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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 Returns for the 12 Months Ended August 31, 2014

Schwab Short-Term Bond Market Fund^tm (Ticker Symbol: SWBDX)			1.72%


Barclays U.S. Government/Credit: 1-5 Years Index			1.94%
Fund Category: Morningstar Short-Term Bond			2.21%


Performance Details			pages 6-7




Schwab Intermediate-Term Bond Fund^tm (Ticker Symbol: SWIIX)			3.95%


Barclays U.S. Intermediate Aggregate Bond Index			4.18%
Fund Category: Morningstar Intermediate-Term Bond			6.19%


Performance Details			pages 8-9




Schwab Total Bond Market Fund^tm (Ticker Symbol: SWLBX)			5.56%


Barclays U.S. Aggregate Bond Index			5.66%
Fund Category: Morningstar Intermediate-Term Bond			6.19%


Performance Details			pages 10-11




Schwab GNMA Fund^tm (Ticker Symbol: SWGSX)			5.04%


Barclays GNMA Index			5.54%
Fund Category: Morningstar Intermediate Government			4.14%


Performance Details			pages 12-13




Schwab^® Treasury Inflation Protected Securities Index Fund (Ticker Symbol: SWRSX)			5.44%


Barclays U.S. TIPS Index (Series-L)			5.70%
Fund Category: Morningstar Inflation Protected Bond			4.68%


Performance Details			pages 14-15


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.

For index definitions, please see the Glossary.

Expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund’s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.

Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.


¹		Please see prospectus for further detail and eligibility requirements.

2 Schwab Taxable Bond Funds

From the President

Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.

Dear Shareholder,

I’d like to thank you for trusting us to help you meet your investment goals, and for reading this annual report regarding the Schwab Bond Funds. These funds are part of our line-up of products designed to serve as the foundation of an investor’s portfolio, and offer a range of solutions and risk levels for the fixed income portion of your portfolio.

For the 12-month reporting period ended August 31, 2014, the funds generated moderate total returns that reflected an overall decline in bond yields, but an overall increase in bond prices. Slow U.S. economic growth in early 2014 and assurances from the Federal Reserve that short-term interest rates need to remain low supported these results, even as the economy improved enough for the Fed to reduce its policies to hold down long-term interest rates. Corporate bonds outperformed Treasuries, as credit conditions generally improved. Additionally, falling yields translated into higher total returns for long-term bonds than for short-term bonds. Reflecting these conditions, the Barclays U.S. Aggregate Bond Index returned 5.7%.

Total returns in bonds are impacted by changes in interest rates. Since bond yields and bond prices tend to move in opposite directions, when yields rise, prices on bonds and bond funds tend to fall. As economic conditions improve, this risk could increase. We employ stress and market scenario testing to analyze the potential performance of our funds under various market conditions.

Yields of U.S. Treasury Securities: Effective Yields of Three-Month, Two-Year and Ten-Year Treasuries

Yields, or interest rates, represent the cost of borrowing money. Rapid economic growth, waning investor interest in bonds, an increase in the issuance of bonds, or the expectation of higher inflation can drive rates up, while the opposite conditions can push rates down.

Data source: Bloomberg L.P.

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

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

Schwab Taxable Bond Funds 3

Fund Management



		Matthew Hastings, CFA, Managing Director and Head of Taxable Bond Strategies, leads the portfolio management team for Schwab’s taxable bond funds and the Schwab Fixed Income ETFs. He also has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 1999, Mr. Hastings was in fixed-income sales and trading at Lehman Brothers. He has worked in the fixed-income securities industry since 1996.

		Steven Hung, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of each of the funds, except for the Schwab GNMA Fund and Schwab Treasury Inflation Protected Securities Index Fund. His primary focus is corporate bonds. Prior to joining CSIM in 1999, Mr. Hung was an associate in Schwab’s management training program for nine months. In that role, he worked as a clerk on the Options Trading Floor of the Pacific Coast Stock Exchange.

		Alfonso Portillo, Jr., Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of each of the funds, except for the Schwab Short-Term Bond Market Fund and Schwab Treasury Inflation Protected Securities Index Fund. His primary focus is securitized products. Prior to joining CSIM in 2007, Mr. Portillo worked for ten years at Pacific Investment Management Company, most recently as a vice president and member of the mortgage- and asset-backed portfolio management team. He has worked in fixed-income asset management since 1996.

		Steven Chan, CFA, Managing Director and Portfolio Manager, is responsible for the day-to-day co-management of the funds. His primary focus is government securities, including Treasury inflation-protected securities. Mr. Chan has been a portfolio manager with CSIM since 2007, and has held a number of positions at the firm since beginning his tenure in 1996. His previous roles include managing the Portfolio Operations and Analytics group, and working as a senior manager in Finance. Prior to joining CSIM, Mr. Chan was a manager of finance at GT Capital Management.

		Brandon Matsui, CFA, Managing Director and Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2010, Mr. Matsui was an associate portfolio manager on the Beta Management team at BNY Mellon for 11 months. Prior to that, Mr. Matsui spent five years at BlackRock Solutions, where he served as an analyst in the portfolio analytics group, and also a risk analytics manager for their corporate, asset management, and pension clients.

Schwab Taxable Bond Funds 5

Schwab Short-Term Bond Market Fund™

The Schwab Short-Term Bond Market Fund (the fund) seeks high current income by tracking the performance of the Barclays U.S. Government/Credit: 1-5 Years Index (the comparative index). To pursue its goal, the fund primarily invests in a diversified portfolio of debt instruments designed to track the performance of the comparative index. The fund uses the comparative index as a guide in structuring the fund’s portfolio and selecting its investments. However, the fund is not required to invest any percentage of its assets in the securities represented in the comparative index. For more information about the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 1.72% for the 12-month reporting period ended August 31, 2014, while the comparative index returned 1.94%.

Market Highlights. U.S. bonds generated moderately positive overall total returns for the reporting period, as falling yields on intermediate- and longer-term bonds translated into gains for many fixed income sectors. Several factors drove yields lower (and returns correspondingly higher), including a shift in expectations regarding Federal Reserve (Fed) policies.

In January, the Fed began to “taper” its monthly purchases of fixed income securities—known as quantitative easing—a policy designed to hold down long-term interest rates. However, helping to offset the effects of this policy shift were Fed assurances that low short-term interest rates remain necessary. In addition, political unrest in Russia and the Ukraine, slow growth in Europe, uneven U.S. economic activity, and attractive U.S. Treasury yields compared with yields on many European government bonds supported the performance of U.S. fixed income securities.

Amid this backdrop, corporate bonds and mortgage-backed securities generally outperformed U.S. Treasuries, as investors gravitated toward potentially higher-yielding investments in the low yield environment. In addition, long-term bonds outperformed short-term bonds, with long-term bonds generating double-digit returns across some fixed income sectors.

Positioning and Strategies. The fund closely tracked the primary risk exposures of the comparative index, which meant keeping the fund’s credit quality, duration, and sector allocations similarly aligned. The fund’s underperformance was primarily attributable to expenses, transaction costs, and pricing differences between fund holdings and index pricing. Also, given the large number of securities in the comparative index, the fund employs a sampling strategy, which can lead to performance differences relative to the index.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


U.S. Government and Government Agencies			66.7%
Corporate Bonds			25.1%
Foreign Securities			7.9%
Municipal Bonds			0.2%
Other Investment Company			0.1%


By Credit Quality²


AAA			71.9%
AA			4.1%
A			9.0%
BBB			14.7%
BB			0.2%
Short-Term Ratings			0.1%



Weighted Average Maturity³			2.8 Yrs
Weighted Average Duration³			2.7 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
³		See Glossary for definitions of maturity and duration.

6 Schwab Taxable Bond Funds

Schwab Short-Term Bond Market Fund^tm

Performance and Fund Facts as of 8/31/14

August 31, 2004 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3

Average Annual Returns^1,2,3


Fund and Inception Date	1 Year			5 Years			10 Years


Fund: Schwab Short-Term Bond Market Fund^tm (11/5/91)		1.72	%		2.01	%		1.69	%
Barclays U.S. Government/Credit: 1-5 Years Index		1.94	%		2.39	%		3.36	%
Fund Category: Morningstar Short-Term Bond		2.21	%		2.71	%		2.97	%

Fund Expense Ratios⁴: Net 0.29%; Gross 0.61%

Yields¹


30-Day SEC Yield³			0.69%


30-Day SEC Yield-No Waiver⁵			0.36%


12-Month Distribution Yield³			0.84%

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

For index definitions, please see the Glossary.

All total returns 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		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		As stated in the prospectus. 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.
⁵		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.

Schwab Taxable Bond Funds 7

Schwab Intermediate-Term Bond Fund™

The Schwab Intermediate-Term Bond Fund (the fund) seeks total return. Under normal circumstances, the fund invests at least 80% of its net assets (net assets plus borrowings for investment purposes) in debt instruments. For more information about the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 3.95% for the 12-month reporting period ended August 31, 2014, while the Barclays U.S. Intermediate Aggregate Bond Index (the comparative index) returned 4.18%.

Positioning and Strategies. The investment adviser implemented several strategies expected to help the fund’s performance, with generally positive results. Corporate bonds were conservatively overweighted relative to the comparative index, enhancing the fund’s performance as these securities performed well compared with other fixed income sectors.

Mortgage-backed security holdings also generally supported the fund’s performance. Selection within this sector focused on mortgage-backed securities that were expected to realize slower prepayments on their underlying mortgages, and therefore maintain the higher-yielding benefits provided by these securities in the low yield environment.

In addition, the fund held positions in TBAs, or “to be announced” securities, which are mortgage-backed bonds that settle on a forward date. The average month-end position in these securities was 4.0% for the fund, with a minimum exposure of 3.2% and maximum exposure of 4.8%.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


U.S. Government and Government Agencies			36.5%
Mortgage-Backed Securities²			34.3%
Corporate Bonds			20.6%
Foreign Securities			4.5%
Commercial Mortgage Backed Securities			3.1%
Other Investment Company			0.4%
Asset-Backed Obligations			0.3%
Preferred Stock			0.3%


By Credit Quality³


AAA			73.9%
AA			1.4%
A			7.1%
BBB			15.0%
BB			1.0%
Short-Term Ratings			0.4%
Unrated Securities			1.2%



Weighted Average Maturity⁴			4.5 Yrs
Weighted Average Duration⁴			3.9 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		The fund may seek to obtain exposure to U.S. agency mortgage pass-through securities, in part or in full, through the use of “to-be-announced” or “TBA” transactions, which are standardized contracts for future delivery of mortgage pass-through securities in which the exact mortgage pools to be delivered are not specified until a few days prior to settlement. These transactions represented approximately 3.9% of net assets on August 31, 2014.
³		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
⁴		See Glossary for definitions of maturity and duration.

8 Schwab Taxable Bond Funds

Schwab Intermediate-Term Bond Fund^tm

Performance and Fund Facts as of 8/31/14

October 31, 2007 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3,4

Average Annual Returns^1,2,3,4


Fund and Inception Date	1 Year			5 Years			Since Inception


Fund: Schwab Intermediate-Term Bond Fund^tm (10/31/07)		3.95	%		4.32	%		4.79	%
Barclays U.S. Intermediate Aggregate Bond Index		4.18	%		3.85	%		4.52	%
Fund Category: Morningstar Intermediate-Term Bond		6.19	%		5.30	%		5.07	%

Fund Expense Ratios⁵: Net 0.46%; Gross 0.63%

Yields¹


30-Day SEC Yield³			1.67%


30-Day SEC Yield-No Waiver⁶			1.48%


12-Month Distribution Yield³			1.99%

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

For index definitions, please see the Glossary.


¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		On August 10, 2009, the Investor Share class, Select Share class and Institutional Share class of the fund were combined into a single class of shares of the fund. The performance and financial history of the fund is that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares.
⁵		As stated in the prospectus. 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. Includes 0.01% interest expenses relating to Treasury Market Practices Group (TMPG) fails charges.
⁶		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.

Schwab Taxable Bond Funds 9

Schwab Total Bond Market Fund™

The Schwab Total Bond Market Fund (the fund) seeks high current income by tracking the performance of the Barclays U.S. Aggregate Bond Index (the comparative index). To pursue its goal, the fund primarily invests in a diversified portfolio of debt instruments designed to track the performance of the comparative index. The fund uses the comparative index as a guide in structuring the fund’s portfolio and selecting its investments. However, the fund is not required to invest any percentage of its assets in the securities represented in the comparative index. For more information about the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 5.56% for the 12-month reporting period ended August 31, 2014, while the comparative index returned 5.66%.

In addition, the fund held positions in TBAs, or “to be announced” securities, which are mortgage-backed bonds that settle on a forward date. The average month-end position in these securities was 5.0% for the fund, with a minimum exposure of 3.7% and maximum exposure of 6.3%.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


U.S. Government and Government Agencies			36.7%
Mortgage-Backed Securities²			27.4%
Corporate Bonds			22.1%
Foreign Securities			5.0%
Short-Term Investments			4.8%
Commercial Mortgage Backed Securities			2.0%
Municipal Bonds			0.9%
Other Investment Company			0.6%
Asset-Backed Obligations			0.5%


By Credit Quality³


AAA			73.3%
AA			3.2%
A			9.3%
BBB			13.0%
BB			0.3%
Short-Term Ratings			0.6%
Unrated Securities			0.3%



Weighted Average Maturity⁴			7.0 Yrs
Weighted Average Duration⁴			5.2 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		The fund may seek to obtain exposure to U.S. agency mortgage pass-through securities, in part or in full, through the use of “to-be-announced” or “TBA” transactions, which are standardized contracts for future delivery of mortgage pass-through securities in which the exact mortgage pools to be delivered are not specified until a few days prior to settlement. These transactions represented approximately 4.9% of net assets on August 31, 2014.
³		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
⁴		See Glossary for definitions of maturity and duration.

10 Schwab Taxable Bond Funds

Schwab Total Bond Market Fund^tm

Performance and Fund Facts as of 8/31/14

August 31, 2004 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3

Average Annual Returns^1,2,3


Fund and Inception Date	1 Year			5 Years			10 Years


Fund: Schwab Total Bond Market Fund^tm (3/5/93)		5.56	%		4.10	%		3.23	%
Barclays U.S. Aggregate Bond Index		5.66	%		4.48	%		4.72	%
Fund Category: Morningstar Intermediate-Term Bond		6.19	%		5.30	%		4.56	%

Fund Expense Ratios⁴: Net 0.29%; Gross 0.56%

Yields¹


30-Day SEC Yield³			1.88%


30-Day SEC Yield-No Waiver⁵			1.62%


12-Month Distribution Yield³			2.30%

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

For index definitions, please see the Glossary.


¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		As stated in the prospectus. 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.
⁵		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.

Schwab Taxable Bond Funds 11

Schwab GNMA Fund™

The Schwab GNMA Fund (the fund) seeks high current income consistent with preservation of capital. To pursue its goal, the fund normally invests at least 80% of its net assets in Government National Mortgage Association (GNMA) securities. For more information about the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 5.04% for the 12-month reporting period that ended August 31, 2014, while its comparative index, the Barclays GNMA Index (the comparative index), returned 5.54%.

Positioning and Strategies. The investment adviser implemented multiple strategies that generally enhanced the fund’s performance, although holdings of long-term, low-coupon mortgage pools at market weight generally detracted from the fund’s relative results. Among the fund’s more successful strategies was an emphasis on mortgage-backed securities that were expected to realize relatively slow underlying mortgage prepayments, which helped the fund maintain its income stream in the low yield environment. This strategy was accomplished by holding securities backed by mortgages with interest rates of 5.5% or more, and these securities appreciated as long-term interest rates declined.

In addition, the fund held positions in TBA, or “to be announced” securities, which are mortgage-backed securities that settle on a forward date. The average month-end position in these securities was 9.1% for the fund, with a minimum exposure of 7.9% and maximum exposure of 13.5%.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


Mortgage-Backed Securities²			94.9%
Short-Term Investment			4.3%
Other Investment Company			0.8%


By Credit Quality³


AAA			80.7%
Short-Term Ratings			0.8%
Unrated Securities			18.5%



Weighted Average Maturity⁴			5.9 Yrs
Weighted Average Duration⁴			4.6 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		The fund may seek to obtain exposure to U.S. agency mortgage pass-through securities, in part or in full, through the use of “to-be-announced” or “TBA” transactions, which are standardized contracts for future delivery of mortgage pass-through securities in which the exact mortgage pools to be delivered are not specified until a few days prior to settlement. These transactions represented approximately 8.0% of net assets on August 31, 2014.
³		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
⁴		See Glossary for definitions of maturity and duration.

12 Schwab Taxable Bond Funds

Schwab GNMA Fund^tm

Performance and Fund Facts as of 8/31/14

August 31, 2004 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3,4

Average Annual Returns^1,2,3,4


Fund and Inception Date	1 Year			5 Years			10 Years


Fund: Schwab GNMA Fund^tm (3/3/03)		5.04	%		3.59	%		4.42	%
Barclays GNMA Index		5.54	%		4.03	%		4.84	%
Fund Category: Morningstar Intermediate Government		4.14	%		3.31	%		3.89	%

Fund Expense Ratios⁵: Net 0.57%; Gross 0.62%

Yields¹


30-Day SEC Yield³			2.41%


30-Day SEC Yield-No Waiver⁶			2.32%


12-Month Distribution Yield³			2.70%

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

For index definitions, please see the Glossary.


¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		On August 10, 2009, the Investor Share class and Select Share class of the fund were combined into a single class of shares of the fund. The performance and financial history of the fund is that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares.
⁵		As stated in the prospectus. 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. Includes 0.02% interest expenses relating to Treasury Market Practices Group (TMPG) fails charges.
⁶		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.

Schwab Taxable Bond Funds 13

Schwab^® Treasury Inflation Protected Securities Index Fund

The Schwab Treasury Inflation Protected Securities Index Fund (the fund) seeks to track as closely as possible, before fees and expenses, the price and yield performance of the Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L) (the comparative index). Under normal circumstances, the fund will invest at least 90% of its net assets in securities included in the comparative index. For more information about the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 5.44% for the 12-month period ended August 31, 2014, while the comparative index returned 5.70%.

Amid this backdrop, U.S. Treasury securities generally underperformed lower credit-quality bonds, as investors favored potentially higher-yielding investments in the low yield environment. In addition, long-term bonds outperformed short-term bonds, with long-term bonds generating double-digit returns across some fixed income sectors.

This overall decline in interest rates also helped the performance of TIPS. In addition, consumer prices—as measured by the non-seasonally adjusted consumer price index for all urban consumers, CPI-NSA (the index against which the principal of TIPS is adjusted)—rose 1.7% during the 12-month reporting period, translating into upwardly adjusted principals for TIPS and a greater income stream for these securities. As a result, U.S. TIPS performed well compared with many other U.S. bond sectors.

Positioning and Strategies. Consistent with its objective and strategies, the fund closely tracked the primary risk exposures of the comparative index, which meant keeping the fund’s duration and maturity allocations similarly aligned. The fund’s underperformance was primarily attributable to expenses.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


U.S. Government Securities			99.9%
Other Investment Company			0.1%


By Credit Quality²


AAA			99.9%
Short-Term Ratings			0.1%



Weighted Average Maturity³			8.6 Yrs
Weighted Average Duration³			7.8 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
³		See Glossary for definitions of maturity and duration.

14 Schwab Taxable Bond Funds

Schwab^® Treasury Inflation Protected Securities Index Fund

Performance and Fund Facts as of 8/31/14

March 31, 2006 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3,4

Average Annual Returns^1,2,3,4


Fund and Inception Date	1 Year			5 Years			Since Inception


Fund: Schwab^® Treasury Inflation Protected Securities Index Fund (3/31/06)		5.44	%		5.04	%		4.86	%
Barclays U.S. TIPS Index (Series-L)		5.70	%		5.45	%		5.46	%
Fund Category: Morningstar Inflation Protected Bond		4.68	%		4.63	%		4.52	%

Fund Expense Ratios⁵: Net 0.19%; Gross 0.63%

Yields¹


30-Day SEC Yield³			2.03%


30-Day SEC Yield-No Waiver⁶			1.69%


12-Month Distribution Yield³			1.97%

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

For index definitions, please see the Glossary.


¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		On August 10, 2009, the Investor Share class and Select Share class of the fund were combined into a single class of shares of the fund. The performance and financial history of the fund is that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares.
⁵		As stated in the prospectus. 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.
⁶		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.

Schwab Taxable Bond Funds 15

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

As a fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees; and (2) ongoing costs, including 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 March 1, 2014 and held through August 31, 2014.

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 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 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 a 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. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, 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 3/1/14		at 8/31/14		3/1/14–8/31/14

Schwab Short-Term Bond Market Fund^tm
Actual Return		0.29%	$	1,000.00	$	1,004.40	$	1.47
Hypothetical 5% Return		0.29%	$	1,000.00	$	1,023.74	$	1.48


Schwab Intermediate-Term Bond Fund^tm
Actual Return		0.45%	$	1,000.00	$	1,015.60	$	2.29
Hypothetical 5% Return		0.45%	$	1,000.00	$	1,022.94	$	2.29


Schwab Total Bond Market Fund^tm
Actual Return		0.29%	$	1,000.00	$	1,027.60	$	1.49
Hypothetical 5% Return		0.29%	$	1,000.00	$	1,023.74	$	1.49


Schwab GNMA Fund^tm
Actual Return		0.56%	$	1,000.00	$	1,020.40	$	2.85
Hypothetical 5% Return		0.56%	$	1,000.00	$	1,022.38	$	2.86


Schwab^® Treasury Inflation Protected Securities Index Fund
Actual Return		0.19%	$	1,000.00	$	1,036.10	$	0.98
Hypothetical 5% Return		0.19%	$	1,000.00	$	1,024.25	$	0.97


¹		Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period.
²		Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 184 days of the period, and divided by 365 days of the fiscal year.

16 Schwab Taxable Bond Funds

Schwab Short-Term Bond Market Fund™

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		9.21			9.33			9.27			9.19			8.93

Income (loss) from investment operations:
Net investment income (loss)		0.08			0.07			0.10			0.12			0.18
Net realized and unrealized gains (losses)		0.08			(0.12	)		0.06			0.08			0.26

Total from investment operations		0.16			(0.05	)		0.16			0.20			0.44
Less distributions:
Distributions from net investment income		(0.08	)		(0.07	)		(0.10	)		(0.12	)		(0.18	)

Net asset value at end of period		9.29			9.21			9.33			9.27			9.19

Total return (%)		1.72			(0.49	)		1.74			2.23			4.92

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.29			0.29			0.29			0.49	¹		0.55
Gross operating expenses		0.62			0.61			0.62			0.62			0.62
Net investment income (loss)		0.85			0.80			1.07			1.34			1.95
Portfolio turnover rate²		67			77			92			94			173
Net assets, end of period ($ x 1,000,000)		438			439			443			267			258

¹ Effective June 16, 2011, the net operating expense limitation was lowered. The ratio presented for period ended 8/31/11 is a blended ratio.

² Includes to-be-announced (TBA) transactions (if any). See financial note 2.

See financial notes 17

Schwab Short-Term Bond Market Fund

Portfolio Holdings as of August 31, 2014

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 the fund’s website at www.schwabfunds.com/prospectus.

For fixed rate obligations, the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date. The maturity date shown for all the securities is the final legal maturity.


				Cost		Value
Holdings by Category				($)		($)

	66	.1%	U.S. Government and Government Agencies		289,595,730		289,769,232
	7	.8%	Foreign Securities		34,021,683		34,323,710
	24	.9%	Corporate Bonds		107,856,003		108,984,248
	0	.1%	Municipal Bonds		624,587		636,340
	0	.1%	Other Investment Company		468,469		468,469


	99	.0%	Total Investments		432,566,472		434,181,999
	1	.0%	Other Assets and Liabilities, Net				4,173,322


	100	.0%	Net Assets				438,355,321


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

U.S. Government and Government Agencies 66.1% of net assets

U.S. Government Agency Securities 7.5%
Fannie Mae
4.38%, 10/15/15		2,000,000		2,092,982
2.38%, 04/11/16		1,750,000		1,804,701
0.63%, 08/26/16		2,850,000		2,852,688
1.20%, 07/17/17 (b)		1,500,000		1,501,347
0.88%, 08/28/17		1,000,000		995,500
0.88%, 10/26/17		1,500,000		1,488,315
1.13%, 03/28/18 (b)		575,000		572,265
1.13%, 05/25/18 (b)		1,000,000		987,994
1.75%, 06/20/19		1,000,000		1,001,000
Federal Farm Credit Bank
4.88%, 12/16/15		150,000		158,792
Federal Home Loan Bank
0.38%, 06/24/16		1,150,000		1,147,470
0.50%, 09/28/16		2,000,000		1,996,334
4.88%, 05/17/17		1,500,000		1,657,946
1.00%, 06/21/17		1,000,000		1,001,238
1.63%, 06/14/19		400,000		397,459
Freddie Mac
2.50%, 05/27/16		2,000,000		2,069,580
2.00%, 08/25/16		2,000,000		2,055,204
0.75%, 10/05/16 (b)		2,000,000		2,000,350
1.00%, 03/08/17		1,000,000		1,003,629
1.00%, 06/29/17		1,750,000		1,750,479
1.03%, 11/28/17 (b)		975,000		968,532
0.88%, 03/07/18		1,800,000		1,772,366
1.75%, 05/30/19		1,500,000		1,505,898

				32,782,069

U.S. Treasury Obligations 58.6%
U.S. Treasury Notes
1.25%, 09/30/15		1,000,000		1,011,953
0.25%, 10/15/15		2,000,000		2,002,070
1.25%, 10/31/15		3,000,000		3,037,500
0.38%, 11/15/15		2,000,000		2,004,532
4.50%, 11/15/15		4,000,000		4,206,796
1.38%, 11/30/15		4,000,000		4,058,436
0.25%, 12/15/15		6,000,000		6,002,694
0.25%, 12/31/15		2,000,000		2,000,938
2.13%, 12/31/15		1,750,000		1,793,750
0.38%, 01/15/16		7,750,000		7,763,167
2.00%, 01/31/16		335,000		343,192
0.38%, 02/15/16		3,000,000		3,003,867
0.25%, 02/29/16		2,250,000		2,248,639
2.13%, 02/29/16		1,000,000		1,027,148
2.63%, 02/29/16		750,000		775,913
0.38%, 03/15/16		4,000,000		4,003,592
2.25%, 03/31/16		1,000,000		1,030,156
2.38%, 03/31/16		1,500,000		1,547,813
0.25%, 04/15/16		1,200,000		1,198,102
0.38%, 04/30/16		2,500,000		2,500,538
2.00%, 04/30/16		2,000,000		2,053,790
0.25%, 05/15/16		1,000,000		997,715
0.38%, 05/31/16		3,850,000		3,848,495
1.75%, 05/31/16		4,000,000		4,092,736
3.25%, 05/31/16		1,000,000		1,049,082
0.50%, 06/15/16		6,000,000		6,008,556
0.50%, 06/30/16		3,500,000		3,504,511
1.50%, 06/30/16		5,000,000		5,095,605
3.25%, 06/30/16		1,450,000		1,523,576
0.63%, 07/15/16		2,500,000		2,507,862
1.50%, 07/31/16		1,100,000		1,121,291
0.63%, 08/15/16		6,000,000		6,015,354
4.88%, 08/15/16		1,750,000		1,897,964
1.00%, 08/31/16		1,500,000		1,514,591
3.00%, 08/31/16		1,000,000		1,049,180
0.88%, 09/15/16		2,500,000		2,517,187
1.00%, 09/30/16		2,000,000		2,018,282
0.63%, 10/15/16		3,000,000		3,003,165
3.13%, 10/31/16		4,500,000		4,744,336
4.63%, 11/15/16		3,500,000		3,806,523
0.88%, 11/30/16		1,250,000		1,256,788
2.75%, 11/30/16		2,500,000		2,618,360
0.88%, 12/31/16		4,000,000		4,018,592
3.25%, 12/31/16		6,000,000		6,357,186
0.88%, 02/28/17		2,100,000		2,106,972
0.75%, 03/15/17		3,000,000		3,000,351
1.00%, 03/31/17		2,000,000		2,010,938
0.88%, 04/30/17		4,500,000		4,506,327
3.13%, 04/30/17		600,000		636,422
0.88%, 05/15/17		2,000,000		2,002,266
0.63%, 05/31/17		9,000,000		8,943,048
2.75%, 05/31/17		1,500,000		1,576,758
0.88%, 06/15/17		1,000,000		1,000,234
0.75%, 06/30/17		2,250,000		2,240,771
2.50%, 06/30/17		800,000		835,562
0.88%, 07/15/17		3,700,000		3,696,529
0.50%, 07/31/17		5,000,000		4,937,305
2.38%, 07/31/17		1,000,000		1,041,172
0.63%, 08/31/17		7,000,000		6,927,816

18 See financial notes

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
0.63%, 09/30/17		3,500,000		3,458,847
0.75%, 10/31/17		2,000,000		1,981,094
0.63%, 11/30/17		3,500,000		3,447,090
2.25%, 11/30/17		1,500,000		1,555,137
0.75%, 12/31/17		6,500,000		6,419,764
0.88%, 01/31/18		4,750,000		4,704,728
0.75%, 02/28/18		1,250,000		1,230,615
0.75%, 03/31/18		1,000,000		983,086
0.63%, 04/30/18		3,000,000		2,931,210
1.00%, 05/31/18		5,000,000		4,945,705
1.38%, 06/30/18		2,500,000		2,504,005
1.38%, 07/31/18		1,000,000		1,000,703
1.50%, 08/31/18		5,250,000		5,272,969
1.38%, 09/30/18		3,500,000		3,494,942
1.25%, 10/31/18		3,000,000		2,976,564
1.25%, 11/30/18		3,000,000		2,973,399
1.38%, 12/31/18		4,000,000		3,982,500
1.50%, 01/31/19		4,500,000		4,497,187
1.50%, 02/28/19		5,500,000		5,492,052
1.63%, 03/31/19		4,000,000		4,012,032
1.63%, 04/30/19		3,500,000		3,507,245
1.50%, 05/31/19		6,750,000		6,720,469
1.63%, 06/30/19		2,250,000		2,252,021
1.63%, 07/31/19		2,000,000		2,000,390
1.63%, 08/31/19		5,000,000		4,999,415

