Schwab Core Equity Fund NCSRS Certified semi-annual shareholder report (management investment company)

Purchase of Securities

Sales/Maturities of Securities

$2,650,000

$6,000,000

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: 811-07704

Schwab Capital Trust

(Exact name of registrant as specified in charter)

101 Montgomery Street, San Francisco, California 94104
(Address of principal executive offices) (Zip code)

Randall W. Merk
Schwab Capital Trust
101 Montgomery Street, San Francisco, California 94104
(Name and address of agent for service)

Registrant’s telephone number, including area code: (415) 627-7000

Date of fiscal year end: October 31

Date of reporting period: April 30, 2010

Item 1: Report(s) to Shareholders.

Semiannual report dated April 30, 2010 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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Schwab MarketTrack Portfolios

Semiannual Report

April 30, 2010

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 Portfolio™		6

Schwab MarketTrack Growth Portfolio™		8

Schwab MarketTrack Balanced Portfolio™		10

Schwab MarketTrack Conservative Portfolio™		12

Fund Expenses		14

Financial Statements		15

Financial Notes		35

Results of Proxy Voting		45

Trustees and Officers		46

Glossary		49
EX-99.CERT
EX-99.906CERT

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: 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. (MSCI) and Standard & Poor’s (S&P). 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.schwabfunds.com/prospectus.


Total Return for the Report Period


Schwab MarketTrack All Equity Portfolio^tm (Ticker Symbol: SWEGX)			14.76%

All Equity Composite Index			13.01%
Fund Category: Morningstar Large-Cap Blend			14.82%

Performance Details			pages 6-7



Schwab MarketTrack Growth Portfolio^tm

Investor Shares (Ticker Symbol: SWHGX)			12.69%
P Shares (Ticker Symbol: SWPGX)			12.75%
Growth Composite Index			11.40%
Fund Category: Morningstar Large-Cap Blend			14.82%

Performance Details			pages 8-9



Schwab MarketTrack Balanced Portfolio^tm (Ticker Symbol: SWBGX)			9.90%

Balanced Composite Index			9.15%
Fund Category: Morningstar Moderate Allocation			10.45%

Performance Details			pages 10-11



Schwab MarketTrack Conservative Portfolio^tm (Ticker Symbol: SWCGX)			7.18%

Conservative Composite Index			6.90%
Fund Category: Morningstar Conservative Allocation			7.79%

Performance Details			pages 12-13



Minimum Initial Investment¹

Investor Shares			$ 100
P Shares			$100,000

The All Equity Composite Index is a custom blended index developed by CSIM 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 a custom blended index developed by CSIM 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 a custom blended index developed by CSIM 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 a custom blended index developed by CSIM 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.


¹	Please see prospectus for further details 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.

Dear Shareholder,

In the United States, we’ve seen modest improvements in employment and consumer spending, along with increased capital spending by businesses. More importantly, the Federal Reserve (the Fed) began to withdraw some of its monetary support programs in 2010 while holding interest rates at historically low levels. The Fed’s description of the U.S. economy at its April 28, 2010 meeting was that the economy “was a little more upbeat but still cautious,” and that the “labor market was beginning to improve,” but then added a cautionary statement about employers remaining reluctant to add jobs to current payrolls. In short, we seem to be in an economic stage that calls for cautious optimism.

From a broader perspective, the global financial marketplace remained challenging as recessionary conditions prevailed along with occasional signs of improvement. Even as major international and domestic equity indices continued to rise, central banks in several countries, including the United States, closely monitored financial markets, debt ratios, monetary exchange rates, interest rates, and inflation, in an ongoing effort to stabilize local and global markets. This was especially true for the governments of Greece, Spain, Portugal, Ireland, and Great Britain, where sovereign debt has escalated and governments have implemented cost-cutting measures while seeking extended, low-cost financing.

For information on the performance of Schwab MarketTrack Portfolios, please see the portfolio manager’s discussion and analysis on the following pages.

In economic environments such as we have today, it’s more important than ever to periodically review your investment portfolio to ensure that your plan is complementary to your financial goals. To that end, we offer a wide array of mutual funds that cover all asset classes. If you would like to talk with us about our mutual funds, we are always available at 1-800-435-4000, and additional resources may be found on schwab.com.

Thank you for investing with us.

Sincerely,

Schwab MarketTrack Portfolios 3

The Investment Environment

The past six months produced significant positive returns and high volatility in global capital markets. Nearly all major equity indices had positive returns. Generally speaking, the domestic equity markets outpaced the international equity markets; fixed income underperformed both.

U.S. small-cap stocks outperformed U.S. large- and mid-cap stocks. Value stocks outpaced growth stocks in all categories. The return of the S&P 500^® Index, which is usually seen as a bellwether for financial markets in the United States, was positive at 15.66%. The international stock markets also had positive overall returns for the period, but significantly underperformed domestic stock markets. The MSCI EAFE^® Index (Gross) returned 2.68% for the period. In the fixed-income realm, the Barclays Capital U.S. Aggregate Bond Index returned 2.54%.

Economic challenges lingered across the globe. Concerns about the long-term ability of Greece, Spain, and Portugal to manage their significant sovereign debt began to worry investors toward the end of the six-month period when Greece’s debt rating was lowered to junk status by Standard and Poor’s. Portugal and Spain’s debt ratings were also lowered, but not to the same extent as Greece’s.

Government central banks around the world continued to discuss possible ways of stabilizing the struggling countries, and the International Monetary Fund promised, in April 2010, to increase the 45 billion euro aid package for Greece to as much as 120 billion euros over the next three years. The promise for aid came with austerity measures that would have to be implemented by Greece, and any other country that might receive aid.

Central banks also continued to use other tools to help the global financial system maintain sufficient liquidity, such as buying distressed debt from private banks and supporting housing markets by intervening in mortgage markets.

On April 28, 2010, the Federal Open Market Committee (FOMC) reported that economic activity continued to strengthen in the United States and that the labor market was beginning to improve, but tempered its comments by adding that high unemployment, modest income growth, lower housing wealth, and tight credit were still concerns. In light of stable inflation trends, the FOMC maintained the target range for the federal funds rate at 0% to 0.25%.

Gross Domestic Product (GDP) growth increased by approximately 3.0% for the first quarter of 2010, a bit down from the increase of 5.6% reported for the GDP growth rate in the fourth quarter of 2009. Private domestic demand was the main force behind the growth in the first quarter, and consumer spending rose at an annual rate of 3.6%. Also in the first quarter, business investments in equipment and software increased by 13.4%. The U.S. unemployment rate remained close to 10% for the entire six-month period.

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.



		15.66%		S&P 500^{^®} Index: measures U.S. large-cap stocks

		28.17%		Russell 2000^{^®} Index: measures U.S. small-cap stocks

		2.68%		MSCI EAFE^{^®} Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

		2.54%		Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market

		0.03%		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



		Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the portfolios. He has been the portfolio manager of the funds since 2008. From 2003, until his appointment, he held vice president level positions in product development, investment operations and audit at the firm. 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 MarketTrack Portfolios 5

Schwab MarketTrack All Equity Portfolio™

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 (the portfolio) returned 14.76% for the period while the All Equity Composite Index returned 13.01%. (For current allocations of the All Equity Composite Index, please refer to footnote 1 on the following page.) 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.

On a total return basis, equity securities were strong performers during the six-month period, with domestic stocks significantly outperforming international stocks. In terms of market capitalization, small-cap domestic stocks outperformed large-cap domestic stocks.

As of 4/30/10:

Statistics


Number of Holdings		4
Weighted Average Market Cap ($ x 1,000,000)		$55,345
Price/Earnings Ratio (P/E)		4.0
Price/Book Ratio (P/B)		2.3
Portfolio Turnover Rate¹		5%

Asset Class Weightings % of Investments


Large-Cap Stocks		45.1%
International Stocks		29.7%
Small-Cap Stocks		24.9%
Short-Term Investments		0.3%
Total		100.0%

Top Holdings % Net Assets²


Schwab S&P 500 Index Fund		45.0%
Schwab International Index Fund		29.7%
Schwab Small-Cap Index Fund		24.9%
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.

6 Schwab MarketTrack Portfolios

Schwab MarketTrack All Equity Portfolio^tm

Performance Summary as of 4/30/10

April 30, 2000 – April 30, 2010
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 Portfolio^tm (5/19/98)		14.76	%		40.69	%		3.74	%		1.14	%
All Equity Composite Index		13.01	%		39.17	%		3.73	%		1.07	%
S&P 500^® Index		15.66	%		38.84	%		2.63	%		-0.19	%
Fund Category: Morningstar Large-Cap Blend		14.82	%		37.81	%		2.67	%		0.75	%

Portfolio Expense Ratios³: Net 0.65%; Gross 0.69%

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 a custom blended index developed by CSIM 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 0.15%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. 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 4/30/10, 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™

The Schwab MarketTrack Growth Portfolio (the portfolio) returned 12.69% for the period while the Growth Composite Index returned 11.40%. (For current allocations of the Growth Composite Index, please refer to footnote 1 on the following page.) 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.

On a total return basis, equity securities were strong performers during the six-month period, with domestic stocks significantly outperforming international stocks, and fixed income underperforming both equity categories. In terms of market capitalization, small-cap domestic stocks outperformed large-cap domestic stocks.

The portfolio’s relative performance was primarily driven by its exposure to small-cap stocks in the Schwab Small-Cap Index Fund. Exposure to the Schwab International Index Fund detracted from performance, as international equities underperformed relative to domestic small- and large-cap equities. Additionally, the Schwab Total Bond Market Fund, which underperformed its comparative index by 35 basis points, was a relative detractor for the portfolio.

As of 4/30/10:

Statistics


Number of Holdings		6
Weighted Average Market Cap ($ x 1,000,000)		$56,460
Price/Earnings Ratio (P/E)		3.8
Price/Book Ratio (P/B)		2.3
Portfolio Turnover Rate¹		10%

Asset Class Weightings % of Investments


Large-Cap Stocks		40.2%
Small-Cap Stocks		20.1%
International Stocks		19.7%
Bonds		15.1%
Short-Term Investments		4.9%
Total		100.0%

Top Holdings % Net Assets²


Schwab S&P 500 Index Fund		40.2%
Schwab Small-Cap Index Fund		20.2%
Schwab International Index Fund		19.7%
Schwab Total Bond Market Fund		15.1%
Schwab Value Advantage Money Fund, Institutional Shares		3.6%
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.

