11,400		59
Infinity Property & Casualty Corp.		5,345		188
Kansas City Life Insurance Co.		1,677		37
Maiden Holdings Ltd.		5,400		24
Meadowbrook Insurance Group, Inc.		14,300		85
National Financial Partners Corp.		69,225		489
NYMAGIC, Inc.		2,300		27
PMA Capital Corp., Class A *		12,770		48
Presidential Life Corp.		14,345		153
ProAssurance Corp. *		5,845		257
RLI Corp.		2,310		111
Safety Insurance Group, Inc.		5,705		189
Seabright Insurance Holdings *		6,300		59
Selective Insurance Group, Inc.		4,600		68
State Auto Financial Corp.		10,930		177
Stewart Information Services Corp.		12,600		285
The Navigators Group, Inc. *		2,565		116
United America Indemnity Ltd., Class A *		8,890		45
United Fire & Casualty Co.		5,860		109
Zenith National Insurance Corp.		10,090		230
				5,019
Materials 5.5%
A. Schulman, Inc.		13,470		211
A.M. Castle & Co.		9,900		96
AEP Industries, Inc. *		2,600		53
AMCOL International Corp.		4,920		95
Arch Chemicals, Inc.		7,950		192
Brush Engineered Materials, Inc. *		5,500		93
Buckeye Technologies, Inc. *		57,180		294
Bway Holding Co. *		18,000		168
Calgon Carbon Corp. *		7,000		119
Caraustar Industries, Inc. *		20,704		5
Carpenter Technology Corp.		12,700		262
Century Aluminum Co. *		115,015		465
Clearwater Paper Corp. *		10,000		152
Compass Minerals International, Inc.		3,030		146
Deltic Timber Corp.		1,500		63
Eagle Materials, Inc.		10,590		294
Ferro Corp.		143,530		398
GenTek, Inc. *		15,570		297
Georgia Gulf Corp.		270,605		298
Glatfelter		20,445		182
H.B. Fuller Co.		13,280		234
Haynes International, Inc. *		8,100		183
Headwaters, Inc. *		101,020		255
Hecla Mining Co. *		57,465		142
Horsehead Holding Corp. *		33,500		239
ICO, Inc. *		34,600		85
Innophos Holdings, Inc.		8,100		120
Innospec, Inc.		10,680		84
Kaiser Aluminum Corp.		4,100		121
KapStone Paper and Packaging Corp. *		39,700		113
Koppers Holdings, Inc.		4,200		80
LSB Industries, Inc. *		2,400		29
Mercer International, Inc. *		12,700		7
Minerals Technologies, Inc.		4,930		183
Myers Industries, Inc.		29,305		294
Neenah Paper, Inc.		21,465		108
NewMarket Corp.		2,335		147
NL Industries, Inc.		9,565		116
Olympic Steel, Inc.		6,400		117
OM Group, Inc. *		8,355		233
Omnova Solutions, Inc. *		54,600		130
Penford Corp.		11,800		53
Quaker Chemical Corp.		10,700		125

See financial notes.     9

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Rock-Tenn Co., Class A		10,915		412
Royal Gold, Inc.		30		1
RTI International Metals, Inc. *		7,780		101
Schnitzer Steel Industries, Inc., Class A		6,190		307
Schweitzer-Mauduit International, Inc.		9,410		216
Sensient Technologies Corp.		12,945		303
Solutia, Inc. *		32,100		121
Spartech Corp.		45,485		179
Stepan Co.		2,765		109
Stillwater Mining Co. *		36,740		166
Texas Industries, Inc.		5,545		177
Titanium Metals Corp.		9,090		62
Tronox, Inc., Class B *		12,850		1
U.S. Concrete, Inc. *		45,900		91
Universal Stainless & Alloy Products, Inc. *		3,800		51
Valhi, Inc.		6,400		68
W.R. Grace & Co. *		31,065		274
Wausau Paper Corp.		32,410		283
Zep, Inc.		5,600		76
Zoltek Cos., Inc. *		8,200		65
				10,144
Media 2.4%
4Kids Entertainment, Inc. *		53,100		68
Arbitron, Inc.		3,360		70
Carmike Cinemas, Inc.		53,675		219
CKX, Inc. *		6,835		37
Cox Radio, Inc., Class A *		35,995		173
CTC Media, Inc. *		30,900		242
Cumulus Media Inc., Class A *		113,585		140
DreamWorks Animation SKG, Inc., Class A *		9,945		239
Entravision Communications Corp., Class A *		30,255		15
Fisher Communications, Inc.		1,800		22
Harte-Hanks, Inc.		12,335		102
John Wiley & Sons, Inc., Class A		11,015		373
Journal Communications, Inc., Class A		22,455		35
Knology, Inc. *		3,700		26
LIN TV Corp., Class A *		31,460		50
LodgeNet Interactive Corp. *		2,000		8
Martha Stewart Living Omnimedia, Inc., Class A *		38,500		139
Marvel Entertainment, Inc. *		5,915		177
Media General, Inc., Class A		123,070		320
Mediacom Communications Corp., Class A *		62,340		355
Morningstar, Inc. *		1,435		57
New Frontier Media, Inc. *		29,200		57
Nexstar Broadcasting Group, Inc., Class A *		5,600		4
Playboy Enterprises, Inc., Class B *		91,700		276
Radio One, Inc., Class D *		80,630		36
RHI Entertainment, Inc. *		31,100		100
Saga Communications, Inc., Class A *		7,695		72
Salem Communications Corp., Class A *		8,790		6
Sinclair Broadcast Group, Inc., Class A		16,510		18
Spanish Broadcasting System, Inc., Class A *		30,600		6
Valassis Communications, Inc. *		171,985		889
World Wrestling Entertainment, Inc., Class A		14,500		155
				4,486
Pharmaceuticals, Biotechnology & Life Sciences 1.5%
Abraxis BioScience *		200		10
Affymetrix, Inc. *		40,490		190
Albany Molecular Research, Inc. *		7,300		71
Bruker Corp. *		8,785		58
Cambrex Corp. *		70,180		164
Celera Corp. *		8,185		66
Celgene Corp. *		3,000		128
Dionex Corp. *		2,050		129
K-V Pharmaceutical Co., Class A *		208,230		292
Kendle International, Inc. *		1,700		15
Martek Biosciences Corp. *		4,840		88
Medicis Pharmaceutical Corp., Class A		7,725		124
Par Pharmaceutical Cos., Inc. *		12,670		136
PAREXEL International Corp. *		13,520		134
PDL BioPharma, Inc.		7,990		57
PerkinElmer, Inc.		11,000		160
Perrigo Co.		9,500		246
Salix Pharmaceuticals Ltd. *		9,695		107
Sepracor, Inc. *		8,000		114
Techne Corp.		2,665		152
Valeant Pharmaceuticals International *		7,500		126
Varian, Inc. *		5,435		179
ViroPharma, Inc. *		12,600		71
				2,817
Real Estate 7.0%
Acadia Realty Trust		6,234		90
Agree Realty Corp.		3,000		48
American Campus Communities, Inc.		6,980		151

10     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Anthracite Capital, Inc.		69,925		28
Anworth Mortgage Asset Corp.		15,755		101
Arbor Realty Trust, Inc.		155,700		437
Ashford Hospitality Trust		192,045		580
Associated Estates Realty Corp.		8,300		46
Avatar Holdings, Inc. *		3,945		73
BioMed Realty Trust, Inc.		17,160		196
BRT Realty Trust		9,400		47
Capital Trust, Inc., Class A		91,500		156
CapLease, Inc.		36,900		110
Capstead Mortgage Corp.		10,550		120
Cedar Shopping Centers, Inc.		11,845		43
Corporate Office Properties Trust		9,535		291
DiamondRock Hospitality Co.		59,075		383
Digital Realty Trust, Inc.		4,170		150
EastGroup Properties, Inc.		6,730		226
Education Realty Trust, Inc.		16,500		77
Entertainment Properties Trust		13,130		303
Equity Lifestyle Properties, Inc.		6,170		245
Essex Property Trust, Inc.		4,456		283
Extra Space Storage, Inc.		15,965		113
FelCor Lodging Trust, Inc.		244,050		483
First Potomac Realty Trust		9,500		93
Forest City Enterprises, Inc., Class A		42,760		360
Forestar Group, Inc. *		8,600		111
Franklin Street Properties Corp.		25,120		335
Getty Realty Corp.		2,960		58
Glimcher Realty Trust		108,425		266
Grubb & Ellis Co.		14,500		13
Hersha Hospitality Trust		18,500		68
Home Properties, Inc.		2,900		106
HomeBanc Corp. (a)(b) *		6,875		—
Inland Real Estate Corp.		19,470		171
Investors Real Estate Trust		7,325		68
Kilroy Realty Corp.		8,435		182
Kite Realty Group Trust		11,100		39
LaSalle Hotel Properties		29,340		351
Lexington Realty Trust		67,491		260
LTC Properties, Inc.		6,830		123
Maguire Properties, Inc. *		5,140		6
Maui Land & Pineapple Co., Inc. *		3,600		23
Medical Properties Trust, Inc.		18,400		98
MFA Financial, Inc.		28,490		168
Mid-America Apartment Communities, Inc.		7,745		286
Mission West Properties, Inc.		15,600		106
National Health Investors, Inc.		7,235		194
National Retail Properties, Inc.		21,805		387
NorthStar Realty Finance Corp.		52,432		166
OMEGA Healthcare Investors, Inc.		11,190		176
One Liberty Properties, Inc.		18,325		75
Parkway Properties, Inc.		6,420		89
Pennsylvania Real Estate Investment Trust		61,000		473
Post Properties, Inc.		21,800		278
PS Business Parks, Inc.		4,110		180
RAIT Financial Trust		211,165		313
Ramco-Gershenson Properties Trust		14,330		158
Resource Capital Corp.		38,600		122
Saul Centers, Inc.		2,405		77
Sovran Self Storage, Inc.		7,510		169
Strategic Hotel & Resorts, Inc.		20,455		17
Sun Communities, Inc.		10,255		150
Sunstone Hotel Investors, Inc.		86,155		456
Tanger Factory Outlet Centers, Inc.		5,930		198
Taubman Centers, Inc.		5,455		130
The St. Joe Co. *		12,470		310
U-Store-It Trust		54,815		188
Universal Health Realty Income Trust		1,200		38
Urstadt Biddle Properties, Class A		9,495		146
Walter Investment Management Corp. *		1,532		12
Washington Real Estate Investment Trust		14,255		304
Winthrop Realty Trust		3,500		31
				12,908
Retailing 7.1%
1-800-FLOWERS.COM, Inc., Class A *		50,900		149
99 Cents Only Stores *		24,900		267
A.C. Moore Arts & Crafts, Inc. *		66,460		196
Aaron Rents, Inc.		4,620		155
Aeropostale, Inc. *		9,470		322
America’s Car-Mart, Inc. *		2,400		39
Audiovox Corp., Class A *		22,800		127
bebe stores, Inc.		10,890		100
Big 5 Sporting Goods Corp.		14,140		116
Books-A-Million, Inc.		22,700		130
Brown Shoe Co., Inc.		61,462		395
Build-A-Bear Workshop, Inc. *		14,550		79
Cache, Inc. *		43,000		196
Casual Male Retail Group, Inc. *		11,000		14
Charlotte Russe Holding, Inc. *		13,515		170
Christopher & Banks Corp.		21,040		117
Citi Trends, Inc. *		3,900		96
Coldwater Creek, Inc. *		48,140		166
Conn’s, Inc. *		9,565		157
Cost Plus, Inc. *		21,500		40
Destination Maternity Corp. *		10,900		146
drugstore.com, Inc. *		4,000		6

See financial notes.     11

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
DSW, Inc., Class A *		13,245		144
Eddie Bauer Holdings, Inc. *		21,500		7
Fred’s, Inc., Class A		16,030		219
Gaiam, Inc., Class A *		15,200		88
Gander Mountain Co. *		19,400		76
Genesco, Inc. *		10,180		232
Guess?, Inc.		4,435		116
Hastings Entertainment, Inc. *		26,620		96
Haverty Furniture Cos., Inc.		15,100		164
hhgregg, Inc. *		6,300		105
Hibbett Sports, Inc. *		6,385		133
J. Crew Group, Inc. *		8,530		147
Jo-Ann Stores, Inc. *		16,450		301
Jos. A. Bank Clothiers, Inc. *		4,790		194
Kirkland’s, Inc. *		15,622		107
Lithia Motors, Inc., Class A		78,535		229
LKQ Corp. *		10,800		183
MarineMax, Inc. *		97,800		445
Monro Muffler Brake, Inc.		2,160		54
Netflix, Inc. *		6,355		288
New York & Co, Inc. *		45,600		265
NutriSystem, Inc.		6,930		95
Orbitz Worldwide, Inc. *		94,400		179
Pacific Sunwear of California, Inc. *		143,450		581
Pier 1 Imports, Inc. *		67,835		127
Priceline.com, Inc. *		2,220		216
Retail Ventures, Inc. *		114,400		297
REX Stores Corp. *		3,300		39
Sally Beauty Holdings, Inc. *		20,725		153
Select Comfort Corp. *		12,770		13
Shoe Carnival, Inc. *		7,800		91
Shutterfly, Inc. *		4,500		58
Stage Stores, Inc.		19,095		234
Stein Mart, Inc. *		83,095		363
Syms Corp. *		3,200		18
Systemax, Inc. *		10,245		173
The Bon-Ton Stores, Inc.		68,600		202
The Buckle, Inc.		2,322		87
The Cato Corp., Class A		12,265		236
The Children’s Place Retail Stores, Inc. *		7,340		209
The Dress Barn, Inc. *		25,175		381
The Finish Line, Inc., Class A		44,452		378
The Gymboree Corp. *		4,620		159
The Men’s Wearhouse, Inc.		17,755		331
The Pep Boys — Manny, Moe & Jack		39,555		293
The Talbots, Inc.		59,300		140
The Wet Seal, Inc., Class A *		13,900		53
Trans World Entertainment Corp. *		47,400		32
Tuesday Morning Corp. *		139,430		475
Tween Brands, Inc. *		109,265		319
Ulta Salon, Cosmetics & Fragrance, Inc. *		14,200		124
Urban Outfitters, Inc. *		11,215		219
ValueVision Media, Inc., Class A *		6,340		5
West Marine, Inc. *		25,580		147
				13,203
Semiconductors & Semiconductor Equipment 3.4%
Actel Corp. *		6,830		84
Advanced Energy Industries, Inc. *		7,220		61
Applied Micro Circuits Corp. *		26,840		146
Atheros Communications *		2,745		47
ATMI, Inc. *		6,915		109
Axcelis Technologies, Inc. *		10,160		5
Brooks Automation, Inc. *		22,390		139
Cabot Microelectronics Corp. *		6,730		194
Cirrus Logic, Inc. *		6,335		29
Cohu, Inc.		5,710		56
Conexant Systems, Inc. *		8,822		12
Cree, Inc. *		12,995		356
Cymer, Inc. *		7,420		211
Cypress Semiconductor Corp. *		31,505		250
Diodes, Inc. *		6,597		98
DSP Group, Inc. *		6,640		42
Entegris, Inc. *		21,465		32
Exar Corp. *		10,015		62
FEI Co. *		6,820		117
FormFactor, Inc. *		10,265		179
Hittite Microwave Corp. *		935		35
Integrated Device Technology, Inc. *		48,900		265
Intersil Corp., Class A		15,500		180
IXYS Corp.		7,300		70
Kulicke & Soffa Industries, Inc. *		49,800		199
Mattson Technology, Inc. *		5,700		6
Micrel, Inc.		9,850		74
Microsemi Corp. *		11,345		152
MKS Instruments, Inc. *		12,050		188
OmniVision Technologies, Inc. *		16,380		156
ON Semiconductor Corp. *		71,174		386
Photronics, Inc. *		118,945		199
PMC-Sierra, Inc. *		26,425		209
RF Micro Devices, Inc. *		199,065		420
Rudolph Technologies, Inc. *		5,280		28
Semtech Corp. *		8,805		127
Sigma Designs, Inc. *		700		9
Silicon Image, Inc. *		7,960		22
Silicon Laboratories, Inc. *		4,570		152
Silicon Storage Technology, Inc. *		15,455		29
SiRF Technology Holdings, Inc. *		38,765		108
Skyworks Solutions, Inc. *		38,310		339

12     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Standard Microsystems Corp. *		4,090		65
Tessera Technologies, Inc. *		6,890		97
Trident Microsystems, Inc. *		26,500		36
TriQuint Semiconductor, Inc. *		31,820		122
Ultra Clean Holdings, Inc. *		35,300		64
Varian Semiconductor Equipment Associates, Inc. *		7,752		198
Veeco Instruments, Inc. *		6,240		45
Zoran Corp. *		16,835		150
				6,359
Software & Services 5.6%
Acxiom Corp.		34,175		330
Akamai Technologies, Inc. *		10,575		233
ANSYS, Inc. *		5,100		141
Ariba, Inc. *		12,745		122
Borland Software Corp. *		21,590		16
CDC Corp., Class A *		12,670		15
CIBER, Inc. *		52,570		170
Compuware Corp. *		35,000		262
Concur Technologies, Inc. *		4,300		116
CSG Systems International, Inc. *		8,645		125
DealerTrack Holdings, Inc. *		4,295		65
Digital River, Inc. *		5,150		198
EarthLink, Inc. *		50,075		380
Epicor Software Corp. *		14,945		83
EPIQ Systems, Inc. *		7,870		122
Equinix, Inc. *		1,730		122
Euronet Worldwide, Inc. *		6,695		108
Exlservice Holdings, Inc. *		5,700		53
FactSet Research Systems, Inc.		2,465		132
Fair Isaac Corp.		11,585		195
Forrester Research, Inc. *		3,925		100
Gartner, Inc. *		7,800		105
Gevity HR, Inc.		33,115		131
Global Cash Access Holdings, Inc. *		18,335		111
Global Payments, Inc.		8,370		268
GSI Commerce, Inc. *		8,280		118
Heartland Payment Systems, Inc.		8,165		66
iGATE Corp.		1,500		6
infoGROUP, Inc. *		7,315		30
Informatica Corp. *		8,055		128
Internap Network Services Corp. *		10,300		29
Ipass, Inc. *		15,100		17
j2 Global Communications, Inc. *		5,285		127
Jack Henry & Associates, Inc.		12,180		219
JDA Software Group, Inc. *		6,385		90
Kenexa Corp. *		11,400		75
Lawson Software, Inc. *		18,620		100
Lionbridge Technologies, Inc. *		41,200		56
Macrovision Solutions Corp. *		8,169		165
Manhattan Associates, Inc. *		3,495		58
Marchex, Inc., Class B		8,400		38
MAXIMUS, Inc.		4,245		171
Mentor Graphics Corp. *		27,180		183
MICROS Systems, Inc. *		9,160		192
MicroStrategy, Inc., Class A *		2,728		106
ModusLink Global Solutions, Inc. *		64,595		239
MSC.Software Corp. *		16,115		99
Ness Technologies, Inc. *		17,500		65
Net 1 UEPS Technologies, Inc. *		3,380		56
NeuStar, Inc., Class A *		6,175		117
Novell, Inc. *		60,935		229
Nuance Communications, Inc. *		16,555		221
Omniture, Inc. *		2,700		33
Openwave Systems, Inc. *		4,435		5
Parametric Technology Corp. *		19,400		216
Progress Software Corp. *		6,050		128
Quality Systems, Inc.		830		45
Quest Software, Inc. *		12,380		180
Radiant Systems, Inc. *		10,200		75
RealNetworks, Inc. *		10,345		25
Red Hat, Inc. *		8,700		150
Renaissance Learning, Inc.		3,540		34
Salesforce.com, Inc. *		1,935		83
Sapient Corp. *		20,980		108
SAVVIS, Inc. *		2,700		31
SINA Corp. *		3,180		89
Solera Holdings, Inc. *		8,100		185
SonicWALL, Inc. *		3,855		21
SPSS, Inc. *		1,760		54
SRA International, Inc., Class A *		8,815		136
StarTek, Inc. *		19,400		80
Switch and Data Facilities Co. *		5,100		59
Sybase, Inc. *		1,950		66
Symyx Technologies, Inc. *		8,110		39
Syntel, Inc.		3,955		110
Take-Two Interactive Software, Inc. *		23,535		214
TeleTech Holdings, Inc. *		8,830		117
THQ, Inc. *		72,930		249
TIBCO Software, Inc. *		39,830		252
TNS, Inc. *		9,975		168
United Online, Inc.		17,027		90
ValueClick, Inc. *		15,960		169
VeriFone Holdings, Inc. *		17,000		128
Vignette Corp. *		5,820		48
WebMD Health Corp., Class A *		4,800		124
Websense, Inc. *		3,490		62
Wind River Systems, Inc. *		12,250		90
				10,366
Technology Hardware & Equipment 6.1%
3Com Corp. *		72,120		292
Adaptec, Inc. *		21,695		62

See financial notes.     13

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
ADC Telecommunications, Inc. *		73,600		542
ADTRAN, Inc.		11,245		238
Agilysys, Inc.		24,422		147
Arris Group, Inc. *		24,965		266
Avid Technology, Inc. *		10,525		116
Avocent Corp. *		14,590		211
Bel Fuse, Inc., Class B		2,800		45
Black Box Corp.		8,140		223
Blue Coat Systems, Inc. *		2,400		32
Checkpoint Systems, Inc. *		16,520		201
Ciena Corp. *		23,000		275
Cogent, Inc. *		5,980		68
Cognex Corp.		7,065		99
Comtech Telecommunications Corp. *		3,670		123
CPI International, Inc. *		1,200		13
CTS Corp.		17,795		108
Daktronics, Inc.		9,265		84
Digi International, Inc. *		7,100		52
Dolby Laboratories, Inc., Class A *		6,645		267
EchoStar Corp., Class A *		11,200		177
Electro Rent Corp.		5,905		56
Electro Scientific Industries, Inc. *		6,655		57
Electronics for Imaging, Inc. *		13,780		135
EMS Technologies, Inc. *		2,900		55
Emulex Corp. *		23,625		247
Extreme Networks, Inc. *		8,365		15
F5 Networks, Inc. *		7,540		206
FLIR Systems, Inc. *		8,790		195
Gerber Scientific, Inc. *		38,900		154
Harris Stratex Networks, Inc., Class A *		31,400		126
Hughes Communications, Inc. *		8,130		156
Hutchinson Technology, Inc. *		69,100		133
Hypercom Corp. *		57,200		62
Imation Corp.		23,025		230
Intermec, Inc. *		8,535		103
Intevac, Inc. *		5,600		39
Itron, Inc. *		3,365		155
Ixia *		10,215		59
L-1 Identity Solutions, Inc. *		21,200		155
Littelfuse, Inc. *		4,405		72
LoJack Corp. *		4,500		15
Loral Space & Communications, Inc. *		8,550		200
Measurement Specialties, Inc. *		10,200		69
Mercury Computer Systems, Inc. *		11,500		93
Methode Electronics, Inc.		20,230		122
MTS Systems Corp.		3,780		80
Multi-Fineline Electronix, Inc. *		2,420		49
National Instruments Corp.		6,495		143
NETGEAR, Inc. *		7,350		118
Newport Corp. *		16,130		80
Novatel Wireless, Inc. *		2,300		16
Nu Horizons Electronics Corp. *		34,300		96
Opnext, Inc. *		58,500		148
OSI Systems, Inc. *		5,090		95
Palm, Inc. *		18,115		190
Park Electrochemical Corp.		6,210		128
PC Connection, Inc. *		20,000		99
PC Mall, Inc. *		27,300		175
Plantronics, Inc.		10,810		138
Plexus Corp. *		11,080		245
Polycom, Inc. *		14,050		262
Powerwave Technologies, Inc. *		68,060		58
QLogic Corp. *		19,680		279
Rackable Systems, Inc. *		15,860		72
RadiSys Corp. *		10,000		72
Richardson Electronics Ltd.		7,000		25
Rofin-Sinar Technologies, Inc. *		6,410		137
Rogers Corp. *		4,220		107
ScanSource, Inc. *		10,100		250
Sonus Networks, Inc. *		10,090		17
Stec, Inc. *		5,400		52
Super Micro Computer, Inc. *		10,100		53
Sycamore Networks, Inc. *		19,805		58
Symmetricom, Inc. *		13,200		66
Synaptics, Inc. *		3,105		101
Technitrol, Inc.		97,590		397
Tekelec *		6,635		103
TESSCO Technologies, Inc. *		1,000		9
Trimble Navigation Ltd. *		10,855		233
TTM Technologies, Inc. *		15,800		117
ViaSat, Inc. *		6,675		153
Westell Technologies, Inc., Class A *		14,933		6
Zebra Technologies Corp., Class A *		10,040		213
Zygo Corp. *		8,400		42
				11,232
Telecommunication Services 1.1%
Alaska Communication Systems Group, Inc.		12,540		76
Atlantic Tele-Network, Inc.		2,200		49
Centennial Communications Corp. *		5,225		43
Cincinnati Bell, Inc. *		83,695		233
Consolidated Communications Holdings, Inc.		9,800		110
FairPoint Communications, Inc.		28,730		30
General Communication, Inc., Class A *		25,460		195
Globalstar, Inc. *		800		1
Iowa Telecommunications Services, Inc.		12,430		164

14     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
NTELOS Holdings Corp.		5,740		92
PAETEC Holding Corp. *		53,900		165
SBA Communications Corp., Class A *		6,405		161
SureWest Communications		10,670		69
Syniverse Holdings, Inc. *		9,765		123
tw telecom, Inc. *		24,675		227
USA Mobility, Inc. *		20,525		228
Virgin Mobile USA, Inc., Class A *		59,500		122
				2,088
Transportation 2.6%
Air Transport Services Group, Inc. *		33,830		22
AirTran Holdings, Inc. *		46,315		322
American Commercial Lines, Inc. *		21,045		105
Arkansas Best Corp.		14,340		331
Atlas Air Worldwide Holdings, Inc. *		10,200		271
CAI International, Inc. *		18,600		68
Celadon Group, Inc. *		10,700		73
Covenant Transport Group, Inc., Class A *		17,300		36
Diana Shipping, Inc.		4,835		76
DryShips, Inc.		23,380		173
Dynamex, Inc. *		2,000		29
Eagle Bulk Shipping, Inc.		40,920		267
Forward Air Corp.		4,625		77
Genco Shipping & Trading Ltd.		9,885		189
Genesee & Wyoming, Inc., Class A *		5,265		158
Hawaiian Holdings, Inc. *		14,000		70
Heartland Express, Inc.		5,985		89
Horizon Lines, Inc., Class A		30,050		160
Hub Group, Inc., Class A *		9,110		210
Kirby Corp. *		7,520		232
Knight Transportation, Inc.		7,765		137
Landstar System, Inc.		6,970		248
Marten Transport Ltd. *		5,800		120
Mesa Air Group, Inc. *		34,771		6
Old Dominion Freight Line, Inc. *		10,600		298
P.A.M. Transportation Services, Inc. *		12,700		68
Pacer International, Inc.		45,360		192
Park-Ohio Holdings Corp. *		34,900		162
Pinnacle Airlines Corp. *		84,900		177
Quality Distribution, Inc. *		19,500		39
Republic Airways Holdings, Inc. *		14,610		105
Saia, Inc. *		13,100		171
Universal Truckload Services, Inc.		3,600		44
USA Truck, Inc. *		4,400		62
				4,787
Utilities 1.5%
ALLETE, Inc.		2,000		52
American States Water Co.		3,515		121
Avista Corp.		5,000		75
California Water Service Group		2,040		80
Central Vermont Public Services Corp.		5,245		90
CH Energy Group, Inc.		3,805		169
Chesapeake Utilities Corp.		2,750		81
Cleco Corp.		3,200		67
El Paso Electric Co. *		17,490		241
ITC Holdings Corp.		4,170		181
MGE Energy, Inc.		7,000		215
Middlesex Water Co.		3,500		49
Northwest Natural Gas Co.		4,445		182
NorthWestern Corp.		14,425		302
Ormat Technologies, Inc.		1,300		46
SJW Corp.		3,320		84
South Jersey Industries, Inc.		3,920		136
Southwest Water Co.		4,500		26
The Empire District Electric Co.		15,110		226
The Laclede Group, Inc.		2,700		94
UIL Holdings Corp.		14,125		326
				2,843
Total Common Stock (Cost $210,253)				181,038
Foreign Common Stock 2.2% of net assets
Bahamas 0.1%
Transportation 0.1%
Ultrapetrol Bahamas Ltd. *		45,900		171
Bermuda 1.3%
Capital Goods 0.1%
Textainer Group Holdings Ltd.		22,300		198
Consumer Durables & Apparel 0.1%
Helen of Troy Ltd. *		10,830		173
Consumer Services 0.1%
Orient-Express Hotels Ltd., Class A		31,190		202
Diversified Financials 0.1%
Lazard Ltd., Class A		9,845		269
Energy 0.3%
Knightsbridge Tankers Ltd.		11,790		156
Nordic American Tanker Shipping Ltd.		6,105		198

See financial notes.     15

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Tsakos Energy Navigation Ltd.		6,890		108
				462
Insurance 0.4%
Assured Guaranty Ltd.		36,565		353
Enstar Group Ltd. *		1,410		101
Max Capital Group Ltd.		13,515		224
				678
Semiconductors & Semiconductor Equipment 0.0%
ChipMOS TECHNOLOGIES (Bermuda) Ltd. *		23,040		13
Software & Services 0.1%
Genpact Ltd. *		9,750		87
Technology Hardware & Equipment 0.1%
Xyratex Ltd. *		48,275		162
Telecommunication Services 0.0%
Global Crossing Ltd. *		6,485		47
Transportation 0.0%
TBS International Ltd., Class A *		10,400		82
				2,373
British Virgin Islands 0.1%
Technology Hardware & Equipment 0.1%
Nam Tai Electronics, Inc.		24,560		102
Canada 0.0%
Capital Goods 0.0%
KHD Humboldt Wedag International Ltd. *		7,600		66
Cayman Islands 0.1%
Technology Hardware & Equipment 0.1%
Smart Modular Technologies (WWH), Inc. *		58,700		144
Greece 0.0%
Energy 0.0%
Top Ships, Inc. *		20,300		32
Liberia 0.2%
Transportation 0.2%
Excel Maritime Carriers Ltd.		48,904		348
Netherlands 0.1%
Energy 0.1%
Core Laboratories N.V.		1,445		120
Netherlands Antilles 0.0%
Health Care Equipment & Services 0.0%
Orthofix International N.V. *		3,880		66
Panama 0.2%
Banks 0.1%
Banco Latinoamericano de Exportaciones, S.A., Class E		23,100		284
Transportation 0.1%
Copa Holdings S.A., Class A		5,100		156
				440
Singapore 0.1%
Semiconductors & Semiconductor Equipment 0.1%
Verigy Ltd. *		18,020		198
Total Foreign Common Stock (Cost $5,030)				4,060
Preferred Stock 0.0% of net assets
Health Care Equipment & Services 0.0%
Inverness Medical Innovations, Inc., Class B *		146		29
Total Preferred Stock (Cost $42)				29
Rights 0.0% of net assets
Capital Goods 0.0%
Fresenius Kabi Pharmaceuticals Holding, Inc. — CVR *		3,500		1
Total Rights (Cost $3)				1

	Face/Maturity
Issuer	Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.1% of net assets
U.S. Treasury Obligation 0.1%
U.S. Treasury Bill
0.16%, 06/18/09		205		205
Total Short-Term Investment (Cost $205)				205

End of Investments.

16     See financial notes.

Schwab Fundamental US Small-Mid Company Index Fund

Portfolio Holdings continued

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $217,306, and the unrealized appreciation and depreciation were $14,041 and ($46,014), respectively, with a net depreciation of ($31,973).

*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets.

See financial notes.     17

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98.1	%	Common Stock		252,216		180,561
	0.1	%	Other Investment Company		75		83
	0.5	%	Preferred Stock		1,722		905
	—	%	Rights		31		32
	0.7	%	Short-Term Investment		1,337		1,337
	99.4	%	Total Investments		255,381		182,918
	0.6	%	Other Assets and Liabilities, Net				1,179
	100.0	%	Net Assets				184,097

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 98.1% of net assets
Australia 6.5%
Banks 1.1%
Australia & New Zealand Banking Group Ltd.		42,357		489
Commonwealth Bank of Australia		22,476		574
National Australia Bank Ltd.		41,818		626
Westpac Banking Corp.		30,724		428
				2,117
Capital Goods 0.0%
Leighton Holdings Ltd.		3,893		59
Commercial & Professional Supplies 0.1%
Brambles Ltd.		24,575		105
Consumer Services 0.1%
Crown Ltd.		16,257		81
TABCORP Holdings Ltd.		14,698		80
Tatts Group Ltd.		19,102		38
				199
Diversified Financials 0.1%
Macquarie Group Ltd.		9,254		224
Energy 0.2%
Caltex Australia Ltd.		10,463		75
Origin Energy Ltd.		5,817		69
Santos Ltd.		4,465		52
Woodside Petroleum Ltd.		3,627		100
				296
Food & Staples Retailing 0.3%
Metcash Ltd.		12,843		39
Wesfarmers Ltd.		16,591		272
Wesfarmers Ltd., Price Protected Shares		1,804		30
Woolworths Ltd.		10,963		213
				554
Food, Beverage & Tobacco 0.1%
Coca-Cola Amatil Ltd.		9,070		60
Foster’s Group Ltd.		18,195		70
Lion Nathan Ltd.		5,396		46
				176
Insurance 0.3%
AMP Ltd.		29,079		109
AXA Asia Pacific Holdings Ltd.		26,566		75
Insurance Australia Group Ltd.		39,468		100
QBE Insurance Group Ltd.		9,359		148
Suncorp-Metway Ltd.		42,962		183
				615
Materials 1.2%
Amcor Ltd.		26,401		92
BHP Billiton Ltd.		46,712		1,128
BlueScope Steel Ltd.		41,606		70
Boral Ltd.		19,012		57
Incitec Pivot Ltd.		21,282		32
OneSteel Ltd.		33,769		55
Orica Ltd.		6,239		76
Rio Tinto Ltd.		12,964		604
Sims Metal Management Ltd.		3,226		47
				2,161
Media 0.7%
Consolidated Media Holdings Ltd.		30,424		47
Fairfax Media Ltd.		111,272		96
Macquarie Communications Infrastructure Group		443,904		724
Macquarie Media Group Ltd.		434,257		389
				1,256

See financial notes.     1

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
CSL Ltd.		2,103		52
Real Estate 0.6%
CFS Retail Property Trust		35,930		43
Dexus Property Group		107,565		57
FKP Property Group		711,842		423
Goodman Group		295,826		79
GPT Group		215,137		73
Lend Lease Corp., Ltd.		22,902		120
Mirvac Group		75,180		57
Stockland		46,032		105
Westfield Group		16,214		127
				1,084
Telecommunication Services 0.1%
Telstra Corp., Ltd.		78,491		190
Transportation 0.7%
ConnectEast Group		476,677		138
Macquarie Airports		284,849		375
Macquarie Infrastructure Group		115,784		113
Qantas Airways Ltd.		112,094		162
Toll Holdings Ltd.		9,701		42
Transurban Group		148,048		480
				1,310
Utilities 0.9%
AGL Energy Ltd.		5,486		60
APA Group		123,746		266
Babcock & Brown Infrastructure Group		8,879,985		679
Babcock & Brown Wind Partners		165,857		151
SP Ausnet		612,680		445
				1,601
				11,999
Austria 0.6%
Banks 0.2%
Erste Group Bank AG		12,657		264
Raiffeisen International Bank Holding AG		1,689		58
				322
Capital Goods 0.1%
Strabag SE		1,695		39
Wienerberger AG		4,828		57
				96
Energy 0.1%
OMV AG		3,920		121
Insurance 0.0%
UNIQA Versicherungen AG		1,728		34
Vienna Insurance Group AG *		733		28
				62
Materials 0.1%
Voestalpine AG		5,712		109
Real Estate 0.1%
IMMOEAST AG *		43,512		98
Immofinanz Immobilien Anlagen AG *		45,393		88
				186
Telecommunication Services 0.0%
Telekom Austria AG		6,669		88
Transportation 0.0%
Oesterreichische Post AG		919		27
Utilities 0.0%
Oesterreichische Elektrizitaetswirtschafts AG, A Shares		498		21
				1,032
Belgium 1.6%
Banks 0.5%
Dexia S.A. *		84,663		411
KBC GROEP N.V. *		19,698		433
				844
Diversified Financials 0.7%
Banque Nationale de Belgique		9		30
Compagnie Nationale a Portefeuille / Nationale Portefeuille Maatschappij		604		29
Fortis		422,614		1,039
Groupe Bruxelles Lambert S.A.		1,535		111
KBC Ancora		2,159		32
Sofina S.A.		610		46
				1,287
Food & Staples Retailing 0.1%
Colruyt S.A.		198		45
Delhaize Group		1,915		129
				174
Food, Beverage & Tobacco 0.1%
Anheuser-Busch InBev N.V.		5,309		162
Health Care Equipment & Services 0.0%
Agfa Gevaert N.V. *		9,368		21

2     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Materials 0.1%
Solvay S.A.		1,116		95
Umicore		3,003		59
				154
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
UCB S.A. *		2,866		78
Retailing 0.0%
S.A. D’Ieteren N.V.		292		56
Telecommunication Services 0.1%
Belgacom S.A.		4,131		120
Mobistar S.A.		351		21
				141
				2,917
Bermuda 0.3%
Capital Goods 0.1%
Jardine Matheson Holdings Ltd.		2,600		59
Jardine Strategic Holdings Ltd.		3,000		35
Noble Group Ltd.		25,157		22
				116
Consumer Durables & Apparel 0.0%
Yue Yuen Industrial (Holdings) Ltd.		11,000		24
Consumer Services 0.0%
Shangri-La Asia Ltd.		16,000		23
Diversified Financials 0.0%
Guoco Group Ltd.		4,000		25
Energy 0.0%
Frontline Ltd.		1,734		34
Seadrill Ltd.		4,374		47
				81
Real Estate 0.1%
Chinese Estates Holdings Ltd.		14,000		17
Hongkong Land Holdings Ltd.		36,000		89
Kerry Properties Ltd.		10,500		32
				138
Retailing 0.1%
Esprit Holdings Ltd.		11,500		71
Li & Fung Ltd.		20,000		56
				127
Transportation 0.0%
Cosco Pacific Ltd.		24,000		23
Orient Overseas International Ltd.		15,000		43
				66
Utilities 0.0%
Cheung Kong Infrastructure Holdings Ltd.		3,100		12
				612
Canada 4.8%
Automobiles & Components 0.1%
Magna International, Inc., Class A		5,559		191
Banks 1.3%
Bank of Montreal		12,013		398
Bank of Nova Scotia		14,548		414
Canadian Imperial Bank of Commerce		6,077		273
National Bank of Canada		2,530		92
Royal Bank of Canada		21,222		752
The Toronto-Dominion Bank		13,159		519
				2,448
Capital Goods 0.1%
Bombardier, Inc., Class B		31,968		101
Finning International, Inc.		2,780		33
				134
Diversified Financials 0.1%
IGM Financial, Inc.		3,020		90
Onex Corp.		4,061		66
				156
Energy 1.0%
Addax Petroleum Corp.		2,258		62
Canadian Natural Resources Ltd.		5,050		233
Enbridge, Inc.		3,019		93
EnCana Corp.		7,009		321
Husky Energy, Inc.		2,867		70
Imperial Oil Ltd.		4,623		165
Nexen, Inc.		5,326		101
Petro-Canada Co.		10,059		318
Suncor Energy, Inc.		7,751		195
Talisman Energy, Inc.		12,181		153
TransCanada Corp.		5,935		148
				1,859
Food & Staples Retailing 0.3%
Alimentation Couche Tard, Inc., Class B		5,037		55
Empire Co., Ltd., Class A		1,333		56
George Weston Ltd.		2,805		139
Loblaw Cos., Ltd.		5,264		142
Metro, Inc., Class A		1,440		45

See financial notes.     3

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Shoppers Drug Mart Corp.		1,559		56
The Jean Coutu Group (PJC), Inc., Class A		6,123		47
				540
Insurance 0.8%
Fairfax Financial Holdings Ltd.		262		69
Great-West Lifeco, Inc.		3,420		59
ING Canada, Inc.		1,623		47
Manulife Financial Corp.		35,048		597
Power Corp. of Canada		12,115		227
Power Financial Corp.		6,114		122
Sun Life Financial, Inc.		12,490		292
				1,413
Materials 0.4%
Agrium, Inc.		1,012		44
Barrick Gold Corp.		3,858		112
Gerdau Ameristeel Corp.		11,048		58
Goldcorp, Inc.		2,710		74
Kinross Gold Corp.		2,453		38
NOVA Chemicals Corp.		6,123		35
Potash Corp. of Saskatchewan, Inc.		814		70
Teck Resources Ltd., Class B		25,357		266
Yamana Gold, Inc.		3,576		28
				725
Media 0.1%
Quebecor, Inc., Class B		2,992		39
Shaw Communications, Inc., Class B		2,877		44
Thomson Reuters Corp.		2,712		76
				159
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Biovail Corp.		2,694		30
Real Estate 0.1%
Brookfield Asset Management, Inc., Class A		7,555		116
Brookfield Properties Corp.		7,591		56
RioCan Real Estate Investment Trust		2,872		33
				205
Retailing 0.1%
Canadian Tire Corp., Ltd., Class A		1,619		69
Sears Canada, Inc. *		3,469		58
				127
Software & Services 0.0%
CGI Group, Inc., Class A *		4,717		42
Technology Hardware & Equipment 0.1%
Celestica, Inc. *		16,912		102
Research In Motion Ltd. *		1,453		100
				202
Telecommunication Services 0.1%
BCE, Inc.		5,353		114
Rogers Communications, Inc., Class B		3,404		84
Telus Corp.		2,378		58
Telus Corp. — Non voting		2,031		47
				303
Transportation 0.1%
Canadian National Railway Co.		4,223		171
Canadian Pacific Railway Ltd.		2,532		90
				261
Utilities 0.1%
ATCO Ltd., Class I		1,433		41
Canadian Utilities Ltd., Class A		1,280		37
TransAlta Corp.		1,869		32
				110
				8,905
Cayman Islands 0.1%
Semiconductors & Semiconductor Equipment 0.0%
Semiconductor Manufacturing International Corp. *		1,032,000		40
Technology Hardware & Equipment 0.0%
Foxconn International Holdings Ltd. *		70,000		43
Telecommunication Services 0.1%
Hutchison Telecommunications International Ltd.		571,000		105
				188
Denmark 0.7%
Banks 0.2%
Danske Bank A/S *		42,297		464
Capital Goods 0.0%
Vestas Wind Systems A/S *		790		51
Food, Beverage & Tobacco 0.1%
Carlsberg A/S, Class B		1,684		81
Danisco A/S		971		32
				113
Insurance 0.0%
Trygvesta A/S		1,007		55

4     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Novo Nordisk A/S, Class B		2,438		116
Transportation 0.3%
A P Moller — Maersk A/S, Series A *		41		234
AP Moller — Maersk A/S, Series B		41		238
				472
				1,271
Finland 1.4%
Capital Goods 0.1%
Kone Oyj, Class B		1,677		46
Metso Corp. Oyj		5,855		90
Wartsila Corp. Oyj		1,894		62
YIT Oyj		4,722		45
				243
Diversified Financials 0.0%
Pohjola Bank plc		3,494		26
Energy 0.1%
Neste Oil Oyj		7,376		96
Food & Staples Retailing 0.1%
Kesko Oyj, Class B		3,121		81
Insurance 0.1%
Sampo Oyj, Class A		12,179		227
Materials 0.4%
M-real Oyj, Class B *		107,853		78
Outokumpu Oyj		5,141		77
Rautaruukki Oyj		3,446		64
Stora Enso Oyj, Class R *		40,133		229
UPM-Kymmene Oyj		22,702		203
				651
Media 0.0%
SanomaWSOY Oyj		3,852		51
Technology Hardware & Equipment 0.5%
Nokia Oyj		59,574		846
Telecommunication Services 0.0%
Elisa Oyj		2,663		35
Utilities 0.1%
Fortum Oyj		10,968		221
				2,477
France 10.5%
Automobiles & Components 1.0%
Compagnie Generale des Etablissements Michelin, Class B		4,711		241
Faurecia *		5,415		59
PSA Peugeot Citroen		21,161		489
Renault S.A.		26,160		839
Societe Fonciere, Financiere et de Participations		1,149		45
Valeo S.A.		5,106		105
				1,778
Banks 1.8%
BNP Paribas		30,782		1,620
Credit Agricole S.A.		34,745		508
Natixis		55,148		125
Societe Generale		18,914		967
				3,220
Capital Goods 1.2%
Alstom S.A.		2,035		127
Bouygues S.A.		6,786		290
Compagnie de Saint-Gobain		16,357		587
Eiffage S.A.		2,102		108
Legrand S.A.		3,710		75
Nexans S.A. *		738		34
Rexel S.A.		4,577		38
Safran S.A.		7,492		89
Schneider Electric S.A.		3,509		267
Thales S.A.		1,162		48
Vallourec S.A.		951		104
Vinci S.A.		7,418		332
Wendel		1,832		67
				2,166
Consumer Durables & Apparel 0.3%
Christian Dior S.A.		1,656		111
Hermes International		463		61
LVMH Moet Hennessy Louis Vuitton S.A.		3,735		282
Nexity		1,799		58
Thomson *		49,056		66
				578
Consumer Services 0.1%
Accor S.A.		2,234		94
Sodexo		2,013		97
				191
Diversified Financials 0.0%
Eurazeo		2,035		83

See financial notes.     5

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Energy 1.1%
Cie Generale De Geophysique — Veritas *		3,297		48
Esso S.A.F		177		19
Technip S.A.		1,550		67
Total S.A.		38,759		1,939
				2,073
Food & Staples Retailing 0.4%
Carrefour S.A. *		15,241		618
Casino Guichard-Perrachon S.A.		1,050		66
Rallye S.A.		3,067		62
				746
Food, Beverage & Tobacco 0.2%
Groupe Danone		4,135		197
Pernod Ricard S.A.		2,008		118
				315
Health Care Equipment & Services 0.0%
Essilor International S.A.		1,478		64
Household & Personal Products 0.1%
L’Oreal S.A.		2,425		174
Insurance 1.1%
Axa *		110,608		1,858
CNP Assurances		1,442		114
Euler Hermes S.A.		1,681		82
SCOR SE		2,636		55
				2,109
Materials 0.5%
Air Liquide S.A.		2,370		193
Arkema		3,360		77
Ciments Francais S.A.		835		76
Eramet		338		72
Imerys S.A.		1,352		56
Lafarge S.A.		5,792		327
SA des Ciments Vicat		815		44
Sequana		6,553		46
				891
Media 0.5%
Eutelsat Communications		2,521		55
JC Decaux S.A.		3,054		43
Lagardere S.C.A.		3,209		101
M6 Metropole Television		1,932		36
PagesJaunes Groupe S.A.		3,514		38
Publicis Groupe		2,060		63
Societe Television Francaise 1		6,996		65
Vivendi		18,810		506
				907
Pharmaceuticals, Biotechnology & Life Sciences 0.4%
Sanofi-Aventis		12,737		738
Real Estate 0.2%
Fonciere des Regions		929		51
Gecina S.A.		630		34
Klepierre		2,024		45
Unibail-Rodamco		1,086		162
				292
Retailing 0.1%
PPR		3,455		265
Software & Services 0.1%
Atos Origin S.A.		1,799		56
Cap Gemini S.A. *		2,842		106
				162
Technology Hardware & Equipment 0.2%
Alcatel-Lucent *		122,950		311
Telecommunication Services 0.5%
France Telecom S.A.		39,414		875
Transportation 0.2%
Aeroports de Paris		1,063		61
Air France-KLM		12,468		139
Bollore		503		64
Societe des Autoroutes Paris-Rhin-Rhone		688		44
				308
Utilities 0.5%
Electricite de France		3,611		167
GDF Suez		9,683		348
Suez Environnement S.A. *		9,383		143
Veolia Environnement		11,770		323
				981
				19,227
Germany 9.3%
Automobiles & Components 1.5%
Bayerische Motoren Werke AG		13,336		462
Daimler AG — Reg’d		57,450		2,060
Volkswagen AG		1,016		321
				2,843
Banks 0.4%
Commerzbank AG		78,822		536
Deutsche Postbank AG		4,467		96
Hypo Real Estate Holding AG		72,649		134
				766

6     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Capital Goods 0.8%
BayWa AG		1,800		45
Bilfinger Berger AG		900		43
GEA Group AG		2,400		32
Heidelberger Druckmaschinen AG		8,248		60
Hochtief AG		2,800		137
MAN AG		3,038		188
Rheinmetall AG		900		38
Siemens AG — Reg’d		13,944		937
Tognum AG		3,400		42
				1,522
Consumer Durables & Apparel 0.1%
Adidas AG		2,705		102
Consumer Services 0.1%
TUI AG		21,434		236
Diversified Financials 1.1%
Deutsche Bank AG — Reg’d		36,534		1,949
Deutsche Boerse AG		1,370		101
				2,050
Food & Staples Retailing 0.2%
Metro AG		6,875		292
Food, Beverage & Tobacco 0.0%
Suedzucker AG		3,484		67
Health Care Equipment & Services 0.1%
Celesio AG		5,723		127
Fresenius Medical Care AG & Co. KGaA		1,884		73
Fresenius SE		318		13
				213
Household & Personal Products 0.1%
Beiersdorf AG		1,600		66
Henkel AG & Co. KGaA		2,423		60
				126
Insurance 1.2%
Allianz SE — Reg’d		16,381		1,512
AMB Generali Holding AG		273		22
Hannover Rueckversicherung AG — Reg’d		1,995		65
Muenchener Rueckversicherungs-Gesellschaft AG — Reg’d		4,112		568
				2,167
Materials 1.0%
BASF SE *		21,182		799
HeidelbergCement AG		1,055		44
K&S AG		1,100		66
Lanxess		2,777		60
Linde AG		2,168		173
Salzgitter AG		1,148		82
ThyssenKrupp AG		21,765		466
Wacker Chemie AG		800		83
				1,773
Media 0.0%
Axel Springer AG		500		36
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Bayer AG *		7,658		381
Merck KGaA		1,740		156
				537
Retailing 0.1%
Arcandor AG *		61,068		145
Semiconductors & Semiconductor Equipment 0.2%
Infineon Technologies AG *		132,107		351
Software & Services 0.1%
SAP AG		5,652		217
Telecommunication Services 0.5%
Deutsche Telekom AG — Reg’d.		82,968		1,003
Transportation 0.5%
Deutsche Lufthansa AG — Reg’d		17,293		221
Deutsche Post AG — Reg’d		45,887		529
Fraport AG		1,734		70
				820
Utilities 1.0%
E.ON AG		41,405		1,400
RWE AG		6,788		490
				1,890
				17,156
Greece 0.6%
Banks 0.3%
Alpha Bank A.E. *		15,700		153
EFG Eurobank Ergasias		17,386		137
National Bank of Greece S.A.		11,595		241
Piraeus Bank S.A. *		10,622		97
				628
Consumer Services 0.1%
OPAP S.A.		3,096		95
Diversified Financials 0.0%
Marfin Financial Group S.A. *		11,443		49
Energy 0.0%
Hellenic Petroleum S.A.		8,025		78

See financial notes.     7

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Food, Beverage & Tobacco 0.0%
Coca-Cola Hellenic Bottling Co., S.A.		5,067		81
Telecommunication Services 0.1%
Hellenic Telecommunications Organization S.A. (OTE)		7,275		111
Utilities 0.1%
Public Power Corp. S.A.		5,333		103
				1,145
Hong Kong 1.6%
Banks 0.2%
BOC Hong Kong (Holdings) Ltd.		83,500		118
Hang Seng Bank Ltd.		8,200		91
The Bank of East Asia Ltd.		28,270		67
				276
Capital Goods 0.2%
Citic Pacific Ltd.		31,000		45
Hutchison Whampoa Ltd.		61,000		359
NWS Holdings Ltd.		9,000		18
				422
Consumer Services 0.0%
SJM Holdings Ltd. *		109,000		32
Diversified Financials 0.0%
Hong Kong Exchanges & Clearing Ltd.		5,000		58
Energy 0.1%
CNOOC Ltd.		108,100		121
Materials 0.0%
Fosun International		50,500		18
Real Estate 0.6%
Cheung Kong (Holdings) Ltd.		20,500		211
China Overseas Land & Investment Ltd.		14,000		24
Hang Lung Group Ltd.		14,000		51
Hang Lung Properties Ltd.		22,000		62
Henderson Land Development Co., Ltd.		16,569		77
New World Development Co., Ltd.		67,000		88
Sino Land Co., Ltd.		42,000		53
Sun Hung Kai Properties Ltd.		23,600		244
Swire Pacific Ltd., Class A		21,500		168
The Link REIT		26,000		51
The Wharf (Holdings) Ltd.		26,000		86
				1,115
Retailing 0.0%
China Resources Enterprise Ltd.		22,000		39
Technology Hardware & Equipment 0.0%
Lenovo Group Ltd.		218,000		59
Telecommunication Services 0.2%
China Mobile Ltd.		33,500		290
China Unicom (Hong Kong) Ltd.		70,056		81
PCCW Ltd.		80,000		36
				407
Transportation 0.1%
Cathay Pacific Airways Ltd.		43,800		51
China Merchants Holdings International Co., Ltd.		12,000		28
MTR Corp., Ltd.		17,500		44
				123
Utilities 0.2%
China Resources Power Holdings Co., Ltd.		5,000		11
CLP Holdings Ltd.		16,500		111
Hong Kong & China Gas Co., Ltd.		29,290		55
Hongkong Electric Holdings Ltd.		13,000		77
				254
				2,924
Ireland 1.1%
Banks 0.6%
Allied Irish Banks plc		384,529		470
Anglo Irish Bank Corp. plc (a)(b)		9,106		—
The Governor and Company of the Bank of Ireland		655,279		653
				1,123
Food, Beverage & Tobacco 0.0%
Kerry Group plc, Class A		1,700		35
Insurance 0.1%
Irish Life & Permanent plc		84,632		214
Materials 0.2%
CRH plc		10,813		281
Smurfit Kappa Group plc		33,518		98
				379
Media 0.1%
WPP plc		29,961		205
Transportation 0.1%
Ryanair Holdings plc *		13,257		57
				2,013

8     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Israel 0.2%
Banks 0.1%
Bank Hapoalim B.M. *		21,037		48
Bank Leumi Le-israel		18,794		47
Israel Discount Bank		21,627		20
				115
Capital Goods 0.1%
Delek Group Ltd.		238		22
Discount Investment Corp. — Reg’d		1,886		26
IDB Holding Corp., Ltd.		1,361		24
				72
Energy 0.0%
Oil Refineries Ltd.		103,999		38
Materials 0.0%
Israel Chemicals Ltd.		2,811		23
The Israel Corp., Ltd.		71		30
				53
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Teva Pharmaceutical Industries Ltd.		1,323		58
Real Estate 0.0%
Delek Real Estate Ltd. *		2,094		2
Telecommunication Services 0.0%
Bezeq Israeli Telecommunication Corp., Ltd.		14,420		23
Cellcom Israel Ltd.		980		22
				45
				383
Italy 5.1%
Automobiles & Components 0.4%
Fiat S.p.A. *		60,168		588
Pirelli & C. S.p.A.		272,860		106
				694
Banks 1.9%
Banca Carige S.p.A. (Cassa di Risparmio di Genova e Imperia)		14,182		52
Banca Monte dei Paschi di Siena S.p.A.		74,383		119
Banca Popolare di Milano Scarl		18,882		110
Banco Popolare Societa Cooperativa		45,345		298
Intesa Sanpaolo S.p.A. *		272,223		867
UniCredit S.p.A. *		745,636		1,815
Unione di Banche Italiane S.c.p.A.		16,309		225
				3,486
Capital Goods 0.1%
C.I.R. S.p.A. — Compagnie Industriali Riunite		35,788		47
Finmeccanica S.p.A.		7,705		108
Prysmian S.p.A.		4,075		50
				205
Consumer Durables & Apparel 0.0%
Benetton Group S.p.A.		3,285		26
Luxottica Group S.p.A.		1,686		31
				57
Consumer Services 0.0%
Autogrill S.p.A.		4,145		31
Lottomatica S.p.A. *		2,218		46
				77
Diversified Financials 0.1%
Exor S.p.A. *		3,580		46
Mediobanca S.p.A.		8,339		96
				142
Energy 0.8%
Eni S.p.A.		57,930		1,243
ERG S.p.A.		2,182		34
Saipem S.p.A.		4,086		87
Saras S.p.A.		8,859		26
				1,390
Food, Beverage & Tobacco 0.0%
Parmalat S.p.A.		26,039		52
Insurance 0.6%
Alleanza Assicurazioni S.p.A.		12,419		83
Assicurazioni Generali S.p.A.		35,309		718
Fondiaria — Sai S.p.A.		6,426		107
Mediolanum S.p.A		3,904		18
Milano Assicurazioni S.p.A.		10,265		31
Premafin Finanziaria S.p.A.		39,187		50
Societa Cattolica di Assicurazioni S.c.r.l.		1,740		56
Unipol Gruppo Finanziario S.p.A.		36,896		46
				1,109
Materials 0.1%
Buzzi Unicem S.p.A.		2,848		42
Italcementi S.p.A.		2,709		32
Italcementi S.p.A. — RNC		5,810		37
Italmobiliare S.p.A.		2,456		60
				171