				256,987,163

Total U.S. Government and Government Agencies
(Cost $289,595,730)				289,769,232




Foreign Securities 7.8% of net assets

Foreign Agencies 2.8%


Austria 0.2%
Oesterreichische Kontrollbank AG
1.75%, 10/05/15		300,000		304,815
0.75%, 12/15/16		500,000		500,263

				805,078


Brazil 0.2%
Petrobras Global Finance BV
3.00%, 01/15/19		650,000		642,115
Petrobras International Finance Co.
3.88%, 01/27/16		350,000		360,674

				1,002,789


Germany 1.5%
Kreditanstalt Fuer Wiederaufbau
2.63%, 02/16/16 (d)		1,000,000		1,032,370
2.00%, 06/01/16 (d)		1,250,000		1,282,998
4.88%, 01/17/17 (d)		1,550,000		1,697,512
4.50%, 07/16/18 (d)		800,000		892,440
1.88%, 04/01/19 (d)		650,000		657,183
Landwirtschaftliche Rentenbank
2.50%, 02/15/16 (d)		750,000		772,821

				6,335,324


Japan 0.4%
Japan Finance Corp.
2.25%, 07/13/16		750,000		773,053
1.75%, 11/13/18		500,000		501,960
2.13%, 02/07/19		250,000		254,855
Japan Finance Organization for Municipalities
5.00%, 05/16/17		200,000		221,000

				1,750,868


Mexico 0.1%
Pemex Project Funding Master Trust
5.75%, 03/01/18		250,000		281,125
Petroleos Mexicanos
3.50%, 07/18/18		250,000		261,875

				543,000


Norway 0.0%
Statoil A.S.A.
1.15%, 05/15/18		200,000		197,432


Republic of Korea 0.3%
Export-Import Bank of Korea
4.00%, 01/11/17		600,000		637,802
The Korea Development Bank
3.50%, 08/22/17		600,000		632,393

				1,270,195


Sweden 0.1%
Svensk Exportkredit AB
1.75%, 05/30/17		150,000		152,909
1.13%, 04/05/18		450,000		446,070

				598,979

				12,503,665

Foreign Local Government 0.6%


Canada 0.6%
Hydro Quebec
2.00%, 06/30/16		300,000		307,233
Province of Manitoba
1.13%, 06/01/18		150,000		148,350
Province of Nova Scotia
5.13%, 01/26/17		250,000		275,413
Province of Ontario
1.88%, 09/15/15		400,000		406,662
2.30%, 05/10/16		300,000		308,906
3.15%, 12/15/17		250,000		264,744
1.20%, 02/14/18		500,000		496,332
2.00%, 01/30/19		500,000		504,880

				2,712,520

Sovereign 0.9%


Brazil 0.1%
Federative Republic of Brazil
6.00%, 01/17/17		400,000		443,000


Canada 0.0%
Canada Government International Bond
0.88%, 02/14/17		150,000		150,120


Colombia 0.1%
Republic of Colombia
7.38%, 01/27/17		300,000		344,250


Italy 0.2%
Republic of Italy
4.75%, 01/25/16		500,000		526,649
5.38%, 06/12/17		300,000		331,175

				857,824

See financial notes 19

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


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


Mexico 0.1%
United Mexican States
5.63%, 01/15/17		500,000		553,750


Republic of Korea 0.1%
Republic of Korea
5.13%, 12/07/16		250,000		274,475


South Africa 0.1%
Republic of South Africa
6.88%, 05/27/19		200,000		232,000


Turkey 0.2%
Turkey Government International Bond
7.00%, 09/26/16		150,000		165,570
7.00%, 03/11/19		650,000		750,717

				916,287

				3,771,706

*Supranational 3.5%**
African Development Bank
6.88%, 10/15/15		250,000		265,239
0.88%, 05/15/17		300,000		299,394
Asian Development Bank
2.50%, 03/15/16		650,000		670,741
1.75%, 09/11/18		450,000		455,550
1.88%, 04/12/19		250,000		252,434
Corp. Andina de Fomento S.A.
5.75%, 01/12/17		100,000		110,696
Council of Europe Development Bank
1.50%, 02/22/17		400,000		406,126
European Bank for Reconstruction & Development
1.38%, 10/20/16		650,000		659,772
1.00%, 02/16/17		250,000		251,219
European Investment Bank
4.88%, 02/16/16		600,000		639,059
2.25%, 03/15/16		1,000,000		1,027,948
2.50%, 05/16/16		800,000		827,450
5.13%, 09/13/16		500,000		545,190
4.88%, 01/17/17		650,000		712,023
1.75%, 03/15/17		450,000		459,688
1.00%, 06/15/18		400,000		394,291
1.63%, 12/18/18		750,000		752,692
1.88%, 03/15/19		1,000,000		1,009,817
Inter-American Development Bank
0.88%, 03/15/18		1,250,000		1,232,097
1.75%, 08/24/18		250,000		252,432
International Bank for Reconstruction & Development
2.13%, 03/15/16		900,000		922,972
0.88%, 04/17/17		700,000		701,977
1.13%, 07/18/17		500,000		502,718
1.88%, 03/15/19		200,000		203,261
International Finance Corp.
2.25%, 04/11/16		200,000		205,744
2.13%, 11/17/17		650,000		669,560
1.75%, 09/04/18		400,000		404,884
1.75%, 09/16/19		250,000		249,973
Nordic Investment Bank
1.00%, 03/07/17		250,000		250,872

				15,335,819

Total Foreign Securities
(Cost $34,021,683)				34,323,710




Corporate Bonds 24.9% of net assets

Finance 10.8%


Banking 8.2%
Abbey National Treasury Services PLC
4.00%, 04/27/16		250,000		262,945
3.05%, 08/23/18		150,000		156,868
American Express Centurion Bank
6.00%, 09/13/17		250,000		283,635
American Express Co.
6.80%, 09/01/66 (a)(b)		200,000		217,500
American Express Credit Corp.
2.75%, 09/15/15		250,000		256,073
2.13%, 07/27/18		350,000		355,080
Bank of America Corp.
1.50%, 10/09/15		250,000		252,385
6.50%, 08/01/16		125,000		137,457
1.35%, 11/21/16		400,000		401,513
5.30%, 03/15/17		250,000		272,825
6.00%, 09/01/17		600,000		673,938
5.75%, 12/01/17		750,000		842,005
2.00%, 01/11/18		700,000		703,659
6.88%, 04/25/18		400,000		466,792
2.65%, 04/01/19		500,000		505,635
Barclays Bank PLC
2.50%, 02/20/19		500,000		508,617
BB&T Corp.
4.90%, 06/30/17		250,000		273,588
6.85%, 04/30/19		300,000		362,206
BNP Paribas S.A.
3.60%, 02/23/16		500,000		520,139
2.45%, 03/17/19		250,000		253,135
Canadian Imperial Bank of Commerce
2.35%, 12/11/15		200,000		204,531
Capital One Bank USA NA
2.25%, 02/13/19 (b)		750,000		752,578
Capital One Financial Corp.
6.75%, 09/15/17		200,000		230,712
Citigroup, Inc.
1.70%, 07/25/16		1,000,000		1,012,211
4.45%, 01/10/17		500,000		536,404
6.00%, 08/15/17		500,000		562,562
6.13%, 05/15/18		600,000		688,726
2.50%, 09/26/18		500,000		508,071
Credit Suisse USA, Inc.
1.38%, 05/26/17		350,000		350,009
Deutsche Bank AG
3.25%, 01/11/16		300,000		310,131
1.35%, 05/30/17		250,000		249,706
Fifth Third Bancorp
3.63%, 01/25/16		600,000		624,463
HSBC USA, Inc.
1.63%, 01/16/18		200,000		200,828
JPMorgan Chase & Co.
3.45%, 03/01/16		1,000,000		1,039,122
3.15%, 07/05/16		300,000		312,004
6.00%, 01/15/18		400,000		454,700
1.80%, 01/25/18		500,000		502,188
2.35%, 01/28/19		600,000		606,438
KeyBank NA
1.10%, 11/25/16 (b)		250,000		250,813
Lloyds Bank PLC
4.88%, 01/21/16		200,000		211,661

20 See financial notes

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
4.20%, 03/28/17		400,000		429,838
2.30%, 11/27/18		400,000		405,193
Manufacturers & Traders Trust Co.
2.30%, 01/30/19 (b)		250,000		252,604
Merrill Lynch & Co., Inc.
6.05%, 05/16/16		1,200,000		1,298,128
Morgan Stanley
5.38%, 10/15/15		1,000,000		1,051,472
6.25%, 08/28/17		1,000,000		1,132,864
5.95%, 12/28/17		300,000		339,654
2.38%, 07/23/19		500,000		499,920
MUFG Union Bank NA
3.00%, 06/06/16		250,000		259,361
PNC Bank NA
2.20%, 01/28/19 (b)		250,000		252,126
PNC Funding Corp.
2.70%, 09/19/16 (b)		750,000		776,272
Rabobank Nederland
3.38%, 01/19/17		150,000		158,253
Regions Financial Corp.
2.00%, 05/15/18 (b)		250,000		249,128
Royal Bank of Canada
2.63%, 12/15/15		300,000		308,102
State Street Corp.
2.88%, 03/07/16		200,000		207,110
Sumitomo Mitsui Banking Corp.
1.80%, 07/18/17		250,000		252,857
2.45%, 01/10/19		250,000		254,000
Svenska Handelsbanken AB
2.88%, 04/04/17		300,000		312,869
The Bank of New York Mellon Corp.
1.97%, 06/20/17 (a)		500,000		511,313
The Bank of Nova Scotia
1.38%, 07/15/16		500,000		506,646
1.45%, 04/25/18		250,000		247,771
The Bear Stearns Cos. LLC
5.55%, 01/22/17		500,000		547,798
6.40%, 10/02/17		500,000		571,079
The Goldman Sachs Group, Inc.
5.35%, 01/15/16		150,000		159,204
6.25%, 09/01/17		250,000		283,052
5.95%, 01/18/18		1,000,000		1,129,273
6.15%, 04/01/18		1,400,000		1,595,920
2.63%, 01/31/19		500,000		506,383
The Toronto-Dominion Bank
2.50%, 07/14/16		250,000		258,370
2.63%, 09/10/18		500,000		514,922
2.13%, 07/02/19		250,000		249,732
UBS AG
5.88%, 12/20/17		175,000		198,827
5.75%, 04/25/18		100,000		113,867
UBS Preferred Funding Trust V
6.24%, 12/31/49 (a)(b)		300,000		317,813
Wells Fargo & Co.
5.75%, 05/16/16		300,000		324,774
2.63%, 12/15/16		250,000		259,445
5.63%, 12/11/17		1,000,000		1,131,319
2.15%, 01/15/19		200,000		201,720
Westpac Banking Corp.
2.25%, 01/17/19		600,000		608,047

				35,990,879


Brokerage 0.2%
Jefferies Group LLC
3.88%, 11/09/15		150,000		155,630
5.50%, 03/15/16		65,000		69,478
5.13%, 04/13/18		150,000		164,081
Nomura Holdings, Inc.
4.13%, 01/19/16		300,000		312,405
2.75%, 03/19/19		150,000		152,224

				853,818


Finance Company 0.7%
GATX Corp.
1.25%, 03/04/17		100,000		99,502
2.50%, 07/30/19		150,000		150,286
General Electric Capital Corp.
1.50%, 07/12/16		650,000		659,082
2.30%, 04/27/17		900,000		925,861
5.63%, 05/01/18		300,000		341,606
2.30%, 01/14/19		250,000		254,920
HSBC Finance Corp.
5.50%, 01/19/16		150,000		159,329
Synchrony Financial
3.00%, 08/15/19 (b)		500,000		507,520

				3,098,106


Insurance 1.2%
ACE INA Holdings, Inc.
5.70%, 02/15/17		350,000		388,463
American International Group, Inc.
5.05%, 10/01/15		100,000		104,820
5.85%, 01/16/18		300,000		340,477
2.30%, 07/16/19 (b)		400,000		402,049
Assurant, Inc.
2.50%, 03/15/18		150,000		151,580
Berkshire Hathaway Finance Corp.
1.60%, 05/15/17		100,000		101,381
2.00%, 08/15/18		150,000		151,893
Berkshire Hathaway, Inc.
2.20%, 08/15/16		150,000		154,621
Cigna Corp.
2.75%, 11/15/16		250,000		259,476
5.38%, 03/15/17		100,000		109,999
CNA Financial Corp.
6.50%, 08/15/16		150,000		165,634
Genworth Holdings, Inc.
8.63%, 12/15/16		200,000		230,862
Hartford Financial Services Group, Inc.
5.38%, 03/15/17		300,000		329,683
MetLife, Inc.
6.82%, 08/15/18		400,000		475,317
Prudential Financial, Inc.
6.00%, 12/01/17		300,000		340,776
The Chubb Corp.
6.38%, 03/29/67 (a)(b)		100,000		110,593
The Travelers Co., Inc.
5.50%, 12/01/15		400,000		424,491
UnitedHealth Group, Inc.
1.40%, 10/15/17		200,000		200,280
Voya Financial, Inc.
2.90%, 02/15/18		300,000		310,693
WellPoint, Inc.
5.25%, 01/15/16		100,000		106,382
2.25%, 08/15/19		300,000		299,116

				5,158,586


Real Estate Investment Trust 0.5%
Health Care REIT, Inc.
3.63%, 03/15/16		600,000		624,271

See financial notes 21

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
ProLogis LP
2.75%, 02/15/19 (b)		450,000		458,960
Simon Property Group LP
5.25%, 12/01/16 (b)		250,000		271,208
2.15%, 09/15/17 (b)		150,000		153,954
Ventas Realty LP
3.13%, 11/30/15		500,000		514,763
2.00%, 02/15/18 (b)		250,000		251,971

				2,275,127

				47,376,516

Industrial 12.7%


Basic Industry 0.9%
Airgas, Inc.
1.65%, 02/15/18 (b)		500,000		497,150
Barrick Gold Corp.
2.50%, 05/01/18		200,000		203,166
CF Industries Holdings, Inc.
6.88%, 05/01/18		100,000		117,041
Domtar Corp.
10.75%, 06/01/17		75,000		92,138
Eastman Chemical Co.
2.40%, 06/01/17		300,000		307,518
EI Du Pont de Nemours & Co.
5.25%, 12/15/16		150,000		164,708
Freeport-McMoRan, Inc.
2.38%, 03/15/18		700,000		710,142
Glencore Canada Corp.
6.00%, 10/15/15		200,000		211,102
LyondellBasell Industries N.V.
5.00%, 04/15/19 (b)		300,000		335,841
Monsanto Co.
2.75%, 04/15/16		200,000		206,695
Rio Tinto Finance (USA) PLC
2.25%, 12/14/18 (b)		600,000		611,354
Rock-Tenn Co.
4.45%, 03/01/19		200,000		217,108
The Dow Chemical Co.
5.70%, 05/15/18		101,000		114,752
Vale Overseas Ltd.
6.25%, 01/23/17		300,000		333,753

				4,122,468


Capital Goods 1.1%
Boeing Capital Corp.
2.13%, 08/15/16 (b)		100,000		102,785
Caterpillar Financial Services Corp.
1.25%, 11/06/17		350,000		349,091
2.10%, 06/09/19		500,000		502,522
CRH America, Inc.
6.00%, 09/30/16		75,000		82,335
Eaton Corp.
0.95%, 11/02/15		350,000		351,511
5.60%, 05/15/18		300,000		340,934
General Dynamics Corp.
2.25%, 07/15/16		100,000		103,042
General Electric Co.
5.25%, 12/06/17		750,000		841,213
Ingersoll-Rand Global Holding Co., Ltd.
2.88%, 01/15/19 (c)		150,000		154,074
John Deere Capital Corp.
5.50%, 04/13/17		150,000		166,666
2.80%, 09/18/17		350,000		365,979
1.95%, 12/13/18		250,000		251,141
L-3 Communications Corp.
3.95%, 11/15/16		200,000		211,011
Lockheed Martin Corp.
2.13%, 09/15/16		100,000		102,569
Northrop Grumman Corp.
1.75%, 06/01/18		200,000		199,686
Owens Corning, Inc.
6.50%, 12/01/16		100,000		110,730
United Technologies Corp.
1.80%, 06/01/17		500,000		509,236
Waste Management, Inc.
2.60%, 09/01/16		200,000		206,470

				4,950,995


Communications 1.9%
America Movil, S.A.B. de CV
2.38%, 09/08/16		250,000		256,388
American Tower Corp.
3.40%, 02/15/19		350,000		363,653
AT&T, Inc.
0.90%, 02/12/16		150,000		150,544
2.40%, 08/15/16		200,000		205,989
1.40%, 12/01/17		200,000		200,038
5.50%, 02/01/18		250,000		282,228
2.38%, 11/27/18		300,000		305,907
British Telecommunications PLC
1.63%, 06/28/16		250,000		252,958
2.35%, 02/14/19		200,000		202,295
Comcast Corp.
4.95%, 06/15/16		150,000		161,214
6.30%, 11/15/17		250,000		288,558
COX Communications, Inc.
5.50%, 10/01/15		100,000		105,024
DIRECTV Holdings LLC
3.13%, 02/15/16		500,000		516,757
2.40%, 03/15/17		100,000		102,897
Grupo Televisa S.A.B.
6.00%, 05/15/18		200,000		226,980
Omnicom Group, Inc.
5.90%, 04/15/16		300,000		323,895
Orange S.A.
2.75%, 02/06/19		200,000		205,305
Telefonica Emisiones S.A.U.
3.99%, 02/16/16		275,000		287,175
The Walt Disney Co.
1.35%, 08/16/16		150,000		152,072
1.85%, 05/30/19		300,000		298,130
Time Warner Cable, Inc.
5.85%, 05/01/17		250,000		279,317
Time Warner, Inc.
5.88%, 11/15/16		300,000		331,173
2.10%, 06/01/19		400,000		397,163
Verizon Communications, Inc.
0.70%, 11/02/15		250,000		250,415
2.50%, 09/15/16		450,000		464,213
2.00%, 11/01/16		200,000		204,016
2.55%, 06/19/19		700,000		712,075
Viacom, Inc.
2.50%, 12/15/16		150,000		154,591
2.20%, 04/01/19		300,000		299,890
Vodafone Group PLC
5.63%, 02/27/17		150,000		165,518
1.25%, 09/26/17		200,000		198,487

				8,344,865

22 See financial notes

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


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


Consumer Cyclical 1.5%
Amazon.com, Inc.
1.20%, 11/29/17		100,000		99,483
American Honda Finance Corp.
1.13%, 10/07/16		350,000		352,237
CVS Caremark Corp.
1.20%, 12/05/16		105,000		105,522
2.25%, 08/12/19 (b)		500,000		500,503
eBay, Inc.
1.63%, 10/15/15		125,000		126,705
1.35%, 07/15/17		150,000		150,573
Ford Motor Credit Co. LLC
2.50%, 01/15/16		250,000		255,542
6.63%, 08/15/17		500,000		571,440
5.00%, 05/15/18		750,000		828,700
2.88%, 10/01/18		200,000		206,114
Kohl’s Corp.
6.25%, 12/15/17		100,000		114,167
Lowe’s Cos., Inc.
5.00%, 10/15/15		100,000		104,917
Macy’s Retail Holdings, Inc.
7.45%, 07/15/17		250,000		291,059
Marriott International, Inc.
6.20%, 06/15/16		150,000		163,320
McDonald’s Corp.
5.30%, 03/15/17		250,000		276,612
Nordstrom, Inc.
6.25%, 01/15/18		200,000		229,638
Starbucks Corp.
2.00%, 12/05/18 (b)		250,000		251,765
Starwood Hotels & Resorts Worldwide, Inc.
6.75%, 05/15/18		150,000		175,280
The Home Depot, Inc.
5.40%, 03/01/16		500,000		536,005
Toyota Motor Credit Corp.
2.80%, 01/11/16		200,000		206,286
1.38%, 01/10/18		200,000		199,821
Wal-Mart Stores, Inc.
2.80%, 04/15/16		200,000		207,495
5.38%, 04/05/17		200,000		222,050
1.13%, 04/11/18		300,000		296,503
Yum! Brands, Inc.
6.25%, 03/15/18		34,000		38,873

				6,510,610


Consumer Non-Cyclical 3.3%
AbbVie, Inc.
1.75%, 11/06/17		750,000		754,532
2.00%, 11/06/18		250,000		249,716
Amgen, Inc.
2.13%, 05/15/17		150,000		153,535
Anheuser-Busch InBev Finance, Inc.
1.13%, 01/27/17		250,000		252,262
2.15%, 02/01/19		200,000		202,457
Bottling Group LLC
5.50%, 04/01/16		150,000		161,557
Bunge Ltd Finance Corp.
3.20%, 06/15/17		250,000		260,017
Cardinal Health, Inc.
1.90%, 06/15/17		350,000		355,197
Celgene Corp.
2.30%, 08/15/18		500,000		507,602
Coca-Cola Enterprises, Inc.
2.13%, 09/15/15		150,000		152,352
Colgate-Palmolive Co.
2.63%, 05/01/17		150,000		156,407
ConAgra Foods, Inc.
1.30%, 01/25/16		250,000		251,774
Diageo Capital PLC
1.13%, 04/29/18		150,000		147,493
Dr. Pepper Snapple Group, Inc.
2.60%, 01/15/19		300,000		304,985
Express Scripts Holding Co.
2.65%, 02/15/17		700,000		724,339
General Mills, Inc.
5.70%, 02/15/17		100,000		110,864
5.65%, 02/15/19		400,000		462,596
Gilead Sciences, Inc.
3.05%, 12/01/16		250,000		261,466
2.05%, 04/01/19		300,000		301,328
Kellogg Co.
4.45%, 05/30/16		100,000		106,207
Kraft Foods Group, Inc.
2.25%, 06/05/17		400,000		409,336
Lorillard Tobacco Co.
2.30%, 08/21/17		100,000		101,716
Mattel, Inc.
2.50%, 11/01/16		100,000		103,051
McKesson Corp.
0.95%, 12/04/15		300,000		300,983
3.25%, 03/01/16		100,000		103,525
5.70%, 03/01/17		150,000		166,848
2.28%, 03/15/19		200,000		200,306
Merck & Co, Inc.
1.30%, 05/18/18		350,000		348,195
Mondelez International, Inc.
4.13%, 02/09/16		500,000		523,552
2.25%, 02/01/19 (b)		200,000		200,507
Mylan, Inc.
1.80%, 06/24/16		200,000		202,797
2.60%, 06/24/18		150,000		152,958
2.55%, 03/28/19		450,000		452,739
Newell Rubbermaid, Inc.
2.05%, 12/01/17		300,000		302,796
PepsiCo, Inc.
2.50%, 05/10/16		100,000		103,132
1.25%, 08/13/17		100,000		100,335
Pfizer, Inc.
2.10%, 05/15/19		400,000		403,066
Philip Morris International, Inc.
1.13%, 08/21/17		150,000		149,744
5.65%, 05/16/18		250,000		285,036
Procter & Gamble Co.
1.80%, 11/15/15		250,000		254,338
Reynolds American, Inc.
1.05%, 10/30/15		100,000		100,119
Sanofi
2.63%, 03/29/16		250,000		258,190
1.25%, 04/10/18		400,000		396,114
The Coca-Cola Co.
1.15%, 04/01/18		250,000		247,929
4.88%, 03/15/19		250,000		282,159
The Kroger Co.
3.90%, 10/01/15		200,000		206,800
Thermo Fisher Scientific, Inc.
2.40%, 02/01/19		500,000		505,684
Tyson Foods, Inc.
2.65%, 08/15/19 (b)		300,000		304,276

See financial notes 23

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Unilever Capital Corp.
0.85%, 08/02/17		100,000		99,417
UST LLC
5.75%, 03/01/18		500,000		566,768
Whirlpool Corp.
6.50%, 06/15/16		250,000		274,489
Zoetis, Inc.
1.15%, 02/01/16		250,000		251,061

				14,234,652


Energy 2.1%
Anadarko Petroleum Corp.
5.95%, 09/15/16		500,000		549,239
Apache Corp.
1.75%, 04/15/17		100,000		101,505
BP Capital Markets PLC
3.13%, 10/01/15		250,000		257,228
3.20%, 03/11/16		250,000		260,006
1.85%, 05/05/17		300,000		305,601
1.38%, 05/10/18		100,000		99,045
2.24%, 05/10/19		200,000		201,318
Chevron Corp.
1.72%, 06/24/18 (b)		650,000		655,033
ConocoPhillips
5.20%, 05/15/18		150,000		168,284
Devon Energy Corp.
2.25%, 12/15/18 (b)		200,000		202,016
Dominion Gas Holdings LLC
1.05%, 11/01/16		500,000		500,358
Encana Corp.
6.50%, 05/15/19		250,000		294,677
Energy Transfer Partners LP
6.13%, 02/15/17		200,000		222,456
6.70%, 07/01/18		350,000		408,537
Ensco PLC
3.25%, 03/15/16		150,000		155,378
Enterprise Products Operating LLC
6.50%, 01/31/19		200,000		236,949
Hess, Corp.
1.30%, 06/15/17		250,000		249,973
Kinder Morgan Energy Partners LP
5.95%, 02/15/18		400,000		451,115
2.65%, 02/01/19		300,000		303,138
Marathon Oil Corp.
0.90%, 11/01/15		250,000		250,702
Marathon Petroleum Corp.
3.50%, 03/01/16		100,000		103,865
Nabors Industries, Inc.
2.35%, 09/15/16		200,000		205,633
Noble Holding International Ltd.
3.05%, 03/01/16		500,000		515,695
Occidental Petroleum Corp.
1.50%, 02/15/18 (b)		600,000		599,021
Shell International Finance BV
5.20%, 03/22/17		150,000		165,887
Spectra Energy Partners LP
2.95%, 09/25/18 (b)		300,000		311,209
Suncor Energy, Inc.
6.10%, 06/01/18		400,000		461,668
Total Capital International S.A.
2.10%, 06/19/19		250,000		250,509
Total Capital S.A.
2.30%, 03/15/16		100,000		102,592
1.50%, 02/17/17		150,000		151,689
Valero Energy Corp.
6.13%, 06/15/17		200,000		225,715
Weatherford International Ltd.
5.50%, 02/15/16		200,000		212,670
Williams Partners LP
7.25%, 02/01/17		200,000		226,722

				9,405,433


Technology 1.6%
Apple, Inc.
0.45%, 05/03/16		150,000		149,823
1.00%, 05/03/18		350,000		343,312
Arrow Electronics, Inc.
3.00%, 03/01/18		500,000		515,957
Baidu, Inc.
3.25%, 08/06/18		200,000		207,517
Broadcom Corp.
2.70%, 11/01/18		500,000		515,545
Cisco Systems, Inc.
5.50%, 02/22/16		200,000		214,606
1.10%, 03/03/17		350,000		351,346
Fiserv, Inc.
3.13%, 10/01/15		200,000		205,068
6.80%, 11/20/17		400,000		460,658
Hewlett-Packard Co.
2.65%, 06/01/16		500,000		515,469
2.75%, 01/14/19		400,000		409,880
Intel Corp.
1.35%, 12/15/17		150,000		150,029
International Business Machines Corp.
1.25%, 02/06/17		350,000		352,728
1.25%, 02/08/18		250,000		249,230
1.88%, 05/15/19		200,000		199,924
Microsoft Corp.
1.63%, 09/25/15		250,000		253,510
1.63%, 12/06/18		250,000		250,375
NetApp, Inc.
2.00%, 12/15/17		750,000		758,519
Oracle Corp.
5.25%, 01/15/16		250,000		266,239
2.25%, 10/08/19		200,000		200,978
Texas Instruments, Inc.
2.38%, 05/16/16		150,000		154,506
Xerox Corp.
2.95%, 03/15/17		150,000		156,165

				6,881,384


Transportation 0.3%
Burlington Northern Santa Fe Corp.
5.75%, 03/15/18		300,000		341,813
CSX Corp.
5.60%, 05/01/17		100,000		110,910
Ryder System, Inc.
2.55%, 06/01/19 (b)		300,000		303,249
Southwest Airlines Co.
5.13%, 03/01/17		400,000		433,973

				1,189,945

				55,640,352

Utilities 1.4%


Electric 1.3%
American Electric Power Co., Inc.
1.65%, 12/15/17 (b)		400,000		401,863

24 See financial notes

Schwab Short-Term Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
CMS Energy Corp.
5.05%, 02/15/18		150,000		166,096
Commonwealth Edison Co.
2.15%, 01/15/19 (b)		500,000		504,988
Consumers Energy Co.
5.50%, 08/15/16		74,000		80,788
Duke Energy Corp.
1.63%, 08/15/17		150,000		151,171
2.10%, 06/15/18 (b)		200,000		201,901
Duke Energy Ohio, Inc.
5.45%, 04/01/19		400,000		458,564
Edison International
3.75%, 09/15/17		300,000		319,349
NextEra Energy Capital Holdings, Inc.
2.60%, 09/01/15		100,000		101,995
7.88%, 12/15/15		150,000		163,505
Oncor Electric Delivery Co. LLC
2.15%, 06/01/19 (b)(c)		350,000		350,856
Pacific Gas & Electric Co.
5.63%, 11/30/17		200,000		225,490
PPL Capital Funding Inc.
1.90%, 06/01/18 (b)		100,000		100,149
PSEG Power LLC
5.50%, 12/01/15		200,000		211,675
Sierra Pacific Power Co.
6.00%, 05/15/16		300,000		326,636
The Dayton Power & Light Co.
1.88%, 09/15/16		300,000		305,286
The Southern Co.
2.45%, 09/01/18		350,000		358,204
2.15%, 09/01/19 (b)		500,000		500,274
TransAlta Corp.
6.65%, 05/15/18		100,000		113,246
Xcel Energy, Inc.
0.75%, 05/09/16		500,000		500,448

				5,542,484


Natural Gas 0.1%
ONE Gas, Inc.
2.07%, 02/01/19 (b)(c)		150,000		150,767
Sempra Energy
6.50%, 06/01/16		250,000		274,129

				424,896

				5,967,380

Total Corporate Bonds
(Cost $107,856,003)				108,984,248




Municipal Bonds 0.1% of net assets

Fixed-Rate Obligations 0.1%
California
GO Bonds
3.95%, 11/01/15		350,000		364,273
Illinois
GO Bonds Series 2011
5.37%, 03/01/17		250,000		272,067

Total Municipal Bonds
(Cost $624,587)				636,340



	Number		Value
Security	of Shares		($)

Other Investment Company 0.1% of net assets

Money Market Fund 0.1%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (e)		468,469		468,469

Total Other Investment Company
(Cost $468,469)				468,469



End of Investments.