8 Schwab MarketTrack Portfolios

Schwab MarketTrack Growth Portfolio^tm

Performance Summary as of 4/30/10

April 30, 2000 – April 30, 2010
Performance of a Hypothetical
$10,000 Investment in Investor Shares¹

April 6, 2006 – April 30, 2010
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)		12.69	%		33.47	%		3.80	%		2.02	%		6.15	%
P Shares (4/6/06)		12.75	%		33.66	%		n/a			n/a			0.76	%
Growth Composite Index		11.40	%		32.30	%		4.15	%		2.14	%		(11/20/95) 6.50%
														(4/6/06) 1.10%
S&P 500^® Index		15.66	%		38.84	%		2.63	%		-0.19	%		(11/20/95) 6.71%
														(4/6/06) -0.33%
Barclays Capital U.S. Aggregate Bond Index		2.54	%		8.30	%		5.38	%		6.43	%		(11/20/95) 6.18%
														(4/6/06) 6.41%
Fund Category: Morningstar Large-Cap Blend		14.82	%		37.81	%		2.67	%		0.75	%		(11/20/95) 6.44%
														(4/6/06) -0.71%

Portfolio Expense Ratios³: Investor Shares: Net 0.70%; Gross 0.72% / P Shares: Net 0.55%; Gross 0.58%

Style Assessment⁴


¹		The Growth Composite Index is a custom blended index developed by CSIM 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 0.20%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. 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 4/30/10, 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™

The Schwab MarketTrack Balanced Portfolio (the portfolio) returned 9.90% for the period while the Balanced Composite Index returned 9.15%. (For current allocations of the Balanced Composite Index, please refer to footnote 1 on the following page.) The portfolio focuses on both stock and bond investments, while remaining close to the target allocations of 60% stocks, 35% bonds and 5% cash.

As of 4/30/10:

Statistics


Number of Holdings		6
Weighted Average Market Cap ($ x 1,000,000)		$56,606
Price/Earnings Ratio (P/E)		4.0
Price/Book Ratio (P/B)		2.3
Portfolio Turnover Rate¹		12%

Asset Class Weightings % of Investments


Bonds		35.2%
Large-Cap Stocks		30.0%
International Stock		15.0%
Small-Cap Stock		14.9%
Short-Term Investments		4.9%
Total		100.0%

Top Holdings % Net Assets²


Schwab Total Bond Market Fund		35.1%
Schwab S&P 500 Index Fund		30.0%
Schwab International Index Fund		15.0%
Schwab Small-Cap Index Fund		14.9%
Schwab Value Advantage Money Fund, Institutional Shares		3.3%
Total		98.3%

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 Summary as of 4/30/10

April 30, 2000 – April 30, 2010
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 Portfolio^tm (11/20/95)		9.90	%		26.54	%		3.60	%		2.80	%
Balanced Composite Index		9.15	%		25.87	%		4.60	%		3.33	%
S&P 500^® Index		15.66	%		38.84	%		2.63	%		-0.19	%
Barclays Capital U.S. Aggregate Bond Index		2.54	%		8.30	%		5.38	%		6.43	%
Fund Category: Morningstar Moderate Allocation		10.45	%		29.29	%		3.71	%		3.18	%

Portfolio Expense Ratios³: Net 0.78%; Gross 0.80%


¹		The Balanced Composite Index is a custom blended index developed by CSIM 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 0.28%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. 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™

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 (the portfolio) returned 7.18% for the period while the Conservative Composite Index returned 6.90%. (For current allocations of the Conservative Composite Index, please refer to footnote 1 on the following page.) 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.

As of 4/30/10:

Statistics


Number of Holdings		6
Weighted Average Market Cap ($ x 1,000,000)		$56,474
Price/Earnings Ratio (P/E)		3.7
Price/Book Ratio (P/B)		2.3
Portfolio Turnover Rate¹		8%

Asset Class Weightings % of Investments


Bonds		55.6%
Large-Cap Stocks		20.1%
Small-Cap Stocks		10.0%
International Stocks		9.7%
Short-Term Investments		4.6%
Total		100.0%

Top Holdings % Net Assets²


Schwab Total Bond Market Fund		55.5%
Schwab S&P 500 Index Fund		20.0%
Schwab Small-Cap Index Fund		10.0%
Schwab International Index Fund		9.7%
Schwab Value Advantage Money Fund, Institutional Shares		3.9%
Total		99.1%

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 Summary as of 4/30/10

April 30, 2000 – April 30, 2010
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 Conservative Portfolio^tm (11/20/95)		7.18	%		19.73	%		3.32	%		3.48	%
Conservative Composite Index		6.90	%		19.66	%		4.94	%		4.41	%
S&P 500^® Index		15.66	%		38.84	%		2.63	%		-0.19	%
Barclays Capital U.S. Aggregate Bond Index		2.54	%		8.30	%		5.38	%		6.43	%
Fund Category: Morningstar Conservative Allocation		7.79	%		23.36	%		3.85	%		3.79	%

Portfolio Expense Ratios³: Net 0.87%; Gross 0.90%


¹		The Conservative Composite Index is a custom blended index developed by CSIM 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 0.37%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. 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, 2009 and held through April 30, 2010.

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 11/1/09		at 4/30/10		11/1/09–4/30/10



Schwab MarketTrack All Equity Portfolio^tm
Actual Return		0.51%	$	1,000	$	1,147.60	$	2.66
Hypothetical 5% Return		0.51%	$	1,000	$	1,022.27	$	2.56


Schwab MarketTrack Growth Portfolio^tm
Investor Shares
Actual Return		0.51%	$	1,000	$	1,126.90	$	2.69
Hypothetical 5% Return		0.51%	$	1,000	$	1,022.27	$	2.56
P Shares
Actual Return		0.36%	$	1,000	$	1,127.50	$	1.90
Hypothetical 5% Return		0.36%	$	1,000	$	1,023.01	$	1.81


Schwab MarketTrack Balanced Portfolio^tm
Actual Return		0.50%	$	1,000	$	1,099.00	$	2.60
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51


Schwab MarketTrack Conservative Portfolio^tm
Actual Return		0.50%	$	1,000	$	1,071.80	$	2.57
Hypothetical 5% Return		0.50%	$	1,000	$	1,022.32	$	2.51


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™

Financial Statements

Financial Highlights


	11/1/09–			11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–
	4/30/10*			10/31/09			10/31/08			10/31/07			10/31/06			10/31/05


Per-Share Data ($)

Net asset value at beginning of period		9.82			9.44			15.58			13.63			11.55			10.44

Income (loss) from investment operations:
Net investment income (loss)		0.14			0.30			0.20			0.21			0.11			0.12
Net realized and unrealized gains (losses)		1.30			0.83			(6.11	)		2.01			2.10			1.11

Total from investment operations		1.44			1.13			(5.91	)		2.22			2.21			1.23
Less distributions:
Distributions from net investment income		(0.14	)		(0.23	)		(0.22	)		(0.27	)		(0.13	)		(0.12	)
Distributions from net realized gains		—			(0.52	)		(0.01	)		—			—			—

Total distributions		(0.14	)		(0.75	)		(0.23	)		(0.27	)		(0.13	)		(0.12	)

Net asset value at end of period		11.12			9.82			9.44			15.58			13.63			11.55

Total return (%)		14.76	¹		13.54			(38.46	)		16.55			19.31			11.81

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses²		0.51	^3,4		0.50			0.50			0.50			0.50			0.50
Gross operating expenses²		0.54	³		0.67			0.73			0.72			0.74			0.75
Net investment income (loss)		2.73	³		3.46			1.46			1.24			0.89			1.07
Portfolio turnover rate		5	¹		10			10			0	⁵		8			49
Net assets, end of period ($ x 1,000,000)		506			461			429			682			527			463

* Unaudited.

¹ Not annualized.

² The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

³ Annualized.

⁴ The ratio of net operating expenses would have been 0.50% if certain non-routine expenses had not been incurred.

⁵ Less than 1%.

See financial notes 15

Schwab MarketTrack All Equity Portfolio

Portfolio Holdings as of April 30, 2010 (Unaudited)

This section shows all the securities in the fund’s portfolio and their values 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.schwabfunds.com/prospectus.

Cost

Value

Holdings by Category

($)

.6%

Other Investment Companies

469,923,114

503,827,526

.3%

Short-Term Investment

1,440,719

.9%

Total Investments

471,363,833

505,268,245

.1%

Other Assets and Liabilities, Net

519,892

100

.0%

Total Net Assets

505,788,137


	Number		Value
Security	of Shares		($)

Other Investment Companies 99.6% of net assets

Equity Funds 99.6%
Schwab International Index Fund (a)		9,231,886		150,295,103
Schwab S&P 500 Index Fund (a)		12,265,966		227,656,337
Schwab Small-Cap Index Fund (a)		6,451,875		125,876,086

Total Other Investment Companies
(Cost $469,923,114)				503,827,526



Security	Face Amount		Value
Rate, Maturity Date	($)		($)

Short-Term Investment 0.3% of net assets

Time Deposit 0.3%
Wells Fargo
0.03%, 05/03/10		1,440,719		1,440,719

Total Short-Term Investment
(Cost $1,440,719)				1,440,719



End of Investments.

At 04/30/10, the tax basis cost of the fund’s investments was $493,356,040 and the unrealized appreciation and depreciation were $12,191,913 and ($279,708), respectively, with a net unrealized appreciation of $11,912,205.


(a)		Issuer is affiliated with the fund’s adviser.

16 See financial notes

Schwab MarketTrack All Equity Portfolio

Statement of

Assets and Liabilities

As of April 30, 2010; unaudited.



Assets

Investments in affiliated underlying funds, at value (cost $469,923,114)		$503,827,526
Investments in unaffiliated issuers, at value (cost $1,440,719)	+	1,440,719

Total investments, at value (cost $471,363,833)		505,268,245
Receivables:
Fund shares sold		870,029
Interest		1
Prepaid expenses	+	6,375

Total assets		506,144,650

Liabilities

Payables:
Investment adviser and administrator fees		8,628
Shareholder services fees		23,744
Fund shares redeemed		278,943
Accrued expenses	+	45,198

Total liabilities		356,513

Net Assets

Total assets		506,144,650
Total liabilities	−	356,513

Net assets		$505,788,137

Net Assets by Source
Capital received from investors		540,904,696
Net investment income not yet distributed		660,323
Net realized capital losses		(69,681,294	)
Net unrealized capital gains		33,904,412

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$505,788,137

45,500,111

$11.12

See financial notes 17

Schwab MarketTrack All Equity Portfolio

Statement of

Operations

For November 1, 2009 through April 30, 2010; unaudited.



Investment Income

Dividends received from affiliated underlying funds		$7,826,702
Interest	+	211

Total investment income		7,826,913

Expenses

Investment adviser and administrator fees		555,411
Shareholder service fees		603,708
Shareholder reports		46,395
Professional fees		19,062
Transfer agent fees		16,129
Registration fees		13,367
Portfolio accounting fees		12,080
Custodian fees		6,064
Trustees’ fees		4,302
Interest expense		3
Other expenses	+	28,684

Total expenses		1,305,205
Expense reduction by adviser and Schwab	−	75,913

Net expenses	−	1,229,292

Net investment income		6,597,621

Realized and Unrealized Gains (Losses)

Net realized losses on sales of affiliated underlying funds		(7,576,238	)
Net realized gains on unaffiliated investments	+	133

Net realized losses		(7,576,105	)
Net unrealized gains on affiliated underlying funds	+	67,295,612

Net realized and unrealized gains		59,719,507

Increase in net assets resulting from operations		$66,317,128

18 See financial notes

Schwab MarketTrack All Equity Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods.
Figures for the current period are unaudited.