See financial notes.     9

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Media 0.1%
Mediaset S.p.A.		22,261		125
Telecom Italia Media S.p.A. *		493,493		56
				181
Telecommunication Services 0.4%
Telecom Italia S.p.A.		466,397		590
Telecom Italia S.p.A. — RNC		210,229		188
				778
Transportation 0.1%
Atlantia S.p.A.		7,411		131
Utilities 0.5%
A2A S.p.A.		23,169		38
Edison S.p.A.		17,051		21
Enel S.p.A.		133,629		724
Hera S.p.A.		10,337		21
Snam Rete Gas S.p.A.		11,759		47
Terna — Rete Elettrica Nationale S.p.A.		21,247		68
				919
				9,392
Japan 15.6%
Automobiles & Components 2.4%
Aisin Seiki		4,900		101
Bridgestone Corp.		11,800		176
Calsonic Kansei Corp.		14,000		26
Daihatsu Motor Co., Ltd.		4,000		36
Denso Corp.		7,500		177
Fuji Heavy Industries Ltd.		22,000		89
Honda Motor Co., Ltd.		22,600		662
Isuzu Motors Ltd.		68,000		114
Mazda Motor Corp.		56,000		140
Mitsubishi Motors Corp. *		68,000		104
NGK Spark Plug Co., Ltd.		3,000		29
Nissan Motors Co., Ltd.		121,800		636
Nok Corp.		3,600		42
Sumitomo Rubber Industries Ltd.		3,400		23
Suzuki Motor Corp.		7,700		145
Takata Corp.		3,000		35
Toyoda Gosei Co., Ltd.		1,200		24
Toyota Auto Body Co., Ltd.		900		14
Toyota Boshoku Corp.		2,000		25
Toyota Industries Corp.		2,900		77
Toyota Motor Corp.		43,600		1,726
Yamaha Motor Co., Ltd.		5,700		60
				4,461
Banks 1.2%
Aozora Bank Ltd. *		20,000		25
Chuo Mitsui Trust Holdings, Inc.		21,000		69
Fukuoka Financial Group, Inc.		12,000		37
Hokuhoku Financial Group, Inc.		19,000		33
Mitsubishi UFJ Financial Group, Inc.		135,734		740
Mizuho Financial Group, Inc.		174,616		368
Mizuho Trust & Banking Co., Ltd. *		14,000		15
Resona Holdings, Inc.		2,058		28
Sapporo Hokuyo Holdings, Inc. *		12,933		37
Shinsei Bank Ltd. *		55,000		72
Sumitomo Mitsui Financial Group, Inc.		13,310		462
The Bank of Kyoto Ltd.		4,000		32
The Bank of Yokohama Ltd.		11,000		47
The Chiba Bank Ltd.		8,000		40
The Gunma Bank Ltd.		4,000		20
The Hachijuni Bank Ltd.		6,000		35
The Joyo Bank Ltd.		7,000		32
The Shizuoka Bank Ltd.		5,000		45
The Sumitomo Trust & Banking Co., Ltd.		25,000		105
				2,242
Capital Goods 2.1%
Amada Co., Ltd.		7,000		43
Asahi Glass Co., Ltd.		25,000		149
Daikin Industries Ltd.		2,400		65
Fanuc Ltd.		1,000		72
Fuji Electric Holdings Co., Ltd.		40,000		69
Fujikura Ltd.		14,000		48
Hankyu Hanshin Holdings, Inc.		11,000		51
Hanwa Co., Ltd.		16,000		45
Hino Motors Ltd.		15,000		43
Hitachi Construction Machinery Co., Ltd.		1,800		25
IHI Corp. *		46,000		70
Itochu Corp.		27,000		145
JFE Shoji Holdings, Inc.		8,000		23
JS Group Corp.		5,300		64
JTEKT Corp.		9,200		89
Kajima Corp.		28,000		81
Kanematsu Corp. *		47,000		37
Kawasaki Heavy Industries Ltd.		33,000		71
Kinden Corp.		4,000		33
Komatsu Ltd.		11,900		148
Kubota Corp.		10,000		60
Marubeni Corp.		42,000		153
Matsushita Electric Works Ltd.		5,000		41
Mitsubishi Corp.		22,600		348
Mitsubishi Electric Corp.		39,000		208
Mitsubishi Heavy Industries Ltd.		58,000		190
Mitsui & Co., Ltd.		25,000		265

10     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Nagase & Co., Ltd.		2,000		15
NEC Leasing Ltd.		2,500		20
NGK Insulators Ltd.		2,000		31
Nippon Sheet Glass Co., Ltd.		18,000		51
Nippon Steel Trading Co., Ltd.		15,000		20
NSK Ltd.		12,000		53
NTN Corp.		15,000		50
Obayashi Corp.		14,000		69
Shimizu Corp.		15,000		72
SMC Corp.		500		49
Sojitz Corp.		152,000		236
Sumikin Bussan Corp.		10,000		20
Sumitomo Corp.		18,300		159
Sumitomo Electric Industries Ltd.		14,300		139
Sumitomo Heavy Industries Ltd.		12,000		50
Taisei Corp.		33,000		72
The Furukawa Electric Co., Ltd.		15,000		45
Toto Ltd.		8,000		40
Toyota Tsusho Corp.		8,700		103
				3,930
Commercial & Professional Supplies 0.2%
Dai Nippon Printing Co., Ltd.		12,000		127
Secom Co., Ltd.		1,600		59
Toppan Printing Co., Ltd.		15,000		114
				300
Consumer Durables & Apparel 1.2%
Casio Computer Co., Ltd.		4,500		34
Chofu Seisakusho Co., Ltd.		4,000		74
HASEKO Corp. *		99,000		62
Makita Corp.		1,800		42
NAMCO BANDAI Holdings, Inc.		3,000		30
Nikon Corp.		5,000		66
Panasonic Corp.		43,000		630
Pioneer Corp. *		30,700		98
Sankyo Co., Ltd.		500		25
Sanyo Electric Co., Ltd. *		50,000		83
Sega Sammy Holdings, Inc.		3,200		29
Sekisui Chemical Co., Ltd.		10,000		52
Sekisui House Ltd.		12,000		104
Sharp Corp.		21,000		221
Sony Corp.		25,500		663
Sumitomo Forestry Co., Ltd.		5,000		34
Yamaha Corp.		4,200		48
				2,295
Consumer Services 0.0%
Oriental Land Co., Ltd.		300		19
Diversified Financials 0.7%
Acom Co., Ltd.		1,020		25
Aiful Corp.		29,850		59
Century Leasing System, Inc.		6,150		38
Credit Saison Co., Ltd.		7,300		82
Daiwa Securities Group, Inc.		27,000		141
Fuyo General Lease Co., Ltd.		3,000		51
Hitachi Capital Corp.		4,000		44
IBJ Leasing Co., Ltd.		4,000		41
Mitsubishi UFJ Lease & Finance Co., Ltd.		2,420		56
Nomura Holdings, Inc.		47,900		289
ORIX Corp.		6,100		286
Promise Co., Ltd.		3,800		50
Ricoh Leasing Co., Ltd.		2,000		30
Takefuji Corp.		9,900		53
				1,245
Energy 0.4%
Cosmo Oil Co., Ltd.		32,000		91
Idemitsu Kosan Co., Ltd.		1,000		74
Inpex Corp.		9		57
Nippon Mining Holdings, Inc.		33,000		150
Nippon Oil Corp.		45,000		234
Showa Shell Sekiyu K.K.		4,000		35
TonenGeneral Sekiyu K.K.		7,000		67
				708
Food & Staples Retailing 0.3%
Aeon Co., Ltd.		26,500		208
Lawson, Inc.		700		27
Ryoshoku Ltd.		600		12
Seven & I Holdings Co., Ltd.		11,000		249
Uny Co., Ltd.		6,000		44
				540
Food, Beverage & Tobacco 0.3%
Ajinomoto Co., Inc.		9,000		66
Asahi Breweries Ltd.		5,600		70
Japan Tobacco, Inc.		70		176
Kirin Holdings Co., Ltd.		11,000		121
MEIJI Holdings Co., Ltd. *		936		29
Nippon Meat Packers, Inc.		4,000		41
Nisshin Seifun Group, Inc.		3,000		31
Yamazaki Baking Co., Ltd.		2,000		20
				554
Health Care Equipment & Services 0.1%
Alfresa Holdings Corp.		1,100		43
Mediceo Paltac Holdings Co., Ltd.		5,800		59
Olympus Corp.		3,500		57
Suzuken Co., Ltd.		1,100		27
Terumo Corp.		800		30
				216

See financial notes.     11

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Household & Personal Products 0.1%
Kao Corp.		5,000		93
Shiseido Co., Ltd.		3,000		53
				146
Insurance 0.3%
Aioi Insurance Co., Ltd.		12,000		53
NIPPONKOA Insurance Co., Ltd.		7,000		38
Sompo Japan Insurance, Inc.		20,000		120
T&D Holdings, Inc.		4,500		134
Tokio Marine Holdings, Inc.		7,800		206
				551
Materials 1.4%
Asahi Kasei Corp.		26,000		104
DIC Corp.		31,000		51
Hitachi Chemical Co., Ltd.		3,000		40
Hitachi Metals Ltd.		3,000		24
JFE Holdings, Inc.		10,400		284
JSR Corp.		3,100		38
Kaneka Corp.		4,000		23
Kobe Steel Ltd.		82,000		135
Kuraray Co., Ltd.		5,000		43
Mitsubishi Chemical Holdings Corp.		36,000		137
Mitsubishi Gas Chemical Co., Inc.		9,000		42
Mitsubishi Materials Corp.		25,000		72
Mitsubishi Rayon Co., Ltd.		16,000		33
Mitsui Chemicals, Inc.		33,000		99
Mitsui Mining & Smelting Co., Ltd. *		23,000		45
Nippon Paper Group, Inc.		2,743		78
Nippon Steel Corp.		99,000		333
Nisshin Steel Co., Ltd.		29,000		56
Nitto Denko Corp.		2,300		54
Oji Paper Co., Ltd.		19,000		82
Shin-Etsu Chemical Co., Ltd.		2,800		136
Showa Denko K.K.		35,000		53
Sumitomo Chemical Co., Ltd.		32,000		126
Sumitomo Metal Industries Ltd.		63,000		148
Sumitomo Metal Mining Co., Ltd.		7,000		78
Taiheiyo Cement Corp.		30,000		53
Teijin Ltd.		30,000		77
Toray Industries, Inc.		20,000		88
Tosoh Corp.		22,000		50
Toyo Seikan Kaisha Ltd.		3,500		58
Ube Industries Ltd.		22,000		41
				2,681
Media 0.1%
Dentsu, Inc.		3,601		67
Fuji Television Network, Inc.		10		11
Hakuhodo Dy Holdings, Inc.		1,000		46
Nippon Television Network Corp.		90		8
Tokyo Broadcasting System, Inc.		500		7
				139
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Astellas Pharma, Inc.		3,000		98
Chugai Pharmaceutical Co., Ltd.		1,300		24
Daiichi Sankyo Co., Ltd.		6,700		112
Eisai Co., Ltd.		2,100		56
Mitsubishi Tanabe Pharma Corp.		1,000		9
Ono Pharmaceutical Co., Ltd.		800		34
Taisho Pharmaceutical Co., Ltd.		2,000		37
Takeda Pharmaceutical Co., Ltd.		5,300		188
				558
Real Estate 0.3%
Daito Trust Construction Co., Ltd.		1,400		59
Daiwa House Industry Co., Ltd.		11,000		96
Leopalace21 Corp.		5,900		43
Mitsubishi Estate Co., Ltd.		9,000		118
Mitsui Fudosan Co., Ltd.		10,000		126
Nomura Real Estate Holdings, Inc.		1,000		16
Sumitomo Realty & Development Co., Ltd.		5,500		66
Tokyu Land Corp.		12,000		40
				564
Retailing 0.2%
Canon Marketing Japan, Inc.		1,900		23
Fast Retailing Co., Ltd.		200		21
J. Front Retailing Co., Ltd.		13,000		54
Marui Group Co., Ltd.		7,300		40
Takashimaya Co., Ltd.		9,000		56
The Daiei, Inc. *		20,650		80
Yamada Denki Co., Ltd.		1,450		67
				341
Semiconductors & Semiconductor Equipment 0.2%
Advantest Corp.		2,300		36
Elpida Memory, Inc. *		6,500		70
NEC Electronics Corp. *		2,000		21
Rohm Co., Ltd.		1,400		86
Sumco Corp.		1,600		24
Tokyo Electron Ltd.		1,600		73
				310
Software & Services 0.1%
Nintendo Co., Ltd.		430		116
NTT Data Corp.		16		42
Yahoo! Japan Corp.		37		9
				167

12     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Technology Hardware & Equipment 1.7%
Alps Electric Co., Ltd.		11,100		59
Brother Industries Ltd.		5,000		41
Canon, Inc.		16,900		506
Citizen Holdings Co., Ltd.		7,800		36
FUJIFILM Holdings Corp.		9,300		239
Fujitsu Ltd.		59,000		253
Hitachi High-Technologies Corp.		1,200		17
Hitachi Ltd.		158,000		552
Hoya Corp.		2,700		47
Ibiden Co., Ltd.		1,300		38
Keyence Corp.		230		40
Konica Minolta Holdings, Inc.		7,000		58
Kyocera Corp.		2,100		163
Murata Manufacturing Co., Ltd.		2,000		81
NEC Corp. *		77,000		256
Nidec Corp.		400		22
Nippon Electric Glass Co., Ltd.		4,000		32
Oki Electric Industry Co., Ltd. *		53,000		50
OMRON Corp.		4,200		63
Ricoh Co., Ltd.		10,000		124
Seiko Epson Corp.		5,900		83
Tdk Corp.		2,100		96
Toshiba Corp.		104,000		357
				3,213
Telecommunication Services 0.5%
KDDI Corp.		43		193
Nippon Telegraph & Telephone Corp.		9,804		370
NTT DoCoMo, Inc.		185		258
SOFTBANK Corp.		4,600		73
				894
Transportation 0.7%
All Nippon Airways Co., Ltd.		9,000		33
Central Japan Railway Co.		25		148
East Japan Railway Co.		3,718		209
Japan Airlines Corp. *		20,000		39
Kawasaki Kisen Kaisha Ltd.		17,000		64
Keio Corp.		6,000		34
Kintetsu Corp.		13,000		57
Mitsui O.S.K. Lines Ltd.		19,000		109
Nagoya Railroad Co., Ltd.		14,000		42
Nippon Express Co., Ltd.		27,000		96
Nippon Yusen Kabushiki Kaisha		25,000		102
Odakyu Electric Railway Co., Ltd.		5,000		41
Tobu Railway Co., Ltd.		8,000		42
Tokyu Corp.		15,000		64
West Japan Railway Co.		24		74
Yamato Holdings Co., Ltd.		6,000		67
				1,221
Utilities 0.8%
Chubu Electric Power Co., Inc.		8,700		191
Electric Power Development Co., Ltd.		2,200		64
Hokkaido Electric Power Co., Inc.		2,900		53
Hokuriku Electric Power Co.		2,100		47
Kyushu Electric Power Co., Inc.		5,900		122
Osaka Gas Co., Ltd.		21,000		66
Shikoku Electric Power Co., Inc.		2,000		55
The Chugoku Electric Power Co., Inc.		3,700		75
The Kansai Electric Power Co., Inc.		10,000		204
The Tokyo Electric Power Co., Inc.		14,600		342
Tohoku Electric Power Co., Inc.		5,900		123
Tokyo Gas Co., Ltd.		25,000		95
				1,437
				28,732
Luxembourg 0.4%
Materials 0.3%
ArcelorMittal N.V.		25,930		607
Media 0.1%
RTL Group		268		11
SES FDR		2,866		52
				63
				670
Netherlands 4.2%
Capital Goods 0.2%
European Aeronautic Defence & Space Co.		9,415		136
Koninklijke (Royal) Philips Electronics N.V.		12,766		230
Koninklijke BAM Groep N.V.		6,291		62
				428
Commercial & Professional Supplies 0.0%
Randstad Holding N.V.		3,448		79
Consumer Durables & Apparel 0.0%
Hunter Douglas N.V.		1,248		31
Diversified Financials 2.4%
ING Groep N.V. CVA		463,834		4,228
SNS Reaal		16,398		92
				4,320
Food & Staples Retailing 0.1%
Koninklijke Ahold N.V.		17,261		189

See financial notes.     13

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Food, Beverage & Tobacco 0.5%
Heineken Holding N.V.		4,820		114
Heineken N.V.		5,332		158
Unilever N.V.		29,440		583
				855
Insurance 0.3%
Aegon N.V.		94,652		476
Materials 0.3%
Akzo Nobel N.V.		5,363		224
James Hardie Industries N.V. CDI		66,118		221
Koninklijke DSM N.V.		4,622		144
				589
Media 0.1%
Reed Elsevier N.V.		3,061		33
Wolters Kluwer N.V.		3,329		55
				88
Real Estate 0.0%
Corio N.V.		1,327		59
Semiconductors & Semiconductor Equipment 0.1%
ASML Holding N.V.		3,841		80
STMicroelectronics N.V.		25,756		170
				250
Telecommunication Services 0.1%
Koninklijke (Royal) KPN N.V.		20,934		252
Transportation 0.1%
TNT N.V.		7,902		146
				7,762
New Zealand 0.1%
Materials 0.0%
Fletcher Building Ltd.		14,403		54
Telecommunication Services 0.1%
Telecom Corp. of New Zealand Ltd.		75,687		121
				175
Norway 0.8%
Banks 0.1%
DnB NOR A.S.A.		36,841		229
Capital Goods 0.1%
Orkla A.S.A.		16,814		120
Energy 0.3%
Aker A.S.A., Class A		1,479		29
Aker Solutions A.S.A.		8,510		51
StatoilHydro A.S.A.		20,864		389
				469
Insurance 0.0%
Storebrand A.S.A. *		14,900		54
Materials 0.2%
Norsk Hydro A.S.A.		78,201		345
Norske Skogindustrier A.S.A. *		25,482		59
Yara International A.S.A.		2,300		62
				466
Telecommunication Services 0.1%
Telenor A.S.A. *		21,384		133
Transportation 0.0%
Wilh. Wilhelmsen A.S.A., Class A		1,381		18
Utilities 0.0%
Hafslund A.S.A., B Shares		2,031		20
				1,509
Portugal 0.3%
Banks 0.1%
Banco BPI S.A. — Reg’d		9,349		22
Banco Comercial Portugues S.A. — Reg’d		84,884		79
Banco Espirito Santo, S.A. Reg’d		7,936		39
				140
Capital Goods 0.0%
Sonae		40,238		34
Energy 0.0%
Galp Energia SGPS S.A., B Shares		3,234		43
Food & Staples Retailing 0.0%
Jeronimo Martins, SGPS, S.A.		4,675		26
Materials 0.0%
CIMPOR-Cimentos de Portugal, SGPS, S.A.		3,549		21
Telecommunication Services 0.1%
Portugal Telecom SGPS S.A. — Reg’d		15,202		116
Transportation 0.0%
Brisa — Private Shares		6,689		46
Utilities 0.1%
EDP — Energias de Portugal S.A.		44,280		161

14     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Redes Energeticas Nacionais S.A.		3,153		13
				174
				600
Republic of Korea 0.0%
Transportation 0.0%
STX Pan Ocean Co., Ltd.		4,600		40
Singapore 0.6%
Banks 0.2%
DBS Group Holdings Ltd.		24,056		153
Oversea-Chinese Banking Corp., Ltd.		31,897		126
United Overseas Bank Ltd.		18,238		140
				419
Capital Goods 0.1%
Fraser & Neave Ltd.		27,000		48
Keppel Corp., Ltd.		18,000		72
SembCorp Industries Ltd.		15,000		27
Singapore Technologies Engineering Ltd.		15,100		26
				173
Energy 0.0%
Singapore Petroleum Co., Ltd.		20,000		45
Food, Beverage & Tobacco 0.0%
Wilmar International Ltd.		8,166		20
Media 0.0%
Singapore Press Holdings Ltd.		22,000		43
Real Estate 0.1%
Capitaland Ltd.		37,000		68
City Developments Ltd.		9,000		39
				107
Retailing 0.0%
Jardine Cycle & Carriage Ltd.		3,000		29
Telecommunication Services 0.1%
Singapore Telecommunications Ltd.		83,486		143
Transportation 0.1%
Neptune Orient Lines Ltd.		35,146		31
Singapore Airlines Ltd.		12,270		88
				119
				1,098
Spain 3.6%
Banks 1.5%
Banco Bilbao Vizcaya Argentaria S.A.		87,367		947
Banco de Sabadell S.A.		15,821		91
Banco Espanol de Credito S.A.		2,078		22
Banco Popular Espanol S.A.		22,735		187
Banco Santander S.A.		162,465		1,563
				2,810
Capital Goods 0.3%
ACS, Actividades de Construccion y Servicios S.A.		3,431		171
Fomento de Construcciones y Contratas S.A. (FCC)		3,544		127
Grupo Ferrovial S.A.		4,513		131
Sacyr Vallehermoso S.A.		9,219		95
				524
Diversified Financials 0.0%
Criteria Caixacorp S.A.		19,933		75
Energy 0.4%
Compania Espanola de Petroleos S.A.		305		12
Repsol YPF S.A.		34,572		657
				669
Insurance 0.1%
Mapfre S.A.		47,797		136
Materials 0.1%
Acerinox S.A.		5,038		77
Media 0.0%
Gestevision Telecinco S.A.		5,957		56
Real Estate 0.0%
Inmobiliaria Colonial S.A. *		172,689		34
Retailing 0.1%
Industria de Diseno Textil S.A.		3,410		145
Telecommunication Services 0.5%
Telefonica S.A.		45,817		868
Transportation 0.1%
Abertis Infraestructuras S.A.		6,570		118
Iberia Lineas Aereas de Espana S.A.		50,963		95
				213
Utilities 0.5%
Acciona S.A.		850		87

See financial notes.     15

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Enagas		1,718		30
Gas Natural SDG S.A.		14,200		225
Iberdrola Renovables S.A. *		26,940		109
Iberdrola S.A.		57,660		454
Red Electrica Corporacion S.A.		1,254		53
				958
				6,565
Sweden 2.8%
Banks 0.9%
Nordea Bank AB		101,135		752
Skandinaviska Enskilda Banken AB, A Shares *		109,370		425
Svenska Handelsbanken AB, A Shares		13,273		231
Swedbank AB, A Shares *		47,742		269
				1,677
Capital Goods 0.7%
AB SKF, B Shares		9,944		109
Assa Abloy AB, B Shares		6,335		75
Atlas Copco AB, A Shares		8,132		76
Atlas Copco AB, B Shares		4,600		38
NCC AB, B Shares		8,557		75
Sandvik AB		21,229		139
Scania AB, B Shares		14,350		152
Skanska AB, B Shares		14,317		155
Volvo AB, A Shares		22,303		146
Volvo AB, B Shares		47,750		311
				1,276
Commercial & Professional Supplies 0.0%
Securitas AB, B Shares *		9,000		75
Consumer Durables & Apparel 0.1%
Electrolux AB, B Shares *		15,847		178
Husqvarna AB, B Shares *		11,100		55
				233
Diversified Financials 0.2%
Industrivarden AB, A Shares *		8,000		72
Investor AB, B Shares		12,110		175
Kinnevik Investment AB, B Shares		5,966		58
L E Lundbergforetagen AB, B Shares		1,524		58
				363
Materials 0.3%
Boliden AB		13,800		87
Holmen AB, B Shares		2,800		62
SSAB Svenskt Stal AB, A Shares		6,700		64
Svenska Cellulosa AB, B Shares		24,100		232
				445
Retailing 0.1%
Hennes & Mauritz AB, B Shares		5,519		246
Technology Hardware & Equipment 0.2%
Telefonaktiebolaget LM Ericsson, B Shares		35,582		302
Telecommunication Services 0.2%
Tele2 AB, B Shares		8,400		79
TeliaSonera AB		70,966		333
				412
Transportation 0.1%
SAS AB *		277,499		128
				5,157
Switzerland 4.5%
Capital Goods 0.1%
ABB Ltd. — Reg’d *		14,406		204
Schindler Holding AG — Reg’d		441		23
				227
Commercial & Professional Supplies 0.1%
Adecco S.A. — Reg’d		4,071		160
SGS S.A. — Reg’d		42		47
				207
Consumer Durables & Apparel 0.1%
Compagnie Financiere Richemont S.A., Series A		8,928		160
Swatch Group AG		315		44
				204
Diversified Financials 1.4%
Credit Suisse Group AG — Reg’d		29,767		1,163
Julius Baer Holding AG — Reg’d		2,523		83
Pargesa Holding S.A.		1,786		113
UBS AG — Reg’d *		81,866		1,124
				2,483
Energy 0.0%
Petroplus Holdings AG *		3,389		58
Food, Beverage & Tobacco 0.5%
Nestle S.A. — Reg’d		29,759		970
Insurance 1.0%
Baloise Holding AG, Class R		1,166		86
Helvetia Holding AG — Reg’d		242		63
Swiss Life Holding — Reg’d *		3,465		268
Swiss Re — Reg’d		30,267		718

16     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Zurich Financial Services AG — Reg’d		4,127		767
				1,902
Materials 0.3%
Clariant AG — Reg’d *		14,283		81
Givaudan S.A. — Reg’d		58		37
Holcim Ltd. — Reg’d		6,524		331
Syngenta AG — Reg’d		447		95
				544
Pharmaceuticals, Biotechnology & Life Sciences 0.8%
Novartis AG — Reg’d		22,028		834
Roche Holding AG		5,006		631
				1,465
Telecommunication Services 0.1%
Swisscom AG — Reg’d		503		131
Transportation 0.1%
Kuehne & Nagel International AG — Reg’d		1,110		83
Panalpina Welttransport Holding AG — Reg’d		785		43
				126
Utilities 0.0%
BKW FMB Energie AG		618		43
				8,360
United Kingdom 20.8%
Automobiles & Components 0.0%
GKN plc		51,107		90
Banks 4.8%
Barclays plc		711,012		2,887
Bradford & Bingley plc (a)(b)		87,225		—
HSBC Holdings plc		458,178		3,258
Lloyds TSB Group plc		535,789		869
Northern Rock plc (a)(b)		4,722		—
Royal Bank of Scotland Group plc *		2,019,851		1,233
Standard Chartered plc		34,223		529
				8,776
Capital Goods 0.7%
BAE Systems plc		39,253		207
Balfour Beatty plc		9,237		46
Bunzl plc		4,353		35
Invensys plc *		15,389		45
Rolls-Royce Group plc *		24,672		122
Rolls-Royce Group plc, C Shares (a)(b) *		2,116,857		3
Rolls-Royce Group plc, C Shares (a)(b)		1,821,476		—
Smiths Group plc		4,967		54
Tomkins plc		39,315		100
Travis Perkins plc		8,135		84
Wolseley plc *		29,398		527
				1,223
Commercial & Professional Supplies 0.1%
Experian plc		10,245		67
G4S plc		16,594		46
Rentokil Initial plc		77,797		75
				188
Consumer Durables & Apparel 0.2%
Barratt Developments plc *		53,932		110
Persimmon plc		13,108		73
Taylor Wimpey plc		302,623		199
				382
Consumer Services 1.0%
Carnival plc		16,988		467
Compass Group plc		29,426		140
Enterprise Inns plc		64,565		155
InterContinental Hotels Group plc		8,941		85
Ladbrokes plc		69,523		240
Mitchells & Butlers plc		22,322		92
Punch Taverns plc		76,385		173
Rank Group plc *		38,680		38
Thomas Cook Group plc		26,071		101
Tui Travel plc		49,969		186
Whitbread plc		5,317		73
William Hill plc		11,476		37
				1,787
Diversified Financials 0.3%
3i Group plc		26,192		123
Henderson Group plc		29,046		38
HSBC Infrastructure Co., Ltd.		67,846		118
ICAP plc		12,313		67
Investec plc		18,257		88
London Stock Exchange Group plc		4,573		50
Man Group plc		31,909		118
Schroders plc		2,638		32
				634
Energy 3.7%
AMEC plc		4,784		44
BG Group plc		14,682		234
BP plc		401,219		2,835
Royal Dutch Shell plc, Class A		90,750		2,089

See financial notes.     17

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Royal Dutch Shell plc, Class B		69,503		1,573
				6,775
Food & Staples Retailing 0.5%
J Sainsbury plc		40,924		198
Tesco plc		133,669		662
William Morrison Supermarkets plc		35,856		130
				990
Food, Beverage & Tobacco 1.3%
Associated British Foods plc		12,823		135
British American Tobacco plc		17,719		427
British American Tobacco plc		2,254		55
Cadbury plc		20,285		152
Diageo plc		23,827		284
Imperial Tobacco Group plc		8,674		198
Premier Foods plc		249,760		132
SABMiller plc		15,389		258
Tate & Lyle plc		14,942		61
Unilever plc		36,465		710
				2,412
Health Care Equipment & Services 0.0%
Smith & Nephew plc		6,641		47
Household & Personal Products 0.1%
Reckitt Benckiser Group plc		3,109		122
Insurance 1.3%
Amlin plc		6,027		32
Aviva plc		158,633		731
Friends Provident plc		91,862		87
Legal & General Group plc		428,290		364
Old Mutual plc		367,691		366
Prudential plc		103,057		592
RSA Insurance Group plc		54,675		105
Standard Life plc		61,981		172
				2,449
Materials 2.1%
Anglo American plc		32,636		702
Antofagasta plc		13,884		119
BHP Billiton plc		53,199		1,104
Eurasian Natural Resources Corp.		5,688		49
Johnson Matthey plc		4,969		88
Kazakhmys plc		10,273		80
Lonmin plc		1,794		38
Mondi plc		40,110		104
Rexam plc		16,904		78
Rio Tinto plc		19,407		789
Vedanta Resources plc		7,751		121
Xstrata plc *		70,409		621
				3,893
Media 0.5%
Aegis Group plc		29,172		39
British Sky Broadcasting Group plc		13,537		96
Daily Mail & General Trust plc		13,862		67
ITV plc		246,623		116
Pearson plc		11,489		119
Reed Elsevier plc		5,589		41
Thomson Reuters plc		7,306		188
United Business Media Ltd.		7,217		49
Yell Group plc		190,865		111
				826
Pharmaceuticals, Biotechnology & Life Sciences 0.9%
AstraZeneca plc		19,012		666
GlaxoSmithKline plc		61,701		950
Shire plc		3,223		40
				1,656
Real Estate 0.4%
British Land Co. plc		24,373		154
Hammerson plc		7,551		35
Land Securities Group plc		37,638		310
Liberty International plc		11,818		69
Segro plc		530,029		186
				754
Retailing 0.6%
DSG International plc		282,057		178
Home Retail Group plc		35,665		131
Inchcape plc		824,991		191
Kesa Electricals plc		27,121		53
Kingfisher plc		108,164		295
Marks & Spencer Group plc		37,533		186
Next plc		3,000		72
The Carphone Warehouse Group plc		23,004		50
				1,156
Software & Services 0.1%
Logica plc		45,672		52
The Sage Group plc		17,747		48
				100
Telecommunication Services 1.5%
BT Group plc		457,252		630
Cable & Wireless plc		33,729		74
Vodafone Group plc		1,092,208		2,008
				2,712
Transportation 0.1%
British Airways plc		62,428		135
EasyJet plc *		8,145		38

18     See financial notes.

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
FirstGroup plc		12,394		61
				234
Utilities 0.6%
Centrica plc		58,162		194
Drax Group plc		10,281		78
International Power plc		15,475		57
National Grid plc		34,976		291
Scottish & Southern Energy plc		11,490		187
Severn Trent plc		4,110		63
United Utilities Group plc		18,847		141
				1,011
				38,217
United States 0.0%
Health Care Equipment & Services 0.0%
Synthes, Inc.		341		35
Total Common Stock (Cost $252,216)				180,561
Other Investment Company 0.1% of net assets
Australia 0.1%
Australian Infrastructure Fund		75,431		83
Total Other Investment Company (Cost $75)				83
Preferred Stock 0.5% of net assets
Germany 0.4%
Automobiles & Components 0.3%
Porsche Automobil Holding SE		4,266		307
Volkswagen AG		3,291		209
				516
Health Care Equipment & Services 0.0%
Fresenius SE		1,716		89
Household & Personal Products 0.1%
Henkel KGaA		3,294		89
Media 0.0%
Prosiebensat.1 Media AG		21,600		63
				757
Italy 0.1%
Diversified Financials 0.1%
Istituto Finanziario Industriale S.p.A. *		9,876		81
Insurance 0.0%
Unipol Gruppo Finanziario S.p.A.		81,162		67
				148
Total Preferred Stock (Cost $1,722)				905
Rights 0.0% of net assets
Australia 0.0%
Dexus Property Group (a)		30,732		2
Onesteel Ltd. (a)		13,507		4
				6
Belgium 0.0%
Fortis (a)(b)*		25,402		—
France 0.0%
Faurecia		5,415		13
Italy 0.0%
Snam Rete Gas S.p.A. *		11,759		9
United Kingdom 0.0%
Liberty International plc (a)		3,075		4
Total Rights (Cost $31)				32

	Face Amount		Value
Security                                                   Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.7% of net assets
Commercial Paper & Other Obligation 0.7%
Citibank, New York Time Deposit
0.03%, 05/01/09		1,337		1,337
Total Short-Term Investment (Cost $1,337)				1,337

End of Investments.

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $279,954 and the unrealized appreciation and depreciation were $0 and ($97,036), respectively, with a net unrealized depreciation of ($97,036).

See financial notes.     19

Schwab Fundamental International Large Company Index Fund

Portfolio Holdings continued

At 04/30/09, the values of certain foreign securities held by the fund aggregating $166,428 were adjusted from their closing market values following the guidelines by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	Illiquid security. At the period end, the value of these amounted to $3 or 0.0% of net assets.

ADR – American Depositary Receipt

CDI – CHESS Depository Interest

CVA – Dutch Certificate

FDR – Fiduciary Depositary Receipt

Reg’d – Registered

REIT – Real Estate Investment Trust

20     See financial notes.

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	90.6	%	Common Stock		39,370		43,298
	7.3	%	Preferred Stock		3,310		3,475
	—	%	Rights		—		—
	0.8	%	Other Investment Company		356		373
	0.6	%	Short-Term Investment		278		278
	99.3	%	Total Investments		43,314		47,424
	0.7	%	Other Assets and Liabilities, Net		351
	100.0	%	Net Assets				47,775

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 90.6% of net assets
Argentina 0.1%
Energy 0.1%
Petrobras Energia Participaciones S.A.		69,062		45
Brazil 2.6%
Banks 0.2%
Banco do Brasil S.A.		13,900		117
Capital Goods 0.1%
Empresa Brasileira de Aeronautica S.A.		14,300		58
Energy 0.7%
Petroleo Brasileiro S.A.		18,400		310
Food, Beverage & Tobacco 0.1%
Companhia de Bebidas das Americas		400		18
Souza Cruz S.A.		1,600		34
				52
Materials 0.6%
Companhia Siderurgica Nacional S.A.		5,300		98
Companhia Vale do Rio Doce		8,800		145
Gerdau S.A.		3,200		18
Usinas Siderurgicas de Minas Gerais S.A.		2,200		30
				291
Telecommunication Services 0.3%
Brasil Telecom Participacoes S.A.		1,500		43
Tele Norte Leste Participacoes S.A.		1,500		29
Telesp — Telecomunicacoes de Sao Paulo S.A.		2,700		49
Tim Participacoes S.A. (a)*		2,900		9
				130
Utilities 0.6%
Centrais Eletricas Brasileiras S.A.		10,000		132
Companhia de Saneamento Basico do Estado de Sao Paulo		4,500		64
Companhia Energetica de Minas Gerais		505		5
CPFL Energia S.A.		2,900		44
Tractebel Energia S.A.		4,300		35
				280
				1,238
Chile 0.6%
Banks 0.1%
Banco Santander Chile S.A.		863,914		30
Capital Goods 0.1%
Empresas Copec S.A.		7,885		78
Food & Staples Retailing 0.0%
Cencosud S.A.		8,244		16
Retailing 0.1%
S.A.C.I. Falabella S.A. *		8,099		27
Utilities 0.3%
Empresa Nacional de Electricidad S.A.		69,319		89
Enersis S.A.		236,503		71
				160
				311

See financial notes.     1

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
China 19.7%
Automobiles & Components 0.1%
Dongfeng Motor Group Co., Ltd., Class H		80,000		60
Banks 4.4%
Bank of China Ltd., Class H		2,231,000		827
Bank of Communications Co., Ltd., Class H		115,000		93
China CITIC Bank, Class H		279,000		127
China Construction Bank Corp., Class H		148,000		85
China Merchants Bank Co., Ltd., Class H		79,000		141
Industrial & Commercial Bank of China Ltd., Class H		1,451,000		825
				2,098
Capital Goods 1.0%
China Communications Construction Co., Ltd., Class H		74,000		88
China International Marine Containers (Group) Co., Ltd., Class B		78,000		49
China Railway Construction Corp., Ltd., Class H *		59,000		82
China Railway Group Ltd., Class H *		280,000		191
Shanghai Electric Group Co., Ltd., Class H		118,000		42
				452
Energy 10.1%
China Coal Energy Co., Class H		96,000		82
China Petroleum & Chemical Corp., Class H		1,990,000		1,547
China Shenhua Energy Co., Ltd., Class H *		190,500		527
PetroChina Co., Ltd., Class H		2,991,000		2,607
Yanzhou Coal Mining Co., Ltd., Class H		78,000		73
				4,836
Insurance 1.5%
China Life Insurance Co., Ltd., Class H		131,000		460
PICC Property & Casualty Co., Ltd., Class H *		96,000		54
Ping An Insurance (Group) Co., of China Ltd., Class H		28,000		173
				687
Materials 1.0%
Aluminum Corp. of China Ltd., Class H		213,000		163
Angang Steel Co., Ltd., Class H		82,000		97
Jiangxi Copper Co., Ltd., Class H		57,000		67
Maanshan Iron & Steel Co., Ltd., Class H		199,000		81
Sinopec Shanghai Petrochemical Co., Ltd., Class H		234,000		79
				487
Telecommunication Services 0.3%
China Telecom Corp., Ltd., Class H		300,000		148
Transportation 0.9%
Air China Ltd., Class H *		158,000		74
China COSCO Holdings Co., Ltd., Class H		147,500		119
China Shipping Container Lines Co., Ltd., Class H		404,000		97
China Shipping Development Co., Ltd., Class H		49,000		56
China Southern Airlines Co., Ltd., Class H *		319,500		74
Jiangsu Expressway Co., Ltd., Class H		1,000		1
				421
Utilities 0.4%
Datang International Power Generation Co., Ltd., Class H		157,000		75
Huaneng Power International, Inc., Class H *		189,000		129
				204
				9,393
Columbia 0.1%
Banks 0.0%
Bancolombia S.A.		3,507		21
Diversified Financials 0.1%
Suramericana de Inversiones S.A.		5,886		44
				65
Czech Republic 0.5%
Banks 0.0%
Komercni Banka A/S		160		22
Materials 0.0%
Unipetrol A/S		900		5

2     See financial notes.

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Telecommunication Services 0.4%
Telefonica 02 Czech Republic A/S		7,900		168
Utilities 0.1%
CEZ		900		37
				232
Hong Kong 0.1%
Real Estate 0.1%
China Vanke Co., Ltd., Class B		55,000		58
Hungary 0.7%
Banks 0.4%
OTP Bank Nyrt. *		12,843		165
Energy 0.2%
MOL Hungarian Oil & Gas Nyrt.		2,348		112
Telecommunication Services 0.1%
Magyar Telekom Telecommunications plc		14,533		34
				311
India 4.4%
Banks 1.2%
Axis Bank Ltd.		18,430		208
Bank of Baroda		2,531		16
Canara Bank Ltd.		5,588		22
HDFC Bank Ltd. *		3,343		74
Housing Development Finance Corp., Ltd.		1,156		41
ICICI Bank Ltd.		9,400		91
Punjab National Bank Ltd.		4,782		46
State Bank of India		2,180		57
				555
Capital Goods 0.3%
Bharat Heavy Electricals Ltd.		998		33
Larsen & Toubro Ltd.		2,082		37
Tata Motors Ltd.		13,295		66
				136
Diversified Financials 0.3%
Infrastructure Development Finance Co., Ltd.		63,603		99
Power Finance Corp.		9,453		29
				128
Energy 0.8%
Bharat Petroleum Corp., Ltd.		4,141		32
Cairn India Ltd. *		3,311		12
Hindustan Petroleum Corp., Ltd.		8,461		47
Indian Oil Corp., Ltd.		2,858		25
Oil & Natural Gas Corp., Ltd.		4,330		76
Reliance Industries Ltd.		5,656		207
				399
Food, Beverage & Tobacco 0.3%
Balrampur Chini Mills Ltd.		67,405		95
ITC Ltd.		13,267		50
				145
Household & Personal Products 0.0%
Hindustan Unilever Ltd.		3,870		18
Materials 0.8%
Grasim Industries Ltd.		1,493		54
Hindalco Industries Ltd.		53,889		59
Steel Authority of India Ltd.		11,831		26
Sterlite Industries (India) Ltd.		5,509		46
Tata Steel Ltd.		26,241		126
Welspun Gujarat Stahl Rohren Ltd.		28,499		57
				368
Real Estate 0.0%
DLF Ltd.		1,747		8
Software & Services 0.2%
Infosys Technologies Ltd.		2,450		74
Tata Consultancy Services		1,034		13
Wipro Ltd.		2,626		17
				104
Telecommunication Services 0.3%
Bharti Airtel Ltd. *		2,787		42
Reliance Communications Ltd.		15,363		67
Tata Communications Ltd.		3,626		40
				149
Utilities 0.2%
Gail India Ltd.		4,682		24
Jaiprakash Hydro Power Ltd.		47,597		36
NTPC Ltd.		5,416		21
Power Grid Corp. of India Ltd.		2,959		6
				87
				2,097
Indonesia 0.9%
Automobiles & Components 0.2%
PT Astra International Tbk		46,000		77
Banks 0.4%
PT Bank Central Asia Tbk		195,000		61
PT Bank Mandiri		93,000		24

See financial notes.     3

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
PT Bank Negara Indonesia (Persero) Tbk		443,500		52
PT Bank Rakyat Indonesia		123,500		67
				204
Telecommunication Services 0.3%
PT Indosat Tbk		74,500		39
PT Telekomunikasi Indonesia		147,000		107
				146
				427
Luxembourg 0.2%
Diversified Financials 0.0%
Reinet Investments SCA *		2,855		3
Energy 0.2%
Tenaris S.A.		8,236		105
				108
Malaysia 1.6%
Banks 0.5%
Bumiputra-Commerce Holdings Berhad		46,200		104
Malayan Banking Berhad		68,800		83
Public Bank Berhad		77		—
Public Bank Berhad		22,800		55
				242
Capital Goods 0.3%
Sime Darby Berhad		70,400		130
Consumer Services 0.1%
Genting Berhad		45,000		59
Food, Beverage & Tobacco 0.1%
IOI Corp., Berhad		28,900		35
Telecommunication Services 0.3%
Digi.com Berhad		5,300		33
Telekom Malaysia Berhad		40,400		43
TM International Berhad *		78,000		48
				124
Transportation 0.1%
MISC Berhad		28,500		71
Utilities 0.2%
Petronas Gas Berhad		13,100		35
Tenaga Nasional Berhad		17,600		36
YTL Power International Berhad		59,007		34
				105
				766
Mexico 4.7%
Banks 0.2%
Grupo Financiero Banorte S.A.B. de C.V., Class O		39,200		61
Grupo Financiero Inbursa, S.A.B. de C.V., Class O		16,100		43
				104
Capital Goods 0.3%
Alfa S.A.B., Class A		28,700		50
Grupo Carso S.A.B de C.V., Series A1		31,000		80
				130
Food & Staples Retailing 0.4%
Organizacion Soriana S.A.B de C.V., Series B *		26,300		47
Wal-Mart de Mexico S.A.B. de C.V., Series V		49,300		134
				181
Food, Beverage & Tobacco 0.7%
Coca-Cola Femsa S.A.B. de C.V. (Femsa), Series L		18,700		74
Fomento Economico Mexicano S.A.B. de C.V.		37,300		105
Grupo Bimbo S.A.B. de C.V., Series A		12,300		55
Grupo Modelo, S.A. de C.V., Series C *		29,000		85
				319
Materials 0.9%
Cemex S.A.B. de C.V. *		423,200		312
Grupo Mexico S.A.B. de C.V., Series B		168,667		131
				443
Media 0.1%
Grupo Televisa S.A.		19,500		60
Telecommunication Services 2.1%
America Movil S.A.B. de C.V., Series L		201,100		329
Carso Global Telecom S.A.B. de C.V., Class A1 *		70,500		253
Telefonos de Mexico S.A.B. de C.V.		388,600		311
Telmex Internacional S.A.B. de C.V., Class L		218,600		114
				1,007
				2,244

4     See financial notes.

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Philippines 0.1%
Telecommunication Services 0.1%
Philippine Long Distance Telephone Co.		1,590		72
Poland 1.1%
Banks 0.3%
Bank Pekao S.A.		1,887		67
Powszechna Kasa Oszczednosci Bank Polski S.A.		11,520		92
				159
Energy 0.4%
Polski Koncern Naftowy Orlen S.A.		21,436		168
Polskie Gornictwo Naftowe I Gazownictwo S.A.		19,086		22
				190
Materials 0.2%
KGHM Polska Miedz S.A.		5,458		96
Telecommunication Services 0.2%
Telekomunikacja Polska S.A.		16,399		86
				531
Republic of Korea 27.7%
Auto Manufacturers 2.9%
Hyundai Autonet Co., Ltd. *		48,640		152
Hyundai Mobis		1,215		93
Hyundai Motor Co.		10,380		555
Kia Motors Corp. *		20,770		182
Korea Kumho Petrochemical Co., Ltd.		1,900		51
S&T Daewoo Co., Ltd. *		14,860		185
S&T Dynamics Co., Ltd.		14,340		162
				1,380
Banks 2.0%
Hana Financial Group, Inc.		7,540		130
Industrial Bank of Korea *		17,490		114
KB Financial Group, Inc. *		2		—
Korea Exchange Bank		29,230		167
Shinhan Financial Group Co., Ltd. *		16,590		410
Woori Finance Holdings Co., Ltd. *		14,980		116
				937
Capital Goods 5.1%
CJ Corp.		838		32
Daelim Industrial Co., Ltd.		1,387		67
Daewoo Engineering & Construction Co., Ltd.		7,190		63
Daewoo Shipbuilding & Marine Engineering Co., Ltd.		2,120		38
Doosan Corp.		1,014		101
Doosan Heavy Industries & Construction Co., Ltd.		1,059		69
GS Engineering & Construction Corp.		1,038		54
Hyundai Engineering & Construction Co., Ltd.		853		40
Hyundai Heavy Industries Co., Ltd.		796		143
Hyundai Mipo Dockyard Co., Ltd.		332		39
KCC Corp.		191		53
Korea Electric Terminal Co., Ltd.		5,480		72
Kumho Industrial Co., Ltd.		4,040		73
LG Corp.		8,008		354
LG Hausys, Ltd. *		143		13
LG International Corp.		3,000		48
LS Corp.		1,005		79
Samsung C&T Corp.		4,960		171
Samsung Heavy Industries Co., Ltd.		2,090		50
SK Holdings Co., Ltd.		6,612		612
SK Networks Co., Ltd.		14,118		131
STX Offshore & Shipbuilding Co., Ltd.		8,690		146
				2,448
Consumer Durables & Apparel 0.8%
LG Electronics, Inc.		4,579		378
Diversified Financials 0.2%
Meritz Securities Co., Ltd. *		56,440		53
Samsung Card Co., Ltd.		707		21
				74
Energy 0.9%
GS Holdings Corp.		5,350		128
S-Oil Corp.		2,893		135
SK Energy Co., Ltd.		2,279		179
				442
Food & Staples Retailing 0.2%
Shinsegae Co., Ltd.		209		75
Food, Beverage & Tobacco 1.3%
KT&G Corp.		1,275		70
Lotte Chilsung Beverage Co., Ltd.		887		574
				644

See financial notes.     5

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Insurance 0.2%
Samsung Fire & Marine Insurance Co., Ltd.		599		82
Materials 4.8%
Dongbu HiTek Co., Ltd. *		22,560		167
Dongkuk Steel Mill Co., Ltd.		1,550		35
Hanwha Chemical Corp.		5,720		51
Hanwha Corp.		6,199		182
Honam Petrochemical Corp.		11,464		685
Hyosung Corp.		880		55
Hyundai Steel Co.		1,983		84
KP Chemical Corp. *		57,210		313
LG Chem Ltd.		1,064		117
POSCO		2,042		630
				2,319
Media 1.7%
CJ CGV		5,050		66
CJ Internet Corp.		3,117		41
Daekyo Co., Ltd.		56,410		276
ON*Media Corp. *		185,640		415
				798
Retail 0.4%
GS Home Shopping, Inc.		1,944		96
Lotte Shopping Co., Ltd		653		114
				210
Semiconductors & Semiconductor Equipment 3.6%
Hynix Semiconductor, Inc. *		21,740		244
Samsung Electronics Co., Ltd.		3,244		1,498
				1,742
Software & Services 0.1%
NHN Corp. *		320		39
Technology Hardware & Equipment 1.1%
Daeduck GDS Co., Ltd.		41,980		228
LG Display Co., Ltd.		7,800		192
Samsung SDI Co., Ltd.		1,406		101
				521
Telecommunication Services 1.1%
KT Corp.		7,760		226
KT Freetel Co., Ltd. *		3,370		70
LG Dacom Corp.		4		—
LG Telecom Ltd.		5,354		37
SK Telecom Co., Ltd.		1,424		203
				536
Transportation 0.4%
Hanjin Shipping Co., Ltd.		3,370		51
Hyundai Merchant Marine Co., Ltd.		2,170		45
Korean Air Lines Co., Ltd. *		2,783		85
				181
Utilities 0.9%
Korea Electric Power Corp. *		15,120		327
Korea Gas Corp.		2,466		82
				409
				13,215
Russia 6.1%
Banks 0.7%
Sberbank GDR — Reg’d		1,907		260
VTB Bank OJSC GDR — Reg’d		37,929		68
				328
Energy 4.4%
Gazprom ADR — Reg’d		49,477		868
LUKOIL ADR		16,167		710
Rosneft Oil Co. GDR *		21,442		111
Surgutneftegaz ADR *		40,242		283
Tatneft GDR		2,607		161
				2,133
Materials 0.5%
Cherepovets MK Severstal GDR		9,091		35
Mining & Metallurgical Co., Norilsk Nickel		24,227		199
				234
Telecommunication Services 0.4%
Mobile TeleSystems ADR		2,870		95
Sistema JSFC GDR		10,406		89
				184
Utilities 0.1%
Federal Grid Co. Unified Energy System JSC GDR (a)(b)*		285		—
RAO Unified Energy System of Russia GDR — Reg’d (a)(b)*		629		25
				25
				2,904
South Africa 5.8%
Banks 1.0%
ABSA Group Ltd.		11,285		130
Nedbank Group Ltd.		8,237		84
Standard Bank Group Ltd.		28,397		275
				489

6     See financial notes.

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Capital Goods 0.5%
Aveng Ltd.		10,550		40
Barloworld Ltd.		17,723		75
Bidvest Group Ltd.		10,966		116
				231
Consumer Durables & Apparel 0.1%
Steinhoff International Holdings Ltd.		31,788		38
Diversified Financials 0.7%
FirstRand Ltd.		95,775		146
Investec Ltd.		5,920		28
Remgro Ltd.		12,740		108
RMB Holdings Ltd.		20,103		53
				335
Energy 0.5%
Sasol		7,839		236
Insurance 0.3%
Sanlam Ltd.		68,392		128
Materials 1.5%
Anglo Platinum Ltd.		2,345		125
AngloGold Ashanti Ltd.		1,260		39
ArcelorMittal South Africa Ltd.		5,287		49
Gold Fields Ltd.		6,609		69
Impala Platinum Holdings Ltd.		11,958		229
Mondi Ltd.		38,739		129
Sappi Ltd.		26,884		72
				712
Media 0.1%
Naspers Ltd., Class N		3,400		69
Real Estate 0.2%
ApexHi Properties Ltd., Class A		21,701		37
ApexHi Properties Ltd., Class B		32,547		68
				105
Telecommunication Services 0.7%
MTN Group Ltd.		14,645		190
Telkom South Africa Ltd.		12,682		160
				350
Transportation 0.2%
Imperial Holdings Ltd.		13,413		86
				2,779
Taiwan 11.2%
Automobiles & Components 0.0%
Yulon Motor Co., Ltd.		312		—
Banks 0.6%
China Development Financial Holding Corp.		259,275		66
Chinatrust Financial Holding Co., Ltd.		210,158		96
First Financial Holding Co., Ltd.		612		—
Hua Nan Financial Holdings Co., Ltd.		40		—
Mega Financial Holding Co., Ltd.		261,000		106
Taiwan Cooperative Bank		700		—
				268
Capital Goods 0.2%
Far Eastern Textile Ltd.		111,640		104
Consumer Durables & Apparel 0.1%
Pou Chen Corp.		100,299		59
Diversified Financials 0.1%
Fubon Financial Holding Co. Ltd.		94,000		73
Energy 0.8%
Formosa Petrochemical Corp.		161,000		375
Food, Beverage & Tobacco 0.1%
Uni-President Enterprises Corp.		63,450		64
Insurance 0.5%
Cathay Financial Holding Co., Ltd.		193,850		217
Shin Kong Financial Holding Co., Ltd.		899		—
				217
Materials 2.3%
China Steel Corp.		379,200		293
Formosa Chemicals & Fibre Corp.		167,000		265
Formosa Plastics Corp.		102,000		180
Nan Ya Plastics Corp.		220,000		291
Taiwan Cement Corp.		56,100		54
				1,083
Semiconductors & Semiconductor Equipment 2.0%
Advanced Semiconductor Engineering, Inc.		151,070		84
MediaTek, Inc.		8,050		84
Nanya Technology Corp. *		221,000		50
Powerchip Semiconductor Corp. *		504,000		81
Siliconware Precision Industries Co.		52,270		68
Taiwan Semiconductor Manufacturing Co., Ltd.		243,169		411
United Microelectronics Corp.		507,965		192
				970

See financial notes.     7

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Technology Hardware & Equipment 3.6%
Acer, Inc.		52,660		101
Asustek Computer, Inc.		113,190		150
AU Optronics Corp.		142,049		151
Chi Mei Optoelectronics Corp.		293,150		146
Chunghwa Picture Tubes Ltd.		605,000		101
Compal Electronics, Inc.		138,425		117
Delta Electronics, Inc.		29,280		64
Hon Hai Precision Industry Co., Ltd.		128,950		372
HTC Corp.		5,000		68
InnoLux Display Corp.		47,000		52
Inventec Co., Ltd.		129,050		65
Lite-On Technology Corp.		103,210		83
Qisda Corp.		920		—
Quanta Computer, Inc.		101,020		150
Tatung Co., Ltd. *		313,000		83
				1,703
Telecommunication Services 0.7%
Chunghwa Telecom Co., Ltd.		106,407		203
Far EasTone Telecommunications Co., Ltd.		59,622		68
Taiwan Mobile Co., Ltd.		35,000		55
				326
Transportation 0.2%
Evergreen Marine Corp.		123,000		61
Wan Hai Lines Ltd.		850		1
Yang Ming Marine Transport		152,699		54
				116
				5,358
Thailand 1.0%
Banks 0.2%
Bangkok Bank Public Co., Ltd. ��� Reg’d		15,700		38
Kasikornbank Public Co., Ltd.		18,900		30
Krung Thai Bank Public Co., Ltd.		112,800		17
Siam Commercial Bank Public Co., Ltd.		16,000		27
				112
Energy 0.6%
IRPC PCL		487,100		43
PTT Aromatics & Refining PCL		158,900		65
PTT Exploration & Production Public Co., Ltd.		12,900		36
PTT Public Co., Ltd.		20,200		108
Thai Oil Public Co., Ltd.		33,000		30
				282
Materials 0.1%
PTT Chemical PCL		18,600		22
The Siam Cement Public Co., Ltd.		9,700		34
				56
Telecommunication Services 0.1%
Advanced Info Service Public Co. Ltd.		13,000		29
				479
Turkey 1.3%
Automobiles & Components 0.0%
Ford Otomotiv Sanayi A/S		3,552		12
Banks 0.6%
Akbank T.A.S.		19,262		74
Turkiye Garanti Bankasi A/S *		25,068		53
Turkiye Halk Bankasi A/S		11,504		40
Turkiye Is Bankasi, Class C		21,228		61
Turkiye Vakiflar Bankasi T.A.O., Class D		34,940		40
Yapi ve Kredi Bankasi A/S *		12,730		17
				285
Capital Goods 0.3%
Dogan Sirketler Grubu Holdings A/S *		96,491		39
Enka Insaat ve Sanayi A/S		2,342		10
Koc Holding A/S *		54,021		98
				147
Consumer Durables & Apparel 0.1%
Arcelik A/S		13,632		23
Diversified Financials 0.1%
Haci Omer Sabanci Holding A/S		16,984		44
Energy 0.1%
Tupras-Turkiye Petrol Rafinerileri A/S		5,409		54
Materials 0.1%
Eregli Demir ve Celik Fabrikalari T.A.S. (Erdemir)		16,275		40
Telecommunication Services 0.0%
Turkcell Iletisim Hizmetleri A/S		3,002		15
				620
United Kingdom 0.1%
Food, Beverage & Tobacco 0.1%
British American Tobacco plc		1,820		45

8     See financial notes.

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Total Common Stock (Cost $39,370)				43,298
Preferred Stock 7.3% of net assets
Brazil 7.2%
Banks 2.7%
Banco Bradesco S.A.		42,100		521
Banco Itau Holding Financeira S.A.		53,850		748
				1,269
Energy 1.5%
Petroleo Brasileiro S.A.		53,500		722
Food & Staples Retailing 0.1%
Compania Brasileira de Distribuicao Grupo Pao de Acucar		2,600		42
Food, Beverage & Tobacco 0.3%
Companhia de Bebidas das Americas		2,310		130
Materials 1.6%
Aracruz Celulose S.A., Class B		57,700		70
Braskem S.A., Class A *		17,600		50
Companhia Vale do Rio Doce, Class A		22,700		316
Gerdau S.A.		15,800		113
Metalurgica Gerdau S.A.		11,100		104
Usinas Siderurgicas de Minas Gerais S.A., Class A		5,450		80
Votorantim Celulose e Papel S.A. *		6,000		52
				785
Telecommunication Services 0.7%
Brasil Telecom Participacoes S.A.		3,300		26
Brasil Telecom S.A.		9,300		57
Tele Norte Leste Participacoes S.A.		6,100		95
Telecomunicacoes de Sao Paulo S.A.		600		13
Telemar Norte Leste S.A., Class A		2,500		62
Tim Participacoes S.A. (a)		20,900		35
Vivo Participacoes S.A.		3,650		59
				347
Utilities 0.3%
Companhia Energetica de Minas Gerais		4,371		53
Companhia Paranaense de Energia-Copel, Class B		3,700		46
Compania Energetica de Sao Paulo, Class B		7,500		53
				152
				3,447
Columbia 0.1%
Banks 0.1%
Bancolombia S.A.		4,784		28
Total Preferred Stock (Cost $3,310)				3,475
Rights 0.0% of net assets
Brazil 0.0%
Food, Beverage & Tobacco 0.0%
Companhia de Bebidas das Americas (Ambev) (a)*		8		—
Total Rights (Cost $—)				—
Other Investment Company 0.8% of net assets
iShares MSCI Emerging Markets Index Fund		13,000		373
Total Other Investment Company (Cost $356)				373

	Face Amount		Value
Security                                                   Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.6% of net assets
Commercial Paper & Other Obligation 0.6%
Argentina Cash Reserve
0.01%, 03/26/10		2		2
1.00%, 06/09/09		8		8
1.00%, 09/16/09		24		24
1.00%, 01/20/10		15		15
Citibank, New York Time Deposit 0.03%, 05/01/09		229		229
Total Short-Term Investment (Cost $278)				278

End of Investments.