At 08/31/14, the tax basis cost of the fund’s investments was $432,632,839 and the unrealized appreciation and depreciation were $2,390,176 and ($841,016), respectively, with a net unrealized appreciation of $1,549,160.


*		Supranational bonds represent the debt of international organizations or institutions such as the World Bank, the International Monetary Fund, regional multilateral development banks and others.
(a)		Variable-rate security.
(b)		The effective maturity may be shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or as the result of embedded demand features (puts or calls).
(c)		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $655,697 or 0.1% of net assets.
(d)		Guaranteed by the Republic of Germany.
(e)		The rate shown is the 7-day yield.


GO —		General obligation
REIT —		Real Estate Investment Trust

See financial notes 25

Schwab Short-Term Bond Market Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$3,636,449			$3,519,782
Net realized gains		1,376,519			2,186,031
Net change in unrealized appreciation (depreciation)	+	2,039,521			(7,343,895	)

Increase (decrease) in net assets from operations		7,052,489			(1,638,082	)

Distributions to shareholders

Distributions from net investment income		($3,636,449	)		($3,519,782	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			18,476,574		$171,226,318			27,837,215		$258,840,696
Shares reinvested			311,076		2,886,296			267,443		2,486,255
Shares redeemed	+		(19,240,163	)	(178,294,815	)		(27,934,919	)	(259,948,466	)

Net transactions in fund shares			(452,513	)	($4,182,201	)		169,739		$1,378,485

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			47,658,878		$439,121,482			47,489,139		$442,900,861
Total increase (decrease)	+		(452,513	)	(766,161	)		169,739		(3,779,379	)

End of period			47,206,365		$438,355,321			47,658,878		$439,121,482

See financial notes 29

Schwab Intermediate-Term Bond Fund™

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		10.06			10.61			10.54			10.43			9.89

Income (loss) from investment operations:
Net investment income (loss)		0.18			0.15			0.17			0.32			0.50
Net realized and unrealized gains (losses)		0.21			(0.32	)		0.22			0.16			0.58

Total from investment operations		0.39			(0.17	)		0.39			0.48			1.08
Less distributions:
Distributions from net investment income		(0.20	)		(0.20	)		(0.21	)		(0.36	)		(0.54	)
Distributions from net realized gains		(0.00	)¹		(0.18	)		(0.11	)		(0.01	)		—

Total distributions		(0.20	)		(0.38	)		(0.32	)		(0.37	)		(0.54	)

Net asset value at end of period		10.25			10.06			10.61			10.54			10.43

Total return (%)		3.95			(1.68	)		3.80			4.75			11.16

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.45			0.51	^2,3		0.61			0.61			0.62
Gross operating expenses		0.64			0.63			0.62			0.61			0.63
Net investment income (loss)		1.73			1.48			1.67			3.13			4.71
Portfolio turnover rate⁴		177			288			304			294			173
Net assets, end of period ($ x 1,000,000)		370			353			418			431			459

¹ Per-share amount was less than $0.01.

² Effective December 15, 2012, the net operating expense limitation was lowered from 0.63% to 0.45%. The ratio presented for period ended 8/31/13 is a blended ratio.

³ The expense ratio would have been 0.50%, if interest expense related to charges on agency mortgage-backed securities not delivered on a timely basis had not been incurred (see financial note 2f).

⁴ Includes to-be-announced (TBA) transactions (if any). See financial note 2.

30 See financial notes

Schwab Intermediate-Term Bond Fund

Portfolio Holdings as of August 31, 2014

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


				Cost			Value
Holdings by Category				($)			($)

	21	.9%	Corporate Bonds		79,305,376			80,937,192
	0	.3%	Asset-Backed Obligations		1,111,771			1,127,343
	36	.3%	Mortgage-Backed Securities		131,327,576			134,374,002
	3	.3%	Commercial Mortgage-Backed Securities		11,806,732			12,112,910
	38	.7%	U.S. Government and Government Agencies		142,291,254			143,191,808
	4	.8%	Foreign Securities		17,343,073			17,675,230
	0	.3%	Preferred Stock		1,018,680			1,018,400
	0	.4%	Other Investment Company		1,725,195			1,725,195


	106	.0%	Total Investments		385,929,657			392,162,080
	(2	.1)%	TBA Sale Commitments		(7,722,656	)		(7,733,013	)
	(3	.9%)	Other Assets and Liabilities, Net					(14,579,822	)


	100	.0%	Net Assets					369,849,245


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

Corporate Bonds 21.9% of net assets

Finance 8.5%


Banking 5.1%
Abbey National Treasury Services PLC
3.05%, 08/23/18		500,000		522,894
American Express Co.
5.50%, 09/12/16		500,000		546,027
Bank of America Corp.
5.42%, 03/15/17		500,000		546,218
1.27%, 01/15/19 (a)		1,000,000		1,024,282
5.63%, 07/01/20		500,000		573,725
4.00%, 04/01/24		550,000		567,679
BNP Paribas S.A.
3.60%, 02/23/16		300,000		312,083
3.25%, 03/03/23		500,000		504,839
BPCE S.A.
1.48%, 04/25/16 (a)		1,000,000		1,015,963
Capital One Financial Corp.
1.00%, 11/06/15		500,000		501,302
Citigroup, Inc.
5.00%, 09/15/14		250,000		250,354
3.95%, 06/15/16		500,000		525,839
1.19%, 07/25/16 (a)		1,000,000		1,010,102
Credit Suisse USA, Inc.
1.38%, 05/26/17		150,000		150,004
First Tennessee Bank NA
5.05%, 01/15/15		1,000,000		1,015,022
JPMorgan Chase & Co.
6.00%, 01/15/18		750,000		852,563
4.95%, 03/25/20		500,000		559,937
Lloyds Bank PLC
6.38%, 01/21/21		1,000,000		1,214,703
Manufacturers & Traders Trust Co.
5.63%, 12/01/21 (a)(b)		500,000		522,500
Merrill Lynch & Co., Inc.
5.00%, 01/15/15		500,000		508,254
Morgan Stanley
5.50%, 07/24/20		1,000,000		1,138,151
3.75%, 02/25/23		100,000		102,819
4.10%, 05/22/23		250,000		254,953
Rabobank Nederland
4.63%, 12/01/23		700,000		745,748
Regions Financial Corp.
2.00%, 05/15/18 (b)		150,000		149,477
Royal Bank of Scotland Group PLC
2.55%, 09/18/15		250,000		254,466
Skandinaviska Enskilda Banken AB
1.75%, 03/19/18 (c)		500,000		500,964
The Bear Stearns Cos. LLC
7.25%, 02/01/18		250,000		294,710
The Goldman Sachs Group, Inc.
3.30%, 05/03/15		250,000		254,764
5.63%, 01/15/17		250,000		273,223
2.38%, 01/22/18		400,000		406,612
6.15%, 04/01/18		650,000		740,963
3.85%, 07/08/24 (b)		100,000		102,014
Wells Fargo & Co.
5.63%, 12/11/17		300,000		339,396
4.60%, 04/01/21		500,000		559,113

				18,841,663


Brokerage 0.1%
Nomura Holdings, Inc.
5.00%, 03/04/15		300,000		306,235
2.75%, 03/19/19		250,000		253,706

				559,941


Finance Company 1.2%
GATX Corp.
1.25%, 03/04/17		600,000		597,009
2.50%, 07/30/19		600,000		601,144
General Electric Capital Corp.
5.63%, 05/01/18		500,000		569,343
International Lease Finance Corp.
4.88%, 04/01/15		1,000,000		1,021,875
Synchrony Financial
3.00%, 08/15/19 (b)		500,000		507,520
3.75%, 08/15/21 (b)		500,000		510,748
4.25%, 08/15/24 (b)		500,000		512,403

				4,320,042


Insurance 1.2%
Aflac, Inc.
3.63%, 06/15/23		250,000		257,685
American International Group, Inc.
2.38%, 08/24/15		600,000		612,077
Assurant, Inc.
2.50%, 03/15/18		750,000		757,900

See financial notes 31

Schwab Intermediate-Term Bond Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Cigna Corp.
5.13%, 06/15/20		350,000		395,165
CNA Financial Corp.
5.88%, 08/15/20		250,000		290,086
Genworth Holdings, Inc.
7.70%, 06/15/20		500,000		606,863
Prudential Financial, Inc.
4.50%, 11/15/20		500,000		549,579
The Chubb Corp.
6.38%, 03/29/67 (a)(b)		100,000		110,593
WellPoint, Inc.
2.30%, 07/15/18		250,000		253,629
2.25%, 08/15/19		250,000		249,263
3.50%, 08/15/24 (b)		500,000		502,467

				4,585,307


Real Estate Investment Trust 0.9%
Brandywine Operating Partnership LP
3.95%, 02/15/23 (b)		500,000		507,721
Kilroy Realty LP
6.63%, 06/01/20		500,000		592,649
4.25%, 08/15/29 (b)		500,000		504,365
Kimco Realty Corp.
3.20%, 05/01/21 (b)		750,000		757,824
ProLogis LP
4.50%, 08/15/17		250,000		269,157
WP Carey, Inc.
4.60%, 04/01/24 (b)		500,000		523,279

				3,154,995

				31,461,948

Industrial 12.5%


Basic Industry 1.5%
Airgas, Inc.
3.65%, 07/15/24 (b)		500,000		511,617
Anglo American Capital PLC
1.18%, 04/15/16 (a)(c)		500,000		503,168
Barrick North America Finance LLC
4.40%, 05/30/21		700,000		737,502
BHP Billiton Finance (USA) Ltd.
3.25%, 11/21/21		500,000		519,573
Glencore Funding LLC
2.50%, 01/15/19 (c)		500,000		499,413
Kinross Gold Corp.
5.13%, 09/01/21 (b)		250,000		260,120
LYB International Finance BV
4.00%, 07/15/23		500,000		529,856
Monsanto Co.
2.75%, 07/15/21		1,000,000		1,006,220
The Dow Chemical Co.
4.25%, 11/15/20 (b)		750,000		819,790
Xstrata Finance Canada Ltd.
2.85%, 11/10/14 (c)		100,000		100,410

				5,487,669


Capital Goods 0.7%
Caterpillar Financial Services Corp.
0.70%, 11/06/15		500,000		501,570
Eaton Corp.
0.95%, 11/02/15		100,000		100,432
2.75%, 11/02/22		750,000		734,375
General Electric Co.
0.85%, 10/09/15		200,000		200,927
5.25%, 12/06/17		500,000		560,808
John Deere Capital Corp.
2.95%, 03/09/15		350,000		354,785

				2,452,897


Communications 2.4%
21st Century Fox America, Inc.
4.00%, 10/01/23		300,000		315,869
America Movil, S.A.B. de CV
1.23%, 09/12/16 (a)		1,000,000		1,008,733
AT&T, Inc.
2.38%, 11/27/18		200,000		203,938
5.80%, 02/15/19		750,000		871,441
Comcast Corp.
5.88%, 02/15/18		400,000		458,456
5.70%, 07/01/19		350,000		409,038
DIRECTV Holdings LLC
5.20%, 03/15/20		250,000		282,617
Embarq Corp.
7.08%, 06/01/16		750,000		825,432
Grupo Televisa S.A.B.
6.00%, 05/15/18		500,000		567,450
Orange S.A.
2.75%, 02/06/19		400,000		410,610
Telefonica Emisiones S.A.U.
4.95%, 01/15/15		300,000		304,545
Time Warner, Inc.
3.15%, 07/15/15		250,000		255,803
Verizon Communications, Inc.
0.63%, 06/09/17 (a)		1,000,000		1,003,982
4.50%, 09/15/20		1,000,000		1,099,650
5.15%, 09/15/23		500,000		566,510
Viacom, Inc.
3.88%, 04/01/24 (b)		300,000		307,208

				8,891,282


Consumer Cyclical 1.8%
CVS Caremark Corp.
3.38%, 08/12/24 (b)		500,000		503,927
eBay, Inc.
0.72%, 08/01/19 (a)		1,000,000		1,002,167
Ford Motor Credit Co. LLC
1.48%, 05/09/16 (a)		1,000,000		1,015,066
6.63%, 08/15/17		265,000		302,863
Hyundai Capital Services, Inc.
1.03%, 03/18/17 (a)(c)		1,000,000		1,004,393
Johnson Controls, Inc.
3.63%, 07/02/24 (b)		500,000		509,124
Macy’s Retail Holdings, Inc.
5.90%, 12/01/16		213,000		235,907
4.38%, 09/01/23 (b)		250,000		268,021
Marriott International, Inc.
3.00%, 03/01/19 (b)		650,000		676,231
QVC, Inc.
5.45%, 08/15/34 (b)(c)		500,000		505,807
The Gap, Inc.
5.95%, 04/12/21 (b)		500,000		580,303
Wyndham Worldwide Corp.
5.63%, 03/01/21		100,000		112,307

				6,716,116


Consumer Non-Cyclical 1.8%
Altria Group, Inc.
4.75%, 05/05/21		500,000		557,800
Anheuser-Busch InBev Finance, Inc.
3.70%, 02/01/24		250,000		262,992

32 See financial notes

Schwab Intermediate-Term Bond Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Cardinal Health, Inc.
4.63%, 12/15/20		500,000		554,838
3.20%, 06/15/22		100,000		100,616
3.20%, 03/15/23		250,000		248,339
Express Scripts Holding Co.
2.10%, 02/12/15		250,000		251,766
Forest Laboratories, Inc.
5.00%, 12/15/21 (b)(c)		1,000,000		1,104,432
Kraft Foods Group, Inc.
5.38%, 02/10/20		523,000		595,427
McKesson Corp.
4.75%, 03/01/21 (b)		500,000		562,889
Mondelez International, Inc.
2.25%, 02/01/19 (b)		350,000		350,887
Mylan, Inc.
7.88%, 07/15/20 (b)(c)		1,000,000		1,096,322
PepsiCo, Inc.
2.25%, 01/07/19 (b)		150,000		152,858
Philip Morris International, Inc.
4.50%, 03/26/20		500,000		554,812
Thermo Fisher Scientific, Inc.
4.15%, 02/01/24 (b)		150,000		158,744
Zoetis, Inc.
3.25%, 02/01/23 (b)		250,000		250,550

				6,803,272


Energy 2.6%
Anadarko Petroleum Corp.
6.38%, 09/15/17		250,000		285,265
BP Capital Markets PLC
2.24%, 05/10/19		1,250,000		1,258,239
Canadian Natural Resources Ltd.
0.61%, 03/30/16 (a)		250,000		250,824
3.80%, 04/15/24		250,000		260,012
Continental Resources, Inc.
5.00%, 09/15/22 (b)		500,000		540,000
Diamond Offshore Drilling, Inc.
3.45%, 11/01/23 (b)		500,000		503,060
El Paso Pipeline Partners Operating Co., LLC
4.30%, 05/01/24 (b)		1,000,000		1,027,940
Encana Corp.
6.50%, 05/15/19		500,000		589,353
Energy Transfer Partners LP
6.70%, 07/01/18		150,000		175,088
4.15%, 10/01/20 (b)		100,000		105,917
Enterprise Products Operating LLC
3.90%, 02/15/24 (b)		250,000		261,216
EOG Resources, Inc.
2.45%, 04/01/20 (b)		500,000		504,540
Hess Corp.
8.13%, 02/15/19		500,000		623,926
Nabors Industries, Inc.
5.10%, 09/15/23 (b)		600,000		665,359
Plains All American Pipeline LP
3.85%, 10/15/23 (b)		100,000		103,575
Plains Exploration & Production Co.
6.50%, 11/15/20 (b)		650,000		721,500
The Williams Cos., Inc.
4.55%, 06/24/24 (b)		1,000,000		1,009,017
Valero Energy Corp.
9.38%, 03/15/19		250,000		324,517
Williams Partners LP
7.25%, 02/01/17		300,000		340,082

				9,549,430


Technology 1.3%
Arrow Electronics, Inc.
3.00%, 03/01/18		300,000		309,574
4.50%, 03/01/23 (b)		300,000		313,997
Baidu, Inc.
3.25%, 08/06/18		300,000		311,276
Broadcom Corp.
3.50%, 08/01/24 (b)		500,000		508,220
Cisco Systems, Inc.
1.10%, 03/03/17		400,000		401,539
Hewlett-Packard Co.
1.17%, 01/14/19 (a)		500,000		506,958
NetApp, Inc.
3.38%, 06/15/21 (b)		500,000		511,264
Oracle Corp.
0.43%, 07/07/17 (a)		500,000		501,343
Pitney Bowes, Inc.
4.63%, 03/15/24 (b)		200,000		208,359
Seagate HDD Cayman
4.75%, 01/01/25 (c)		1,000,000		1,025,000
Xerox Corp.
4.25%, 02/15/15		250,000		254,186

				4,851,716


Transportation 0.4%
American Airlines Pass-Through Trust
4.00%, 01/15/27		332,053		339,525
Burlington Northern Santa Fe LLC
4.70%, 10/01/19		300,000		336,924
3.60%, 09/01/20 (b)		250,000		265,239
CSX Corp.
7.38%, 02/01/19		300,000		364,902

				1,306,590

				46,058,972

Utilities 0.9%


Electric 0.8%
CenterPoint Energy Houston Electric LLC
2.25%, 08/01/22 (b)		100,000		96,816
Dominion Resources, Inc.
6.40%, 06/15/18		500,000		580,928
Duke Energy Corp.
0.61%, 04/03/17 (a)		1,000,000		1,003,461
5.05%, 09/15/19		300,000		339,090
Exelon Generation Co. LLC
4.00%, 10/01/20 (b)		500,000		528,333
Oncor Electric Delivery Co. LLC
2.15%, 06/01/19 (b)(c)		150,000		150,367
PPL Electric Utilities Corp.
2.50%, 09/01/22 (b)		100,000		98,928
Sempra Energy
3.55%, 06/15/24 (b)		250,000		255,287
TransAlta Corp.
6.65%, 05/15/18		100,000		113,246

				3,166,456


Natural Gas 0.1%
ONE Gas, Inc.
2.07%, 02/01/19 (b)(c)		100,000		100,511

See financial notes 33

Schwab Intermediate-Term Bond Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Sempra Energy
2.88%, 10/01/22 (b)		150,000		149,305

				249,816

				3,416,272

Total Corporate Bonds
(Cost $79,305,376)				80,937,192




Asset-Backed Obligations 0.3% of net assets


Citibank Credit Card Issuance Trust
Series 2007-A8 Class A8
5.65%, 09/20/19 (b)		1,000,000		1,127,343

Total Asset-Backed Obligations
(Cost $1,111,771)				1,127,343




Mortgage-Backed Securities 36.3% of net assets

Collateralized Mortgage Obligations 0.6%
Credit Suisse First Boston Mortgage Securities Corp.
Series 2003-23 Class 7A1
5.00%, 09/25/18 (b)		975,152		999,054
MASTR Asset Securitization Trust
Series 2003-10 Class 3A1
5.50%, 11/25/33 (b)		223,565		235,516
Residential Accredit Loans, Inc.
Series 2002-QS18 Class A1
5.50%, 12/25/17 (b)		30,683		31,067
Sequoia Mortgage Trust
Series 2011-1 Class A1
4.13%, 02/25/41 (b)		278,637		283,277
Series 2012-2 Class A2
3.50%, 04/25/42 (b)		325,150		332,222
Series 2013-5 Class A1
2.50%, 05/25/43 (b)(c)		327,699		310,899

				2,192,035

TBA Securities 5.9%
Fannie Mae TBA
2.00%, 10/01/29 (b)(f)		400,000		393,563
2.50%, 10/01/29 (b)(f)		300,000		303,398
3.00%, 10/01/29 to 09/01/44 (b)(f)		2,800,000		2,819,600
3.50%, 10/01/29 (b)(f)		1,800,000		1,898,156
2.50%, 09/01/44 (b)(f)		500,000		479,629
4.00%, 10/01/44 (b)(f)		1,800,000		1,901,883
4.50%, 10/01/44 (b)(f)		2,500,000		2,694,190
Freddie Mac TBA
2.00%, 10/01/29 (b)(f)		400,000		393,305
2.50%, 10/01/29 (b)(f)		900,000		909,724
3.00%, 10/01/29 (b)(f)		800,000		826,375
3.50%, 10/01/29 to 09/01/44 (b)(f)		3,700,000		3,830,369
3.00%, 10/01/44 (b)(f)		300,000		297,785
4.00%, 10/01/44 (b)(f)		500,000		527,339
Ginnie Mae TBA
3.00%, 09/01/44 to 10/01/44 (b)(f)		3,000,000		3,040,234
3.50%, 10/01/44 (b)(f)		700,000		726,059
4.50%, 10/01/44 (b)(f)		900,000		976,781

				22,018,390

U.S. Government Agency Mortgages 29.8%
Fannie Mae
6.00%, 03/01/16 to 05/01/21 (b)(g)		299,363		329,346
7.00%, 11/15/16 to 01/01/35 (b)		360,038		417,578
6.00%, 06/01/17 to 10/01/39 (b)		2,213,002		2,490,176
4.50%, 03/01/18 to 10/01/43 (b)		4,882,265		5,253,772
6.50%, 03/01/19 to 09/01/22 (b)		306,436		340,060
6.50%, 07/01/21 (b)(g)		21,880		24,682
5.50%, 10/01/22 (b)(g)		344,318		382,386
5.50%, 01/01/23 to 05/01/40 (b)		1,606,844		1,796,545
5.00%, 08/01/23 (b)(g)		1,341,870		1,479,258
5.00%, 09/01/23 to 05/01/40 (b)		1,991,492		2,210,939
3.00%, 01/01/26 to 05/01/43 (b)		10,256,949		10,382,736
2.50%, 07/01/28 (b)		2,881,935		2,931,961
3.50%, 02/01/32 to 08/01/44 (b)		9,486,595		9,801,812
5.49%, 08/01/32 to 12/01/32 (b)		724,959		809,513
5.45%, 06/01/33 to 07/01/33 (b)		101,438		113,244
3.70%, 06/01/40 (a)(b)		2,483,250		2,647,918
4.00%, 09/01/40 (b)(g)		5,118,938		5,442,146
4.00%, 02/01/41 to 02/01/42 (b)		408,217		435,268
Fannie Mae REMICs
6.00%, 01/25/20 (b)		69,911		74,713
2.50%, 02/25/21 (b)		27,498		27,490
3.25%, 04/25/28 (b)		20,577		21,101
Freddie Mac
4.50%, 09/01/15 (b)(g)		789		833
6.50%, 03/01/16 to 02/01/21 (b)(g)		167,139		183,462
6.00%, 06/01/16 to 10/01/38 (b)		475,287		541,882
5.50%, 11/01/17 to 07/01/35 (b)		804,601		888,705
4.50%, 10/01/18 to 08/01/41 (b)		4,024,827		4,369,890
5.00%, 10/01/18 to 10/01/43 (b)		2,055,232		2,246,882
4.00%, 07/01/19 to 01/01/44 (b)		4,964,001		5,281,442
6.50%, 08/01/22 to 04/01/26 (b)		134,717		152,145
2.50%, 07/01/28 to 05/01/33 (b)		1,465,669		1,485,805
3.00%, 09/01/28 to 07/01/43 (b)		4,162,602		4,180,244
5.50%, 06/01/33 to 10/01/33 (b)(g)		2,305,723		2,585,050
3.50%, 03/01/42 to 07/01/43 (b)		1,285,957		1,323,779
Freddie Mac REMICs
3.00%, 08/15/19 (b)		471,354		479,280
2.00%, 07/15/20 (b)		559,848		566,159
0.71%, 05/15/23 (a)(b)		53,421		53,678
4.00%, 11/15/23 to 07/15/24 (b)		477,576		488,392
5.00%, 06/15/33 (b)		541,379		544,158
6.00%, 08/15/35 (b)		82,833		85,321
Ginnie Mae
6.00%, 03/15/17 to 03/15/24 (b)		21,106		23,199
9.50%, 03/20/17 to 05/20/20 (b)		4,791		5,039
5.00%, 12/15/17 to 08/15/40 (b)		5,118,695		5,659,211
10.00%, 04/15/18 to 06/20/19 (b)		1,938		2,052
5.50%, 06/15/18 to 08/20/40 (b)		4,048,822		4,595,206
4.00%, 08/15/18 to 08/20/44 (b)		6,269,738		6,690,484
4.50%, 11/15/18 to 07/20/44 (b)		4,271,792		4,661,502
8.50%, 06/15/21 to 10/20/26 (b)		1,543		1,589
7.50%, 03/15/22 to 10/15/25 (b)		2,606		2,730
6.50%, 10/15/23 (b)		1,212		1,376
8.00%, 06/20/24 to 07/15/27 (b)		2,857		3,152
3.00%, 02/15/26 to 07/20/44 (b)		3,113,260		3,176,680
3.50%, 01/20/27 to 08/20/44 (b)		5,794,142		6,040,621
2.50%, 06/15/27 (b)		348,328		357,337
2.00%, 07/20/28 (b)		22,874		22,571
5.50%, 02/15/33 to 06/15/34 (b)(g)		2,603,359		2,930,214
5.00%, 10/15/34 (b)(g)		1,788,802		1,974,008
5.25%, 11/15/34 (b)		128,783		141,506

34 See financial notes

Schwab Intermediate-Term Bond Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Ginnie Mae REMICs
6.47%, 08/20/34 (a)(b)		865,914		1,005,349

				110,163,577

Total Mortgage-Backed Securities
(Cost $131,327,576)				134,374,002




Commercial Mortgage-Backed Securities 3.3% of net assets


Bear Stearns Commercial Mortgage Securities
Series 2005-PW10 Class A4
5.41%, 12/11/40 (b)		2,962,002		3,070,592
Series 2006-T24 Class A4
5.54%, 10/12/41 (b)		959,940		1,035,500
Series 2007-T28 Class A4
5.74%, 09/11/42 (a)(b)		505,000		560,176
Credit Suisse First Boston Mortgage Securities Corp.
Series 2004-C5 Class A4
4.83%, 11/15/37 (b)		464,692		465,494
Fannie Mae-Aces
Series 2011-M5 Class A2
2.94%, 07/25/21 (b)		250,000		258,212
Series 2014-M6 Class A2
2.68%, 05/25/21 (b)		500,000		511,034
FHLMC Multifamily Structured Pass-Through Certificates
Series K014 Class A1
2.79%, 10/25/20 (b)		336,849		350,484
Series K026 Class A2
2.51%, 11/25/22 (b)		650,000		644,229
Series K027 Class A2
2.64%, 01/25/23 (b)		110,000		109,923
Series K714 Class A2
3.03%, 10/25/20 (b)		154,000		161,361
Government National Mortgage Association
Series 2012-55 Class A
1.70%, 08/16/33 (b)		61,393		61,879
Greenwich Capital Commercial Funding Corp.
Series 2006-GG7 Class A4
6.01%, 07/10/38 (a)(b)		644,026		686,396
Series 2007-GG9 Class A4
5.44%, 03/10/39 (b)		1,000,000		1,082,981
JPMorgan Chase Commercial Mortgage Securities Trust
Series 2013-C16 Class A2
3.07%, 12/15/46 (b)		3,000,000		3,114,649

Total Commercial Mortgage-Backed Securities
(Cost $11,806,732)				12,112,910




U.S. Government and Government Agencies 38.7% of net assets

U.S. Government Agency Securities 4.0%
Fannie Mae
1.63%, 10/26/15 (g)		2,000,000		2,031,864
0.63%, 08/26/16		6,000,000		6,005,658
0.88%, 10/26/17		3,000,000		2,976,630
Freddie Mac
2.50%, 05/27/16		3,000,000		3,104,370
1.25%, 08/01/19		600,000		587,409

				14,705,931

U.S. Treasury Obligations 34.7%
U.S. Treasury Notes
0.25%, 09/30/15		4,600,000		4,605,750
0.38%, 01/15/16		7,000,000		7,011,893
2.00%, 04/30/16 (g)		3,000,000		3,080,685
1.50%, 07/31/16		2,550,000		2,599,355
0.63%, 08/15/16		8,000,000		8,020,472
0.75%, 01/15/17 (g)		16,000,000		16,023,120
0.88%, 02/28/17		5,000,000		5,016,600
3.13%, 04/30/17 (g)		1,500,000		1,591,055
0.88%, 05/15/17		3,000,000		3,003,399
0.88%, 06/15/17		3,000,000		3,000,702
0.75%, 06/30/17		10,000,000		9,958,980
0.88%, 07/15/17		1,500,000		1,498,593
1.88%, 10/31/17 (g)		3,000,000		3,076,173
0.75%, 12/31/17		6,000,000		5,925,936
2.88%, 03/31/18 (g)		2,000,000		2,115,312
3.75%, 11/15/18 (g)		2,000,000		2,189,610
1.63%, 03/31/19		3,000,000		3,009,024
1.25%, 04/30/19		2,250,000		2,218,007
1.50%, 05/31/19		1,500,000		1,493,438
1.00%, 06/30/19		3,250,000		3,156,055
1.63%, 06/30/19		1,500,000		1,501,347
1.38%, 01/31/20		2,500,000		2,452,540
1.25%, 02/29/20		4,500,000		4,377,303
3.50%, 05/15/20		5,000,000		5,467,190
2.63%, 08/15/20		2,000,000		2,086,172
2.38%, 12/31/20		4,000,000		4,103,124
2.13%, 01/31/21		2,500,000		2,525,292
2.00%, 02/28/21		3,000,000		3,005,157
2.25%, 04/30/21		1,000,000		1,015,742
2.13%, 06/30/21		2,500,000		2,515,625
1.63%, 08/15/22		2,000,000		1,922,734
2.00%, 02/15/23		1,500,000		1,474,454
2.50%, 08/15/23		2,000,000		2,038,124
2.75%, 11/15/23		1,000,000		1,038,398
2.75%, 02/15/24		2,500,000		2,593,360
2.50%, 05/15/24		1,750,000		1,775,156

				128,485,877

Total U.S. Government and Government Agencies
(Cost $142,291,254)				143,191,808




Foreign Securities 4.8% of net assets

Foreign Agencies 1.7%


Brazil 0.6%
Petrobras Global Finance BV
1.85%, 05/20/16 (a)		1,500,000		1,504,035
2.59%, 03/17/17 (a)		500,000		507,550

				2,011,585


Germany 0.3%
Kreditanstalt Fuer Wiederaufbau
4.00%, 01/27/20 (d)		1,000,000		1,109,316


Mexico 0.4%
Petroleos Mexicanos
4.88%, 03/15/15		500,000		510,825
2.25%, 07/18/18 (a)		500,000		525,750
5.50%, 01/21/21		500,000		565,000

				1,601,575

See financial notes 35

Schwab Intermediate-Term Bond Fund

Portfolio Holdings continued


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


Norway 0.1%
Statoil A.S.A.
3.13%, 08/17/17		500,000		527,634


Republic of Korea 0.3%
Export-Import Bank of Korea
4.00%, 01/11/17		500,000		531,501
Korea Development Bank
3.75%, 01/22/24		500,000		523,589

				1,055,090

				6,305,200

Foreign Local Government 0.3%


Canada 0.3%
Province of Manitoba
1.13%, 06/01/18		1,000,000		989,002

Sovereign 0.9%


Brazil 0.1%
Federative Republic of Brazil
6.00%, 01/17/17		250,000		276,875
4.88%, 01/22/21		100,000		110,400

				387,275


Chile 0.1%
Republic of Chile
2.25%, 10/30/22		250,000		241,875


Italy 0.1%
Republic of Italy
3.13%, 01/26/15		100,000		101,024
5.38%, 06/12/17		250,000		275,979

				377,003


Mexico 0.2%
United Mexican States
5.13%, 01/15/20		500,000		568,750
3.63%, 03/15/22		250,000		260,875

				829,625


Philippines 0.0%
Republic of the Philippines
4.20%, 01/21/24		150,000		161,250


Poland 0.2%
Poland Government International Bond
6.38%, 07/15/19		500,000		595,238


Republic of Korea 0.1%
Republic of Korea
5.13%, 12/07/16		500,000		548,950


Turkey 0.1%
Turkey Government International Bond
3.25%, 03/23/23		300,000		281,700

				3,422,916

*Supranational 1.9%**
Asian Development Bank
2.50%, 03/15/16		750,000		773,932
European Investment Bank
2.50%, 05/16/16		2,000,000		2,068,624
4.00%, 02/16/21		750,000		837,112
Inter-American Development Bank
1.38%, 10/18/16		1,000,000		1,014,356
International Bank for Reconstruction & Development
0.88%, 04/17/17		1,000,000		1,002,825
International Finance Corp.
1.13%, 11/23/16		500,000		503,954
1.75%, 09/04/18		600,000		607,325
1.75%, 09/16/19		150,000		149,984

				6,958,112

Total Foreign Securities
(Cost $17,343,073)				17,675,230



	Number		Value
Security	of Shares		($)

Preferred Stock 0.3% of net assets

Real Estate 0.3%
Vornado Realty LP		40,000		1,018,400

Total Preferred Stock
(Cost $1,018,680)				1,018,400




Other Investment Company 0.4% of net assets

Money Market Fund 0.4%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (e)		1,725,195		1,725,195

Total Other Investment Company
(Cost $1,725,195)				1,725,195



End of Investments.