Operations


11/1/09-4/30/10				11/1/08-10/31/09
Net investment income		$6,597,621			$13,923,424
Net realized losses		(7,576,105	)		(28,943,419	)
Net unrealized gains	+	67,295,612			67,086,206

Increase in net assets from operations		66,317,128			52,066,211

Distributions to Shareholders

Distributions from net investment income		6,503,913			10,447,556
Distributions from net realized gains	+	—			23,861,871

Total distributions		$6,503,913			$34,309,427

Transactions in Fund Shares


		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		VALUE			SHARES		VALUE
Shares sold			2,872,234		$30,684,951			8,708,360		$74,118,956
Shares reinvested			582,150		6,141,683			3,933,902		32,336,678
Shares redeemed	+		(4,894,327	)	(51,805,576	)		(11,183,572	)	(92,388,572	)

Net transactions in fund shares			(1,439,943	)	($14,978,942	)		1,458,690		$14,067,062

Shares Outstanding and Net Assets

		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			46,940,054		$460,953,864			45,481,364		$429,130,018
Total increase or decrease	+		(1,439,943	)	44,834,273			1,458,690		31,823,846

End of period			45,500,111		$505,788,137			46,940,054		$460,953,864


Net investment income not yet distributed					$660,323					$566,615

See financial notes 19

Schwab MarketTrack Growth Portfolio™

Financial Statements

Financial Highlights


	11/1/09–			11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–
Investor Shares	4/30/10*			10/31/09			10/31/08			10/31/07			10/31/06			10/31/05


Per-Share Data ($)

Net asset value at beginning of period		14.51			13.71			21.09			19.16			16.81			15.57

Income (loss) from investment operations:
Net investment income (loss)		0.19			0.39			0.37			0.40			0.30			0.27
Net realized and unrealized gains (losses)		1.64			1.25			(6.94	)		2.16			2.33			1.20

Total from investment operations		1.83			1.64			(6.57	)		2.56			2.63			1.47
Less distributions:
Distributions from net investment income		(0.30	)		(0.40	)		(0.41	)		(0.46	)		(0.28	)		(0.23	)
Distributions from net realized gains		—			(0.44	)		(0.40	)		(0.17	)		—			—

Total distributions		(0.30	)		(0.84	)		(0.81	)		(0.63	)		(0.28	)		(0.23	)

Net asset value at end of period		16.04			14.51			13.71			21.09			19.16			16.81

Total return (%)		12.69	¹		12.95			(32.27	)		13.69			15.83			9.48

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses²		0.51	^3,4		0.50			0.50			0.50			0.50			0.50
Gross operating expenses²		0.53	³		0.66			0.71			0.70			0.71			0.72
Net investment income (loss)		2.54	³		3.03			1.99			1.94			1.74			1.58
Portfolio turnover rate		10	¹		23			10			4			7			33
Net assets, end of period ($ x 1,000,000)		558			507			454			686			602			657


	11/1/09–			11/1/08–			11/1/07–			11/1/06–			4/6/06⁵–
P Shares	4/30/10*			10/31/09			10/31/08			10/31/07			10/31/06


Per-Share Data ($)

Net asset value at beginning of period		14.51			13.72			21.10			19.18			18.32

Income (loss) from investment operations:
Net investment income (loss)		0.20			0.43			0.37			0.42			0.10
Net realized and unrealized gains (losses)		1.63			1.22			(6.91	)		2.16			0.76

Total from investment operations		1.83			1.65			(6.54	)		2.58			0.86
Less distributions:
Distributions from net investment income		(0.31	)		(0.42	)		(0.44	)		(0.49	)		—
Distributions from net realized gains		—			(0.44	)		(0.40	)		(0.17	)		—

Total distributions		(0.31	)		(0.86	)		(0.84	)		(0.66	)		—

Net asset value at end of period		16.03			14.51			13.72			21.10			19.18

Total return (%)		12.75	¹		13.09			(32.14	)		13.83			4.69	¹

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses²		0.36	^3,6		0.35			0.35			0.35			0.35	³
Gross operating expenses²		0.38	³		0.51			0.56			0.55			0.56	³
Net investment income (loss)		2.69	³		3.31			2.10			2.07			0.95	³
Portfolio turnover rate		10	¹		23			10			4			7	¹
Net assets, end of period ($ x 1,000,000)		88			84			94			138			119

* Unaudited.

¹ Not annualized.

² The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio.

³ Annualized.

⁴ The ratio of net operating expenses would have been 0.50% if certain non-routine expenses had not been incurred.

⁵ Commencement of operations.

⁶ The ratio of net operating expenses would have been 0.35% if certain non-routine expenses had not been incurred.

20 See financial notes

Schwab MarketTrack Growth Portfolio

Portfolio Holdings as of April 30, 2010 (Unaudited)

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

Cost

Value

Holdings by Category

($)

.7%

Other Investment Companies

529,271,784

638,456,611

.3%

Short-Term Investment

8,432,555

100

.0%

Total Investments

537,704,339

646,889,166

.0%

Other Assets and Liabilities, Net

(211,084

)

100

.0%

Total Net Assets

646,678,082


	Number		Value
Security	of Shares		($)

Other Investment Companies 98.7% of net assets

Equity Funds 80.0%
Schwab International Index Fund (a)		7,831,976		127,504,576
Schwab S&P 500 Index Fund (a)		14,002,877		259,893,405
Schwab Small-Cap Index Fund (a)		6,678,502		130,297,564

				517,695,545

Fixed-Income Funds 15.1%
Schwab Total Bond Market Fund (a)		10,766,487		97,759,702

Money Fund 3.6%
Schwab Value Advantage Money Fund,Institutional Shares (a)		23,001,364		23,001,364

Total Other Investment Companies
(Cost $529,271,784)				638,456,611



Security	Face Amount		Value
Rate, Maturity Date	($)		($)

Short-Term Investment 1.3% of net assets

Time Deposit 1.3%
Wells Fargo
0.03%, 05/03/10		8,432,555		8,432,555

Total Short-Term Investment
(Cost $8,432,555)				8,432,555



End of Investments.

At 04/30/10, the tax basis cost of the fund’s investments was $543,607,583 and the unrealized appreciation and depreciation were $105,541,362 and ($2,259,779), respectively, with a net unrealized appreciation of $103,281,583.


(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, 2010; unaudited.



Assets

Investments in affiliated underlying funds, at value (cost $529,271,784)		$638,456,611
Investments in unaffiliated issuers, at value (cost $8,432,555)	+	8,432,555

Total investments, at value (cost $537,704,339)		646,889,166
Receivables:
Fund shares sold		1,233,065
Dividends		284,797
Interest		7
Prepaid expenses	+	8,232

Total assets		648,415,267

Liabilities

Payables:
Investments bought		284,167
Investment adviser and administrator fees		11,697
Shareholder services fees		22,295
Fund shares redeemed		1,372,396
Accrued expenses	+	46,630

Total liabilities		1,737,185

Net Assets

Total assets		648,415,267
Total liabilities	−	1,737,185

Net assets		$646,678,082

Net Assets by Source
Capital received from investors		578,422,774
Net investment income not yet distributed		89,605
Net realized capital losses		(41,019,124	)
Net unrealized capital gains		109,184,827

Net Asset Value (NAV) by Shares Class


			Shares
Share Class	Net Assets	÷	Outstanding	=	NAV
Investor Shares	$558,293,644		34,813,785			$16.04
P Shares	$88,384,438		5,514,089			$16.03

22 See financial notes

Schwab MarketTrack Growth Portfolio

Statement of

Operations

For November 1, 2009 through April 30, 2010; unaudited.



Investment Income

Dividends received from unaffiliated underlying funds		$9,429,595
Interest	+	1,073

Total investment income		9,430,668

Expenses

Investment adviser and administrator fees		712,192
Shareholder service fees:
Investor Shares		664,297
P Shares		43,930
Shareholder reports		36,526
Transfer agent fees		21,109
Professional fees		19,691
Portfolio accounting fees		12,690
Registration fees		11,940
Custodian fees		7,278
Trustees’ fees		4,750
Other expenses	+	28,541

Total expenses		1,562,944
Expense reduction by adviser and Schwab	−	61,137

Net expenses	−	1,501,807

Net investment income		7,928,861

Realized and Unrealized Gains (Losses)

Net realized losses on sales of affiliated underlying funds		(2,712,089	)
Net realized gains on unaffiliated investments	+	9,862

Net realized losses		(2,702,227	)
Net unrealized gains on affiliated underlying funds	+	68,562,500

Net realized and unrealized gains		65,860,273

Increase in net assets resulting from operations		$73,789,134

See financial notes 23

Schwab MarketTrack Growth Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods.
Figures for the current period are unaudited.



Operations


11/1/09-4/30/10				11/1/08-10/31/09
Net investment income		$7,928,861			$16,063,334
Net realized losses		(2,702,227	)		(31,086,835	)
Net unrealized gains	+	68,562,500			78,311,394

Increase in net assets from operations		73,789,134			63,287,893

Distributions to Shareholders

Distributions from net investment income
Investor Shares		10,262,889			13,232,317
P Shares	+	1,818,947			2,791,634

Total distributions from net investment income		$12,081,836			$16,023,951


Distributions from net realized gains
Investor Shares		—			14,725,965
P Shares	+	—			2,923,653

Total distributions from net realized gains		$—			$17,649,618

Total distributions		$12,081,836			$33,673,569

Transactions in Fund Shares


		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		VALUE			SHARES		VALUE
Shares Sold
Investor Shares			2,957,947		$45,744,956			6,664,962		$86,067,902
P Shares			376,478		5,776,784			673,603		8,706,594

Total shares sold			3,334,425		$51,521,740			7,338,565		$94,774,496


Shares Reinvested
Investor Shares			642,346		$9,802,192			2,157,157		$26,856,610
P Shares	+		119,275		1,818,947			459,798		5,715,288

Total shares reinvested			761,621		$11,621,139			2,616,955		$32,571,898


Shares Redeemed
Investor Shares			(3,731,027	)	($57,546,768	)		(6,983,306	)	($86,229,576	)
P Shares	+		(745,713	)	(11,480,136	)		(2,239,609	)	(28,121,336	)

Total shares redeemed			(4,476,740	)	($69,026,904	)		(9,222,915	)	($114,350,912	)

Net transactions in fund shares			(380,694	)	($5,884,025	)		732,605		$12,995,482

Shares Outstanding and Net Assets

		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			40,708,568		$590,854,809			39,975,963		$548,245,003
Total increase or decrease	+		(380,694	)	55,823,273			732,605		42,609,806

End of period			40,327,874		$646,678,082			40,708,568		$590,854,809


Net investment income not yet distributed					$89,605					$4,242,580

24 See financial notes

Schwab MarketTrack Balanced Portfolio™

Financial Statements

Financial Highlights


	11/1/09–			11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–
	4/30/10*			10/31/09			10/31/08			10/31/07			10/31/06			10/31/05


Per-Share Data ($)

Net asset value at beginning of period		13.54			12.74			18.13			17.04			15.46			14.66

Income (loss) from investment operations:
Net investment income (loss)		0.18			0.38			0.42			0.47			0.38			0.34
Net realized and unrealized gains (losses)		1.15			1.11			(5.06	)		1.41			1.58			0.74

Total from investment operations		1.33			1.49			(4.64	)		1.88			1.96			1.08
Less distributions:
Distributions from net investment income		(0.31	)		(0.44	)		(0.48	)		(0.50	)		(0.34	)		(0.28	)
Distributions from net realized gains		—			(0.25	)		(0.27	)		(0.29	)		(0.04	)		—

Total distributions		(0.31	)		(0.69	)		(0.75	)		(0.79	)		(0.38	)		(0.28	)

Net asset value at end of period		14.56			13.54			12.74			18.13			17.04			15.46

Total return (%)		9.90	¹		12.41			(26.59	)		11.38			12.92			7.41

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		0.52	³		0.66			0.72			0.72			0.73			0.73
Net investment income (loss)		2.61	³		3.09			2.57			2.65			2.35			2.20
Portfolio turnover rate		12	¹		30			17			6			8			25
Net assets, end of period ($ x 1,000,000)		461			434			405			598			534			519

* Unaudited.