See financial notes.     9

Schwab Fundamental Emerging Markets Index Fund

Portfolio Holdings continued

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $49,013 and the unrealized appreciation and depreciation were $384 and ($1,973), respectively, with a net unrealized depreciation of ($1,589).

As of 04/30/09, the prices of certain foreign securities held by the fund aggregating $38,816 were adjusted from their market prices following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	Illiquid security. At the period end, the value of these amounted to $25 or 0.1% of net assets.
ADR	– American Depositary Receipt
GDR	– Global Depositary Receipt
Reg’d	– Registered

10     See financial notes.

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97.3	%	Common Stock		20,069		16,266
	0.7	%	Other Investment Companies		105		113
	0.4	%	Preferred Stock		94		69
	0.3	%	Rights		5		46
	—	%	Warrants		—		—
	0.4	%	Short-Term Investment		75		75
	99.1	%	Total Investments		20,348		16,569
	0.9	%	Other Assets and Liabilities, Net				144
	100.0	%	Net Assets				16,713

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 97.3% of net assets
Australia 7.1%
Banks 0.3%
Bank of Queensland Ltd.		3,118		19
Bendigo & Adelaide Bank Ltd.		4,919		25
				44
Capital Goods 0.8%
Alesco Corp., Ltd.		11,052		32
Boart Longyear Group		145,013		12
Crane Group Ltd.		2,040		14
CSR Ltd.		34,989		34
Emeco Holdings Ltd.		34,386		10
GWA International Ltd.		4,708		8
Hills Industries Ltd.		7,244		10
United Group Ltd.		2,687		19
				139
Commercial & Professional Supplies 0.4%
Corporate Express Australia Ltd.		2,163		6
Downer EDI Ltd.		6,134		22
PMP Ltd.		29,679		9
Spotless Group Ltd.		10,184		15
Transfield Services Ltd.		8,542		15
Transpacific Industries Group Ltd. (a)(b)		2,659		4
				71
Consumer Durables & Apparel 0.1%
Billabong International Ltd.		2,105		16
Consumer Services 0.1%
A.B.C. Learning Centres Ltd. (a) (b)*		9,091		—
Aristocrat Leisure Ltd.		4,398		12
Flight Centre Ltd.		3,049		13
				25
Diversified Financials 0.5%
Allco Finance Group Ltd. (a)(b)*		23,422		—
ASX Ltd.		1,484		35
Australian Wealth Management Ltd.		8,473		6
Babcock & Brown Ltd. (a)(b)*		15,142		—
Challenger Financial Services Group Ltd.		12,672		19
City Pacific Ltd. *		3,406		—
Perpetual Ltd.		728		17
Platinum Asset Management Ltd.		3,450		10
				87
Energy 0.3%
Australian Worldwide Exploration Ltd.		4,289		7
Beach Petroleum Ltd.		6,512		4
Centennial Coal Co., Ltd.		5,285		7
New Hope Corp., Ltd.		695		2
Paladin Energy Ltd. *		3,279		11
WorleyParsons Ltd.		1,785		23
				54
Food & Staples Retailing 0.3%
ABB Grain Ltd.		2,138		14
AWB Ltd.		33,212		32
				46
Food, Beverage & Tobacco 0.3%
Elders Ltd.		80,485		25
Goodman Fielder Ltd.		29,641		25
				50
Health Care Equipment & Services 0.5%
Ansell Ltd.		1,198		7

See financial notes.     1

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Australian Pharmaceutical Industries Ltd.		17,955		7
Cochlear Ltd.		184		7
Healthscope Ltd.		2,639		7
Primary Health Care Ltd.		3,587		11
Ramsay Health Care Ltd.		1,186		8
Sigma Pharmaceuticals Ltd.		19,268		16
Sonic Healthcare Ltd.		2,541		21
				84
Materials 1.0%
Adelaide Brighton Ltd.		4,351		7
Alumina Ltd.		30,362		39
Gunns Ltd.		19,955		16
Iluka Resources Ltd. *		3,013		7
Macarthur Coal Ltd.		2,744		8
Minara Resources Ltd. *		51,568		22
Mount Gibson Iron Ltd. *		14,074		6
Newcrest Mining Ltd.		1,194		26
OZ Minerals Ltd.		37,748		20
Straits Resources Ltd.		11,292		13
				164
Media 0.3%
APN News & Media Ltd.		15,368		16
Seven Network Ltd.		1,676		8
Ten Network Holdings Ltd.		17,248		12
West Australian Newspapers Holdings Ltd.		2,257		8
				44
Real Estate 1.4%
Abacus Property Group		42,513		10
Australand Property Group		95,882		31
Centro Retail Group		550,703		17
Commonwealth Property Office Fund		28,921		17
ING Industrial Fund		336,063		41
ING Office Fund		66,273		21
Macquarie CountryWide Trust		235,375		54
Macquarie Office Trust		256,802		36
Sunland Group Ltd.		20,262		8
				235
Retailing 0.6%
David Jones Ltd.		8,029		18
Harvey Norman Holdings Ltd.		11,092		24
Pacific Brands Ltd.		99,605		50
				92
Software & Services 0.1%
Computershare Ltd.		2,920		19
Utilities 0.1%
Envestra Ltd.		30,150		11
				1,181
Austria 1.0%
Automobiles & Components 0.0%
Semperit AG Holding		214		5
Capital Goods 0.2%
A-TEC Industries AG *		208		2
Andritz AG		315		11
Palfinger AG		474		7
Zumtobel AG *		1,082		9
				29
Food, Beverage & Tobacco 0.1%
Agrana Beteiligungs AG		134		9
Materials 0.1%
Mayr-Melnhof Karton AG		113		8
RHI AG *		272		4
				12
Real Estate 0.4%
Atrium European Real Estate Ltd. *		9,393		37
CA Immobilien Anlagen AG *		3,241		26
Conwert Immobilien Invest SE *		1,600		12
				75
Transportation 0.1%
Austrian Airlines AG *		3,021		16
Flughafen Wien AG		329		10
				26
Utilities 0.1%
EVN AG		682		10
				166
Belgium 1.3%
Capital Goods 0.2%
Bekaert N.V.		305		28
Compagnie d’Enterprises CFE		235		8
				36
Diversified Financials 0.2%
Ackermans & van Haaren N.V.		150		9
Brederode S.A.		593		10
GIMV N.V.		136		7
RHJ International *		4,116		19
				45
Energy 0.1%
Euronav S.A.		737		11

2     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Exmar N.V.		412		5
				16
Health Care Equipment & Services 0.0%
Omega Pharma S.A.		237		6
Materials 0.3%
Nyrstar		4,444		29
Recticel S.A.		1,682		7
Tessenderlo Chemie N.V.		567		17
				53
Real Estate 0.1%
Cofinimmo		139		15
Technology Hardware & Equipment 0.1%
Barco N.V.		375		9
Telecommunication Services 0.1%
Telenet Group Holding N.V. *		680		13
Transportation 0.1%
Compagnie Maritime Belge S.A.		641		16
Utilities 0.1%
Elia System Operator SA/NV		321		12
				221
Bermuda 1.6%
Automobiles & Components 0.0%
Brilliance China Automotive Holdings Ltd. *		104,000		8
Capital Goods 0.0%
Johnson Electric Holdings Ltd.		39,000		8
Consumer Durables & Apparel 0.1%
C C Land Holdings Ltd. *		16,000		5
Texwinca Holdings Ltd.		10,000		6
				11
Consumer Services 0.1%
Cafe De Coral Holdings Ltd.		2,000		4
Mandarin Oriental International Ltd.		6,000		6
				10
Diversified Financials 0.1%
Macquarie International Infrastructure Fund Ltd.		41,000		9
Energy 0.3%
BW GAS Ltd. *		757		2
BW Offshore Ltd. *		15,903		14
CNPC Hong Kong Ltd.		20,000		10
Dockwise Ltd. *		6,243		6
Golar LNG Ltd.		722		4
Mongolia Energy Co., Ltd. *		10,000		3
Sinopec Kantons Holdings Ltd.		12,000		2
Titan Petrochemicals Group Ltd *		300,000		5
				46
Food, Beverage & Tobacco 0.1%
China Foods Ltd.		28,000		14
First Pacific Co., Ltd.		22,000		10
				24
Insurance 0.3%
Catlin Group Ltd.		5,221		27
Hiscox Ltd.		4,233		21
				48
Materials 0.2%
Aquarius Platinum Ltd.		3,817		14
Nine Dragons Paper Holdings Ltd.		16,000		7
Samling Global Ltd.		84,000		4
Sinofert Holdings Ltd.		11,000		5
				30
Real Estate 0.1%
Great Eagle Holdings Ltd.		11,000		15
K Wah International Holdings Ltd.		25,000		4
Sinolink Worldwide Holdings Ltd.		98,000		8
				27
Retailing 0.1%
Chow Sang Sang Holdings International Ltd.		5,000		3
Giordano International Ltd.		27,000		6
GOME Electrical Appliances Holdings Ltd. (a)(b)		28,000		2
				11
Technology Hardware & Equipment 0.1%
TPV Technology Ltd.		65,000		21
Transportation 0.1%
Pacific Basin Shipping Ltd.		20,000		10
Road King Infrastructure Ltd.		15,000		7
				17
				270
British Virgin Islands 0.0%
Materials 0.0%
Gem Diamonds Ltd. *		1,631		3
Canada 7.3%
Automobiles & Components 0.1%
Linamar Corp.		3,336		12
Martinrea International, Inc. *		3,186		11
				23

     See financial notes.     3

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Banks 0.1%
Canadian Western Bank		304		3
Laurentian Bank of Canada		353		9
				12
Capital Goods 0.3%
CAE, Inc.		1,349		9
Russel Metals, Inc.		1,539		16
SNC-Lavalin Group, Inc.		750		22
Toromont Industries Ltd.		457		9
				56
Commercial & Professional Supplies 0.1%
Transcontinental, Inc., Class A		2,785		17
Consumer Durables & Apparel 0.2%
Dorel Industries, Inc., Class B		680		13
Gildan Activewear, Inc. *		1,602		18
				31
Diversified Financials 0.3%
AGF Management Ltd., Class B		2,472		24
Dundee Corp., Class A *		2,565		12
DundeeWealth, Inc.		1,536		8
TMX Group, Inc.		447		12
				56
Energy 1.2%
Cameco Corp.		1,906		44
Compton Petroleum Corp. *		18,308		12
Ensign Energy Services, Inc.		2,246		26
Fairborne Energy Ltd *		1,946		8
Flint Energy Services Ltd. *		1,289		7
Highpine Oil & Gas Ltd. *		938		4
OPTI Canada, Inc. *		11,333		18
Paramount Resources Ltd., Class A *		653		3
ShawCor Ltd., Class A		422		8
Trican Well Service Ltd.		603		5
Trinidad Drilling Ltd.		4,171		17
Uranium One, Inc. *		15,000		41
				193
Food, Beverage & Tobacco 0.4%
Maple Leaf Foods, Inc.		3,034		21
Saputo, Inc.		790		15
Viterra, Inc. *		3,206		23
				59
Insurance 0.2%
Industrial Alliance Insurance & Financial Services, Inc.		1,099		22
Kingsway Financial Services, Inc.		6,449		15
				37
Materials 2.6%
Agnico-Eagle Mines Ltd.		229		10
Canfor Corp. *		3,498		15
Cascades, Inc.		5,797		18
Catalyst Paper Corp. *		58,772		12
CCL Industries, Inc., Class B		395		8
Centerra Gold, Inc. *		1,580		9
First Quantum Minerals Ltd.		702		27
Franco-Nevada Corp.		597		13
Harry Winston Diamond Corp.		3,473		14
HudBay Minerals, Inc. *		2,369		16
IAMGOLD Corp.		1,233		10
Inmet Mining Corp.		364		13
Lundin Mining Corp. *		41,030		75
Methanex Corp.		3,517		40
Norbord, Inc.		25,957		28
Quadra Mining Ltd. *		3,130		17
Sherritt International Corp.		12,759		55
Silver Wheaton Corp. *		398		3
Sino-Forest Corp. *		2,464		21
Thompson Creek Metals Co., Inc. *		2,365		16
West Fraser Timber Co., Ltd.		823		19
				439
Media 0.4%
Astral Media, Inc.		397		11
CanWest Global Communications Corp. *		55,730		13
Cogeco Cable, Inc.		453		11
Corus Entertainment, Inc., Class B		304		4
Groupe Aeroplan, Inc.		3,194		20
Torstar Corp., Class B		2,199		9
				68
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
MDS, Inc. *		1,532		9
Real Estate 0.6%
Boardwalk Real Estate Investment Trust		270		6
Calloway Real Estate Investment Trust		1,870		17
Canadian Apartment Properties Real Estate Investment Trust		575		6
Canadian Real Estate Investment Trust		489		8
Chartwell Seniors Housing Real Estate Investment Trust		1,224		4

4     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Cominar Real Estate Investment Trust		417		5
Dundee Real Estate Investment Trust		370		4
Extendicare Real Estate Investment Trust		1,574		7
First Capital Realty, Inc.		487		6
FirstService Corp. *		496		5
H&R Real Estate Investment Trust		3,178		25
InnVest Real Estate Investment Trust		2,416		7
Primaris Retail Real Estate Investment Trust		662		6
				106
Retailing 0.2%
Reitmans (Canada) Ltd., Class A		725		7
RONA, Inc. *		2,299		26
				33
Software & Services 0.1%
MacDonald, Dettwiler & Associates Ltd. *		351		9
Open Text Corp. *		230		8
				17
Transportation 0.1%
Transat A.T., Inc., Class B		1,746		16
Utilities 0.3%
Emera, Inc.		1,136		19
Fortis, Inc.		1,603		29
				48
				1,220
Cayman Islands 1.4%
Capital Goods 0.0%
China High Speed Transmission Equipment Group Co., Ltd.		3,000		5
Consumer Durables & Apparel 0.2%
Bosideng International Holdings Ltd.		48,000		4
China Dongxiang Group Co.		15,000		8
Stella International Holdings Ltd.		7,000		9
TCL Multimedia Technology Holdings Ltd. *		37,000		7
				28
Food, Beverage & Tobacco 0.2%
Chaoda Modern Agriculture (Holdings) Ltd.		10,320		6
China Fishery Group Ltd.		19,000		10
China Mengniu Dairy Co., Ltd.		3,000		5
Tingyi (Cayman Islands) Holding Corp.		8,000		10
Uni-President China Holdings Ltd. *		9,000		4
				35
Household & Personal Products 0.1%
Hengan International Group Co., Ltd.		2,000		8
Materials 0.0%
Lee & Man Paper Manufacturing Ltd.		5,800		4
Real Estate 0.6%
Agile Property Holdings Ltd.		18,000		13
China Resources Land Ltd.		7,000		13
Country Garden Holdings Co. *		25,000		8
Greentown China Holdings Ltd.		15,000		8
HKR International Ltd.		22,400		6
KWG Property Holding Ltd.		21,000		8
New World China Land Ltd.		23,600		9
Shimao Property Holdings Ltd.		13,000		15
Shui On Land Ltd.		24,000		10
Soho China Ltd.		17,000		8
				98
Retailing 0.1%
Belle International Holdings Ltd.		9,000		7
Lifestyle International Holdings Ltd.		4,000		4
				11
Technology Hardware & Equipment 0.2%
Kingboard Chemical Holdings Ltd.		10,000		24
Kingboard Laminates Holding Ltd.		19,500		8
				32
Transportation 0.0%
Hopewell Highway Infrastructure Ltd.		9,900		6
				227
China 0.1%
Capital Goods 0.1%
Beijing Enterprises Holdings Ltd.		2,000		9
CITIC Resources Holdings Ltd. *		21,000		3
				12
Food, Beverage & Tobacco 0.0%
China Yurun Food Group Ltd.		1,000		1
Technology Hardware & Equipment 0.0%
Digital China Holdings Ltd.		16,700		9
				22

     See financial notes.     5

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Cyprus 0.1%
Energy 0.1%
Prosafe SE *		3,425		14
Denmark 1.5%
Banks 0.3%
Jyske Bank A/S — Reg’d *		1,199		31
Sydbank A/S *		692		11
				42
Capital Goods 0.3%
FLSmidth & Co. A/S *		670		21
NKT Holding A/S *		358		10
Rockwool International A/S, B Shares		201		16
Schouw & Co. A/S		365		5
Solar A/S, B Shares		152		5
				57
Consumer Durables & Apparel 0.0%
Bang & Olufsen A/S, B Shares		329		2
Energy 0.1%
Dampskibsselskabet Torm A/S		980		9
Food, Beverage & Tobacco 0.1%
East Asiatic Co., Ltd.		532		17
Health Care Equipment & Services 0.1%
Coloplast A/S, Class B		130		9
GN Store Nord A/S *		2,384		8
William Demant Holding A/S *		154		7
				24
Insurance 0.1%
Alm. Brand A/S *		540		8
Topdanmark A/S *		138		16
				24
Materials 0.1%
Auriga Industries A/S, Class B		280		5
Novozymes A/S, Class B		184		12
				17
Pharmaceuticals, Biotechnology & Life Sciences 0.2%
Alk-Abello A/S		262		16
H. Lundbeck A/S		519		9
				25
Transportation 0.2%
D/S Norden A/S		343		12
DSV A/S		1,704		19
				31
				248
Finland 1.4%
Automobiles & Components 0.2%
Nokian Renkaat Oyj		1,646		26
Capital Goods 0.4%
Cargotec Corp., B Shares		1,579		20
KCI Konecranes Oyj		325		7
Lemminkainen Oyj		292		8
Outotec Oyj		780		16
Ramirent Oyj *		1,267		6
Uponor Oyj		1,234		14
				71
Commercial & Professional Supplies 0.0%
Poyry Oyj		321		4
Consumer Durables & Apparel 0.1%
Amer Sports Oyj, A Shares		1,883		18
Food, Beverage & Tobacco 0.0%
HKScan Oyj		728		5
Health Care Equipment & Services 0.0%
Oriola-KD Oyj, Class B		2,175		6
Materials 0.2%
Huhtamaki Oyj		2,417		23
Kemira Oyj		2,214		19
				42
Media 0.0%
Alma Media Corp.		454		3
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Orion Oyj, Class B		799		12
Real Estate 0.1%
Citycon Oyj		1,924		4
Sponda Oyj *		1,713		7
				11
Retailing 0.1%
Stockmann Oyj Abp, B Shares		629		12
Software & Services 0.1%
Tieto Oyj		1,343		17
Transportation 0.1%
Finnair Oyj *		1,337		8
Finnlines Oyj		606		4
				12
				239
France 3.1%
Automobiles & Components 0.1%
Plastic Omnium S.A. *		1,591		20

6     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Capital Goods 0.3%
Carbone Lorraine S.A.		256		7
IMS International Metal Service		488		7
Lisi		172		6
Manitou BF		1,325		15
Saft Groupe S.A.		131		4
Zodiac Aerospace		272		8
				47
Commercial & Professional Supplies 0.3%
Bureau Veritas S.A.		181		7
Societe BIC S.A.		417		22
Sperian Protection		96		5
Teleperformance		447		13
				47
Consumer Durables & Apparel 0.3%
Beneteau		869		9
Kaufman & Broad S.A.		1,116		26
SEB S.A.		625		21
				56
Consumer Services 0.2%
Club Mediterranee S.A. *		572		9
Euro Disney S.C.A. — Reg’d *		2,199		10
Pierre & Vacances		107		7
				26
Diversified Financials 0.1%
Boursorama *		542		4
Financiere Marc de Lacharriere S.A.		165		8
				12
Energy 0.2%
Bourbon S.A.		455		17
Etablissements Maurel et Prom		878		13
				30
Food & Staples Retailing 0.0%
Guyenne et Gascogne S.A.		84		7
Food, Beverage & Tobacco 0.2%
Bonduelle S.C.A.		60		4
Bongrain S.A.		283		14
Remy Cointreau S.A.		473		15
Vilmorin & Cie		51		5
				38
Health Care Equipment & Services 0.1%
bioMerieux		88		7
Orpea *		81		3
				10
Insurance 0.0%
April Group		206		6
Media 0.3%				��
Canal Plus		1,344		9
Havas S.A.		7,393		23
Ipsos		318		7
NRJ Group		504		3
Spir Communication		360		7
				49
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Ipsen S.A.		197		8
Real Estate 0.1%
Mercialys		250		8
Societe Immobilliere de Location pour l’Industrie et le Commerce		111		9
				17
Retailing 0.1%
Etam		641		10
Semiconductors & Semiconductor Equipment 0.1%
Silicon-On-Insulator Technologies *		1,417		9
Software & Services 0.3%
Alten *		229		4
Altran Technologies S.A. *		2,715		9
Dassault Systemes S.A.		319		13
Groupe Steria S.C.A.		582		11
Sopra Group		151		6
UbiSoft Entertainment S.A. *		501		10
				53
Technology Hardware & Equipment 0.1%
Bull S.A. *		2,284		7
Neopost S.A.		226		19
				26
Telecommunication Services 0.0%
Iliad S.A.		67		7
Transportation 0.2%
Derichebourg S.A.		4,257		10
Groupe Eurotunnel S.A. — Reg’d *		2,347		12
Norbert Dentressangle		236		8
				30
Utilities 0.1%
EDF Energies Nouvelles S.A.		138		5
Rubis		118		7
				12
				520

     See financial notes.     7

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Germany 3.6%
Automobiles & Components 0.1%
ElringKlinger AG		608		9
Leoni AG		1,062		15
				24
Banks 0.3%
Aareal Bank AG		3,155		29
comdirect bank AG		1,006		8
IKB Deutsche Industriebank AG *		18,069		19
				56
Capital Goods 1.0%
Bauer AG		170		6
Demag Cranes AG		244		5
Deutz AG		3,743		16
Duerr AG		605		12
Gildemeister AG		1,073		11
Indus Holding AG		503		7
Kloeckner-Werke AG *		275		6
Koenig & Bauer AG		661		7
Krones AG		240		8
KUKA AG		519		7
MTU Aero Engines Holding AG		456		15
Pfleiderer AG		1,997		11
Q-Cells SE *		742		16
SGL Carbon SE *		440		13
Solarworld AG		344		10
Vossloh AG		84		9
				159
Commercial & Professional Supplies 0.1%
GfK SE		239		6
INTERSEROH SE		68		3
				9
Consumer Durables & Apparel 0.2%
Puma AG Rudolf Dassler Sport *		91		19
Rational AG		56		6
				25
Diversified Financials 0.1%
MLP AG		697		10
MPC Muenchmeyer Petersen Capital AG *		827		6
				16
Food, Beverage & Tobacco 0.0%
KWS Saat AG		21		3
Health Care Equipment & Services 0.1%
Carl Zeiss Meditec AG *		378		4
Rhoen-klinikum AG		427		9
				13
Materials 0.3%
Aurubis AG		822		23
Fuchs Petrolub AG		116		7
Symrise AG		1,157		16
				46
Media 0.3%
Premiere AG *		17,581		43
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
QIAGEN N.V. *		636		10
Stada Arzneimittel AG		679		13
				23
Real Estate 0.3%
Deutsche Euroshop AG		317		9
Deutsche Wohnen AG *		631		12
DIC Asset AG		1,181		9
IVG Immobilien AG		3,101		27
				57
Retailing 0.2%
Fielmann AG		103		6
Medion AG		1,215		9
Praktiker Bau- und Heimwerkermaerkte Holding AG		2,760		20
Takkt AG		466		5
				40
Software & Services 0.1%
Bechtle AG		295		5
Software AG		87		5
United Internet AG — Reg’d		951		10
				20
Technology Hardware & Equipment 0.1%
Jenoptik AG *		1,351		6
Wincor Nixdorf AG		236		12
				18
Telecommunication Services 0.1%
Freenet AG *		2,868		18
Transportation 0.1%
Hamburger Hafen und Logistik AG		425		15
Sixt AG		543		9
				24
Utilities 0.1%
MVV Energie AG		292		12
				606

8     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Gibraltar 0.1%
Consumer Services 0.1%
PartyGaming plc *		3,897		15
Greece 1.1%
Banks 0.3%
Agricultural Bank of Greece		11,981		21
Emporiki Bank of Greece S.A. *		2,127		15
TT Hellenic Postbank S.A.		1,691		10
				46
Capital Goods 0.1%
Ellaktor S.A.		1,392		9
Halcor S.A.		4,739		8
				17
Consumer Services 0.1%
Intralot S.A. Integrated Lottery		1,812		11
Energy 0.1%
Motor Oil (Hellas) Corinth Refineries S.A.		1,526		16
Household & Personal Products 0.1%
Alapis Holding Industrial & Commercial S.A. *		10,255		10
Materials 0.3%
Elval Aluminum Process Co.		2,777		6
Mytilineos Holdings S.A.		1,307		8
Sidenor Steel Products Manufacturing Co., S.A.		1,897		9
Titan Cement Co.		746		19
Viohalco, Hellenic Copper & Aluminum Industry S.A.		3,124		16
				58
Real Estate 0.0%
Babis Vovos International Construction S.A. *		796		5
Eurobank Properties Real Estate Investment Co.		134		1
				6
Technology Hardware & Equipment 0.1%
Intracom Holdings S.A. — Reg’d *		6,485		10
Utilities 0.0%
EYDAP Athens Water Supply & Sewage Co., S.A.		828		7
				181
Hong Kong 2.6%
Automobiles & Components 0.1%
Denway Motors Ltd.		34,000		14
Banks 0.2%
Chong Hing Bank Ltd.		3,000		4
Dah Sing Banking Group Ltd.		4,600		3
Dah Sing Financial Group		2,800		8
Fubon Bank (Hong Kong) Ltd.		8,000		3
Industrial & Commercial Bank of China (Asia) Ltd.		8,000		10
Wing Hang Bank Ltd.		2,000		12
				40
Capital Goods 0.3%
Henderson Investment Ltd.		150,000		9
HKC Holdings Ltd.		76,000		6
Melco International Development Ltd. *		15,000		7
Shanghai Industrial Holdings Ltd.		4,000		14
Shui On Construction & Materials Ltd.		4,000		4
Sinotruk Hong Kong Ltd.		12,000		11
Tianjin Development Holdings Ltd.		16,000		7
				58
Consumer Durables & Apparel 0.2%
Techtronic Industries Co., Ltd.		32,000		19
Truly International Holdings Ltd.		9,000		5
				24
Consumer Services 0.1%
China Travel International Investment Hong Kong Ltd.		38,000		7
Galaxy Entertainment Group Ltd. *		21,000		5
The Hongkong & Shanghai Hotels Ltd.		14,000		10
				22
Diversified Financials 0.1%
China Everbright Ltd.		6,000		11
China Merchants China Direct Investments Ltd. *		4,000		5
Public Financial Holdings Ltd.		14,000		5
Sun Hung Kai & Co., Ltd.		3,000		2
				23
Food, Beverage & Tobacco 0.1%
China Agri-Industries Holdings Ltd. *		16,000		8
Global Bio-chem Technology Group Co., Ltd.		54,000		8

     See financial notes.     9

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Want Want China Holdings Ltd.		2,000		1
				17
Insurance 0.0%
China Insurance International Holdings Co., Ltd.		4,000		7
Materials 0.1%
Minmetals Resources Ltd.		21,100		4
Shougang Concord International Enterprises Co., Ltd.		41,000		4
				8
Media 0.1%
Television Broadcasts Ltd.		3,000		11
Real Estate 0.8%
Champion Real Estate Investment Trust		44,000		10
Franshion Properties China Ltd.		20,000		5
Guangzhou Investment Co., Ltd.		121,000		20
Hopewell Holdings Ltd.		7,000		18
Hopson Development Holdings Ltd.		18,000		14
Hysan Development Co., Ltd.		9,000		16
Kowloon Development Co., Ltd.		20,000		10
Shenzhen Investment Ltd.		33,000		9
Sino-Ocean Land Holdings Ltd.		20,000		15
Tian An China Investments Co., Ltd.		22,000		7
Tomson Group Ltd.		16,000		4
Wheelock & Co., Ltd.		1,000		2
				130
Semiconductors & Semiconductor Equipment 0.1%
ASM Pacific Technology Ltd.		3,000		13
Technology Hardware & Equipment 0.1%
BYD Electronic International Co., Ltd.		10,000		5
VTech Holdings Ltd.		3,000		15
				20
Telecommunication Services 0.0%
SmarTone Telecommunications Holdings Ltd.		6,000		4
Transportation 0.2%
Hong Kong Aircraft Engineering Co., Ltd.		800		7
Shenzhen International Holdings Ltd.		110,000		5
Shun Tak Holdings Ltd.		17,000		8
Sinotrans Shipping Ltd.		28,000		9
				29
Utilities 0.1%
China Power International Development Ltd.		33,900		7
Guangdong Investment Ltd.		14,000		6
				13
				433
Ireland 1.3%
Capital Goods 0.6%
DCC plc		1,636		30
Grafton Group plc *		14,232		50
Kingspan Group plc		3,057		16
				96
Consumer Services 0.0%
Paddy Power plc		304		6
Food & Staples Retailing 0.1%
Fyffes plc		30,151		12
Total Produce plc		27,448		10
				22
Food, Beverage & Tobacco 0.3%
C&C Group plc		8,665		20
Glanbia plc		3,012		9
Greencore Group plc		8,215		10
Origin Enterprises plc *		3,158		7
				46
Health Care Equipment & Services 0.1%
United Drug plc		4,351		12
Insurance 0.0%
FBD Holdings plc		646		5
Media 0.2%
Independent News & Media plc		76,564		26
Transportation 0.0%
Aer Lingus Group plc *		9,012		8
				221
Israel 0.9%
Banks 0.1%
First International Bank of Israel Ltd. *		4,432		7
First International Bank of Israel Ltd. (FIBI) *		265		2
Mizrahi Tefahot Bank Ltd.		2,042		12
				21
Capital Goods 0.1%
Clal Industries Ltd.		1,836		5
Elbit Systems Ltd.		167		8

10     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Koor Industries Ltd. *		448		10
				23
Consumer Durables & Apparel 0.0%
Elco Holdings Ltd.		1,147		6
Energy 0.0%
Paz Oil Co Ltd.		45		5
Food & Staples Retailing 0.1%
Blue Square-Israel Ltd.		986		7
Shufersal Ltd.		1,633		5
				12
Food, Beverage & Tobacco 0.1%
Osem Investments Ltd.		296		3
Strauss Group Ltd.		502		5
				8
Insurance 0.1%
Clal Insurance Enterprise Holdings Ltd. *		583		7
Harel Insurance Investments & Finances Service Ltd. *		147		5
Migdal Insurance & Financial Ltd. Holdings *		4,961		5
				17
Materials 0.1%
Makhteshim-Agan Industries Ltd.		2,703		12
Real Estate 0.2%
Africa Israel Investments Ltd. *		426		7
Delek Real Estate Ltd. *		5,421		5
Elbit Imaging Ltd.		317		6
Gazit Globe Ltd.		944		5
Jerusalem Economy Ltd. *		1,581		7
Property & Building Corp., Ltd.		63		3
				33
Retailing 0.0%
Delek Automotive Systems Ltd.		292		2
Technology Hardware & Equipment 0.0%
Nice Systems Ltd. *		250		6
Telecommunication Services 0.1%
Partner Communications Co., Ltd.		592		10
				155
Italy 2.7%
Automobiles & Components 0.2%
Brembo S.p.A.		1,564		10
Immsi S.p.A.		7,448		7
Piaggio & C. S.p.A.		5,496		9
Sogefi S.p.A. *		5,738		8
				34
Banks 0.3%
Banca Piccolo Credito Valtellinese Scarl		2,230		17
Banca Popolare dell’Etruria e del Lazio Scrl		1,352		8
Banco di Desio e della Brianza S.p.A.		891		5
Credito Artigiano S.p.A.		1,688		5
Credito Emiliano S.p.A.		2,342		12
				47
Capital Goods 0.4%
Astaldi S.p.A.		882		5
Cofide S.p.A. — Compagnia Finanziaria De Benedetti		32,004		16
Danieli S.p.A. — Officine Meccaniche Danieli & C.		519		6
Danieli S.p.A. — Officine Meccaniche Danieli & C. — RNC		1,232		9
Impregilo S.p.A. *		4,703		13
Interpump Group S.p.A.		1,279		5
Maire Tecnimont S.p.A.		3,827		8
Permasteelisa S.p.A.		478		7
				69
Consumer Durables & Apparel 0.3%
Bulgari S.p.A.		2,856		15
Geox S.p.A. *		973		8
Indesit Co., S.p.A.		3,245		16
Safilo Group S.p.A.		17,304		10
Tod’s S.p.A.		157		8
				57
Diversified Financials 0.1%
Azimut Holding S.p.A.		718		5
Banca Italease *		5,530		11
DeA Capital S.p.A. *		2,804		5
				21
Food & Staples Retailing 0.0%
Marr S.p.A.		876		6
Food, Beverage & Tobacco 0.1%
Davide Campari — Milano S.p.A.		1,350		9
Health Care Equipment & Services 0.1%
Sorin S.p.A. *		6,993		7
Materials 0.1%
Cementir Holding S.p.A.		3,759		13
KME Group		10,413		9
				22

     See financial notes.     11

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Media 0.3%
Gruppo Editoriale L’Espresso S.p.A. *		3,769		5
Mondadori (Arnoldo) Editore S.p.A.		4,154		15
RCS MediaGroup S.p.A.		6,302		7
Seat Pagine Gialle S.p.A. *		52,853		14
				41
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Recordati S.p.A.		1,034		6
Real Estate 0.2%
Beni Stabili S.p.A.		11,067		7
Immobiliare Grande Distribuzione *		2,791		4
Pirelli & C. Real Estate S.p.A. *		2,698		15
Risanamento S.p.A. *		13,332		4
				30
Retailing 0.1%
Gruppo Coin S.p.A. *		2,930		10
Software & Services 0.0%
Tiscali S.p.A. *		11,519		6
Technology Hardware & Equipment 0.1%
Esprinet S.p.A.		991		7
Telecommunication Services 0.0%
Fastweb *		240		6
Transportation 0.2%
Alitalia S.p.A. (a)(b)		14,782		—
Ansaldo STS S.p.A.		529		8
Autostrada Torino-Milano S.p.A.		1,527		11
Gemina S.p.A. *		16,518		8
Societa Iniziative Autostradali e Servizi S.p.A.		990		6
				33
Utilities 0.2%
ACEA S.p.A.		961		12
Acegas-APS S.p.A.		674		5
Ascopiave S.p.A.		631		1
Enia S.p.A.		1,200		7
Iride S.p.A.		9,692		14
				39
				450
Japan 27.8%
Automobiles & Components 2.0%
Ahresty Corp.		2,000		7
Aichi Machine Industry Co., Ltd.		3,000		7
Aisan Industry Co., Ltd.		1,000		6
Akebono Brake Industry Co., Ltd.		1,000		5
F.C.C. Co., Ltd.		1,000		13
Futaba Industrial Co., Ltd.		6,000		27
Kanto Auto Works Ltd.		1,000		11
Kayaba Industry Co., Ltd.		6,000		11
Keihin Corp.		1,000		13
Koito Manufacturing Co., Ltd.		2,000		18
Mitsuba Corp. *		3,000		9
Musashi Seimitsu Industry Co., Ltd.		1,000		13
Nhk Spring Co. , Ltd.		4,000		19
Nippon Seiki Co., Ltd.		1,000		9
Nissan Shatai Co., Ltd.		1,000		6
Nissin Kogyo Co., Ltd.		1,000		11
Press Kogyo Co., Ltd.		6,000		11
Riken Corp.		2,000		5
Sanden Corp. *		6,000		14
Showa Corp.		3,000		14
Stanley Electric Co., Ltd.		2,000		28
Tachi-S Co., Ltd.		1,000		6
The Yokohama Rubber Co., Ltd.		3,000		13
Tokai Rika Co., Ltd.		1,000		13
Tokai Rubber Industries Ltd.		1,000		9
Topre Corp.		1,000		8
Toyo Tire & Rubber Co., Ltd. *		8,000		14
TS Tech Co., Ltd.		700		9
Unipres Corp.		1,000		7
				336
Banks 2.5%
Atrium Co., Ltd. *		5,000		7
Bank of The Ryukyus Ltd. *		1,000		8
Kansai Urban Banking Corp.		2,000		4
Kiyo Holdings, Inc.		7,000		8
Suruga Bank Ltd.		1,000		9
The 77 Bank Ltd.		3,000		15
The Aichi Bank Ltd.		100		7
The Akita Bank Ltd.		2,000		7
The Aomori Bank Ltd.		2,000		8
The Awa Bank Ltd.		2,000		11
The Bank of Iwate Ltd.		100		5
The Bank of Nagoya Ltd.		2,000		9
The Bank of Okinawa Ltd.		300		8
The Bank of Saga Ltd.		2,000		6
The Chiba Kogyo Bank Ltd. *		1,000		9
The Chugoku Bank Ltd.		1,000		13
The Chukyo Bank Ltd.		1,000		3
The Daisan Bank Ltd.		1,000		3
The Daishi Bank Ltd.		3,000		11
The Ehime Bank Ltd.		2,000		5
The Eighteenth Bank Ltd.		2,000		6
The Fukui Bank Ltd.		2,000		6
The Higashi-Nippon Bank Ltd.		2,000		5

12     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
The Higo Bank Ltd.		2,000		11
The Hokkoku Bank Ltd.		3,000		10
The Hokuetsu Bank Ltd.		3,000		5
The Hyakugo Bank Ltd.		2,000		10
The Hyakujushi Bank Ltd.		2,000		9
The Juroku Bank Ltd.		4,000		14
The Kagawa Bank Ltd.		1,000		4
The Kagoshima Bank Ltd.		2,000		13
The Keiyo Bank Ltd.		1,000		4
The Mie Bank Ltd.		1,000		3
The Minato Bank Ltd. *		4,000		5
The Miyazaki Bank Ltd.		1,000		4
The Musashino Bank Ltd.		400		11
The Nanto Bank Ltd.		2,000		10
The Nishi-Nippon City Bank Ltd.		8,000		16
The Ogaki Kyoritsu Bank Ltd.		3,000		13
The Oita Bank Ltd.		1,000		5
The San-in Godo Bank Ltd.		2,000		16
The Shiga Bank Ltd.		2,000		11
The Shikoku Bank Ltd.		2,000		7
The Tochigi Bank Ltd.		1,000		5
The Toho Bank Ltd.		2,000		7
The Tokyo Tomin Bank Ltd.		1,000		14
The Yamagata Bank Ltd.		1,000		5
The Yamanashi Chuo Bank Ltd.		1,000		5
Yamaguchi Financial Group, Inc.		2,000		19
				409
Capital Goods 5.2%
Aica Kogyo Co., Ltd.		1,000		9
Amano Corp.		1,000		8
Ando Corp.		5,000		7
Bando Chemical Industries Ltd.		2,000		5
Central Glass Co., Ltd.		4,000		15
Chiyoda Corp.		3,000		18
Chudenko Corp.		1,000		14
CKD Corp.		1,000		4
COMSYS Holdings Corp.		2,000		16
Dai-Dan Co., Ltd.		1,000		4
Daifuku Co., Ltd.		1,000		6
Ebara Corp. *		9,000		24
Fujitec Co., Ltd.		2,000		8
Fukuda Corp. *		2,000		3
Furukawa Co., Ltd.		6,000		6
Futaba Corp.		1,000		18
Glory Ltd.		1,000		18
GS Yuasa Corp.		2,000		13
Hitachi Cable Ltd.		4,000		11
Hitachi Plant Technologies Ltd.		2,000		8
Hitachi Zosen Corp. *		17,000		18
Inaba Denki Sangyo Co., Ltd.		400		8
Inabata & Co., Ltd.		4,000		11
Iseki & Co., Ltd. *		3,000		8
Iwatani Corp.		7,000		16
Japan Pulp & Paper Co., Ltd.		2,000		5
JGC Corp.		2,000		26
Kamei Corp.		2,000		9
Kandenko Co., Ltd.		1,000		6
Keihan Electric Railway Co., Ltd.		4,000		16
Kitz Corp.		2,000		6
Komori Corp.		1,000		9
Kumagai Gumi Co., Ltd. *		9,000		5
Kurita Water Industries Ltd.		1,000		24
Kuroda Electric Co., Ltd.		1,000		7
Kyowa Exeo Corp.		1,000		8
Kyudenko Corp.		1,000		6
Maeda Corp.		4,000		13
Maeda Road Construction Co., Ltd.		1,000		8
Makino Milling Machine Co., Ltd.		2,000		6
Meidensha Corp.		4,000		11
Minebea Co., Ltd.		5,000		19
Mitsui Engineering & Shipbuilding Co., Ltd.		11,000		23
Mori Seiki Co., Ltd.		1,000		10
Nabtesco Corp.		1,000		8
Nachi-Fujikoshi Corp.		4,000		7
NEC Networks & System Integration Corp.		1,000		9
Nichias Corp.		3,000		7
Nichiha Corp.		1,000		6
Nippo Corp.		1,000		8
Nippon Densetsu Kogyo Co., Ltd.		1,000		9
Nishimatsu Construction Co., Ltd.		12,000		10
Nishio Rent All Co., Ltd.		1,000		6
Nitto Boseki Co., Ltd.		5,000		10
Noritake Co., Ltd.		2,000		6
Noritz Corp.		1,000		13
OKUMA Corp.		2,000		9
Okumura Corp.		3,000		11
OSG Corp.		1,000		6
Penta-Ocean Construction Co., Ltd. *		9,000		11
Ryobi Ltd.		4,000		9
Sanki Engineering Co., Ltd.		1,000		7
Sankyo-Tateyama Holdings, Inc.		15,000		11
Sanwa Holdings Corp.		5,000		14
ShinMaywa Industries Ltd.		3,000		9
Sintokogio Ltd.		1,000		6
Sumitomo Mitsui Construction Co., Ltd. *		13,000		10
Swcc Showa Holdings Co., Ltd. *		6,000		4
Tadano Ltd.		1,000		4
Taihei Kogyo Co., Ltd.		1,000		3
Taikisha Ltd.		1,000		11
Takara Standard Co., Ltd.		1,000		6

     See financial notes.     13

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Takasago Thermal Engineering Co., Ltd.		1,000		8
Takuma Co., Ltd. *		2,000		3
Tekken Corp. *		6,000		6
The Japan Steel Works Ltd.		1,000		11
The Nippon Road Co., Ltd.		1,000		3
THK Co., Ltd.		1,000		14
TOA Corp.		6,000		7
Toda Corp.		6,000		20
Toenec Corp.		1,000		5
Tokyu Construction Co., Ltd. *		3,000		8
Toshiba Machine Co., Ltd.		1,000		3
Toshiba Plant Systems & Services Corp.		1,000		9
Toyo Construction Co., Ltd.		15,000		7
Toyo Engineering Corp.		2,000		6
Tsubakimoto Chain Co.		2,000		7
Ushio, Inc.		1,000		13
Yamazen Corp.		2,000		6
Yuasa Trading Co., Ltd.		12,000		12
Yurtec Corp.		1,000		5
				876
Commercial & Professional Supplies 0.4%
Arrk Corp. *		9,000		8
Kyodo Printing Co., Ltd.		2,000		4
Nissha Printing Co., Ltd.		400		12
Okamura Corp.		1,000		5
Radia Holdings, Inc. *		185		1
Sohgo Security Services Co., Ltd.		1,000		9
Temp Holdings Co., Ltd.		500		3
Toppan Forms Co., Ltd.		1,000		11
Uchida Yoko Co., Ltd.		2,000		5
				58
Consumer Durables & Apparel 1.5%
Alpine Electronics, Inc.		1,000		8
Arnest One Corp. *		4,000		7
Asics Corp.		1,000		6
Clarion Co., Ltd. *		5,000		5
Cleanup Corp.		1,000		4
Daikyo, Inc. *		10,000		12
Fujitsu General Ltd.		2,000		6
Funai Electric Co., Ltd.		400		11
Gunze Ltd.		3,000		10
Heiwa Corp.		1,000		9
Hitachi Koki Co., Ltd.		1,000		9
Juki Corp.		8,000		10
Kurabo Industries Ltd.		6,000		12
Misawa Homes Co., Ltd. *		5,000		15
Mitsui Home Co., Ltd.		1,000		4
Mizuno Corp.		2,000		8
Nisshinbo Holdings, Inc.		2,000		21
Onward Holdings Co., Ltd.		3,000		18
PanaHome Corp.		1,000		6
Sanyo Shokai Ltd.		2,000		7
Seiko Holdings Corp.		3,000		6
The Japan General Estate Co., Ltd. (a)(b)*		1,000		—
The Japan Wool Textile Co., Ltd.		1,000		6
Tokyo Style Co., Ltd.		1,000		7
Toyobo Co., Ltd.		12,000		19
Unitika Ltd. *		13,000		14
Wacoal Holdings Corp.		1,000		12
				252
Consumer Services 0.3%
Accordia Golf Co., Ltd.		7		4
H.I.S. Co., Ltd.		1,000		16
Pacific Golf Group International Holdings KK		2		1
Resorttrust, Inc.		1,000		9
Royal Holdings Co., Ltd.		1,000		10
Tokyo Dome Corp.		2,000		6
Yoshinoya Holdings Co., Ltd.		3		3
Zensho Co., Ltd.		1,000		5
				54
Diversified Financials 0.8%
Aeon Credit Service Co., Ltd.		1,000		11
Cedyna Financial Corp. *		5,550		10
Jaccs Co., Ltd.		7,000		15
Japan Securities Finance Co., Ltd.		2,000		11
Marusan Securities Co., Ltd.		1,000		6
Matsui Securities Co., Ltd.		1,000		7
Mizuho Investors Securities Co., Ltd. *		5,000		5
Monex Group, Inc.		11		3
NIS Group Co., Ltd. *		14,000		6
Okasan Securities Group, Inc.		2,000		7
Orient Corp. *		14,000		14
SBI Holdings, Inc.		128		15
SFCG Co., Ltd. (a)(b)		182,970		—
Shinko Securities Co., Ltd.		9,000		21
Tokai Tokyo Financial Holdings, Inc.		3,000		7
				138
Energy 0.2%
AOC Holdings, Inc.		2,000		12
Itohchu Enex Co., Ltd.		1,000		6
Mitsuuroko Co., Ltd.		1,000		6
San-Ai Oil Co., Ltd.		2,000		7
Sinanen Co., Ltd.		1,000		5
				36

14     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Food & Staples Retailing 0.8%
Arcs Co., Ltd.		1,000		12
Circle K Sunkus Co., Ltd.		1,000		14
FamilyMart Co., Ltd.		1,000		28
Heiwado Co., Ltd.		1,000		11
Inageya Co., Ltd.		1,000		9
Izumiya Co., Ltd.		2,000		11
Kasumi Co., Ltd.		1,000		4
Life Corp.		1,000		16
Okuwa Co., Ltd.		1,000		11
The Maruetsu, Inc.		1,000		4
Valor Co., Ltd.		1,000		8
				128
Food, Beverage & Tobacco 2.3%
Coca-Cola Central Japan Co., Ltd.		500		6
Coca-Cola West Holdings Co., Ltd.		1,000		16
Ezaki Glico Co., Ltd.		1,000		9
Fuji Oil Co., Ltd.		1,000		10
House Foods Corp.		1,000		14
Ito En Ltd.		1,000		12
Itoham Foods, Inc.		3,000		9
J-Oil Mills, Inc.		1,000		3
Kagome Co., Ltd.		1,000		15
Kikkoman Corp.		2,000		18
Marudai Food Co., Ltd.		3,000		7
Maruha Nichiro Holdings, Inc.		14,000		18
MEIJI Holdings Co., Ltd. *		1,500		46
Mikuni Coca-Cola Bottling Co., Ltd.		1,000		8
Morinaga & Co., Ltd.		4,000		8
Morinaga Milk Industry Co., Ltd.		5,000		15
Nichirei Corp.		5,000		17
Nippon Flour Mills Co., Ltd.		2,000		8
Nippon Suisan Kaisha Ltd.		7,000		20
Nissin Food Products Co., Ltd.		1,000		27
Prima Meat Packers Ltd.		8,000		9
Q.P. Corp.		1,000		10
Sapporo Holdings Ltd.		4,000		17
Showa Sangyo Co., Ltd.		1,000		3
Snow Brand Milk Products Co., Ltd.		3,000		7
Starzen Co., Ltd.		1,000		2
Takara Holdings, Inc.		2,000		10
The Nisshin Oillio Group Ltd.		2,000		8
Toyo Suisan Kaisha Ltd.		1,000		20
Yakult Honsha Co., Ltd.		1,000		17
				389
Health Care Equipment & Services 0.2%
Hitachi Medical Corp.		1,000		8
Nipro Corp.		1,000		14
Toho Pharmaceutical Co., Ltd.		1,000		10
Vital Ksk Holdings, Inc. *		1,000		5
				37
Household & Personal Products 0.3%
Aderans Holdings Co., Ltd.		1,000		10
Fancl Corp.		1,000		11
Kobayashi Pharmaceutical Co., Ltd.		300		10
Lion Corp.		2,000		9
Unicharm Corp.		200		14
				54
Insurance 0.1%
The Fuji Fire & Marine Insurance Co., Ltd. *		8,000		8
Materials 3.8%
Adeka Corp.		2,000		13
Aichi Steel Corp.		2,000		7
Air Water, Inc.		2,000		17
Chuetsu Pulp & Paper Co., Ltd.		1,000		3
Daicel Chemical Industries, Ltd.		2,000		8
Daido Steel Co., Ltd.		6,000		20
Daiken Corp.		3,000		5
Dainichiseika Color & Chemical Mfg. Co., Ltd.		1,000		2
Daio Paper Corp.		2,000		18
Denki Kagaku Kogyo Kabushiki Kaisha		11,000		24
Dowa Holdings Co., Ltd.		6,000		24
Furukawa-Sky Aluminum Corp.		4,000		7
Godo Steel Ltd.		3,000		8
Hokkan Holdings Ltd.		1,000		2
Hokuetsu Paper Mills Ltd.		2,000		9
Ishihara Sangyo Kaisha Ltd. *		4,000		3
Kansai Paint Co., Ltd.		2,000		11
Kureha Corp.		2,000		9
Kurimoto Ltd. *		5,000		4
Kyoei Steel Ltd.		1,000		20
Lintec Corp.		1,000		14
Maruichi Steel Tube Ltd.		1,000		20
Mitsubishi Paper Mills Ltd.		8,000		12
Mitsubishi Steel Mfg. Co., Ltd.		2,000		4
Nakayama Steel Works Ltd.		4,000		9
Nifco, Inc.		1,000		13
Nippon Coke & Engineering Co.		2,000		2
Nippon Kayaku Co., Ltd.		2,000		11
Nippon Light Metal Co., Ltd. *		14,000		13
Nippon Metal Industry Co., Ltd.		2,000		3
Nippon Paint Co., Ltd.		3,000		11
Nippon Shokubai Co., Ltd.		2,000		12
Nippon Soda Co., Ltd.		2,000		7