At 08/31/14, the tax basis cost of the fund’s investments was $385,957,021 and the unrealized appreciation and depreciation were $6,935,214 and ($730,155), respectively, with a net unrealized appreciation of $6,205,059.


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

TBA Sale Commitments 2.1% of net assets

U.S. Government Agency Mortgages 2.1%
Ginnie Mae TBA
5.00%, 09/01/44 (b)(f)		3,000,000		3,293,558
5.50%, 09/01/44 (b)(f)		4,000,000		4,439,455

				7,733,013

Total TBA Sale Commitments
(Proceeds $7,722,656)				7,733,013


*		Supranational bonds represent the debt of international organizations or institutions such as the World Bank, the International Monetary Fund, regional multilateral development banks and others.
(a)		Variable-rate security.
(b)		The effective maturity may be shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or as the result of embedded demand features (puts or calls).

36 See financial notes

Schwab Intermediate-Term Bond Fund

Portfolio Holdings continued


(c)		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $6,901,686 or 1.9% of net assets.
(d)		Guaranteed by the Republic of Germany.
(e)		The rate shown is the 7-day yield.
(f)		Security or a portion of the security purchased on a delayed delivery or when-issued basis.
(g)		All or a portion of this security is designated as collateral for delayed-delivery securities.


REMIC —		Real Estate Mortgage Investment Conduit

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2014 (see financial note 2(a) for additional information):

Assets Valuation Input


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

Corporate Bonds¹		$—		$34,878,220			$—		$34,878,220
Industrial¹		—		44,752,382			—		44,752,382
Transportation		—		967,065			339,525		1,306,590
Asset-Backed Obligations		—		1,127,343			—		1,127,343
Mortgage-Backed Securities¹		—		134,374,002			—		134,374,002
Commercial Mortgage-Backed Securities		—		12,112,910			—		12,112,910
U.S. Government and Government Agencies¹		—		143,191,808			—		143,191,808
Foreign Securities¹		—		17,675,230			—		17,675,230
Preferred Stock		1,018,400		—			—		1,018,400
Other Investment Company¹		1,725,195		—			—		1,725,195

Total		$2,743,595		$389,078,960			$339,525		$392,162,080



Liabilities Valuation Input


Other Financial Instruments
TBA Sale Commitments¹		$—		($7,733,013	)		$—		($7,733,013	)


¹		As categorized in Portfolio Holdings.

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

Balance

Change in

Balance

as of

Accrued

Realized

Unrealized

Gross

as of

Investments in

August 31,

Discounts

Gains

Appreciation

Gross

Transfers

August 31,

Securities

2013

(Premiums)

(Losses)

(Depreciation)

Purchases

Sales

out

2014

Corporate Bonds

$—

$7,472

$332,053

$—

$339,525

Total

$—

$7,472

$332,053

$—

$339,525

All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The change in net unrealized appreciation (depreciation) for Level 3 investments held by the fund at August 31, 2014 was $7,472.

The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended August 31, 2014.

See financial notes 37

Schwab Intermediate-Term Bond Fund

Statement of

Assets and Liabilities

As of August 31, 2014



Assets

Investments, at value (cost $385,929,657)		$392,162,080
Receivables:
Investments sold		2,088,703
Interest		1,759,332
Fund shares sold		940,880
TBA sale commitment		7,722,656
Prepaid expenses	+	3,985

Total assets		404,677,636

Liabilities

TBA sale commitments, at value (proceeds $7,722,656)		7,733,013
Payables:
Investments bought		2,477,499
Investments bought - Delayed delivery		23,955,861
Investment adviser and administrator fees		6,317
Shareholder service fees		15,203
Fund shares redeemed		362,247
Distributions to shareholders		187,579
Interest for TBA sale commitments		17,472
Accrued expenses	+	73,200

Total liabilities		34,828,391

Net Assets

Total assets		404,677,636
Total liabilities	−	34,828,391

Net assets		$369,849,245

Net Assets by Source
Capital received from investors		363,341,075
Distributions in excess of net investment income		(187,579	)
Net realized capital gains		473,683
Net unrealized capital appreciation		6,222,066

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$369,849,245

36,069,558

$10.25

38 See financial notes

Schwab Intermediate-Term Bond Fund

Statement of

Operations

For the period September 1, 2013 through August 31, 2014



Investment Income

Interest		$7,667,275*
Dividends	+	85,514

Total investment income		7,752,789

Expenses

Investment adviser and administrator fees		1,066,077
Shareholder service fees		883,252
Portfolio accounting fees		92,001
Professional fees		71,309
Registration fees		38,303
Shareholder reports		37,200
Custodian fees		34,793
Transfer agent fees		23,188
Interest expense		15,228*
Independent trustees’ fees		10,005
Other expenses	+	9,346

Total expenses		2,280,702
Expense reduction by CSIM and its affiliates	−	666,359

Net expenses	−	1,614,343

Net investment income		6,138,446

Realized and Unrealized Gains (Losses)

Net realized gains on investments		1,848,591
Net realized losses on TBA sale commitments	+	(232,813	)

Net realized gains		1,615,778
Net change in unrealized appreciation (depreciation) on investments		6,089,395
Net change in unrealized appreciation (depreciation) on TBA sale commitments	+	(19,573	)

Net change in unrealized appreciation (depreciation)	+	6,069,822

Net realized and unrealized gains		7,685,600

Increase in net assets resulting from operations		$13,824,046


*		Includes $16,975 in interest income and $15,192 in interest expense related to charges on agency mortgage-backed securities not received or delivered on a timely basis (see financial note 2f).

See financial notes 39

Schwab Intermediate-Term Bond Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$6,138,446			$5,788,362
Net realized gains		1,615,778			3,119,934
Net change in unrealized appreciation (depreciation)	+	6,069,822			(14,979,835	)

Increase (decrease) in net assets from operations		13,824,046			(6,071,539	)

Distributions to shareholders

Distributions from net investment income		(6,966,655	)		(7,436,362	)
Distributions from net realized gains	+	(160,807	)		(6,888,288	)

Total distributions		($7,127,462	)		($14,324,650	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			9,742,824		$99,074,351			9,131,188		$94,585,160
Shares reinvested			397,473		4,050,506			601,274		6,241,174
Shares redeemed	+		(9,122,261	)	(92,649,051	)		(14,113,510	)	(146,012,986	)

Net transactions in fund shares			1,018,036		$10,475,806			(4,381,048	)	($45,186,652	)

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			35,051,522		$352,676,855			39,432,570		$418,259,696
Total increase (decrease)	+		1,018,036		17,172,390			(4,381,048	)	(65,582,841	)

End of period			36,069,558		$369,849,245			35,051,522		$352,676,855


Distributions in excess of net investment income					($187,579	)				($365,301	)

40 See financial notes

Schwab Total Bond Market Fund™

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		9.26			9.76			9.51			9.42			8.96

Income (loss) from investment operations:
Net investment income (loss)		0.21			0.20			0.25			0.26			0.29
Net realized and unrealized gains (losses)		0.30			(0.47	)		0.26			0.10			0.48

Total from investment operations		0.51			(0.27	)		0.51			0.36			0.77
Less distributions:
Distributions from net investment income		(0.22	)		(0.23	)		(0.26	)		(0.27	)		(0.31	)

Net asset value at end of period		9.55			9.26			9.76			9.51			9.42

Total return (%)		5.56			(2.85	)		5.46			3.93			8.76

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.29			0.29			0.29			0.49	¹		0.55
Gross operating expenses		0.55			0.56			0.56			0.59	²		0.58	²
Net investment income (loss)		2.18			2.10			2.58			2.78			3.21
Portfolio turnover rate³		93			165			160			166			155
Net assets, end of period ($ x 1,000,000)		1,021			885			957			936			929

¹ Effective June 16, 2011, the net operating expense limitation was lowered. The ratio presented for period ended 8/31/11 is a blended ratio.

² The ratio of gross operating expenses would have been 0.55%, if certain non-routine expenses (litigation fees) had not been incurred.

³ Includes to-be-announced (TBA) transactions (if any). See financial note 2.

See financial notes 41

Schwab Total Bond Market Fund

Portfolio Holdings as of August 31, 2014

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


				Cost		Value
Holdings by Category				($)		($)

	28	.7%	Mortgage-Backed Securities		287,286,659		293,422,862
	23	.3%	Corporate Bonds		225,145,858		237,360,669
	38	.6%	U.S. Government and Government Agencies		382,799,969		393,732,674
	2	.0%	Commercial Mortgage-Backed Securities		20,190,417		20,914,402
	0	.5%	Asset-Backed Obligations		5,250,814		5,199,906
	5	.3%	Foreign Securities		52,500,146		53,886,535
	1	.0%	Municipal Bonds		8,805,092		9,925,198
	0	.6%	Other Investment Company		6,608,733		6,608,733
	5	.0%	Short-Term Investments		51,099,658		51,099,658


	105	.0%	Total Investments		1,039,687,346		1,072,150,637
	(5	.0%)	Other Assets and Liabilities, Net				(51,293,542	)


	100	.0%	Net Assets				1,020,857,095


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

Mortgage-Backed Securities 28.7% of net assets

TBA Securities 4.9%
Fannie Mae TBA
2.00%, 10/01/29 (b)(g)		1,000,000		983,907
2.50%, 10/01/29 (b)(g)		1,300,000		1,314,726
3.00%, 10/01/29 to 09/01/44 (b)(g)		3,600,000		3,647,325
3.50%, 10/01/29 (b)(g)		2,100,000		2,214,516
2.50%, 09/01/44 (b)(g)		700,000		671,480
3.50%, 09/01/44 (b)(g)		1,700,000		1,750,947
4.00%, 10/01/44 (b)(g)		5,900,000		6,233,950
4.50%, 10/01/44 (b)(g)		2,800,000		3,017,492
Freddie Mac TBA
2.00%, 10/01/29 (b)(g)		600,000		589,957
2.50%, 10/01/29 (b)(g)		900,000		909,724
3.00%, 10/01/29 (b)(g)		400,000		413,187
3.50%, 10/01/29 to 09/01/44 (b)(g)		5,700,000		5,908,400
4.50%, 09/01/44 (b)(g)		3,500,000		3,780,000
3.00%, 10/01/44 (b)(g)		1,600,000		1,588,188
4.00%, 10/01/44 (b)(g)		500,000		527,339
Ginnie Mae TBA
2.50%, 09/01/44 (b)(g)		500,000		487,859
3.00%, 09/01/44 to 10/01/44 (b)(g)		5,200,000		5,268,594
3.50%, 10/01/44 (b)(g)		7,400,000		7,673,648
4.00%, 10/01/44 (b)(g)		2,200,000		2,337,156
4.50%, 10/01/44 (b)(g)		1,100,000		1,193,156

				50,511,551

U.S. Government Agency Mortgages 23.8%
Fannie Mae
5.50%, 02/01/16 to 03/01/35 (b)(h)		4,397,707		4,960,482
5.00%, 12/01/17 to 06/01/42 (b)		6,621,731		7,274,653
4.50%, 05/01/18 to 01/01/44 (b)		12,668,277		13,738,215
6.50%, 06/01/18 to 11/01/37 (b)		747,263		858,435
5.50%, 05/01/23 to 07/01/40 (b)		1,316,957		1,476,550
5.00%, 07/01/23 to 06/01/36 (b)(h)		2,360,170		2,608,491
3.50%, 09/01/23 to 08/01/44 (b)		23,464,207		24,304,911
4.00%, 04/01/24 to 02/01/44 (b)		21,324,393		22,714,403
6.00%, 09/01/24 to 10/01/39 (b)		4,005,689		4,529,033
3.00%, 10/01/26 to 07/01/43 (b)		24,176,862		24,385,587
2.50%, 10/01/27 to 07/01/28 (b)		6,547,687		6,658,362
2.00%, 08/01/28 to 09/01/28 (b)		183,787		181,345
6.50%, 03/01/32 to 11/01/37 (b)(h)		794,305		904,723
1.92%, 03/01/34 (a)(b)		837,051		892,904
2.04%, 03/01/35 (a)(b)		317,969		334,685
2.54%, 08/01/35 (a)(b)(h)		1,520,143		1,623,829
7.00%, 04/01/37 (b)		155,228		173,841
Freddie Mac
6.00%, 04/01/15 to 12/01/32 (b)(h)		501,348		563,292
4.50%, 06/01/18 to 08/01/41 (b)		6,692,625		7,249,179
5.00%, 01/01/19 to 06/01/40 (b)		5,633,285		6,247,649
5.50%, 08/01/22 to 07/01/40 (b)		3,496,253		3,909,034
6.00%, 12/01/23 to 10/01/38 (b)		1,079,759		1,224,526
4.00%, 03/01/24 to 06/01/44 (b)		13,695,584		14,537,647
3.00%, 10/01/26 to 09/01/43 (b)		15,144,492		15,322,208
2.50%, 11/01/27 to 02/01/43 (b)		4,613,585		4,673,226
2.00%, 04/01/28 (b)		176,393		173,992
3.50%, 07/01/32 to 07/01/43 (b)		7,865,168		8,104,426
6.50%, 10/01/36 to 09/01/39 (b)		250,370		282,255
2.02%, 05/01/37 (a)(b)		803,332		847,266
Ginnie Mae
4.00%, 06/20/20 to 08/20/44 (b)		13,617,043		14,554,275
5.50%, 09/20/23 to 03/15/40 (b)		2,470,537		2,751,306
4.50%, 05/15/24 to 07/20/44 (b)		11,396,494		12,448,323
3.00%, 02/15/26 to 07/20/43 (b)		9,178,840		9,354,607
3.50%, 02/15/26 to 08/20/44 (b)		12,087,545		12,605,530
2.50%, 03/20/28 to 01/20/29 (b)		667,203		685,153
2.00%, 07/20/28 (b)		45,748		45,142
5.00%, 08/15/28 to 07/20/44 (b)		6,798,799		7,535,084
1.63%, 04/20/32 (a)(b)		268,729		279,469
6.00%, 07/20/34 to 08/15/38 (b)		1,325,974		1,511,194
6.50%, 10/20/37 (b)		316,910		356,569
3.00%, 10/20/40 (a)(b)		28,396		29,510

				242,911,311

Total Mortgage-Backed Securities
(Cost $287,286,659)				293,422,862

42 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


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

Corporate Bonds 23.3% of net assets

Finance 7.7%


Banking 5.0%
Abbey National Treasury Services PLC
4.00%, 04/27/16		400,000		420,712
3.05%, 08/23/18		200,000		209,158
American Express Co.
7.00%, 03/19/18		300,000		353,537
6.80%, 09/01/66 (a)(b)		500,000		543,750
Bank of America Corp.
5.25%, 12/01/15		500,000		525,535
6.50%, 08/01/16		750,000		824,744
5.30%, 03/15/17		1,500,000		1,636,947
6.88%, 04/25/18		450,000		525,141
5.65%, 05/01/18		400,000		450,217
6.88%, 11/15/18		250,000		295,410
2.65%, 04/01/19		750,000		758,453
5.88%, 01/05/21		500,000		583,782
5.00%, 05/13/21		900,000		1,007,788
3.30%, 01/11/23		500,000		496,382
4.00%, 04/01/24		300,000		309,643
6.00%, 10/15/36		250,000		311,779
4.88%, 04/01/44		400,000		429,650
Barclays Bank PLC
5.00%, 09/22/16		150,000		162,029
6.75%, 05/22/19		300,000		360,329
BB&T Corp.
3.95%, 03/22/22 (b)		200,000		213,318
BNP Paribas S.A.
3.60%, 02/23/16		300,000		312,083
5.00%, 01/15/21		250,000		282,473
3.25%, 03/03/23		250,000		252,419
Capital One Bank USA NA
3.38%, 02/15/23		250,000		249,544
Capital One Financial Corp.
1.50%, 03/22/18 (b)		500,000		495,073
Citigroup, Inc.
1.70%, 07/25/16		150,000		151,832
4.45%, 01/10/17		1,000,000		1,072,808
6.00%, 08/15/17		200,000		225,025
6.13%, 11/21/17		750,000		851,488
6.13%, 05/15/18		750,000		860,908
4.05%, 07/30/22		1,000,000		1,032,444
6.13%, 08/25/36		250,000		293,801
5.88%, 01/30/42		250,000		308,689
6.68%, 09/13/43		100,000		127,648
Credit Suisse USA, Inc.
1.38%, 05/26/17		500,000		500,014
5.40%, 01/14/20		250,000		281,898
Deutsche Bank AG
6.00%, 09/01/17		450,000		508,125
3.70%, 05/30/24		100,000		101,264
Fifth Third Bancorp
8.25%, 03/01/38		200,000		302,321
HSBC Bank USA
5.88%, 11/01/34		500,000		620,826
HSBC Holdings PLC
4.00%, 03/30/22		500,000		536,444
7.63%, 05/17/32		150,000		205,392
6.50%, 09/15/37		200,000		253,519
JPMorgan Chase & Co.
2.60%, 01/15/16		800,000		819,863
1.13%, 02/26/16		250,000		251,426
3.15%, 07/05/16		500,000		520,007
6.00%, 01/15/18		1,000,000		1,136,751
4.25%, 10/15/20		1,500,000		1,624,186
3.20%, 01/25/23		500,000		499,082
6.40%, 05/15/38		300,000		390,200
5.50%, 10/15/40		100,000		117,611
JPMorgan Chase Bank NA
6.00%, 10/01/17		500,000		566,010
KeyBank NA
1.10%, 11/25/16 (b)		200,000		200,651
Lloyds Bank PLC
4.88%, 01/21/16		400,000		423,323
4.20%, 03/28/17		500,000		537,298
2.30%, 11/27/18		300,000		303,895
6.38%, 01/21/21		500,000		607,351
Manufacturers & Traders Trust Co.
5.63%, 12/01/21 (a)(b)		250,000		261,250
Morgan Stanley
5.45%, 01/09/17		1,500,000		1,644,015
6.63%, 04/01/18		200,000		231,770
7.30%, 05/13/19		250,000		302,825
2.38%, 07/23/19		2,000,000		1,999,678
4.10%, 05/22/23		500,000		509,907
6.25%, 08/09/26		250,000		307,771
6.38%, 07/24/42		400,000		522,565
National City Bank
5.80%, 06/07/17		500,000		559,617
National City Corp.
6.88%, 05/15/19		100,000		120,165
Rabobank Nederland
2.13%, 10/13/15		200,000		203,708
3.38%, 01/19/17		350,000		369,257
4.63%, 12/01/23		100,000		106,535
Regions Financial Corp.
2.00%, 05/15/18 (b)		500,000		498,255
Royal Bank of Canada
2.63%, 12/15/15		250,000		256,752
2.20%, 07/27/18		500,000		510,750
Royal Bank of Scotland N.V.
4.65%, 06/04/18		500,000		529,026
State Street Corp.
2.88%, 03/07/16		350,000		362,442
Sumitomo Mitsui Banking Corp.
3.40%, 07/11/24		300,000		307,806
Svenska Handelsbanken AB
2.88%, 04/04/17		350,000		365,014
The Bank of New York Mellon Corp.
1.97%, 06/20/17 (a)		500,000		511,313
The Bank of Nova Scotia
1.38%, 07/15/16		600,000		607,975
4.38%, 01/13/21		500,000		555,594
The Bear Stearns Cos. LLC
7.25%, 02/01/18		200,000		235,768
The Goldman Sachs Group, Inc.
5.63%, 01/15/17		750,000		819,668
5.95%, 01/18/18		600,000		677,564
2.38%, 01/22/18		300,000		304,959
6.15%, 04/01/18		250,000		284,986
7.50%, 02/15/19		1,000,000		1,209,742
3.85%, 07/08/24 (b)		500,000		510,069
5.95%, 01/15/27		450,000		522,019
6.75%, 10/01/37		600,000		741,536
4.80%, 07/08/44 (b)		750,000		787,283

See financial notes 43

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
The PNC Financial Services Group, Inc.
3.90%, 04/29/24 (b)		500,000		513,272
The Toronto-Dominion Bank
2.13%, 07/02/19		500,000		499,464
UBS AG
5.88%, 12/20/17		550,000		624,885
US Bancorp
2.20%, 11/15/16 (b)		250,000		257,066
Wells Fargo & Co.
5.63%, 12/11/17		700,000		791,923
3.50%, 03/08/22		1,000,000		1,042,648
3.45%, 02/13/23		800,000		806,424
5.38%, 02/07/35		250,000		295,965
5.38%, 11/02/43		325,000		371,312

				51,182,539


Brokerage 0.2%
BlackRock, Inc.
5.00%, 12/10/19		300,000		343,343
4.25%, 05/24/21		500,000		551,868
Jefferies Group LLC
5.50%, 03/15/16		125,000		133,612
5.13%, 04/13/18		250,000		273,468
6.45%, 06/08/27		75,000		85,423
Nomura Holdings, Inc.
6.70%, 03/04/20		200,000		240,725

				1,628,439


Finance Company 0.6%
GATX Corp.
1.25%, 03/04/17		200,000		199,003
2.50%, 07/30/19		150,000		150,286
5.20%, 03/15/44 (b)		150,000		165,027
GE Capital Trust I
6.38%, 11/15/67 (a)(b)		250,000		278,047
General Electric Capital Corp.
5.00%, 01/08/16		650,000		688,359
1.50%, 07/12/16		500,000		506,986
2.30%, 04/27/17		500,000		514,367
5.63%, 09/15/17		200,000		224,835
5.63%, 05/01/18		650,000		740,147
2.30%, 01/14/19		250,000		254,920
4.38%, 09/16/20		300,000		330,374
5.30%, 02/11/21		150,000		172,230
6.75%, 03/15/32		300,000		404,929
5.88%, 01/14/38		250,000		311,367
6.88%, 01/10/39		150,000		208,418
HSBC Finance Capital Trust IX
5.91%, 11/30/35 (a)(b)		400,000		415,500
HSBC Finance Corp.
5.50%, 01/19/16		100,000		106,219
International Lease Finance Corp.
7.13%, 09/01/18 (c)		200,000		230,000
Synchrony Financial
3.75%, 08/15/21 (b)		250,000		255,374
4.25%, 08/15/24 (b)		250,000		256,202

				6,412,590


Insurance 1.3%
ACE INA Holdings, Inc.
2.60%, 11/23/15		200,000		204,836
5.80%, 03/15/18		250,000		284,441
2.70%, 03/13/23		500,000		488,801
Aetna, Inc.
3.95%, 09/01/20		250,000		269,647
Aflac, Inc.
3.63%, 06/15/23		750,000		773,054
American International Group, Inc.
5.60%, 10/18/16		925,000		1,011,528
6.40%, 12/15/20		59,000		71,201
6.25%, 05/01/36		250,000		320,811
8.18%, 05/15/68 (a)(b)		100,000		138,250
Assurant, Inc.
6.75%, 02/15/34		200,000		245,244
Berkshire Hathaway Finance Corp.
4.25%, 01/15/21		500,000		551,952
Cigna Corp.
2.75%, 11/15/16		450,000		467,057
5.88%, 03/15/41 (b)		500,000		623,153
5.38%, 02/15/42 (b)		150,000		174,439
CNA Financial Corp.
7.35%, 11/15/19		325,000		398,278
Genworth Holdings, Inc.
8.63%, 12/15/16		100,000		115,431
7.70%, 06/15/20		350,000		424,804
6.50%, 06/15/34		250,000		297,797
Hartford Financial Services Group, Inc.
6.30%, 03/15/18		200,000		229,481
6.00%, 01/15/19		100,000		115,149
Lincoln National Corp.
4.00%, 09/01/23		200,000		211,137
Marsh & McLennan Cos., Inc.
4.80%, 07/15/21 (b)		100,000		111,618
MetLife, Inc.
6.82%, 08/15/18		450,000		534,732
4.88%, 11/13/43		250,000		276,960
Principal Financial Group, Inc.
6.05%, 10/15/36		300,000		374,270
Prudential Financial, Inc.
4.50%, 11/16/21		750,000		825,412
The Allstate Corp.
4.50%, 06/15/43		200,000		212,321
The Chubb Corp.
6.00%, 05/11/37		100,000		129,403
The Travelers Co., Inc.
5.90%, 06/02/19		300,000		350,648
6.75%, 06/20/36		150,000		207,669
UnitedHealth Group, Inc.
1.40%, 10/15/17		100,000		100,140
2.75%, 02/15/23 (b)		150,000		147,055
5.80%, 03/15/36		350,000		439,989
Voya Financial, Inc.
2.90%, 02/15/18		200,000		207,128
WellPoint, Inc.
2.25%, 08/15/19		300,000		299,116
3.30%, 01/15/23		500,000		502,175
3.50%, 08/15/24 (b)		250,000		251,233
4.65%, 08/15/44 (b)		750,000		778,076

				13,164,436


Real Estate Investment Trust 0.6%
Boston Properties LP
5.63%, 11/15/20 (b)		150,000		172,815
3.80%, 02/01/24 (b)		150,000		154,214
Brandywine Operating Partnership LP
3.95%, 02/15/23 (b)		250,000		253,861
BRE Properties, Inc.
5.20%, 03/15/21 (b)		100,000		112,582
Digital Realty Trust LP
5.88%, 02/01/20		250,000		280,347

44 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Duke Realty LP
4.38%, 06/15/22 (b)		400,000		423,810
HCP, Inc.
6.70%, 01/30/18		400,000		463,760
Health Care REIT, Inc.
4.13%, 04/01/19 (b)		200,000		215,819
4.50%, 01/15/24 (b)		150,000		158,587
Kilroy Realty LP
3.80%, 01/15/23 (b)		200,000		202,574
4.25%, 08/15/29 (b)		300,000		302,619
Kimco Realty Corp.
4.30%, 02/01/18 (b)		250,000		270,728
3.20%, 05/01/21 (b)		150,000		151,565
ProLogis LP
2.75%, 02/15/19 (b)		150,000		152,987
4.25%, 08/15/23 (b)		200,000		211,170
Regency Centers LP
4.80%, 04/15/21		150,000		165,803
Simon Property Group LP
5.25%, 12/01/16 (b)		150,000		162,725
2.80%, 01/30/17 (b)		200,000		208,056
2.75%, 02/01/23 (b)		500,000		487,856
3.75%, 02/01/24 (b)		500,000		520,883
Ventas Realty LP
4.75%, 06/01/21 (b)		100,000		110,378
4.25%, 03/01/22 (b)		500,000		529,735