¹ Not annualized.

² The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

³ Annualized

See financial notes 25

Schwab MarketTrack Balanced Portfolio

Portfolio Holdings as of April 30, 2010 (Unaudited)

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

Cost

Value

Holdings by Category

($)

.4%

Other Investment Companies

381,586,314

453,635,916

.6%

Short-Term Investment

7,461,657

100

.0%

Total Investments

389,047,971

461,097,573

.0%

Other Assets and Liabilities, Net

224,514

100

.0%

Total Net Assets

461,322,087


	Number		Value
Security	of Shares		($)

Other Investment Companies 98.4% of net assets

Equity Funds 60.0%
Schwab International Index Fund (a)		4,255,390		69,277,747
Schwab S&P 500 Index Fund (a)		7,453,289		138,333,047
Schwab Small-Cap Index Fund (a)		3,532,458		68,918,264

				276,529,058

Fixed-Income Funds 35.1%
Schwab Total Bond Market Fund (a)		17,853,080		162,105,968

Money Fund 3.3%
Schwab Value Advantage Money Fund,Institutional Shares (a)		15,000,890		15,000,890

Total Other Investment Companies
(Cost $381,586,314)				453,635,916



Security	Face Amount		Value
Rate, Maturity Date	($)		($)

Short-Term Investment 1.6% of net assets

Time Deposit 1.6%
Wells Fargo
0.03%, 05/03/10		7,461,657		7,461,657

Total Short-Term Investment
(Cost $7,461,657)				7,461,657



End of Investments.

At 04/30/10, the tax basis cost of the fund’s investments was $397,488,290 and the unrealized appreciation and depreciation were $67,520,554 and ($3,911,271), respectively, with a net unrealized appreciation of $63,609,283.


(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, 2010; unaudited.



Assets

Investments in affiliated underlying funds, at value (cost $381,586,314)		$453,635,916
Investments in unaffiliated issuers, at value (cost $7,461,657)	+	7,461,657

Total investments, at value (cost $389,047,971)		461,097,573
Receivables:
Investments sold		500,000
Fund shares sold		564,691
Dividends		480,829
Interest		6
Prepaid expenses	+	6,133

Total assets		462,649,232

Liabilities

Payables:
Investments bought		481,015
Investment adviser and administrator fees		8,206
Shareholder services fees		18,805
Fund shares redeemed		786,965
Trustees’ fees		2,382
Accrued expenses	+	29,772

Total liabilities		1,327,145

Net Assets

Total assets		462,649,232
Total liabilities	−	1,327,145

Net assets		$461,322,087

Net Assets by Source
Capital received from investors		416,561,339
Net investment income not yet distributed		1,070,861
Net realized capital losses		(28,359,715	)
Net unrealized capital gains		72,049,602

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$461,322,087

31,689,809

$14.56

See financial notes 27

Schwab MarketTrack Balanced Portfolio

Statement of

Operations

For November 1, 2009 through April 30, 2010; unaudited.



Investment Income

Dividends received from affiliated underlying funds		$6,964,770
Interest	+	1,093

Total investment income		6,965,863

Expenses

Investment adviser and administrator fees		514,539
Shareholder service fees		559,281
Professional fees		18,981
Shareholder reports		18,867
Registration fees		11,523
Portfolio accounting fees		11,117
Transfer agent fees		10,115
Trustees’ fees		6,770
Custodian fees		6,193
Other expenses	+	14,920

Total expenses		1,172,306
Expense reduction by adviser and Schwab	−	43,441

Net expenses	−	1,128,865

Net investment income		5,836,998

Realized and Unrealized Gains (Losses)

Net realized gains on sales of affiliated underlying funds		73,506
Net realized gains on unaffiliated investments	+	6,283

Net realized gains		79,789
Net unrealized gains on affiliated underlying funds	+	36,540,588

Net realized and unrealized gains		36,620,377

Increase in net assets resulting from operations		$42,457,375

28 See financial notes

Schwab MarketTrack Balanced Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods.
Figures for the current period are unaudited.



Operations


11/1/09-4/30/10			11/1/08-10/31/09
Net investment income		$5,836,998		$12,157,550
Net realized gains (losses)		79,789		(24,139,690	)
Net unrealized gains	+	36,540,588		57,965,744

Increase in net assets from operations		42,457,375		45,983,604

Distributions to Shareholders

Distributions from net investment income		$9,784,254		$14,076,018
Distributions from net realized gains	+	—		7,743,717

Total distributions		$9,784,254		$21,819,735

Transactions in Fund Shares


		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		VALUE			SHARES		VALUE
Shares sold			3,174,560		$44,772,667			5,527,528		$67,634,861
Shares reinvested			663,279		9,246,104			1,742,428		20,734,893
Shares redeemed	+		(4,170,975	)	(58,899,089	)		(7,035,012	)	(84,003,348	)

Net transactions in fund shares			(333,136	)	($4,880,318	)		234,944		$4,366,406

Shares Outstanding and Net Assets

		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			32,022,945		$433,529,284			31,788,001		$404,999,009
Total increase or decrease	+		(333,136	)	27,792,803			234,944		28,530,275

End of period			31,689,809		$461,322,087			32,022,945		$433,529,284


Net investment income not yet distributed					$1,070,861					$5,018,117

See financial notes 29

Schwab MarketTrack Conservative Portfolio™

Financial Statements

Financial Highlights


	11/1/09–			11/1/08–			3/28/08–			11/1/06–			11/1/05–			11/1/04–
	4/30/10*			10/31/09			10/31/08			10/31/07			10/31/06			10/31/05


Per-Share Data ($)

Net asset value at beginning of period		12.15			11.34			14.90			14.33			13.42			13.09

Income (loss) from investment operations:
Net investment income (loss)		0.17			0.37			0.43			0.49			0.42			0.36
Net realized and unrealized gains (losses)		0.70			0.91			(3.40	)		0.78			1.92			0.32

Total from investment operations		0.87			1.28			(2.97	)		1.27			1.34			0.68
Less distributions:
Distributions from net investment income		(0.17	)		(0.38	)		(0.46	)		(0.51	)		(0.42	)		(0.35	)
Distributions from net realized gains		—			(0.09	)		(0.13	)		(0.19	)		(0.01	)		—

Total distributions		(0.17	)		(0.47	)		(0.59	)		(0.70	)		(0.43	)		(0.35	)

Net asset value at end of period		12.85			12.15			11.34			14.90			14.33			13.42

Total return (%)		7.18	¹		11.72			(20.59	)		9.12			10.13			5.24

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		0.56	³		0.68			0.74			0.73			0.74			0.75
Net investment income (loss)		2.70	³		3.31			3.12			3.37			3.12			2.67
Portfolio turnover rate		8	¹		25			16			4			11			9
Net assets, end of period ($ x 1,000,000)		189			181			182			252			232			300

* Unaudited.

¹ Not annualized.

² The expenses incurred by underlying funds in which the fund invests are not included in this ratio.

³ Annualized.

30 See financial notes

Schwab MarketTrack Conservative Portfolio

Portfolio Holdings as of April 30, 2010 (Unaudited)

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

Cost

Value

Holdings by Category

($)

.1%

Other Investment Companies

164,180,637

187,092,680

.7%

Short-Term Investment

1,294,321

.8%

Total Investments

165,474,958

188,387,001

.2%

Other Assets and Liabilities, Net

283,093

100

.0%

Total Net Assets

188,670,094


	Number		Value
Security	of Shares		($)

Other Investment Companies 99.1% of net assets

Equity Funds 39.7%
Schwab International Index Fund (a)		1,123,740		18,294,483
Schwab S&P 500 Index Fund (a)		2,035,091		37,771,280
Schwab Small-Cap Index Fund (a)		969,117		18,907,474

				74,973,237

Fixed-Income Funds 55.5%
Schwab Total Bond Market Fund (a)		11,541,303		104,795,031

Money Fund 3.9%
Schwab Value Advantage Money Fund, Institutional Shares (a)		7,324,412		7,324,412

Total Other Investment Companies
(Cost $164,180,637)				187,092,680



Security	Face Amount		Value
Rate, Maturity Date	($)		($)

Short-Term Investment 0.7% of net assets

Time Deposit 0.7%
Wells Fargo
0.03%, 05/03/10		1,294,321		1,294,321

Total Short-Term Investment
(Cost $1,294,321)				1,294,321



End of Investments.

At 4/30/10 the tax basis cost of the fund’s investments was $173,163,276 and the unrealized appreciation and depreciation were $18,028,477 and ($2,804752), respectively, with a net unrealized appreciation of $15,223,725.


(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, 2010; unaudited.



Assets

Investments in affiliated underlying funds, at value (cost $164,180,637)		$187,092,680
Investments in unaffiliated issuers, at value (cost $1,294,321)	+	1,294,321

Total investments, at value (cost $165,474,958)		188,387,001
Receivables:
Investments sold		200,000
Dividends		308,848
Fund shares sold		157,513
Interest		1
Prepaid expenses	+	3,024

Total assets		189,056,387

Liabilities

Payables:
Investments bought		309,192
Investment adviser and administrator fees		2,912
Shareholder services fees		8,725
Fund shares redeemed		32,500
Accrued expenses	+	32,964

Total liabilities		386,293

Net Assets

Total assets		189,056,387
Total liabilities	−	386,293

Net assets		$188,670,094

Net Assets by Source
Capital received from investors		186,664,173
Net investment income not yet distributed		229,126
Net realized capital losses		(21,135,248	)
Net unrealized capital gains		22,912,043

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$188,670,094

14,679,910

$12.85

32 See financial notes

Schwab MarketTrack Conservative Portfolio

Statement of

Operations

For November 1, 2009 through April 30, 2010; unaudited.