     See financial notes.     15

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Nippon Yakin Kogyo Co., Ltd.		2,000		7
Nissan Chemical Industries Ltd.		2,000		17
Nittetsu Mining Co., Ltd.		1,000		3
Nof Corp.		2,000		7
Pacific Metals Co., Ltd.		2,000		13
Rengo Co., Ltd.		3,000		15
Sakai Chemical Industry Co., Ltd.		2,000		6
Sakata Inx Corp.		1,000		3
Sanyo Chemical Industries Ltd.		1,000		5
Sanyo Special Steel Co., Ltd.		2,000		7
Shin-Etsu Polymer Co., Ltd.		1,000		5
Sumitomo Bakelite Co., Ltd.		3,000		12
Sumitomo Light Metal Industries Ltd. *		13,000		12
Sumitomo Osaka Cement Co., Ltd.		6,000		13
Taiyo Nippon Sanso Corp.		3,000		21
Takasago International Corp.		1,000		5
Toagosei Co., Ltd.		4,000		10
Toho Zinc Co., Ltd.		1,000		3
Tokai Carbon Co., Ltd.		1,000		4
Tokuyama Corp.		3,000		18
Tokyo Ohka Kogyo Co., Ltd.		1,000		17
Tokyo Steel Manufacturing Co., Ltd.		2,000		20
Tomoku Co., Ltd.		3,000		5
Topy Industries Ltd.		7,000		11
Toyo Ink Mfg. Co., Ltd.		5,000		11
Toyo Kohan Co., Ltd.		1,000		4
Yamato Kogyo Co., Ltd.		300		7
Yodogawa Steel Works Ltd.		2,000		9
Zeon Corp.		5,000		15
				630
Media 0.4%
Asatsu-DK, Inc.		1,000		17
Avex Group Holdings, Inc.		1,000		9
Kadokawa Group Holdings, Inc.		500		10
Shochiku Co., Ltd.		1,000		7
Toei Co., Ltd.		1,000		4
Toho Co., Ltd.		1,000		13
TV Asahi Corp.		3		4
				64
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Dainippon Sumitomo Pharma Co., Ltd.		1,000		8
Kaken Pharmaceutical Co., Ltd.		1,000		9
Mochida Pharmaceutical Co., Ltd.		1,000		9
Rohto Pharmaceutical Co., Ltd.		1,000		9
Shionogi & Co., Ltd.		1,000		17
				52
Real Estate 0.2%
Daibiru Corp.		1,000		7
Iida Home Max		1,000		4
Joint Corp. *		4,000		6
NTT Urban Development Corp.		9		7
Tokyo Tatemono Co., Ltd.		5,000		17
				41
Retailing 1.9%
Aoyama Trading Co., Ltd.		1,000		14
Belluna Co., Ltd.		1,000		3
Best Denki Co., Ltd.		3,000		9
Chiyoda Co., Ltd.		1,000		14
Chori Co., Ltd.		5,000		5
Culture Convenience Club Co., Ltd.		1,000		6
DCM Japan Holdings Co., Ltd.		1,000		5
Don Quijote Co., Ltd.		1,000		15
Duskin Co., Ltd.		1,000		16
EDION Corp.		5,000		24
GEO Corp.		10		6
H2O Retailing Corp.		2,000		13
Izumi Co., Ltd.		1,000		11
Joshin Denki Co., Ltd.		1,000		5
K’s Holdings Corp.		1,000		18
Kato Sangyo Co., Ltd.		1,000		14
Keiyo Co., Ltd.		1,000		5
Kohnan Shoji Co., Ltd.		1,000		9
Kojima Co., Ltd.		3,000		11
Komeri Co., Ltd.		1,000		21
Nice Holdings, Inc.		5,000		7
Nissen Holdings Co., Ltd.		1,000		4
Parco Co., Ltd.		1,000		7
Paris Miki Holdings, Inc.		1,000		9
Ryohin Keikaku Co., Ltd.		300		11
Shimachu Co., Ltd.		1,000		17
Shimamura Co., Ltd.		200		14
T-Gaia Corp.		5		6
USS Co., Ltd.		200		9
Yokohama Reito Co., Ltd.		1,000		6
				314
Semiconductors & Semiconductor Equipment 0.3%
Sanken Electric Co., Ltd.		4,000		12
Shinko Electric Industries Co., Ltd.		1,000		10
Tokyo Seimitsu Co., Ltd.		1,000		12
ULVAC, Inc.		300		6
USC Corp.		1,000		8
				48
Software & Services 1.1%
CSK Holdings Corp. *		8,000		42
eAccess Ltd.		12		8

16     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Fuji Soft, Inc.		1,000		14
ITOCHU Techno-Solutions Corp.		400		9
Konami Corp.		1,000		15
NEC Fielding Ltd.		1,000		10
Nihon Unisys Ltd.		1,000		6
Nomura Research Institute Ltd.		1,000		18
OBIC Co., Ltd.		40		5
OTSUKA Corp.		200		8
Square Enix Holdings Co., Ltd.		300		5
Tecmo Koei Holdings Co., Ltd. *		1,000		7
Trans Cosmos, Inc. *		1,000		6
Trend Micro, Inc.		1,000		31
				184
Technology Hardware & Equipment 2.0%
Anritsu Corp.		2,000		7
Cmk Corp.		1,000		5
Dainippon Screen Mfg. Co., Ltd. *		5,000		11
Hamamatsu Photonics K.K.		1,000		20
Hirose Electric Co., Ltd.		200		21
Hitachi Kokusai Electric, Inc.		1,000		6
Hitachi Maxell Ltd.		1,000		10
Hosiden Corp.		1,000		12
Japan Aviation Electronics Industry Ltd.		1,000		5
Japan Radio Co., Ltd.		4,000		8
Kaga Electronics Co., Ltd.		1,000		9
Mabuchi Motor Co., Ltd.		500		23
Marubun Corp.		2,000		5
Mitsumi Electric Co., Ltd.		1,000		17
Nichicon Corp.		1,000		10
Nidec Sankyo Corp.		1,000		4
Nippon Chemi-Con Corp.		3,000		7
Ryoden Trading Co., Ltd.		1,000		4
Ryosan Co., Ltd.		1,000		21
Ryoyo Electro Corp.		1,000		8
Sanshin Electronics Co., Ltd.		1,000		6
Satori Electric Co., Ltd.		1,000		5
Shimadzu Corp.		2,000		12
Shinko Shoji Co., Ltd.		1,000		6
Star Micronics Co., Ltd.		1,000		8
Taiyo Yuden Co., Ltd.		2,000		15
Topcon Corp.		1,000		5
Toshiba Tec Corp.		3,000		11
Uniden Corp. *		2,000		6
Yamatake Corp.		1,000		17
YASKAWA Electric Corp.		2,000		9
Yokogawa Electric Corp.		4,000		21
				334
Transportation 1.1%
Daiichi Chuo Kisen Kaisha		2,000		5
Fukuyama Transporting Co., Ltd.		1,000		4
Hitachi Transport System Ltd.		1,000		10
Iino Kaiun Kaisha Ltd.		1,000		5
Japan Airport Terminal Co., Ltd.		1,000		10
Kamigumi Co., Ltd.		2,000		13
Kanagawa Chuo Kotsu Co., Ltd.		1,000		5
Keihin Electric Express Railway Co., Ltd.		2,000		15
Keisei Electric Railway Co., Ltd.		3,000		14
Mitsubishi Logistics Corp.		1,000		10
Mitsui-Soko Co., Ltd.		2,000		7
Nippon Konpo Unyu Soko Co., Ltd.		1,000		8
Nishi-Nippon Railroad Co., Ltd.		4,000		15
Nissin Corp.		2,000		4
Sagami Railway Co., Ltd.		3,000		12
Sankyu, Inc.		5,000		15
Seino Transportation Co., Ltd.		4,000		22
Senko Co., Ltd.		2,000		5
Shinwa Kaiun Kaisha Ltd.		1,000		3
The Sumitomo Warehouse Co., Ltd.		2,000		7
Tonami Transportation Co., Ltd.		1,000		2
				191
Utilities 0.1%
Saibu Gas Co., Ltd.		2,000		5
Shizuoka Gas Co., Ltd.		1,000		6
Tokai Corp.		1,000		3
				14
				4,647
Liechtenstein 0.1%
Banks 0.1%
Liechtensteinische Landesbank AG		221		11
Diversified Financials 0.0%
Verwaltungs-und Privat-Bank AG		96		7
				18
Luxembourg 0.2%
Real Estate 0.1%
Gagfah S.A.		1,484		9
Telecommunication Services 0.1%
COLT Telecom Group S.A. *		11,796		17
Transportation 0.0%
Logwin AG *		5,563		9
				35
Mauritius 0.1%
Food, Beverage & Tobacco 0.1%
Golden Agri-Resources Ltd.		85,554		21

     See financial notes.     17

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Netherlands 3.0%
Capital Goods 0.6%
Aalberts Industries N.V.		1,494		11
Arcadis N.V.		572		9
Draka Holdings N.V. *		1,114		12
Eriks Group N.V., CVA		90		3
Heijmans N.V., CVA *		3,461		22
Imtech N.V.		1,109		17
Koninklijke Boskalis Westminster N.V., CVA		459		11
Wavin N.V.		4,678		13
				98
Commercial & Professional Supplies 0.1%
USG People N.V.		1,127		11
Consumer Durables & Apparel 0.2%
Koninklijke Ten Cate N.V.		400		8
TomTom N.V. *		3,756		24
				32
Diversified Financials 0.1%
Kardan N.V.		2,733		10
Energy 0.3%
Fugro N.V., CVA		738		27
SBM Offshore N.V.		1,322		21
				48
Food & Staples Retailing 0.2%
Sligro Food Group N.V.		380		8
Super De Boer *		4,425		18
				26
Food, Beverage & Tobacco 0.4%
CSM		2,282		29
Koninklijike Wessanen N.V.		2,109		10
Nutreco Holding N.V.		623		21
				60
Health Care Equipment & Services 0.1%
Mediq N.V.		1,754		17
Materials 0.0%
AMG Advanced Metallurgical Group N.V. *		748		4
Media 0.0%
Telegraaf Media Groep N.V.		381		5
Real Estate 0.4%
Eurocommercial Properties N.V., CVA		564		17
Nieuwe Steen Investments N.V.		550		8
Vastned Offices/Industrial N.V.		746		9
VastNed Retail N.V.		269		12
Wereldhave N.V.		369		25
				71
Retailing 0.0%
Macintosh Retail Group N.V.		550		6
Semiconductors & Semiconductor Equipment 0.1%
ASM International N.V. *		1,367		16
Software & Services 0.0%
Exact Holding N.V.		160		3
Technology Hardware & Equipment 0.4%
Gemalto N.V. *		567		18
Oce N.V.		8,779		55
				73
Transportation 0.1%
Koninklijke Vopak N.V.		205		9
Smit Internationale N.V.		109		6
				15
				495
New Zealand 0.6%
Consumer Durables & Apparel 0.0%
Fisher & Paykel Appliances Holdings Ltd.		26,398		7
Consumer Services 0.1%
Sky City Entertainment Group Ltd.		7,207		11
Materials 0.1%
Nufarm Ltd.		1,639		16
Media 0.0%
Sky Network Television Ltd.		2,512		6
Real Estate 0.0%
AMP NZ Office Trust		352		—
Goodman Property Trust		1,154		1
Kiwi Income Property Trust		12,956		6
				7
Retailing 0.1%
The Warehouse Group Ltd.		4,231		9
Transportation 0.2%
Air New Zealand Ltd.		29,360		17
Auckland International Airport Ltd.		13,938		13
				30
Utilities 0.1%
Contact Energy Ltd.		4,028		13
Vector Ltd.		7,288		9
				22
				108

18     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Norway 1.4%
Banks 0.1%
Sparebanken 1 SMN		1,707		8
Sparebanken Rogaland		1,827		6
				14
Capital Goods 0.1%
Renewable Energy Corp. A/S *		1,667		15
Veidekke A.S.A.		2,051		10
				25
Consumer Durables & Apparel 0.0%
Ekornes A.S.A.		579		7
Diversified Financials 0.1%
ABG Sundal Collier Holding A.S.A. *		8,833		7
Acta Holding A.S.A.		27,180		9
				16
Energy 0.4%
DNO International A.S.A. *		10,765		9
DOF A.S.A.		1,003		5
Fred. Olsen Energy A.S.A.		341		11
Petroleum Geo-Services A.S.A. *		4,293		21
Solstad Offshore A.S.A.		170		2
Subsea 7, Inc. *		1,738		13
TGS Nopec Geophysical Co., A.S.A. *		722		5
				66
Food, Beverage & Tobacco 0.3%
Austevoll Seafood A.S.A.		2,666		8
Cermaq A.S.A.		1,681		10
Leroy Seafood Group A.S.A.		660		7
Marine Harvest *		41,875		19
				44
Media 0.1%
Schibsted A.S.A.		1,563		16
Real Estate 0.1%
Norwegian Property A.S.A.		8,489		10
Software & Services 0.1%
Atea A.S.A.		1,805		6
EDB Business Partner A.S.A.		2,462		5
				11
Technology Hardware & Equipment 0.0%
Tandberg A.S.A.		389		6
Transportation 0.1%
Camillo Eitzen & Co., A.S.A.		2,778		4
Eitzen Chemical A.S.A. *		5,209		3
Stolt-Nielsen S.A.		1,364		12
				19
				234
Portugal 0.7%
Banks 0.0%
Banif, SGPS, S.A. — Reg’d		5,376		8
Capital Goods 0.2%
Mota-Engil, SGPS, S.A. *		3,059		13
Teixeira Duarte-Engenharia e Construcoes S.A.		12,166		12
				25
Materials 0.3%
Portucel-Empresa Produtora de Pasta e Papel S.A.		6,134		13
Semapa — Sociedade de Investimento e Gestao, SGPS, S.A.		993		8
Sonae Industria-SGPS, S.A.		7,155		23
				44
Media 0.1%
Zon Multimedia-Servicos de Telecomunicacoes e Multimedia SGPS S.A.		1,997		11
Retailing 0.0%
SAG GEST — Solucos Automovel Globais, SGPS, S.A.		3,007		4
Telecommunication Services 0.1%
SONAECOM — SGPS, S.A. *		7,558		19
				111
Singapore 2.0%
Capital Goods 0.2%
Cosco Corp.(Singapore) Ltd.		8,431		6
Haw Par Corp., Ltd.		2,000		5
Hong Leong Asia Ltd.		18,000		9
SembCorp Marine Ltd.		6,048		8
				28
Consumer Services 0.0%
Hotel Properties Ltd.		9,000		6
Diversified Financials 0.2%
First Ship Lease Trust		18,000		5
Kim Eng Holdings Ltd.		7,120		7
Singapore Exchange Ltd.		6,000		25
				37
Food & Staples Retailing 0.1%
Olam International Ltd.		11,000		13

     See financial notes.     19

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Food, Beverage & Tobacco 0.1%
Cerebos Pacific Ltd.		2,000		4
Indofood Agri Resources Ltd. *		17,000		10
				14
Health Care Equipment & Services 0.0%
Parkway Holdings Ltd.		5,866		5
Real Estate 0.8%
Allgreen Properties Ltd.		27,000		10
Ascendas Real Estate Investment Trust (A-REIT)		13,000		12
CapitaCommercial Trust		26,000		15
CapitaMall Trust		27,000		23
CDL Hospitality Trusts		17,000		7
Fortune REIT		13,000		5
Guocoland Ltd.		3,000		2
K-REIT Asia		5,000		2
Keppel Land Ltd.		8,000		9
Mapletree Logistics Trust		15,000		4
Singapore Land Ltd.		3,000		7
UOL Group Ltd. *		11,000		17
Wing Tai Holdings Ltd.		14,000		8
Yanlord Land Group Ltd.		7,000		7
				128
Semiconductors & Semiconductor Equipment 0.1%
Chartered Semiconductor Manufacturing Ltd. *		125,000		14
STATS ChipPAC Ltd. *		16,000		5
				19
Technology Hardware & Equipment 0.1%
Venture Corp., Ltd.		4,000		16
Telecommunication Services 0.1%
MobileOne Ltd.		8,000		8
StarHub Ltd.		6,000		7
				15
Transportation 0.3%
ComfortDelGro Corp., Ltd.		22,000		21
SIA Engineering Co., Ltd.		3,205		4
Singapore Airport Terminal Services Ltd.		5,749		5
Singapore Post Ltd.		17,000		9
SMRT Corp., Ltd.		7,000		7
				46
				327
Spain 2.1%
Banks 0.3%
Banco de Valencia S.A.		768		7
Banco Pastor S.A.		3,140		21
Bankinter S.A.		1,578		19
				47
Capital Goods 0.2%
Abengoa S.A.		773		13
Construcciones Y Auxiliar De Ferrocarriles S.A.		8		3
Fluidra S.A.		67		—
Obrascon Huarte Lain S.A.		1,287		17
Uralita S.A.		955		6
				39
Commercial & Professional Supplies 0.0%
Prosegur, Compania de Seguridad S.A. — Reg’d		241		7
Consumer Durables & Apparel 0.0%
La Seda de Barcelona S.A., Class B *		15,006		7
Consumer Services 0.2%
Codere S.A. *		586		4
NH Hoteles S.A.		3,791		18
Sol Melia S.A.		1,952		10
				32
Diversified Financials 0.2%
Bolsas y Mercados Espanoles		590		16
Corporacion Financiera Alba S.A.		434		19
				35
Energy 0.1%
Tecnicas Reunidas S.A.		259		9
Food, Beverage & Tobacco 0.2%
Campofrio Food Group S.A.		496		5
Ebro Puleva S.A.		1,913		27
Pescanova S.A.		142		5
Sos Cuetara S.A.		566		3
				40
Insurance 0.1%
Grupo Catalana Occidente S.A.		947		14
Materials 0.2%
Cementos Portland Valderrivas S.A.		346		11
Cie Automotive S.A.		1,169		5
Ercros S.A. *		19,097		4
Grupo Empresarial Ence S.A.		2,934		10
Tubos Reunidos S.A.		1,698		4
				34
Media 0.2%
Antena 3 de Television S.A.		1,933		11

20     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Promotora de Informaciones S.A. (Prisa) *		5,970		16
Vocento S.A.		2,549		14
				41
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Grifols S.A.		426		8
Laboratorios Almirall S.A.		933		8
				16
Real Estate 0.1%
Parquesol Inmobiliaria S.A.		172		1
Realia Business S.A.		2,930		9
				10
Software & Services 0.1%
Indra Sistemas S.A.		785		15
Transportation 0.1%
Cintra Concesiones de Infraestructuras de Transporte S.A. *		2,458		13
				359
Sweden 3.1%
Capital Goods 1.2%
Alfa Laval AB		2,327		21
Cardo AB		409		9
Haldex AB *		1,506		8
Hexagon AB, Class B		2,554		19
Lindab International AB		1,705		15
Peab AB		3,764		16
Saab AB, Class B		2,247		15
Trelleborg AB, B Shares *		24,731		101
				204
Commercial & Professional Supplies 0.1%
Intrum Justitia AB		319		3
Niscayah Group AB		10,292		13
				16
Consumer Durables & Apparel 0.1%
JM AB *		1,973		14
Diversified Financials 0.2%
D. Carnegie & Co. AB (a)(b)*		851		—
Investment AB Oresund		771		8
Ratos AB, B Shares		1,752		30
				38
Energy 0.1%
Lundin Petroleum AB *		2,382		15
Food & Staples Retailing 0.1%
Axfood AB		574		12
Hakon Invest AB		802		8
				20
Food, Beverage & Tobacco 0.1%
AarhusKarlshamn AB		383		5
Swedish Match AB		1,196		17
				22
Health Care Equipment & Services 0.1%
Getinge AB, Class B		1,875		22
Materials 0.1%
Billerud *		2,869		14
Media 0.5%
Eniro AB		20,015		44
Modern Times Group MTG AB, B Shares		1,422		39
				83
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Meda AB, A Shares		896		6
Real Estate 0.3%
Castellum AB		886		6
Fabege AB		4,477		19
Hufvudstaden AB, A Shares		925		5
Klovern AB		1,542		3
Kungsleden AB		2,748		14
Lennart Wallenstam Byggnads AB, B Shares		649		7
				54
Retailing 0.1%
Nobia AB *		4,725		18
				526
Switzerland 3.6%
Automobiles & Components 0.1%
Rieter Holding AG — Reg’d		119		18
Banks 0.3%
Banque Cantonale Vaudoise — Reg’d *		36		12
Basler Kantonalbank		142		14
Gottex Fund Management Holdings Ltd.		1,635		9
St. Galler Kantonalbank — Reg’d *		20		7
				42
Capital Goods 0.9%
Bobst Group AG		283		7
Bucher Industries AG — Reg’d		116		10
Daetwyler Holding AG		157		5
Geberit AG — Reg’d		226		24

     See financial notes.     21

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Georg Fischer AG — Reg’d *		163		27
Implenia AG *		376		9
Kaba Holding AG, Class B — Reg’d		34		7
OC Oerlikon Corp. AG — Reg’d *		580		33
Sulzer AG — Reg’d		427		23
				145
Consumer Durables & Apparel 0.1%
AFG Arbonia-Forster Holding AG *		67		1
Forbo Holding AG — Reg’d *		58		10
Metall Zug AG		2		3
				14
Consumer Services 0.1%
Kuoni Reisen Holding AG — Reg’d		36		10
Diversified Financials 0.4%
Athris Holding AG *		5		4
Bank Sarasin & Cie AG Class B — Reg’d *		294		7
Compagnie Financiere Tradition		78		7
EFG International AG *		1,584		19
Partners Group Holding AG		100		9
Vontobel Holding AG — Reg’d		642		14
				60
Food, Beverage & Tobacco 0.3%
Aryzta AG *		553		16
Barry Callebaut AG — Reg’d *		15		7
Bell Holding AG — Reg’d		5		6
Emmi AG — Reg’d		51		5
Lindt & Spruengli AG		3		5
Lindt & Spruengli AG — Reg’d		1		19
				58
Health Care Equipment & Services 0.3%
Galenica AG — Reg’d		31		9
Nobel Biocare Holding AG — Reg’d		545		11
Sonova Holding AG — Reg’d		242		16
Straumann Holding AG — Reg’d		41		7
				43
Insurance 0.0%
Schweizerische Naional-Versicherungs-Gesellschaft — Reg’d		18		8
Materials 0.3%
EMS-Chemie Holding AG — Reg’d		196		15
Schmolz & Bickenbach AG — Reg’d		955		19
Sika AG		19		17
				51
Media 0.0%
PubliGroupe S.A. — Reg’d		131		8
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Actelion Ltd. — Reg’d *		154		7
BB Medtech AG		549		18
Lonza Group AG — Reg’d		210		19
				44
Real Estate 0.2%
Allreal Holding AG — Reg’d		47		5
Jelmoli Holding AG — Reg’d		25		8
PSP Swiss Property AG — Reg’d *		303		14
Swiss Prime Site AG — Reg’d *		164		8
				35
Retailing 0.1%
Charles Vogele Holding AG *		194		5
Valora Holding AG — Reg’d		74		13
				18
Semiconductors & Semiconductor Equipment 0.0%
Micronas Semiconductor Holding AG — Reg’d *		1,887		6
Technology Hardware & Equipment 0.2%
Kudelski S.A. *		223		3
Logitech International S.A. — Reg’d *		1,880		25
				28
Transportation 0.0%
Flughafen Zuerich AG — Reg’d *		26		6
Utilities 0.0%
Romande Energie Holding S.A. — Reg’d		4		7
				601
United Kingdom 14.3%
Banks 0.1%
Paragon Group Cos. plc		17,679		17
Capital Goods 2.9%
Ashtead Group plc		30,390		28
Bodycote plc		7,141		15
BSS Group plc		1,767		8
Carillion plc		6,578		26
Charter International plc		3,177		26
Cobham plc		7,332		19
Cookson Group plc		138,015		39
Fenner plc		3,812		5
Galliford Try plc		18,391		15
IMI plc		6,460		34
Interserve plc		4,990		15

22     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Keller Group plc		938		8
Kier Group plc		845		12
Meggitt plc		13,870		37
Melrose plc		5,448		8
Morgan Crucible Co. plc		7,107		12
Morgan Sindall plc		654		6
Qinetiq Group plc		7,268		14
SIG plc		46,073		109
Speedy Hire plc		2,473		9
Spirax-Sarco Engineering plc		652		8
The Weir Group plc		3,297		23
Ultra Electronics Holdings plc		341		6
VT Group plc		1,335		9
				491
Commercial & Professional Supplies 1.3%
Aggreko plc		2,129		18
Babcock International Group plc		1,300		8
Capita Group plc		2,233		22
De La Rue plc		862		12
Hays plc		29,082		39
Homeserve plc		388		7
Intertek Group plc		790		12
Michael Page International plc		2,379		10
Mitie Group plc		3,195		10
Regus plc		6,918		8
Serco Group plc		3,308		18
Shanks Group plc		10,593		15
The Davis Service Group plc		7,168		28
WS Atkins plc		1,436		13
				220
Consumer Durables & Apparel 0.7%
Bellway plc		3,150		33
Bovis Homes Group plc		2,703		18
Burberry Group plc		5,001		30
Redrow plc *		6,421		19
The Berkeley Group Holdings plc *		1,196		17
				117
Consumer Services 0.5%
Greene King plc		3,096		28
J.D. Wetherspoon plc		1,781		11
Luminar Group Holdings plc		3,378		7
Marston’s plc		10,667		27
Millennium & Copthorne Hotels plc		2,724		9
Restaurant Group plc		3,211		7
				89
Diversified Financials 1.3%
Aberdeen Asset Management plc		8,246		16
Ashmore Group plc		5,365		18
Cattles plc (a)(b)		247,655		25
Close Brothers Group plc		3,581		33
Collins Stewart plc		4,329		6
F&C Asset Management plc		8,564		10
IG Group Holdings plc		2,093		7
Intermediate Capital Group plc		5,785		41
International Personal Finance		6,196		13
Provident Financial plc		2,104		26
Tullett Prebon plc		5,220		21
				216
Energy 0.7%
Cairn Energy plc *		248		8
Dana Petroleum plc *		471		9
Hunting plc		2,181		15
John Wood Group plc		3,395		12
Petrofac Ltd.		880		7
Premier Oil plc *		791		12
Tullow Oil plc		1,792		21
UK Coal plc *		3,522		6
Venture Production plc		2,172		26
				116
Food, Beverage & Tobacco 0.4%
Britvic plc		3,494		13
Dairy Crest Group plc		4,765		22
Greggs plc		128		7
Northern Foods plc		16,661		15
Robert Wiseman Dairies plc		1,203		6
				63
Health Care Equipment & Services 0.1%
Southern Cross Healthcare Ltd.		4,351		7
SSL International plc		898		6
				13
Household & Personal Products 0.1%
McBride plc		3,663		7
PZ Cussons plc		2,447		6
				13
Insurance 0.4%
Admiral Group plc		812		11
Beazley Group plc		4,967		8
Brit Insurance Holdings plc		7,810		21
Chaucer Holdings plc		6,992		4
Jardine Lloyd Thompson Group plc		1,805		12
St. James’s Place plc		1,700		4
				60
Materials 0.5%
Croda International plc		1,058		8

     See financial notes.     23

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
DS Smith plc		21,350		24
Elementis plc		4,736		2
Filtrona plc		2,954		5
Hochschild Mining plc		1,136		4
Marshalls plc		7,661		13
Peter Hambro Mining plc		2,095		20
Yule Catto & Co. plc		8,572		8
				84
Media 0.6%
Euromoney Institutional Investor plc		1,319		5
Informa plc		6,847		30
Johnston Press plc *		168,758		30
St. Ives plc		10,871		10
Taylor Nelson Sofres plc		5,062		20
				95
Real Estate 0.8%
Big Yellow Group plc		1,792		7
Brixton plc		23,737		10
CLS Holdings plc *		1,351		6
Daejan Holdings plc		187		6
Derwent London plc		2,577		32
Grainger plc		3,520		9
Great Portland Estates plc		2,703		12
Invista Foundation Property Trust Ltd.		23,631		11
Mapeley Ltd. (b)		2,199		6
Minerva plc *		7,823		1
Savills plc		1,712		7
Shaftesbury plc		1,665		9
St. Modwen Properties plc		1,983		5
Workspace Group plc		32,822		7
				128
Retailing 1.2%
Carpetright plc		823		7
Debenhams plc		26,845		36
Findel plc		4,827		11
Galiform plc		34,703		16
GAME GROUP plc		3,074		9
Halfords Group plc		3,038		15
Headlam Group plc		1,578		6
HMV Group plc		11,676		25
JJB Sports plc		63,687		23
Mothercare plc		1,048		6
N Brown Group plc		2,531		9
Smiths News plc		10,504		15
Sports Direct International		10,640		11
WH Smith plc		2,593		16
Woolworths Group plc (a)(b)*		165,675		—
				205
Semiconductors & Semiconductor Equipment 0.1%
ARM Holdings plc		6,075		10
CSR plc *		2,006		8
				18
Software & Services 0.5%
Autonomy Corp. plc *		900		19
Computacenter plc		6,290		14
Dimension Data Holdings plc		38,722		29
Misys plc		6,751		13
Xchanging plc		235		1
				76
	��
Technology Hardware & Equipment 0.7%
Electrocomponents plc		15,711		37
Halma plc		3,645		10
Laird plc		14,037		32
Premier Farnell plc		5,747		13
Spectris plc		1,295		11
TT electronics plc		17,074		7
				110
Telecommunication Services 0.1%
Inmarsat plc		2,407		17
KCOM Group plc		22,007		9
				26
Transportation 1.0%
Air Berlin plc *		1,903		10
BBA Aviation plc		22,787		35
Forth Ports plc		324		5
Go-Ahead Group plc		1,192		22
Northgate plc		28,276		61
Stagecoach Group plc		9,682		19
Wincanton plc		9,870		23
				175
Utilities 0.3%
Northumbrian Water Group plc		5,055		17
Pennon Group plc		5,242		34
				51
				2,383
United States 0.1%
Pharmaceuticals, Biotechnology & Life Sciences 0.1%
Perrigo Co.		320		9
Total Common Stock
(Cost $20,069)				16,266

24     See financial notes.     

Schwab Fundamental International Small-Mid Company Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Other Investment Companies 0.7% of net assets
Canada 0.1%
CML Healthcare Income Fund		770		8
United States 0.6%
iShares MSCI EAFE Index Fund		2,500		105
Total Other Investment Companies
(Cost $105)				113
Preferred Stock 0.4% of net assets
Germany 0.4%
Capital Goods 0.1%
Jungheinrich AG		1,084		13
Consumer Durables & Apparel 0.1%
Hugo Boss AG		1,095		22
Healthcare — Services 0.1%
Draegerwerk AG & Co. KGAA		332		8
Materials 0.1%
Dyckerhoff AG		238		13
Fuchs Petrolub AG		105		5
				18
Transportation 0.0%
Sixt AG		584		8
Total Preferred Stock
(Cost $94)				69
Rights 0.3% of net assets
Denmark 0.0%
Consumer Durables & Apparel 0.0%
Bang & Olufsen A/S *		658		2
Spain 0.0%
Banks 0.0%
Banco de Valencia S.A. *		768		—
Sweden 0.3%
Capital Goods 0.3%
Trelleborg AB *		16,612		44
Total Rights
(Cost $5)				46
Warrants 0.0% of net assets
Bermuda 0.0%
Capital Goods 0.0%
PYI Corp. *		3,333		—
Hong Kong 0.0%
Energy 0.0%
HK Energy		527		—
HKC Holdings (a)		7,600		—
Total Other Investment Companies
(Cost $—)				—

Security	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.4% of net assets
Commercial Paper & Other Obligation 0.4%
Citibank, New York Time Deposit 0.03%, 05/01/09		75		75
Total Short-Term Investment
(Cost $75)				75

End of Investments.
(All dollar amounts are x 1,000)
At of 04/30/09, the tax basis cost of the fund’s investments was $20,872, and the unrealized appreciation and depreciation were $423 and ($4,726), respecitively, with a net unrealized depreciation of ($4,303).
As of 04/30/09, the prices of certain foreign securities held by the fund aggregating $14,924 were adjusted from their market prices following the guidelines adopted by the fund’s Board of Trustees.
*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	Illiquid Security. At the period end, the value of these amounted to $37 or 0.2% of net assets. Please see complete schedule of holdings.
CVA — Dutch Certificate
Reg’d — Registered
REIT — Real Estate Investment Trust

     See financial notes.     25

Schwab Small-Cap Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98.7	%	Common Stock		1,185,598		953,092
	1.2	%	Foreign Common Stock		18,351		11,413
	0.1	%	Preferred Stock		1,145		625
	—	%	Rights		44		17
	0.3	%	Short-Term Investment		3,303		3,303
	100.3	%	Total Investments		1,208,441		968,450
	(0.3	)%	Other Assets and Liabilities, Net				(2,472	)
	100.0	%	Total Net Assets				965,978

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 98.7% of net assets
Automobiles & Components 0.5%
Cooper Tire & Rubber Co.		96,123		795
Exide Technologies *		176,700		960
Federal-Mogul Corp. *		56,700		629
Fuel Systems Solutions, Inc. *		22,000		336
Thor Industries, Inc.		57,864		1,330
TRW Automotive Holdings Corp. *		97,800		843
				4,893
Banks 7.0%
1st Source Corp.		19,221		378
Abington Bancorp, Inc.		24,900		219
BancFirst Corp.		13,416		573
Bank Mutual Corp.		82,693		849
Bank of the Ozarks, Inc.		22,300		554
Beneficial Mutual Bancorp, Inc. *		60,203		606
Boston Private Financial Holdings, Inc.		114,100		526
Brookline Bancorp, Inc.		96,492		957
Capital City Bank Group, Inc.		15,400		232
Cathay General Bancorp		82,622		927
Chemical Financial Corp.		41,203		880
Citizens Republic Bancorp, Inc. *		225,528		379
City Holding Co.		31,200		920
Community Bank System, Inc.		52,700		867
Community Trust Bancorp, Inc.		22,800		690
CVB Financial Corp.		109,819		660
Dime Community Bancshares		44,400		370
Doral Financial Corp. *		40,979		195
Downey Financial Corp.		430		—
East West Bancorp, Inc.		106,800		729
F.N.B. Corp.		143,237		1,077
Fannie Mae		1,925,800		1,502
First BanCorp Puerto Rico		154,877		853
First Busey Corp.		42,000		329
First Citizens BancShares, Inc., Class A		7,100		850
First Commonwealth Financial Corp.		121,256		1,051
First Financial Bancorp		52,189		563
First Financial Bankshares, Inc.		40,721		2,007
First Financial Corp.		10,300		382
First Merchants Corp.		38,100		463
First Midwest Bancorp, Inc.		98,263		871
Freddie Mac		1,158,000		915
Frontier Financial Corp.		6,678		9
Glacier Bancorp, Inc.		105,811		1,621
Hancock Holding Co.		47,610		1,803
Harleysville National Corp.		50,500		443
Home Bancshares, Inc.		23,800		525
IBERIABANK Corp.		27,800		1,270
Independent Bank Corp.		29,100		581
Kearny Financial Corp.		29,200		326
MB Financial, Inc.		62,424		851
MGIC Investment Corp.		223,800		573
National Penn Bancshares, Inc.		132,378		1,071
NBT Bancorp, Inc.		56,685		1,342
Northfield Bancorp, Inc.		17,200		194
Northwest Bancorp, Inc.		37,693		663
Ocwen Financial Corp. *		67,300		748
Old National Bancorp		132,583		1,807
Oritani Financial Corp. *		17,500		248
Pacific Capital Bancorp		83,442		579
PacWest Bancorp		38,016		554
Park National Corp.		20,953		1,403
Pinnacle Financial Partners, Inc. *		39,532		705
PrivateBancorp, Inc.		45,476		921
Prosperity Bancshares, Inc.		73,365		2,037
Provident Financial Services, Inc.		94,551		1,009
Provident New York Bancorp		50,000		424
Republic Bancorp, Inc., Class A		15,900		354
Roma Financial Corp.		17,700		230
S&T Bancorp, Inc.		39,081		698
S.Y. Bancorp, Inc.		19,500		492

See financial notes.     1

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Sandy Spring Bancorp, Inc.		29,400		478
Santander BanCorp		7,400		50
SCBT Financial Corp.		16,200		374
Signature Bank *		62,209		1,691
Simmons First National Corp., Class A		17,700		459
StellarOne Corp.		29,700		382
Sterling Bancshares, Inc.		129,512		861
Sterling Financial Corp.		82,747		264
Susquehanna Bancshares, Inc.		170,308		1,373
SVB Financial Group *		56,123		1,165
Texas Capital Bancshares, Inc. *		37,400		524
The Colonial BancGroup, Inc.		475,200		361
Tompkins Financial Corp.		10,300		434
TowneBank		24,400		420
TriCo Bancshares		22,500		360
TrustCo Bank Corp. NY		124,802		749
Trustmark Corp.		86,177		1,874
UCBH Holdings, Inc.		201,725		258
Umpqua Holdings Corp.		99,795		957
United Bankshares, Inc.		63,122		1,637
United Community Banks, Inc.		68,868		444
Univest Corp. of Pennsylvania		13,800		288
ViewPoint Financial Group		10,100		157
Washington Federal, Inc.		171,039		2,220
Webster Financial Corp.		118,400		619
WesBanco, Inc.		44,198		879
Western Alliance Bancorp *		36,100		235
Whitney Holding Corp.		105,800		1,265
Wintrust Financial Corp.		39,055		664
				67,297
Capital Goods 10.0%
A.O. Smith Corp.		38,730		1,204
AAON, Inc.		23,100		450
AAR CORP. *		63,597		958
Actuant Corp., Class A		111,448		1,366
Aerovironment, Inc. *		27,900		660
Albany International Corp., Class A		44,500		413
American Science & Engineering, Inc.		15,700		946
American Superconductor Corp. *		70,553		1,813
Ameron International Corp.		15,500		917
Apogee Enterprises, Inc.		49,200		659
Applied Industrial Technologies, Inc.		60,166		1,354
Argon ST, Inc. *		18,800		383
Astec Industries, Inc. *		32,695		1,008
Axsys Technologies, Inc. *		16,400		687
Badger Meter, Inc.		24,303		947
Baldor Electric Co.		82,708		1,919
Barnes Group, Inc.		76,840		1,088
BE Aerospace, Inc. *		178,000		1,921
Beacon Roofing Supply, Inc. *		74,882		1,191
Belden, Inc.		83,200		1,341
Blount International, Inc. *		62,762		402
Brady Corp., Class A		88,529		1,865
Briggs & Stratton Corp.		83,093		1,236
Cascade Corp.		12,800		309
Ceradyne, Inc. *		47,012		810
Chart Industries, Inc. *		48,200		667
CIRCOR International, Inc.		28,200		726
Colfax Corp. *		36,200		312
Cubic Corp.		26,015		747
Dycom Industries, Inc. *		58,132		489
DynCorp International, Inc., Class A *		40,399		616
EMCOR Group, Inc. *		117,104		2,435
Encore Wire Corp.		31,541		689
Ener1, Inc. *		65,600		386
Energy Conversion Devices, Inc. *		81,763		1,503
Energy Recovery, Inc. *		35,401		279
EnerSys *		73,278		1,249
EnPro Industries, Inc. *		46,400		741
ESCO Technologies, Inc. *		46,769		1,945
Esterline Technologies Corp. *		57,611		1,518
Evergreen Solar, Inc. *		217,289		528
Federal Signal Corp.		80,759		628
Force Protection, Inc. *		122,200		931
Franklin Electric Co., Inc.		37,818		896
Gardner Denver, Inc. *		87,512		2,330
Gibraltar Industries, Inc.		48,272		323
GrafTech International Ltd. *		232,300		2,042
Griffon Corp. *		77,421		671
GT Solar International, Inc. *		71,600		508
HEICO Corp., Class A		23,724		592
Hexcel Corp. *		172,383		1,653
II-VI, Inc. *		40,100		961
Insituform Technologies, Inc., Class A *		45,900		704
Interline Brands, Inc. *		53,034		687
Kaman Corp.		42,349		716
Kaydon Corp.		57,735		1,845
Layne Christensen Co. *		39,911		864
Lindsay Corp.		27,400		1,066
MasTec, Inc. *		73,273		917
Michael Baker Corp. *		13,900		467
Moog, Inc., Class A *		4,658		125
Mueller Industries, Inc.		74,724		1,642
Mueller Water Products, Inc., Class A		189,300		793
NACCO Industries, Inc., Class A		9,477		362
NCI Building Systems, Inc. *		34,206		135
Nordson Corp.		61,043		2,215

2     See financial notes.

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Northwest Pipe Co. *		16,400		622
Orbital Sciences Corp. *		114,336		1,768
Oshkosh Corp.		133,200		1,279
Otter Tail Corp.		63,309		1,404
Perini Corp. *		44,930		777
Pike Electric Corp. *		32,300		335
Polypore International, Inc. *		69,300		523
Quanex Building Products Corp.		67,404		691
Raven Industries, Inc.		22,200		531
RBC Bearings, Inc. *		36,000		666
Regal-Beloit Corp.		62,547		2,541
Robbins & Myers, Inc.		56,800		1,076
RSC Holdings, Inc. *		62,000		443
Rush Enterprises, Inc., Class A *		56,287		741
Sauer-Danfoss, Inc.		27,000		112
Simpson Manufacturing Co., Inc.		61,894		1,378
Stanley, Inc. *		24,000		619
TAL International Group, Inc.		23,100		221
Taser International, Inc. *		107,100		514
Tennant Co.		31,200		464
The Gorman-Rupp Co.		25,700		547
The Manitowoc Co., Inc.		233,200		1,388
The Middleby Corp. *		33,052		1,447
The Toro Co.		63,535		1,930
Titan International, Inc.		56,925		344
Tredegar Corp.		29,800		524
Triumph Group, Inc.		29,701		1,228
United Rentals, Inc. *		92,000		558
Universal Forest Products, Inc.		38,462		1,291
Vicor Corp.		12,800		69
Watsco, Inc.		55,882		2,400
Watts Water Technologies, Inc., Class A		57,807		1,287
WESCO International, Inc. *		75,800		1,971
				96,439
Commercial & Professional Supplies 3.7%
ABM Industries, Inc.		90,109		1,579
Administaff, Inc.		36,310		968
American Ecology Corp.		21,300		352
American Reprographics Co. *		60,787		392
CBIZ, Inc. *		73,222		576
Comfort Systems USA, Inc.		70,700		763
CoStar Group, Inc. *		36,483		1,352
Deluxe Corp.		84,546		1,226
Duff & Phelps Corp., Class A *		21,000		396
EnergySolutions, Inc.		65,000		630
Ennis, Inc.		39,000		351
Exponent, Inc. *		18,400		513
First Advantage Corp., Class A *		17,552		252
G & K Services, Inc., Class A		29,330		732
Healthcare Services Group, Inc.		71,150		1,272
Heidrick & Struggles International, Inc.		25,600		433
Herman Miller, Inc.		95,700		1,423
HNI Corp.		75,200		1,166
Huron Consulting Group, Inc. *		37,500		1,798
ICF International, Inc. *		13,000		358
Innerworkings, Inc. *		121,400		613
Interface, Inc., Class A		90,700		525
Kelly Services, Inc., Class A		46,723		531
Kimball International, Inc., Class B		41,251		226
Knoll, Inc.		71,903		509
Korn/Ferry International *		78,461		831
M&F Worldwide Corp. *		45,070		719
McGrath Rentcorp		38,898		822
Mine Safety Appliances Co.		48,689		1,200
Mobile Mini, Inc. *		56,768		778
MPS Group, Inc. *		152,646		1,227
Navigant Consulting, Inc. *		77,748		1,144
Resources Connection, Inc. *		75,550		1,477
Rollins, Inc.		5,188		93
School Specialty, Inc. *		26,093		490
Steelcase, Inc., Class A		104,242		472
Sykes Enterprises, Inc. *		54,693		1,075
Team, Inc. *		33,700		484
The Advisory Board Co. *		27,976		521
The Corporate Executive Board Co.		69,400		1,199
The Geo Group, Inc. *		103,700		1,725
TrueBlue, Inc. *		69,376		674
United Stationers, Inc. *		48,467		1,586
Viad Corp.		33,896		647
				36,100
Consumer Durables & Apparel 3.8%
American Greetings Corp., Class A		67,111		527
Brunswick Corp.		129,500		774
Callaway Golf Co.		133,369		1,007
Carter’s, Inc. *		92,314		1,974
Columbia Sportswear Co.		18,919		581
Deckers Outdoor Corp. *		24,500		1,385
Ethan Allen Interiors, Inc.		42,479		571
Fossil, Inc. *		79,900		1,611
Iconix Brand Group, Inc. *		104,300		1,487
JAKKS Pacific, Inc. *		62,174		787
Jarden Corp. *		138,808		2,790
Jones Apparel Group, Inc.		123,300		1,139
K-Swiss, Inc., Class A		65,428		657
Meritage Homes Corp. *		74,885		1,558
National Presto Industries, Inc.		8,600		613
Phillips-Van Heusen Corp.		92,100		2,674
Polaris Industries, Inc.		53,323		1,784
Pool Corp.		85,777		1,532

See financial notes.     3

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Skechers U.S.A., Inc., Class A *		50,278		588
Steven Madden Ltd. *		32,000		941
Tempur-Pedic International, Inc.		133,862		1,721
The Ryland Group, Inc.		76,500		1,584
The Timberland Co., Class A *		69,660		1,131
The Warnaco Group, Inc. *		92,763		2,675
Under Armour, Inc., Class A *		59,920		1,411
UniFirst Corp.		21,635		807
Weyco Group, Inc.		3,700		102
Wolverine World Wide, Inc.		98,936		2,061
				36,472
Consumer Services 4.8%
American Public Education, Inc. *		18,600		670
Ameristar Casinos, Inc.		67,075		1,376
Bally Technologies, Inc. *		98,062		2,567
Bob Evans Farms, Inc.		48,046		1,165
Boyd Gaming Corp.		138,600		1,274
Brink’s Home Security Holdings, Inc. *		72,900		1,938
Buffalo Wild Wings, Inc. *		31,900		1,245
Capella Education Co. *		23,500		1,207
CEC Entertainment, Inc. *		45,538		1,387
Cedar Fair L.P.		84,997		968
Churchill Downs, Inc.		16,261		566
CKE Restaurants, Inc.		85,979		823
Coinstar, Inc. *		50,500		1,797
Cracker Barrel Old Country Store, Inc.		37,353		1,218
Domino’s Pizza, Inc. *		67,079		633
Gaylord Entertainment Co. *		88,735		1,237
Grand Canyon Education Inc *		53,500		875
Hillenbrand, Inc.		88,100		1,602
Jack in the Box, Inc. *		101,588		2,498
Jackson Hewitt Tax Service, Inc.		46,200		226
Life Time Fitness, Inc. *		56,977		1,069
Matthews International Corp., Class A		54,684		1,713
P.F. Chang’s China Bistro, Inc. *		40,742		1,230
Papa John’s International, Inc. *		34,655		920
Pinnacle Entertainment, Inc. *		107,285		1,339
Pre-Paid Legal Services, Inc. *		14,300		527
Regis Corp.		93,649		1,792
Sonic Corp. *		99,229		1,084
Sotheby’s		140,100		1,626
Speedway Motorsports, Inc.		21,584		324
Steiner Leisure Ltd. *		32,309		1,022
Stewart Enterprises, Inc., Class A		144,000		502
Texas Roadhouse, Inc., Class A *		84,696		964
The Cheesecake Factory, Inc. *		100,500		1,746
The Marcus Corp.		35,083		445
Universal Technical Institute, Inc. *		38,600		550
Vail Resorts, Inc. *		48,871		1,427
WMS Industries, Inc. *		89,551		2,875
				46,427
Diversified Financials 3.0%
AmeriCredit Corp. *		235,100		2,391
Cash America International, Inc.		47,570		1,064
Cohen & Steers, Inc.		28,028		413
Credit Acceptance Corp. *		12,253		282
E*TRADE Financial Corp. *		1,007,000		1,440
EZCORP, Inc., Class A *		73,600		912
Financial Federal Corp.		45,423		1,118
First Cash Financial Services, Inc. *		46,000		756
Fortress Investment Group LLC, Class A		312,800		1,082
GAMCO Investors, Inc., Class A		8,700		436
GFI Group, Inc.		75,668		309
GLG Partners, Inc.		201,200		481
Interactive Brokers Group, Inc., Class A *		72,700		1,072
Investment Technology Group, Inc. *		71,665		1,632
KBW, Inc. *		53,400		1,292
KKR Financial Holdings LLC		309,743		418
Life Partners Holdings, Inc.		13,000		243
MF Global Ltd. *		124,100		757
Nelnet, Inc., Class A *		35,600		215
optionsXpress Holdings, Inc.		66,147		1,089
PHH Corp. *		97,363		1,634
PICO Holdings, Inc. *		29,500		885
Piper Jaffray Cos., Inc. *		24,439		847
Portfolio Recovery Associates, Inc. *		25,943		907
Pzena Investment Management, Inc., Class A		40,689		193
Riskmetrics Group, Inc. *		51,300		892
Stifel Financial Corp. *		42,150		2,075
SWS Group, Inc.		49,100		628
Teton Advisors, Inc. (a)*		130		—
The Student Loan Corp.		7,200		347
thinkorswim Group, Inc. *		105,600		1,003
W.P. Carey & Co., L.L.C.		71,666		1,524
World Acceptance Corp. *		32,300		959
				29,296
Energy 6.7%
Alliance Holdings GP L.P.		24,194		445
Alliance Resource Partners L.P.		35,010		1,152
Alon USA Energy, Inc.		22,000		279
APCO Argentina, Inc.		6,200		118
Arena Resources, Inc. *		64,000		1,835
Atlas America, Inc.		66,244		1,031

4     See financial notes.

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Atlas Energy Resources LLC		22,700		403
Atlas Pipeline Partners L.P.		84,500		351
Basic Energy Services, Inc. *		38,100		389
Berry Petroleum Co., Class A		79,700		1,313
BPZ Resources, Inc. *		91,200		497
BreitBurn Energy Partners L.P.		54,363		345
Bristow Group, Inc. *		59,987		1,365
Buckeye GP Holdings L.P.		18,104		305
Cal Dive International, Inc. *		74,500		590
Calumet Specialty Products Partners L.P.		20,000		242
CARBO Ceramics, Inc.		33,420		1,026
Carrizo Oil & Gas, Inc. *		45,000		555
Cheniere Energy Partners L.P.		38,300		260
Clayton Williams Energy, Inc. *		11,000		330
Complete Production Services, Inc. *		88,700		593
Contango Oil & Gas Co. *		23,200		879
Copano Energy LLC		70,100		1,096
CVR Energy, Inc. *		67,800		499
DCP Midstream Partners L.P.		41,700		621
Delek US Holdings, Inc.		73,400		754
Delta Petroleum Corp. *		107,300		315
Dorchester Minerals L.P.		29,392		517
Dril-Quip, Inc. *		53,800		1,850
Eagle Rock Energy Partners L.P.		63,385		240
Enbridge Energy Management LLC *		21,885		757
Encore Energy Partners L.P.		17,900		299
Foundation Coal Holdings, Inc.		79,700		1,294
General Maritime Corp.		102,834		1,021
Genesis Energy L.P.		37,343		451
Global Industries Ltd. *		200,482		1,297
GMX Resources, Inc. *		22,700		248
Goodrich Petroleum Corp. *		36,800		844
GulfMark Offshore, Inc. *		39,000		1,048
Helix Energy Solutions Group, Inc. *		164,400		1,494
Hercules Offshore, Inc. *		157,400		504
Holly Energy Partners L.P.		20,610		613
Hornbeck Offshore Services, Inc. *		37,845		879
Hugoton Royalty Trust		30,860		327
Inergy Holdings L.P.		13,242		477
Inergy L.P.		87,542		2,022
International Coal Group, Inc. *		214,668		427
James River Coal Co. *		49,000		698
Key Energy Services, Inc. *		218,000		957
Legacy Reserves L.P.		42,728		525
Lufkin Industries, Inc.		24,595		858
Magellan Midstream Holdings L.P.		33,125		657
Mariner Energy, Inc. *		159,000		1,809
MarkWest Energy Partners L.P.		93,100		1,334
McMoRan Exploration Co. *		90,300		496
NATCO Group, Inc., Class A *		34,500		830
Newpark Resources, Inc. *		142,610		399
NuStar GP Holdings LLC		31,100		703
Oil States International, Inc. *		89,142		1,685
Parker Drilling Co. *		265,065		732
Patriot Coal Corp. *		105,200		663
Penn Virginia Corp.		70,378		990
Penn Virginia GP Holdings L.P.		41,600		500
Penn Virginia Resource Partners L.P.		49,246		618
Petroleum Development Corp. *		25,203		409
PetroQuest Energy, Inc. *		73,200		220
Pioneer Southwest Energy Partners L.P.		17,800		298
Regency Energy Partners L.P.		75,420		988
Rosetta Resources, Inc. *		85,100		600
RPC, Inc.		54,689		585
Ship Finance International Ltd.		72,025		622
Stone Energy Corp. *		56,968		246
Sunoco Logistics Partners L.P.		700		36
Swift Energy Co. *		50,601		548
Targa Resources Partners L.P.		31,795		366
TC Pipelines L.P.		39,800		1,196
Teekay LNG Partners L.P.		33,000		580
Teekay Offshore Partners L.P.		30,400		416
Tesco Corp. *		57,500		578
TETRA Technologies, Inc. *		173,674		993
USEC, Inc. *		184,023		1,139
VAALCO Energy, Inc. *		104,200		497
Western Gas Partners L.P.		30,651		466
Western Refining, Inc. *		53,822		678
Williams Partners L.P.		83,820		1,438
Williams Pipeline Partners L.P.		31,000		580
World Fuel Services Corp.		57,978		2,211
				64,341
Food & Staples Retailing 1.1%
Arden Group, Inc., Class A		790		92
Casey’s General Stores, Inc.		90,926		2,419
Ingles Markets, Inc., Class A		23,631		369
Nash Finch Co.		22,900		671
PriceSmart, Inc.		24,300		434
Spartan Stores, Inc.		39,500		642
The Andersons, Inc.		30,600		492
The Great Atlantic & Pacific Tea Co., Inc. *		81,590		599
The Pantry, Inc. *		39,700		938
United Natural Foods, Inc. *		72,882		1,660
Village Super Market, Inc., Class A		11,400		353
Weis Markets, Inc.		20,000		740