				5,712,874

				78,100,878

Industrial 13.8%


Basic Industry 1.2%
Airgas, Inc.
1.65%, 02/15/18 (b)		350,000		348,005
3.65%, 07/15/24 (b)		300,000		306,971
Barrick Gold Corp.
4.10%, 05/01/23		250,000		254,004
Barrick North America Finance LLC
5.75%, 05/01/43		500,000		541,244
Barrick PD Australia Finance Pty Ltd.
4.95%, 01/15/20		250,000		276,876
BHP Billiton Finance (USA) Ltd.
3.25%, 11/21/21		700,000		727,403
4.13%, 02/24/42		250,000		252,546
CF Industries, Inc.
7.13%, 05/01/20		150,000		183,255
Domtar Corp.
10.75%, 06/01/17		250,000		307,125
Eastman Chemical Co.
3.60%, 08/15/22 (b)		350,000		360,217
Ecolab, Inc.
3.00%, 12/08/16		200,000		208,868
Freeport-McMoRan, Inc.
2.15%, 03/01/17		500,000		509,660
Glencore Canada Corp.
6.00%, 10/15/15		250,000		263,877
International Paper Co.
7.50%, 08/15/21		250,000		319,216
7.30%, 11/15/39		300,000		414,000
Kinross Gold Corp.
5.95%, 03/15/24 (b)(c)		150,000		156,301
Lubrizol Corp.
8.88%, 02/01/19		200,000		255,321
LYB International Finance BV
4.00%, 07/15/23		150,000		158,957
5.25%, 07/15/43		500,000		565,237
LyondellBasell Industries N.V.
5.00%, 04/15/19 (b)		500,000		559,735
Monsanto Co.
2.75%, 04/15/16		100,000		103,347
4.20%, 07/15/34 (b)		750,000		781,057
Newmont Mining Corp.
4.88%, 03/15/42 (b)		250,000		232,544
Packaging Corp. of America
4.50%, 11/01/23 (b)		250,000		270,186
Plains Exploration & Production Co.
6.75%, 02/01/22 (b)		228,000		259,350
Rio Tinto Finance (USA) Ltd.
3.50%, 11/02/20		250,000		263,190
7.13%, 07/15/28		200,000		266,009
Rio Tinto Finance (USA) PLC
2.25%, 12/14/18 (b)		500,000		509,462
4.75%, 03/22/42 (b)		500,000		536,693
Rock-Tenn Co.
4.45%, 03/01/19		250,000		271,385
Teck Resources Ltd.
4.75%, 01/15/22 (b)		300,000		318,345
The Dow Chemical Co.
7.38%, 11/01/29		325,000		444,037
The Mosaic Co.
4.25%, 11/15/23 (b)		150,000		160,606
The Valspar Corp.
4.20%, 01/15/22 (b)		150,000		160,119
Vale Overseas Ltd.
4.38%, 01/11/22		375,000		393,330
Vale S.A.
5.63%, 09/11/42		500,000		519,585

				12,458,063


Capital Goods 1.1%
Caterpillar Financial Services Corp.
0.70%, 11/06/15		250,000		250,785
1.25%, 11/06/17		700,000		698,181
Deere & Co.
5.38%, 10/16/29		550,000		662,321
Eaton Corp.
0.95%, 11/02/15		150,000		150,648
1.50%, 11/02/17		200,000		200,222
2.75%, 11/02/22		250,000		244,792
4.00%, 11/02/32		150,000		153,051
Emerson Electric Co.
5.00%, 04/15/19		250,000		281,846
General Electric Co.
0.85%, 10/09/15		100,000		100,463
5.25%, 12/06/17		750,000		841,213
3.38%, 03/11/24		150,000		154,281
4.13%, 10/09/42		500,000		514,491
4.50%, 03/11/44		250,000		273,235
Honeywell International, Inc.
5.00%, 02/15/19		150,000		170,000
5.38%, 03/01/41		250,000		306,480
Ingersoll-Rand Global Holding Co., Ltd.
6.88%, 08/15/18		150,000		177,881
John Deere Capital Corp.
2.80%, 09/18/17		400,000		418,262
1.70%, 01/15/20		150,000		147,360
Joy Global, Inc.
6.00%, 11/15/16		150,000		165,060

See financial notes 45

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
L-3 Communications Corp.
4.95%, 02/15/21 (b)		250,000		274,082
Lockheed Martin Corp.
6.15%, 09/01/36		200,000		259,508
5.50%, 11/15/39		100,000		121,746
Northrop Grumman Corp.
1.75%, 06/01/18		350,000		349,451
Owens Corning
4.20%, 12/15/22 (b)		500,000		516,353
Raytheon Co.
3.13%, 10/15/20		200,000		207,409
4.88%, 10/15/40		150,000		168,618
Republic Services, Inc.
4.75%, 05/15/23 (b)		500,000		561,241
Textron, Inc.
5.95%, 09/21/21 (b)		500,000		583,757
The Boeing Co.
3.75%, 11/20/16		300,000		319,723
6.88%, 03/15/39		100,000		145,756
United Technologies Corp.
1.80%, 06/01/17		250,000		254,618
6.13%, 02/01/19		500,000		588,263
4.50%, 06/01/42		700,000		756,689
Waste Management, Inc.
7.00%, 07/15/28		200,000		266,164

				11,283,950


Communications 2.5%
21st Century Fox America, Inc.
4.00%, 10/01/23		300,000		315,869
6.40%, 12/15/35		250,000		319,296
6.15%, 03/01/37		450,000		547,607
America Movil, S.A.B. de CV
2.38%, 09/08/16		250,000		256,388
5.00%, 10/16/19		200,000		226,208
4.38%, 07/16/42		300,000		294,057
American Tower Corp.
3.40%, 02/15/19		200,000		207,801
5.00%, 02/15/24		200,000		216,587
AT&T, Inc.
0.90%, 02/12/16		500,000		501,814
3.00%, 02/15/22		350,000		352,095
6.15%, 09/15/34		300,000		368,214
5.35%, 09/01/40		250,000		280,589
5.55%, 08/15/41		100,000		114,873
4.80%, 06/15/44 (b)		600,000		630,030
CBS Corp.
5.75%, 04/15/20		275,000		317,277
4.90%, 08/15/44 (b)		100,000		103,121
Comcast Corp.
5.90%, 03/15/16		600,000		647,403
5.70%, 07/01/19		200,000		233,736
3.38%, 02/15/25 (b)		350,000		354,624
6.50%, 11/15/35		175,000		230,925
Deutsche Telekom International Finance BV
6.00%, 07/08/19		400,000		467,802
DIRECTV Holdings LLC
3.13%, 02/15/16		500,000		516,757
5.20%, 03/15/20		100,000		113,047
4.45%, 04/01/24 (b)		150,000		161,254
6.00%, 08/15/40 (b)		350,000		417,615
Discovery Communications LLC
3.25%, 04/01/23		300,000		297,226
Grupo Televisa S.A.B.
6.00%, 05/15/18		500,000		567,450
5.00%, 05/13/45		400,000		413,628
Historic TW, Inc.
6.88%, 06/15/18		500,000		590,345
NBCUniversal Media LLC
5.95%, 04/01/41		150,000		189,164
4.45%, 01/15/43		250,000		262,722
Orange S.A.
2.75%, 02/06/19		150,000		153,979
9.00%, 03/01/31 (a)		200,000		306,214
5.38%, 01/13/42		100,000		112,293
Pacific Bell Telephone Co.
7.13%, 03/15/26		750,000		977,796
Qwest Corp.
6.75%, 12/01/21		300,000		349,560
Rogers Communications, Inc.
3.00%, 03/15/23 (b)		400,000		387,951
TCI Communication, Inc.
7.13%, 02/15/28		350,000		468,560
Telefonica Emisiones S.A.U.
6.42%, 06/20/16		350,000		383,019
5.13%, 04/27/20		100,000		111,538
5.46%, 02/16/21		500,000		568,558
7.05%, 06/20/36		100,000		131,706
Telefonos de Mexico, S.A.B. de CV
5.50%, 11/15/19		250,000		287,495
The Walt Disney Co.
5.63%, 09/15/16		300,000		329,505
2.55%, 02/15/22		500,000		498,325
4.13%, 12/01/41		100,000		102,174
Time Warner Cable, Inc.
5.85%, 05/01/17		600,000		670,361
8.25%, 04/01/19		200,000		251,854
4.50%, 09/15/42 (b)		250,000		254,079
Time Warner Entertainment Co. LP
8.38%, 07/15/33		350,000		527,747
Time Warner, Inc.
2.10%, 06/01/19		300,000		297,872
4.88%, 03/15/20		400,000		446,412
3.55%, 06/01/24 (b)		250,000		250,197
6.50%, 11/15/36		250,000		314,271
Verizon Communications, Inc.
2.50%, 09/15/16		300,000		309,475
1.35%, 06/09/17		250,000		250,244
3.65%, 09/14/18		350,000		373,525
4.50%, 09/15/20		200,000		219,930
5.15%, 09/15/23		750,000		849,765
4.15%, 03/15/24 (b)		200,000		211,874
6.40%, 09/15/33		1,000,000		1,264,512
5.85%, 09/15/35		650,000		772,816
6.55%, 09/15/43		1,000,000		1,289,881
Viacom, Inc.
2.50%, 12/15/16		300,000		309,183
4.25%, 09/01/23 (b)		150,000		158,185
Vodafone Group PLC
4.63%, 07/15/18		500,000		551,535
6.15%, 02/27/37		250,000		303,810

				25,561,725


Consumer Cyclical 1.5%
Amazon.com, Inc.
2.50%, 11/29/22 (b)		200,000		191,545
CVS Caremark Corp.
6.13%, 08/15/16		1,000,000		1,100,703
2.25%, 08/12/19 (b)		250,000		250,251
4.75%, 05/18/20 (b)		350,000		394,831

46 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
3.38%, 08/12/24 (b)		250,000		251,963
5.75%, 05/15/41 (b)		200,000		245,656
Darden Restaurants, Inc.
3.35%, 11/01/22 (b)		22,000		20,909
Delphi Corp.
6.13%, 05/15/21 (b)		700,000		775,250
4.15%, 03/15/24 (b)		500,000		520,748
eBay, Inc.
1.63%, 10/15/15		400,000		405,457
2.60%, 07/15/22 (b)		300,000		292,058
Ford Motor Co.
7.45%, 07/16/31		100,000		136,579
4.75%, 01/15/43		250,000		262,707
Ford Motor Credit Co. LLC
6.63%, 08/15/17		750,000		857,160
5.00%, 05/15/18		350,000		386,727
4.25%, 09/20/22		350,000		374,600
Johnson Controls, Inc.
3.63%, 07/02/24 (b)		300,000		305,474
4.63%, 07/02/44 (b)		300,000		307,378
Kohl’s Corp.
4.00%, 11/01/21 (b)		500,000		528,114
Lowe’s Cos., Inc.
3.12%, 04/15/22 (b)		150,000		154,184
4.65%, 04/15/42 (b)		100,000		108,550
Macy’s Retail Holdings, Inc.
2.88%, 02/15/23 (b)		500,000		487,693
6.90%, 04/01/29		200,000		257,272
5.13%, 01/15/42 (b)		250,000		274,355
Marriott International, Inc.
3.00%, 03/01/19 (b)		350,000		364,125
McDonald’s Corp.
2.63%, 01/15/22		400,000		402,809
3.70%, 02/15/42		200,000		190,277
NIKE, Inc.
2.25%, 05/01/23 (b)		200,000		191,745
3.63%, 05/01/43 (b)		100,000		96,735
Nordstrom, Inc.
6.25%, 01/15/18		100,000		114,819
QVC, Inc.
5.45%, 08/15/34 (b)(c)		300,000		303,484
Starbucks Corp.
3.85%, 10/01/23 (b)		300,000		319,410
Target Corp.
3.50%, 07/01/24		400,000		409,360
The Gap, Inc.
5.95%, 04/12/21 (b)		100,000		116,061
The Home Depot, Inc.
3.75%, 02/15/24 (b)		150,000		158,864
5.88%, 12/16/36		500,000		636,243
4.88%, 02/15/44 (b)		150,000		170,061
Toyota Motor Credit Corp.
3.40%, 09/15/21		100,000		105,045
VF Corp.
6.45%, 11/01/37		50,000		66,138
Wal-Mart Stores, Inc.
5.80%, 02/15/18		300,000		343,415
3.25%, 10/25/20		500,000		526,810
5.88%, 04/05/27		275,000		349,732
5.25%, 09/01/35		100,000		119,661
6.50%, 08/15/37		150,000		205,046
6.20%, 04/15/38		350,000		464,787
Wyndham Worldwide Corp.
5.63%, 03/01/21		250,000		280,767

				14,825,558


Consumer Non-Cyclical 3.1%
AbbVie, Inc.
1.20%, 11/06/15		500,000		502,876
2.00%, 11/06/18		500,000		499,432
4.40%, 11/06/42		300,000		302,989
Actavis, Inc.
4.63%, 10/01/42 (b)		135,000		135,036
Altria Group, Inc.
9.70%, 11/10/18		111,000		144,161
9.25%, 08/06/19		50,000		65,842
4.75%, 05/05/21		150,000		167,340
2.85%, 08/09/22		200,000		195,956
4.00%, 01/31/24		600,000		625,325
9.95%, 11/10/38		17,000		28,966
AmerisourceBergen Corp.
4.88%, 11/15/19		250,000		279,430
Amgen, Inc.
2.50%, 11/15/16		250,000		258,287
5.70%, 02/01/19		500,000		574,416
3.63%, 05/15/22 (b)		150,000		156,420
Anheuser-Busch InBev Finance, Inc.
1.13%, 01/27/17		150,000		151,357
2.15%, 02/01/19		300,000		303,686
3.70%, 02/01/24		300,000		315,591
4.63%, 02/01/44		650,000		712,331
Anheuser-Busch InBev Worldwide, Inc.
5.00%, 04/15/20		450,000		509,877
4.38%, 02/15/21		150,000		166,745
Archer-Daniels-Midland Co.
5.45%, 03/15/18		150,000		169,647
AstraZeneca PLC
6.45%, 09/15/37		500,000		664,732
Baxter International, Inc.
4.50%, 06/15/43 (b)		200,000		215,305
Bristol-Myers Squibb Co.
3.25%, 08/01/42		150,000		129,901
Bunge Ltd. Finance Corp.
8.50%, 06/15/19		100,000		125,468
Cardinal Health, Inc.
3.20%, 06/15/22		500,000		503,079
3.20%, 03/15/23		250,000		248,339
4.60%, 03/15/43		100,000		105,020
Celgene Corp.
4.63%, 05/15/44 (b)		1,000,000		1,034,538
ConAgra Foods, Inc.
3.20%, 01/25/23 (b)		724,000		714,799
4.65%, 01/25/43 (b)		165,000		167,243
Covidien International Finance S.A.
6.00%, 10/15/17		400,000		453,981
Delhaize Group S.A.
5.70%, 10/01/40		500,000		551,982
Diageo Capital PLC
1.13%, 04/29/18		100,000		98,329
5.88%, 09/30/36		150,000		188,596
Dr. Pepper Snapple Group, Inc.
2.00%, 01/15/20		500,000		491,267
Express Scripts Holding Co.
2.65%, 02/15/17		250,000		258,693
4.75%, 11/15/21		450,000		501,240
Forest Laboratories, Inc.
4.88%, 02/15/21 (c)		1,000,000		1,101,169

See financial notes 47

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
General Mills, Inc.
5.65%, 02/15/19		500,000		578,245
GlaxoSmithKline Capital, Inc.
6.38%, 05/15/38		400,000		529,532
Hasbro, Inc.
6.30%, 09/15/17		100,000		113,392
Johnson & Johnson
4.38%, 12/05/33 (b)		100,000		111,908
4.85%, 05/15/41		200,000		233,425
Kellogg Co.
7.45%, 04/01/31		250,000		331,884
Kimberly-Clark Corp.
7.50%, 11/01/18		325,000		398,329
5.30%, 03/01/41		200,000		243,117
Koninklijke Philips NV
5.00%, 03/15/42		300,000		337,721
Kraft Foods Group, Inc.
5.38%, 02/10/20		392,000		446,285
5.00%, 06/04/42		300,000		327,489
Lorillard Tobacco Co.
2.30%, 08/21/17		100,000		101,716
6.88%, 05/01/20		100,000		118,830
McKesson Corp.
2.28%, 03/15/19		650,000		650,993
Medtronic, Inc.
3.13%, 03/15/22 (b)		250,000		254,663
3.63%, 03/15/24 (b)		650,000		676,558
Merck & Co., Inc.
3.88%, 01/15/21 (b)		700,000		762,316
Merck Sharp & Dohme Corp.
5.00%, 06/30/19		200,000		227,167
Molson Coors Brewing Co.
3.50%, 05/01/22		100,000		102,947
Mondelez International, Inc.
4.13%, 02/09/16		750,000		785,329
2.25%, 02/01/19 (b)		200,000		200,507
Mylan, Inc.
1.80%, 06/24/16		200,000		202,797
2.60%, 06/24/18		300,000		305,915
4.20%, 11/29/23 (b)		350,000		366,549
5.40%, 11/29/43 (b)		200,000		220,818
Newell Rubbermaid, Inc.
2.05%, 12/01/17		150,000		151,398
4.70%, 08/15/20		200,000		216,484
PepsiCo, Inc.
2.25%, 01/07/19 (b)		200,000		203,811
4.50%, 01/15/20		250,000		279,497
4.88%, 11/01/40		500,000		560,667
Pfizer, Inc.
6.20%, 03/15/19		500,000		590,207
7.20%, 03/15/39		250,000		361,523
Philip Morris International, Inc.
1.13%, 08/21/17		600,000		598,975
4.50%, 03/26/20		350,000		388,368
2.50%, 08/22/22		100,000		98,012
Reynolds American, Inc.
1.05%, 10/30/15		100,000		100,119
3.25%, 11/01/22		100,000		98,063
4.75%, 11/01/42		150,000		146,954
Safeway, Inc.
7.25%, 02/01/31		250,000		255,697
Sanofi
2.63%, 03/29/16		800,000		826,207
1.25%, 04/10/18		250,000		247,572
Teva Pharmaceutical Finance Co. LLC
6.15%, 02/01/36		250,000		306,964
Teva Pharmaceutical Finance IV BV
3.65%, 11/10/21		200,000		208,604
The Coca-Cola Co.
3.15%, 11/15/20		200,000		210,138
2.50%, 04/01/23		750,000		730,993
The Kroger Co.
3.90%, 10/01/15		200,000		206,800
3.85%, 08/01/23 (b)		100,000		103,963
5.40%, 07/15/40 (b)		50,000		57,199
The Procter & Gamble Co.
4.70%, 02/15/19		400,000		451,402
Thermo Fisher Scientific, Inc.
3.20%, 03/01/16		100,000		103,565
4.15%, 02/01/24 (b)		300,000		317,488
5.30%, 02/01/44 (b)		300,000		343,037
Unilever Capital Corp.
4.25%, 02/10/21		700,000		780,290
Zimmer Holdings, Inc.
5.75%, 11/30/39		400,000		480,191
Zoetis, Inc.
4.70%, 02/01/43 (b)		100,000		104,411

				31,976,422


Energy 2.6%
Anadarko Petroleum Corp.
6.38%, 09/15/17		250,000		285,265
6.45%, 09/15/36		100,000		128,678
Apache Corp.
5.10%, 09/01/40 (b)		250,000		276,813
Baker Hughes, Inc.
7.50%, 11/15/18		100,000		122,493
BP Capital Markets PLC
1.85%, 05/05/17		150,000		152,801
2.24%, 05/10/19		250,000		251,648
4.50%, 10/01/20		300,000		331,511
3.56%, 11/01/21		600,000		630,616
3.25%, 05/06/22		250,000		255,545
2.75%, 05/10/23		150,000		146,140
Canadian Natural Resources Ltd.
5.70%, 05/15/17		250,000		278,544
3.80%, 04/15/24		250,000		260,012
5.85%, 02/01/35		250,000		301,020
6.25%, 03/15/38		200,000		253,440
CenterPoint Energy Resources Corp.
5.85%, 01/15/41 (b)		100,000		127,157
Chevron Corp.
3.19%, 06/24/23 (b)		500,000		514,786
Continental Resources, Inc.
5.00%, 09/15/22 (b)		250,000		270,000
4.90%, 06/01/44 (b)(c)		100,000		106,072
Devon Energy Corp.
2.25%, 12/15/18 (b)		300,000		303,024
Diamond Offshore Drilling, Inc.
4.88%, 11/01/43 (b)		150,000		154,028
Dominion Gas Holdings LLC
4.80%, 11/01/43 (b)(c)		400,000		439,896
El Paso Pipeline Partners Operating Co., LLC
4.30%, 05/01/24 (b)		450,000		462,573
4.70%, 11/01/42 (b)		100,000		94,578
Encana Corp.
6.50%, 05/15/19		400,000		471,483
Energy Transfer Partners LP
9.00%, 04/15/19		187,000		237,792

48 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
5.20%, 02/01/22 (b)		250,000		276,212
6.63%, 10/15/36		200,000		242,680
5.15%, 02/01/43 (b)		150,000		152,534
Ensco PLC
4.70%, 03/15/21		100,000		109,023
Enterprise Products Operating LLC
6.30%, 09/15/17		700,000		800,888
3.90%, 02/15/24 (b)		100,000		104,487
6.65%, 10/15/34		250,000		331,127
EOG Resources, Inc.
2.45%, 04/01/20 (b)		300,000		302,724
Halliburton Co.
2.00%, 08/01/18 (b)		300,000		304,119
7.45%, 09/15/39		225,000		332,708
Hess Corp.
8.13%, 02/15/19		300,000		374,356
7.30%, 08/15/31		300,000		407,677
5.60%, 02/15/41		100,000		118,941
Husky Energy, Inc.
7.25%, 12/15/19		163,000		200,632
Kerr-McGee Corp.
6.95%, 07/01/24		250,000		320,456
Kinder Morgan Energy Partners LP
6.85%, 02/15/20		400,000		477,335
6.95%, 01/15/38		250,000		307,856
5.00%, 08/15/42 (b)		200,000		197,824
5.50%, 03/01/44 (b)		800,000		846,529
Magellan Midstream Partners LP
4.20%, 12/01/42 (b)		250,000		242,091
Marathon Oil Corp.
0.90%, 11/01/15		100,000		100,281
2.80%, 11/01/22 (b)		200,000		195,914
Nabors Industries, Inc.
2.35%, 09/15/16 (c)		200,000		205,633
6.15%, 02/15/18		450,000		512,173
5.10%, 09/15/23 (b)(c)		300,000		332,679
Nexen Energy ULC
6.20%, 07/30/19		125,000		145,999
5.88%, 03/10/35		300,000		353,005
Nisource Finance Corp.
5.25%, 02/15/43 (b)		300,000		328,670
Noble Energy, Inc.
8.25%, 03/01/19		100,000		125,165
6.00%, 03/01/41 (b)		400,000		485,032
Noble Holding International Ltd.
2.50%, 03/15/17		200,000		204,633
Occidental Petroleum Corp.
4.13%, 06/01/16		200,000		211,742
Phillips 66
5.88%, 05/01/42		150,000		185,100
Plains All American Pipeline LP
5.75%, 01/15/20		500,000		579,768
Plains Exploration & Production Co.
6.50%, 11/15/20 (b)		325,000		360,750
Shell International Finance BV
5.20%, 03/22/17		500,000		552,957
3.63%, 08/21/42		250,000		237,412
Southern Natural Gas Co. LLC
5.90%, 04/01/17 (c)		150,000		167,055
Spectra Energy Partners LP
2.95%, 09/25/18 (b)		300,000		311,209
Suncor Energy, Inc.
6.50%, 06/15/38		500,000		651,786
Talisman Energy, Inc.
7.75%, 06/01/19		250,000		308,352
6.25%, 02/01/38		250,000		295,397
The Williams Cos., Inc.
5.75%, 06/24/44 (b)		850,000		861,727
Tosco Corp.
7.80%, 01/01/27		750,000		1,065,004
Total Capital International S.A.
3.75%, 04/10/24		150,000		157,527
Total Capital S.A.
2.30%, 03/15/16		150,000		153,888
4.13%, 01/28/21		350,000		384,092
TransCanada PipeLines Ltd.
6.50%, 08/15/18		325,000		383,106
3.75%, 10/16/23 (b)		100,000		104,721
4.63%, 03/01/34 (b)		350,000		380,256
6.20%, 10/15/37		150,000		194,010
5.00%, 10/16/43 (b)		150,000		169,527
Valero Energy Corp.
9.38%, 03/15/19		250,000		324,516
10.50%, 03/15/39		200,000		339,941
Weatherford International Ltd.
4.50%, 04/15/22 (b)		500,000		534,898
Williams Partners LP
7.25%, 02/01/17		250,000		283,402
4.13%, 11/15/20 (b)		500,000		532,794
XTO Energy, Inc.
6.75%, 08/01/37		100,000		148,931

				26,175,166


Other Industrial 0.0%
Thomas & Betts Corp.
5.63%, 11/15/21		250,000		294,849


Technology 1.3%
Apple, Inc.
0.45%, 05/03/16		100,000		99,882
1.00%, 05/03/18		200,000		196,178
2.40%, 05/03/23		300,000		288,132
3.85%, 05/04/43		100,000		95,916
Arrow Electronics, Inc.
3.38%, 11/01/15		250,000		257,139
3.00%, 03/01/18		200,000		206,383
4.50%, 03/01/23 (b)		500,000		523,329
Broadcom Corp.
3.50%, 08/01/24 (b)		300,000		304,932
4.50%, 08/01/34 (b)		850,000		886,685
Cisco Systems, Inc.
5.50%, 02/22/16		700,000		751,122
4.45%, 01/15/20		800,000		890,016
5.90%, 02/15/39		150,000		187,984
EMC Corp.
1.88%, 06/01/18		1,000,000		1,003,477
2.65%, 06/01/20		40,000		40,493
Fiserv, Inc.
3.13%, 06/15/16		250,000		259,471
Google, Inc.
3.38%, 02/25/24		300,000		311,482
Harris Corp.
6.15%, 12/15/40		150,000		183,752
Hewlett-Packard Co.
2.60%, 09/15/17		300,000		310,158
2.75%, 01/14/19		200,000		204,940
3.75%, 12/01/20		550,000		577,678
4.65%, 12/09/21		350,000		386,229
Intel Corp.
1.95%, 10/01/16		250,000		256,211
3.30%, 10/01/21		400,000		418,514

See financial notes 49

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
4.80%, 10/01/41		150,000		163,112
International Business Machines Corp.
5.70%, 09/14/17		400,000		452,868
7.63%, 10/15/18		700,000		859,770
Leidos, Inc.
5.50%, 07/01/33		150,000		145,238
Microsoft Corp.
5.30%, 02/08/41		500,000		598,709
Motorola Solutions, Inc.
3.50%, 03/01/23		500,000		489,566
NetApp, Inc.
3.38%, 06/15/21 (b)		350,000		357,885
Oracle Corp.
5.25%, 01/15/16		100,000		106,496
3.40%, 07/08/24 (b)		250,000		254,519
4.30%, 07/08/34 (b)		250,000		261,640
Pitney Bowes, Inc.
4.63%, 03/15/24 (b)		200,000		208,359
Seagate HDD Cayman
4.75%, 01/01/25 (c)		200,000		205,000
Xerox Corp.
2.75%, 03/15/19		400,000		407,126

				13,150,391


Transportation 0.5%
American Airlines Pass-Through Trust
4.00%, 01/15/27		664,107		679,049
Burlington Northern Santa Fe LLC
5.65%, 05/01/17		400,000		446,720
3.60%, 09/01/20 (b)		300,000		318,287
4.55%, 09/01/44 (b)		300,000		312,813
Canadian National Railway Co.
6.20%, 06/01/36		100,000		131,865
4.50%, 11/07/43 (b)		400,000		434,012
Canadian Pacific Railway Ltd.
4.50%, 01/15/22		500,000		555,852
CSX Corp.
3.70%, 10/30/20 (b)		500,000		529,969
4.10%, 03/15/44 (b)		400,000		392,394
FedEx Corp.
2.63%, 08/01/22		200,000		195,378
3.88%, 08/01/42		200,000		188,387
Norfolk Southern Corp.
5.90%, 06/15/19		300,000		348,739
Ryder System, Inc.
2.55%, 06/01/19 (b)		200,000		202,166
United Parcel Service, Inc.
1.13%, 10/01/17		250,000		249,783
6.20%, 01/15/38		150,000		199,614