Investment Income

Dividends received from affiliated underlying funds		$2,948,462
Interest	+	230

Total investment income		2,948,692

Expenses

Investment adviser and administrator fees		211,757
Shareholder service fees		230,170
Professional fees		18,542
Transfer agent fees		13,107
Registration fees		11,436
Portfolio accounting fees		8,695
Shareholder reports		7,525
Custodian fees		3,756
Trustees’ fees		3,141
Other expenses	+	9,544

Total expenses		517,673
Expense reduction by adviser and Schwab	−	52,769

Net expenses	−	464,904

Net investment income		2,483,788

Realized and Unrealized Gains (Losses)

Net realized gains on sales of affiliated underlying funds		512,720
Net realized gains on unaffiliated investments	+	1,182

Net realized gains		513,902
Net unrealized gains on affiliated underlying funds	+	9,904,309

Net realized and unrealized gains		10,418,211

Increase in net assets resulting from operations		$12,901,999

See financial notes 33

Schwab MarketTrack Conservative Portfolio

Statements of

Changes in Net Assets

For the current and prior report periods.
Figures for the current period are unaudited.



Operations


11/1/09-4/30/10			11/1/08-10/31/09
Net investment income		$2,483,788		$7,989,293
Net realized gains (losses)		513,902		(19,678,353	)
Net unrealized gains	+	9,904,309		37,078,717

Increase in net assets from operations		12,901,999		25,389,657

Distributions to Shareholders¹

Distributions from net investment income
Investor Shares		2,484,200		5,882,453
P Shares	+	—		2,530,771

Total distributions from net investment income		$2,484,200		$8,413,224


Distributions from net realized gains
Investor Shares		—		1,450,219
P Shares	+	—		713,644

Total distributions from net realized gains		$—		$2,163,863

Total distributions		$2,484,200		$10,577,087

Transactions in Fund Shares¹


		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		VALUE			SHARES		VALUE
Shares Sold
Investor Shares			1,341,540		$16,855,221			3,062,687		$34,493,000
P Shares			—		—			860,699		9,543,340

Total shares sold			1,341,540		$16,855,221			3,923,386		$44,036,340


Shares Reinvested
Investor Shares			185,668		$2,322,358			611,891		$6,892,611
P Shares	+		—		—			294,579		3,244,416

Total shares reinvested			185,668		$2,322,358			906,470		$10,137,027


Shares Redeemed
Investor Shares			(1,718,368	)	($21,602,949	)		(4,893,066	)	($53,978,206	)
P Shares	+		—		—			(8,763,549	)	(102,700,469	)

Total shares redeemed			(1,718,368	)	($21,602,949	)		(13,656,615	)	($156,678,675	)

Net transactions in fund shares			(191,160	)	($2,425,370	)		(8,826,759	)	($102,505,308	)

Shares Outstanding and Net Assets

		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			14,871,070		$180,677,665			23,697,829		$268,370,403
Total increase or decrease	+		(191,160	)	7,992,429			(8,826,759	)	(87,692,738	)

End of period			14,679,910		$188,670,094			14,871,070		$180,677,665


Net investment income not yet distributed					$229,126					$229,538


¹		Effective August 4, 2009, all outstanding P shares were redeemed. The Board of Trustees voted that effective December 10, 2009 the fund would no longer offer P shares.

34 See financial notes

Schwab MarketTrack Portfolios

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 MarketTrack All Equity Portfolio Schwab MarketTrack Growth Portfolio Schwab MarketTrack Balanced Portfolio Schwab MarketTrack Conservative Portfolio Schwab S&P 500 Index Fund Schwab Small-Cap Index Fund Schwab Total Stock Market Index Fund Schwab International Index 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 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 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 funds may purchase individual securities to achieve their investment objectives. Each fund bears its share of the allocable expenses of the underlying funds in which they invest. Such expenses are reflected in the net asset value.

Schwab MarketTrack Growth Portfolio offers two share classes: Investor Shares and P Shares. Shares of each class represent an interest in the same portfolio, but each class has different expenses and investment minimums. The Board of Trustees voted that effective December 10, 2009, Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio, each offer one share class: Investor Class. Prior to December 10, 2009, Schwab MarketTrack Conservative Portfolio also offered P shares.

Shares are bought and sold (subject to a redemption fee, see Note 8) at closing net asset value(“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:

The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the Securities Exchange Commission (“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 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.

Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):


	•	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, the 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.

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

	•	Underlying funds: valued at their respective net asset values as determined by the underlying 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.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements).

The funds adopted the authoritative guidance under GAAP on 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. Accordingly, if the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.

The guidance establishes three levels of the fair value hierarchy as follows:


	•	Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted prices.

	•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

	•	Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments). — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.

Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of April 30, 2010:

Schwab MarketTrack All Equity Portfolio


	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total*

Other Investment Companies(a)		$503,827,526		$—		$—		$503,827,526
Short-Term Investment(a)		—		1,440,719		—		1,440,719

Total		$503,827,526		$1,440,719		$—		$505,268,245

Schwab MarketTrack Growth Portfolio


	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total*

Other Investment Companies(a)		$638,456,611		$—		$—		$638,456,611
Short-Term Investments		—		8,432,555		—		8,432,555

Total		$638,456,611		$8,432,555		$—		$646,889,166

Schwab MarketTrack Balanced Portfolio


	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total*

Other Investment Companies(a)		$453,635,916		$—		$—		$453,635,916
Short-Term Investments(a)		—		7,461,657		—		7,461,657

Total		$453,635,916		$7,461,657		$—		$461,097,573

Schwab MarketTrack Conservative Portfolio


	Quoted Prices in				Significant
	Active Markets for		Significant Other		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total*

Other Investment Companies(a)		$187,092,680		$—		$—		$187,092,680
Short-Term Investment(a)		—		1,294,321		—		1,294,321

Total		$187,092,680		$1,294,321		$—		$188,387,001


*		The fund had no Other Financial Instruments.
(a)		As categorized in Portfolio Holdings.

(b) Portfolio Investments:

Derivatives: The funds may invest in futures contracts to reduce the effects of uninvested cash on performance or for other reasons. Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date.

Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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 until the contract is closed, at which time the gains and losses are realized. 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 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 are charged directly to that fund. 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, net investment income, other than class specific expenses, and 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, if any, once a year, except for the Schwab MarketTrack Conservative Portfolio, which makes distributions from net investment income quarterly.

(g) Accounting Estimates:

The accounting policies described in this report conform to 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.

(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 except for the Schwab MarketTrack Conservative Portfolio, which typically makes distributions at the end of every calendar quarter. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

Schwab MarketTrack Portfolios

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(i) Indemnification:

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.

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. Any of these risks could cause an investor to lose money.

Asset Allocation Risk. The funds are subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of a fund’s assets among the various asset classes and market segments will cause the fund to underperform other funds with a similar investment objective.

Market Risk. Stock markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.

Underlying Fund Investment Risk. The value of your investment in the funds is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although a fund’s exposure to a particular risk will be proportionate to the fund’s overall asset allocation and underlying fund allocation.


	•	*Investment Risk.* An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective.

	•	*Investment Style Risk.* The underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Each underlying fund follows these stocks during upturns as well as downturns. Because of their indexing strategy, the underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying fund’s expenses, the underlying fund’s performance is normally below that of the index.

	•	*Equity Risk.* The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, the equity market tends to move in cycles, which may cause stock prices to fall over short or extended periods of time.

	•	*Tracking Error Risk.* As an index fund, each underlying fund seeks to track the performance of its benchmark indices, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.

	•	*Large-Cap Risk.* Many of the risks of the underlying funds are associated with its investment in the large-cap segments of the stock market. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments — bonds or mid- or smallcap stocks, for instance — an underlying fund’s large-cap holdings could reduce performance.

	•	*Small-Cap Risk.* Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies 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 — an underlying fund’s small-cap holdings could reduce performance.

	•	*Foreign Investment Risk.* An underlying fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in

Schwab MarketTrack Portfolios

Financial Notes (continued)

3. Risk factors (continued):


		foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets.


	•	*Currency Risk.* As a result of an underlying fund’s investments in securities denominated in, and/or receiving revenues in, foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in a fund would be adversely affected.

	•	*Derivatives Risk.* An underlying fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested.

	•	*Debt Securities Risk.* Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by a fund 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.

	•	*Liquidity Risk.* A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price.

	•	*Securities Lending Risk.* Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.

Direct Investment Risk. A fund may invest directly in individual securities to maintain its allocations. A fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same security.

4. Affiliates and Affiliated Transactions:

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, CSIM is entitled to receive an annual fee of 0.23% payable monthly based on each fund’s average daily net assets.

The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.

Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee of up to 0.10% for the Schwab MarketTrack Growth Portfolio’s P Shares and 0.25% for the remaining funds. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.

Schwab MarketTrack Portfolios

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

expenses for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the funds’ Board of Trustees. The expense limitation as a percentage of average daily net assets is as follows:

Schwab

MarketTrack

All Equity

Growth

Balanced

Conservative

Portfolio

Investor Shares

0.50%

P Shares*

n/a

0.35%

n/a

The agreement to limit the funds’ total expenses charged is limited to each fund’s direct operating expenses and, therefore, does not apply to fees and expenses of underlying funds, which are indirect expenses incurred by a fund through its investments in the underlying funds.