See financial notes.     5

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Winn-Dixie Stores, Inc. *		90,300		1,035
				10,444
Food, Beverage & Tobacco 1.8%
Alliance One International, Inc. *		30,875		116
American Italian Pasta Co., Class A *		34,700		1,091
Cal-Maine Foods, Inc.		22,300		590
Chiquita Brands International, Inc. *		74,202		562
Coca-Cola Bottling Co.		4,200		219
Darling International, Inc. *		179,000		1,024
Diamond Foods, Inc.		29,300		767
Farmer Brothers Co.		5,400		107
Green Mountain Coffee Roasters, Inc. *		29,800		2,155
J & J Snack Foods Corp.		24,900		965
Lancaster Colony Corp.		32,443		1,421
Lance, Inc.		51,800		1,200
National Beverage Corp. *		17,301		182
Sanderson Farms, Inc.		28,700		1,145
Smart Balance, Inc. *		112,100		788
The Boston Beer Co., Inc., Class A *		17,300		460
The Hain Celestial Group, Inc. *		67,831		1,132
Tootsie Roll Industries, Inc.		3,429		84
TreeHouse Foods, Inc. *		51,900		1,380
Universal Corp., VA		41,345		1,247
Vector Group Ltd.		90,528		1,220
				17,855
Health Care Equipment & Services 6.6%
ABIOMED, Inc. *		55,000		367
Align Technology, Inc. *		120,000		1,489
Alliance Imaging, Inc. *		45,700		360
Almost Family, Inc. *		11,400		282
Amedisys, Inc. *		52,300		1,754
American Medical Systems Holdings, Inc. *		131,125		1,622
AmSurg Corp. *		51,900		1,066
Analogic Corp.		19,854		723
Assisted Living Concepts, Inc., Class A *		4,856		96
athenahealth, Inc. *		43,400		1,380
Bio-Reference Laboratories, Inc. *		20,700		531
Brookdale Senior Living, Inc.		65,300		673
CardioNet, Inc. *		15,600		324
Catalyst Health Solutions, Inc. *		77,365		1,745
Centene Corp. *		72,092		1,324
Chemed Corp.		45,400		1,922
Conceptus, Inc. *		54,300		735
CONMED Corp. *		51,500		686
Cyberonics, Inc. *		41,500		549
Eclipsys Corp. *		90,467		1,194
Emergency Medical Services Corp., Class A *		17,100		596
Emeritus Corp. *		47,800		432
Ensign Group, Inc.		18,500		287
ev3, Inc. *		112,655		942
Genoptix, Inc. *		16,900		491
Gentiva Health Services, Inc. *		47,396		755
Greatbatch, Inc. *		41,000		863
Hanger Orthopedic Group, Inc. *		46,100		641
Health Management Associates, Inc., Class A *		379,200		1,771
HEALTHSOUTH Corp. *		174,500		1,635
Healthspring, Inc. *		100,544		928
Healthways, Inc. *		74,863		781
Hill-Rom Holdings, Inc.		105,200		1,365
HMS Holdings Corp. *		41,800		1,253
ICU Medical, Inc. *		22,600		850
Integra LifeSciences Holdings *		32,948		851
Invacare Corp.		54,211		834
inVentiv Health, Inc. *		55,401		614
Kindred Healthcare, Inc. *		51,492		670
Landauer, Inc.		16,700		885
LHC Group, Inc. *		26,400		602
LifePoint Hospitals, Inc. *		95,641		2,472
MedAssets, Inc. *		20,800		359
Meridian Bioscience, Inc.		67,750		1,177
Merit Medical Systems, Inc. *		40,266		625
Molina Healthcare, Inc. *		24,000		520
National Healthcare Corp.		16,388		651
Neogen Corp. *		13,900		315
NuVasive, Inc. *		64,700		2,452
Omnicell, Inc. *		58,300		513
PharMerica Corp. *		58,664		1,071
Phase Forward, Inc. *		71,500		1,020
PSS World Medical, Inc. *		103,066		1,496
Quidel Corp. *		50,700		590
Res-Care, Inc. *		32,500		521
Sirona Dental Systems, Inc. *		39,465		646
Skilled Healthcare Group, Inc., Class A *		35,400		309
Sun Healthcare Group, Inc. *		77,900		660
SurModics, Inc. *		25,019		543
Tenet Healthcare Corp. *		742,800		1,671
The Cooper Cos., Inc.		80,500		2,314
TomoTherapy, Inc. *		14,185		37
Triple-S Management Corp., Class B *		26,300		337
Universal American Financial Corp. *		79,202		818
Volcano Corp. *		62,900		830
WellCare Health Plans, Inc. *		74,600		1,120

6     See financial notes.

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
West Pharmaceutical Services, Inc.		63,465		2,072
Wright Medical Group, Inc. *		69,300		953
Zoll Medical Corp. *		37,700		606
				63,566
Household & Personal Products 0.7%
Bare Escentuals, Inc. *		95,200		881
Central Garden & Pet Co., Class A *		127,400		1,155
Chattem, Inc. *		33,813		1,857
Elizabeth Arden, Inc. *		40,498		351
Nu Skin Enterprises, Inc., Class A		88,122		1,130
Prestige Brands Holdings, Inc. *		60,800		393
Revlon, Inc., Class A *		49,102		233
USANA Health Sciences, Inc. *		10,400		249
WD-40 Co.		29,500		798
				7,047
Insurance 2.9%
Ambac Financial Group, Inc.		434,900		396
American Equity Investment Life Holding Co.		77,764		438
American Physicians Capital, Inc.		14,400		600
Amerisafe, Inc. *		33,700		518
AmTrust Financial Services, Inc.		40,705		372
Argo Group International Holdings Ltd. *		50,838		1,423
Citizens, Inc. *		51,643		372
CNA Surety Corp. *		37,000		712
Conseco, Inc. *		330,600		529
Crawford & Co., Class B *		44,000		262
Delphi Financial Group, Inc., Class A		71,880		1,241
Donegal Group, Inc., Class A		6,500		95
eHealth, Inc. *		42,900		823
Employers Holdings, Inc.		82,000		684
FBL Financial Group, Inc., Class A		27,168		156
Greenlight Capital Re, Ltd., Class A *		64,889		1,005
Harleysville Group, Inc.		28,263		817
Hilltop Holdings, Inc. *		73,739		835
Horace Mann Educators Corp.		78,278		687
Infinity Property & Casualty Corp.		28,892		1,018
Kansas City Life Insurance Co.		7,399		163
Meadowbrook Insurance Group, Inc.		78,400		466
National Western Life Insurance Co., Class A		4,494		512
OneBeacon Insurance Group Ltd., Class A		44,200		514
Protective Life Corp.		125,100		1,072
RLI Corp.		35,155		1,689
Safety Insurance Group, Inc.		26,870		888
Selective Insurance Group, Inc.		91,014		1,343
State Auto Financial Corp.		37,356		606
Stewart Information Services Corp.		31,543		713
The Navigators Group, Inc. *		22,485		1,020
The Phoenix Cos., Inc.		191,792		299
Tower Group, Inc.		56,865		1,546
United America Indemnity Ltd., Class A *		28,511		145
United Fire & Casualty Co.		37,200		695
Unitrin, Inc.		88,100		1,498
Zenith National Insurance Corp.		66,645		1,519
				27,671
Materials 4.3%
A. Schulman, Inc.		39,109		614
A.M. Castle & Co.		2,661		26
AMCOL International Corp.		33,252		644
Arch Chemicals, Inc.		44,572		1,078
Ashland, Inc.		118,400		2,600
Balchem Corp.		23,000		572
Calgon Carbon Corp. *		96,700		1,642
Carpenter Technology Corp.		78,900		1,631
Century Aluminum Co. *		65,800		266
Coeur d’Alene Mines Corp. *		986,506		1,361
Deltic Timber Corp.		22,204		936
Domtar Corp. *		781,500		1,422
Eagle Materials, Inc.		77,890		2,165
Glatfelter		66,900		594
Graphic Packaging Holding Co. *		392,315		675
H.B. Fuller Co.		81,816		1,445
Haynes International, Inc. *		31,225		705
Hecla Mining Co. *		266,900		659
Huntsman Corp.		289,400		1,551
Innophos Holdings, Inc.		18,800		279
Kaiser Aluminum Corp.		23,150		684
Koppers Holdings, Inc.		46,200		876
Kronos Worldwide, Inc.		5,905		44
Minerals Technologies, Inc.		33,561		1,248
NewMarket Corp.		18,500		1,166
NL Industries, Inc.		20,741		251
OM Group, Inc. *		54,500		1,518
PolyOne Corp. *		141,175		387
Rock-Tenn Co., Class A		68,400		2,583
Rockwood Holdings, Inc. *		61,000		750
RTI International Metals, Inc. *		30,766		400
Sensient Technologies Corp.		81,225		1,899
Silgan Holdings, Inc.		2,060		96
Solutia, Inc. *		168,800		635
Stepan Co.		12,900		510
Stillwater Mining Co. *		52,341		236

See financial notes.     7

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Temple-Inland, Inc.		157,000		1,875
Texas Industries, Inc.		44,951		1,438
W.R. Grace & Co. *		90,600		800
Wausau Paper Corp.		73,820		644
Westlake Chemical Corp.		38,000		711
Worthington Industries, Inc.		107,160		1,597
				41,213
Media 1.1%
Arbitron, Inc.		41,256		859
Ascent Media Corp., Class A *		25,200		649
Cinemark Holdings, Inc.		78,794		701
CKX, Inc. *		72,771		392
Cox Radio, Inc., Class A *		39,900		191
Crown Media Holdings, Inc., Class A *		4,200		13
Entravision Communications Corp., Class A *		7,900		4
Harte-Hanks, Inc.		58,916		487
Hearst-Argyle Television, Inc.		33,980		153
Journal Communications, Inc., Class A		3,400		5
Liberty Media Corp. — Capital, Series A *		174,700		2,044
Live Nation, Inc. *		114,589		448
Mediacom Communications Corp., Class A *		71,200		405
Meredith Corp.		64,700		1,623
National CineMedia, Inc.		75,300		1,094
Radio One, Inc., Class A *		12,600		12
RCN Corp. *		11,162		46
Scholastic Corp.		39,169		773
Sinclair Broadcast Group, Inc., Class A		77,078		85
Value Line, Inc.		1,700		48
Warner Music Group Corp. *		74,286		400
World Wrestling Entertainment, Inc., Class A		62,900		673
				11,105
Pharmaceuticals, Biotechnology & Life Sciences 4.7%
Acorda Therapeutics, Inc. *		62,800		1,245
Alkermes, Inc. *		187,342		1,433
Allos Therapeutics, Inc. *		95,800		587
Alnylam Pharmaceuticals, Inc. *		59,800		1,098
AMAG Pharmaceuticals, Inc. *		28,000		1,256
Arena Pharmaceuticals, Inc. *		132,500		372
Auxilium Pharmaceuticals, Inc. *		73,000		1,672
Bruker Corp. *		91,000		599
Celera Corp. *		133,617		1,081
Cepheid, Inc. *		94,800		920
Cougar Biotechnology, Inc. *		27,800		971
Cubist Pharmaceuticals, Inc. *		109,332		1,815
Dendreon Corp. *		173,500		3,678
Dionex Corp. *		36,344		2,290
Emergent Biosolutions, Inc. *		24,600		263
eResearch Technology, Inc. *		70,703		358
Exelixis, Inc. *		188,972		932
Genomic Health, Inc. *		24,900		560
Geron Corp. *		141,700		728
GTx, Inc. *		25,700		253
Halozyme Therapeutics, Inc. *		94,800		599
Incyte Corp. *		228,063		538
InterMune, Inc. *		42,100		570
Kendle International, Inc. *		19,577		174
Luminex Corp. *		69,300		1,137
MannKind Corp. *		89,300		365
Martek Biosciences Corp. *		66,676		1,215
Maxygen, Inc. *		54,500		319
Medarex, Inc. *		210,650		1,247
Medicis Pharmaceutical Corp., Class A		93,549		1,503
Medivation, Inc. *		45,700		883
Momenta Pharmaceuticals, Inc. *		40,444		453
Nektar Therapeutics *		165,471		927
Osiris Therapeutics, Inc. *		31,300		397
Par Pharmaceutical Cos., Inc. *		75,280		808
PAREXEL International Corp. *		92,818		920
PDL BioPharma, Inc.		242,900		1,737
Questcor Pharmaceuticals, Inc. *		116,200		523
Rigel Pharmaceuticals, Inc. *		54,100		359
Salix Pharmaceuticals Ltd. *		70,249		773
Savient Pharmaceuticals, Inc. *		84,700		447
Seattle Genetics, Inc. *		99,198		916
The Medicines Co. *		94,108		939
Theravance, Inc. *		85,938		1,231
Varian, Inc. *		58,571		1,934
ViroPharma, Inc. *		153,974		867
VIVUS, Inc. *		124,100		498
XenoPort, Inc. *		41,600		569
				44,959
Real Estate 6.9%
Acadia Realty Trust		57,536		834
Alexander’s, Inc.		3,410		744
American Campus Communities, Inc.		85,000		1,843
Anworth Mortgage Asset Corp.		160,200		1,030
BioMed Realty Trust, Inc.		160,334		1,829
Brandywine Realty Trust		147,430		913
Capstead Mortgage Corp.		121,100		1,379
CBL & Associates Properties, Inc.		106,906		849
Chimera Investment Corp		234,151		827
Colonial Properties Trust		70,800		513
Corporate Office Properties Trust		92,349		2,822
Cousins Properties, Inc.		77,545		655

8     See financial notes.

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
DCT Industrial Trust, Inc.		287,400		1,270
Developers Diversified Realty Corp.		228,756		945
DiamondRock Hospitality Co.		196,200		1,273
EastGroup Properties, Inc.		50,490		1,697
Entertainment Properties Trust		66,555		1,538
Equity Lifestyle Properties, Inc.		49,259		1,954
Equity One, Inc.		59,037		878
Extra Space Storage, Inc.		150,558		1,070
First Industrial Realty Trust, Inc.		83,501		315
Forest City Enterprises, Inc., Class A		133,200		1,123
Forestar Group, Inc. *		71,600		921
Franklin Street Properties Corp.		99,365		1,326
Getty Realty Corp.		32,542		638
Hatteras Financial Corp.		64,800		1,560
Healthcare Realty Trust, Inc.		101,281		1,700
Home Properties, Inc.		55,765		2,032
HRPT Properties Trust		407,404		1,756
Inland Real Estate Corp.		95,436		838
Investors Real Estate Trust		74,800		692
Jones Lang LaSalle, Inc.		61,700		1,991
Kilroy Realty Corp.		55,300		1,191
LaSalle Hotel Properties		62,726		750
Lexington Realty Trust		130,573		503
LTC Properties, Inc.		39,667		714
Medical Properties Trust, Inc.		140,200		749
MFA Financial, Inc.		396,064		2,333
Mid-America Apartment Communities, Inc.		46,852		1,733
National Health Investors, Inc.		40,368		1,083
National Retail Properties, Inc.		150,826		2,676
NorthStar Realty Finance Corp.		86,396		274
OMEGA Healthcare Investors, Inc.		147,258		2,315
Pennsylvania Real Estate Investment Trust		58,812		456
Post Properties, Inc.		72,567		926
Potlatch Corp.		66,303		1,950
PS Business Parks, Inc.		27,038		1,183
Redwood Trust, Inc.		43,129		702
Saul Centers, Inc.		20,300		646
Sovran Self Storage, Inc.		36,326		819
Sunstone Hotel Investors, Inc.		87,510		463
Tanger Factory Outlet Centers, Inc.		62,034		2,067
Tejon Ranch Co. *		21,292		494
Universal Health Realty Income Trust		13,700		439
Washington Real Estate Investment Trust		93,782		2,000
				66,221
Retailing 4.6%
99 Cents Only Stores *		80,806		868
AnnTaylor Stores Corp. *		88,500		654
bebe stores, Inc.		73,149		673
Blockbuster, Inc., Class A *		344,921		276
Blue Nile, Inc. *		22,000		936
Brown Shoe Co., Inc.		69,975		450
Cabela’s, Inc. *		58,036		743
Chico’s FAS, Inc. *		293,200		2,240
Collective Brands, Inc. *		110,800		1,609
Dillard’s, Inc., Class A		80,600		621
DSW, Inc., Class A *		22,700		247
Fred’s, Inc., Class A		71,500		977
Genesco, Inc. *		33,244		757
Hibbett Sports, Inc. *		46,775		975
Hot Topic, Inc. *		78,400		960
J. Crew Group, Inc. *		92,800		1,597
Jo-Ann Stores, Inc. *		43,400		795
Jos. A. Bank Clothiers, Inc. *		29,712		1,202
Monro Muffler Brake, Inc.		33,200		829
NutriSystem, Inc.		65,548		901
Office Depot, Inc. *		491,900		1,274
OfficeMax, Inc.		125,600		936
Orbitz Worldwide, Inc. *		77,000		146
Penske Auto Group, Inc.		69,116		916
PetMed Express, Inc. *		42,100		685
Rent-A-Center, Inc. *		130,705		2,516
Saks, Inc. *		254,200		1,324
Sally Beauty Holdings, Inc. *		135,350		1,002
Signet Jewelers Ltd.		126,600		2,009
Stage Stores, Inc.		73,327		898
Systemax, Inc. *		24,400		411
The Buckle, Inc.		40,764		1,523
The Cato Corp., Class A		48,604		934
The Children’s Place Retail Stores, Inc. *		45,613		1,297
The Dress Barn, Inc. *		81,512		1,234
The Finish Line, Inc., Class A		98,219		835
The Gymboree Corp. *		49,210		1,693
The Men’s Wearhouse, Inc.		86,300		1,609
Ticketmaster Entertainment, Inc. *		62,604		329
Tractor Supply Co. *		55,200		2,229
Ulta Salon, Cosmetics & Fragrance, Inc. *		51,300		449
Williams-Sonoma, Inc.		155,000		2,170
				44,729
Semiconductors & Semiconductor Equipment 4.5%
Advanced Energy Industries, Inc. *		50,600		427
Amkor Technology, Inc. *		187,518		808
Applied Micro Circuits Corp. *		100,765		549

See financial notes.     9

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Atheros Communications *		99,743		1,718
ATMI, Inc. *		60,254		951
Brooks Automation, Inc. *		87,231		543
Cabot Microelectronics Corp. *		49,100		1,415
Cavium Networks, Inc. *		59,800		752
Cirrus Logic, Inc. *		15,978		74
Cymer, Inc. *		61,165		1,738
Cypress Semiconductor Corp. *		259,100		2,055
Diodes, Inc. *		50,081		745
Entegris, Inc. *		14,000		21
Fairchild Semiconductor International, Inc. *		258,200		1,590
FEI Co. *		66,400		1,141
FormFactor, Inc. *		87,773		1,530
Hittite Microwave Corp. *		38,609		1,435
Integrated Device Technology, Inc. *		302,500		1,643
International Rectifier Corp. *		142,500		2,405
Micrel, Inc.		76,505		574
Microsemi Corp. *		134,019		1,798
MKS Instruments, Inc. *		80,499		1,260
Monolithic Power Systems *		53,900		997
Netlogic Microsystems, Inc. *		31,600		1,030
OmniVision Technologies, Inc. *		79,573		757
PMC-Sierra, Inc. *		432,923		3,429
Power Integrations, Inc.		61,262		1,305
RF Micro Devices, Inc. *		351,204		741
Semtech Corp. *		95,829		1,382
Sigma Designs, Inc. *		35,000		452
Silicon Image, Inc. *		108,822		296
Skyworks Solutions, Inc. *		313,308		2,770
Standard Microsystems Corp. *		33,692		534
Teradyne, Inc. *		302,900		1,799
Tessera Technologies, Inc. *		75,090		1,054
TriQuint Semiconductor, Inc. *		223,800		857
Veeco Instruments, Inc. *		9,600		69
Zoran Corp. *		128,124		1,145
				43,789
Software & Services 7.1%
ACI Worldwide, Inc. *		60,759		1,049
Acxiom Corp.		121,576		1,173
Advent Software, Inc. *		28,114		935
Ariba, Inc. *		147,100		1,414
Bankrate, Inc. *		23,300		583
Blackbaud, Inc.		90,969		1,385
Blackboard, Inc. *		51,461		1,751
Commvault Systems, Inc. *		74,000		921
comScore, Inc. *		30,000		383
Constant Contact, Inc. *		22,500		358
Convergys Corp. *		218,400		2,208
CSG Systems International, Inc. *		62,600		908
CyberSource Corp. *		124,400		1,817
DealerTrack Holdings, Inc. *		66,536		1,010
Digital River, Inc. *		61,200		2,351
EarthLink, Inc. *		193,881		1,470
Epicor Software Corp. *		126,700		699
EPIQ Systems, Inc. *		63,600		984
Euronet Worldwide, Inc. *		90,036		1,457
Exlservice Holdings, Inc. *		13,358		124
Fair Isaac Corp.		86,700		1,458
Forrester Research, Inc. *		25,317		643
GSI Commerce, Inc. *		40,700		578
Heartland Payment Systems, Inc.		51,100		411
iGATE Corp.		43,340		164
Informatica Corp. *		171,381		2,725
j2 Global Communications, Inc. *		78,528		1,884
JDA Software Group, Inc. *		36,469		515
Lawson Software, Inc. *		254,500		1,372
Manhattan Associates, Inc. *		37,047		616
MAXIMUS, Inc.		32,574		1,314
Mentor Graphics Corp. *		143,367		963
MicroStrategy, Inc., Class A *		15,662		609
Move, Inc. *		23,900		49
NCI, Inc., Class A *		11,700		285
NetScout Systems, Inc. *		59,100		531
NetSuite, Inc. *		25,000		350
Omniture, Inc. *		104,300		1,285
Pegasystems, Inc.		25,800		451
Progress Software Corp. *		68,280		1,447
Quality Systems, Inc.		30,272		1,623
Quest Software, Inc. *		122,388		1,778
Rackspace Hosting, Inc. *		56,100		516
RealNetworks, Inc. *		139,430		343
S1 Corp. *		83,400		517
Sapient Corp. *		175,463		900
SAVVIS, Inc. *		62,200		708
SPSS, Inc. *		39,500		1,221
SRA International, Inc., Class A *		69,495		1,070
Synchronoss Technologies, Inc. *		26,100		347
Syntel, Inc.		21,183		587
Take-Two Interactive Software, Inc. *		127,504		1,158
TeleCommunication Systems, Inc., Class A *		65,700		645
TeleTech Holdings, Inc. *		54,400		722
The Ultimate Software Group, Inc. *		51,900		972
THQ, Inc. *		112,500		385
TIBCO Software, Inc. *		300,936		1,902
TiVo, Inc. *		209,103		1,568
Tyler Technologies, Inc. *		52,700		870
Unisys Corp. *		838,500		1,023
United Online, Inc.		134,187		711
ValueClick, Inc. *		155,200		1,645
VeriFone Holdings, Inc. *		147,843		1,110

10     See financial notes.

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Vocus, Inc. *		34,000		578
WebMD Health Corp., Class A *		16,824		434
Websense, Inc. *		75,404		1,344
Wind River Systems, Inc. *		118,836		871
Wright Express Corp. *		83,976		1,921
				68,099
Technology Hardware & Equipment 6.6%
3Com Corp. *		803,119		3,253
3PAR, Inc. *		41,000		314
Adaptec, Inc. *		155,500		445
ADC Telecommunications, Inc. *		174,300		1,283
ADTRAN, Inc.		98,005		2,073
Airvana, Inc. *		45,500		259
Arris Group, Inc. *		219,860		2,346
Avid Technology, Inc. *		50,405		558
Avocent Corp. *		75,056		1,084
Benchmark Electronics, Inc. *		109,294		1,326
Black Box Corp.		29,892		818
Blue Coat Systems, Inc. *		64,600		857
Brightpoint, Inc. *		127,995		667
Checkpoint Systems, Inc. *		64,444		783
Ciena Corp. *		161,600		1,931
Cogent, Inc. *		68,609		778
Cognex Corp.		68,609		965
Coherent, Inc. *		46,951		892
Comtech Telecommunications Corp. *		44,300		1,483
Daktronics, Inc.		57,100		516
Data Domain, Inc. *		55,300		917
Echelon Corp. *		52,300		416
Electro Scientific Industries, Inc. *		3,936		34
Electronics for Imaging, Inc. *		72,409		711
EMS Technologies, Inc. *		27,200		518
Emulex Corp. *		172,190		1,803
Harmonic, Inc. *		157,700		1,156
Harris Stratex Networks, Inc., Class A *		30,500		123
Hughes Communications, Inc. *		17,500		335
Imation Corp.		49,813		498
Infinera Corp. *		190,300		1,606
Insight Enterprises, Inc. *		65,900		377
InterDigital, Inc. *		76,594		2,016
Intermec, Inc. *		81,440		984
IPG Photonics Corp. *		33,218		371
Ixia *		32,600		188
JDS Uniphase Corp. *		393,400		1,813
L-1 Identity Solutions, Inc. *		107,184		784
Littelfuse, Inc. *		32,800		538
MTS Systems Corp.		30,175		638
Multi-Fineline Electronix, Inc. *		18,600		373
NETGEAR, Inc. *		59,000		945
Palm, Inc. *		196,360		2,060
Park Electrochemical Corp.		26,800		552
Plantronics, Inc.		81,593		1,039
Plexus Corp. *		70,362		1,558
Riverbed Technology, Inc. *		94,100		1,724
Rofin-Sinar Technologies, Inc. *		61,236		1,305
Rogers Corp. *		30,267		770
ScanSource, Inc. *		43,878		1,084
Sonus Networks, Inc. *		609,358		1,054
Starent Networks Corp. *		51,400		1,014
Sycamore Networks, Inc. *		407,115		1,201
Synaptics, Inc. *		63,300		2,056
SYNNEX Corp. *		31,900		687
Tech Data Corp. *		89,500		2,577
Tekelec *		110,627		1,715
Universal Display Corp. *		49,000		553
ViaSat, Inc. *		46,019		1,058
Vishay Intertechnology, Inc. *		333,800		1,959
				63,741
Telecommunication Services 1.1%
Alaska Communication Systems Group, Inc.		75,300		454
Atlantic Tele-Network, Inc.		12,400		274
Cbeyond, Inc. *		45,800		933
Centennial Communications Corp. *		176,873		1,463
Cincinnati Bell, Inc. *		370,445		1,033
Cogent Communications Group, Inc. *		67,300		568
Consolidated Communications Holdings, Inc.		42,200		475
General Communication, Inc., Class A *		42,400		325
Iowa Telecommunications Services, Inc.		54,100		713
iPCS, Inc. *		3,300		48
Neutral Tandem, Inc. *		31,800		909
NTELOS Holdings Corp.		49,600		793
PAETEC Holding Corp. *		26,600		82
Premiere Global Services, Inc. *		118,800		1,252
Shenandoah Telecommunications Co.		29,200		573
Syniverse Holdings, Inc. *		90,400		1,139
				11,034
Transportation 2.2%
AirTran Holdings, Inc. *		245,998		1,710
Alaska Air Group, Inc. *		70,809		1,188
Alexander & Baldwin, Inc.		74,000		1,971
Allegiant Travel Co. *		24,400		1,270
AMERCO *		9,104		295
American Commercial Lines, Inc. *		64,202		320

See financial notes.     11

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Arkansas Best Corp.		40,572		936
Atlas Air Worldwide Holdings, Inc. *		22,100		587
Eagle Bulk Shipping, Inc.		72,600		473
Forward Air Corp.		48,682		812
Genco Shipping & Trading Ltd.		46,000		879
Genesee & Wyoming, Inc., Class A *		57,972		1,739
Hub Group, Inc., Class A *		62,892		1,447
Knight Transportation, Inc.		97,488		1,724
Marten Transport Ltd. *		23,002		477
Old Dominion Freight Line, Inc. *		50,989		1,435
Pacer International, Inc.		58,118		246
Republic Airways Holdings, Inc. *		55,900		400
SkyWest, Inc.		111,212		1,339
US Airways Group, Inc. *		200,200		759
Werner Enterprises, Inc.		72,543		1,186
				21,193
Utilities 3.0%
ALLETE, Inc.		53,090		1,382
American States Water Co.		29,100		1,005
Avista Corp.		97,412		1,466
Black Hills Corp.		74,998		1,491
California Water Service Group		34,987		1,365
CH Energy Group, Inc.		26,297		1,169
El Paso Electric Co. *		75,016		1,035
Ferrellgas Partners L.P.		61,700		885
MGE Energy, Inc.		36,760		1,128
Northwest Natural Gas Co.		44,895		1,836
NorthWestern Corp.		65,912		1,379
PNM Resources, Inc.		172,500		1,470
Portland General Electric Co.		120,800		2,207
SJW Corp.		19,400		489
South Jersey Industries, Inc.		53,160		1,845
Southwest Gas Corp.		85,696		1,732
Suburban Propane Partners L.P.		55,094		2,204
The Empire District Electric Co.		56,900		852
The Laclede Group, Inc.		36,877		1,279
UIL Holdings Corp.		49,310		1,139
Unisource Energy Corp.		63,517		1,672
Vectren Corp.		5,925		131
				29,161
Total Common Stock (Cost $1,185,598)				953,092
Foreign Common Stock 1.2% of net assets
Bermuda 1.2%
Capital Goods 0.1%
Aircastle Ltd.		113,800		751
Textainer Group Holdings Ltd.		23,000		204
				955
Consumer Durables & Apparel 0.1%
Helen of Troy Ltd. *		54,100		863
Consumer Services 0.1%
Orient-Express Hotels Ltd., Class A		63,900		413
Insurance 0.5%
Assured Guaranty Ltd.		149,937		1,448
Enstar Group Ltd. *		16,394		1,170
Flagstone Reinsurance Holdings Ltd.		151,529		1,403
Max Capital Group Ltd.		69,384		1,148
				5,169
Software & Services 0.2%
VistaPrint Ltd. *		59,300		2,037
Telecommunication Services 0.1%
Global Crossing Ltd. *		92,624		673
Transportation 0.0%
TBS International Ltd., Class A *		49,000		389
Utilities 0.1%
Brookfield Infrastructure Partners L.P.		38,566		526
				11,025
Liberia 0.0%
Transportation 0.0%
Excel Maritime Carriers Ltd.		54,600		388
Total Foreign Common Stock (Cost $18,351)				11,413
Preferred Stock 0.1% of net assets
Healthcare — Services 0.1%
Inverness Medical Innovations, Inc., Class B *		3,150		625
Total Preferred Stock (Cost $1,145)				625
Rights 0.0% of net assets
Fresenius Kabi Pharmaceuticals Holding, Inc. — CVR *		47,356		17
Indevus Pharmaceuticals, Inc. (a)*		138,800		—
Total Rights (Cost $44)				17

12     See financial notes.

Schwab Small-Cap Index Fund

Portfolio Holdings continued

	Face Amount		Value
Security                                                              Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.3% of net assets
Commercial Paper & Other Obligation 0.2%
Citibank, New York Time Deposit
0.03%, 05/01/09		2,344		2,344
U.S. Treasury Obligations 0.1%
U.S. Treasury Bill
0.10%, 06/18/09		169		169
0.15%, 06/18/09		290		290
0.16%, 06/18/09		500		500
				959
Total Short-Term Investment (Cost $3,303)				3,303

End of Investments.

(All dollar amounts are x 1,000)

At 04/30/09 the tax basis cost of the fund’s investments was $1,230,405 and the unrealized appreciation and depreciation were $103,023 and ($364,978), respectively, with a net unrealized depreciation of ($261,955).

*	Non-income producing security.
(a)	Fair-valued by Management.

See financial notes.     13

Schwab International Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98.5	%	Common Stock		1,022,869		1,029,112
	0.2	%	Preferred Stock		3,232		2,034
	—	%	Rights		—		—
	0.3	%	Other Investment Company		2,336		2,934
	0.5	%	Short-Term Investments		5,101		5,101
	99.5	%	Total Investments		1,033,538		1,039,181
	0.5	%	Other Assets and Liabilities, Net				5,528
	100.0	%	Total Net Assets				1,044,709

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 98.5% of net assets
Australia 6.3%
Banks 2.0%
Australia & New Zealand Banking Group Ltd.		340,769		3,930
Commonwealth Bank of Australia		232,449		5,939
National Australia Bank Ltd.		311,210		4,654
Westpac Banking Corp.		478,668		6,674
				21,197
Commercial & Professional Supplies 0.1%
Brambles Ltd.		230,929		991
Diversified Financials 0.1%
Macquarie Group Ltd.		41,564		1,005
Energy 0.5%
Origin Energy Ltd.		135,541		1,602
Santos Ltd.		88,626		1,045
Woodside Petroleum Ltd.		73,798		2,029
				4,676
Food & Staples Retailing 0.6%
Wesfarmers Ltd.		126,650		2,081
Woolworths Ltd.		204,030		3,958
				6,039
Food, Beverage & Tobacco 0.1%
Foster’s Group Ltd.		345,984		1,323
Insurance 0.4%
AMP Ltd.		338,260		1,273
QBE Insurance Group Ltd.		163,842		2,591
Suncorp-Metway Ltd.		148,012		632
				4,496
Materials 1.7%
BHP Billiton Ltd.		551,567		13,325
Newcrest Mining Ltd.		74,314		1,605
Rio Tinto Ltd.		47,036		2,190
				17,120
Pharmaceuticals, Biotechnology & Life Sciences 0.2%
CSL Ltd.		90,137		2,246
Real Estate 0.2%
Westfield Group		294,774		2,301
Telecommunication Services 0.4%
Telstra Corp., Ltd.		1,741,441		4,207
				65,601
Austria 0.2%
Banks 0.0%
Erste Group Bank AG		33,336		696
Energy 0.1%
OMV AG		25,065		776
Telecommunication Services 0.1%
Telekom Austria AG		54,842		721
				2,193
Belgium 0.7%
Banks 0.2%
Dexia S.A. *		190,576		925
KBC GROEP N.V. *		34,679		762
				1,687
Diversified Financials 0.2%
Fortis *		391,801		963
Groupe Bruxelles Lambert S.A.		13,694		987
				1,950
Food, Beverage & Tobacco 0.2%
Anheuser-Busch InBev N.V.		86,699		2,654

See financial notes.     1

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Materials 0.1%
Solvay S.A.		9,124		782
				7,073
Bermuda 0.1%
Retailing 0.1%
Esprit Holdings Ltd.		171,000		1,048
Canada 9.2%
Banks 2.3%
Bank of Montreal		82,275		2,723
Bank of Nova Scotia		162,452		4,621
Canadian Imperial Bank of Commerce		62,110		2,788
National Bank of Canada		26,629		974
Royal Bank of Canada		223,468		7,921
The Toronto-Dominion Bank		135,532		5,350
				24,377
Capital Goods 0.1%
Bombardier, Inc., Class B		239,456		759
Energy 2.8%
Cameco Corp.		53,209		1,222
Canadian Natural Resources Ltd.		86,888		4,005
Canadian Oil Sands Trust		77,547		1,601
Enbridge, Inc.		59,980		1,852
EnCana Corp.		120,062		5,503
Husky Energy, Inc.		41,610		1,008
Imperial Oil Ltd.		41,159		1,471
Nexen, Inc.		83,274		1,586
Petro-Canada Co.		78,634		2,482
Suncor Energy, Inc.		150,448		3,786
Talisman Energy, Inc.		164,142		2,056
TransCanada Corp.		97,982		2,445
				29,017
Food & Staples Retailing 0.1%
Shoppers Drug Mart Corp.		35,376		1,279
Insurance 0.8%
Manulife Financial Corp.		259,097		4,412
Power Corp. of Canada		55,503		1,038
Power Financial Corp.		29,666		594
Sun Life Financial, Inc.		92,057		2,152
				8,196
Materials 1.6%
Agnico-Eagle Mines Ltd.		22,340		988
Agrium, Inc.		25,529		1,095
Barrick Gold Corp.		140,921		4,080
Goldcorp, Inc.		118,151		3,230
Kinross Gold Corp.		109,791		1,692
Potash Corp. of Saskatchewan, Inc.		48,480		4,164
Teck Resources Ltd., Class B		72,800		764
Yamana Gold, Inc.		109,204		857
				16,870
Real Estate 0.1%
Brookfield Asset Management, Inc., Class A		78,429		1,201
Technology Hardware & Equipment 0.5%
Research In Motion Ltd. *		78,948		5,454
Telecommunication Services 0.5%
BCE, Inc.		129,949		2,778
Rogers Communications, Inc., Class B		86,778		2,132
				4,910
Transportation 0.4%
Canadian National Railway Co.		74,978		3,031
Canadian Pacific Railway Ltd.		25,153		900
				3,931
				95,994
Denmark 0.7%
Banks 0.1%
Danske Bank A/S *		90,729		995
Capital Goods 0.2%
Vestas Wind Systems A/S *		29,397		1,908
Pharmaceuticals, Biotechnology & Life Sciences 0.3%
Novo Nordisk A/S, Class B		79,293		3,773
Transportation 0.1%
AP Moller — Maersk A/S, Series B		168		976
				7,652
Finland 1.0%
Materials 0.1%
UPM-Kymmene Oyj		83,482		747
Technology Hardware & Equipment 0.8%
Nokia Oyj		613,039		8,707
Utilities 0.1%
Fortum Oyj		67,873		1,369
				10,823

2     See financial notes.

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
France 11.0%
Automobiles & Components 0.2%
Compagnie Generale des Etablissements Michelin, Class B		23,759		1,216
Renault S.A.		30,704		985
				2,201
Banks 1.4%
BNP Paribas		146,042		7,688
Credit Agricole S.A.		142,815		2,088
Societe Generale		94,237		4,817
				14,593
Capital Goods 1.3%
Alstom S.A.		32,032		1,997
Bouygues S.A.		37,426		1,597
Compagnie de Saint-Gobain		63,235		2,269
Schneider Electric S.A.		40,323		3,068
Vallourec S.A.		8,759		957
Vinci S.A.		79,508		3,562
				13,450
Consumer Durables & Apparel 0.5%
Hermes International		12,189		1,616
LVMH Moet Hennessy Louis Vuitton S.A.		41,709		3,149
				4,765
Consumer Services 0.1%
Accor S.A.		29,767		1,259
Energy 1.8%
Total S.A.		379,677		18,997
Food & Staples Retailing 0.3%
Carrefour S.A. *		83,527		3,387
Food, Beverage & Tobacco 0.5%
Groupe Danone		82,460		3,922
Pernod Ricard S.A.		30,146		1,781
				5,703
Health Care Equipment & Services 0.1%
Essilor International S.A.		32,662		1,407
Household & Personal Products 0.3%
L’Oreal S.A.		40,141		2,872
Insurance 0.5%
Axa *		287,595		4,832
Materials 0.4%
Air Liquide S.A.		42,011		3,418
Lafarge S.A.		21,107		1,191
				4,609
Media 0.5%
Vivendi		187,793		5,050
Pharmaceuticals, Biotechnology & Life Sciences 0.9%
Sanofi-Aventis		165,635		9,592
Real Estate 0.2%
Unibail-Rodamco		13,257		1,977
Retailing 0.1%
PPR		12,173		933
Technology Hardware & Equipment 0.1%
Alcatel-Lucent *		358,710		907
Telecommunication Services 0.7%
France Telecom S.A.		304,264		6,755
Utilities 1.1%
Electricite de France		44,531		2,063
GDF Suez		225,749		8,107
Veolia Environnement		57,387		1,572
				11,742
				115,031
Germany 8.6%
Automobiles & Components 1.1%
Bayerische Motoren Werke AG		52,349		1,814
Daimler AG — Reg’d		155,304		5,568
Volkswagen AG		13,893		4,395
				11,777
Banks 0.1%
Commerzbank AG		104,904		713
Capital Goods 1.0%
MAN AG		16,017		993
Siemens AG — Reg’d		146,478		9,848
				10,841
Consumer Durables & Apparel 0.1%
Adidas AG		31,178		1,178
Diversified Financials 0.7%
Deutsche Bank AG — Reg’d		92,335		4,924
Deutsche Boerse AG		30,300		2,238
				7,162
Health Care Equipment & Services 0.1%
Fresenius Medical Care AG & Co. KGaA		29,500		1,145

See financial notes.     3

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Insurance 1.1%
Allianz SE — Reg’d		72,500		6,690
Muenchener Rueckversicherungs-Gesellschaft AG — Reg’d		33,094		4,572
				11,262
Materials 1.0%
BASF SE *		148,324		5,597
K&S AG		21,600		1,300
Linde AG		22,986		1,833
ThyssenKrupp AG		54,528		1,167
				9,897
Pharmaceuticals, Biotechnology & Life Sciences 0.7%
Bayer AG *		123,306		6,129
Merck KGaA		10,200		915
				7,044
Software & Services 0.5%
SAP AG		137,740		5,296
Telecommunication Services 0.6%
Deutsche Telekom AG — Reg’d.		477,162		5,770
Transportation 0.1%
Deutsche Post AG — Reg’d		130,927		1,511
Utilities 1.5%
E.ON AG		320,551		10,840
RWE AG		70,676		5,095
				15,935
				89,531
Greece 0.2%
Banks 0.2%
Alpha Bank A.E. *		57,197		557
National Bank of Greece S.A.		67,942		1,413
Piraeus Bank S.A. *		55,440		508
				2,478
Hong Kong 1.5%
Banks 0.1%
Hang Seng Bank Ltd.		116,736		1,294
Capital Goods 0.2%
Hutchison Whampoa Ltd.		337,370		1,987
Diversified Financials 0.2%
Hong Kong Exchanges & Clearing Ltd.		174,018		2,005
Real Estate 0.6%
Cheung Kong (Holdings) Ltd.		232,628		2,400
Sun Hung Kai Properties Ltd.		242,604		2,508
Swire Pacific Ltd., Class A		122,890		960
				5,868
Utilities 0.4%
CLP Holdings Ltd.		308,580		2,082
Hong Kong & China Gas Co., Ltd.		645,200		1,200
Hongkong Electric Holdings Ltd.		211,000		1,246
				4,528
				15,682
Ireland 0.4%
Banks 0.0%
Allied Irish Banks plc		138,658		170
Materials 0.2%
CRH plc		87,100		2,261
Media 0.2%
WPP plc		204,396		1,398
				3,829
Italy 3.1%
Automobiles & Components 0.1%
Fiat S.p.A. *		117,783		1,151
Banks 1.2%
Banca Monte dei Paschi di Siena S.p.A.		595,701		953
Banco Popolare Societa Cooperativa		97,904		643
Intesa Sanpaolo S.p.A. *		1,447,569		4,612
UniCredit S.p.A. *		2,157,207		5,253
Unione di Banche Italiane S.c.p.A.		102,112		1,408
				12,869
Energy 0.8%
Eni S.p.A.		398,855		8,559
Insurance 0.4%
Assicurazioni Generali S.p.A.		194,725		3,962
Telecommunication Services 0.2%
Telecom Italia S.p.A.		1,629,658		2,061
Utilities 0.4%
Enel S.p.A.		669,609		3,630
				32,232
Japan 17.9%
Automobiles & Components 2.8%
Bridgestone Corp.		95,657		1,426
Denso Corp.		74,500		1,761

4     See financial notes.

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Honda Motor Co., Ltd.		246,739		7,231
Nissan Motors Co., Ltd.		337,196		1,760
Toyota Motor Corp.		427,803		16,932
				29,110
Banks 2.0%
Mitsubishi UFJ Financial Group, Inc.		1,671,009		9,115
Mizuho Financial Group, Inc.		1,795,634		3,786
Resona Holdings, Inc.		88,700		1,192
Sumitomo Mitsui Financial Group, Inc.		127,746		4,430
The Bank of Yokohama Ltd.		202,000		857
The Sumitomo Trust & Banking Co., Ltd.		268,950		1,126
				20,506
Capital Goods 1.9%
Asahi Glass Co., Ltd.		156,000		932
Daikin Industries Ltd.		41,300		1,111
Fanuc Ltd.		29,300		2,114
Itochu Corp.		216,000		1,158
Komatsu Ltd.		140,609		1,754
Mitsubishi Corp.		224,000		3,447
Mitsubishi Electric Corp.		303,000		1,614
Mitsubishi Heavy Industries Ltd.		547,000		1,791
Mitsui & Co., Ltd.		265,000		2,811
Sumitomo Corp.		183,000		1,593
Sumitomo Electric Industries Ltd.		116,900		1,139
				19,464
Commercial & Professional Supplies 0.2%
Dai Nippon Printing Co., Ltd.		94,000		995
Secom Co., Ltd.		33,500		1,237
				2,232
Consumer Durables & Apparel 1.0%
Nikon Corp.		55,000		729
Panasonic Corp.		304,912		4,468
Sharp Corp.		130,785		1,377
Sony Corp.		160,500		4,171
				10,745
Diversified Financials 0.3%
Daiwa Securities Group, Inc.		206,045		1,079
Nomura Holdings, Inc.		319,000		1,925
ORIX Corp.		14,000		656
				3,660
Food & Staples Retailing 0.3%
Aeon Co., Ltd.		106,200		832
Seven & I Holdings Co., Ltd.		122,203		2,761
				3,593
Food, Beverage & Tobacco 0.4%
Asahi Breweries Ltd.		63,000		791
Japan Tobacco, Inc.		732		1,839
Kirin Holdings Co., Ltd.		136,000		1,496
				4,126
Health Care Equipment & Services 0.1%
Terumo Corp.		25,000		946
Household & Personal Products 0.2%
Kao Corp.		78,619		1,470
Shiseido Co., Ltd.		53,000		931
				2,401
Insurance 0.7%
Mitsui Sumitomo Insurance Group Holdings, Inc.		66,562		1,816
Sompo Japan Insurance, Inc.		140,000		844
T&D Holdings, Inc.		35,000		1,046
Tokio Marine Holdings, Inc.		121,999		3,218
				6,924
Materials 0.9%
JFE Holdings, Inc.		81,000		2,212
Nippon Steel Corp.		870,000		2,925
Shin-Etsu Chemical Co., Ltd.		57,560		2,798
Sumitomo Metal Industries Ltd.		542,000		1,270
				9,205
Pharmaceuticals, Biotechnology & Life Sciences 1.0%
Astellas Pharma, Inc.		71,370		2,321
Daiichi Sankyo Co., Ltd.		100,500		1,681
Eisai Co., Ltd.		40,000		1,073
Shionogi & Co., Ltd.		56,000		963
Takeda Pharmaceutical Co., Ltd.		110,900		3,933
				9,971
Real Estate 0.5%
Mitsubishi Estate Co., Ltd.		187,502		2,451
Mitsui Fudosan Co., Ltd.		131,777		1,658
Sumitomo Realty & Development Co., Ltd.		70,000		840
				4,949
Retailing 0.1%
Yamada Denki Co., Ltd.		14,000		645
Semiconductors & Semiconductor Equipment 0.1%
Tokyo Electron Ltd.		26,500	��	1,212
Software & Services 0.4%
Nintendo Co., Ltd.		17,239		4,635

See financial notes.     5

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Technology Hardware & Equipment 1.9%
Canon, Inc.		178,995		5,356
FUJIFILM Holdings Corp.		72,811		1,873
Fujitsu Ltd.		302,000		1,294
Hitachi Ltd.		501,079		1,751
Hoya Corp.		66,507		1,154
Keyence Corp.		6,200		1,095
Kyocera Corp.		26,600		2,066
Murata Manufacturing Co., Ltd.		31,574		1,280
NEC Corp. *		303,000		1,007
Ricoh Co., Ltd.		94,000		1,162
Toshiba Corp.		453,178		1,555
				19,593
Telecommunication Services 1.2%
KDDI Corp.		480		2,159
Nippon Telegraph & Telephone Corp.		133,478		5,029
NTT DoCoMo, Inc.		2,404		3,354
SOFTBANK Corp.		120,200		1,902
				12,444
Transportation 0.6%
Central Japan Railway Co.		268		1,588
East Japan Railway Co.		54,760		3,086
Mitsui O.S.K. Lines Ltd.		175,000		1,000
West Japan Railway Co.		273		837
				6,511
Utilities 1.3%
Chubu Electric Power Co., Inc.		102,100		2,245
Kyushu Electric Power Co., Inc.		64,493		1,331
Osaka Gas Co., Ltd.		298,000		944
The Kansai Electric Power Co., Inc.		116,000		2,362
The Tokyo Electric Power Co., Inc.		181,890		4,261
Tohoku Electric Power Co., Inc.		72,800		1,518
Tokyo Gas Co., Ltd.		363,201		1,377
				14,038
				186,910
Luxembourg 0.3%
Materials 0.3%
ArcelorMittal		133,898		3,136
Netherlands 2.6%
Capital Goods 0.4%
European Aeronautic Defence & Space Co.		61,252		884
Koninklijke (Royal) Philips Electronics N.V.		156,362		2,821
				3,705
Diversified Financials 0.3%
ING Groep N.V. CVA		333,590		3,041
Food & Staples Retailing 0.2%
Koninklijke Ahold N.V.		192,276		2,107
Food, Beverage & Tobacco 0.6%
Heineken N.V.		39,103		1,162
Unilever N.V. CVA		274,655		5,435
				6,597
Insurance 0.1%
Aegon N.V.		180,648		908
Materials 0.3%
Akzo Nobel N.V.		41,768		1,747
Koninklijke DSM N.V.		28,460		882
				2,629
Media 0.1%
Reed Elsevier N.V.		106,400		1,169
Semiconductors & Semiconductor Equipment 0.2%
ASML Holding N.V.		69,218		1,452
STMicroelectronics N.V. *		99,193		652
				2,104
Telecommunication Services 0.3%
Koninklijke (Royal) KPN N.V.		279,514		3,360
Transportation 0.1%
TNT N.V.		62,709		1,156
				26,776
Norway 0.5%
Capital Goods 0.1%
Orkla A.S.A.		129,421		926
Energy 0.3%
StatoilHydro A.S.A.		191,911		3,577
Telecommunication Services 0.1%
Telenor A.S.A. *		117,795		733
				5,236
Portugal 0.3%
Banks 0.1%
Banco Comercial Portugues S.A. — Reg’d		622,781		581

6     See financial notes.

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Telecommunication Services 0.1%
Portugal Telecom SGPS S.A. — Reg’d		150,426		1,147
Utilities 0.1%
EDP — Energias de Portugal S.A.		377,876		1,375
				3,103
Singapore 0.6%
Banks 0.4%
DBS Group Holdings Ltd.		175,246		1,114
Oversea-Chinese Banking Corp., Ltd.		437,552		1,724
United Overseas Bank Ltd.		216,233		1,667
				4,505
Telecommunication Services 0.2%
Singapore Telecommunications Ltd.		1,221,237		2,099
				6,604
Spain 4.8%
Banks 2.1%
Banco Bilbao Vizcaya Argentaria S.A.		614,226		6,657
Banco de Sabadell S.A.		185,508		1,070
Banco Popular Espanol S.A.		197,744		1,630
Banco Santander S.A.		1,304,375		12,547
				21,904
Capital Goods 0.1%
ACS, Actividades de Construccion y Servicios S.A.		33,875		1,694
Energy 0.3%
Compania Espanola de Petroleos S.A.		17,357		670
Repsol YPF S.A.		143,548		2,729
				3,399
Retailing 0.1%
Industria de Diseno Textil S.A.		34,317		1,463
Telecommunication Services 1.4%
Telefonica S.A.		753,618		14,278
Transportation 0.1%
Abertis Infraestructuras S.A.		46,952		841
Utilities 0.7%
Gas Natural SDG S.A.		42,673		677
Iberdrola S.A.		801,243		6,309
				6,986
				50,565
Sweden 1.7%
Banks 0.4%
Nordea Bank AB		338,050		2,515
Skandinaviska Enskilda Banken AB, A Shares *		80,861		314
Svenska Handelsbanken AB, A Shares		69,876		1,217
				4,046
Capital Goods 0.3%
Atlas Copco AB, A Shares		107,348		998
Sandvik AB		171,265		1,125
Volvo AB, B Shares		188,427		1,228
				3,351
Diversified Financials 0.1%
Investor AB, B Shares		69,460		1,003
Retailing 0.3%
Hennes & Mauritz AB, B Shares		77,196		3,437
Technology Hardware & Equipment 0.4%
Telefonaktiebolaget LM Ericsson, B Shares		478,085		4,061
Telecommunication Services 0.2%
TeliaSonera AB		356,757		1,674
				17,572
Switzerland 7.9%
Capital Goods 0.5%
ABB Ltd. — Reg’d *		372,453		5,273
Consumer Durables & Apparel 0.1%
Compagnie Financiere Richemont S.A., Series A		51,737		926
Diversified Financials 1.3%
Credit Suisse Group AG — Reg’d		159,054		6,215
Julius Baer Holding AG — Reg’d		31,583		1,036
UBS AG — Reg’d *		472,086		6,485
				13,736
Food, Beverage & Tobacco 1.9%
Nestle S.A. — Reg’d		613,467		19,997
Insurance 0.5%
Swiss Re — Reg’d		56,807		1,348

See financial notes.     7

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Zurich Financial Services AG — Reg’d		22,875		4,251
				5,599
Materials 0.5%
Holcim Ltd. — Reg’d		33,680		1,708
Syngenta AG — Reg’d		15,671		3,346
				5,054
Pharmaceuticals, Biotechnology & Life Sciences 3.0%
Novartis AG — Reg’d		423,440		16,027
Roche Holding AG		112,533		14,191
Roche Holding AG — Bearer Shares		7,642		1,050
				31,268
Telecommunication Services 0.1%
Swisscom AG — Reg’d		3,760		980
				82,833
United Kingdom 18.8%
Banks 2.6%
Barclays plc		1,360,383		5,523
HSBC Holdings plc		1,946,527		13,843
Lloyds TSB Group plc		1,486,086		2,411
Royal Bank of Scotland Group plc *		2,730,432		1,666
Standard Chartered plc		247,708		3,832
				27,275
Capital Goods 0.4%
BAE Systems plc		579,039		3,046
Rolls-Royce Group plc *		296,911		1,472
Rolls-Royce Group plc, C Shares (a)*		25,474,963		38
Rolls-Royce Group plc, C Shares (a)(b) *		17,705,058		—
				4,556
Commercial & Professional Supplies 0.1%
Capita Group plc		102,892		1,037
Diversified Financials 0.1%
Man Group plc		266,983		987
Energy 5.1%
BG Group plc		545,612		8,712
BP plc		2,999,726		21,198
Royal Dutch Shell plc, B Share		438,079		9,914
Royal Dutch Shell plc, A Share		588,320		13,493
				53,317
Food & Staples Retailing 0.7%
J Sainsbury plc		206,980		1,003
Tesco plc		1,280,582		6,345
				7,348
Food, Beverage & Tobacco 2.1%
British American Tobacco plc		280,225		6,758
British American Tobacco plc		52,381		1,270
Cadbury plc		219,834		1,644
Diageo plc		408,377		4,872
Imperial Tobacco Group plc		164,040		3,743
Unilever plc		208,124		4,052
				22,339
Household & Personal Products 0.4%
Reckitt Benckiser Group plc		96,555		3,790
Insurance 0.5%
Aviva plc		423,498		1,950
Prudential plc		412,192		2,369
Standard Life plc		336,827		936
				5,255
Materials 1.8%
Anglo American plc		212,855		4,580
BHP Billiton plc		358,112		7,433
Rio Tinto plc		143,473		5,829
Xstrata plc *		100,849		889
				18,731
Media 0.1%
Reed Elsevier plc		176,347		1,307
Pharmaceuticals, Biotechnology & Life Sciences 2.1%
AstraZeneca PLC		235,719		8,254
GlaxoSmithKline PLC		832,673		12,826
Shire plc		89,610		1,120
				22,200
Real Estate 0.1%
Land Securities Group plc		77,701		641
Retailing 0.1%
Marks & Spencer Group plc		228,045		1,130
Telecommunication Services 1.7%
BT Group plc		1,259,132		1,735
Vodafone Group plc		8,404,590		15,448
				17,183
Utilities 0.9%
Centrica plc		823,040		2,751
National Grid plc		392,585		3,262
Scottish & Southern Energy plc		146,282		2,384

8     See financial notes.

Schwab International Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
United Utilities Group plc		107,747		806
				9,203
				196,299
United States 0.1%
Health Care Equipment & Services 0.1%
Synthes, Inc.		9,008		911
Total Common Stock (Cost $1,022,869)				1,029,112
Preferred Stock 0.2% of net assets
Germany 0.2%
Porsche Automobil Holding SE		13,600		980
Volkswagen AG		16,600		1,054
Total Preferred Stock (Cost $3,232)				2,034
Rights 0.0% of net assets
Belgium 0.0%
Fortis (a)(b)*		358,772		—
Total Rights (Cost $—)				—
Other Investment Company 0.3% of net assets
United States 0.3%
iShares MSCI EAFE Index Fund		70,000		2,934
Total Other Investment Company (Cost $2,336)				2,934

	Face Amount		Value
Security                                                              Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investment 0.5% of net assets
Citibank, New York Time Deposit
0.03%, 05/01/09		5,101		5,101
Total Short-Term Investment (Cost $5,101)				5,101

End of Investments.

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $1,044,172 and the unrealized appreciation and depreciation were $223,013 and ($228,004), respectively, with a net unrealized depreciation of ($4,991).

At 04/30/09, the prices of certain foreign securities held by the fund aggregating $xxx,xxx were adjusted from their closing market prices following the guidelines adopted by the fund’s Board of Trustees.