				5,185,028

				140,911,152

Utilities 1.8%


Electric 1.7%
Ameren Illinois Co.
2.70%, 09/01/22 (b)		400,000		398,862
Appalachian Power Co.
6.38%, 04/01/36		650,000		851,895
7.00%, 04/01/38		400,000		554,342
Berkshire Hathaway Energy Co.
3.75%, 11/15/23 (b)		500,000		520,332
Commonwealth Edison Co.
1.95%, 09/01/16 (b)		500,000		511,877
Consolidated Edison Co. of New York, Inc.
5.30%, 03/01/35		350,000		410,358
Consumers Energy Co.
3.38%, 08/15/23 (b)		500,000		521,407
3.95%, 05/15/43 (b)		400,000		402,981
Dominion Resources, Inc.
4.45%, 03/15/21		450,000		496,011
5.25%, 08/01/33 (b)		500,000		576,335
DTE Electric Co.
3.65%, 03/15/24 (b)		150,000		157,018
Duke Energy Carolinas LLC
4.30%, 06/15/20		100,000		110,767
6.45%, 10/15/32		350,000		462,629
Duke Energy Corp.
3.75%, 04/15/24 (b)		250,000		260,666
Duke Energy Florida, Inc.
4.55%, 04/01/20		750,000		836,165
Duke Energy Progress, Inc.
4.10%, 05/15/42 (b)		250,000		255,077
Exelon Generation Co. LLC
4.00%, 10/01/20 (b)		300,000		317,000
5.60%, 06/15/42 (b)		300,000		332,491
Florida Power & Light Co.
6.20%, 06/01/36		500,000		674,081
Georgia Power Co.
4.75%, 09/01/40		350,000		387,577
LG&E & KU Energy LLC
3.75%, 11/15/20 (b)		600,000		632,266
National Rural Utilities Cooperative Finance Corp.
3.05%, 03/01/16		500,000		519,334
NextEra Energy Capital Holdings, Inc.
3.63%, 06/15/23 (b)		200,000		205,379
Oncor Electric Delivery Co. LLC
2.15%, 06/01/19 (b)(c)		300,000		300,733
4.55%, 12/01/41 (b)		500,000		553,643
Pacific Gas & Electric Co.
3.50%, 10/01/20 (b)		200,000		210,015
6.05%, 03/01/34		300,000		377,153
5.80%, 03/01/37		400,000		491,014
Pacificorp
5.50%, 01/15/19		150,000		172,113
6.00%, 01/15/39		500,000		655,329
PPL Electric Utilities Corp.
2.50%, 09/01/22 (b)		200,000		197,857
PSEG Power LLC
5.13%, 04/15/20		150,000		167,752
8.63%, 04/15/31		500,000		732,466
San Diego Gas & Electric Co.
4.50%, 08/15/40		250,000		272,346
Sempra Energy
3.55%, 06/15/24 (b)		150,000		153,172
Sierra Pacific Power Co.
6.00%, 05/15/16		200,000		217,757
Southern California Edison Co.
5.50%, 08/15/18		250,000		285,240
The Southern Co.
2.15%, 09/01/19 (b)		500,000		500,274
TransAlta Corp.
6.65%, 05/15/18		100,000		113,246
Union Electric Co.
3.90%, 09/15/42 (b)		200,000		196,875
Westar Energy, Inc.
4.13%, 03/01/42 (b)		100,000		102,358
Xcel Energy, Inc.
4.70%, 05/15/20 (b)		315,000		351,760

50 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
4.80%, 09/15/41 (b)		750,000		838,837

				17,284,790


Natural Gas 0.1%
ONE Gas, Inc.
3.61%, 02/01/24 (b)(c)		200,000		210,273
4.66%, 02/01/44 (b)(c)		150,000		167,990
Sempra Energy
6.15%, 06/15/18		500,000		578,372
Southwest Gas Corp.
3.88%, 04/01/22 (b)		100,000		107,214

				1,063,849

				18,348,639

Total Corporate Bonds
(Cost $225,145,858)				237,360,669




U.S. Government and Government Agencies 38.6% of net assets

U.S. Government Agency Securities 3.4%
Fannie Mae
4.38%, 10/15/15 (h)		2,000,000		2,092,982
2.38%, 04/11/16		1,000,000		1,031,258
1.25%, 09/28/16		3,000,000		3,039,636
5.38%, 06/12/17		1,000,000		1,120,899
1.20%, 07/17/17 (b)		1,000,000		1,000,898
0.88%, 08/28/17		2,500,000		2,488,750
1.50%, 10/17/19 (b)		3,000,000		2,928,657
2.25%, 10/17/22 (b)		500,000		481,291
6.63%, 11/15/30 (h)		500,000		722,815
Federal Farm Credit Bank
4.88%, 01/17/17		500,000		548,043
Federal Home Loan Bank
5.38%, 05/18/16		1,000,000		1,084,134
0.38%, 06/24/16		1,500,000		1,496,700
1.00%, 11/09/17 (b)		1,000,000		997,281
5.00%, 11/17/17		750,000		840,344
5.38%, 05/15/19		500,000		585,824
1.88%, 12/09/22		1,000,000		958,228
5.50%, 07/15/36		500,000		664,005
Freddie Mac
4.75%, 11/17/15		2,000,000		2,108,464
2.00%, 08/25/16		1,000,000		1,027,602
0.88%, 10/14/16		2,250,000		2,262,451
0.88%, 03/07/18		3,750,000		3,692,430
4.88%, 06/13/18		1,000,000		1,129,409
2.38%, 01/13/22		1,500,000		1,509,004
Tennessee Valley Authority
4.65%, 06/15/35		1,000,000		1,159,110

				34,970,215

U.S. Treasury Obligations 35.2%
U.S. Treasury Bonds
7.25%, 05/15/16		1,000,000		1,116,016
8.13%, 08/15/19		1,000,000		1,312,148
6.00%, 02/15/26 (h)		3,500,000		4,747,967
6.13%, 11/15/27		400,000		559,469
5.25%, 11/15/28		1,000,000		1,310,234
5.25%, 02/15/29 (h)		2,750,000		3,606,581
5.00%, 05/15/37		500,000		674,219
4.25%, 05/15/39		1,000,000		1,222,656
4.38%, 11/15/39		500,000		623,281
4.63%, 02/15/40		2,000,000		2,588,438
4.38%, 05/15/40		1,750,000		2,187,227
3.88%, 08/15/40 (h)		2,300,000		2,662,968
4.25%, 11/15/40		1,650,000		2,026,406
4.75%, 02/15/41		1,450,000		1,920,570
4.38%, 05/15/41		1,250,000		1,567,969
3.75%, 08/15/41		2,000,000		2,270,938
3.13%, 11/15/41		1,285,000		1,304,676
3.13%, 02/15/42		2,230,000		2,261,184
2.75%, 08/15/42		525,000		493,008
2.75%, 11/15/42		2,000,000		1,875,312
3.13%, 02/15/43		1,000,000		1,009,688
3.63%, 08/15/43		3,000,000		3,320,625
U.S. Treasury Notes
0.25%, 09/15/15 (h)		4,000,000		4,005,468
1.25%, 09/30/15		2,000,000		2,023,906
0.25%, 10/15/15		3,500,000		3,503,622
0.38%, 11/15/15		2,000,000		2,004,532
4.50%, 11/15/15		1,000,000		1,051,699
0.25%, 11/30/15		5,500,000		5,503,866
1.38%, 11/30/15		1,000,000		1,014,609
0.25%, 12/15/15		6,500,000		6,502,918
2.13%, 12/31/15		2,700,000		2,767,500
2.00%, 01/31/16		2,250,000		2,305,019
0.38%, 02/15/16		4,000,000		4,005,156
4.50%, 02/15/16		1,000,000		1,060,781
2.13%, 02/29/16		1,000,000		1,027,148
0.38%, 03/15/16		2,000,000		2,001,796
0.25%, 04/15/16 (h)		8,000,000		7,987,344
0.38%, 04/30/16		6,000,000		6,001,290
2.63%, 04/30/16		1,000,000		1,037,070
0.25%, 05/15/16		4,500,000		4,489,717
5.13%, 05/15/16		1,000,000		1,080,000
3.25%, 05/31/16		1,000,000		1,049,082
0.50%, 06/30/16		3,000,000		3,003,867
1.50%, 06/30/16		2,000,000		2,038,242
3.25%, 06/30/16		1,000,000		1,050,742
0.63%, 07/15/16		4,000,000		4,012,580
1.50%, 07/31/16		1,000,000		1,019,355
3.25%, 07/31/16		1,850,000		1,947,414
0.63%, 08/15/16		1,500,000		1,503,839
4.88%, 08/15/16		1,000,000		1,084,551
1.00%, 08/31/16		1,500,000		1,514,591
3.00%, 08/31/16		2,100,000		2,203,278
0.88%, 09/15/16		3,000,000		3,020,625
3.00%, 09/30/16		1,000,000		1,050,469
1.00%, 10/31/16		2,000,000		2,017,188
4.63%, 11/15/16		1,000,000		1,087,578
0.88%, 11/30/16		2,000,000		2,010,860
2.75%, 11/30/16 (h)		5,000,000		5,236,720
0.88%, 12/31/16		3,750,000		3,767,430
0.75%, 01/15/17		3,000,000		3,004,335
3.13%, 01/31/17 (h)		3,700,000		3,914,197
0.88%, 02/28/17		7,750,000		7,775,730
0.75%, 03/15/17		5,500,000		5,500,643
1.00%, 03/31/17		2,000,000		2,010,938
3.25%, 03/31/17		2,000,000		2,125,546
3.13%, 04/30/17 (h)		5,250,000		5,568,691
0.88%, 05/15/17		3,000,000		3,003,399
4.50%, 05/15/17		3,000,000		3,292,149
0.63%, 05/31/17		2,500,000		2,484,180
0.75%, 06/30/17		3,000,000		2,987,694
0.88%, 07/15/17		2,000,000		1,998,124
2.38%, 07/31/17		3,500,000		3,644,102
0.63%, 08/31/17		2,000,000		1,979,376

See financial notes 51

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
0.63%, 09/30/17		1,000,000		988,242
4.25%, 11/15/17		3,000,000		3,299,181
0.63%, 11/30/17		3,000,000		2,954,649
0.75%, 12/31/17		1,000,000		987,656
2.63%, 01/31/18		2,000,000		2,097,188
3.50%, 02/15/18		1,000,000		1,078,398
0.75%, 03/31/18		3,000,000		2,949,258
2.88%, 03/31/18		2,500,000		2,644,140
3.88%, 05/15/18		2,500,000		2,736,327
1.00%, 05/31/18		1,000,000		989,141
1.38%, 07/31/18		1,500,000		1,501,055
4.00%, 08/15/18		2,000,000		2,205,234
1.50%, 08/31/18		3,000,000		3,013,125
1.38%, 09/30/18		4,000,000		3,994,220
1.25%, 10/31/18		1,000,000		992,188
1.75%, 10/31/18		4,000,000		4,050,624
3.75%, 11/15/18		3,000,000		3,284,415
1.25%, 11/30/18		6,000,000		5,946,798
1.38%, 11/30/18		3,000,000		2,990,157
1.38%, 12/31/18		5,000,000		4,978,125
2.75%, 02/15/19		1,500,000		1,579,337
1.50%, 02/28/19		4,500,000		4,493,497
1.50%, 03/31/19		2,000,000		1,995,156
1.63%, 03/31/19		5,000,000		5,015,040
1.63%, 04/30/19		1,500,000		1,503,105
1.50%, 05/31/19		3,000,000		2,986,875
1.00%, 06/30/19		1,500,000		1,456,641
1.63%, 06/30/19		3,000,000		3,002,694
1.63%, 07/31/19		2,500,000		2,500,488
1.63%, 08/31/19		3,500,000		3,499,590
3.38%, 11/15/19		3,000,000		3,254,181
1.00%, 11/30/19		1,500,000		1,446,446
3.63%, 02/15/20 (h)		5,000,000		5,493,555
1.13%, 04/30/20		1,000,000		963,281
1.38%, 05/31/20		1,000,000		976,016
1.88%, 06/30/20		1,550,000		1,554,117
2.00%, 07/31/20		3,000,000		3,026,484
2.63%, 08/15/20 (h)		2,000,000		2,086,172
2.00%, 09/30/20		1,000,000		1,006,094
2.00%, 11/30/20		1,000,000		1,004,180
2.38%, 12/31/20		6,250,000		6,411,131
3.63%, 02/15/21		2,000,000		2,205,860
2.00%, 02/28/21		2,850,000		2,854,899
2.25%, 04/30/21		2,500,000		2,539,355
3.13%, 05/15/21 (h)		6,600,000		7,077,470
2.13%, 06/30/21		1,000,000		1,006,250
2.25%, 07/31/21		1,200,000		1,216,874
2.13%, 08/15/21 (h)		4,500,000		4,527,072
2.00%, 08/31/21		2,000,000		1,994,218
2.00%, 02/15/22		3,000,000		2,981,484
1.75%, 05/15/22		1,250,000		1,216,211
1.63%, 08/15/22		3,000,000		2,884,101
1.63%, 11/15/22		2,500,000		2,393,360
2.00%, 02/15/23		3,000,000		2,948,907
1.75%, 05/15/23		2,250,000		2,160,880
2.50%, 08/15/23		2,500,000		2,547,655
2.75%, 11/15/23		3,000,000		3,115,194
2.75%, 02/15/24		3,000,000		3,112,032
2.50%, 05/15/24		3,800,000		3,854,625
2.38%, 08/15/24		2,000,000		2,005,468
2.88%, 05/15/43		1,000,000		960,078
3.75%, 11/15/43		1,000,000		1,131,797
3.63%, 02/15/44		1,750,000		1,937,441
3.38%, 05/15/44		3,500,000		3,702,069
3.13%, 08/15/44		1,500,000		1,512,422

				358,762,459

Total U.S. Government and Government Agencies
(Cost $382,799,969)				393,732,674




Commercial Mortgage-Backed Securities 2.0% of net assets


Banc of America Commercial Mortgage Trust
Series 2007-1 Class A4
5.45%, 01/15/49 (b)		1,000,000		1,073,245
Series 2007-2 Class A4
5.78%, 04/10/49 (a)(b)		1,600,000		1,748,046
Series 2007-4 Class A4
5.95%, 02/10/51 (a)(b)		2,353,767		2,600,537
Bear Stearns Commercial Mortgage Securities
Series 2005-PW10 Class A4
5.41%, 12/11/40 (b)		2,190,413		2,270,715
Series 2007-T28 Class A4
5.74%, 09/11/42 (a)(b)		380,000		421,519
Citigroup Commercial Mortgage Trust
Series 2013-GC17 Class A4
4.13%, 11/10/46 (b)		450,000		483,824
COMM 2013-CCRE11 Mortgage Trust
Series 2013-CR10 Class A4
4.21%, 08/10/46 (b)		1,500,000		1,629,214
Credit Suisse Commercial Mortgage Trust
Series 2006-C1 Class AM
5.64%, 02/15/39 (a)(b)		650,000		686,552
Fannie Mae-Aces
Series 2011-M5 Class A2
2.94%, 07/25/21 (b)		700,000		722,993
Series 2014-M6 Class A2
2.68%, 05/25/21 (b)		1,000,000		1,022,068
FHLMC Multifamily Structured Pass-Through Certificates
Series K014 Class A1
2.79%, 10/25/20 (b)		898,265		934,625
Series K026 Class A2
2.51%, 11/25/22 (b)		1,400,000		1,387,570
Series K027 Class A2
2.64%, 01/25/23 (b)		300,000		299,789
Series K714 Class A2
3.03%, 10/25/20 (b)		380,000		398,164
Greenwich Capital Commercial Funding Corp.
Series 2007-GG9 Class A4
5.44%, 03/10/39 (b)		800,000		866,384
JPMorgan Chase Commercial Mortgage Securities Trust
Series 2005-LDP5 Class AJ
5.53%, 12/15/44 (a)(b)		1,025,000		1,071,757
Merrill Lynch Mortgage Trust
Series 2005-LC1 Class AM
5.49%, 01/12/44 (a)(b)		700,000		735,543
Morgan Stanley Bank of America Merrill Lynch Trust
Series 2013-C13 Class A2
2.94%, 11/15/46 (b)		200,000		206,522
Wells Fargo Commercial Mortgage Trust
Series 2013-LC12 Class A4
4.22%, 07/15/46 (a)(b)		1,500,000		1,624,871
WFRBS Commercial Mortgage Trust
Series 2013-C11 Class A2
2.03%, 03/15/45 (b)		400,000		403,701

52 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Series 2013-C14 Class A2
2.13%, 06/15/46 (b)		324,000		326,763

Total Commercial Mortgage-Backed Securities
(Cost $20,190,417)				20,914,402




Asset-Backed Obligations 0.5% of net assets


Capital One Multi-Asset Execution Trust
5.75%, 07/15/20 (b)		100,000		112,822
Chase Issuance Trust
Series 2007-A3 Class A3
5.23%, 04/15/19 (b)		1,515,000		1,665,651
Citibank Credit Card Issuance Trust
Series 2005-A2 Class A2
4.85%, 03/10/17 (b)		700,000		716,621
Series 2007-A8 Class A8
5.65%, 09/20/19 (b)		850,000		958,242
Discover Card Execution Note Trust
Series 2012-A1 Class A1
0.81%, 08/15/17 (b)		600,000		601,325
Ford Credit Auto Owner Trust
Series 2013-A Class A4
0.78%, 05/15/18 (b)		150,000		150,064
Honda Auto Receivables Owner Trust
Series 2012-4 Class A3
0.52%, 08/18/16 (b)		164,891		165,060
Hyundai Auto Receivables Trust
Series 2013-A Class A4
0.75%, 09/17/18 (b)		230,000		229,800
Series 2013-C Class A4
1.55%, 03/15/19 (b)		100,000		100,964
Mercedes Benz Auto Lease Trust
Series 2013-B Class A4
0.76%, 07/15/19 (b)		100,000		100,198
Volkswagen Auto Loan Enhanced Trust
0.66%, 03/20/19 (b)		400,000		399,159

Total Asset-Backed Obligations
(Cost $5,250,814)				5,199,906




Foreign Securities 5.3% of net assets

Foreign Agencies 1.7%


Austria 0.0%
Oesterreichische Kontrollbank AG
5.00%, 04/25/17		400,000		442,618


Brazil 0.3%
Petrobras Global Finance BV
4.38%, 05/20/23		500,000		494,590
5.63%, 05/20/43		500,000		487,450
Petrobras International Finance Co.
3.88%, 01/27/16		500,000		515,248
5.75%, 01/20/20		700,000		756,315
5.38%, 01/27/21		500,000		529,650

				2,783,253


Germany 0.7%
Kreditanstalt Fuer Wiederaufbau
1.25%, 10/26/15 (d)		1,000,000		1,011,455
2.63%, 02/16/16 (d)		1,000,000		1,032,370
2.00%, 06/01/16 (d)		900,000		923,758
0.50%, 07/15/16 (d)		350,000		349,895
4.88%, 01/17/17 (d)		850,000		930,894
4.38%, 03/15/18 (d)		500,000		552,739
4.50%, 07/16/18 (d)		1,250,000		1,394,437
4.00%, 01/27/20 (d)		250,000		277,329
2.75%, 09/08/20 (d)		750,000		781,437
Landwirtschaftliche Rentenbank
1.00%, 04/04/18 (d)		150,000		148,279

				7,402,593


Japan 0.1%
Japan Finance Corp.
2.50%, 01/21/16		400,000		411,527
2.25%, 07/13/16		300,000		309,222

				720,749


Mexico 0.2%
Pemex Project Funding Master Trust
6.63%, 06/15/35		1,000,000		1,237,500
Petroleos Mexicanos
5.50%, 01/21/21		500,000		565,000
6.50%, 06/02/41		200,000		245,000

				2,047,500


Norway 0.1%
Statoil A.S.A.
3.13%, 08/17/17		200,000		211,054
7.75%, 06/15/23		100,000		134,951
3.70%, 03/01/24		600,000		636,003
5.10%, 08/17/40		250,000		290,449

				1,272,457


Republic of Korea 0.2%
Export-Import Bank of Korea
4.00%, 01/11/17		600,000		637,802
The Korea Development Bank
4.00%, 09/09/16		1,000,000		1,057,247
3.00%, 09/14/22		250,000		249,830

				1,944,879


Sweden 0.1%
Svensk Exportkredit AB
1.13%, 04/05/18		750,000		743,450

				17,357,499

Foreign Local Government 0.4%


Canada 0.4%
Province of British Columbia
2.00%, 10/23/22		400,000		385,561
Province of Manitoba
1.13%, 06/01/18		500,000		494,501
Province of Ontario
1.00%, 07/22/16		300,000		302,109
4.00%, 10/07/19		400,000		439,193
4.40%, 04/14/20		975,000		1,089,924
Province of Quebec
5.13%, 11/14/16		350,000		383,211
7.50%, 09/15/29		650,000		939,243

				4,033,742

Sovereign 1.6%


Brazil 0.2%
Federative Republic of Brazil
6.00%, 01/17/17		500,000		553,750
4.88%, 01/22/21		250,000		276,000

See financial notes 53

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
8.88%, 04/15/24		200,000		283,500
4.25%, 01/07/25		200,000		208,250
5.63%, 01/07/41		500,000		565,000

				1,886,500


Chile 0.1%
Republic of Chile
3.88%, 08/05/20		600,000		649,500
3.63%, 10/30/42		200,000		185,000

				834,500


Colombia 0.1%
Republic of Colombia
7.38%, 09/18/37		650,000		908,700


Egypt 0.1%
Egypt Government AID Bonds
4.45%, 09/15/15 (i)		1,000,000		1,041,857


Italy 0.1%
Republic of Italy
5.38%, 06/12/17		500,000		551,958
6.88%, 09/27/23		250,000		322,738

				874,696


Mexico 0.3%
United Mexican States
5.63%, 01/15/17		500,000		553,750
3.50%, 01/21/21		350,000		364,875
3.63%, 03/15/22		1,000,000		1,043,500
6.75%, 09/27/34		750,000		993,750
6.05%, 01/11/40		150,000		188,250

				3,144,125


Panama 0.0%
Republic of Panama
5.20%, 01/30/20		100,000		112,000
6.70%, 01/26/36		200,000		258,000

				370,000


Peru 0.1%
Republic of Peru
7.13%, 03/30/19		650,000		791,375


Philippines 0.1%
Republic of the Philippines
4.20%, 01/21/24		750,000		806,250
5.00%, 01/13/37		500,000		575,625

				1,381,875


Poland 0.1%
Republic of Poland
5.13%, 04/21/21		750,000		850,791


Republic of Korea 0.0%
Republic of Korea
7.13%, 04/16/19		250,000		307,000


South Africa 0.1%
Republic of South Africa
6.88%, 05/27/19		500,000		580,000


Turkey 0.3%
Republic of Turkey
7.50%, 07/14/17		1,000,000		1,138,670
5.63%, 03/30/21		1,000,000		1,104,300
7.38%, 02/05/25		500,000		623,250
4.88%, 04/16/43		500,000		487,500

				3,353,720

				16,325,139

*Supranational 1.6%**
African Development Bank
2.50%, 03/15/16		350,000		361,060
0.88%, 05/15/17		200,000		199,596
Asian Development Bank
2.50%, 03/15/16		750,000		773,932
5.59%, 07/16/18		500,000		571,603
Corp Andina de Fomento
3.75%, 01/15/16		300,000		311,527
European Bank for Reconstruction & Development
2.50%, 03/15/16		500,000		516,285
1.00%, 02/16/17		400,000		401,950
European Investment Bank
2.50%, 05/16/16		1,000,000		1,034,312
5.13%, 05/30/17		1,250,000		1,389,621
1.00%, 06/15/18		2,000,000		1,971,456
1.88%, 03/15/19		1,000,000		1,009,817
2.88%, 09/15/20		600,000		629,688
4.88%, 02/15/36		150,000		186,539
Inter-American Development Bank
1.13%, 03/15/17		1,000,000		1,011,377
0.88%, 03/15/18		350,000		344,987
3.88%, 09/17/19		500,000		550,249
International Bank for Reconstruction & Development
2.13%, 03/15/16		800,000		820,419
0.88%, 04/17/17		1,000,000		1,002,825
2.13%, 02/13/23		500,000		501,724
4.75%, 02/15/35		500,000		611,711
International Finance Corp.
2.25%, 04/11/16		500,000		514,359
1.75%, 09/04/18		350,000		354,273
1.75%, 09/16/19		350,000		349,962
Nordic Investment Bank
0.50%, 04/14/16		750,000		750,883

				16,170,155

Total Foreign Securities
(Cost $52,500,146)				53,886,535




Municipal Bonds 1.0% of net assets

Fixed-Rate Obligations 1.0%
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB (Build America Bonds) Series 2009F2
6.26%, 04/01/49		750,000		1,044,577
California
GO (Build America Bonds) Series 2009
7.50%, 04/01/34		1,000,000		1,462,650
GO (Build America Bonds) Series 2010
7.95%, 03/01/36 (b)		210,000		259,102
Catholic Health Initiatives
1.60%, 11/01/17		150,000		150,171
Connecticut
GO (Build America Bonds) Series 2010D
5.09%, 10/01/30		100,000		115,000
GO (Teachers’ Retirement Fund) Series 2008A
5.85%, 03/15/32		300,000		372,564
East Bay Municipal Utility District
Water System RB (Build America Bonds) Series 2010
5.87%, 06/01/40		700,000		910,112

54 See financial notes

Schwab Total Bond Market Fund

Portfolio Holdings continued


	Face
Security	Amount		Value
Rate, Maturity Date	($)		($)
Georgia
GO (Build America Bonds) Series 2009H
4.50%, 11/01/25		900,000		1,011,654
Illinois
GO Bonds Series 2011
5.37%, 03/01/17		750,000		816,202
JobsOhio Beverage System
Statewide Senior Lien Liquor Profits RB Series 2013B
3.99%, 01/01/29		750,000		769,763
Maryland State Transportation Auth
RB (Build America Bonds) Series 2009B
5.89%, 07/01/43		100,000		128,971
Metropolitan Government of Nashville & Davidson Cnty
GO (Build America Bonds) Series 2010B
5.71%, 07/01/34		200,000		239,298
Metropolitan Transportation Auth
GO (Build America Bonds) Series 2010E
6.81%, 11/15/40		350,000		492,286
New Jersey State Turnpike Auth
RB (Build America Bonds) Series 2009F
7.41%, 01/01/40		100,000		148,511
RB (Build America Bonds) Series 2010A
7.10%, 01/01/41		200,000		287,840
New Jersey Transportation Trust Fund Auth
RB (Build America Bonds) Series 2010C
5.75%, 12/15/28		250,000		293,943
New York City Municipal Water Finance Auth
Water and Sewer Systems Second General Resolution RB (Build America Bonds) Series 2011CC
5.88%, 06/15/44		150,000		197,918
New York City Transitional Finance Auth
Future Tax Secured RB (Build America Bonds) Series 2011A
5.51%, 08/01/37		100,000		122,774
President and Fellows of Harvard College
3.62%, 10/01/37		400,000		393,064
Texas State Transportation Commission
RB (Build America Bonds) Series 2010B
5.03%, 04/01/26		600,000		708,798

Total Municipal Bonds
(Cost $8,805,092)				9,925,198



	Number		Value
Security	of Shares		($)

Other Investment Company 0.6% of net assets

Money Market Fund 0.6%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (e)		6,608,733		6,608,733

Total Other Investment Company
(Cost $6,608,733)				6,608,733



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

Short-Term Investments 5.0% of net assets

U.S. Government Agency Securities 5.0%
Fannie Mae
0.05%, 09/08/14 (f)		3,600,000		3,599,965
Federal Home Loan Bank
0.04%, 09/05/14 (f)		20,000,000		19,999,911
0.05%, 09/10/14 (f)		12,100,000		12,099,846
0.06%, 09/03/14 (f)		11,000,000		10,999,963
0.06%, 09/05/14 (f)		4,400,000		4,399,973

Total Short-Term Investments
(Cost $51,099,658)				51,099,658



End of Investments.

At 08/31/14, the tax basis cost of the fund’s investments was $1,040,203,997 and the unrealized appreciation and depreciation were $34,356,537 and ($2,409,897), respectively, with a net unrealized appreciation of $31,946,640.


*		Supranational bonds represent the debt of international organizations or institutions such as the World Bank, the International Monetary Fund, regional multilateral development banks and others.
(a)		Variable-rate security.
(b)		The effective maturity may be shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or as the result of embedded demand features (puts or calls).
(c)		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $3,926,285 or 0.4% of net assets.
(d)		Guaranteed by the Republic of Germany.
(e)		The rate shown is the 7-day yield.
(f)		The rate shown is the purchase yield.
(g)		Security or a portion of the security purchased on a delayed delivery or when-issued basis.
(h)		All or a portion of this security is designated as collateral for delayed-delivery securities.
(i)		Backed by a U.S. “sovereign guarantee”.


GO —		General obligation
RB —		Revenue bond
REIT —		Real Estate Investment Trust

See financial notes 55

Schwab Total Bond Market Fund

Portfolio Holdings continued

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2014 (see financial note 2(a) for additional information):


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

Mortgage-Backed Securities¹		$—		$293,422,862		$—		$293,422,862
Corporate Bonds¹		—		96,449,517		—		96,449,517
Industrial¹		—		135,726,124		—		135,726,124
Transportation		—		4,505,979		679,049		5,185,028
U.S. Government and Government Agencies¹		—		393,732,674		—		393,732,674
Commercial Mortgage-Backed Securities		—		20,914,402		—		20,914,402
Asset-Backed Obligations		—		5,199,906		—		5,199,906
Foreign Securities¹		—		53,886,535		—		53,886,535
Municipal Bonds¹		—		9,925,198		—		9,925,198
Other Investment Company¹		6,608,733		—		—		6,608,733
Short-Term Investments¹		—		51,099,658		—		51,099,658

Total		$6,608,733		$1,064,862,855		$679,049		$1,072,150,637


¹		As categorized in Portfolio Holdings.

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

Balance

Change in

Balance

as of

Accrued

Realized

Unrealized

Gross

as of

Investments in

August 31,

Discounts

Gain

Appreciation

Gross

Transfers

August 31,

Securities

2013

(Premiums)

(Loss)

(Depreciation)

Purchases

Sales

out

2014

Corporate Bonds

$—

($31

)

$—

$9,798

$669,282

$—

$679,049

Total

$—

($31

)

$—

$9,798

$669,282

$—

$679,049

56 See financial notes

Schwab Total Bond Market Fund

Statement of

Operations

For the period September 1, 2013 through August 31, 2014



Investment Income

Interest		$23,314,746*
Securities on loan	+	5,942

Total investment income		23,320,688

Expenses

Investment adviser and administrator fees		2,472,075
Shareholder service fees		2,341,002
Portfolio accounting fees		183,925
Custodian fees		64,372
Shareholder reports		49,598
Transfer agent fees		28,124
Registration fees		26,421
Independent trustees’ fees		14,031
Interest expense		13,835*
Professional fees		1,241
Other expenses	+	20,880

Total expenses		5,215,504
Expense reduction by CSIM and its affiliates	−	2,470,297

Net expenses	−	2,745,207

Net investment income		20,575,481

Realized and Unrealized Gains (Losses)

Net realized gains on investments		7,972,536
Net realized losses on TBA sale commitments	+	(21,242	)

Net realized gains		7,951,294
Net change in unrealized appreciation (depreciation) on investments	+	22,800,858

Net realized and unrealized gains		30,752,152

Increase in net assets resulting from operations		$51,327,633


*		Includes $14,635 in interest income and $13,516 in interest expense related to charges on agency mortgage-backed securities not received or delivered on a timely basis (see financial note 2f).