*		P Shares are currently only offered by Schwab MarketTrack Growth 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, 2010, the percentages of shares of other related funds owned by each Schwab MarketTrack Portfolio are:


	Schwab		Schwab		Schwab		Schwab
	MarketTrack		MarketTrack		MarketTrack		MarketTrack
	All Equity		Growth		Balanced		Conservative
	Portfolio		Portfolio		Portfolio		Portfolio

Equity Funds:
Schwab International Index Fund		10.5%		8.9%		4.8%		1.3%
Schwab S&P 500 Index Fund		2.3%		2.6%		1.4%		0.4%
Schwab Small-Cap Index Fund		8.7%		9.0%		4.7%		1.3%
Fixed-Income Funds:
Schwab Total Bond Market Fund		—%		10.2%		17.0%		11.0%
Money Funds:
Schwab Value Advantage Money Fund		—%		0.1%		0.1%		0.0%	*


*		Less than 0.05%

Below is a summary of the funds’ transactions with their affiliated underlying funds during the period ended April 30, 2010:

Schwab MarketTrack All Equity Portfolio


												Realized			Distribution
	Balance of							Balance		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			of Shares Held at		Value at		11/01/2009			11/01/2009
Underlying Fund	at 10/31/09		Additions		Sales			04/30/2010		04/30/2010		to 04/30/2010			to 04/30/2010

Schwab Equity Index Funds:
Schwab International Index Fund		8,562,505		997,724		(328,343	)		9,231,886		$150,295,103		$(547,681	)		$3,702,411
Schwab S&P 500 Index Fund		12,790,339		277,567		(801,940	)		12,265,966		227,656,337		(4,015,049	)		3,028,785
Schwab Small-Cap Index Fund		7,488,666		115,500		(1,152,291	)		6,451,875		125,876,086		(3,013,508	)		1,095,506

Total											$503,827,526		$(7,576,238	)		$7,826,702

Schwab MarketTrack Portfolios

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Schwab MarketTrack Growth Portfolio


												Realized			Distribution
	Balance of							Balance of		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2009			11/01/2009
Underlying Fund	at 10/31/09		Additions		Sales			at 04/30/2010		04/30/2010		to 04/30/2010			to 04/30/2010

Schwab Equity Index Funds:
Schwab International Index Fund		7,252,275		860,235		(280,534	)		7,831,976		$127,504,576		$(45,689	)		$3,171,513
Schwab S&P 500 Index Fund		14,588,652		366,185		(951,960	)		14,002,877		259,893,405		(1,670,546	)		3,491,923
Schwab Small-Cap Index Fund		7,630,640		281,081		(1,233,219	)		6,678,502		130,297,564		(553,160	)		1,141,835
Schwab Bond Funds:
Schwab Total Bond Market Fund		10,103,612		1,266,390		(603,515	)		10,766,487		97,759,702		(442,694	)		1,613,674
Schwab Money Funds:
Schwab Value Advantage Money Fund, Institutional Shares		23,260,416		23,010,215		(23,269,267	)		23,001,364		23,001,364		—			10,650

Total											$638,456,611		$(2,712,089	)		$9,429,595

Schwab MarketTrack Balanced Portfolio


												Realized			Distribution
	Balance of							Balance of		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2009			11/01/2009
Underlying Fund	at 10/31/09		Additions		Sales			at 04/30/2010		04/30/2010		to 04/30/2010			to 04/30/2010

Schwab Equity Index Funds:
Schwab International Index Fund		3,947,359		634,013		(325,982	)		4,255,390		$69,277,747		$237,134			$1,721,029
Schwab S&P 500 Index Fund		7,893,746		406,091		(846,548	)		7,453,289		138,333,047		(974,919	)		1,890,987
Schwab Small-Cap Index Fund		4,244,673		148,428		(860,643	)		3,532,458		68,918,264		1,841,581			612,165
Schwab Bond Funds:
Schwab Total Bond Market Fund		17,171,458		2,176,269		(1,494,647	)		17,853,080		162,105,968		(1,030,290	)		2,733,798
Schwab Money Funds:
Schwab Value Advantage Money Fund		14,732,411		15,006,539		(14,738,060	)		15,000,890		15,000,890		—			6,791

Total											$453,635,916		73,506			6,964,770

Schwab MarketTrack Portfolios

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Schwab MarketTrack Conservative Portfolio


												Realized			Distribution
	Balance of							Balance of		Market		Gain (Loss)			Received*
	Shares Held		Gross		Gross			Shares Held		Value at		11/01/2009			11/01/2009
Underlying Fund	at 10/31/09		Additions		Sales			at 04/30/2010		04/30/2010		to 04/30/2010			to 04/30/2010

Schwab Equity Index Funds:
Schwab International Index Fund		1,099,466		152,119		(127,845	)		1,123,740		$18,294,483		$141,425			$479,587
Schwab S&P 500 Index Fund		2,190,907		116,637		(272,453	)		2,035,091		37,771,280		161,545			525,274
Schwab Small-Cap Index Fund		1,166,848		60,459		(258,190	)		969,117		18,907,474		741,235			168,278
Schwab Bond Funds:
Schwab Total Bond Market Fund		11,171,182		1,044,054		(673,933	)		11,541,303		104,795,031		(531,485	)		1,772,108
Schwab Money Funds:
Schwab Value Advantage Money Fund, Institutional Shares		7,721,069		3,343		(400,000	)		7,324,412		7,324,412		—			3,215

Total											$187,092,680		$512,720			$2,948,462


*		Distributions received include distributions from net investment income and from capital gains from the underlying funds.

As of April 30, 2010, the shares owned by Schwab Charitable Giving Trust (an affiliate of Schwab) as a percentage of the total shares of the Schwab MarketTrack Growth Portfolio is 13.7%.

The funds may engage in 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. For the period ended April 30, 2010, there were no such 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 with other 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. The funds had no interfund borrowing or lending activity 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 Bank and Trust Company, 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. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.

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

Schwab MarketTrack Portfolios

Financial Notes (continued)

7. Purchases and Sales of Investment Securities:

For the period ended April 30, 2010, purchases and sales of securities (excluding short-term obligations) were as follows:


	Purchases		Sales/Maturities
	of Securities		of Securities

Schwab MarketTrack All Equity Portfolio		$22,826,702		$39,550,000
Schwab MarketTrack Growth Portfolio		59,076,174		72,019,267
Schwab MarketTrack Balanced Portfolio		54,108,996		64,008,060
Schwab MarketTrack Conservative Portfolio		14,795,536		18,040,000

8. Redemption Fee:

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 periods are:


	Current Period		Prior Period
	(11/01/09-04/30/10)		(11/01/08-10/31/09)

Schwab MarketTrack All Equity Portfolio		$6,241		$17,889
Schwab MarketTrack Growth Portfolio		3,785		19,356
Schwab MarketTrack Balance Portfolio		2,495		7,512
Schwab MarketTrack Conservative Portfolio		2,083		7,195

9. Federal Income Taxes:

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2009, the following funds had capital loss carry forwards available to offset future net capital gains before the expiration dates:


	Schwab		Schwab		Schwab		Schwab
	MarketTrack		MarketTrack		MarketTrack		MarketTrack
	All Equity		Growth		Balanced		Conservative
Expiration Date	Portfolio*		Portfolio		Portfolio		Portfolio

December 31, 2016		$12,514,459		—		—		—
October 31, 2017		—		$34,089,594		$21,312,015		$14,303,826
December 31, 2017		$31,279,738		—		—		—

Total		$43,794,197		$34,089,594		$21,312,015		$14,303,826

For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following year. As of December 31, 2009, the Schwab MarketTrack All Equity Portfolio had deferred realized capital losses of $2,538,506 and did not utilize any capital losses to offset capital gains.


*		Tax information for Schwab MarketTrack All Equity Portfolio is as of December 31, 2009.

10. Subsequent Events:

Management has determined there are no subsequent events or transactions that would have materially impacted the financial statements as presented.

Results of Proxy Voting:

At a special meeting of shareholders of the trust held on December 14, 2009, shareholders approved the following proposal: to elect nine trustees to serve on the Board of Trustees of the trust. The individuals listed in the table below were elected as trustees for each fund. All trustees served as trustees of the trust prior to the special meeting.


	For		Withheld		% For
	(shares)		(shares)

Charles R. Schwab		1,402,634,526.75		105,696,405.10		92.99	%
Walter W. Bettinger, II		1,458,729,719.36		49,601,212.49		96.71	%
Mariann Byerwalter		1,455,075,604.88		53,255,326.97		96.47	%
John F. Cogan		1,458,904,762.09		49,426,169.76		96.72	%
William A. Hasler		1,449,460,489.61		58,970,442.24		96.10	%
Gerald B. Smith		1,455,433,324.25		52,897,607.60		96.49	%
Donald R. Stephens		1,457,006,880.73		51,324,051.12		96.60	%
Joseph H. Wender		1,453,198,913.40		55,132,018.45		96.34	%
Michael W. Wilsey		1,454,741,033.96		53,589,897.89		96.45	%

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, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 85 funds.

The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. 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.	77	Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009) Director, Excelsior Funds (2006 – 2007)


John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present).	77	Director, Gilead Sciences, Inc. (2005 – present) Director, Monaco Coach Corporation (2005 – 2009)


William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present).	77	Director, Ditech Networks Corporation (1997 – present) Director, TOUSA (1998 – present) Director, Mission West Properties (1998 – present) Director, Globalstar, Inc. (2009 – present) Director, Harris-Stratex Networks (2001 – present) Director, Aphton Corp. (1991 – 2007) Director, Solectron Corporation (1998 – 2007) Director, Genitope Corporation (2000 – 2009) Director, Excelsior Funds (2006 – 2007)


Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present).	77	Lead Independent Director, Board of Cooper Industries (2002 – present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present) Director, Oneok, Inc (2009 – present)


Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1993.)	Managing Partner, D.R. Stephens & Company (investments) (1973 – present).	77	None

Independent Trustees (continued)


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

Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008-present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005).	77	Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)


Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1993.)	Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).	77	None

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. Schwab²1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1993.)	Founded Charles Schwab & Co., Inc. in 1971 and became Chairman in 1978. Since 1986, Chairman and Director, The Charles Schwab Corporation. Since 1989, Director, Charles Schwab Investment Management, Inc., and appointed as Chairman in 1991. Since 1996, Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. Since 1999, Director and Chief Executive Officer, Schwab Holdings, Inc. Since 2003, Chairman, Charles Schwab Bank, N. A.; 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, and the Charles Schwab & Co., Inc.	77	None


Walter W. Bettinger II²1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc., principal underwriter to the Funds, and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	85	None

Officers of the Trust


Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served³)		Principal Occupations During the Past Five Years

Randall W. Merk 1954 President and Chief Executive Officer (Since 2007.)		Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc. (August 2004 – present); Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); Director, President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (August 2007 – present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC (Sept. 2002 – present); President and Chief Executive Officer, Schwab Strategic Trust (Oct. 2009 – present); Trustee (June 2006 – Dec. 2009), President and Chief Executive Officer (July 2007 – March 2008; effective July 2, 2010), Laudus Trust and Laudus Institutional Trust; President and Chief Executive Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust (June 2006 – June 2007).


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. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Trust and Laudus Institutional Trust (2006 – present); Treasurer and Principal Financial Officer, Schwab Strategic Trust (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (Sept. 2002 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007).


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. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Secretary and Chief Legal Officer, Schwab Strategic Trust (Oct. 2009 – present); Vice President and Assistant Clerk, Laudus Trust and Laudus Institutional Trust (Feb. 2010 – present); Secretary and Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007); Chief Legal Officer, Laudus Trust and Laudus Institutional Trust (Aug. 2006 – Dec. 2006).


Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)		Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (March 2007 – present) of Laudus Trust and Laudus Institutional Trust. Since 2009, Vice President of Schwab Strategic Trust (Oct. 2009 – present).


Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)		Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Trust, Laudus Institutional Trust; Vice President, Schwab Strategic Trust (Oct. 2009 – present).


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, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. 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.

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.

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.schwabfunds.com/prospectus, 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.schwabfunds.com/prospectus 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 Hedged 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 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^® 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 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.

211 Main Street, San Francisco, CA 94105

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.

Member SIPC^®

Printed on recycled paper.