*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets.
CVA –	Dutch Certificate
Reg’d –	Registered

See financial notes.     9

Schwab S&P 500 Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99.4	%	Common Stock		4,840,128		4,553,088
	0.8	%	Short-Term Investments		33,958		33,958
	100.2	%	Total Investments		4,874,086		4,587,046
	0.2	%	Collateral Invested for Securities on Loan		9,834		9,834
	(0.4	)%	Other Assets and Liabilities, Net				(16,651	)
	100.0	%	Net Assets				4,580,229

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 99.3% of net assets
Automobiles & Components 0.4%
Ford Motor Co. *		1,432,277		8,565
General Motors Corp.		355,225		682
Harley-Davidson, Inc.		143,545		3,181
Johnson Controls, Inc.		358,952		6,823
The Goodyear Tire & Rubber Co. *		105,796		1,163
				20,414
Banks 2.4%
BB&T Corp.		335,116		7,822
Comerica, Inc.		95,108		1,995
Fifth Third Bancorp		347,725		1,426
First Horizon National Corp.		126,147		1,452
Hudson City Bancorp, Inc.		310,900		3,905
Huntington Bancshares, Inc.		217,426		607
KeyCorp		296,955		1,826
M&T Bank Corp.		47,155		2,473
Marshall & Ilsley Corp.		154,183		891
People’s United Financial, Inc.		205,000		3,202
PNC Financial Services Group, Inc.		261,219		10,371
Regions Financial Corp.		426,331		1,914
SunTrust Banks, Inc.		227,836		3,290
U.S. Bancorp		1,059,232		19,299
Wells Fargo & Co.		2,486,376		49,752
Zions Bancorp		68,162		745
				110,970
Capital Goods 7.6%
3M Co.		415,741		23,947
Caterpillar, Inc.		363,792		12,944
Cooper Industries Ltd., Class A		109,322		3,585
Cummins, Inc.		121,708		4,138
Danaher Corp.		145,519		8,504
Deere & Co.		261,688		10,797
Dover Corp.		114,923		3,537
Eaton Corp.		93,395		4,091
Emerson Electric Co.		462,648		15,748
Fastenal Co.		58,534		2,245
Flowserve Corp.		20,000		1,358
Fluor Corp.		103,898		3,935
General Dynamics Corp.		236,932		12,242
General Electric Co.		6,237,677		78,907
Goodrich Corp.		74,318		3,291
Honeywell International, Inc.		441,700		13,785
Illinois Tool Works, Inc.		240,895		7,901
Ingersoll-Rand Co., Ltd., Class A		194,677		4,238
ITT Corp.		112,360		4,608
Jacobs Engineering Group, Inc. *		60,234		2,291
L-3 Communications Holdings, Inc.		73,595		5,604
Lockheed Martin Corp.		200,252		15,726
Masco Corp.		236,681		2,097
Northrop Grumman Corp.		199,871		9,664
PACCAR, Inc.		227,020		8,046
Pall Corp.		48,022		1,268
Parker Hannifin Corp.		103,306		4,685
Precision Castparts Corp.		84,100		6,296
Raytheon Co.		250,739		11,341
Rockwell Automation, Inc.		88,041		2,781
Rockwell Collins, Inc.		98,524		3,778
Textron, Inc.		154,126		1,654
The Boeing Co.		440,715		17,651
The Manitowoc Co., Inc.		74,100		441
Tyco International Ltd.		84,553		2,009
United Technologies Corp.		570,169		27,847
W.W. Grainger, Inc.		40,399		3,389
				346,369
Commercial & Professional Supplies 0.7%
Avery Dennison Corp.		56,457		1,623
Cintas Corp.		81,991		2,104

See financial notes.     1

Schwab S&P 500 Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Equifax, Inc.		80,620		2,351
Iron Mountain, Inc. *		75,000		2,137
Monster Worldwide, Inc. *		77,326		1,067
Pitney Bowes, Inc.		131,854		3,236
R.R. Donnelley & Sons Co.		131,347		1,530
Republic Services, Inc.		156,433		3,285
Robert Half International, Inc.		97,973		2,353
Stericycle, Inc. *		48,000		2,260
The Dun & Bradstreet Corp.		23,000		1,872
Waste Management, Inc.		310,505		8,281
				32,099
Consumer Durables & Apparel 1.1%
Centex Corp.		72,629		794
Coach, Inc. *		207,716		5,089
D.R. Horton, Inc.		164,056		2,141
Eastman Kodak Co.		169,561		517
Fortune Brands, Inc.		91,549		3,599
Harman International Industries, Inc.		34,500		627
Hasbro, Inc.		83,255		2,220
Jones Apparel Group, Inc.		52,684		487
KB HOME		38,775		701
Leggett & Platt, Inc.		107,903		1,549
Lennar Corp., Class A		79,582		775
Liz Claiborne, Inc.		61,119		290
Mattel, Inc.		222,967		3,336
Newell Rubbermaid, Inc.		167,418		1,749
NIKE, Inc., Class B		236,242		12,396
Polo Ralph Lauren Corp.		37,700		2,030
Pulte Homes, Inc.		122,586		1,411
Snap-on, Inc.		35,854		1,216
The Black & Decker Corp.		37,550		1,513
The Stanley Works		52,574		1,999
VF Corp.		53,707		3,183
Whirlpool Corp.		46,691		2,109
				49,731
Consumer Services 1.8%
Apollo Group, Inc., Class A *		69,705		4,388
Carnival Corp.		265,307		7,131
Darden Restaurants, Inc.		78,430		2,900
H&R Block, Inc.		157,094		2,378
International Game Technology		191,469		2,365
Marriott International, Inc., Class A		183,134		4,315
McDonald’s Corp.		671,221		35,769
Starbucks Corp. *		462,410		6,686
Starwood Hotels & Resorts Worldwide, Inc.		120,073		2,505
Wyndham Worldwide Corp.		107,943		1,261
Wynn Resorts Ltd. *		46,000		1,805
Yum! Brands, Inc.		288,706		9,628
				81,131
Diversified Financials 6.3%
American Capital Ltd.		55,200		171
American Express Co.		703,404		17,740
Ameriprise Financial, Inc.		148,061		3,901
Bank of America Corp.		3,837,204		34,266
Bank of New York Mellon Corp.		691,023		17,607
Capital One Financial Corp.		233,489		3,909
CIT Group, Inc.		116,838		259
Citigroup, Inc. (c)		3,356,343		10,237
CME Group, Inc.		41,090		9,095
Discover Financial Services		300,324		2,442
E*TRADE Financial Corp. *		262,898		376
Federated Investors, Inc., Class B		45,911		1,050
Franklin Resources, Inc.		96,036		5,808
IntercontinentalExchange, Inc. *		37,700		3,303
Invesco Ltd.		238,243		3,507
Janus Capital Group, Inc.		95,251		955
JPMorgan Chase & Co.		2,251,616		74,303
Legg Mason, Inc.		81,300		1,632
Leucadia National Corp. *		119,200		2,531
Moody’s Corp.		126,591		3,737
Morgan Stanley		655,048		15,485
Northern Trust Corp.		136,434		7,417
NYSE Euronext		163,400		3,786
SLM Corp. *		255,962		1,236
State Street Corp.		265,928		9,076
T. Rowe Price Group, Inc.		159,326		6,137
The Charles Schwab Corp. (b)		582,786		10,770
The Goldman Sachs Group, Inc.		297,977		38,290
The Nasdaq OMX Group, Inc. *		64,000		1,231
				286,750
Energy 12.5%
Anadarko Petroleum Corp.		286,332		12,329
Apache Corp.		194,449		14,168
Baker Hughes, Inc.		190,241		6,769
BJ Services Co.		150,775		2,094
Cabot Oil & Gas Corp.		59,700		1,802
Cameron International Corp. *		129,400		3,310
Chesapeake Energy Corp.		286,300		5,643
Chevron Corp.		1,219,559		80,613
ConocoPhillips		906,119		37,151
CONSOL Energy, Inc.		104,200		3,259
Denbury Resources, Inc. *		90,000		1,465
Devon Energy Corp.		269,713		13,985
Diamond Offshore Drilling, Inc.		21,000		1,521
El Paso Corp.		410,934		2,835
ENSCO International, Inc.		70,400		1,991
EOG Resources, Inc.		150,907		9,580
Exxon Mobil Corp.		3,052,491		203,510

2     See financial notes.

Schwab S&P 500 Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Halliburton Co.		546,836		11,057
Hess Corp.		162,202		8,887
Marathon Oil Corp.		436,722		12,971
Massey Energy Co.		66,700		1,061
Murphy Oil Corp.		97,527		4,653
Nabors Industries Ltd. *		174,696		2,657
National-Oilwell Varco, Inc. *		222,610		6,741
Noble Corp.		38,482		1,052
Noble Energy		104,000		5,902
Occidental Petroleum Corp.		495,524		27,893
Peabody Energy Corp.		134,400		3,547
Pioneer Natural Resources Co.		73,000		1,688
Range Resources Corp.		88,600		3,541
Rowan Cos., Inc.		64,341		1,004
Schlumberger Ltd.		728,459		35,687
Smith International, Inc.		110,400		2,854
Southwestern Energy Co. *		189,200		6,785
Spectra Energy Corp.		356,334		5,167
Sunoco, Inc.		72,311		1,917
Tesoro Corp.		42,700		651
The Williams Cos., Inc.		368,102		5,190
Valero Energy Corp.		322,485		6,398
Weatherford International Ltd. *		100,262		1,667
XTO Energy, Inc.		325,083		11,267
				572,262
Food & Staples Retailing 3.3%
Costco Wholesale Corp.		259,841		12,628
CVS Caremark Corp.		854,940		27,170
Safeway, Inc.		264,175		5,218
SUPERVALU, Inc.		124,524		2,036
Sysco Corp.		355,595		8,296
The Kroger Co.		393,636		8,510
Wal-Mart Stores, Inc.		1,331,643		67,115
Walgreen Co.		593,699		18,660
Whole Foods Market, Inc.		62,900		1,304
				150,937
Food, Beverage & Tobacco 5.8%
Altria Group, Inc.		1,193,829		19,495
Archer-Daniels-Midland Co.		390,669		9,618
Brown-Forman Corp., Class B		51,186		2,380
Campbell Soup Co.		120,713		3,105
Coca-Cola Enterprises, Inc.		173,467		2,959
ConAgra Foods, Inc.		286,055		5,063
Constellation Brands, Inc., Class A *		117,905		1,367
Dean Foods Co. *		43,900		909
Dr. Pepper Snapple Group, Inc. *		140,000		2,899
General Mills, Inc.		204,503		10,366
H.J. Heinz Co.		192,551		6,628
Hormel Foods Corp.		30,000		939
Kellogg Co.		153,585		6,467
Kraft Foods, Inc., Class A		882,400		20,648
Lorillard, Inc.		103,718		6,548
McCormick & Co., Inc.		77,973		2,296
Molson Coors Brewing Co., Class B		72,850		2,786
PepsiCo, Inc.		927,083		46,132
Philip Morris International, Inc.		1,214,884		43,979
Reynolds American, Inc.		110,078		4,181
Sara Lee Corp.		442,030		3,678
The Coca-Cola Co.		1,184,352		50,986
The Hershey Co.		97,892		3,538
The J.M. Smucker Co.		78,504		3,093
The Pepsi Bottling Group, Inc.		81,611		2,552
Tyson Foods, Inc., Class A		136,402		1,438
				264,050
Health Care Equipment & Services 4.3%
Aetna, Inc.		282,132		6,210
AmerisourceBergen Corp.		102,482		3,448
Baxter International, Inc.		372,961		18,089
Becton, Dickinson & Co.		147,494		8,921
Boston Scientific Corp. *		800,150		6,729
C.R. Bard, Inc.		60,312		4,320
Cardinal Health, Inc.		216,680		7,322
CIGNA Corp.		175,110		3,451
Coventry Health Care, Inc. *		93,847		1,493
Covidien Ltd.		302,553		9,978
DaVita, Inc. *		47,000		2,179
DENTSPLY International, Inc.		65,000		1,860
Express Scripts, Inc. *		152,264		9,740
Hospira, Inc. *		92,968		3,056
Humana, Inc. *		105,389		3,033
IMS Health, Inc.		120,083		1,508
Intuitive Surgical, Inc. *		22,700		3,263
Laboratory Corp. of America Holdings *		67,844		4,352
McKesson Corp.		170,166		6,296
Medco Health Solutions, Inc. *		302,326		13,166
Medtronic, Inc.		670,796		21,466
Patterson Cos., Inc. *		69,444		1,421
Quest Diagnostics, Inc.		88,042		4,519
St. Jude Medical, Inc. *		208,159		6,978
Stryker Corp.		146,742		5,680
Tenet Healthcare Corp. *		48,777		110
UnitedHealth Group, Inc.		725,993		17,075
Varian Medical Systems, Inc. *		49,000		1,635
WellPoint, Inc. *		308,969		13,211
Zimmer Holdings, Inc. *		140,969		6,201
				196,710
Household & Personal Products 2.8%
Avon Products, Inc.		257,470		5,860
Colgate-Palmolive Co.		302,177		17,829

See financial notes.     3

Schwab S&P 500 Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Kimberly-Clark Corp.		249,681		12,269
The Clorox Co.		84,122		4,715
The Estee Lauder Cos., Inc., Class A		62,600		1,872
The Procter & Gamble Co.		1,774,636		87,738
				130,283
Insurance 2.3%
Aflac, Inc.		282,803		8,170
American International Group, Inc.		1,600,032		2,208
Aon Corp.		178,840		7,547
Assurant, Inc.		53,600		1,310
Cincinnati Financial Corp.		101,886		2,440
Genworth Financial, Inc., Class A		280,038		661
Lincoln National Corp.		165,270		1,858
Loews Corp.		223,303		5,558
Marsh & McLennan Cos., Inc.		315,984		6,664
MBIA, Inc. *		78,224		370
MetLife, Inc.		502,911		14,962
Principal Financial Group, Inc.		158,912		2,597
Prudential Financial, Inc.		269,281		7,777
The Allstate Corp.		327,492		7,640
The Chubb Corp.		217,240		8,461
The Hartford Financial Services Group, Inc.		194,837		2,235
The Progressive Corp. *		415,028		6,342
The Travelers Cos., Inc.		352,357		14,496
Torchmark Corp.		58,181		1,706
Unum Group		213,338		3,486
XL Capital Ltd., Class A		108,299		1,030
				107,518
Materials 3.4%
Air Products & Chemicals, Inc.		131,754		8,683
AK Steel Holding Corp.		50,800		661
Alcoa, Inc.		613,437		5,564
Allegheny Technologies, Inc.		53,155		1,740
Ashland, Inc.		43,550		956
Ball Corp.		59,822		2,257
Bemis Co., Inc.		59,750		1,436
CF Industries Holdings, Inc. *		25,000		1,801
E.I. du Pont de Nemours & Co.		551,828		15,396
Eastman Chemical Co.		45,991		1,825
Ecolab, Inc.		105,595		4,071
Freeport-McMoRan Copper & Gold, Inc.		249,796		10,654
International Flavors & Fragrances, Inc.		48,167		1,503
International Paper Co.		258,603		3,274
MeadWestvaco Corp.		104,877		1,642
Monsanto Co.		329,326		27,956
Newmont Mining Corp.		295,912		11,908
Nucor Corp.		189,804		7,723
Owens-Illinois, Inc. *		80,000		1,951
Pactiv Corp. *		79,295		1,733
PPG Industries, Inc.		102,061		4,496
Praxair, Inc.		187,730		14,007
Sealed Air Corp.		98,210		1,872
Sigma-Aldrich Corp.		77,926		3,416
The Dow Chemical Co.		587,403		9,398
Titanium Metals Corp.		26,900		183
United States Steel Corp.		77,148		2,048
Vulcan Materials Co.		69,704		3,314
Weyerhaeuser Co.		127,433		4,493
				155,961
Media 2.6%
CBS Corp., Class B		419,711		2,955
Comcast Corp., Class A		1,727,063		26,700
Gannett Co., Inc.		138,839		543
Meredith Corp.		17,154		430
News Corp., Class A		1,391,611		11,495
Omnicom Group, Inc.		195,442		6,151
Scripps Networks Interactive, Class A		39,225		1,076
The DIRECTV Group, Inc. *		366,460		9,063
The Interpublic Group of Cos., Inc. *		256,619		1,606
The McGraw-Hill Cos., Inc.		195,811		5,904
The New York Times Co., Class A		81,287		437
The Walt Disney Co.		1,111,116		24,334
The Washington Post Co., Class B		1,250		523
Time Warner Cable, Inc., Class A		217,171		6,999
Time Warner, Inc.		717,003		15,652
Viacom, Inc., Class B *		379,603		7,304
				121,172
Pharmaceuticals, Biotechnology & Life Sciences 9.4%
Abbott Laboratories		924,205		38,678
Allergan, Inc.		185,022		8,633
Amgen, Inc. *		633,298		30,696
Biogen Idec, Inc. *		177,761		8,593
Bristol-Myers Squibb Co.		1,189,853		22,845
Celgene Corp. *		257,500		11,000
Cephalon, Inc. *		40,000		2,624
Eli Lilly & Co.		604,055		19,886
Forest Laboratories, Inc. *		195,423		4,239
Genzyme Corp. *		162,807		8,683
Gilead Sciences, Inc. *		551,294		25,249
Johnson & Johnson		1,655,330		86,673
King Pharmaceuticals, Inc. *		159,892		1,260
Life Technologies Corp. *		45,749		1,706
Merck & Co., Inc.		1,272,857		30,854
Millipore Corp. *		16,408		970
Mylan, Inc. *		115,549		1,531

4     See financial notes.

Schwab S&P 500 Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
PerkinElmer, Inc.		70,980		1,034
Pfizer, Inc.		4,016,667		53,663
Schering-Plough Corp.		946,326		21,784
Teva Pharmaceutical Industries Ltd. ADR		41,481		1,821
Thermo Fisher Scientific, Inc. *		251,699		8,830
Waters Corp. *		60,268		2,662
Watson Pharmaceuticals, Inc. *		63,811		1,974
Wyeth		800,282		33,932
				429,820
Real Estate 1.0%
Apartment Investment & Management Co., Class A		82,689		604
AvalonBay Communities, Inc.		41,310		2,347
Boston Properties, Inc.		65,600		3,242
CB Richard Ellis Group, Inc., Class A *		164,700		1,235
Developers Diversified Realty Corp.		42,200		174
Equity Residential		165,692		3,793
HCP, Inc.		134,700		2,957
Health Care REIT, Inc.		60,000		2,044
Host Hotels & Resorts, Inc.		349,458		2,687
Kimco Realty Corp.		184,400		2,216
Plum Creek Timber Co., Inc.		106,950		3,692
ProLogis		204,506		1,863
Public Storage		74,825		5,003
Simon Property Group, Inc.		161,054		8,310
Ventas, Inc.		75,000		2,148
Vornado Realty Trust		76,519		3,741
				46,056
Retailing 3.7%
Abercrombie & Fitch Co., Class A		55,900		1,513
Amazon.com, Inc. *		192,488		15,499
AutoNation, Inc. *		80,566		1,427
AutoZone, Inc. *		24,987		4,158
Bed Bath & Beyond, Inc. *		167,865		5,106
Best Buy Co., Inc.		212,291		8,148
Big Lots, Inc. *		62,909		1,739
Dillard’s, Inc., Class A		33,711		260
Expedia, Inc. *		126,600		1,723
Family Dollar Stores, Inc.		85,892		2,851
GameStop Corp., Class A *		97,900		2,953
Genuine Parts Co.		102,653		3,486
J.C. Penney Co., Inc.		135,584		4,161
Kohl’s Corp. *		188,281		8,539
Limited Brands, Inc.		189,987		2,170
Lowe’s Cos., Inc.		881,200		18,946
Macy’s, Inc.		272,190		3,724
Nordstrom, Inc.		109,382		2,475
O’Reilly Automotive, Inc. *		84,000		3,263
Office Depot, Inc. *		167,083		433
RadioShack Corp.		79,067		1,113
Sears Holdings Corp. *		40,075		2,503
Staples, Inc.		426,397		8,792
Target Corp.		456,519		18,836
The Gap, Inc.		294,399		4,575
The Home Depot, Inc.		1,019,607		26,836
The Sherwin-Williams Co.		60,651		3,435
The TJX Cos., Inc.		262,389		7,339
Tiffany & Co.		74,308		2,150
				168,153
Semiconductors & Semiconductor Equipment 2.5%
Advanced Micro Devices, Inc. *		301,471		1,088
Altera Corp.		194,494		3,172
Analog Devices, Inc.		179,122		3,812
Applied Materials, Inc.		820,999		10,024
Broadcom Corp., Class A *		274,481		6,365
Intel Corp.		3,333,326		52,600
KLA-Tencor Corp.		110,567		3,067
Linear Technology Corp.		136,338		2,970
LSI Corp. *		250,138		961
MEMC Electronic Materials, Inc. *		105,100		1,703
Microchip Technology, Inc.		92,700		2,132
Micron Technology, Inc. *		425,213		2,075
National Semiconductor Corp.		132,830		1,643
Novellus Systems, Inc. *		62,474		1,128
NVIDIA Corp. *		324,850		3,729
Teradyne, Inc. *		119,683		711
Texas Instruments, Inc.		789,420		14,257
Xilinx, Inc.		172,868		3,533
				114,970
Software & Services 6.9%
Adobe Systems, Inc. *		322,522		8,821
Affiliated Computer Services, Inc., Class A *		58,472		2,829
Akamai Technologies, Inc. *		49,500		1,090
Autodesk, Inc. *		142,646		2,844
Automatic Data Processing, Inc.		306,040		10,773
BMC Software, Inc. *		120,001		4,160
CA, Inc.		248,295		4,283
Citrix Systems, Inc. *		101,545		2,897
Cognizant Technology Solutions Corp., Class A *		176,300		4,370
Computer Sciences Corp. *		94,953		3,509
Compuware Corp. *		179,317		1,341
Convergys Corp. *		85,006		859
eBay, Inc. *		653,586		10,765
Electronic Arts, Inc. *		189,219		3,851
Fidelity National Information Services, Inc.		102,300		1,826
Fiserv, Inc. *		100,097		3,736

See financial notes.     5

Schwab S&P 500 Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Google, Inc., Class A *		141,971		56,216
Intuit, Inc. *		197,876		4,577
MasterCard, Inc., Class A		43,900		8,053
McAfee, Inc. *		90,000		3,379
Microsoft Corp.		4,613,998		93,480
Novell, Inc. *		220,687		830
Oracle Corp.		2,331,376		45,089
Paychex, Inc.		198,430		5,360
Salesforce.com, Inc. *		47,435		2,031
Symantec Corp. *		513,854		8,864
Total System Services, Inc.		118,200		1,474
VeriSign, Inc. *		117,700		2,422
Western Union Co.		442,962		7,420
Yahoo!, Inc. *		787,491		11,253
				318,402
Technology Hardware & Equipment 8.8%
Agilent Technologies, Inc. *		220,967		4,035
Amphenol Corp., Class A		72,000		2,437
Apple, Inc. *		532,505		67,005
Ciena Corp. *		47,466		567
Cisco Systems, Inc. *		3,498,668		67,594
Corning, Inc.		943,854		13,799
Dell, Inc. *		1,041,999		12,108
EMC Corp. *		1,232,341		15,441
FLIR Systems, Inc. *		80,000		1,774
Harris Corp.		80,000		2,446
Hewlett-Packard Co.		1,456,373		52,400
International Business Machines Corp.		802,287		82,804
Jabil Circuit, Inc.		108,685		880
JDS Uniphase Corp. *		125,689		580
Juniper Networks, Inc. *		305,100		6,606
Lexmark International, Inc., Class A *		53,391		1,048
Molex, Inc.		85,448		1,425
Motorola, Inc.		1,388,000		7,676
NetApp, Inc. *		208,093		3,808
QLogic Corp. *		92,672		1,314
QUALCOMM, Inc.		986,578		41,752
SanDisk Corp. *		109,800		1,726
Sun Microsystems, Inc. *		483,538		4,429
Tellabs, Inc. *		266,357		1,396
Teradata Corp. *		108,424		1,813
Tyco Electronics Ltd.		281,553		4,910
Xerox Corp.		540,916		3,305
				405,078
Telecommunication Services 3.7%
American Tower Corp., Class A *		211,700		6,724
AT&T, Inc.		3,500,842		89,692
CenturyTel, Inc.		68,817		1,868
Embarq Corp.		93,293		3,411
Frontier Communications Corp.		197,963		1,407
Qwest Communications International, Inc.		954,223		3,712
Sprint Nextel Corp. *		1,782,577		7,772
Verizon Communications, Inc.		1,693,606		51,384
Windstream Corp.		261,945		2,174
				168,144
Transportation 2.1%
Burlington Northern Santa Fe Corp.		170,459		11,502
C.H. Robinson Worldwide, Inc.		87,200		4,635
CSX Corp.		248,206		7,344
Expeditors International of Washington, Inc.		99,500		3,454
FedEx Corp.		187,949		10,518
Norfolk Southern Corp.		229,224		8,179
Ryder System, Inc.		34,193		947
Southwest Airlines Co.		450,801		3,147
Union Pacific Corp.		307,341		15,103
United Parcel Service, Inc., Class B		596,665		31,229
				96,058
Utilities 3.9%
Allegheny Energy, Inc.		100,525		2,606
Ameren Corp.		124,330		2,862
American Electric Power Co., Inc.		245,935		6,488
CenterPoint Energy, Inc.		172,437		1,835
CMS Energy Corp.		116,771		1,404
Consolidated Edison, Inc.		149,269		5,542
Constellation Energy Group, Inc.		109,191		2,629
Dominion Resources, Inc.		351,016		10,587
DTE Energy Co.		102,614		3,034
Duke Energy Corp.		766,889		10,591
Dynegy, Inc., Class A *		247,112		440
Edison International		204,467		5,829
Entergy Corp.		116,073		7,518
EQT Corp.		78,000		2,623
Exelon Corp. *		396,464		18,289
FirstEnergy Corp.		185,163		7,573
FPL Group, Inc.		250,250		13,461
Integrys Energy Group, Inc.		27,779		734
Nicor, Inc.		20,782		668
NiSource, Inc.		161,756		1,778
Northeast Utilities		65,000		1,366
Pepco Holdings, Inc.		99,700		1,191
PG&E Corp.		219,856		8,161
Pinnacle West Capital Corp.		51,445		1,409
PPL Corp.		227,042		6,791
Progress Energy, Inc.		158,192		5,397
Public Service Enterprise Group, Inc.		310,174		9,256

6     See financial notes.

Schwab S&P 500 Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Questar Corp.		98,900		2,939
SCANA Corp.		55,000		1,662
Sempra Energy		156,317		7,194
Southern Co.		464,409		13,412
TECO Energy, Inc.		114,004		1,207
The AES Corp. *		414,310		2,929
Wisconsin Energy Corp.		65,000		2,597
Xcel Energy, Inc.		246,254		4,541
				176,543
Total Common Stock (Cost $4,840,128)				4,553,088

	Face Amount		Value
Security                                                                 Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 0.8% of net assets
Commercial Paper & Other Obligations 0.7%
Citibank, New York Time Deposit
0.03%, 05/01/09		28,456		28,456
U.S. Treasury Obligations 0.1%
U.S. Treasury Bill
0.17%, 06/18/09 (a)		550		550
0.10%, 06/18/09 (a)		253		253
0.15%, 06/18/09 (a)		1,700		1,700
0.16%, 06/18/09 (a)		3,000		2,999
				5,502
Total Short-Term Investments (Cost $33,958)				33,958

End of Investments.

	Number of		Value
Security	Shares		($ x 1,000)
Collateral Invested for Securities on Loan 0.2% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust		9,834,058		9,834
Total Collateral Invested for Securities on Loan (Cost $9,834)				9,834

(All dollar amounts are x 1,000)

At 04/30/09 tax basis cost of the fund’s investments was $4,916,023 and the unrealized appreciation and depreciation were $1,131,129 and ($1,460,106), respectively, with a net unrealized depreciation of ($328,977).

*	Non-income producing security.
(a)	All or a portion of this security is held as collateral for open futures contracts.
(b)	Issuer is affiliated with the fund’s adviser.
(c)	All or a portion of this security is on loan.
ADR –	American Depositary Receipt
REIT –	Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		500		21,750		2,605

See financial notes.     7

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	96.9	%	Common Stock		3,258,475		2,413,924
	2.2	%	Short-Term Investments		54,287		54,287
	99.1	%	Total Investments		3,312,762		2,468,211
	0.2	%	Collateral Invested for Securities on Loan		4,286		4,286
	0.7	%	Other Assets and Liabilities, Net				18,372
	100.0	%	Total Net Assets				2,490,869

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 96.9% of net assets
Automobiles & Components 0.5%
Ford Motor Co. *		928,020		5,550
General Motors Corp.		180,152		346
Harley-Davidson, Inc.		85,625		1,897
Johnson Controls, Inc.		188,107		3,576
The Goodyear Tire & Rubber Co. *		71,540		786
				12,155
Banks 2.4%
BB&T Corp.		177,897		4,152
Comerica, Inc.		43,662		916
Fifth Third Bancorp		237,604		974
First Horizon National Corp.		86,170		992
Hudson City Bancorp, Inc.		160,592		2,017
Huntington Bancshares, Inc.		104,867		293
KeyCorp		141,943		873
M&T Bank Corp.		22,743		1,193
Marshall & Ilsley Corp.		75,109		434
People’s United Financial, Inc.		103,800		1,621
PNC Financial Services Group, Inc.		136,059		5,401
Regions Financial Corp.		211,714		951
SunTrust Banks, Inc.		108,380		1,565
U.S. Bancorp		555,696		10,125
Wells Fargo & Co.		1,350,433		27,022
Zions Bancorp		40,036		438
				58,967
Capital Goods 7.3%
3M Co.		219,478		12,642
Caterpillar, Inc.		196,870		7,005
Cooper Industries Ltd., Class A		55,929		1,834
Cummins, Inc.		58,854		2,001
Danaher Corp.		78,168		4,568
Deere & Co.		134,598		5,554
Dover Corp.		57,547		1,771
Eaton Corp.		48,844		2,139
Emerson Electric Co.		238,867		8,131
Fastenal Co.		38,815		1,489
Flowserve Corp.		16,600		1,127
Fluor Corp.		54,884		2,078
General Dynamics Corp.		122,328		6,321
General Electric Co.		3,321,675		42,019
Goodrich Corp.		39,178		1,735
Honeywell International, Inc.		228,129		7,120
Illinois Tool Works, Inc.		119,841		3,931
Ingersoll-Rand Co., Ltd. Class A		98,224		2,138
ITT Corp.		55,518		2,277
Jacobs Engineering Group, Inc. *		37,400		1,423
L-3 Communications Holdings, Inc.		35,588		2,710
Lockheed Martin Corp.		103,439		8,123
Masco Corp.		107,207		950
Northrop Grumman Corp.		103,596		5,009
PACCAR, Inc.		114,830		4,070
Pall Corp.		37,308		985
Parker Hannifin Corp.		50,430		2,287
Precision Castparts Corp.		44,427		3,326
Raytheon Co.		129,449		5,855
Rockwell Automation, Inc.		43,080		1,361
Rockwell Collins, Inc.		47,381		1,817
Textron, Inc.		74,178		796
The Boeing Co.		227,639		9,117
The Manitowoc Co., Inc.		39,400		234
Tyco International Ltd.		41,405		984
United Technologies Corp.		298,166		14,562
W.W. Grainger, Inc.		22,128		1,856
				181,345
Commercial & Professional Supplies 0.7%
Avery Dennison Corp.		32,219		926
Cintas Corp.		39,585		1,016
Equifax, Inc.		37,841		1,103
Iron Mountain, Inc. *		55,400		1,578
Monster Worldwide, Inc. *		34,612		478

See financial notes.     1

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Pitney Bowes, Inc.		62,737		1,540
R.R. Donnelley & Sons Co.		61,522		717
Republic Services, Inc.		97,101		2,039
Robert Half International, Inc.		45,969		1,104
Stericycle, Inc. *		25,800		1,215
The Dun & Bradstreet Corp.		16,600		1,351
Waste Management, Inc.		161,611		4,310
				17,377
Consumer Durables & Apparel 1.0%
Centex Corp.		35,337		387
Coach, Inc. *		102,212		2,504
D.R. Horton, Inc.		78,260		1,021
Eastman Kodak Co.		88,752		271
Fortune Brands, Inc.		45,130		1,774
Harman International Industries, Inc.		16,056		292
Hasbro, Inc.		49,662		1,324
Jones Apparel Group, Inc.		24,819		229
KB HOME		21,535		389
Leggett & Platt, Inc.		48,491		696
Lennar Corp., Class A		40,136		391
Liz Claiborne, Inc.		25,123		119
Mattel, Inc.		110,427		1,652
Newell Rubbermaid, Inc.		79,932		835
NIKE, Inc., Class B		124,620		6,539
Polo Ralph Lauren Corp.		22,326		1,202
Pulte Homes, Inc.		62,164		716
Snap-on, Inc.		21,828		741
The Black & Decker Corp.		19,154		772
The Stanley Works		22,145		842
VF Corp.		25,784		1,528
Whirlpool Corp.		29,331		1,325
				25,549
Consumer Services 1.7%
Apollo Group, Inc., Class A *		39,085		2,461
Carnival Corp.		138,514		3,723
Darden Restaurants, Inc.		48,518		1,794
H&R Block, Inc.		101,711		1,540
International Game Technology		87,391		1,079
Marriott International, Inc., Class A		90,760		2,138
McDonald’s Corp.		355,817		18,962
Starbucks Corp. *		245,152		3,545
Starwood Hotels & Resorts Worldwide, Inc.		58,195		1,214
Wyndham Worldwide Corp.		52,921		618
Wynn Resorts Ltd. *		28,100		1,102
Yum! Brands, Inc.		151,779		5,062
				43,238
Diversified Financials 6.1%
American Capital Ltd.		50,161		155
American Express Co.		370,537		9,345
Ameriprise Financial, Inc.		67,253		1,772
Bank of America Corp.		2,033,607		18,160
Bank of New York Mellon Corp.		363,950		9,273
Capital One Financial Corp.		116,885		1,957
CIT Group, Inc.		105,814		235
Citigroup, Inc. (c)		1,779,001		5,426
CME Group, Inc.		21,847		4,836
Discover Financial Services		146,049		1,187
E*TRADE Financial Corp. *		307,695		440
Federated Investors, Inc., Class B		30,095		689
Franklin Resources, Inc.		45,799		2,770
IntercontinentalExchange, Inc. *		22,058		1,932
Invesco Ltd.		114,604		1,687
Janus Capital Group, Inc.		74,944		752
JPMorgan Chase & Co.		1,193,415		39,383
Legg Mason, Inc.		41,098		825
Leucadia National Corp. *		53,051		1,126
Moody’s Corp.		60,038		1,772
Morgan Stanley		334,606		7,910
Northern Trust Corp.		71,784		3,902
NYSE Euronext		79,600		1,844
SLM Corp. *		139,456		674
State Street Corp.		140,998		4,812
T. Rowe Price Group, Inc.		78,153		3,011
The Charles Schwab Corp. (a)		299,895		5,542
The Goldman Sachs Group, Inc.		159,892		20,546
The Nasdaq OMX Group, Inc. *		41,100		790
				152,753
Energy 12.1%
Anadarko Petroleum Corp.		147,017		6,331
Apache Corp.		105,957		7,720
Baker Hughes, Inc.		97,786		3,479
BJ Services Co.		82,284		1,143
Cabot Oil & Gas Corp.		31,500		951
Cameron International Corp. *		66,900		1,711
Chesapeake Energy Corp.		177,766		3,504
Chevron Corp.		632,875		41,833
ConocoPhillips		467,871		19,183
CONSOL Energy, Inc.		55,318		1,730
Denbury Resources, Inc. *		71,500		1,164
Devon Energy Corp.		140,445		7,282
Diamond Offshore Drilling, Inc.		21,600		1,564
El Paso Corp.		211,137		1,457
ENSCO International, Inc.		46,193		1,306
EOG Resources, Inc.		79,099		5,021
Exxon Mobil Corp.		1,574,407		104,966
Halliburton Co.		284,032		5,743
Hess Corp.		89,738		4,917

2     See financial notes.

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Marathon Oil Corp.		227,030		6,743
Massey Energy Co.		21,700		345
Murphy Oil Corp.		59,865		2,856
Nabors Industries Ltd. *		86,694		1,319
National-Oilwell Varco, Inc. *		132,114		4,000
Noble Corp.		18,333		501
Noble Energy		54,584		3,098
Occidental Petroleum Corp.		255,926		14,406
Peabody Energy Corp.		84,564		2,232
Pioneer Natural Resources Co.		34,500		798
Range Resources Corp.		49,400		1,974
Rowan Cos., Inc.		31,222		487
Schlumberger Ltd.		378,380		18,537
Smith International, Inc.		66,232		1,712
Southwestern Energy Co. *		104,600		3,751
Spectra Energy Corp.		202,875		2,942
Sunoco, Inc.		35,590		943
Tesoro Corp.		42,107		642
The Williams Cos., Inc.		172,596		2,434
Valero Energy Corp.		157,455		3,124
Weatherford International Ltd. *		39,720		661
XTO Energy, Inc.		183,417		6,357
				300,867
Food & Staples Retailing 3.2%
Costco Wholesale Corp.		134,151		6,520
CVS Caremark Corp.		464,011		14,746
Safeway, Inc.		133,921		2,645
SUPERVALU, Inc.		61,057		998
Sysco Corp.		183,662		4,285
The Kroger Co.		203,311		4,396
Wal-Mart Stores, Inc.		711,059		35,837
Walgreen Co.		318,312		10,004
Whole Foods Market, Inc.		43,116		894
				80,325
Food, Beverage & Tobacco 5.7%
Altria Group, Inc.		647,862		10,580
Archer-Daniels-Midland Co.		203,730		5,016
Brown-Forman Corp., Class B		28,542		1,327
Campbell Soup Co.		75,998		1,955
Coca-Cola Enterprises, Inc.		91,595		1,563
ConAgra Foods, Inc.		164,694		2,915
Constellation Brands, Inc., Class A *		55,260		640
Dean Foods Co. *		44,370		918
Dr. Pepper Snapple Group, Inc. *		74,300		1,539
General Mills, Inc.		106,687		5,408
H.J. Heinz Co.		107,992		3,717
Hormel Foods Corp.		19,300		604
Kellogg Co.		78,449		3,303
Kraft Foods, Inc., Class A		461,554		10,800
Lorillard, Inc.		51,279		3,237
McCormick & Co., Inc.		53,329		1,571
Molson Coors Brewing Co., Class B		52,680		2,015
PepsiCo, Inc.		495,756		24,669
Philip Morris International, Inc.		633,262		22,924
Reynolds American, Inc.		52,120		1,980
Sara Lee Corp.		220,312		1,833
The Coca-Cola Co.		633,176		27,258
The Hershey Co.		54,936		1,985
The J.M. Smucker Co.		51,271		2,020
The Pepsi Bottling Group, Inc.		43,260		1,353
Tyson Foods, Inc., Class A		88,388		932
				142,062
Health Care Equipment & Services 4.1%
Aetna, Inc.		151,548		3,336
AmerisourceBergen Corp.		53,491		1,799
Baxter International, Inc.		193,028		9,362
Becton, Dickinson & Co.		74,896		4,530
Boston Scientific Corp. *		470,924		3,960
C.R. Bard, Inc.		30,161		2,160
Cardinal Health, Inc.		110,553		3,736
CIGNA Corp.		87,198		1,719
Coventry Health Care, Inc. *		44,738		712
Covidien Ltd.		157,006		5,178
DaVita, Inc. *		32,100		1,489
DENTSPLY International, Inc.		46,000		1,317
Express Scripts, Inc. *		78,322		5,010
Hospira, Inc. *		46,814		1,539
Humana, Inc. *		52,414		1,508
IMS Health, Inc.		53,886		677
Intuitive Surgical, Inc. *		11,300		1,624
Laboratory Corp. of America Holdings *		31,947		2,049
McKesson Corp.		83,009		3,071
Medco Health Solutions, Inc. *		157,856		6,875
Medtronic, Inc.		349,443		11,182
Patterson Cos., Inc. *		37,603		769
Quest Diagnostics, Inc.		46,838		2,404
St. Jude Medical, Inc. *		107,828		3,614
Stryker Corp.		77,698		3,008
Tenet Healthcare Corp. *		131,540		296
UnitedHealth Group, Inc.		384,617		9,046
Varian Medical Systems, Inc. *		35,606		1,188
WellPoint, Inc. *		166,460		7,118
Zimmer Holdings, Inc. *		67,054		2,950
				103,226
Household & Personal Products 2.7%
Avon Products, Inc.		129,450		2,946
Colgate-Palmolive Co.		157,020		9,264
Kimberly-Clark Corp.		129,714		6,374
The Clorox Co.		42,435		2,379

See financial notes.     3

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
The Estee Lauder Cos., Inc., Class A		34,626		1,035
The Procter & Gamble Co.		925,554		45,760
				67,758
Insurance 2.3%
Aflac, Inc.		142,470		4,116
American International Group, Inc.		765,327		1,056
Aon Corp.		94,810		4,001
Assurant, Inc.		34,646		847
Cincinnati Financial Corp.		51,717		1,239
Genworth Financial, Inc., Class A		123,626		292
Lincoln National Corp.		103,201		1,160
Loews Corp.		111,913		2,785
Marsh & McLennan Cos., Inc.		164,795		3,476
MBIA, Inc. *		52,289		247
MetLife, Inc.		266,466		7,927
Principal Financial Group, Inc.		96,855		1,583
Prudential Financial, Inc.		142,750		4,123
The Allstate Corp.		169,418		3,953
The Chubb Corp.		113,253		4,411
The Hartford Financial Services Group, Inc.		120,958		1,387
The Progressive Corp. *		219,992		3,361
The Travelers Cos., Inc.		187,103		7,697
Torchmark Corp.		33,560		984
Unum Group		100,002		1,634
XL Capital Ltd., Class A		108,500		1,032
				57,311
Materials 3.3%
Air Products & Chemicals, Inc.		69,847		4,603
AK Steel Holding Corp.		54,000		702
Alcoa, Inc.		325,127		2,949
Allegheny Technologies, Inc.		27,515		900
Ashland, Inc.		20,237		444
Ball Corp.		29,347		1,107
Bemis Co., Inc.		27,985		673
CF Industries Holdings, Inc. *		16,025		1,155
E.I. du Pont de Nemours & Co.		292,576		8,163
Eastman Chemical Co.		27,367		1,086
Ecolab, Inc.		52,033		2,006
Freeport-McMoRan Copper & Gold, Inc.		127,174		5,424
International Flavors & Fragrances, Inc.		22,876		714
International Paper Co.		161,986		2,051
MeadWestvaco Corp.		49,173		770
Monsanto Co.		174,574		14,820
Newmont Mining Corp.		156,834		6,311
Nucor Corp.		100,596		4,093
Owens-Illinois, Inc. *		50,900		1,241
Pactiv Corp. *		41,048		897
PPG Industries, Inc.		56,587		2,493
Praxair, Inc.		97,049		7,241
Sealed Air Corp.		46,258		882
Sigma-Aldrich Corp.		37,328		1,636
The Dow Chemical Co.		311,332		4,981
Titanium Metals Corp.		55,100		374
United States Steel Corp.		44,565		1,183
Vulcan Materials Co.		33,267		1,582
Weyerhaeuser Co.		72,742		2,565
				83,046
Media 2.6%
CBS Corp., Class B		207,625		1,462
Comcast Corp., Class A		915,401		14,152
Gannett Co., Inc.		66,075		258
Meredith Corp.		15,658		393
News Corp., Class A		727,990		6,013
Omnicom Group, Inc.		94,705		2,980
Scripps Networks Interactive, Class A		23,068		633
The DIRECTV Group, Inc. *		199,842		4,942
The Interpublic Group of Cos., Inc. *		133,246		834
The McGraw-Hill Cos., Inc.		99,856		3,011
The New York Times Co., Class A		31,047		167
The Walt Disney Co.		587,267		12,861
The Washington Post Co., Class B		2,019		845
Time Warner Cable, Inc.		114,530		3,691
Time Warner, Inc.		380,071		8,297
Viacom, Inc., Class B *		188,650		3,630
				64,169
Pharmaceuticals, Biotechnology & Life Sciences 9.2%
Abbott Laboratories		486,581		20,363
Allergan, Inc.		95,936		4,476
Amgen, Inc. *		330,261		16,008
Biogen Idec, Inc. *		93,230		4,507
Bristol-Myers Squibb Co.		623,911		11,979
Celgene Corp. *		144,413		6,169
Cephalon, Inc. *		26,900		1,765
Eli Lilly & Co.		318,468		10,484
Forest Laboratories, Inc. *		91,241		1,979
Genzyme Corp. *		85,041		4,535
Gilead Sciences, Inc. *		287,381		13,162
Johnson & Johnson		874,095		45,768
King Pharmaceuticals, Inc. *		105,433		831
Life Technologies Corp. *		53,386		1,991
Merck & Co., Inc.		663,486		16,083
Millipore Corp. *		15,452		913
Mylan, Inc. *		88,202		1,169
PerkinElmer, Inc.		33,580		489
Pfizer, Inc.		2,119,005		28,310

4     See financial notes.

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Schering-Plough Corp.		512,575		11,800
Teva Pharmaceutical Industries Ltd. ADR		18,250		801
Thermo Fisher Scientific, Inc. *		130,738		4,586
Waters Corp. *		29,184		1,289
Watson Pharmaceuticals, Inc. *		42,635		1,319
Wyeth		419,782		17,799
				228,575
Real Estate 1.0%
Apartment Investment & Management Co., Class A		42,225		308
AvalonBay Communities, Inc.		23,689		1,346
Boston Properties, Inc.		43,176		2,134
CB Richard Ellis Group, Inc., Class A *		66,140		496
Developers Diversified Realty Corp.		38,640		159
Equity Residential		82,130		1,880
HCP, Inc.		75,700		1,662
Health Care REIT, Inc.		31,600		1,077
Host Hotels & Resorts, Inc.		158,004		1,215
Kimco Realty Corp.		117,559		1,413
Plum Creek Timber Co., Inc.		50,227		1,734
ProLogis		158,140		1,441
Public Storage		39,653		2,651
Simon Property Group, Inc.		84,095		4,339
Ventas, Inc.		53,800		1,541
Vornado Realty Trust		41,871		2,047
				25,443
Retailing 3.6%
Abercrombie & Fitch Co., Class A		28,945		783
Amazon.com, Inc. *		102,502		8,253
AutoNation, Inc. *		37,567		665
AutoZone, Inc. *		14,511		2,414
Bed Bath & Beyond, Inc. *		89,004		2,708
Best Buy Co., Inc.		112,566		4,320
Big Lots, Inc. *		32,158		889
Dillard’s, Inc., Class A		15,101		116
Expedia, Inc. *		61,626		839
Family Dollar Stores, Inc.		50,438		1,674
GameStop Corp., Class A *		47,300		1,427
Genuine Parts Co.		48,585		1,650
J.C. Penney Co., Inc.		69,337		2,128
Kohl’s Corp. *		97,329		4,414
Limited Brands, Inc.		105,748		1,208
Lowe’s Cos., Inc.		467,088		10,042
Macy’s, Inc.		149,636		2,047
Nordstrom, Inc.		59,114		1,338
O’Reilly Automotive, Inc. *		42,900		1,667
Office Depot, Inc. *		197,044		510
RadioShack Corp.		59,379		836
Sears Holdings Corp. *		22,551		1,409
Staples, Inc.		220,172		4,540
Target Corp.		241,989		9,984
The Gap, Inc.		152,063		2,363
The Home Depot, Inc.		540,343		14,222
The Sherwin-Williams Co.		35,885		2,033
The TJX Cos., Inc.		139,064		3,890
Tiffany & Co.		46,620		1,349
				89,718
Semiconductors & Semiconductor Equipment 2.5%
Advanced Micro Devices, Inc. *		177,468		641
Altera Corp.		104,352		1,702
Analog Devices, Inc.		91,332		1,943
Applied Materials, Inc.		414,573		5,062
Broadcom Corp., Class A *		143,737		3,333
Intel Corp.		1,771,579		27,955
KLA-Tencor Corp.		53,014		1,471
Linear Technology Corp.		72,630		1,582
LSI Corp. *		180,938		695
MEMC Electronic Materials, Inc. *		84,627		1,371
Microchip Technology, Inc.		66,723		1,535
Micron Technology, Inc. *		190,562		930
National Semiconductor Corp.		79,645		985
Novellus Systems, Inc. *		37,937		685
NVIDIA Corp. *		170,032		1,952
Teradyne, Inc. *		59,066		351
Texas Instruments, Inc.		411,534		7,432
Xilinx, Inc.		93,595		1,913
				61,538
Software & Services 6.8%
Adobe Systems, Inc. *		174,354		4,769
Affiliated Computer Services, Inc., Class A *		34,575		1,673
Akamai Technologies, Inc. *		53,941		1,188
Autodesk, Inc. *		83,335		1,662
Automatic Data Processing, Inc.		165,233		5,816
BMC Software, Inc. *		64,438		2,234
CA, Inc.		118,830		2,050
Citrix Systems, Inc. *		57,463		1,639
Cognizant Technology Solutions Corp., Class A *		92,548		2,294
Computer Sciences Corp. *		47,587		1,759
Compuware Corp. *		96,468		722
Convergys Corp. *		46,132		466
eBay, Inc. *		337,483		5,558
Electronic Arts, Inc. *		102,073		2,077
Fidelity National Information Services, Inc.		70,534		1,259
Fiserv, Inc. *		48,755		1,820
Google, Inc., Class A *		75,787		30,009
Intuit, Inc. *		101,933		2,358

See financial notes.     5

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
MasterCard, Inc., Class A		24,200		4,439
McAfee, Inc. *		45,900		1,723
Microsoft Corp.		2,427,833		49,188
Novell, Inc. *		101,560		382
Oracle Corp.		1,213,310		23,465
Paychex, Inc.		103,535		2,796
Salesforce.com, Inc. *		29,936		1,282
Symantec Corp. *		271,496		4,683
Total System Services, Inc.		57,000		711
VeriSign, Inc. *		60,925		1,254
Western Union Co.		228,763		3,832
Yahoo!, Inc. *		441,264		6,306
				169,414
Technology Hardware & Equipment 8.6%
Agilent Technologies, Inc. *		109,399		1,998
Amphenol Corp., Class A		52,100		1,763
Apple, Inc. *		282,135		35,501
Ciena Corp. *		25,233		302
Cisco Systems, Inc. *		1,846,360		35,672
Corning, Inc.		492,033		7,194
Dell, Inc. *		620,686		7,212
EMC Corp. *		635,104		7,958
FLIR Systems, Inc. *		48,000		1,065
Harris Corp.		38,300		1,171
Hewlett-Packard Co.		758,335		27,285
International Business Machines Corp.		424,403		43,803
Jabil Circuit, Inc.		59,901		485
JDS Uniphase Corp. *		64,192		296
Juniper Networks, Inc. *		157,365		3,407
Lexmark International, Inc., Class A *		29,317		575
Molex, Inc.		39,918		665
Motorola, Inc.		720,154		3,982
NetApp, Inc. *		103,281		1,890
Nortel Networks Corp. *		321		—
QLogic Corp. *		53,045		752
QUALCOMM, Inc.		526,787		22,294
SanDisk Corp. *		65,824		1,035
Sun Microsystems, Inc. *		234,931		2,152
Tellabs, Inc. *		166,699		873
Teradata Corp. *		51,247		857
Tyco Electronics Ltd.		139,306		2,429
Xerox Corp.		264,522		1,616
				214,232
Telecommunication Services 3.6%
American Tower Corp., Class A *		125,300		3,979
AT&T, Inc.		1,851,394		47,433
CenturyTel, Inc.		34,476		936
Embarq Corp.		43,282		1,582
Frontier Communications Corp.		101,315		720
Qwest Communications International, Inc.		447,218		1,740
Sprint Nextel Corp. *		911,731		3,975
Verizon Communications, Inc.		898,272		27,254
Windstream Corp.		130,129		1,080
				88,699
Transportation 2.1%
Burlington Northern Santa Fe Corp.		92,371		6,233
C.H. Robinson Worldwide, Inc.		53,895		2,865
CSX Corp.		125,491		3,713
Expeditors International of Washington, Inc.		67,100		2,329
FedEx Corp.		98,519		5,513
Norfolk Southern Corp.		119,568		4,266
Ryder System, Inc.		26,009		720
Southwest Airlines Co.		275,635		1,924
Union Pacific Corp.		159,234		7,825
United Parcel Service, Inc., Class B		314,953		16,485
				51,873
Utilities 3.8%
Allegheny Energy, Inc.		49,855		1,292
Ameren Corp.		69,390		1,597
American Electric Power Co., Inc.		147,367		3,888
CenterPoint Energy, Inc.		102,929		1,095
CMS Energy Corp.		67,313		809
Consolidated Edison, Inc.		87,096		3,234
Constellation Energy Group, Inc.		63,674		1,533
Dominion Resources, Inc.		180,848		5,455
DTE Energy Co.		49,098		1,452
Duke Energy Corp.		399,209		5,513
Dynegy, Inc., Class A *		131,596		234
Edison International		98,426		2,806
Entergy Corp.		60,280		3,904
EQT Corp.		39,200		1,318
Exelon Corp. *		208,326		9,610
FirstEnergy Corp.		96,892		3,963
FPL Group, Inc.		129,188		6,949
Integrys Energy Group, Inc.		20,415		539
Nicor, Inc.		13,226		425
NiSource, Inc.		80,406		884
Northeast Utilities		48,100		1,011
Pepco Holdings, Inc.		65,100		778
PG&E Corp.		115,950		4,304
Pinnacle West Capital Corp.		29,616		811
PPL Corp.		119,228		3,566
Progress Energy, Inc.		85,767		2,926
Public Service Enterprise Group, Inc.		157,096		4,688
Questar Corp.		51,391		1,527

6     See financial notes.

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
SCANA Corp.		35,800		1,082
Sempra Energy		81,552		3,753
Southern Co.		246,516		7,120
TECO Energy, Inc.		67,915		719
The AES Corp. *		202,539		1,432
Wisconsin Energy Corp.		35,300		1,411
Xcel Energy, Inc.		144,032		2,656
				94,284
Total Common Stock (Cost $3,258,475)				2,413,924

	Face Amount		Value
Security                                                                 Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 2.2% of net assets
Commercial Paper & Other Obligation 1.7%
Citibank, New York Time Deposit
0.03%, 05/01/09		42,792		42,792
U.S. Treasury Obligations 0.5%
U.S. Treasury Bill
0.05%, 06/18/09 (b)		2,394		2,393
0.10%, 06/18/09 (b)		503		503
0.14%, 06/18/09 (b)		50		50
0.15%, 06/18/09 (b)		1,250		1,250
0.16%, 06/18/09 (b)		7,000		6,999
0.17%, 06/18/09 (b)		300		300
				11,495
Total Short-Term Investments (Cost $54,287)				54,287

End of Investments.

	Number of		Value
Security	Shares		($ x 1,000)
Collateral Invested for Securities on Loan 0.2% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust		4,286,285		4,286
Total Collateral Invested for Securities on Loan (Cost $4,286)				4,286

(All dollar amounts are x 1,000)

At 04/30/09, the tax basis cost of the fund’s investments was $3,324,040 and the unrealized appreciation and depreciation were $69,320 and ($925,149), respectively, with a net unrealized depreciation of ($855,829).