58 See financial notes

Schwab Total Bond Market Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$20,575,481			$19,221,841
Net realized gains		7,951,294			7,890,642
Net change in unrealized appreciation (depreciation)	+	22,800,858			(54,405,800	)

Increase (decrease) in net assets from operations		51,327,633			(27,293,317	)

Distributions to shareholders

Distributions from net investment income		($21,989,219	)		($21,602,937	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			25,703,245		$241,046,767			26,692,367		$256,281,480
Shares reinvested			2,018,292		19,007,634			1,553,785		14,890,038
Shares redeemed	+		(16,408,856	)	(153,755,448	)		(30,683,823	)	(294,263,336	)

Net transactions in fund shares			11,312,681		$106,298,953			(2,437,671	)	($23,091,818	)

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			95,598,750		$885,219,728			98,036,421		$957,207,800
Total increase (decrease)	+		11,312,681		135,637,367			(2,437,671	)	(71,988,072	)

End of period			106,911,431		$1,020,857,095			95,598,750		$885,219,728

See financial notes 59

Schwab GNMA Fund™

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		9.93			10.61			10.63			10.40			10.06

Income (loss) from investment operations:
Net investment income (loss)		0.18			0.08			0.19			0.23			0.29
Net realized and unrealized gains (losses)		0.31			(0.45	)		0.21			0.37			0.40

Total from investment operations		0.49			(0.37	)		0.40			0.60			0.69
Less distributions:
Distributions from net investment income		(0.27	)		(0.29	)		(0.28	)		(0.31	)		(0.35	)
Distributions from net realized gains		—			(0.02	)		(0.14	)		(0.06	)		—

Total distributions		(0.27	)		(0.31	)		(0.42	)		(0.37	)		(0.35	)

Net asset value at end of period		10.15			9.93			10.61			10.63			10.40

Total return (%)		5.04			(3.55	)		3.87			5.95			7.00

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.57	¹		0.57	¹		0.55			0.55			0.55
Gross operating expenses		0.66			0.62			0.60			0.61			0.63
Net investment income (loss)		1.89			1.34			1.76			2.24			2.66
Portfolio turnover rate²		481			401			567			641			264
Net assets, end of period ($ x 1,000,000)		289			363			638			506			578

¹ The expense ratio would have been 0.55%, if interest expense related to charges on agency mortgage-backed securities not delivered on a timely basis had not been incurred (see financial note 2f).

² Includes to-be-announced (TBA) transactions (if any). See financial note 2.

60 See financial notes

Schwab GNMA Fund

Portfolio Holdings as of August 31, 2014

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


				Cost			Value
Holdings by Category				($)			($)

	111	.6%	Mortgage-Backed Securities		317,657,475			322,844,096
	0	.9%	Other Investment Company		2,678,584			2,678,584
	5	.1%	Short-Term Investments		14,699,890			14,699,890


	117	.6%	Total Investments		335,035,949			340,222,570
	(8	.8)%	TBA Sale Commitments		(25,304,375	)		(25,334,689	)
	(8	.8%)	Other Assets and Liabilities, Net					(25,573,320	)


	100	.0%	Net Assets					289,314,561


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

Mortgage-Backed Securities 111.6% of net assets

TBA Securities 16.8%
Ginnie Mae TBA
2.50%, 09/01/44 (b)(e)		2,000,000		1,951,434
3.00%, 09/01/44 to 10/01/44 (b)(e)		36,000,000		36,495,312
3.50%, 10/01/44 (b)(e)		9,800,000		10,164,539

				48,611,285

U.S. Government Agency Mortgages 94.8%
Fannie Mae
5.45%, 12/01/31 to 07/01/32 (b)		225,926		252,264
5.49%, 09/01/29 to 09/01/31 (b)		102,944		114,916
5.50%, 09/01/17 (b)		69,623		73,807
5.81%, 12/01/31 (b)		71,303		79,230
6.50%, 04/01/31 (b)		140,525		155,744
7.17%, 11/01/30 (b)		13,351		13,396
Fannie Mae REMICs
1.50%, 11/25/17 (b)		72,148		72,176
2.50%, 02/25/21 (b)		27,498		27,490
3.75%, 05/25/33 (b)		181,495		182,182
4.50%, 01/25/30 to 11/25/36 (b)		398,554		409,808
7.00%, 09/25/22 (b)		72,758		81,011
Freddie Mac REMICs
2.00%, 07/15/20 (b)		562,683		569,025
3.00%, 08/15/19 to 12/15/40 (b)		1,760,972		1,786,324
3.50%, 03/15/28 (b)		3,627,360		3,712,641
4.00%, 11/15/23 to 07/15/27 (b)		911,710		931,094
4.50%, 09/15/35 (b)		104,326		106,562
5.00%, 06/15/33 to 05/15/34 (b)		597,482		600,828
5.50%, 08/15/35 (b)		372,879		380,451
Ginnie Mae
1.63%, 07/20/24 to 04/20/37 (a)(b)		462,573		480,674
2.00%, 07/20/28 (b)		182,991		180,567
2.13%, 08/20/33 (a)(b)		79,915		80,301
2.50%, 06/15/27 to 06/15/28 (b)		2,007,327		2,059,938
3.00%, 02/15/26 to 07/20/44 (b)		16,153,414		16,534,453
3.50%, 02/20/16 (a)(b)		13,150		13,303
3.50%, 01/15/26 to 08/20/44 (b)		58,284,364		60,756,920
4.00%, 06/20/20 to 08/20/44 (b)		37,264,882		39,768,935
4.50%, 12/15/17 to 07/20/44 (b)		36,551,622		39,879,690
5.00%, 11/15/17 to 08/15/40 (b)		34,338,237		37,968,256
5.50%, 04/15/17 to 07/15/34 (b)		14,244,033		16,125,827
6.00%, 05/15/16 to 06/20/37 (b)		1,193,704		1,316,637
6.50%, 07/15/16 to 07/15/31 (b)		164,733		185,093
7.00%, 09/20/16 to 05/15/17 (b)		9,490		9,607
Ginnie Mae REMICs
2.25%, 03/20/36 (b)		1,022,665		1,035,423
4.00%, 02/20/32 (b)		11,645		11,725
4.26%, 10/20/43 (a)(b)		19,020,089		20,507,631
4.50%, 04/20/36 to 08/20/36 (b)		338,890		348,553
5.66%, 12/20/37 (a)(b)		15,422,481		17,367,071
6.47%, 08/20/34 (a)(b)		8,658,932		10,053,258

				274,232,811

Total Mortgage-Backed Securities
(Cost $317,657,475)				322,844,096



	Number		Value
Security	of Shares		($)

Other Investment Company 0.9% of net assets

Money Market Fund 0.9%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (c)		2,678,584		2,678,584

Total Other Investment Company
(Cost $2,678,584)				2,678,584



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

Short-Term Investments 5.1% of net assets

U.S. Government Agency Securities 5.1%
Fannie Mae
0.07%, 09/10/14 (d)		2,700,000		2,699,956
Federal Home Loan Bank
0.06%, 09/03/14 (d)		10,000,000		9,999,967
Freddie Mac
0.07%, 09/10/14 (d)		2,000,000		1,999,967

Total Short-Term Investments
(Cost $14,699,890)				14,699,890



End of Investments.

See financial notes 61

Schwab GNMA Fund

Portfolio Holdings continued

At 08/31/14, the tax basis cost of the fund’s investments was $335,214,191 and the unrealized appreciation and depreciation were $5,327,216 and ($318,837), respectively, with a net unrealized appreciation of $5,008,379.


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

TBA Sale Commitments 8.8% of net assets

U.S. Government Agency Mortgages 8.8%
Ginnie Mae TBA
5.00%, 09/01/44 (b)(e)		16,000,000		17,565,643
5.50%, 09/01/44 (b)(e)		7,000,000		7,769,046

Total TBA Sale Commitments
(Proceeds $25,304,375)				25,334,689


(a)		Variable-rate security.
(b)		The effective maturity may be shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or as the result of embedded demand features (puts or calls).
(c)		The rate shown is the 7-day yield.
(d)		The rate shown is the purchase yield.
(e)		Security or a portion of the security purchased on a delayed delivery or when-issued basis.


REMIC —		Real Estate Mortgage Investment Conduit

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2014 (see financial note 2(a) for additional information):

Assets Valuation Input


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

Mortgage-Backed Securities¹		$—		$322,844,096			$—		$322,844,096
Other Investment Company¹		2,678,584		—			—		2,678,584
Short-Term Investments¹		—		14,699,890			—		14,699,890

Total		$2,678,584		$337,543,986			$—		$340,222,570



Liabilities Valuation Input


Other Financial Instruments
TBA Sale Commitments¹		$—		($25,334,689	)		$—		($25,334,689	)


¹		As categorized in Portfolio Holdings.

62 See financial notes

Schwab GNMA Fund

Statement of

Assets and Liabilities

As of August 31, 2014



Assets

Investments, at value (cost $335,035,949)		$340,222,570
Receivables:
Investments sold		25,173,845
Interest		984,819
Fund shares sold		53,997
Collateral received for Agency MBS transactions		275,000
TBA sale commitment		25,304,375
Prepaid expenses	+	2,752

Total assets		392,017,358

Liabilities

TBA sale commitments, at value (proceeds $25,304,375)		25,334,689
Payables:
Investments bought		25,330,785
Investments bought - Delayed delivery		51,207,075
Investment adviser and administrator fees		9,885
Shareholder service fees		11,842
Distributions to shareholders		185,005
Fund shares redeemed		134,276
Due to custodian		94,257
Interest for TBA sale commitments		55,958
Due to brokers for Agency MBS transactions		275,000
Accrued expenses	+	64,025

Total liabilities		102,702,797

Net Assets

Total assets		392,017,358
Total liabilities	−	102,702,797

Net assets		$289,314,561

Net Assets by Source
Capital received from investors		292,338,933
Distributions in excess of net investment income		(5,170	)
Net realized capital losses		(8,175,509	)
Net unrealized capital appreciation		5,156,307

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$289,314,561

28,516,064

$10.15

See financial notes 63

Schwab GNMA Fund

Statement of

Operations

For the period September 1, 2013 through August 31, 2014



Investment Income

Interest		$7,459,922*

Expenses

Investment adviser and administrator fees		913,298
Shareholder service fees		749,348
Portfolio accounting fees		84,463
Professional fees		56,013
Interest expense		45,987*
Custodian fees		45,773
Shareholder reports		43,555
Registration fees		27,581
Transfer agent fees		26,064
Independent trustees’ fees		9,781
Other expenses	+	10,289

Total expenses		2,012,152
Expense reduction by CSIM and its affiliates	−	291,785

Net expenses	−	1,720,367

Net investment income		5,739,555

Realized and Unrealized Gains (Losses)

Net realized gains on investments		1,999,201
Net realized gains on TBA sale commitments	+	5,153

Net realized gains		2,004,354
Net change in unrealized appreciation (depreciation) on investments		7,163,015
Net change in unrealized appreciation (depreciation) on TBA sale commitments	+	(49,681	)

Net change in unrealized appreciation (depreciation)	+	7,113,334

Net realized and unrealized gains		9,117,688

Increase in net assets resulting from operations		$14,857,243


*		Includes $45,994 in interest income and $45,756 in interest expense related to charges on agency mortgage-backed securities not received or delivered on a timely basis (see financial note 2f).

64 See financial notes

Schwab GNMA Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$5,739,555			$7,165,549
Net realized gains		2,004,354			1,882
Net change in unrealized appreciation (depreciation)	+	7,113,334			(25,215,853	)

Increase (decrease) in net assets from operations		14,857,243			(18,048,422	)

Distributions to shareholders

Distributions from net investment income		(8,325,822	)		(14,761,028	)
Distributions from net realized gains	+	—			(1,438,925	)

Total distributions		($8,325,822	)		($16,199,953	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			3,773,972		$37,939,257			12,942,027		$135,168,242
Shares reinvested			577,594		5,811,156			1,048,311		10,856,663
Shares redeemed	+		(12,439,702	)	(124,371,698	)		(37,492,412	)	(386,285,940	)

Net transactions in fund shares			(8,088,136	)	($80,621,285	)		(23,502,074	)	($240,261,035	)

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			36,604,200		$363,404,425			60,106,274		$637,913,835
Total increase (decrease)	+		(8,088,136	)	(74,089,864	)		(23,502,074	)	(274,509,410	)

End of period			28,516,064		$289,314,561			36,604,200		$363,404,425


Distributions in excess of net investment income					($5,170	)				($5,169	)

See financial notes 65

Schwab^® Treasury Inflation Protected Securities Index Fund

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		11.07			12.12			11.58			10.90			10.05

Income (loss) from investment operations:
Net investment income (loss)		0.27	¹		0.19	¹		0.23	¹		0.46	¹		0.23	¹
Net realized and unrealized gains (losses)		0.33			(1.05	)		0.66			0.62			0.77

Total from investment operations		0.60			(0.86	)		0.89			1.08			1.00
Less distributions:
Distributions from net investment income		(0.23	)		(0.18	)		(0.33	)		(0.40	)		(0.15	)
Distributions from net realized gains		—			(0.01	)		(0.02	)		—			—

Total distributions		(0.23	)		(0.19	)		(0.35	)		(0.40	)		(0.15	)

Net asset value at end of period		11.44			11.07			12.12			11.58			10.90

Total return (%)		5.44			(7.19	)		7.84			10.20			9.93

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.19			0.29	^2,3		0.29			0.45	⁴		0.50
Gross operating expenses		0.61			0.67			0.64			0.63			0.62
Net investment income (loss)		2.43			1.61			1.97			4.14			2.16
Portfolio turnover rate		27			31			32			37			67
Net assets, end of period ($ x 1,000,000)		273			294			398			235			204

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

² Effective April 1, 2013, the net operating expense limitation was lowered from 0.29% to 0.19%. The ratio presented for period ended 8/31/13 is a blended ratio.

³ The ratio of net operating expenses would have been 0.25%, if proxy expenses had not been incurred.

⁴ Effective June 16, 2011, the net operating expense limitation was lowered. The ratio presented for period ended 8/31/11 is a blended ratio.

66 See financial notes

Schwab Treasury Inflation Protected Securities Index Fund

Portfolio Holdings as of August 31, 2014

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

Cost

Value

Holdings by Category

($)

.8%

U.S. Government Securities

257,273,804

273,039,112

.1%

Other Investment Company

164,107

.9%

Total Investments

257,437,911

273,203,219

.1%

Other Assets and Liabilities, Net

218,020

100

.0%

Net Assets

273,421,239


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

U.S. Government Securities 99.8% of net assets

U.S. Treasury Obligations 99.8%
U.S. Treasury Inflation Protected Securities
2.00%, 01/15/16		6,067,590		6,324,492
0.13%, 04/15/16		12,194,465		12,411,649
2.50%, 07/15/16		5,937,232		6,357,469
2.38%, 01/15/17		5,149,144		5,557,060
0.13%, 04/15/17		13,722,740		14,044,401
2.63%, 07/15/17		4,414,541		4,869,769
1.63%, 01/15/18		4,662,006		5,017,484
0.13%, 04/15/18		15,256,880		15,581,089
1.38%, 07/15/18		4,597,713		4,955,461
2.13%, 01/15/19		4,277,060		4,750,188
0.13%, 04/15/19		10,276,033		10,465,523
1.88%, 07/15/19		4,859,913		5,397,517
1.38%, 01/15/20		5,894,136		6,392,367
1.25%, 07/15/20		9,057,289		9,822,901
1.13%, 01/15/21		10,361,046		11,118,749
0.63%, 07/15/21		10,997,268		11,492,145
0.13%, 01/15/22		12,138,864		12,161,685
0.13%, 07/15/22		12,520,502		12,549,800
0.13%, 01/15/23		12,578,154		12,493,629
0.38%, 07/15/23		12,476,727		12,697,066
0.63%, 01/15/24		12,448,041		12,883,722
0.13%, 07/15/24		4,474,562		4,434,023
2.38%, 01/15/25		8,051,441		9,762,373
2.00%, 01/15/26		5,864,656		6,940,468
2.38%, 01/15/27		4,718,966		5,830,141
1.75%, 01/15/28		4,723,438		5,502,049
3.63%, 04/15/28		4,059,573		5,755,094
2.50%, 01/15/29		4,557,905		5,822,723
3.88%, 04/15/29		4,885,655		7,210,152
3.38%, 04/15/32		1,838,156		2,690,894
2.13%, 02/15/40		2,535,014		3,316,508
2.13%, 02/15/41		3,203,954		4,228,226
0.75%, 02/15/42		5,631,254		5,507,198
0.63%, 02/15/43		4,114,304		3,888,017
1.38%, 02/15/44		4,212,119		4,807,080

Total U.S. Government Securities
(Cost $257,273,804)				273,039,112



	Number		Value
Security	of Shares		($)

Other Investment Company 0.1% of net assets

Money Market Fund 0.1%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a)		164,107		164,107

Total Other Investment Company
(Cost $164,107)				164,107



End of Investments.

At 08/31/14, the tax basis cost of the fund’s investments was $259,390,407 and the unrealized appreciation and depreciation were $15,425,243 and ($1,612,431), respectively, with a net unrealized appreciation of $13,812,812.


(a)		The rate shown is the 7-day yield.

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2014 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Other Significant

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total

U.S. Government Securities¹

$—

$273,039,112

$—

$273,039,112

Other Investment Company¹

164,107

—

164,107

Total

$164,107

$273,039,112

$—

$273,203,219


¹		As categorized in Portfolio Holdings.

See financial notes 67

Schwab Treasury Inflation Protected Securities Index Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$6,528,320			$6,274,930
Net realized gains (losses)		994,973			(586,689	)
Net change in unrealized appreciation (depreciation)	+	6,676,669			(32,787,081	)

Increase (decrease) in net assets from operations		14,199,962			(27,098,840	)

Distributions to shareholders

Distributions from net investment income		(5,422,953	)		(5,959,519	)
Distributions from net realized gains	+	—			(503,187	)

Total distributions		($5,422,953	)		($6,462,706	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			4,230,991		$47,410,130			10,410,316		$125,392,498
Shares reinvested			359,026		4,010,683			403,550		4,848,657
Shares redeemed	+		(7,235,372	)	(80,445,955	)		(17,114,076	)	(201,106,114	)

Net transactions in fund shares			(2,645,355	)	($29,025,142	)		(6,300,210	)	($70,864,959	)

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			26,537,838		$293,669,372			32,838,048		$398,095,877
Total decrease	+		(2,645,355	)	(20,248,133	)		(6,300,210	)	(104,426,505	)

End of period			23,892,483		$273,421,239			26,537,838		$293,669,372


Net investment income not yet distributed					$3,627,584					$2,507,483

See financial notes 71

Schwab Bond Funds

Financial Notes

1. Business Structure of the Funds:

Each of the funds in this report is a series of Schwab Investments (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 as of the end of the period, including the funds discussed in this report, which are highlighted:



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

Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value per share (“NAV”), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds’ Board of Trustees (the “Board”) 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 funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services - Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

(a) Security Valuation:

Under procedures approved by the Board, the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

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


	•	Bonds and notes: Bonds and notes are valued at halfway between the most recent bid and ask quotes or, if such quotes are unavailable, at prices for securities of comparable maturity, credit quality and type. Valuations for bonds and notes are provided by independent bond-pricing services.

	•	Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it 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 Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.

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

	•	Underlying funds: Mutual funds are valued at their respective NAVs.

Schwab Bond Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. 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 three levels of the fair value hierarchy are 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 and futures contracts. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 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 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 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 fund’s results of operations.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The levels associated with valuing the funds’ investments as of August 31, 2014 are disclosed in the Portfolio Holdings.

(b) Accounting Policies for certain Portfolio Investments (if held):

Inflation-Protected Securities: The Schwab Treasury Inflation Protected Securities Index Fund invests in inflation-protected securities. Inflation-protected securities are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. Over the life of an inflation-protected security, interest is paid based on a fixed percentage of the inflation-adjusted principal value. Any increase or decrease in the principal amount of an inflation-protected security will be included as interest income on the Statement of Operations, even though investors do not receive their principal until maturity.

TBA Commitments: The funds may enter into “TBA” (to be announced) commitments to purchase or sell securities for a fixed price at a future date. Payments or proceeds of TBA commitments are not delivered until the contractual settlement date. Unsettled TBA commitments are valued at the current market value generally according to the procedures described above in the Security Valuation section. The funds’ use of TBA commitments may cause the funds to experience higher portfolio turnover and higher transaction costs.

Schwab Bond Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

Agency MBS Transactions: In November 2012, the Treasury Market Practices Group (an industry group sponsored by the Federal Reserve Bank of New York) recommended the margining of certain forward-settling Agency MBS transactions to reduce counterparty and systemic risks. The Treasury Market Practices Group recommended market participants exchange two-way variation margin on a regular basis. In April 2014, the Schwab Intermediate-Term Bond Fund, Schwab Total Bond Market Fund and Schwab GNMA Fund began posting and receiving variation margin with certain counterparties in instances where the unrealized gain/loss on such transactions exceeded certain pre-determined thresholds. The variation margin, if any, is disclosed on the Statement of Assets and Liabilities.

Delayed-Delivery Transactions: The funds may buy securities at a predetermined price or yield, with payment and delivery taking place after the customary settlement period for that type of security. The funds will assume the rights and risks of ownership at the time of purchase, including the risk of price and yield fluctuations. Typically, no interest will accrue to a fund until the security is delivered. The funds will earmark or segregate appropriate liquid assets to cover their delayed-delivery purchase obligations.

Securities Lending: Under the trust’s Securities Lending Program, a fund (lender) may make short-term loans of its securities to another party (borrower) to generate additional revenue for the fund. The borrower pledges collateral in the form of cash, securities issued or fully guaranteed by the U.S. government or foreign governments, or letters of credit issued by a bank. Collateral at the individual loan level is required to be maintained on a daily marked-to-market basis in an amount at least equal to the current value of the securities loaned. The lending agent provides a fund with indemnification against borrower default (the borrower fails to return the security on loan) reducing the risk of loss as a result of default. The cash collateral of securities loaned is currently invested in money market portfolios operating under Rule 2a-7 of the 1940 Act. Each fund bears the risk of loss with respect to the investment of cash collateral. The terms of the securities lending agreement allow the funds to terminate any loans at any given time. Securities lending income, as disclosed in a fund’s Statement of Operations, if applicable, represents the income earned from the investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent and broker rebates which are subject to adjustments pursuant to the securities lending agreement. On loans not collateralized by cash, a fee is received from the borrower, and is allocated between a fund and the lending agent. A fund retains the right to recall a security on loan. The aggregate market value of securities loaned will not at any time exceed one-third of the total assets of a fund, including collateral received from the loan (at market value computed at the time of the loan). Total costs and expenses, including agent fees, associated with securities lending activities under the trust’s Securities Lending Program paid to the unaffiliated lending agent are approximately 15% of the gross lending revenues.

(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. Gains and losses from paydowns on mortgage and asset backed securities are recorded as adjustments to interest income.

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (less than face value) or a premium (more than face value), it amortizes premiums and accretes discounts from the purchase settlement date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.

(e) Expenses:

Expenses that are specific to a fund are charged directly to the 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) Agency Mortgage-Backed Securities Charges:

Due to market conditions or other reasons, delivery of agency debt and agency mortgage-backed securities may not occur on a timely basis. In these instances, a fund may fail to receive a security purchased causing the fund to be unable to deliver a security

Schwab Bond Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

sold. The Treasury Market Practices Group recommended voluntary fail charges when agency debt and agency mortgage-backed securities are not delivered as agreed by the parties.

During the period ended August 31, 2014, the funds received and paid out the following amounts for agency mortgage-backed securities not received or delivered on a timely basis:


	Fail Charges Received		Fail Charges Paid

Schwab Short-Term Bond Market Fund		$—		$—
Schwab Intermediate-Term Bond Fund		16,975		15,192
Schwab Total Bond Market Fund		14,635		13,516
Schwab GNMA Fund		45,994		45,756
Schwab Treasury Inflation Protected Securities Index Fund		—		—

(g) Distributions to Shareholders:

The Schwab Short-Term Bond Market Fund, Schwab Intermediate-Term Bond Fund, Schwab Total Bond Market Fund and the Schwab GNMA Fund declare distributions from net investment income, if any, every day they are open for business. These distributions, which are substantially equal to the funds’ net investment income for that day, are paid out to shareholders once a month. The Schwab Treasury Inflation Protected Securities Index Fund declares and pays distributions from net investment income, if any, quarterly. All the funds make distributions from net realized capital gains, if any, once a year.

(h) Custody Credit:

The funds have an arrangement with their custodian bank, State Street Bank and Trust Company (“State Street”), under which the funds may receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(i) Accounting Estimates:

The accounting policies described in this report conform to GAAP. 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 and these differences may be material.

(j) Federal Income Taxes:

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

(k) Indemnification:

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

3. Risk Factors:

The funds invest mainly in corporate bonds, mortgage-backed and asset-backed securities, government or municipal obligations, and other debt securities. These investments may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below:

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

Schwab Bond Funds

Financial Notes (continued)

3. Risk Factors (continued):

Interest Rate Risk. Interest rates will rise and fall over time. During periods when interest rates are low, the fund’s yield and total return also may be low. Changes in interest rates also may affect the fund’s share price: a sharp rise in interest rates could cause the fund’s share price to fall. The longer the fund’s duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central bank’s monetary policy (e.g., tapering of the Federal Reserve Board’s quantitative easing program) or improving economic conditions may result in an increase in interest rates. Rising interest rates may decrease liquidity in the fixed income securities markets, making it more difficult for a fund to sell its fixed income investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of a fund’s fixed income securities holdings.

Credit Risk. The funds are subject to the risk that a decline in the credit quality of a portfolio investment could cause the funds to lose money or underperform. The funds could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations.

Liquidity Risk. A particular investment may be difficult to purchase or sell. The funds may be unable to sell illiquid securities at an advantageous time or price.

Prepayment and Extension Risk. The funds’ investments are subject to the risk that the securities may be paid off earlier or later than expected. Either situation could cause the funds to hold securities paying lower-than-market rates of interest, which could hurt the funds’ yield or share price.

High Yield Risk. High yield securities and unrated securities of similar credit quality (sometimes called junk bonds) that the funds may invest in are subject to greater levels of credit and liquidity risks. High yield securities are considered primarily speculative with respect to the issuer’s continuing ability to make principal and interest payments.

Foreign Investment Risk. The funds’ investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets. To the extent a fund’s investments in a single country or a limited number of countries represent a larger percentage of the fund’s assets, the fund’s performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility.

Emerging Market Risk. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investments in emerging market countries, and at times, it may be difficult to value such investments.

Mortgage-Backed and Mortgage Pass-Through Securities Risk. Certain of the mortgage-backed securities in which a fund may invest are not backed by the full faith and credit of the U.S. government and there can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. Because of prepayment and extension risk, mortgage-backed securities react differently to changes in interest rates than other bonds. Small movements in interest rates — both increases and decreases — may quickly and significantly affect the value of certain mortgage-backed securities. Transactions in mortgage pass-through securities primarily occur through to be announced (TBA) transactions. Default by or bankruptcy of a counterparty to a TBA transaction would expose a fund to possible losses because of an adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction.

Mortgage Dollar Rolls Risk. Mortgage dollar rolls are transactions in which a fund sells mortgage-backed securities to a dealer and simultaneously agrees to repurchase similar securities in the future at a predetermined price. A fund’s mortgage dollar rolls

Schwab Bond Funds

Financial Notes (continued)

3. Risk Factors (continued):

could lose money if the price of the mortgage-backed securities sold falls below the agreed upon repurchase price, or if the counterparty is unable to honor the agreement.

Derivatives Risk. The funds’ use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause a fund to lose more than the principal amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately larger impact on the funds. However, these risks are less severe when the funds use derivatives for hedging rather than to enhance the funds’ returns or as a substitute for a position or security.

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.

Leverage Risk. Certain fund transactions, such as derivatives and mortgage dollar rolls, may give rise to a form of leverage and may expose the funds to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of a fund’s portfolio securities. The use of leverage may cause a fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations.

Lack of Governmental Insurance or Guarantee. An investment in the funds is not a bank deposit and it is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

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

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 CSIM and the trust.

For its advisory and administrative services to the funds, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:

Schwab

Treasury Inflation

Short-Term Bond

Intermediate-Term

Total Bond

Schwab

Protected Securities

% of Average Daily Net Assets

Market Fund

Bond Fund

Market Fund

GNMA Fund

Index Fund

First $500 million

0.30%

Over $500 million

0.22%

The Board 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). 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 up to 0.25%. 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), and the funds will pay no more than 0.25% of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service provider. 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 Bond Funds

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

the approval of the Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (“expense limitation”). The expense limitation as a percentage of average daily net assets is as follows:

Schwab

Treasury Inflation

Short-Term Bond

Intermediate-Term

Total Bond

Schwab

Protected Securities

Market Fund

Bond Fund

Market Fund

GNMA Fund

Index Fund

0.29%

0.45%

0.29%

0.55%

0.19%

Schwab Total Bond Market Fund has incurred legal expenses in prior periods relating to the lawsuit discussed in note 10, as well as another lawsuit that was dismissed by a California court in April of 2011. The legal fees related to these lawsuits were non-routine and would not have been subject to the expense limitation agreement; however, CSIM and its affiliates have voluntarily agreed to include these expenses under the expense limitation agreement. This voluntary agreement is to advance the fund certain litigation expenses in connection with certain legal matters (excluding amounts paid in connection with judgments and settlements) to the extent necessary to maintain the expense limitation. The expenses advanced by CSIM pursuant to the contractual agreement are subject to reimbursement by the fund to the extent the expenses are subsequently paid or reimbursed to the fund by its insurance carriers.

For the period ended August 31, 2014, the fund incurred no legal expenses related to these lawsuits. From the commencement of these lawsuits through August 31, 2014, the fund has incurred a total of $1,459,454 in legal expense of which $1,409,948 has been waived by CSIM subject to recoupment in accordance with the provisions noted above.