MFR13559-13

Semiannual report dated April 30, 2010 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, 2010

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 Fund™		6

Fund Expenses		8

Financial Statements		9

Financial Notes		14

Results of Proxy Voting		21

Trustees and Officers		22

Glossary		25

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

Performance at a Glance


Total Return for the Report Period


Schwab Balanced Fund^tm (Ticker Symbol: SWOBX)			10.96%

Balanced Blended Index			10.36%
Fund Category: Morningstar Moderate Allocation			10.45%

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 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 Balanced Blended Index is a custom blended index developed by CSIM composed of 60% S&P 500^® Index and 40% Barclays Capital U.S. Aggregate Bond Index.


¹	Please see prospectus for further details 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.

Dear Shareholder,

For information on the performance of the Schwab Balanced Fund, please see the fund manager’s discussion and analysis on the following pages.

Thank you for investing with us.

Sincerely,

Schwab Balanced Fund 3

The Investment Environment

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.



		15.66%		S&P 500^{^®} Index: measures U.S. large-cap stocks

		28.17%		Russell 2000^{^®} Index: measures U.S. small-cap stocks

		2.68%		MSCI EAFE^{^®} Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East

		2.54%		Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market

		0.03%		Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations

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



		Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the fund. He has been the portfolio manager of the funds since 2008. From 2003, until his appointment, he held vice president level positions in product development, investment operations and audit at the firm. 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™

Schwab Balanced Fund returned 10.96% for the period, while its comparative index, the Balanced Blended Index, returned 10.36%.

On a total return basis, equity securities were strong performers during the six-month period, with domestic stocks significantly outperforming fixed income. In terms of market capitalization, small-cap domestic stocks outperformed large-cap.

Looking at the Fund’s equity component, which makes up over 63% of the portfolio, the Laudus Small-Cap MarketMasters Fund and the Schwab Core Equity Fund produced strong total-return gains. While both holdings underperformed their respective comparative indices, their allocation and overall exposure to U.S. equities, especially to small-cap stocks, aided the fund’s performance relative to its blended comparative index. Within the fund’s fixed-income component, the Schwab Total Bond Market Fund, which underperformed its comparative index by 35 basis points, was a relative detractor for the fund.

As of 4/30/10:

Statistics


Number of Holdings		4
Weighted Average Market Cap ($ x 1,000,000)		$55,112
Price/Earnings Ratio (P/E)		53.8
Price/Book Ratio (P/B)		2.1
Portfolio Turnover Rate¹		3%

Asset Class Weightings % of Investments


Equity Funds - Domestic		63.1%
Fixed - Income Funds		36.4%
Short-Term Investments		0.5%
Total		100.0%

Top Holdings % of Net Assets²


Schwab Core Equity Fund		49.3%
Schwab Total Bond Market Fund		36.4%
Laudus Small-Cap MarketMasters Fund, Select Shares		13.8%
State Street Institutional Liquid Reserves Fund - Institutional Class		0.5%
Total		100.0%

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.

Laudus MarketMasters Funds are part of 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.

6 Schwab Balanced Fund

Schwab Balanced Fund^tm

Performance Summary as of 4/30/10

April 30, 2000 – April 30, 2010
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 Balanced Fund^tm (11/18/96)		10.96	%		24.97	%		3.05	%		2.47	%
Balanced Blended Index*		10.36	%		25.97	%		4.04	%		2.75	%
S&P 500^® Index		15.66	%		38.84	%		2.63	%		-0.19	%
Barclays Capital U.S. Aggregate Bond Index		2.54	%		8.30	%		5.38	%		6.43	%
Fund Category: Morningstar Moderate Allocation		10.45	%		29.29	%		3.71	%		3.18	%

Fund Expense Ratios³: Net 0.75%; Gross 0.91%

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.


*		The Balanced Blended Index is a custom blended index developed by CSIM composed of 60% S&P 500^® Index and 40% Barclays Capital U.S. Aggregate Bond Index.
¹		Fund expenses 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 expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.75%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. 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


					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio¹		Account Value		(Net of Expenses)		During Period²
	(Annualized)		at 11/1/09		at 4/30/10		11/1/09–4/30/10



Schwab Balanced Fund^tm
Actual Return		0.01	$	1,000	$	1,109.60	$	0.05
Hypothetical 5% Return		0.01	$	1,000	$	1,024.74	$	0.05


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™

Financial Statements

Financial Highlights


	11/1/09–			11/1/08–			11/1/07–			11/1/06–			11/1/05–			11/1/04–
	4/30/10*			10/31/09			10/31/08¹			10/31/07			10/31/06			10/31/05


Per-Share Data ($)

Net asset value at beginning of period		9.99			9.82			13.86			13.39			12.85			11.88

Income (loss) from investment operations:
Net investment income (loss)		0.11	²		0.22	²		0.20	²		0.25	²		0.25	²		0.15
Net realized and unrealized gains (losses)		0.98			0.64			(3.26	)		1.06			0.83			0.91

Total from investment operations		1.09			0.86			(3.06	)		1.31			1.08			1.06
Less distributions:
Distributions from net investment income		(0.19	)		(0.37	)		(0.29	)		(0.24	)		(0.16	)		(0.09	)
Distributions from net realized gains		—			(0.32	)		(0.69	)		(0.60	)		(0.38	)		—

Total distributions		(0.19	)		(0.69	)		(0.98	)		(0.84	)		(0.54	)		(0.09	)

Net asset value at end of period		10.89			9.99			9.82			13.86			13.39			12.85

Total return (%)		10.96	³		9.45			(23.56	)		10.24			8.59			8.92

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses⁴		0.01	^5,6		0.00			0.36			1.02	⁷		1.03	⁷		1.10
Gross operating expenses⁴		0.19	⁵		0.17			0.53			1.27			1.26			1.27
Net investment income (loss)		2.20	⁵		2.41			1.81			1.84			1.90			1.14
Portfolio turnover rate		3	³		21			267			244			244			283
Net assets, end of period ($ x 1,000,000)		91			86			85			112			122			130

* Unaudited.

¹ Effective February 28, 2008, the Investor Share class and the Select Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Investor Shares.

² Calculated based on the 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 The ratio of net operating expenses would have been 0.00% if certain non-routine expenses had not been incurred.

⁷ The ratio of net operating expenses would have been 1.10% for periods ended 10/31/06 and 10/31/07, respectively, if custody credits and dividend and interest expenses on short sales had not been incurred.

See financial notes 9

Schwab Balanced Fund

Portfolio Holdings as of April 30, 2010 (Unaudited)

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

Cost

Value

Holdings by Category

($)

100

.0%

Other Investment Companies

91,881,492

90,474,692

100

.0%

Total Investments

91,881,492

90,474,692

.0%

Other Assets and Liabilities

31,500

100

.0%

Net Assets

90,506,192


	Number		Value
Security	of Shares		($)

Other Investment Companies 100.0% of net assets

Equity Funds 63.1%
Laudus Small-Cap MarketMasters Fund, Select Shares (a)*		1,068,277		12,520,212
Schwab Core Equity Fund (a)		2,771,812		44,570,739

				57,090,951

Fixed-Income Funds 36.4%
Schwab Total Bond Market Fund (a)		3,630,785		32,967,532

Money Funds 0.5%
State Street Institutional Liquid Reserves Fund - Institutional Class		416,209		416,209

Total Other Investment Companies
(Cost $91,881,492)				90,474,692



End of Investments.

At 04/30/10, the tax basis cost of the fund’s investments was $93,064,820 and the unrealized appreciation and depreciation were $2,967,378 and ($5,557,506), respectively, with a net unrealized depreciation of ($2,590,128).


*		Non-income producing security.
(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, 2010; unaudited.



Assets

Investments in affiliated underlying funds, at value (cost $91,465,283)		$90,058,483
Investments in unaffiliated issuers, at value (cost $416,209)	+	416,209

Total investments, at value (cost $91,881,492)		90,474,692
Receivables:
Dividends		96,518
Fund shares sold		55,403
Due from investment adviser		1,245
Interest		95
Prepaid expenses	+	1,539

Total assets		90,629,492

Liabilities

Payables:
Fund shares redeemed		72,146
Accrued expenses	+	51,154

Total liabilities		123,300

Net Assets

Total assets		90,629,492
Total liabilities	−	123,300

Net assets		$90,506,192

Net Assets by Source
Capital received from investors		97,571,832
Net investment income not yet distributed		266,106
Net realized capital losses		(5,924,946	)
Net unrealized capital losses		(1,406,800	)

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$90,506,192

8,313,563

$10.89

See financial notes 11

Schwab Balanced Fund

Statement of

Operations

For November 1, 2009 through April 30, 2010; unaudited.



Investment Income

Dividends received from affiliated underlying funds		$975,185
Interest	+	394

Total investment income		975,579

Expenses

Shareholder reports		20,677
Professional fees		17,366
Transfer agent fees		12,592
Registration fees		8,742
Portfolio accounting fees		8,386
Trustees’ fees		2,865
Custodian fees		752
Interest expense		8
Other expenses	+	11,740

Total expenses		83,128
Expense reduction by adviser and Schwab	−	80,046
Custody credits	−	6

Net expenses	−	3,076

Net investment income		972,503

Realized and Unrealized Gains (Losses)

Net realized gains on sales of affiliated underlying funds		497,885
Net realized gains on unaffiliated investments	+	2,411

Net realized gains		500,296
Net unrealized gains on affiliated underlying funds	+	7,715,297

Net realized and unrealized gains		8,215,593

Increase in net assets resulting from operations		$9,188,096

12 See financial notes

Schwab Balanced Fund

Statements of

Changes in Net Assets

For the current and prior report periods.
Figures for the current period are unaudited.



Operations


11/1/09-4/30/10			11/1/08-10/31/09
Net investment income		$972,503		$1,941,574
Net realized gains (losses)		500,296		(5,972,403	)
Net unrealized gains	+	7,715,297		11,205,277

Increase in net assets from operations		9,188,096		7,174,448

Distributions to Shareholders

Distributions from net investment income		1,576,121		3,132,669
Distributions from net realized gains	+	—		2,727,245

Total distributions		$1,576,121		$5,859,914

Transactions in Fund Shares


		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		VALUE			SHARES		VALUE
Shares sold			523,565		$5,480,700			898,966		$8,337,904
Shares reinvested			142,827		1,479,682			607,671		5,511,579
Shares redeemed	+		(912,039	)	(9,568,660	)		(1,583,828	)	(14,502,159	)

Net transactions in fund shares			(245,647	)	($2,608,278	)		(77,191	)	($652,676	)

Shares Outstanding and Net Assets

		11/1/09-4/30/10					11/1/08-10/31/09
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			8,559,210		$85,502,495			8,636,401		$84,840,637
Total increase or decrease	+		(245,647	)	5,003,697			(77,191	)	661,858

End of period			8,313,563		$90,506,192			8,559,210		$85,502,495


Net investment income not yet distributed					$266,106					$869,724

See financial notes 13

Schwab Balanced Fund

Financial Notes, unaudited

1. Business Structure of the Fund:

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 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 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 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 unaffiliated, third party mutual funds, including exchange traded funds (“ETFs”). 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 closing net asset value (“NAV”), which is the price for all outstanding shares of a fund, 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.