*	Non-income producing security.
(a)	Issuer is affiliated with the fund’s adviser.
(b)	All or a portion of this security is held as collateral for open futures contracts.
(c)	All or a portion of this security is on loan.
ADR – American Depositary Receipt
REIT – Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contract
S & P 500 Index, e-mini, Long, expires 06/19/09		1,700		73,950		6,862

See financial notes.     7

Schwab Total Stock Market Index Fund

Portfolio Holdings as of April 30, 2009 (Unaudited)

This section shows all the securities in the fund’s portfolio and their value as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98.2	%	Common Stock		1,084,714		929,276
	0.2	%	Foreign Common Stock		2,428		1,394
	0.1	%	Preferred Stock		955		1,243
	—	%	Rights		13		5
	1.5	%	Short-Term Investments		13,714		13,714
	100.0	%	Total Investments		1,101,824		945,632
	0.1	%	Collateral Invested for Securities on Loan		972		972
	(0.1	)%	Other Assets and Liabilities, Net				(489	)
	100.0	%	Net Assets				946,115

	Number of		Value
Security	Shares		($ x 1,000)
Common Stock 98.2% of net assets
Automobiles & Components 0.4%
American Axle & Manufacturing Holdings, Inc.		5,300		5
ArvinMeritor, Inc.		9,900		12
BorgWarner, Inc.		10,800		313
Cooper Tire & Rubber Co.		8,900		74
Drew Industries, Inc. *		2,400		34
Ford Motor Co. *		198,736		1,188
General Motors Corp.		45,386		87
Gentex Corp.		11,500		154
Harley-Davidson, Inc.		25,500		565
Hawk Corp., Class A *		1,800		26
Johnson Controls, Inc.		45,000		855
Standard Motor Products, Inc.		7,500		30
Stoneridge, Inc. *		8,200		19
Strattec Security Corp.		1,500		20
Superior Industries International, Inc.		800		12
Tenneco, Inc. *		4,480		14
The Goodyear Tire & Rubber Co. *		20,500		225
Thor Industries, Inc.		4,500		104
TRW Automotive Holdings Corp. *		7,800		67
WABCO Holdings, Inc.		5,133		82
Winnebago Industries, Inc.		5,100		45
				3,931
Banks 2.9%
1st Source Corp.		3,728		73
Abigail Adams National Bancorp, Inc.		550		1
AMCORE Financial, Inc.		3,811		6
Ameris Bancorp		1,800		12
Anchor BanCorp Wisconsin, Inc.		3,100		5
Arrow Financial Corp.		1,081		29
Associated Banc-Corp.		15,500		240
Astoria Financial Corp.		8,300		69
BancFirst Corp.		2,000		85
BancorpSouth, Inc.		7,612		177
BancTrust Financial Group, Inc.		1,100		7
Bank Mutual Corp.		6,168		63
Bank of Hawaii Corp.		3,500		123
Bank of the Ozarks, Inc.		2,800		70
Banner Corp.		1,200		6
BB&T Corp.		49,458		1,154
Berkshire Bancorp, Inc.		3,600		17
Berkshire Hills Bancorp, Inc.		1,400		32
BOK Financial Corp.		7,540		284
Boston Private Financial Holdings, Inc.		2,129		10
Brookline Bancorp, Inc.		2,405		24
Bryn Mawr Bank Corp.		1,400		27
Camco Financial Corp.		700		2
Camden National Corp.		700		20
Capital City Bank Group, Inc.		1,875		28
CapitalSource, Inc.		6,900		21
Capitol Bancorp Ltd.		1,500		5
Capitol Federal Financial		6,920		270
Cascade Bancorp		3,318		6
Cathay General Bancorp		6,200		70
Central Pacific Financial Corp.		3,400		20
Century Bancorp Inc., Class A		800		12
Charter Financial Corp.		900		8
Chemical Financial Corp.		5,383		115
Citizens First Bancorp, Inc.		700		1
Citizens South Banking Corp.		1,000		5
City Holding Co.		1,800		53
City National Corp.		3,100		113
Columbia Banking System, Inc.		1,951		19

See financial notes.     1

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Comerica, Inc.		13,496		283
Commerce Bancshares, Inc.		15,430		511
Community Bank System, Inc.		4,400		72
Community Trust Bancorp, Inc.		2,487		75
Cullen/Frost Bankers, Inc.		6,300		297
CVB Financial Corp.		5,811		35
Dime Community Bancshares		3,375		28
Downey Financial Corp.		2,000		—
East West Bancorp, Inc.		2,600		18
F.N.B. Corp.		7,661		58
Fifth Third Bancorp		51,714		212
First BanCorp Puerto Rico		7,200		40
First Busey Corp.		1,500		12
First Citizens BancShares, Inc., Class A		300		36
First Commonwealth Financial Corp.		10,504		91
First Financial Bancorp		1,839		20
First Financial Bankshares, Inc.		4,000		197
First Financial Corp.		600		22
First Financial Holdings, Inc.		3,900		35
First Horizon National Corp.		20,309		234
First M&F Corp.		2,000		10
First Merchants Corp.		1,041		13
First Midwest Bancorp, Inc.		3,125		28
First Niagara Financial Group, Inc.		13,672		185
First Place Financial Corp.		2,900		16
First United Corp.		2,200		22
FirstMerit Corp.		7,300		142
Flushing Financial Corp.		3,300		30
Fremont General Corp. *		6,200		1
Frontier Financial Corp.		1,575		2
Fulton Financial Corp.		14,762		98
Glacier Bancorp, Inc.		7,697		118
Great Southern Bancorp, Inc.		1,400		23
Guaranty Financial Group, Inc. *		2,933		2
Hancock Holding Co.		5,100		193
Harleysville National Corp.		2,496		22
Hawthorn Bancshares, Inc.		750		9
Heritage Financial Corp.		735		8
Horizon Financial Corp.		2,695		4
Hudson City Bancorp, Inc.		55,731		700
Huntington Bancshares, Inc.		34,199		95
IBERIABANK Corp.		3,875		177
Imperial Capital Bancorp, Inc. *		700		—
Independent Bank Corp.		1,000		20
Independent Bank Corp., Michigan		4,302		8
Indiana Community Bancorp		800		10
IndyMac Bancorp, Inc. *		5,900		—
Integra Bank Corp.		1,225		3
International Bancshares Corp.		7,784		105
Investors Bancorp, Inc. *		9,600		88
Irwin Financial Corp. *		3,700		5
Kearny Financial Corp.		4,500		50
KeyCorp		46,290		285
Lakeland Financial Corp.		2,200		41
M&T Bank Corp.		9,962		523
MainSource Financial Group, Inc.		1,735		15
Marshall & Ilsley Corp.		24,650		142
MB Financial, Inc.		2,133		29
Merchants Bancshares, Inc.		750		14
MGIC Investment Corp.		9,300		24
Midwest Banc Holdings, Inc.		1,300		2
MutualFirst Financial, Inc.		2,000		11
Nara Bancorp, Inc.		4,000		15
National Penn Bancshares, Inc.		6,675		54
NBT Bancorp, Inc.		4,400		104
New York Community Bancorp, Inc.		31,585		357
NewAlliance Bancshares, Inc.		9,100		117
North Valley Bancorp		1,500		7
Northrim BanCorp, Inc.		3,281		38
Northwest Bancorp, Inc.		5,000		88
OceanFirst Financial Corp.		1,050		13
Ocwen Financial Corp. *		8,420		94
Old National Bancorp		6,244		85
Oriental Financial Group, Inc.		1,663		15
PAB Bankshares, Inc.		714		3
Pacific Capital Bancorp		6,844		47
Park National Corp.		845		57
People’s United Financial, Inc.		31,987		500
Peoples Financial Corp.		3,000		50
Pinnacle Financial Partners, Inc. *		475		8
PNC Financial Services Group, Inc.		39,032		1,550
Popular, Inc.		21,700		62
PrivateBancorp, Inc.		5,000		101
Prosperity Bancshares, Inc.		6,400		178
Provident Bankshares Corp.		1,657		15
Provident Financial Holdings, Inc.		750		5
Provident Financial Services, Inc.		5,217		56
Regions Financial Corp.		61,962		278
Renasant Corp.		1,125		16
Republic Bancorp, Inc., Class A		1,821		40
Roma Financial Corp.		2,500		33
Royal Bank of Canada		416		15
S&T Bancorp, Inc.		4,400		79
S.Y. Bancorp, Inc.		1,470		37
Sandy Spring Bancorp, Inc.		2,900		47
Santander BanCorp		4,686		31
Seacoast Banking Corp. of Florida		1,980		8
Shore Bancshares, Inc.		750		15
Simmons First National Corp., Class A		1,000		26
Southwest Bancorp, Inc.		3,300		23

2     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
State Bancorp, Inc.		1,058		9
Sterling Bancorp		1,918		22
Sterling Bancshares, Inc.		6,150		41
Sterling Financial Corp., Washington		1,827		6
Suffolk Bancorp		2,400		61
Sun Bancorp, Inc. *		4,219		28
SunTrust Banks, Inc.		33,342		481
Susquehanna Bancshares, Inc.		7,468		60
SVB Financial Group *		2,200		46
Synovus Financial Corp.		27,700		89
TCF Financial Corp.		13,600		189
TF Financial Corp.		700		13
TFS Financial Corp.		28,000		328
The First of Long Island Corp.		4,000		83
The PMI Group, Inc.		8,100		5
The South Financial Group, Inc.		4,500		7
Timberland Bancorp, Inc.		2,000		11
Tompkins Financial Corp.		931		39
Tree.com, Inc. *		1,044		7
TriCo Bancshares		400		6
TrustCo Bank Corp. NY		6,857		41
Trustmark Corp.		8,300		180
U.S. Bancorp		158,531		2,888
UCBH Holdings, Inc.		9,400		12
UMB Financial Corp.		3,574		164
Umpqua Holdings Corp.		343		3
Union Bankshares Corp.		1,050		18
United Bankshares, Inc.		7,400		192
United Community Banks, Inc.		3,836		25
Valley National Bancorp		12,925		187
Washington Federal, Inc.		7,942		103
Washington Trust Bancorp, Inc.		1,000		18
Webster Financial Corp.		8,663		45
Wells Fargo & Co.		386,406		7,732
WesBanco, Inc.		4,456		89
West Coast Bancorp		1,200		3
Westamerica Bancorp		5,200		279
Whitney Holding Corp.		6,675		80
Wilmington Trust Corp.		5,700		83
Wintrust Financial Corp.		5,800		99
WSFS Financial Corp.		1,000		27
Zions Bancorp		13,725		150
				27,047
Capital Goods 7.6%
3D Systems Corp. *		1,400		10
3M Co.		65,000		3,744
A.O. Smith Corp.		1,300		40
AAON, Inc.		6,113		119
AAR CORP. *		5,000		75
Aceto Corp.		5,000		36
Actuant Corp., Class A		5,680		70
Acuity Brands, Inc.		5,200		149
Aecom Technology Corp. *		8,000		206
Aerosonic Corp. *		300		1
AGCO Corp. *		6,762		164
Alamo Group, Inc.		500		6
Albany International Corp., Class A		3,918		36
Alliant Techsystems, Inc. *		2,437		194
American Science & Engineering, Inc.		500		30
American Superconductor Corp. *		700		18
American Woodmark Corp.		4,000		83
Ameron International Corp.		900		53
AMETEK, Inc.		9,300		300
Ampco-Pittsburgh Corp.		2,800		68
Apogee Enterprises, Inc.		1,200		16
Applied Industrial Technologies, Inc.		6,525		147
Applied Signal Technology, Inc.		2,500		49
Armstrong World Industries, Inc. *		3,500		64
Astronics Corp. *		1,250		14
Astronics Corp., Class B *		312		3
Badger Meter, Inc.		4,000		156
Baldor Electric Co.		3,800		88
Barnes Group, Inc.		3,600		51
BE Aerospace, Inc. *		6,200		67
Belden, Inc.		4,400		71
Blount International, Inc. *		1,200		8
Brady Corp., Class A		6,400		135
Breeze-Eastern Corp. *		500		4
Briggs & Stratton Corp.		3,500		52
C&D Technologies, Inc. *		4,500		10
Carlisle Cos., Inc.		3,200		73
Cascade Corp.		4,400		106
Caterpillar, Inc.		53,800		1,914
Ceradyne, Inc. *		2,500		43
Chase Corp.		200		2
CIRCOR International, Inc.		3,750		97
CLARCOR, Inc.		3,400		106
Columbus McKinnon Corp. *		2,400		31
Cooper Industries Ltd., Class A		27,400		898
Crane Co.		5,000		115
Cummins, Inc.		15,600		530
Curtiss-Wright Corp.		3,600		115
Danaher Corp.		29,000		1,695
Deere & Co.		38,000		1,568
Donaldson Co., Inc.		6,500		214
Dover Corp.		16,700		514
Ducommun, Inc.		3,200		55
Dycom Industries, Inc. *		3,300		28
DynCorp International, Inc., Class A *		4,500		69
Eaton Corp.		16,600		727

See financial notes.     3

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
EMCOR Group, Inc. *		7,800		162
Emerson Electric Co.		70,000		2,383
Energy Conversion Devices, Inc. *		600		11
ESCO Technologies, Inc. *		2,800		116
Esterline Technologies Corp. *		2,400		63
Evergreen Solar, Inc. *		1,000		2
Fastenal Co.		13,200		506
Federal Signal Corp.		5,300		41
First Solar, Inc. *		7,000		1,311
Flow International Corp. *		900		2
Flowserve Corp.		3,900		265
Fluor Corp.		16,200		614
Franklin Electric Co., Inc.		1,300		31
FreightCar America, Inc.		2,500		48
FuelCell Energy, Inc. *		1,200		4
Furmanite Corp. *		1,400		6
Gardner Denver, Inc. *		3,400		91
GATX Corp.		4,000		120
GenCorp, Inc. *		2,500		6
General Cable Corp. *		4,700		128
General Dynamics Corp.		36,400		1,881
General Electric Co.		954,266		12,071
Gibraltar Industries, Inc.		2,500		17
Goodrich Corp.		8,404		372
Graco, Inc.		7,012		165
GrafTech International Ltd. *		8,600		76
Granite Construction, Inc.		4,850		191
Hardinge, Inc.		1,800		9
Harsco Corp.		6,200		171
HEICO Corp., Class A		2,286		57
Herley Industries, Inc. *		4,000		41
Hexcel Corp. *		2,000		19
Honeywell International, Inc.		71,062		2,218
Hubbell, Inc., Class B		3,800		126
Icahn Enterprises L.P.		5,150		150
IDEX Corp.		7,225		182
II-VI, Inc. *		3,800		91
Illinois Tool Works, Inc.		51,700		1,696
Ingersoll-Rand Co., Ltd., Class A		30,942		674
Insituform Technologies, Inc., Class A *		1,300		20
Integrated Electrical Services, Inc. *		5,105		49
ITT Corp.		17,400		714
Jacobs Engineering Group, Inc. *		10,600		403
John Bean Technologies Corp.		1,983		22
Joy Global, Inc.		19,350		493
Kadant, Inc. *		1		—
Kaydon Corp.		3,300		105
KBR, Inc.		13,500		211
Kennametal, Inc.		8,000		164
Kratos Defense & Security Solutions, Inc. *		1,800		1
L-3 Communications Holdings, Inc.		15,100		1,150
Ladish Co., Inc. *		1,300		10
Lawson Products, Inc.		2,000		23
Lennox International, Inc.		4,771		152
Lincoln Electric Holdings, Inc.		3,900		174
Lockheed Martin Corp.		37,052		2,910
Lydall, Inc. *		2,500		11
Magnetek, Inc. *		1,500		3
Masco Corp.		35,800		317
MasTec, Inc. *		5,350		67
McDermott International, Inc. *		25,000		404
Michael Baker Corp. *		3,000		101
Moog, Inc., Class A *		2,787		75
MSC Industrial Direct Co., Inc., Class A		4,300		176
Mueller Industries, Inc.		4,200		92
Mueller Water Products, Inc., Class A		3,139		13
NACCO Industries, Inc., Class A		1,300		50
NCI Building Systems, Inc. *		2,900		11
NN, Inc.		1,800		2
Nordson Corp.		4,000		145
Northrop Grumman Corp.		30,032		1,452
Omega Flex, Inc.		700		11
Orbital Sciences Corp. *		4,600		71
Oshkosh Corp.		9,000		86
Otter Tail Corp.		1,100		24
Owens Corning, Inc. *		11,000		197
PACCAR, Inc.		31,725		1,124
Pall Corp.		10,900		288
Parker Hannifin Corp.		16,500		748
Pentair, Inc.		9,500		253
Perini Corp. *		5,000		87
Powell Industries, Inc. *		1,000		36
Power-One, Inc. *		6,000		7
Precision Castparts Corp.		16,302		1,220
Quanex Building Products Corp.		5,625		58
Quanta Services, Inc. *		18,371		418
Raven Industries, Inc.		2,800		67
Raytheon Co.		44,900		2,031
Regal-Beloit Corp.		2,500		102
Rockwell Automation, Inc.		15,700		496
Rockwell Collins, Inc.		13,100		502
Roper Industries, Inc.		6,500		296
Rush Enterprises, Inc., Class B *		750		8
Sauer-Danfoss, Inc.		3,800		16
Seaboard Corp.		200		187
Simpson Manufacturing Co., Inc.		3,200		71
Spirit AeroSystems Holdings, Inc., Class A *		11,000		140
SPX Corp.		8,610		398
Standex International Corp.		3,000		42

4     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
SunPower Corp., Class A *		1,300		36
SunPower Corp., Class B *		2,331		59
Taser International, Inc. *		1,700		8
Tecumseh Products Co., Class A *		3,200		33
Teledyne Technologies, Inc. *		12,157		388
Tennant Co.		4,200		62
Terex Corp. *		7,400		102
Textron, Inc.		23,600		253
The Allied Defense Group, Inc. *		500		2
The Boeing Co.		65,800		2,635
The Gorman-Rupp Co.		4,491		96
The Greenbrier Cos., Inc.		4,100		35
The Manitowoc Co., Inc.		11,600		69
The Middleby Corp. *		7,000		306
The Shaw Group, Inc. *		8,500		285
The Timken Co.		6,600		106
The Toro Co.		4,100		125
Thomas & Betts Corp. *		7,300		227
Titan International, Inc.		4,125		25
TransDigm Group, Inc. *		3,600		127
Tredegar Corp.		5,100		90
Trinity Industries, Inc.		1,650		24
Triumph Group, Inc.		1,200		50
Tyco International Ltd.		43,525		1,034
United Rentals, Inc. *		5,900		36
United Technologies Corp.		88,068		4,301
Universal Forest Products, Inc.		2,500		84
URS Corp. *		7,700		339
USG Corp. *		3,900		58
Valmont Industries, Inc.		1,900		121
Vicor Corp.		4,200		23
W.W. Grainger, Inc.		7,300		612
Wabash National Corp.		2,500		3
Wabtec Corp.		5,828		222
Watsco, Inc.		3,400		146
Watts Water Technologies, Inc., Class A		1,000		22
WESCO International, Inc. *		4,800		125
Woodward Governor Co.		8,000		160
				72,287
Commercial & Professional Supplies 1.2%
A.T. Cross Co., Class A *		2,400		7
ABM Industries, Inc.		4,900		86
Administaff, Inc.		2,800		75
American Reprographics Co. *		4,000		26
AMREP Corp. *		2,500		46
ATC Technology Corp. *		5,011		80
Avery Dennison Corp.		9,700		279
Bowne & Co., Inc.		4,250		22
Casella Waste Systems, Inc., Class A *		2,500		5
CDI Corp.		3,700		44
Cenveo, Inc. *		4,300		20
Cintas Corp.		15,350		394
Clean Harbors, Inc. *		2,500		125
CompX International, Inc.		1,300		8
Consolidated Graphics, Inc. *		3,900		76
Copart, Inc. *		6,550		206
Cornell Cos., Inc. *		4,600		84
Corrections Corp. of America *		11,484		162
CoStar Group, Inc. *		800		30
Covanta Holding Corp. *		11,700		165
CRA International, Inc. *		2,500		58
Deluxe Corp.		3,800		55
Diamond Management & Technology Consultants, Inc.		1,000		3
EnergySolutions, Inc.		7,000		68
Ennis, Inc.		4,500		40
Equifax, Inc.		13,095		382
Exponent, Inc. *		6,000		167
FTI Consulting, Inc. *		2,700		148
G & K Services, Inc., Class A		4,100		102
GP Strategies Corp. *		1,500		6
Healthcare Services Group, Inc.		8,437		151
Heidrick & Struggles International, Inc.		3,100		52
Herman Miller, Inc.		5,700		85
HNI Corp.		4,000		62
Hudson Highland Group, Inc. *		3,220		5
ICT Group, Inc. *		3,000		21
IHS, Inc., Class A *		6,600		273
Interface, Inc., Class A		5,800		34
Iron Mountain, Inc. *		14,680		418
Kelly Services, Inc., Class A		5,700		65
Kforce, Inc. *		2,905		32
Kimball International, Inc., Class B		6,100		33
Knoll, Inc.		4,000		28
Korn/Ferry International *		3,600		38
M&F Worldwide Corp. *		1,200		19
Manpower, Inc.		6,991		301
McGrath Rentcorp		1,600		34
Mine Safety Appliances Co.		2,700		67
Mobile Mini, Inc. *		1,200		16
Monster Worldwide, Inc. *		9,800		135
MPS Group, Inc. *		11,400		92
Multi-Color Corp.		2,625		31
Navigant Consulting, Inc. *		5,000		74
On Assignment, Inc. *		4,700		17
Pitney Bowes, Inc.		20,000		491
R.R. Donnelley & Sons Co.		17,000		198
Republic Services, Inc.		36,645		770
Resources Connection, Inc. *		3,700		72
Robert Half International, Inc.		14,000		336
Rollins, Inc.		10,012		180

See financial notes.     5

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
School Specialty, Inc. *		1,600		30
Spherion Corp. *		6,830		25
Stantec, Inc. *		1,690		37
Steelcase, Inc., Class A		11,500		52
Stericycle, Inc. *		6,400		301
Superior Uniform Group, Inc.		1,600		12
Tetra Tech, Inc. *		12,031		295
The Advisory Board Co. *		1,000		19
The Brink’s Co.		5,600		159
The Corporate Executive Board Co.		2,700		47
The Dun & Bradstreet Corp.		12,140		988
The Geo Group, Inc. *		11,400		190
The Standard Register Co.		4,100		21
TRC Cos., Inc. *		1,350		4
TrueBlue, Inc. *		6,000		58
United Stationers, Inc. *		2,900		95
Viad Corp.		3,625		69
Virco Mfg. Corp.		1,170		4
Volt Information Sciences, Inc. *		3,150		23
Waste Connections, Inc. *		5,475		141
Waste Management, Inc.		48,100		1,283
Watson Wyatt Worldwide, Inc., Class A		4,600		244
				11,196
Consumer Durables & Apparel 1.3%
American Greetings Corp., Class A		8,500		67
Blyth, Inc.		1,200		53
Brookfield Homes Corp.		3,074		16
Brunswick Corp.		7,400		44
Callaway Golf Co.		5,600		42
Carter’s, Inc. *		5,000		107
Cavco Industries, Inc. *		410		10
Centex Corp.		10,700		117
Coach, Inc. *		32,008		784
Columbia Sportswear Co.		4,350		134
Craftmade International, Inc. *		2,800		6
CSS Industries, Inc.		3,400		68
D.R. Horton, Inc.		24,604		321
Deckers Outdoor Corp. *		2,500		141
DGSE Cos., Inc. *		700		1
Eastman Kodak Co.		22,700		69
Ethan Allen Interiors, Inc.		4,200		56
Flexsteel Industries, Inc.		600		4
Foamex International, Inc. *		2,278		—
Fortune Brands, Inc.		11,500		452
Fossil, Inc. *		5,462		110
Furniture Brands International, Inc.		4,700		15
Garmin Ltd.		16,000		403
Hampshire Group Ltd. *		2,000		6
Hanesbrands, Inc. *		11,047		182
Harman International Industries, Inc.		6,800		124
Hasbro, Inc.		14,500		387
Helen of Troy Ltd. *		5,000		80
Hovnanian Enterprises, Inc., Class A *		3,700		10
Jarden Corp. *		7,059		142
Jones Apparel Group, Inc.		12,156		112
K-Swiss, Inc., Class A		2,400		24
KB HOME		7,800		141
Kenneth Cole Productions, Inc., Class A		3,100		21
Leggett & Platt, Inc.		16,200		233
Lennar Corp., Class A		12,190		119
Liz Claiborne, Inc.		8,600		41
M.D.C. Holdings, Inc.		4,403		150
M/I Homes, Inc.		1,800		27
Maidenform Brands, Inc. *		5,000		64
Marine Products Corp.		405		2
Mattel, Inc.		34,300		513
Meritage Homes Corp. *		1,000		21
Mohawk Industries, Inc. *		4,819		228
Movado Group, Inc.		3,300		30
Nautilus, Inc. *		4,125		4
Newell Rubbermaid, Inc.		23,900		250
NIKE, Inc., Class B		41,400		2,172
NVR, Inc. *		500		253
Oxford Industries, Inc.		2,500		24
Palm Harbor Homes, Inc. *		2,700		8
Perry Ellis International, Inc. *		2,500		18
Phillips-Van Heusen Corp.		5,600		163
Polaris Industries, Inc.		3,200		107
Polo Ralph Lauren Corp.		7,500		404
Pool Corp.		5,662		101
Pulte Homes, Inc.		20,244		233
Quiksilver, Inc. *		4,000		7
RC2 Corp. *		2,200		25
Russ Berrie & Co., Inc. *		3,000		6
Skechers U.S.A., Inc., Class A *		6,500		76
Skyline Corp.		2,600		54
Snap-on, Inc.		4,000		136
Standard Pacific Corp. *		4,800		9
Stanley Furniture Co., Inc.		5,200		53
Steven Madden Ltd. *		2,700		79
Sturm, Ruger & Co., Inc. *		6,000		74
Tandy Brands Accessories, Inc.		1,000		2
Tempur-Pedic International, Inc.		8,000		103
The Black & Decker Corp.		7,100		286
The Boyds Collection Ltd. (a)(d)*		34		—
The Ryland Group, Inc.		3,700		77
The Stanley Works		6,600		251
The Timberland Co., Class A *		5,300		86

6     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
The Warnaco Group, Inc. *		2,500		72
Toll Brothers, Inc. *		13,700		278
Tupperware Brands Corp.		4,800		120
UniFirst Corp.		1,500		56
Uniroyal Technology Corp. (a)(d)*		1,100		—
Universal Electronics, Inc. *		5,200		97
VF Corp.		13,500		800
Whirlpool Corp.		6,849		309
Wolverine World Wide, Inc.		7,800		162
				12,632
Consumer Services 2.2%
Ambassadors Groups, Inc.		3,400		41
Ameristar Casinos, Inc.		3,400		70
Apollo Group, Inc., Class A *		14,550		916
Bally Technologies, Inc. *		3,000		79
Bob Evans Farms, Inc.		2,200		53
Boyd Gaming Corp.		7,800		72
Brink’s Home Security Holdings, Inc. *		5,600		149
Brinker International, Inc.		10,350		183
Burger King Holdings, Inc.		10,800		176
Career Education Corp. *		8,614		190
Carnival Corp.		50,000		1,344
CEC Entertainment, Inc. *		2,025		62
Cedar Fair L.P.		5,300		60
Chipotle Mexican Grill, Inc., Class A *		2,600		211
Choice Hotels International, Inc.		6,800		204
Churchill Downs, Inc.		900		31
CKE Restaurants, Inc.		4,800		46
Coinstar, Inc. *		5,000		178
Corinthian Colleges, Inc. *		9,200		142
CPI Corp.		2,900		30
Cracker Barrel Old Country Store, Inc.		3,446		112
Darden Restaurants, Inc.		13,300		492
DeVry, Inc.		4,800		204
DineEquity, Inc.		3,000		96
Domino’s Pizza, Inc. *		5,100		48
Dover Downs Gaming & Entertainment, Inc.		4,899		21
Dover Motorsports, Inc.		1,400		2
Empire Resorts, Inc. *		3,000		5
Gaylord Entertainment Co. *		2,625		37
H&R Block, Inc.		26,300		398
Hillenbrand, Inc.		5,800		105
International Game Technology		29,100		359
International Speedway Corp., Class A		3,245		77
Interval Leisure Group, Inc. *		6,269		50
Isle of Capri Casinos, Inc. *		4,400		47
ITT Educational Services, Inc. *		6,000		605
Jack in the Box, Inc. *		8,400		207
Jackson Hewitt Tax Service, Inc.		3,000		15
Krispy Kreme Doughnuts, Inc. *		2,100		8
Landry’s Restaurants, Inc. *		1,800		16
Las Vegas Sands Corp. *		25,000		195
Learning Tree International, Inc. *		1,400		12
LIFE TIME FITNESS, Inc. *		2,500		47
Luby’s, Inc. *		1,400		7
Marriott International, Inc., Class A		37,400		881
Matthews International Corp., Class A		1,900		59
McDonald’s Corp.		110,300		5,878
MGM MIRAGE *		22,500		189
Monarch Casino & Resort, Inc. *		8,000		82
MTR Gaming Group, Inc. *		5,300		11
Multimedia Games, Inc. *		1,500		3
Nobel Learning Communities, Inc. *		500		6
O’Charley’s, Inc.		400		3
u.F. Chang’s China Bistro, Inc. *		800		24
Panera Bread Co., Class A *		800		45
Papa John’s International, Inc. *		3,400		90
Peet’s Coffee & Tea, Inc. *		1,800		49
Penn National Gaming, Inc. *		6,800		231
Pinnacle Entertainment, Inc. *		3,800		47
Pre-Paid Legal Services, Inc. *		3,600		133
Regis Corp.		3,900		75
Royal Caribbean Cruises Ltd.		16,500		243
Ruby Tuesday, Inc. *		5,600		43
Scientific Games Corp., Class A *		6,500		114
Service Corp. International		24,100		109
Shuffle Master, Inc. *		2,812		11
Sonic Corp. *		7,968		87
Sotheby’s		5,438		63
Speedway Motorsports, Inc.		4,800		72
Starbucks Corp. *		62,600		905
Starwood Hotels & Resorts Worldwide, Inc.		17,730		370
Stewart Enterprises, Inc., Class A		10,000		35
Strayer Education, Inc.		700		133
Texas Roadhouse, Inc., Class A *		5,900		67
The Cheesecake Factory, Inc. *		2,887		50
The Steak n Shake Co. *		1,580		18
Vail Resorts, Inc. *		3,800		111
Weight Watchers International, Inc.		8,700		216
Wendy’s/Arby’s Group, Inc., Class A		50,775		254
WMS Industries, Inc. *		8,250		265
Wyndham Worldwide Corp.		16,744		196
Wynn Resorts Ltd. *		9,000		353

See financial notes.     7

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Yum! Brands, Inc.		48,000		1,601
				20,524
Diversified Financials 5.4%
Advance America Cash Advance Centers, Inc.		12,500		50
Affiliated Managers Group, Inc. *		4,800		273
AllianceBernstein Holding L.P.		7,700		135
American Express Co.		105,150		2,652
AmeriCredit Corp. *		12,300		125
Ameriprise Financial, Inc.		21,030		554
Asset Acceptance Capital Corp. *		2,500		21
ASTA Funding, Inc.		6,000		17
Bank of America Corp.		577,956		5,161
Bank of New York Mellon Corp.		102,734		2,618
BGC Partners, Inc., Class A		28,300		73
BlackRock, Inc.		9,400		1,377
Calamos Asset Management, Inc., Class A		5,000		57
Capital One Financial Corp.		33,710		564
Cash America International, Inc.		6,500		145
CIT Group, Inc.		18,600		41
Citigroup, Inc. (e)		490,086		1,495
CME Group, Inc.		6,330		1,401
Cohen & Steers, Inc.		5,400		80
CompuCredit Corp. *		8,400		27
Cowen Group, Inc. *		6,500		38
Credit Acceptance Corp. *		2,400		55
Discover Financial Services		45,150		367
Dollar Financial Corp. *		6,500		66
E*TRADE Financial Corp. *		34,335		49
Eaton Vance Corp.		11,600		318
Encore Capital Group, Inc. *		2,000		18
Evercore Partners, Inc., Class A		6,500		123
EZCORP, Inc., Class A *		8,500		105
FBR Capital Markets Corp. *		4,000		17
FCStone Group, Inc. *		2,500		8
Federated Investors, Inc., Class B		9,950		228
Financial Federal Corp.		3,700		91
Franklin Resources, Inc.		20,600		1,246
GAMCO Investors, Inc., Class A		3,200		161
GFI Group, Inc.		9,900		40
Greenhill & Co., Inc.		2,500		194
Interactive Brokers Group, Inc., Class A *		3,400		50
IntercontinentalExchange, Inc. *		5,100		447
Investment Technology Group, Inc. *		4,750		108
Janus Capital Group, Inc.		19,200		193
Jefferies Group, Inc.		14,200		278
JPMorgan Chase & Co.		337,444		11,136
Knight Capital Group, Inc., Class A *		9,700		150
LaBranche & Co., Inc. *		6,900		29
Legg Mason, Inc.		13,050		262
Leucadia National Corp. *		21,908		465
MarketAxess Holdings, Inc. *		4,000		38
MF Global Ltd. *		14,000		85
MicroFinancial, Inc.		1,900		4
Moody’s Corp.		26,600		785
Morgan Stanley		100,500		2,376
MSCI, Inc., Class A *		9,000		189
Nelnet, Inc., Class A *		7,500		45
NewStar Financial, Inc. *		2,000		5
Northern Trust Corp.		18,500		1,006
NYSE Euronext		22,500		521
Och-Ziff Capital Management Group, Class A		25,000		186
optionsXpress Holdings, Inc.		5,300		87
Penson Worldwide, Inc. *		8,000		81
PHH Corp. *		4,186		70
Piper Jaffray Cos., Inc. *		3,950		137
Portfolio Recovery Associates, Inc. *		2,000		70
Raymond James Financial, Inc.		10,350		162
Resource America, Inc., Class A		4,000		20
SEI Investments Co.		19,400		272
Siebert Financial Corp.		2,900		4
SLM Corp. *		42,300		204
State Street Corp.		36,983		1,262
Stifel Financial Corp. *		3,000		148
SWS Group, Inc.		8,211		105
T. Rowe Price Group, Inc.		21,400		824
TD Ameritrade Holding Corp. *		52,400		834
Teton Advisors, Inc. (a)*		48		—
The Blackstone Group L.P.		22,000		215
The Charles Schwab Corp. (c)		111,120		2,054
The First Marblehead Corp. *		7,500		14
The Goldman Sachs Group, Inc.		42,700		5,487
The Nasdaq OMX Group, Inc. *		17,100		329
The Student Loan Corp.		1,700		82
TradeStation Group, Inc. *		4,000		32
Virtus Investment Partners, Inc. *		475		5
W.P. Carey & Co., L.L.C.		4,100		87
Waddell & Reed Financial, Inc., Class A		7,250		163
Westwood Holdings Group, Inc.		4,285		169
World Acceptance Corp. *		5,000		148
				51,413
Energy 11.4%
Abraxas Petroleum Corp. *		8,500		8
Adams Resources & Energy, Inc.		1,400		21
Alliance Holdings GP L.P.		1,000		18
Alliance Resource Partners L.P.		3,400		112
Alon USA Energy, Inc.		8,700		111

8     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Alpha Natural Resources, Inc. *		5,200		107
Anadarko Petroleum Corp.		45,060		1,940
Apache Corp.		29,772		2,169
APCO Argentina, Inc.		800		15
Approach Resources, Inc. *		4,000		28
Arch Coal, Inc.		12,500		175
Arena Resources, Inc. *		3,000		86
Atlas America, Inc.		4,005		62
ATP Oil & Gas Corp. *		6,600		47
Atwood Oceanics, Inc. *		4,800		107
Baker Hughes, Inc.		28,300		1,007
Basic Energy Services, Inc. *		3,000		31
Berry Petroleum Co., Class A		4,000		66
Bill Barrett Corp. *		3,700		96
BJ Services Co.		28,600		397
Boardwalk Pipeline Partners L.P.		14,100		289
BP Prudhoe Bay Royalty Trust		2,200		142
Brigham Exploration Co. *		5,000		12
Bristow Group, Inc. *		6,800		155
Buckeye Partners L.P.		3,400		131
Cabot Oil & Gas Corp.		22,200		670
Cal Dive International, Inc. *		9,000		71
Callon Petroleum Co. *		5,000		9
Calumet Specialty Products Partners L.P.		5,000		60
Cameron International Corp. *		18,200		466
CARBO Ceramics, Inc.		1,900		58
Carrizo Oil & Gas, Inc. *		3,000		37
Cheniere Energy Partners L.P.		2,500		17
Chesapeake Energy Corp.		50,100		987
Chevron Corp.		186,939		12,357
Cimarex Energy Co.		8,008		215
Clayton Williams Energy, Inc. *		2,500		75
CNX Gas Corp. *		12,000		309
Complete Production Services, Inc. *		6,100		41
Comstock Resources, Inc. *		4,500		155
Concho Resources, Inc. *		6,400		176
ConocoPhillips		138,223		5,667
CONSOL Energy, Inc.		14,100		441
Continental Resources, Inc. *		15,000		350
CREDO Petroleum Corp. *		6,700		55
Cross Timbers Royalty Trust		1,500		30
Crosstex Energy L.P.		2,000		4
Crosstex Energy, Inc.		3,200		6
CVR Energy, Inc. *		6,900		51
Delek US Holdings, Inc.		7,000		72
Delta Petroleum Corp. *		8,600		25
Denbury Resources, Inc. *		19,600		319
Devon Energy Corp.		40,360		2,093
Diamond Offshore Drilling, Inc.		12,300		891
Dresser-Rand Group, Inc. *		6,000		148
Dril-Quip, Inc. *		3,100		107
Eagle Rock Energy Partners L.P.		3,000		11
El Paso Corp.		61,587		425
El Paso Pipeline Partners L.P.		5,000		97
Enbridge Energy Management L.L.C. *		1,610		56
Enbridge Energy Partners, L.P.		7,100		258
Encore Acquisition Co. *		5,250		153
Energy Transfer Equity L.P.		23,000		590
Energy Transfer Partners L.P.		14,000		554
ENGlobal Corp. *		4,000		23
ENSCO International, Inc.		11,200		317
Enterprise GP Holdings L.P.		14,100		344
Enterprise Products Partners L.P.		41,500		979
EOG Resources, Inc.		22,800		1,447
Exterran Holdings, Inc. *		4,720		97
Exxon Mobil Corp.		466,166		31,079
FMC Technologies, Inc. *		9,182		314
Forest Oil Corp. *		9,450		151
Foundation Coal Holdings, Inc.		3,700		60
Frontier Oil Corp.		14,400		183
General Maritime Corp.		14,720		146
Geomet, Inc. *		4,000		4
Global Industries Ltd. *		14,400		93
Gulf Island Fabrication, Inc.		2,800		36
GulfMark Offshore, Inc. *		4,100		110
Gulfport Energy Corp. *		5,000		15
Halliburton Co.		81,200		1,642
Harvest Natural Resources, Inc. *		6,000		31
Helix Energy Solutions Group, Inc. *		8,564		78
Helmerich & Payne, Inc.		9,600		296
Hercules Offshore, Inc. *		7,400		24
Hess Corp.		28,200		1,545
Holly Corp.		8,000		168
Hornbeck Offshore Services, Inc. *		5,000		116
Houston American Energy Corp.		4,000		8
Hugoton Royalty Trust		4,846		51
Inergy L.P.		2,000		46
International Coal Group, Inc. *		12,800		25
ION Geophysical Corp. *		7,900		20
James River Coal Co. *		2,500		36
Key Energy Services, Inc. *		10,300		45
Kinder Morgan Energy Partners L.P.		20,000		955
Kinder Morgan Management L.L.C. *		4,609		188
Lufkin Industries, Inc.		3,500		122
Magellan Midstream Partners L.P.		6,000		200
Marathon Oil Corp.		67,308		1,999
Mariner Energy, Inc. *		6,601		75
MarkWest Energy Partners L.P.		1,000		14
Massey Energy Co.		6,800		108

See financial notes.     9

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Matrix Service Co. *		8,000		77
McMoRan Exploration Co. *		4,500		25
Murphy Oil Corp.		18,500		883
Nabors Industries Ltd. *		23,634		359
NATCO Group, Inc., Class A *		6,200		149
National-Oilwell Varco, Inc. *		37,622		1,139
Natural Gas Services Group *		7,500		75
Natural Resource Partners L.P.		4,000		92
Newfield Exploration Co. *		10,600		331
Newpark Resources, Inc. *		11,500		32
Ngas Resources, Inc. *		4,000		7
Noble Corp.		25,200		689
Noble Energy		14,218		807
NuStar Energy L.P.		4,900		247
NuStar GP Holdings L.L.C.		1,000		23
Occidental Petroleum Corp.		78,020		4,392
Oceaneering International, Inc. *		5,200		237
Oil States International, Inc. *		3,600		68
ONEOK Partners, L.P.		6,000		282
Overseas Shipholding Group, Inc.		3,700		106
OYO Geospace Corp. *		300		5
Panhandle Oil & Gas, Inc., Class A		2,000		34
Parallel Petroleum Corp. *		8,500		11
Parker Drilling Co. *		18,300		51
Patriot Coal Corp. *		3,700		23
Patterson-UTI Energy, Inc.		13,200		168
Peabody Energy Corp.		23,700		625
Penn Virginia Corp.		5,000		70
Penn Virginia GP Holdings L.P.		1,500		18
Penn Virginia Resource Partners L.P.		5,000		63
Petrohawk Energy Corp. *		21,600		510
Petroleum Development Corp. *		4,000		65
PetroQuest Energy, Inc. *		4,200		13
PHI, Inc. *		4,000		45
Pioneer Drilling Co. *		9,200		46
Pioneer Natural Resources Co.		10,133		234
Plains All American Pipeline L.P.		7,295		309
Plains Exploration & Production Co. *		9,765		184
Pride International, Inc. *		15,700		356
Quicksilver Resources, Inc. *		8,400		68
Range Resources Corp.		14,100		564
Rex Energy Corp. *		8,000		31
Rosetta Resources, Inc. *		6,600		47
Rowan Cos., Inc.		8,400		131
RPC, Inc.		11,475		123
SandRidge Energy, Inc. *		6,000		49
Schlumberger Ltd.		105,000		5,144
SEACOR Holdings, Inc. *		1,250		82
Ship Finance International Ltd.		6,100		53
Smith International, Inc.		18,932		489
Southern Union Co.		9,874		157
Southwestern Energy Co. *		30,000		1,076
Spectra Energy Corp.		54,678		793
St. Mary Land & Exploration Co.		7,400		132
Stone Energy Corp. *		4,383		19
Sunoco Logistics Partners L.P.		2,000		104
Sunoco, Inc.		11,000		292
Superior Energy Services, Inc. *		9,900		190
Swift Energy Co. *		2,500		27
T-3 Energy Services, Inc. *		5,000		67
Targa Resources Partners L.P.		2,000		23
TC Pipelines L.P.		2,400		72
Teekay Corp.		6,000		87
Teekay LNG Partners L.P.		1,000		18
Tel Offshore Trust		83		—
TEPPCO Partners L.P.		10,000		272
Tesoro Corp.		12,100		185
TETRA Technologies, Inc. *		5,300		30
The Williams Cos., Inc.		51,360		724
Tidewater, Inc.		7,700		333
Transocean Ltd. *		7,512		507
Trico Marine Services, Inc. *		5,000		19
Ultra Petroleum Corp. *		13,000		556
Union Drilling, Inc. *		2,500		15
Unit Corp. *		4,400		120
USEC, Inc. *		14,300		89
VAALCO Energy, Inc. *		9,000		43
Valero Energy Corp.		50,980		1,011
Verenium Corp. *		1,100		—
W&T Offshore, Inc.		7,500		70
Walter Industries, Inc.		4,900		112
Warren Resources, Inc. *		5,000		8
Western Refining, Inc. *		5,600		71
Westmoreland Coal Co. *		6,500		55
Whiting Petroleum Corp. *		3,400		111
World Fuel Services Corp.		4,100		156
XTO Energy, Inc.		49,177		1,705
				107,508
Food & Staples Retailing 3.3%
Arden Group, Inc., Class A		600		70
BJ’s Wholesale Club, Inc. *		6,100		203
Casey’s General Stores, Inc.		5,100		136
Costco Wholesale Corp.		38,600		1,876
CVS Caremark Corp.		125,640		3,993
Ingles Markets, Inc., Class A		300		5
Nash Finch Co.		1,700		50
PriceSmart, Inc.		500		9
Ruddick Corp.		3,100		79
Safeway, Inc.		35,900		709
Spartan Stores, Inc.		500		8
SUPERVALU, Inc.		19,832		324
Sysco Corp.		48,636		1,135

10     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
The Andersons, Inc.		1,000		16
The Great Atlantic & Pacific Tea Co., Inc. *		2,705		20
The Kroger Co.		63,800		1,379
The Pantry, Inc. *		1,000		24
United Natural Foods, Inc. *		2,600		59
Wal-Mart Stores, Inc.		359,100		18,099
Walgreen Co.		87,400		2,747
Weis Markets, Inc.		1,700		63
Whole Foods Market, Inc.		10,900		226
				31,230
Food, Beverage & Tobacco 5.1%
Alliance One International, Inc. *		10,800		41
Altria Group, Inc.		174,800		2,854
American Italian Pasta Co., Class A *		1,000		31
Archer-Daniels-Midland Co.		53,958		1,328
Bridgford Foods Corp. *		300		2
Brown-Forman Corp., Class B		12,390		576
Bunge Ltd.		8,000		384
Campbell Soup Co.		35,400		910
Chiquita Brands International, Inc. *		3,200		24
Coca-Cola Bottling Co.		400		21
Coca-Cola Enterprises, Inc.		44,000		751
ConAgra Foods, Inc.		43,293		766
Constellation Brands, Inc., Class A *		17,600		204
Corn Products International, Inc.		5,800		139
Dean Foods Co. *		11,113		230
Del Monte Foods Co.		16,031		121
Dr. Pepper Snapple Group, Inc. *		20,000		414
Flowers Foods, Inc.		7,158		165
Fresh Del Monte Produce, Inc. *		4,200		61
General Mills, Inc.		31,300		1,587
Green Mountain Coffee Roasters, Inc. *		2,700		195
Griffin Land & Nurseries, Inc.		300		9
H.J. Heinz Co.		27,900		960
Hansen Natural Corp. *		10,000		408
Hormel Foods Corp.		11,500		360
J & J Snack Foods Corp.		6,400		248
John B. Sanfilippo & Son, Inc. *		5,000		29
Kellogg Co.		34,400		1,449
Kraft Foods, Inc., Class A		147,513		3,452
Lancaster Colony Corp.		3,400		149
Lance, Inc.		2,900		67
Lorillard, Inc.		20,648		1,304
McCormick & Co., Inc.		11,300		333
Molson Coors Brewing Co., Class B		17,000		650
National Beverage Corp. *		4,500		47
PepsiAmericas, Inc.		13,200		324
PepsiCo, Inc.		140,800		7,006
Philip Morris International, Inc.		182,800		6,617
Ralcorp Holdings, Inc. *		6,700		383
Reynolds American, Inc.		22,664		861
Rocky Mountain Chocolate Factory, Inc.		2,427		15
Sanderson Farms, Inc.		1,750		70
Sara Lee Corp.		64,378		536
Smithfield Foods, Inc. *		6,300		54
Tasty Baking Co.		500		2
The Boston Beer Co., Inc., Class A *		2,500		67
The Coca-Cola Co.		210,200		9,049
The Hain Celestial Group, Inc. *		1,406		23
The Hershey Co.		19,400		701
The J.M. Smucker Co.		20,246		798
The Pepsi Bottling Group, Inc.		23,400		732
Tootsie Roll Industries, Inc.		2,611		64
TreeHouse Foods, Inc. *		1,722		46
Tyson Foods, Inc., Class A		30,340		320
Universal Corp., VA		4,800		145
Vector Group Ltd.		4,116		55
Zapata Corp. *		8,000		50
				48,187
Health Care Equipment & Services 4.4%
ABIOMED, Inc. *		800		5
Aetna, Inc.		59,200		1,303
Align Technology, Inc. *		8,700		108
Alliance Imaging, Inc. *		1,800		14
Allscripts Healthcare Solutions, Inc.		1,900		24
Amedisys, Inc. *		3,334		112
America Service Group, Inc. *		3,550		51
American Medical Systems Holdings, Inc. *		7,800		97
AMERIGROUP Corp. *		4,300		128
AmerisourceBergen Corp.		20,648		695
AMN Healthcare Services, Inc. *		4,110		28
AmSurg Corp. *		2,300		47
Analogic Corp.		1,400		51
Aspect Medical Systems, Inc. *		3,700		19
athenahealth, Inc. *		1,000		32
Baxter International, Inc.		59,018		2,862
Beckman Coulter, Inc.		5,100		268
Becton, Dickinson & Co.		21,300		1,288
BioScrip, Inc. *		2,172		7
Boston Scientific Corp. *		134,568		1,132
Brookdale Senior Living, Inc.		300		3
C.R. Bard, Inc.		8,000		573
Cantel Medical Corp. *		3,571		50
Cardinal Health, Inc.		36,160		1,222

See financial notes.     11

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Catalyst Health Solutions, Inc. *		1,900		43
Centene Corp. *		4,000		74
Cerner Corp. *		8,400		452
Chemed Corp.		3,900		165
Chindex International, Inc. *		3,300		27
CIGNA Corp.		38,400		757
Community Health Systems, Inc. *		7,100		162
CONMED Corp. *		4,200		56
CorVel Corp. *		2,850		64
Coventry Health Care, Inc. *		23,937		381
Covidien Ltd.		44,525		1,468
Cross Country Healthcare, Inc. *		4,600		41
CryoLife, Inc. *		750		4
Cyberonics, Inc. *		1,200		16
DaVita, Inc. *		8,250		383
DENTSPLY International, Inc.		13,100		375
Eclipsys Corp. *		6,300		83
Edwards Lifesciences Corp. *		3,900		247
Express Scripts, Inc. *		25,200		1,612
Five Star Quality Care, Inc. *		135		—
Gen-Probe, Inc. *		3,400		164
Gentiva Health Services, Inc. *		3,250		52
Greatbatch, Inc. *		1,100		23
Haemonetics Corp. *		3,700		191
Hanger Orthopedic Group, Inc. *		5,400		75
Health Management Associates, Inc., Class A *		15,900		74
Health Net, Inc. *		9,100		131
Healthspring, Inc. *		4,600		42
HealthTronics, Inc. *		3,500		5
Healthways, Inc. *		3,100		32
Henry Schein, Inc. *		7,600		312
Hill-Rom Holdings, Inc.		5,800		75
Hlth Corp. *		21,926		241
Hologic, Inc. *		21,112		314
Home Diagnostics, Inc. *		2,500		15
Hospira, Inc. *		14,070		463
Humana, Inc. *		18,900		544
ICU Medical, Inc. *		550		21
IDEXX Laboratories, Inc. *		5,000		197
Immucor, Inc. *		6,795		111
IMS Health, Inc.		19,300		242
Integra LifeSciences Holdings *		1,100		28
Intuitive Surgical, Inc. *		2,050		295
Invacare Corp.		2,000		31
inVentiv Health, Inc. *		4,733		53
Inverness Medical Innovations, Inc. *		6,441		208
Kindred Healthcare, Inc. *		4,624		60
Kinetic Concepts, Inc. *		5,600		139
Laboratory Corp. of America Holdings *		12,800		821
Landauer, Inc.		1,100		58
LCA-Vision, Inc.		2,500		14
LifePoint Hospitals, Inc. *		3,707		96
Lincare Holdings, Inc. *		7,100		171
Magellan Health Services, Inc. *		3,007		89
McKesson Corp.		25,400		940
MedCath Corp. *		1,500		15
Medco Health Solutions, Inc. *		50,066		2,180
Medical Action Industries, Inc. *		3,750		36
MEDNAX, Inc. *		6,000		215
Medtronic, Inc.		100,374		3,212
Meridian Bioscience, Inc.		11,250		196
Merit Medical Systems, Inc. *		2,222		35
Molina Healthcare, Inc. *		2,500		54
uational Healthcare Corp.		600		24
Neogen Corp. *		937		21
NOVT Corp. *		400		1
Odyssey HealthCare, Inc. *		2,250		23
Omnicare, Inc.		10,000		257
OraSure Technologies, Inc. *		1,500		5
Owens & Minor, Inc.		2,000		69
Patterson Cos., Inc. *		10,600		217
PDI, Inc. *		2,900		9
PharMerica Corp. *		3,413		62
uSS World Medical, Inc. *		5,800		84
Psychiatric Solutions, Inc. *		4,400		85
Quest Diagnostics, Inc.		19,820		1,017
RehabCare Group, Inc. *		4,000		67
Res-Care, Inc. *		4,500		72
ResMed, Inc. *		7,000		269
RTI Biologics, Inc. *		1,700		6
u SonoSite, Inc. *		1,600		29
St. Jude Medical, Inc. *		29,600		992
STERIS Corp.		6,100		147
Stryker Corp.		37,100		1,436
Sunrise Senior Living, Inc. *		3,400		9
SXC Health Solutions Corp. *		173		4
Teleflex, Inc.		4,300		185
Tenet Healthcare Corp. *		36,650		83
The Cooper Cos., Inc.		2,781		80
Thoratec Corp. *		5,636		164
U.S. Physical Therapy, Inc. *		3,500		41
UnitedHealth Group, Inc.		118,880		2,796
Universal American Financial Corp. *		4,000		41
Universal Health Services, Inc., Class B		4,000		202
Utah Medical Products, Inc.		2,500		55
Varian Medical Systems, Inc. *		11,900		397
VCA Antech, Inc. *		7,900		198
WellCare Health Plans, Inc. *		3,200		48
WellPoint, Inc. *		57,723		2,468
West Pharmaceutical Services, Inc.		4,600		150

12     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Wright Medical Group, Inc. *		4,200		58
Young Innovations, Inc.		2,000		31
Zimmer Holdings, Inc. *		20,300		893
				41,594
Household & Personal Products 2.3%
Alberto-Culver Co.		9,450		211
Avon Products, Inc.		39,000		888
Central Garden & Pet Co. *		1,600		15
Central Garden & Pet Co., Class A *		3,200		29
Chattem, Inc. *		1,200		66
Church & Dwight Co., Inc.		4,950		269
Colgate-Palmolive Co.		46,500		2,743
Energizer Holdings, Inc. *		6,333		363
Herbalife Ltd.		5,800		115
Inter Parfums, Inc.		1,013		8
Kimberly-Clark Corp.		40,639		1,997
Mead Johnson Nutrition Co., Class A *		18,000		509
NBTY, Inc. *		5,400		140
Nu Skin Enterprises, Inc., Class A		6,500		83
Nutraceutical International Corp. *		5,000		41
Oil-Dri Corp. of America		500		8
Spectrum Brands, Inc. *		2,800		—
The Clorox Co.		12,200		684
The Estee Lauder Cos., Inc., Class A		12,800		383
The Procter & Gamble Co.		264,215		13,063
USANA Health Sciences, Inc. *		3,500		84
WD-40 Co.		1,600		43
				21,742
Insurance 4.0%
21st Century Holding Co.		1,500		6
Aflac, Inc.		42,600		1,231
Alleghany Corp. *		233		59
Allied World Assurance Co. Holdings Ltd.		4,900		182
Ambac Financial Group, Inc.		7,750		7
American Financial Group, Inc.		10,750		189
American International Group, Inc.		111,922		154
American National Insurance Co.		1,300		88
American Physicians Capital, Inc.		3,750		156
AmTrust Financial Services, Inc.		7,500		68
Aon Corp.		25,500		1,076
Arch Capital Group Ltd. *		6,900		399
Argo Group International Holdings Ltd. *		1,556		44
Arthur J. Gallagher & Co.		6,800		153
Aspen Insurance Holdings Ltd.		7,000		165
Assurant, Inc.		11,500		281
Axis Capital Holdings Ltd.		12,200		301
Baldwin & Lyons, Inc., Class B		750		15
Berkshire Hathaway, Inc., Class A *		143		13,442
Brown & Brown, Inc.		11,000		214
Cincinnati Financial Corp.		13,450		322
Citizens, Inc. *		5,000		36
CNA Financial Corp.		20,900		250
CNA Surety Corp. *		4,700		90
Conseco, Inc. *		16,000		26
Crawford & Co., Class B *		1,600		10
Delphi Financial Group, Inc., Class A		6,772		117
Eastern Insurance Holdings, Inc.		2,500		20
EMC Insurance Group, Inc.		1,200		27
Employers Holdings, Inc.		4,200		35
Endurance Specialty Holdings Ltd.		5,000		131
Erie Indemnity Co., Class A		5,500		194
Everest Re Group Ltd.		5,900		440
FBL Financial Group, Inc., Class A		2,090		12
Fidelity National Financial, Inc., Class A		17,327		314
First American Corp.		7,800		219
FPIC Insurance Group, Inc. *		400		12
Genworth Financial, Inc., Class A		37,500		89
Hanover Insurance Group, Inc.		4,900		147
Harleysville Group, Inc.		1,800		52
HCC Insurance Holdings, Inc.		10,950		262
Hilltop Holdings, Inc. *		3,726		42
Horace Mann Educators Corp.		4,300		38
Independence Holding Co.		2,700		14
Infinity Property & Casualty Corp.		2,500		88
IPC Holdings Ltd.		5,000		130
LandAmerica Financial Group, Inc.		5,300		—
Lincoln National Corp.		21,926		246
Loews Corp.		35,645		887
Markel Corp. *		300		86
Marsh & McLennan Cos., Inc.		43,000		907
MBIA, Inc. *		11,250		53
Mercury General Corp.		5,400		182
MetLife, Inc.		72,000		2,142
Montpelier Re Holdings Ltd.		8,100		101
National Financial Partners Corp.		2,500		18
National Western Life Insurance Co., Class A		300		34
NYMAGIC, Inc.		2,100		25
Odyssey Re Holdings Corp.		5,400		207
Old Republic International Corp.		20,437		192
OneBeacon Insurance Group Ltd., Class A		8,200		95
PartnerRe Ltd.		5,400		368
Penn Treaty American Corp. (a)*		150		—

See financial notes.     13

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
PMA Capital Corp., Class A *		700		3
Presidential Life Corp.		1,000		11
Principal Financial Group, Inc.		25,400		415
ProAssurance Corp. *		1,670		73
Protective Life Corp.		5,500		47
Prudential Financial, Inc.		45,500		1,314
Reinsurance Group of America, Inc.		5,100		162
RenaissanceRe Holdings Ltd.		5,800		282
RLI Corp.		2,800		134
Safety Insurance Group, Inc.		1,000		33
Selective Insurance Group, Inc.		5,400		80
StanCorp Financial Group, Inc.		5,000		137
State Auto Financial Corp.		3,800		62
Stewart Information Services Corp.		1,400		32
The Allstate Corp.		58,874		1,374
The Chubb Corp.		33,094		1,289
The Hartford Financial Services Group, Inc.		24,400		280
The Navigators Group, Inc. *		1,500		68
The Phoenix Cos., Inc.		9,500		15
The Progressive Corp. *		85,200		1,302
The Travelers Cos., Inc.		54,550		2,244
Torchmark Corp.		10,600		311
Transatlantic Holdings, Inc.		6,437		244
United Fire & Casualty Co.		5,000		93
Unitrin, Inc.		5,600		95
Unum Group		23,914		391
W. R. Berkley Corp.		22,950		549
Wesco Financial Corp.		200		60
White Mountains Insurance Group Ltd.		200		38
XL Capital Ltd., Class A		14,700		140
Zenith National Insurance Corp.		3,400		78
				38,246
Materials 3.7%
A. Schulman, Inc.		2,300		36
A.M. Castle & Co.		4,000		39
AEP Industries, Inc. *		1,900		39
Air Products & Chemicals, Inc.		17,700		1,166
Airgas, Inc.		7,500		323
AK Steel Holding Corp.		9,527		124
Albemarle Corp.		9,000		241
Alcoa, Inc.		71,664		650
Allegheny Technologies, Inc.		7,700		252
AptarGroup, Inc.		6,900		214
Arch Chemicals, Inc.		2,700		65
Ashland, Inc.		6,523		143
Ball Corp.		8,700		328
Bemis Co., Inc.		8,900		214
Brush Engineered Materials, Inc. *		4,000		68
Buckeye Technologies, Inc. *		7,700		40
Cabot Corp.		5,200		76
Calgon Carbon Corp. *		4,000		68
Carpenter Technology Corp.		5,000		103
Celanese Corp., Series A		12,500		261
Century Aluminum Co. *		3,100		13
CF Industries Holdings, Inc. *		4,400		317
Clearwater Paper Corp. *		786		12
Cliffs Natural Resources, Inc.		10,300		238
Commercial Metals Co.		9,000		134
Compass Minerals International, Inc.		5,000		241
Crown Holdings, Inc. *		13,400		295
Cytec Industries, Inc.		3,600		72
Deltic Timber Corp.		700		30
Domtar Corp. *		39,000		71
E.I. du Pont de Nemours & Co.		78,195		2,182
Eagle Materials, Inc.		4,143		115
Eastman Chemical Co.		8,100		321
Ecolab, Inc.		21,500		829
Ferro Corp.		8,200		23
FMC Corp.		6,200		302
Freeport-McMoRan Copper & Gold, Inc.		36,622		1,562
Glatfelter		4,000		36
Goldcorp, Inc.		18,759		516
Greif, Inc., Class A		7,400		335
H.B. Fuller Co.		6,500		115
Hawkins, Inc.		1,900		33
Headwaters, Inc. *		7,500		19
Hecla Mining Co. *		12,000		30
Horsehead Holding Corp. *		4,000		29
Huntsman Corp.		17,500		94
Innophos Holdings, Inc.		6,500		96
International Flavors & Fragrances, Inc.		7,400		231
International Paper Co.		39,304		498
Koppers Holdings, Inc.		2,500		47
Kronos Worldwide, Inc.		6,060		45
Landec Corp. *		6,500		44
Louisiana-Pacific Corp.		8,300		34
Martin Marietta Materials, Inc.		4,200		353
Material Sciences Corp. *		8,000		9
MeadWestvaco Corp.		14,474		227
Minerals Technologies, Inc.		3,100		115
Mod-Pac Corp. *		500		1
Monsanto Co.		48,290		4,099
Myers Industries, Inc.		8,080		81
Nalco Holding Co.		13,600		222
Neenah Paper, Inc.		1,231		6
NewMarket Corp.		2,000		126
Newmont Mining Corp.		38,251		1,539
NL Industries, Inc.		7,800		94

14     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Nucor Corp.		27,000		1,099
Olin Corp.		7,320		92
OM Group, Inc. *		2,400		67
Omnova Solutions, Inc. *		3,400		8
Owens-Illinois, Inc. *		13,700		334
Packaging Corp. of America		8,500		135
Pactiv Corp. *		12,400		271
Penford Corp.		5,200		23
PolyOne Corp. *		7,200		20
PPG Industries, Inc.		13,900		612
Praxair, Inc.		25,700		1,917
Reliance Steel & Aluminum Co.		8,500		299
Rock-Tenn Co., Class A		4,500		170
Rockwood Holdings, Inc. *		5,900		73
Royal Gold, Inc.		2,200		80
RPM International, Inc.		9,600		133
RTI International Metals, Inc. *		1,500		20
Schnitzer Steel Industries, Inc., Class A		1,650		82
Schweitzer-Mauduit International, Inc.		3,300		76
Sealed Air Corp.		14,500		276
Sensient Technologies Corp.		4,800		112
Sigma-Aldrich Corp.		12,600		552
Silgan Holdings, Inc.		5,800		270
Sonoco Products Co.		8,000		195
Southern Copper Corp.		78,400		1,456
Spartech Corp.		8,200		32
Steel Dynamics, Inc.		14,000		174
Stepan Co.		1,200		47
Stillwater Mining Co. *		11,233		51
Temple-Inland, Inc.		8,800		105
Terra Industries, Inc.		7,500		199
Terra Nitrogen Co., L.P.		3,000		402
Texas Industries, Inc.		1,000		32
The Dow Chemical Co.		78,766		1,260
The Lubrizol Corp.		5,400		233
The Mosaic Co.		36,000		1,456
The Scotts Miracle-Gro Co., Class A		5,600		189
The Valspar Corp.		8,400		202
Titanium Metals Corp.		11,307		77
United States Steel Corp.		9,900		263
Valhi, Inc.		8,600		92
Vulcan Materials Co.		7,592		361
Wausau Paper Corp.		8,700		76
Westlake Chemical Corp.		5,100		95
Weyerhaeuser Co.		18,250		643
Worthington Industries, Inc.		7,200		107
Yamana Gold, Inc.		14,751		117
Zep, Inc.		6,600		89
				34,955
Media 3.0%
4Kids Entertainment, Inc. *		4,000		5
AH Belo Corp., Class A		1,880		4
Alloy, Inc. *		3,500		16
Arbitron, Inc.		2,120		44
Ascent Media Corp., Class A *		1,116		29
Belo Corp., Class A		9,400		16
Cablevision Systems Corp., Class A		21,100		362
Carmike Cinemas, Inc.		2,500		10
CBS Corp., Class B		72,006		507
CKX, Inc. *		7,300		39
Clear Channel Outdoor Holdings, Inc., Class A *		28,700		110
Comcast Corp., Class A		227,004		3,510
Comcast Corp., Special Class A		64,200		942
Cox Radio, Inc., Class A *		4,600		22
Crown Media Holdings, Inc., Class A *		6,000		19
Cumulus Media Inc., Class A *		4,351		5
Daily Journal Corp. *		500		17
Discovery Communications, Inc., Series A *		11,161		212
Discovery Communications, Inc., Series C *		11,161		196
DISH Network Corp., Class A *		37,700		500
DreamWorks Animation SKG, Inc., Class A *		8,200		197
Entercom Communications Corp., Class A		3,000		5
Gannett Co., Inc.		19,500		76
Harte-Hanks, Inc.		8,100		67
Hearst-Argyle Television, Inc.		7,500		34
Interactive Data Corp.		20,700		465
John Wiley & Sons, Inc., Class A		6,300		214
Journal Communications, Inc., Class A		7,500		12
Journal Register Co. *		3,200		—
Lakes Entertainment, Inc. *		1,800		6
Lamar Advertising Co., Class A *		9,200		155
Liberty Global, Inc., Series A *		37,575		620
Liberty Media Corp — Entertainment, Series A *		44,644		1,087
Liberty Media Corp. — Capital, Series A *		11,161		131
Live Nation, Inc. *		6,215		24
Martha Stewart Living Omnimedia, Inc., Class A *		3,900		14
Marvel Entertainment, Inc. *		11,700		349
Media General, Inc., Class A		2,000		5
Mediacom Communications Corp., Class A *		7,600		43

See financial notes.     15

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Meredith Corp.		3,800		95
Morningstar, Inc. *		3,200		127
News Corp., Class A		253,950		2,098
Omnicom Group, Inc.		33,600		1,057
Playboy Enterprises, Inc., Class B *		4,500		14
Radio One, Inc., Class A *		9,500		9
Regal Entertainment Group, Class A		12,100		158
Salem Communications Corp., Class A *		900		1
Scholastic Corp.		2,200		43
Scripps Networks Interactive, Class A		12,000		329
Sinclair Broadcast Group, Inc., Class A		7,300		8
The DIRECTV Group, Inc. *		101,476		2,510
The E.W. Scripps Co., Class A		4,000		8
The Interpublic Group of Cos., Inc. *		34,537		216
The McGraw-Hill Cos., Inc.		34,600		1,043
The New York Times Co., Class A		13,200		71
The Walt Disney Co.		185,410		4,060
The Washington Post Co., Class B		600		251
Time Warner Cable, Inc.		55,711		1,796
Time Warner, Inc.		122,350		2,671
Valassis Communications, Inc. *		3,700		19
Value Line, Inc.		300		8
Viacom, Inc., Class B *		56,606		1,089
Virgin Media, Inc.		15,000		116
Warner Music Group Corp. *		11,700		63
World Wrestling Entertainment, Inc., Class A		4,900		52
Xanadoo Co., Class A *		63		14
				27,995
Pharmaceuticals, Biotechnology & Life Sciences 7.8%
Abbott Laboratories		136,705		5,721
Abraxis BioScience *		2,500		121
Accelrys, Inc. *		4,300		19
Acura Pharmaceuticals, Inc. *		1,000		7
Adolor Corp. *		8,700		20
Affymax, Inc. *		2,900		51
Affymetrix, Inc. *		8,900		42
Albany Molecular Research, Inc. *		5,600		55
Alexion Pharmaceuticals, Inc. *		6,200		207
Alkermes, Inc. *		8,500		65
Allergan, Inc.		26,468		1,235
Alnylam Pharmaceuticals, Inc. *		7,400		136
Amgen, Inc. *		103,268		5,005
Amicus Therapeutics, Inc. *		500		4
Amylin Pharmaceuticals, Inc. *		12,400		136
Aphton Corp. *		800		—
Arena Pharmaceuticals, Inc. *		800		2
ArQule, Inc. *		8,800		39
Bio-Rad Laboratories, Inc., Class A *		3,000		209
BioCryst Pharmaceuticals, Inc. *		1,400		6
Biogen Idec, Inc. *		28,125		1,360
BioMarin Pharmaceuticals, Inc. *		7,300		94
Bristol-Myers Squibb Co.		177,250		3,403
Bruker Corp. *		2,100		14
Caliper Life Sciences, Inc. *		700		1
Cambrex Corp. *		8,900		21
Caraco Pharmaceutical Laboratories Ltd. *		2,000		9
Celera Corp. *		9,600		78
Celgene Corp. *		44,091		1,884
Cephalon, Inc. *		6,000		394
Charles River Laboratories International, Inc. *		6,416		177
Clinical Data, Inc. *		175		2
Cougar Biotechnology, Inc. *		1,000		35
Covance, Inc. *		5,800		228
Cubist Pharmaceuticals, Inc. *		8,900		148
Cypress Bioscience, Inc. *		4,000		29
Dendreon Corp. *		1,400		30
Dionex Corp. *		5,200		328
Durect Corp. *		2,000		5
Dyax Corp. *		2,000		4
Eli Lilly & Co.		106,400		3,503
Emergent Biosolutions, Inc. *		4,000		43
Endo Pharmaceuticals Holdings, Inc. *		10,500		174
Enzo Biochem, Inc. *		5,781		24
Enzon Pharmaceuticals, Inc. *		8,900		51
eResearch Technology, Inc. *		5,625		29
Exelixis, Inc. *		7,300		36
Facet Biotech Corp. *		1,900		18
Forest Laboratories, Inc. *		27,500		596
Genzyme Corp. *		24,732		1,319
Geron Corp. *		1,000		5
Gilead Sciences, Inc. *		84,840		3,886
GTx, Inc. *		3,000		29
Harvard Bioscience, Inc. *		500		1
Human Genome Sciences, Inc. *		5,100		11
Illumina, Inc. *		9,200		344
ImmunoGen, Inc. *		1,500		10
Incyte Corp. *		2,600		6
Inspire Pharmaceuticals, Inc. *		1,300		6
InterMune, Inc. *		1,100		15
Isis Pharmaceuticals, Inc. *		7,300		114
Johnson & Johnson		251,370		13,162
Kendle International, Inc. *		2,700		24
King Pharmaceuticals, Inc. *		22,516		177

16     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Lexicon Pharmaceuticals, Inc. *		6,900		8
Life Technologies Corp. *		14,562		543
Ligand Pharmaceuticals, Inc., Class B *		2,689		8
Luminex Corp. *		7,800		128
MAP Pharmaceuticals, Inc. *		500		1
Martek Biosciences Corp. *		3,000		55
Matrixx Initiatives, Inc. *		2,700		46
Maxygen, Inc. *		6,500		38
Medarex, Inc. *		15,600		92
Medicis Pharmaceutical Corp., Class A		5,900		95
Merck & Co., Inc.		194,552		4,716
Mettler-Toledo International, Inc. *		3,200		197
Millipore Corp. *		5,100		301
Momenta Pharmaceuticals, Inc. *		4,000		45
Mylan, Inc. *		25,500		338
Myriad Genetics, Inc. *		14,800		574
Nabi Biopharmaceuticals *		2,800		10
Nektar Therapeutics *		2,200		12
Neurocrine Biosciences, Inc. *		1,400		5
Noven Pharmaceuticals, Inc. *		5,800		60
NPS Pharmacuticals, Inc. *		1,000		3
Onyx Pharmaceuticals, Inc. *		4,500		117
OSI Pharmaceuticals, Inc. *		4,998		168
Pain Therapeutics, Inc. *		7,400		35
Par Pharmaceutical Cos., Inc. *		5,900		63
PAREXEL International Corp. *		4,800		48
PDL BioPharma, Inc.		9,500		68
PerkinElmer, Inc.		11,477		167
Perrigo Co.		7,300		189
Pfizer, Inc.		610,192		8,152
Pharmaceutical Product Development, Inc.		10,000		196
POZEN, Inc. *		1,300		10
Regeneron Pharmaceuticals, Inc. *		9,200		122
Salix Pharmaceuticals Ltd. *		4,000		44
Sangamo BioSciences, Inc. *		1,200		5
Savient Pharmaceuticals, Inc. *		2,300		12
Schering-Plough Corp.		144,750		3,332
Sepracor, Inc. *		9,100		129
Sucampo Pharmaceuticals, Inc., Class A *		1,500		10
SuperGen, Inc. *		900		2
Synta Pharmaceuticals Corp. *		4,000		13
Techne Corp.		3,800		217
Teva Pharmaceutical Industries Ltd. ADR		5,507		242
The Medicines Co. *		8,300		83
Thermo Fisher Scientific, Inc. *		37,302		1,309
United Therapeutics Corp. *		3,000		188
Valeant Pharmaceuticals International *		7,900		132
Varian, Inc. *		5,800		191
Vertex Pharmaceuticals, Inc. *		12,644		390
Vical, Inc. *		1,600		4
ViroPharma, Inc. *		10,000		56
VIVUS, Inc. *		4,000		16
Warner Chilcott Ltd., Class A *		24,500		240
Waters Corp. *		8,700		384
Watson Pharmaceuticals, Inc. *		7,732		239
Wyeth		119,400		5,063
XenoPort, Inc. *		2,500		34
ZymoGenetics, Inc. *		2,000		7
				73,859
Real Estate 1.6%
Alexander’s, Inc.		700		153
Alexandria Real Estate Equities, Inc.		2,500		91
AMB Property Corp.		11,300		216
American Realty Investors, Inc. *		1,537		15
Annaly Capital Management, Inc.		47,400		667
Anthracite Capital, Inc.		4,900		2
Anworth Mortgage Asset Corp.		1,000		7
Apartment Investment & Management Co., Class A		10,711		78
AvalonBay Communities, Inc.		8,892		505
Avatar Holdings, Inc. *		2,500		47
BioMed Realty Trust, Inc.		7,000		80
Boston Properties, Inc.		13,400		662
Brandywine Realty Trust		7,363		46
BRE Properties, Inc.		5,000		123
Brookfield Properties Corp.		35,200		263
Camden Property Trust		4,800		130
Capstead Mortgage Corp.		6,240		71
CB Richard Ellis Group, Inc., Class A *		24,500		184
CBL & Associates Properties, Inc.		4,685		37
Colonial Properties Trust		2,567		19
Consolidated-Tomoka Land Co.		900		31
Corporate Office Properties Trust		3,500		107
Cousins Properties, Inc.		5,200		44
DCT Industrial Trust, Inc.		14,500		64
Developers Diversified Realty Corp.		10,749		44
Digital Realty Trust, Inc.		7,000		252
Douglas Emmett, Inc.		9,000		86
Duke Realty Corp.		19,990		195
EastGroup Properties, Inc.		900		30
Entertainment Properties Trust		2,200		51
Equity Lifestyle Properties, Inc.		3,000		119
Equity One, Inc.		6,600		98
Equity Residential		24,700		565

See financial notes.     17

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Essex Property Trust, Inc.		3,600		229
Extra Space Storage, Inc.		7,500		53
Federal Realty Investment Trust		5,200		287
FelCor Lodging Trust, Inc.		5,700		11
First Industrial Realty Trust, Inc.		2,600		10
Forest City Enterprises, Inc., Class A		10,400		88
Forestar Group, Inc. *		2,933		38
Franklin Street Properties Corp.		6,500		87
Getty Realty Corp.		2,000		39
Glimcher Realty Trust		3,800		9
Gramercy Capital Corp.		1,028		2
Hatteras Financial Corp.		4,000		96
HCP, Inc.		22,648		497
Health Care REIT, Inc.		9,700		331
Healthcare Realty Trust, Inc.		4,900		82
Highwoods Properties, Inc.		5,600		134
Home Properties, Inc.		2,500		91
Hospitality Properties Trust		8,500		104
Host Hotels & Resorts, Inc.		54,254		417
HRPT Properties Trust		19,000		82
Inland Real Estate Corp.		5,500		48
Investors Real Estate Trust		5,000		46
iStar Financial, Inc.		9,390		32
Jones Lang LaSalle, Inc.		2,300		74
Kilroy Realty Corp.		1,800		39
Kimco Realty Corp.		33,195		399
LaSalle Hotel Properties		3,500		42
Lexington Realty Trust		3,146		12
Liberty Property Trust		8,300		202
LTC Properties, Inc.		2,800		50
Mack-Cali Realty Corp.		5,900		159
Maguire Properties, Inc. *		3,000		3
Maui Land & Pineapple Co., Inc. *		800		5
MFA Financial, Inc.		17,500		103
Mid-America Apartment Communities, Inc.		2,500		93
National Health Investors, Inc.		3,100		83
National Retail Properties, Inc.		7,320		130
Nationwide Health Properties, Inc.		8,100		200
New Century Financial Corp. (a)(d)*		3,600		—
OMEGA Healthcare Investors, Inc.		6,784		107
Parkway Properties, Inc.		500		7
Pennsylvania Real Estate Investment Trust		2,500		19
Plum Creek Timber Co., Inc.		15,047		519
PMC Commercial Trust		1,500		11
Post Properties, Inc.		2,200		28
Potlatch Corp.		2,753		81
ProLogis		38,854		354
PS Business Parks, Inc.		3,000		131
Public Storage		14,590		976
RAIT Financial Trust		3,300		5
Ramco-Gershenson Properties Trust		1,400		15
Rayonier, Inc.		7,388		285
Realty Income Corp.		8,600		192
Redwood Trust, Inc.		2,500		41
Regency Centers Corp.		5,700		214
Reis, Inc. *		1,400		7
Saul Centers, Inc.		2,100		67
Senior Housing Properties Trust		11,450		188
SL Green Realty Corp.		4,750		84
Sovran Self Storage, Inc.		800		18
Sun Communities, Inc.		3,000		44
Tanger Factory Outlet Centers, Inc.		1,600		53
Taubman Centers, Inc.		4,100		98
Tejon Ranch Co. *		674		16
The Macerich Co.		5,200		91
The St. Joe Co. *		9,300		231
UDR, Inc.		12,861		130
UMH Properties, Inc.		1,600		10
Universal Health Realty Income Trust		900		29
Urstadt Biddle Properties		500		7
Urstadt Biddle Properties, Class A		1,000		15
Ventas, Inc.		12,800		367
Vornado Realty Trust		16,284		796
Walter Investment Management Corp. *		1,789		14
Washington Real Estate Investment Trust		3,100		66
Weingarten Realty Investors		11,475		178
				14,983
Retailing 3.8%
99 Cents Only Stores *		3,066		33
Aaron Rents, Inc.		6,250		210
Aaron Rents, Inc., Class A		2,175		65
Abercrombie & Fitch Co., Class A		5,800		157
Advance Auto Parts, Inc.		9,540		417
Aeropostale, Inc. *		6,600		224
Amazon.com, Inc. *		41,700		3,358
America’s Car-Mart, Inc. *		3,750		61
American Eagle Outfitters, Inc.		18,150		269
AnnTaylor Stores Corp. *		9,825		73
Asbury Automotive Group, Inc.		4,100		40
Audiovox Corp., Class A *		1,600		9
AutoNation, Inc. *		21,600		383
AutoZone, Inc. *		6,100		1,015
Barnes & Noble, Inc.		7,400		193
Bed Bath & Beyond, Inc. *		23,700		721
Best Buy Co., Inc.		39,225		1,505

18     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Big Lots, Inc. *		11,100		307
Blockbuster, Inc., Class A *		15,300		12
Brown Shoe Co., Inc.		6,675		43
Cabela’s, Inc. *		3,500		45
CarMax, Inc. *		17,046		218
Charlotte Russe Holding, Inc. *		2,500		31
Charming Shoppes, Inc. *		10,200		36
Chico’s FAS, Inc. *		13,300		102
Christopher & Banks Corp.		2,900		16
Coldwater Creek, Inc. *		8,502		29
Collective Brands, Inc. *		5,906		86
Destination Maternity Corp. *		2,500		34
Dick’s Sporting Goods, Inc. *		11,000		209
Dillard’s, Inc., Class A		5,500		42
Dollar Tree, Inc. *		8,650		366
DSW, Inc., Class A *		3,500		38
Duckwall-ALCO Stores, Inc. *		1,800		20
Expedia, Inc. *		31,345		427
Family Dollar Stores, Inc.		12,700		422
Foot Locker, Inc.		14,100		168
GameStop Corp., Class A *		12,048		363
Genesco, Inc. *		4,300		98
Genuine Parts Co.		13,500		458
Group 1 Automotive, Inc.		1,400		30
Guess?, Inc.		7,900		206
Hibbett Sports, Inc. *		3,543		74
HSN, Inc. *		6,269		43
J. Crew Group, Inc. *		5,500		95
J.C. Penney Co., Inc.		27,400		841
Kohl’s Corp. *		28,300		1,283
Liberty Media Corp. — Interactive Class A *		55,809		296
Limited Brands, Inc.		31,520		360
Lithia Motors, Inc., Class A		700		2
Lowe’s Cos., Inc.		130,500		2,806
Macy’s, Inc.		42,952		588
MarineMax, Inc. *		800		4
Midas, Inc. *		6,800		68
Monro Muffler Brake, Inc.		1,575		39
Netflix, Inc. *		6,000		272
Nordstrom, Inc.		20,600		466
O’Reilly Automotive, Inc. *		11,899		462
Office Depot, Inc. *		26,000		67
OfficeMax, Inc.		6,400		48
Pacific Sunwear of California, Inc. *		7,475		30
Penske Auto Group, Inc.		2,000		27
PetSmart, Inc.		11,100		254
Pomeroy IT Solutions, Inc. *		2,100		7
Priceline.com, Inc. *		3,983		387
RadioShack Corp.		10,700		151
Rent-A-Center, Inc. *		7,750		149
Retail Ventures, Inc. *		5,000		13
REX Stores Corp. *		1,875		22
Ross Stores, Inc.		13,400		508
Saks, Inc. *		10,800		56
Sally Beauty Holdings, Inc. *		6,950		51
Sears Holdings Corp. *		12,885		805
Shoe Carnival, Inc. *		1,200		14
Sonic Automotive, Inc., Class A		1,400		7
Stage Stores, Inc.		2,700		33
Staples, Inc.		61,800		1,274
Stein Mart, Inc. *		3,800		17
Systemax, Inc. *		2,500		42
Target Corp.		69,800		2,880
The Buckle, Inc.		7,875		294
The Cato Corp., Class A		4,300		83
The Children’s Place Retail Stores, Inc. *		1,800		51
The Dress Barn, Inc. *		6,000		91
The Finish Line, Inc., Class A		5,061		43
The Gap, Inc.		73,900		1,148
The Gymboree Corp. *		2,500		86
The Home Depot, Inc.		151,070		3,976
The Men’s Wearhouse, Inc.		3,600		67
The Pep Boys — Manny, Moe & Jack		5,000		37
The Sherwin-Williams Co.		13,000		736
The Talbots, Inc.		5,700		13
The TJX Cos., Inc.		40,400		1,130
The Wet Seal, Inc., Class A *		6,000		23
Ticketmaster Entertainment, Inc. *		6,269		33
Tiffany & Co.		11,500		333
Tractor Supply Co. *		4,000		162
Trans World Entertainment Corp. *		1,500		1
TravelCenters of America L.L.C. *		600		1
Tuesday Morning Corp. *		2,500		9
Tween Brands, Inc. *		1,742		5
Ulta Salon, Cosmetics & Fragrance, Inc. *		4,000		35
Urban Outfitters, Inc. *		12,800		250
West Marine, Inc. *		2,500		14
Williams-Sonoma, Inc.		9,200		129
Winmark Corp. *		1,200		15
Zale Corp. *		5,020		19
				35,864
Semiconductors & Semiconductor Equipment 2.4%
Actel Corp. *		1,100		14
Advanced Energy Industries, Inc. *		3,900		33
Advanced Micro Devices, Inc. *		34,200		123
Altera Corp.		30,400		496
Amkor Technology, Inc. *		14,400		62
ANADIGICS, Inc. *		1,150		3

See financial notes.     19

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Analog Devices, Inc.		30,200		643
Applied Materials, Inc.		139,098		1,698
Atmel Corp. *		37,900		146
ATMI, Inc. *		1,400		22
Broadcom Corp., Class A *		46,700		1,083
Brooks Automation, Inc. *		5,585		35
Cabot Microelectronics Corp. *		660		19
CEVA, Inc. *		433		4
Cirrus Logic, Inc. *		3,800		18
Cohu, Inc.		1,100		11
Cree, Inc. *		6,000		164
Cymer, Inc. *		4,200		119
Cypress Semiconductor Corp. *		8,500		67
Diodes, Inc. *		6,412		95
DSP Group, Inc. *		3,300		21
Entegris, Inc. *		14,299		21
Exar Corp. *		3,834		24
Fairchild Semiconductor International, Inc. *		8,600		53
FEI Co. *		1,500		26
FormFactor, Inc. *		2,500		44
Integrated Device Technology, Inc. *		16,120		88
Integrated Silicon Solution, Inc. *		3,038		7
Intel Corp.		515,832		8,140
International Rectifier Corp. *		6,600		111
Intersil Corp., Class A		12,364		143
IXYS Corp.		900		9
KLA-Tencor Corp.		15,000		416
Kopin Corp. *		2,500		7
Kulicke & Soffa Industries, Inc. *		4,400		18
Lam Research Corp. *		11,600		323
Lattice Semiconductor Corp. *		4,600		8
Linear Technology Corp.		25,000		544
LSI Corp. *		62,387		240
Marvell Technology Group Ltd. *		54,400		597
Maxim Integrated Products, Inc.		30,000		406
MEMC Electronic Materials, Inc. *		21,300		345
Micrel, Inc.		6,800		51
Microchip Technology, Inc.		16,475		379
Micron Technology, Inc. *		52,699		257
Microsemi Corp. *		7,652		103
MIPS Technologies, Inc. *		1,100		4
MKS Instruments, Inc. *		4,300		67
MoSys, Inc. *		1,200		2
Nanometrics, Inc. *		300		1
National Semiconductor Corp.		29,200		361
Novellus Systems, Inc. *		11,171		202
NVIDIA Corp. *		51,000		585
OmniVision Technologies, Inc. *		4,800		46
ON Semiconductor Corp. *		29,165		158
Pericom Semiconductor Corp. *		600		5
Photronics, Inc. *		9,400		16
PLX Technology, Inc. *		1,300		4
PMC-Sierra, Inc. *		8,800		70
Rambus, Inc. *		8,200		98
RF Micro Devices, Inc. *		16,020		34
Rudolph Technologies, Inc. *		1,318		7
Semitool, Inc. *		4,300		20
Semtech Corp. *		6,000		86
Silicon Image, Inc. *		6,500		18
Silicon Laboratories, Inc. *		5,000		166
Silicon Storage Technology, Inc. *		7,000		13
SiRF Technology Holdings, Inc. *		3,500		10
Skyworks Solutions, Inc. *		5,689		50
Standard Microsystems Corp. *		3,600		57
Supertex, Inc. *		1,400		36
Techwell, Inc. *		2,500		18
Teradyne, Inc. *		15,559		92
Tessera Technologies, Inc. *		3,000		42
Texas Instruments, Inc.		143,397		2,590
Three-Five Systems, Inc. *		1,099		—
Trident Microsystems, Inc. *		5,000		7
TriQuint Semiconductor, Inc. *		5,310		20
Ultratech, Inc. *		1,300		18
Varian Semiconductor Equipment Associates, Inc. *		7,875		202
Veeco Instruments, Inc. *		3,500		25
Virage Logic Corp. *		1,400		5
Xilinx, Inc.		27,600		564
Zoran Corp. *		4,261		38
				22,973
Software & Services 8.2%
Accenture Ltd., Class A		72,000		2,119
ACI Worldwide, Inc. *		5,200		90
Activision Blizzard, Inc. *		110,732		1,193
Actuate Corp. *		5,862		22
Acxiom Corp.		13,300		128
Adobe Systems, Inc. *		46,210		1,264
Advent Software, Inc. *		4,100		136
Affiliated Computer Services, Inc., Class A *		9,900		479
Akamai Technologies, Inc. *		12,138		267
Alliance Data Systems Corp. *		6,600		276
ANSYS, Inc. *		8,786		243
Ariba, Inc. *		11,570		111
Autodesk, Inc. *		16,800		335
Automatic Data Processing, Inc.		48,100		1,693
Blackbaud, Inc.		3,000		46
BMC Software, Inc. *		29,000		1,005
Bottomline Technologies, Inc. *		5,000		39
Broadridge Financial Solutions, Inc.		12,025		233
CA, Inc.		47,508		820
CACI International, Inc., Class A *		2,100		83

20     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Cadence Design Systems, Inc. *		22,600		126
Catapult Communications Corp. *		1,600		12
Chordiant Software, Inc. *		440		1
CIBER, Inc. *		7,300		24
Citrix Systems, Inc. *		20,000		571
Cognizant Technology Solutions Corp., Class A *		21,200		526
Computer Sciences Corp. *		16,238		600
Compuware Corp. *		27,900		209
Convergys Corp. *		10,500		106
CSG Systems International, Inc. *		5,400		78
CyberSource Corp. *		5,457		80
DealerTrack Holdings, Inc. *		3,100		47
Digimarc Corp. *		2,142		21
Digital River, Inc. *		2,100		81
DST Systems, Inc. *		8,100		293
Dynamics Research Corp. *		1,200		10
EarthLink, Inc. *		17,050		129
eBay, Inc. *		110,848		1,826
Edgewater Technology, Inc. *		767		2
Electronic Arts, Inc. *		25,200		513
eLoyalty Corp. *		190		1
Entrust, Inc. *		11,300		22
Epicor Software Corp. *		4,000		22
EPIQ Systems, Inc. *		825		13
Equinix, Inc. *		2,565		180
Euronet Worldwide, Inc. *		2,500		40
Exlservice Holdings, Inc. *		5,000		47
FactSet Research Systems, Inc.		3,750		201
Fair Isaac Corp.		7,744		130
FalconStor Software, Inc. *		1,200		4
Fidelity National Information Services, Inc.		16,314		291
Fiserv, Inc. *		15,300		571
Forrester Research, Inc. *		4,100		104
Gartner, Inc. *		10,300		139
Global Payments, Inc.		6,240		200
Google, Inc., Class A *		28,400		11,246
GSE Systems, Inc. *		424		2
Hackett Group, Inc. *		1,700		4
Hewitt Associates, Inc., Class A *		9,425		296
IAC/InterActiveCorp. *		15,672		251
iGATE Corp.		9,600		36
infoGROUP, Inc. *		4,800		19
Informatica Corp. *		6,700		107
InfoSpace, Inc. *		3,872		26
Interactive Intelligence, Inc. *		4,000		44
Internet Capital Group, Inc. *		350		2
Intuit, Inc. *		33,430		773
j2 Global Communications, Inc. *		4,000		96
Jack Henry & Associates, Inc.		6,300		114
JDA Software Group, Inc. *		4,500		64
Kana Software, Inc. (a)*		528		—
Lawson Software, Inc. *		14,500		78
Lender Processing Services, Inc.		8,157		234
LookSmart, Ltd. *		480		1
Macrovision Solutions Corp. *		12,812		259
Magma Design Automation, Inc. *		7,200		13
Manhattan Associates, Inc. *		4,300		71
ManTech International Corp., Class A *		5,000		181
Mastech Holdings, Inc. *		640		1
MasterCard, Inc., Class A		12,000		2,201
MAXIMUS, Inc.		4,200		169
McAfee, Inc. *		14,445		542
Mentor Graphics Corp. *		8,200		55
Metavante Technologies, Inc. *		7,550		178
MICROS Systems, Inc. *		22,000		462
Microsoft Corp.		830,850		16,833
MicroStrategy, Inc., Class A *		856		33
ModusLink Global Solutions, Inc. *		3,950		15
MoneyGram International, Inc. *		7,500		11
Move, Inc. *		5,020		10
MSC.Software Corp. *		1,800		11
NetScout Systems, Inc. *		7,300		66
NeuStar, Inc., Class A *		6,300		120
Novell, Inc. *		25,600		96
Nuance Communications, Inc. *		1,974		26
NYFIX, Inc. *		750		1
Omniture, Inc. *		5,000		62
Openwave Systems, Inc. *		7,771		9
OPNET Technologies, Inc. *		3,600		31
Oracle Corp.		449,449		8,692
Parametric Technology Corp. *		8,680		97
Paychex, Inc.		32,400		875
Perot Systems Corp., Class A *		9,100		128
Phoenix Technologies Ltd. *		4,100		12
PLATO Learning, Inc. *		1,433		4
Progress Software Corp. *		4,200		89
Quality Systems, Inc.		2,000		107
Quest Software, Inc. *		7,700		112
Radiant Systems, Inc. *		3,800		28
RealNetworks, Inc. *		18,900		46
Red Hat, Inc. *		14,600		252
Renaissance Learning, Inc.		2,100		20
S1 Corp. *		12,930		80
Saba Software, Inc. *		3,849		9
SAIC, Inc. *		9,500		172
Salesforce.com, Inc. *		8,500		364
Sapient Corp. *		9,100		47
SAVVIS, Inc. *		4,000		46
Soapstone Networks, Inc. *		375		1
Solera Holdings, Inc. *		5,000		114
SonicWALL, Inc. *		7,400		40
SourceForge, Inc. *		4,527		4
SPSS, Inc. *		3,200		99

See financial notes.     21

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
SRA International, Inc., Class A *		5,000		77
StarTek, Inc. *		3,900		16
SumTotal Systems, Inc. *		463		2
SupportSoft, Inc. *		11,600		26
Sybase, Inc. *		19,036		646
Symantec Corp. *		93,673		1,616
Symyx Technologies, Inc. *		3,800		18
Synopsys, Inc. *		13,684		298
Syntel, Inc.		2,500		69
Take-Two Interactive Software, Inc. *		6,000		54
TeleCommunication Systems, Inc., Class A *		1,300		13
TeleTech Holdings, Inc. *		5,000		66
THQ, Inc. *		5,425		19
TIBCO Software, Inc. *		16,000		101
TiVo, Inc. *		4,500		34
Total System Services, Inc.		28,204		352
United Online, Inc.		8,650		46
USinternetworking, Inc. (d)*		1,100		—
ValueClick, Inc. *		8,500		90
VeriFone Holdings, Inc. *		6,600		50
VeriSign, Inc. *		20,875		430
Vignette Corp. *		3,394		28
Visa, Inc., Class A		80,000		5,197
VMware, Inc., Class A *		38,000		991
Web.com Group, Inc. *		223		1
WebMD Health Corp., Class A *		5,600		145
Websense, Inc. *		7,500		134
Western Union Co.		62,932		1,054
Wind River Systems, Inc. *		10,060		74
Yahoo!, Inc. *		111,144		1,588
				77,324
Technology Hardware & Equipment 7.5%
3Com Corp. *		17,900		72
Adaptec, Inc. *		5,700		16
ADC Telecommunications, Inc. *		9,431		69
ADTRAN, Inc.		7,000		148
Agilent Technologies, Inc. *		39,317		718
Agilysys, Inc.		1,360		8
Amphenol Corp., Class A		17,600		596
Anaren, Inc. *		3,300		43
Anixter International, Inc. *		3,300		131
Apple, Inc. *		80,000		10,066
Arris Group, Inc. *		5,775		62
Arrow Electronics, Inc. *		12,000		273
Avid Technology, Inc. *		3,756		42
Avnet, Inc. *		11,288		247
Avocent Corp. *		3,963		57
AVX Corp.		14,000		140
Bel Fuse, Inc., Class A		1,200		17
Bell Microproducts, Inc. *		1,000		1
Benchmark Electronics, Inc. *		4,830		59
Black Box Corp.		1,700		46
Blue Coat Systems, Inc. *		680		9
Brightpoint, Inc. *		4,454		23
Brocade Communications Systems, Inc. *		32,535		188
Checkpoint Systems, Inc. *		4,600		56
Ciena Corp. *		2,470		29
Cisco Systems, Inc. *		541,909		10,470
Cogent, Inc. *		7,500		85
Cognex Corp.		2,900		41
Coherent, Inc. *		1,300		25
Comarco, Inc. *		500		1
CommScope, Inc. *		5,323		134
Comtech Telecommunications Corp. *		2,175		73
Corning, Inc.		146,807		2,146
Cosine Communications, Inc. *		730		1
CPI International, Inc. *		6,000		66
CTS Corp.		5,800		35
Daktronics, Inc.		5,200		47
Data Domain, Inc. *		4,500		75
DDi Corp. *		1		—
Dell, Inc. *		189,400		2,201
Diebold, Inc.		5,300		140
Dolby Laboratories, Inc., Class A *		8,800		353
Echelon Corp. *		3,700		29
EchoStar Corp., Class A *		7,540		119
Electro Rent Corp.		5,100		49
Electro Scientific Industries, Inc. *		1,300		11
Electronics for Imaging, Inc. *		3,400		33
EMC Corp. *		199,686		2,502
EMS Technologies, Inc. *		1,000		19
Emulex Corp. *		5,900		62
Extreme Networks, Inc. *		9,000		16
F5 Networks, Inc. *		6,600		180
FLIR Systems, Inc. *		9,600		213
Frequency Electronics, Inc. *		500		2
Gerber Scientific, Inc. *		5,400		21
Harmonic, Inc. *		6,342		46
Harris Corp.		14,000		428
Harris Stratex Networks, Inc., Class A *		700		3
Hewlett-Packard Co.		234,636		8,442
Hutchinson Technology, Inc. *		2,500		5
I.D. Systems, Inc. *		5,500		22
Imation Corp.		2,000		20
Immersion Corp. *		800		3
Infinera Corp. *		7,500		63
Ingram Micro, Inc., Class A *		13,400		195
Insight Enterprises, Inc. *		4,650		27
Intelli-Check-Mobilisa, Inc. *		500		1
InterDigital, Inc. *		4,500		118

22     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Intermec, Inc. *		5,600		68
International Business Machines Corp.		126,510		13,057
Itron, Inc. *		2,500		115
Ixia *		5,200		30
Jabil Circuit, Inc.		15,400		125
JDS Uniphase Corp. *		17,553		81
Juniper Networks, Inc. *		40,565		878
Keithley Instruments, Inc.		3,200		11
L-1 Identity Solutions, Inc. *		756		6
LaserCard Corp. *		1,000		4
LeCroy Corp. *		900		3
Lexmark International, Inc., Class A *		10,900		214
LightPath Technologies, Inc. *		75		—
Littelfuse, Inc. *		2,000		33
Maxwell Technologies, Inc. *		1,000		10
Measurement Specialties, Inc. *		700		5
Mercury Computer Systems, Inc. *		3,600		29
Merrimac Industries, Inc. *		600		2
Methode Electronics, Inc.		3,600		22
MOCON, Inc.		600		6
Molex, Inc.		16,125		269
Motorola, Inc.		195,955		1,084
MTS Systems Corp.		4,500		95
Multi-Fineline Electronix, Inc. *		2,500		50
National Instruments Corp.		5,675		125
NCR Corp. *		23,800		242
NetApp, Inc. *		27,500		503
NETGEAR, Inc. *		3,000		48
Network Equipment Technologies, Inc. *		5,000		20
Newport Corp. *		4,200		21
Oplink Communications, Inc. *		657		7
OSI Systems, Inc. *		3,700		69
Palm, Inc. *		8,638		91
Park Electrochemical Corp.		3,600		74
ParkerVision, Inc. *		400		1
PC Connection, Inc. *		5,500		27
PC-Tel, Inc.		6,400		31
Performance Technologies, Inc. *		1,600		4
Plantronics, Inc.		4,000		51
Plexus Corp. *		3,700		82
Polycom, Inc. *		9,200		171
Presstek, Inc. *		1,100		2
QLogic Corp. *		17,044		242
QUALCOMM, Inc.		155,100		6,564
RadiSys Corp. *		3,700		27
Research Frontiers, Inc. *		800		3
Richardson Electronics Ltd.		1,300		5
Riverbed Technology, Inc. *		5,500		101
Rofin-Sinar Technologies, Inc. *		3,800		81
Rogers Corp. *		2,500		64
SanDisk Corp. *		19,500		307
ScanSource, Inc. *		1,200		30
SCM Microsystems, Inc. *		1,200		3
SeaChange International, Inc. *		6,350		40
Seagate Technology		37,066		302
Sonus Networks, Inc. *		19,400		34
Stratasys, Inc. *		2,700		25
Sun Microsystems, Inc. *		62,057		568
Sycamore Networks, Inc. *		27,900		82
Symmetricom, Inc. *		8,450		42
Synaptics, Inc. *		5,250		170
Tech Data Corp. *		5,300		153
Technitrol, Inc.		4,000		16
Tekelec *		8,700		135
Tellabs, Inc. *		34,564		181
Teradata Corp. *		23,800		398
TESSCO Technologies, Inc. *		1,350		12
Tollgrade Communications, Inc. *		3,600		21
Trimble Navigation Ltd. *		11,792		253
TTM Technologies, Inc. *		4,400		33
Tyco Electronics Ltd.		38,525		672
UTStarcom, Inc. *		16,000		19
ViaSat, Inc. *		3,500		80
Vishay Intertechnology, Inc. *		36,688		215
Western Digital Corp. *		18,700		440
Xerox Corp.		69,700		426
Xybernaut Corp. (a)(d)*		1,400		—
Zebra Technologies Corp., Class A *		6,375		135
Zygo Corp. *		3,500		18
				71,301
Telecommunication Services 3.1%
Alaska Communication Systems Group, Inc.		5,000		30
American Tower Corp., Class A *		33,800		1,074
AT&T, Inc.		540,056		13,836
Atlantic Tele-Network, Inc.		3,250		72
Centennial Communications Corp. *		8,000		66
CenturyTel, Inc.		9,500		258
CIBL, Inc. (a)(d)		9		—
Cincinnati Bell, Inc. *		22,268		62
Clearwire Corp., Class A *		62,500		346
Cogent Communications Group, Inc. *		3,900		33
Consolidated Communications Holdings, Inc.		2,622		30
Crown Castle International Corp. *		27,776		681
D&E Communications, Inc.		5,500		31
Embarq Corp.		11,576		423
FairPoint Communications, Inc.		4,669		5
Frontier Communications Corp.		37,119		264

See financial notes.     23

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
General Communication, Inc., Class A *		10,500		80
HickoryTech Corp.		4,600		26
Iowa Telecommunications Services, Inc.		2,500		33
Leap Wireless International, Inc. *		5,700		206
Level 3 Communications, Inc. *		93,000		104
Lynch Interactive Corp. *		9		22
MetroPCS Communications, Inc. *		30,000		513
NII Holdings, Inc. *		14,900		241
NTELOS Holdings Corp.		3,000		48
PAETEC Holding Corp. *		8,500		26
Premiere Global Services, Inc. *		5,100		54
Qwest Communications International, Inc.		151,337		589
SBA Communications Corp., Class A *		9,300		234
Shenandoah Telecommunications Co.		2,500		49
Sprint Nextel Corp. *		236,530		1,031
SureWest Communications		5,500		35
Syniverse Holdings, Inc. *		10,400		131
Telephone & Data Systems, Inc.		10,600		304
tw telecom, Inc. *		14,000		129
United States Cellular Corp. *		6,100		207
USA Mobility, Inc. *		5,500		61
Verizon Communications, Inc.		253,572		7,693
Warwick Valley Telephone Co.		1,100		12
Windstream Corp.		31,624		263
				29,302
Transportation 1.9%
AirTran Holdings, Inc. *		5,800		40
Alaska Air Group, Inc. *		1,900		32
Alexander & Baldwin, Inc.		3,400		91
AMERCO *		900		29
AMR Corp. *		25,200		120
Arkansas Best Corp.		1,100		25
Atlas Air Worldwide Holdings, Inc. *		3,000		80
Burlington Northern Santa Fe Corp.		30,300		2,045
C.H. Robinson Worldwide, Inc.		15,000		797
Con-way, Inc.		4,500		112
Continental Airlines, Inc., Class B *		10,000		105
CSX Corp.		36,700		1,086
Delta Air Lines, Inc. *		50,000		308
Dollar Thrifty Automotive Group, Inc. *		3,500		13
Expeditors International of Washington, Inc.		16,200		562
FedEx Corp.		29,063		1,626
Forward Air Corp.		2,600		43
Genco Shipping & Trading Ltd.		5,500		105
Heartland Express, Inc.		8,941		134
Hertz Global Holdings, Inc. *		26,000		177
Horizon Lines, Inc., Class A		5,200		28
Hub Group, Inc., Class A *		4,400		101
J.B. Hunt Transport Services, Inc.		13,000		366
JetBlue Airways Corp. *		23,462		116
Kansas City Southern *		7,550		115
Kirby Corp. *		5,600		173
Knight Transportation, Inc.		9,050		160
Landstar System, Inc.		15,200		541
MAIR Holdings, Inc. (a)(d)*		1,100		3
Norfolk Southern Corp.		34,500		1,231
Old Dominion Freight Line, Inc. *		4,050		114
Pacer International, Inc.		2,800		12
Park-Ohio Holdings Corp. *		2,600		12
Pinnacle Airlines Corp. *		7,500		16
Quixote Corp.		1,300		4
Republic Airways Holdings, Inc. *		7,500		54
Ryder System, Inc.		6,400		177
Saia, Inc. *		6,100		80
SkyWest, Inc.		4,000		48
Southwest Airlines Co.		64,125		448
UAL Corp. *		10,600		52
Union Pacific Corp.		44,000		2,162
United Parcel Service, Inc., Class B		91,480		4,788
US Airways Group, Inc. *		5,900		22
Werner Enterprises, Inc.		5,832		95
YRC Worldwide, Inc. *		5,004		15
				18,463
Utilities 3.7%
AGL Resources, Inc.		6,800		212
Allegheny Energy, Inc.		14,400		373
ALLETE, Inc.		5,233		136
Alliant Energy Corp.		11,800		264
Ameren Corp.		20,100		463
American Electric Power Co., Inc.		37,820		998
American Water Works Co., Inc.		20,000		360
Aqua America, Inc.		12,094		222
Atmos Energy Corp.		9,200		227
Avista Corp.		7,800		117
Black Hills Corp.		3,900		78
Calpine Corp. *		36,900		299
CenterPoint Energy, Inc.		29,100		310
Central Vermont Public Services Corp.		6,200		106
CH Energy Group, Inc.		1,900		84
Cleco Corp.		6,400		135
CMS Energy Corp.		19,900		239
Consolidated Edison, Inc.		23,500		873

24     See financial notes.

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Constellation Energy Group, Inc.		19,500		470
Dominion Resources, Inc.		53,480		1,613
DPL, Inc.		11,452		257
DTE Energy Co.		13,801		408
Duke Energy Corp.		113,556		1,568
Dynegy, Inc., Class A *		39,081		70
Edison International		37,710		1,075
El Paso Electric Co. *		5,300		73
Energen Corp.		5,200		188
Entergy Corp.		15,700		1,017
EQT Corp.		9,800		330
Exelon Corp. *		59,474		2,744
FirstEnergy Corp.		28,217		1,154
Florida Public Utilities Co.		1,599		20
FPL Group, Inc.		37,900		2,039
Great Plains Energy, Inc.		9,341		135
Hawaiian Electric Industries, Inc.		7,700		120
IDACORP, Inc.		4,200		101
Integrys Energy Group, Inc.		7,540		199
MDU Resources Group, Inc.		16,425		289
MGE Energy, Inc.		2,000		61
Middlesex Water Co.		3,000		42
Mirant Corp. *		17,700		225
National Fuel Gas Co.		8,800		288
New Jersey Resources Corp.		6,225		205
Nicor, Inc.		3,000		96
NiSource, Inc.		22,864		251
Northeast Utilities		15,624		328
Northwest Natural Gas Co.		5,700		233
NorthWestern Corp.		7,100		149
NRG Energy, Inc. *		20,700		372
NSTAR		7,734		243
NV Energy, Inc.		20,476		210
OGE Energy Corp.		6,500		167
ONEOK, Inc.		12,900		338
Ormat Technologies, Inc.		2,800		99
Pepco Holdings, Inc.		16,800		201
PG&E Corp.		33,900		1,258
Piedmont Natural Gas Co., Inc.		6,300		154
Pinnacle West Capital Corp.		9,800		268
PNM Resources, Inc.		5,500		47
Portland General Electric Co.		5,200		95
PPL Corp.		32,500		972
Progress Energy, Inc.		25,159		858
Public Service Enterprise Group, Inc.		44,000		1,313
Questar Corp.		16,200		481
Reliant Energy, Inc. *		28,125		139
SCANA Corp.		10,405		314
Sempra Energy		21,675		997
South Jersey Industries, Inc.		2,500		87
Southern Co.		68,600		1,981
Southwest Gas Corp.		3,600		73
Spectra Energy Partners L.P.		2,000		45
TECO Energy, Inc.		23,700		251
The AES Corp. *		60,096		425
The Laclede Group, Inc.		3,300		114
UGI Corp.		10,700		245
UIL Holdings Corp.		3,166		73
Unisource Energy Corp.		3,800		100
Unitil Corp.		600		12
Vectren Corp.		5,766		128
Westar Energy, Inc.		8,200		144
WGL Holdings, Inc.		3,000		93
Wisconsin Energy Corp.		11,400		456
Xcel Energy, Inc.		39,195		723
				34,720
Total Common Stock (Cost $1,084,714)				929,276
Foreign Common Stock 0.2% of net assets
Bermuda 0.2%
Capital Goods 0.0%
Aircastle Ltd.		5,500		36
Consumer Services 0.0%
Orient-Express Hotels Ltd., Class A		1,600		10
Diversified Financials 0.1%
Invesco Ltd.		35,000		515
Lazard Ltd., Class A		7,300		200
				715
Insurance 0.1%
Assured Guaranty Ltd.		6,500		63
Flagstone Reinsurance Holdings Ltd.		7,500		69
Platinum Underwriters Holdings, Ltd.		4,500		129
Validus Holdings Ltd.		6,500		146
				407
Software & Services 0.0%
Genpact Ltd. *		15,000		135
Telecommunication Services 0.0%
Global Crossing Ltd. *		4,600		33
				1,336
British Virgin Islands 0.0%
Transportation 0.0%
UTI Worldwide, Inc. *		4,300		58

See financial notes.     25

Schwab Total Stock Market Index Fund

Portfolio Holdings continued

	Number of		Value
Security	Shares		($ x 1,000)
Total Foreign Common Stock (Cost $2,428)				1,394
Preferred Stock 0.1% of net assets
Health Care Equipment & Services 0.0%
Inverness Medical Innovations, Inc., Class B *		154		30
National Healthcare Corp., Series A *		2,300		27
				57
Real Estate 0.1%
Simon Property Group, Inc.		22,981		1,186
Total Preferred Stock (Cost $955)				1,243
Rights 0.0% of net assets
Capital Goods 0.0%
Fresenius Kabi Pharmaceuticals Holding, Inc. — CVR *		14,000		5
Pharmaceuticals 0.0%
Indevus Pharmaceuticals, Inc. (a)*		1,800		—
Total Rights (Cost $13)				5

	Face Amount		Value
Security                                                   Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Short-Term Investments 1.5% of net assets
Commercial Paper & Other Obligations 1.3%
Citibank, New York Time Deposit
0.03%, 05/01/09		12,093		12,093
U.S. Treasury Obligations 0.2%
U.S. Treasury Bill
0.09%, 06/18/09 (b)		50		50
0.10%, 06/18/09 (b)		916		916
0.15%, 06/18/09 (b)		155		155
0.16%, 06/18/09 (b)		500		500
				1,621
Total Short-Term Investments (Cost $13,714)				13,714

End of Investments.

	Number of		Value
Security	Shares		($ x 1,000)
Collateral Invested for Securities on Loan 0.1% of net assets
Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust		972,130		972

End of collateral invested for securities on loan.

(All dollar amounts are x 1,000) At 04/30/09, the tax basis cost of the fund’s investments was $1,100,890 and the unrealized appreciation and depreciation were $173,315 and ($328,573), respectively, with a net unrealized depreciation of ($155,258).

*	Non-income producing security.
(a)	Fair-valued by Management.
(b)	All or a portion of this security is held as collateral for open futures contracts.
(c)	Issuer is affiliated with the fund’s adviser.
(d)	Illiquid security. At the period end, the value of these amounted to $3 or 0.0% of net assets.
(e)	All or a portion of this security is on loan.
ADR – American Depositary Receipt
REIT – Real Estate Investment Trust

In addition to the above, the fund held the following at 04/30/09. All numbers are x 1,000 except number of futures contracts.

	Number of		Contract		Unrealized
	Contracts		Value		Gains
Futures Contracts
Russell 2000 Index, e-mini, Long, expires 06/19/09		150		7,301		951
S & P 500 Index, e-mini, Long, expires 06/19/09		120		5,220		499
Net unrealized gains on futures						1,450

26     See financial notes.

Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8: Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9: Purchases of Equity Securities by Closed-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, Randall W. Merk and Registrant’s Principal Financial Officer, George Pereira, 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 second fiscal quarter of 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)    Code of ethics — not applicable to this semi-annual report.

(2)	Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-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 Rule 30a-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 Form N-CSR with the Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Schwab Capital Trust

By:	/s/ Randall W. MerkRandall W. Merk
	Chief Executive Officer

Date: 06/09/09

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Randall W. MerkRandall W. Merk
	Chief Executive Officer

Date: 06/09/09

By:	/s/ George PereiraGeorge Pereira
	Principal Financial Officer

Date: 06/15/09