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:

The following is a summary of the significant accounting policies the fund uses in its preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

(a) Security Valuation:

The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:


	•	Underlying funds: valued at their respective net asset values as determined by the underlying 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.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements).

Schwab Balanced Fund

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

The fund adopted the authoritative guidance under GAAP on 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. Accordingly, if the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.

The guidance establishes three levels of the fair value hierarchy as follows:


	•	Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The fund does not adjust the quoted price for such investments, even in situations where the fund holds a large position and a sale could reasonably impact the quoted price.

	•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 Prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the fund values their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

	•	Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.

Quoted Prices in

Significant

Active Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total*

Other Investment Companies(a)

$90,474,692

$—

$90,474,692

Total

$90,474,692

$—

$90,474,692


*		The fund had no Other Financial Instruments.
(a)		As categorized in Portfolio Holdings

(b) Portfolio Investments:

Repurchase Agreements: The fund 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.

Schwab Balanced Fund

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

The fund’s repurchase agreements will be fully collateralized by cash, U.S. government securities, U.S. government agency securities or other 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:

(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 the fund are charged directly to that fund. 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 makes distributions from net investment income and from net realized capital gains, if any, once a year.

(g) Custody Credit:

The fund has an arrangement with its custodian bank, State Street Bank and Trust Company, under which the fund receives a credit for their 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 to 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 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 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.

3. Risk Factors

Investing in the fund may involve certain risks, as discussed in the fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.

Schwab Balanced Fund

Financial Notes, unaudited (continued)

3. Risk Factors (continued)

Asset Allocation Risk. The fund is subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of the fund’s assets among the various asset classes and market segments will cause the fund to underperform other funds with a similar investment objective.

Market Risk. Stock and bond markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money.

Underlying Fund Investment Risk. The value of your investment in the fund is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. Before investing in the fund, investors should assess the risks associated with the underlying funds in which the fund may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although the fund’s exposure to a particular risk will be proportionate to the fund’s overall asset allocation and underlying fund allocation.


	•	Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective.

	•	Management Risk. The underlying funds are actively managed mutual funds. Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser) will make poor security selections. An underlying fund’s 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.

	•	Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.

	•	Large- and Mid-Cap Risk. Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments — small-cap stocks, for instance — an underlying fund’s large- and mid-cap holdings could reduce performance.

	•	Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies 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 — large-cap and mid-cap stocks, for instance — an underlying fund’s small-cap holdings could reduce performance.

	•	Fixed Income Risk. Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause a fund’s share price to fall. A fund could lose money if the issuer or guarantor of a portfolio investment or the counterparty to a derivatives contract fails to make timely principal or interest payments or otherwise honor its obligations. Fixed income securities may be paid off earlier or later than expected. Either situation could cause a fund to hold securities paying lower than-market rates of interest, which could hurt the fund’s yield or share price. Below investment-grade bonds (junk bonds) involve greater credit risk, are more volatile, involve greater risk of price declines and may be more susceptible to economic downturns than investment-grade securities.

	•	ETF Risk. An underlying fund may purchase shares of ETFs to gain exposure to a particular portion of the market while awaiting an opportunity to purchase securities directly. When an underlying fund invests in an ETF, it will bear a proportionate share of the ETF’s expenses. In addition, lack of liquidity in an ETF can result in its value being more volatile than the underlying portfolio of securities.

Schwab Balanced Fund

Financial Notes, unaudited (continued)

3. Risk Factors (continued)


	•	Derivatives Risk. An underlying fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested.

	•	Leverage Risk. Certain underlying fund transactions, such as derivatives, short sales, reverse repurchase agreements, and mortgage dollar rolls, may give rise to a form of leverage and may expose a fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of a fund’s portfolio securities, which means even a small amount of leverage can have a disproportionately larger impact on the fund.

	•	Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price.

	•	Portfolio turnover risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying fund’s performance and may increase the likelihood of capital gain distributions.

Direct Investment Risk. The fund may invest a portion of its assets directly in equity and fixed income securities, as well as other mutual funds or ETFs, to maintain its asset allocations. The fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same security.

4. Affiliates and Affiliated Transactions:

Charles Schwab Investment Management, Inc. (“CSIM” or “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.

The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the fund. The Plan enables the fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund. The fund is not subject to any fee under the Plan.

CSIM and Schwab have agreed with the fund to limit (“expense limitation”) the total expenses charged, excluding interest, taxes and certain non-routine expenses of the fund to 0.00% for so long as CSIM serves as adviser to the fund, which may only be amended or terminated with the approval of the fund’s Board of Trustees.

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.

The fund may make direct transactions with certain other Schwab Funds when practical. When the 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. During the period ended April 30, 2010, the fund had 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, 2010, the percentages of shares of other related funds owned by the Schwab Balanced Fund are:


Equity Funds:
Laudus Small-Cap MarketMasters Fund			2.9%
Schwab Core Equity Fund			2.3%
Fixed-Income Funds:
Schwab Total Bond Market Fund			3.5%

Schwab Balanced Fund

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended April 30, 2010:


	Balance						Balance				Realized			Distribution
	of Shares						of Shares		Market		Gain (Loss)			Received*
	Held at		Gross		Gross		Held at		Value at		11/01/09			11/01/09
Underlying Fund	10/31/09		Additions		Sales		04/30/10		04/30/10		to 04/30/10			to 04/30/10

Laudus Small-Cap MarketMasters Fund, Select Shares		1,528,130		—		459,853		1,068,277		$12,520,212		$567,654			$—
Schwab Core Equity Fund		2,771,812		—		—		2,771,812		44,570,739		—			424,642
Schwab Total Bond Market Fund		3,447,725		293,802		110,742		3,630,785		32,967,532		(69,769	)		550,543

Total										$90,058,483		$497,885			$975,185


*		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 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. The fund had no interfund borrowing or lending activity during the period.

5. Board of Trustees:

6. Borrowing from Banks:

The fund may borrow money from banks and custodians. The fund has custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, 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. The fund also pays an annual fee to State Street Bank and Trust Company for the committed line of credit.

There were no borrowings from the lines of credit during the period. However, the fund utilized its overdraft facility and incurred interest expense, which is included in other expenses in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

7. Purchases and Sales of Investment Securities:

For the period ended April 30, 2010, purchases and sales of securities (excluding short-term obligations) were as follows:

8. Redemption Fee:

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 $387 and $2,343, respectively.

9. Federal Income Taxes:

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2009, the fund had capital loss carry forwards of $5,199,466 available to offset future net capital gains before October 31, 2017.

Schwab Balanced Fund

Financial Notes, unaudited (continued)

9. Federal Income Taxes (continued):

As of October 31, 2009, the fund had no capital losses utilized or capital losses deferred.

As of October 31, 2009, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purpose, 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. The fund is not subject to examination by U.S. federal tax authorities for tax years before 2006 and by state tax authorities for the tax years before 2005.

10. Subsequent Events:

Management has determined there are no subsequent events or transactions that would have materially impacted the financial statements as presented.

Results of Proxy Voting:


	For		Withheld		% For
	(shares)		(shares)

Charles R. Schwab		1,402,634,526.75		105,696,405.10		92.99	%
Walter W. Bettinger, II		1,458,729,719.36		49,601,212.49		96.71	%
Mariann Byerwalter		1,455,075,604.88		53,255,326.97		96.47	%
John F. Cogan		1,458,904,762.09		49,426,169.76		96.72	%
William A. Hasler		1,449,460,489.61		58,970,442.24		96.10	%
Gerald B. Smith		1,455,433,324.25		52,897,607.60		96.49	%
Donald R. Stephens		1,457,006,880.73		51,324,051.12		96.60	%
Joseph H. Wender		1,453,198,913.40		55,132,018.45		96.34	%
Michael W. Wilsey		1,454,741,033.96		53,589,897.89		96.45	%

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, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 85 funds.

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.	77	Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009) Director, Excelsior Funds (2006 – 2007)


John F. Cogan 1947 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present).	77	Director, Gilead Sciences, Inc. (2005 – present) Director, Monaco Coach Corporation (2005 – 2009)


William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present).	77	Director, Ditech Networks Corporation (1997 – present) Director, TOUSA (1998 – present) Director, Mission West Properties (1998 – present) Director, Globalstar, Inc. (2009 – present) Director, Harris-Stratex Networks (2001 – present) Director, Aphton Corp. (1991 – 2007) Director, Solectron Corporation (1998 – 2007) Director, Genitope Corporation (2000 – 2009) Director, Excelsior Funds (2006 – 2007)


Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present).	77	Lead Independent Director, Board of Cooper Industries (2002 – present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present) Director, Oneok, Inc (2009 – present)


Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1993.)	Managing Partner, D.R. Stephens & Company (investments) (1973 – present).	77	None

Independent Trustees (continued)


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

Joseph H. Wender 1944 Trustee (Trustee of Schwab Capital Trust since 2008.)	Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008-present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005).	77	Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)


Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1993.)	Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).	77	None

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. Schwab²1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1993.)	Founded Charles Schwab & Co., Inc. in 1971 and became Chairman in 1978. Since 1986, Chairman and Director, The Charles Schwab Corporation. Since 1989, Director, Charles Schwab Investment Management, Inc., and appointed as Chairman in 1991. Since 1996, Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. Since 1999, Director and Chief Executive Officer, Schwab Holdings, Inc. Since 2003, Chairman, Charles Schwab Bank, N. A.; 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, and the Charles Schwab & Co., Inc.	77	None


Walter W. Bettinger II²1960 Trustee (Trustee of Schwab Capital Trust since 2008.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc., principal underwriter to the Funds, and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	85	None

Officers of the Trust


Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served³)		Principal Occupations During the Past Five Years

Randall W. Merk 1954 President and Chief Executive Officer (Since 2007.)		Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc. (August 2004 – present); Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); Director, President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (August 2007 – present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC (Sept. 2002 – present); President and Chief Executive Officer, Schwab Strategic Trust (Oct. 2009 – present); Trustee (June 2006 – Dec. 2009), President and Chief Executive Officer (July 2007 – March 2008; effective July 2, 2010), Laudus Trust and Laudus Institutional Trust; President and Chief Executive Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust (June 2006 – June 2007).


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. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Trust and Laudus Institutional Trust (2006 – present); Treasurer and Principal Financial Officer, Schwab Strategic Trust (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (Sept. 2002 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007).


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. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Secretary and Chief Legal Officer, Schwab Strategic Trust (Oct. 2009 – present); Vice President and Assistant Clerk, Laudus Trust and Laudus Institutional Trust (Feb. 2010 – present); Secretary and Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007); Chief Legal Officer, Laudus Trust and Laudus Institutional Trust (Aug. 2006 – Dec. 2006).


Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)		Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (March 2007 – present) of Laudus Trust and Laudus Institutional Trust. Since 2009, Vice President of Schwab Strategic Trust (Oct. 2009 – present).


Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)		Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Trust, Laudus Institutional Trust; Vice President, Schwab Strategic Trust (Oct. 2009 – present).


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, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. 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.