Certain Schwab funds may own shares of other Schwab funds. The table below reflects the percentage of shares of each fund in this report that are owned by other Schwab funds as of August 31, 2014, as applicable:


	Underlying Funds
										Schwab
	Schwab			Schwab			Schwab			Treasury Inflation
	Short-Term Bond			Intermediate-Term			Total Bond			Protected Securities
	Market Fund			Bond Fund			Market Fund			Index Fund

Schwab MarketTrack Growth Portfolio		—%			—%			10.5%			—%
Schwab MarketTrack Balanced Portfolio		—%			—%			18.4%			—%
Schwab MarketTrack Conservative Portfolio		—%			—%			12.1%			—%
Schwab MarketTrack Growth Portfolio II		—%			—%			0.5%			—%
Schwab Target 2010 Fund		2.2%			0.5%			1.3%			1.2%
Schwab Target 2015 Fund		3.3%			0.9%			2.1%			1.9%
Schwab Target 2020 Fund		8.4%			4.0%			6.1%			5.7%
Schwab Target 2025 Fund		3.5%			2.3%			2.8%			2.6%
Schwab Target 2030 Fund		4.6%			4.0%			4.0%			3.9%
Schwab Target 2035 Fund		1.1%			1.1%			0.8%			1.0%
Schwab Target 2040 Fund		1.9%			1.8%			1.2%			1.5%
Schwab Target 2045 Fund		0.1%			0.0%	*		0.0%	*		0.0%	*
Schwab Target 2050 Fund		0.0%	*		0.0%	*		0.0%	*		0.0%	*
Schwab Target 2055 Fund		0.0%	*		0.0%	*		0.0%	*		0.0%	*
Schwab Monthly Income Fund — Moderate Payout		—%			2.8%			1.4%			—%
Schwab Monthly Income Fund — Enhanced Payout		—%			7.0%			3.6%			—%
Schwab Monthly Income Fund — Maximum Payout		—%			5.0%			2.6%			—%
Schwab Balanced Fund		—%			6.3%			4.6%			—%


*		Less than 0.1%.

Schwab Bond Funds

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (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 to be charged on a 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 by the Board. The funds had no interfund borrowing or lending activity during the period.

5. Board of Trustees:

The Board may include people who are officers and/or directors of CSIM or its affiliates. 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 interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted on each fund’s Statement of Operations. For information regarding the trustees, please refer to Trustees and Officers table at the end of this report.

6. Borrowing from Banks:

The funds have access to custodian overdraft facilities, a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A. (excluding Schwab Total Bond Market Fund) and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. 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 for the committed line of credit.

There were no borrowings from the lines of credit by the funds during the period. However, the funds may have utilized their overdraft facility and incurred interest expense, which is disclosed on the funds’ 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/Maturities of Investment Securities:

For the period ended August 31, 2014, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:


	Purchases of Long-Term
	U.S. Government		Purchases of Other		Total Purchases of
	Securities Transactions*		Long-Term Securities		Long-Term Securities

Schwab Short-Term Bond Market Fund		$211,069,417		$78,937,878		$290,007,295
Schwab Intermediate-Term Bond Fund		588,202,752		132,031,690		720,234,442
Schwab Total Bond Market Fund		835,047,849		152,512,046		987,559,895
Schwab GNMA Fund		1,651,214,344		—		1,651,214,344
Schwab Treasury Inflation Protected Securities Index Fund		72,016,625		—		72,016,625


	Sales/Maturities of
	Long-Term U.S. Government		Sales/Maturities of		Total Sales/Maturities of
	Securities Transactions*		Other Long-Term Securities		Long-Term Securities

Schwab Short-Term Bond Market Fund		$226,677,443		$66,157,820		$292,835,263
Schwab Intermediate-Term Bond Fund		569,454,795		88,023,509		657,478,304
Schwab Total Bond Market Fund		775,937,569		104,019,147		879,956,716
Schwab GNMA Fund		1,710,069,582		—		1,710,069,582
Schwab Treasury Inflation Protected Securities Index Fund		103,115,413		—		103,115,413


*		Includes securities guaranteed by U.S. Government Agencies.

Schwab Bond Funds

Financial Notes (continued)

8. Redemption Fee:

Prior to December 15, 2012, the Schwab Intermediate-Term Bond Fund imposed a 2.00% short-term redemption fee on shares that were redeemed or exchanged by a shareholder 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 prior period is $2,069.

9. Federal Income Taxes:

As of August 31, 2014, the components of distributable earnings on a tax-basis were as follows:


													Schwab
	Schwab			Schwab			Schwab						Treasury Inflation
	Short-Term Bond			Intermediate-Term			Total Bond			Schwab			Protected Securities
	Market Fund			Bond Fund			Market Fund			GNMA Fund			Index Fund

Undistributed ordinary income		$42,685			$—			$81,139			$179,835			$3,627,837
Undistributed long-term capital gains		—			501,047			—			—			440,988
Unrealized appreciation		2,390,176			6,935,214			34,356,537			5,327,216			15,425,243
Unrealized depreciation		(841,016	)		(730,155	)		(2,409,897	)		(318,837	)		(1,612,431	)
Other unrealized appreciation/(depreciation)		—			(10,357	)		—			(30,314	)		—

Net unrealized appreciation/(depreciation)		$1,549,160			$6,194,702			$31,946,640			$4,978,065			$13,812,812

The primary difference between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments is the tax deferral of losses on wash sales.

Net investment income and realized capital gains and losses may differ for financial statement and tax purposes primarily due to differing treatments of paydown gains and losses and amortization of bond discounts and premiums.

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of August 31, 2014, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:


									Schwab
	Schwab		Schwab		Schwab				Treasury Inflation
	Short-Term Bond		Intermediate-Term		Total Bond		Schwab		Protected Securities
Expiration Date	Market Fund		Bond Fund		Market Fund		GNMA Fund		Index Fund

August 31, 2015		$4,664,327		$—		$—		$—		$—
August 31, 2016		2,401,090		—		—		—		—
August 31, 2017		30,633,553		—		86,609,947		—		—
August 31, 2018		15,464,000		—		33,497,357		—		—
No expiration*		—		—		—		7,997,267		—

Total		$53,162,970		$—		$120,107,304		$7,997,267		$—


*		As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss. However, such losses must be utilized prior to the pre-enactment capital losses, which may increase the likelihood that the pre-enactment capital losses may expire unused. Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as short-term capital loss, irrespective of the character of the original loss.

Schwab Bond Funds

Financial Notes (continued)

9. Federal Income Taxes (continued):

For tax purposes, realized net capital losses and late-year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended August 31, 2014, the funds had capital losses deferred and capital loss carryforwards utilized as follows:

Schwab

Treasury Inflation

Short-Term Bond

Intermediate-Term

Total Bond

Schwab

Protected Securities

Market Fund

Bond Fund

Market Fund

GNMA Fund

Index Fund

Deferred capital losses

$—

Capital loss carryforwards utilized

1,354,781

—

1,589,795

—

The tax-basis components of distributions paid during the current and prior fiscal years were as follows:


									Schwab
	Schwab		Schwab		Schwab				Treasury Inflation
	Short-Term Bond		Intermediate-Term		Total Bond		Schwab		Protected Securities
	Market Fund		Bond Fund		Market Fund		GNMA Fund		Index Fund

Current Period Distributions
Ordinary income		$3,636,449		$6,943,862		$21,989,219		$8,325,822		$5,422,953
Long-term capital gains		—		183,600		—		—		—
Return of capital		—		—		—		—		—

Prior Period Distributions
Ordinary income		$3,519,782		$11,850,349		$21,602,937		$16,199,953		$6,006,457
Long-term capital gains		—		2,474,301		—		—		456,249
Return of capital		—		—		—		—		—

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses, capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

Permanent book and tax basis differences, which are mainly due to differing treatments of paydown gains and losses and amortization of bond discounts and premiums, may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of August 31, 2014, the funds made the following reclassifications:


												Schwab
	Schwab		Schwab			Schwab						Treasury Inflation
	Short-Term Bond		Intermediate-Term			Total Bond			Schwab			Protected Securities
	Market Fund		Bond Fund			Market Fund			GNMA Fund			Index Fund

Capital shares		$—		$—			$—			$—			$6,255
Undistributed net investment income		—		1,005,931			1,413,738			2,586,266			14,734
Net realized capital gains and losses		—		(1,005,931	)		(1,413,738	)		(2,586,266	)		(20,989	)

As of August 31, 2014, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended August 31, 2014, the funds did not incur any interest or penalties.

Schwab Bond Funds

Financial Notes (continued)

10. Legal Matters:

On August 28, 2008, a class action lawsuit was filed in the U.S. District Court for the Northern District of California on behalf of investors in the Schwab Total Bond Market Fund. The lawsuit, which alleged violations of state law and federal securities law in connection with the fund’s investment policy, named the trust, the fund, CSIM and Schwab as defendants. Allegations include that the fund improperly deviated from its stated investment objectives by investing in collateralized mortgage obligations (CMOs) and investing more than 25% of fund assets in CMOs and mortgage-backed securities without obtaining a shareholder vote. Plaintiffs sought unspecified compensatory and rescission damages, unspecified equitable and injunctive relief, and costs and attorneys’ fees. On August 8, 2011, the court dismissed Plaintiffs’ case with prejudice, and on September 7, 2011, Plaintiffs filed a notice of appeal with the Ninth Circuit Court of Appeals. Oral arguments were held on May 17, 2013, but no ruling has been issued. At this time the defendants are unable to estimate whether they will incur a liability or the range of any liability in this matter and any liability incurred could exceed the limits of any potentially applicable insurance policies.

11. Subsequent Events:

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

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:

Schwab Short-Term Bond Market Fund

Schwab Intermediate-Term Bond Fund

Schwab Total Bond Market Fund

Schwab GNMA Fund

Schwab Treasury Inflation Protected Securities Index Fund

In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Short-Term Bond Market Fund, Schwab Intermediate-Term Bond Fund, Schwab Total Bond Market Fund, Schwab GNMA Fund and Schwab Treasury Inflation Protected Securities Index Fund (five of the funds constituting Schwab Investments, hereafter referred to as the “Funds”) at August 31, 2014, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 17, 2014

Investment Advisory Agreement Approval

The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.

The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Investments (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to existing funds in the Trust, including Schwab Short-Term Bond Market Fund, Schwab Intermediate-Term Bond Fund, Schwab Total Bond Market Fund, Schwab GNMA Fund and Schwab Treasury Inflation Protected Securities Index Fund (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.

The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 30, 2014, and June 3, 2014, and approved the renewal of the Agreement with respect to the Funds for an additional one year term at the meeting held on June 3, 2014. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:


1.	the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds;

2.	each Fund’s investment performance and how it compared to that of certain other comparable mutual funds;

3.	each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds;

4.	the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and

5.	the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors.

Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered information provided by CSIM relating to each Fund’s portfolio management team, portfolio strategy and risk oversight structure, and internal investment guidelines. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.

Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, and market trends. As part of this review, the Trustees considered the composition of the peer

category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of such Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation, the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.

Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of other comparable mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered a commitment by CSIM and Schwab to reduce the specified expense caps of Schwab Treasury Inflation Protected Securities Index Fund and Schwab Intermediate-Term Bond Fund. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.

Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the compensation and profitability with respect to each Fund under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to such Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.

Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have previously committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to the Funds that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.

In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.

Trustees and Officers

The tables below give information about the trustees and officers of Schwab Investments, 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 96 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 funds’ 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 Investments since 2000.)	Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 – present).	75	Director, WageWorks, Inc. (2010 – present) Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009)


John F. Cogan 1947 Trustee (Trustee of Schwab Investments 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. 2000 – present).	75	Director, Gilead Sciences, Inc. (2005 – present) Director, Monaco Coach Corporation (2005 – 2009)


David L. Mahoney 1954 Trustee (Trustee of Schwab Investments since 2011.)	Private Investor.	75	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present)


Kiran M. Patel 1948 Trustee (Trustee of Schwab Investments since 2011.)	Retired. Formerly, Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 – Sept. 2013).	75	Director, KLA-Tencor Corporation (2008 – present)


Gerald B. Smith 1950 Trustee (Trustee of Schwab Investments since 2000.)	Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present).	75	Director, Eaton (2012-present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present) Director, Oneok, Inc. (2009 – present) Lead Independent Director, Board of Cooper Industries (2002 – 2012)


Joseph H. Wender 1944 Trustee (Trustee of Schwab Investments since 2008.)	Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present).	75	Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)

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 Investments since 1991.)	Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.	75	None


Walter W. Bettinger II²1960 Trustee (Trustee of Schwab Investments since 2008.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. 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. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. 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.	96	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

Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Investments since 2010.)		Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010).


George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Investments since 2004.)		Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).


Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer of Schwab Investments since 2011.)		Senior Vice President and Chief Investment Officer — Equities, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds and Laudus Funds (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).

Officers of the Trust (continued)


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

Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of Schwab Investments since 2011.)		Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds and Laudus Funds (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 – Jan. 2008).


David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Investments since 2011.)		Senior Vice President (Sept. 2011 – present), Vice President (March 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.


Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Investments 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), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (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 retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first.
²		Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser.
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

agency discount notes Notes issued by federal agencies—known as Government Sponsored Enterprises, or GSEs—at a discount to their value at maturity. An agency discount note is a short-term investment offering a high degree of credit quality.

Alternative Minimum Tax (AMT) A federal income tax designed to limit the extent to which high-income taxpayers (including individuals, estates, trusts and corporations) can benefit from certain deductions and exemptions. For example, some types of income that are exempt from regular federal income tax are not exempt from the AMT.

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

asset-backed securities Bond or other debt securities that represent ownership in a pool of assets such as credit card debt.

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

average rate The average rate of interest paid annually by the fixed-income securities in a fund or portfolio.

Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-back securities (agency fixed-rate and hybrid ARM passthroughs), asset-backed securities, and commercial mortgage-backed securities.

Barclays U.S. Intermediate Aggregate Bond Index An index that represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

Barclays U.S. Government/Credit: 1 − 5 Years Index An index that includes investment-grade government and corporate bonds that are denominated in U.S. dollars and have maturities of one to five years. Bonds are represented in the index in proportion to their market value.

Barclays GNMA Index An index that includes the mortgage-backed pass-through securities of the Government National Mortgage Association (GNMA).

Barclays U.S. TIPS (Treasury Inflation-Protected Securities) Index An index that measures the performance of fixed income securities with fixed-rate coupon payments that adjust for inflation, as measured by the Consumer Price Index for All Urban Consumers.

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.

call An early repayment of a bond’s principal by the issuer, usually done because the issuer is able to refinance its bond debt at a lower rate.

call protection A term used in reference to a bond that cannot be called by the issuer before maturity, or at least for many years from the present date. A bond that offers call protection can more reliably be expected to provide a given yield over a given number of years than a bond that could be called (assuming both bonds are of the same credit quality).

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.

certificate of participation A municipal bond that is repaid from an annual budget appropriation rather than being backed by the full faith and credit of the issuer.

coupon, coupon rate The annual rate of interest paid until maturity by the issuer of a debt security.

credit-enhanced securities Securities that are backed by the credit of an entity other than the issuer (such as a financial institution). Credit enhancements, which can equal up to 100% of the security’s value, are designed to help lower the risk of default on a security and may also make the security more liquid.

credit quality The capacity of an issuer to make its interest and principal payments. See chart below.

Credit Ratings

Most major bond issuers arrange with a recognized independent rating organization, such as Standard & Poor’s (S&P) or Moody’s Investors Service, to rate the creditworthiness of their bonds. The spectrum of these ratings is divided into two major categories: investment grade and below investment grade (sometimes called “junk bonds”). Bonds rated below investment grade range from those that are considered to have some vulnerability to default to those that appear on the brink of default or are in default.

credit risk The risk that a bond issuer may be unable to pay interest or principal to its bondholders.

discount rate The implied rate on a debt security that does not pay interest but is bought at a discount and redeemed at face value when it matures.

duration A measure of an individual bond’s sensitivity to interest rates, expressed in years. Calculations of duration generally take into account the bond’s yield, interest payments, maturity date and call features.

weighted average duration A measure of the duration of all bonds in a fund’s portfolio, also expressed in years, based on the market value weighted average duration of each bond in the portfolio.

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.

general obligation bonds Municipal bonds that are secured by the issuer’s full faith and credit, which typically is backed by the power of the issuer to levy taxes.

interest Payments to bondholders (usually made twice a year) as compensation for loaning the bond principal to the issuer.

interest rate risk The risk that a bond’s value will fluctuate if market interest rates change or are expected to change. Bond prices tend to move in the opposite direction of interest rates: when interest rates rise, bond prices tend to fall.

liquidity-enhanced security A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

market risk Those elements of risk that are common to all securities in an asset class, and therefore cannot be significantly reduced by diversification within the asset class. Also known as “systemic risk.”’

maturity The maturity of a bond will generally be determined using a portfolio security’s final maturity date (date on which the final principal payment of a bond is scheduled to be paid); however, for securitized products, such as mortgage-backed securities and certain other asset-backed securities, maturity will be determined on an average life basis (weighted average time to receipt of all principal payments) by the investment adviser. Because pre-payment rates of individual mortgage pools vary widely, the average life of a particular pool cannot be predicted precisely. For securities with embedded demand features, such as puts or calls, either the demand date or the final maturity date will be used depending on interest rates, yields and other market conditions. The average portfolio maturity of a fund is dollar-weighted based upon the market value of a fund’s securities at the time of the calculation.

mortgage-backed securities Bond or other debt securities that represent ownership in a pool of mortgage loans.

muni, municipal bonds, municipal securities Debt securities issued by a state, its counties, municipalities, authorities and other subdivisions, or the territories and possessions of the United States and the District of Columbia, including their subdivisions, agencies and instrumentalities and corporations. These securities may be issued to obtain money for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works.

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.

prepayment risk The risk that a mortgage-backed security may be paid off early, typically because interest rates have fallen and the homeowners who hold the underlying mortgages have refinanced those mortgages at lower rates. In this type of situation, the investor who held the mortgage-backed security will usually have to settle for a lower rate when reinvesting the principal.

refunded bond A bond for which the principal and interest payments are secured or guaranteed by cash or U.S. government securities held in an escrow account.

restricted securities Securities that are subject to contractual restrictions on resale. These securities are often purchased in private placement transactions.

revenue bonds Municipal bonds that are issued to finance public works projects and are secured by revenue generated by the project (such as water and sewer fees) rather than the full faith and credit of the issuer.

section 4(2)/144A securities Securities exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may be sold only to qualified institutional buyers under Securities Act Rule 144A.

taxable-equivalent yield The yield an investor would need to get from a taxable investment in order to match the yield paid by a given tax-exempt investment, once the effect of all applicable taxes is taken into account. For example, if your tax rate were 25%, a tax-exempt investment paying 4.5% would have a taxable-equivalent yield for you of 6.0% (4.5% ¸ [1 − 0.25%] = 6.0%).

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.

yield to maturity The annualized rate of return a bondholder could expect if the bond were held to maturity. In addition to interest payments, yield to maturity also factors in any difference between a bond’s current price and its principal amount, or face value.

PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT

A Commitment to Your Privacy

Your Privacy Is Not for Sale

We do not and will not sell your personal information to anyone, for any reason.

We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.

How We Collect Information About You

We collect personal information about you in a number of ways.


•	APPLICATION AND REGISTRATION INFORMATION.

We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.


•	TRANSACTION AND EXPERIENCE INFORMATION.

Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.


•	WEBSITE USAGE.

When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please go to www.schwab.com/privacy.

How We Share and Use Your Information

We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:


•	to help us process transactions for your account;

•	when we use other companies to provide services for us, such as printing and mailing your account statements;

•	when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).

State Laws

We will comply with state laws that apply to the disclosure or use of information about you.

Safeguarding Your Information — Security Is a Partnership

We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.

Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.

We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.

We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

Contact Us

To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.

Schwab Funds^® direct investors: 1-800-407-0256

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 the Schwab Funds’ 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 the fund’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.

The Schwab Funds Family^®

Stock Funds

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 Company Index Fund

Schwab Fundamental International Large Company Index Fund

Schwab Fundamental International Small Company Index Fund

Schwab Fundamental Emerging Markets Large Company 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 Target 2045 Fund

Schwab Target 2050 Fund

Schwab Target 2055 Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab Short-Term Bond Market Fund^tm

Schwab Intermediate-Term Bond Fund^tm

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab^® Treasury Inflation Protected Securities Index Fund

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds¹. 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^®.


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.

Performance at a Glance


Total Returns for the 12 Months Ended August 31, 2014

Schwab Tax-Free Bond Fund^tm (Ticker Symbol: SWNTX)			7.86%


S&P National AMT-Free Municipal Bond Index¹			10.15%
Barclays 7-Year Municipal Bond Index			7.52%
Fund Category: Morningstar Municipal National Intermediate Bond			7.89%


Performance Details			pages 8-9




Schwab California Tax-Free Bond Fund^tm (Ticker Symbol: SWCAX)			8.74%


S&P California AMT-Free Municipal Bond Index²			11.99%
Barclays 7-Year Municipal Bond Index			7.52%
Fund Category: Morningstar Municipal California Intermediate/Short Bond			7.92%


Performance Details			pages 10-11


Minimum Initial Investment³	$	100

For index definitions, please see the Glossary.

Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.


¹		Effective January 1, 2014, the fund uses the S&P National AMT-Free Municipal Bond Index as its primary benchmark index. The fund selected the S&P National AMT-Free Municipal Bond Index because the fund’s investment adviser believes that it provides a more accurate benchmark for comparing fund performance. The fund’s previous primary benchmark index was the Barclays 7-Year Municipal Bond Index.
²		Effective January 1, 2014, the fund uses the S&P California AMT-Free Municipal Bond Index as its primary benchmark index. The fund selected the S&P California AMT-Free Municipal Bond Index because the fund’s investment adviser believes that it provides a more accurate benchmark for comparing fund performance. The fund’s previous primary benchmark index was the Barclays 7-Year Municipal Bond Index.
³		Please see prospectus for further detail and eligibility requirements.

Schwab Tax-Free Bond Funds 3

From the President

Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.

Dear Shareholder,

I’d like to thank you for trusting us to help you meet your investment goals, and for reading this annual report regarding the Schwab Tax-Free Bond Fund and Schwab California Tax-Free Bond Fund. These funds are part of our line-up of products designed to serve as the foundation of an investor’s portfolio, and seek current income exempt from federal income tax, including the Alternative Minimum Tax.¹ In addition, we are proud to say that for a sixth consecutive year, the Schwab California Tax-Free Bond Fund was named by Lipper² as its “Best California Intermediate Municipal Debt Fund over 10 Years.”

For the 12-month reporting period ended August 31, 2014, the funds generated moderate total returns that reflected a decline in municipal bond yields, but an overall increase in bond prices. Slow U.S. economic growth in early 2014 and assurances from the Federal Reserve that short-term interest rates need to remain low supported these results, even as the economy improved enough for the Fed to reduce its policies to hold down long-term interest rates. A reduction in municipal bond supply combined with rising demand also helped to push yields lower and prices higher on municipal securities. Moreover, credit quality improved for a majority of municipal bond issuers.

Total returns in bonds are impacted by changes in interest rates. Since bond yields and bond prices tend to move in opposite directions, when

Yield Advantage of Munis over Treasuries: For Five-Year bonds; Tax Brackets Shown are the Highest Applicable

This chart shows how much more the average five-year muni yielded than the average five-year Treasury after federal (or combined California and federal) income tax.

Data source: Bloomberg L.P.

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

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


¹		The Schwab California Tax-Free Bond Fund also seeks current income exempt from California state income tax.
²		The Lipper Fund Awards recognize funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers. Lipper, a Thomson Reuters company, uses the Lipper Leader for Consistent Return methodology to designate award-winning funds in most individual classifications for the 3-, 5-, and 10-year periods. Lipper Rankings are based on average annual total returns. As of 8/31/2014, the Schwab California Tax-Free Bond Fund rankings within the Lipper California Intermediate Municipal Debt Funds category for the 1-, 3-,5-, and 10-year periods were 12/40, 9/37, 8/33, and 3/29, respectively.

4 Schwab Tax-Free Bond Funds

California State Investment Environment

California’s financial position is improving with the state’s moderate economic recovery and additional revenues from a tax increase approved by voters in November 2012.

California is expected to report that it ended fiscal 2014 (7/1/13-6/30/14) with a general fund balance of $3.9 billion, equal to about 3.9% of annual spending. The fiscal 2014 budget was the first to be structurally balanced since fiscal 2008. The state’s improved financial position is largely the result of a temporary increase in personal income taxes and sales taxes, approved by voters in November 2012. The new taxes were projected to yield $6.2 billion in additional general fund revenues in fiscal 2014. State tax receipts through June 2014 were about $5.6 billion, or 5.7%, ahead of budget projections, led by personal income taxes and corporation taxes.

The fiscal 2015 budget was signed by Governor Brown on June 20, 2014. The general fund spending plan totals $108.0 billion, up from $100.7 billion in fiscal 2014, including $1.6 billion set aside in a budget stabilization account. With the help of strong capital gains income, the budget pays down over $10 billion of $26.2 billion in outstanding budgetary debt, including $5 billion of delayed payments to schools and community colleges. The state projects ending fiscal 2015 with $3.0 billion of reserves, or 2.8% of annual spending. The state’s school districts, which rely on state funds for nearly 60% of their operating revenues, benefit the most from this new budget with $4.75 billion of additional appropriations. The budget also begins to address the large unfunded liabilities of the California State Teachers Retirement System.

As in other states, many of California’s cities, counties, school districts, as well as water and sewer systems, public and private universities, and non-profit health systems issue bonds. Though the current outlook for state funding is brighter, California’s recent budget cuts have had varying impacts on the credit quality of these issuers. For example, while California school districts and community college districts receive over 50% of their total funding from the state, their general obligation bonds are secured by dedicated local property tax levies and are not paid from state funds. Many local property tax bases are now growing again, but the areas that experienced the most development just prior to the recession have not yet returned to pre-recession levels. County governments are also seeing some improvement in their financial positions from growth in their tax bases and are tentatively restoring some of the health and social service spending trimmed in response to prior cuts in state aid and declines in local tax revenues.

The outlook for many of California’s cities is also improving, with moderate growth in sales and business taxes. However, they continue to face cost pressures especially in the areas of pensions and healthcare benefits. The cities of Stockton and San Bernardino remain in bankruptcy, and continue to work toward reorganization plans. Stockton and San Bernardino were both centers for the recent housing market boom and bust.

California’s essential service enterprises and healthcare providers, such as the Metropolitan Water District of Southern California, the Los Angeles Department of Water and Power, the Bay Area Toll Authority and St. Joseph Health System have been generally insulated from the state’s earlier financial difficulties as they pay off their bonds with revenues received from the services they provide to customers. Despite serious drought conditions, the state’s largest water utilities are positioned well to meet demand through stored water, conservation and alternate supplies.

California’s economy is recovering from a deep recession at a moderate pace. The state gained 323,600 jobs from July 2013 to July 2014, a 2.1% increase, continuing on from the 441,100 jobs gained in calendar year 2013. California’s unemployment rate declined to 7.4% in July 2014, down from 9.0% in July 2013. It was tied with Kentucky for the sixth highest rate in the country and still above the national average of 6.2%.

Despite its diversified economy and high wealth indicators, California’s credit quality remains relatively weak compared to other states due primarily to its recent structural budget problems. At the end of the report period, the state’s general obligation ratings were Aa3 from Moody’s Investors Service, A from Standard & Poor’s Ratings Services, and A from Fitch Ratings. Moody’s raised its rating from A1 in June 2014 and S&P revised its rating outlook to positive in January 2014.

Schwab Tax-Free Bond Funds 7

Schwab Tax-Free Bond Fund™

The Schwab Tax-Free Bond Fund (the fund) seeks high current income exempt from federal income tax, consistent with capital preservation. To pursue its goal, the fund primarily invests in investment-grade municipal securities (munis)—those in the four highest credit rating categories (rated AAA to BBB- or the unrated equivalent as determined by the investment adviser). The fund does not currently intend to invest in munis whose interest is subject to the alternative minimum tax. For more information on the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 7.86% for the 12-month period ended August 31, 2014, compared with the S&P National AMT-Free Municipal Bond Index (the comparative index), which returned 10.15%.

Market Highlights. U.S. bonds generated moderate overall total returns for the reporting period, as falling yields on intermediate- and longer-term bonds translated into gains for many fixed income sectors. Several factors drove yields lower and returns correspondingly higher, including a shift in expectations regarding Federal Reserve (Fed) policies.

Amid this backdrop, munis performed very well compared with other fixed income sectors, as investors gravitated toward potentially higher-yielding investments than U.S. Treasuries in the low yield environment. A reduction in municipal bond supply combined with rising demand also helped to push yields lower and total returns higher on munis.

Positioning and Strategies. The fund generally maintains a sensitivity to interest rates within a conservative range to limit unexpected performance swings. Although this range is close to the fund’s peer group, the fund typically maintains a lower sensitivity to interest rates than the comparative index. With longer-term bond yields generally declining the most, this translated into a higher total return for the comparative index than for the fund.

Regarding bond-maturity strategies, the fund continued to maintain a slight “barbell” relative to the fund’s peers. This slight barbell was accomplished by holding a relatively larger percentage of short- and long-term munis, while underweighting intermediate-term securities. With the yield difference between short- and long-term munis shrinking overall, this positioning enhanced the fund’s performance.

The fund’s overall credit quality remained high. However, a careful assessment of holdings late in the first quarter of 2014 led to a decrease in munis with AA ratings, and an increase in holdings of securities with credit ratings below this level. These securities were carefully screened through a methodical review process and were added because munis in this ratings spectrum have historically performed well when economic conditions are improving.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


Fixed Rate Bonds			90.3%
Variable Rate Demand Obligations			3.3%
Floating Rate Notes			3.1%
Put Bonds			2.9%
Refunded Bonds			0.4%


By Credit Quality²


AAA			9.4%
AA			42.7%
A			37.7%
BBB			8.8%
BB			1.3%
Unrated Securities			0.1%



Weighted Average Maturity³			5.6 Yrs
Weighted Average Duration³			5.1 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
³		See Glossary for definitions of maturity and duration.

8 Schwab Tax-Free Bond Funds

Schwab Tax-Free Bond Fund^tm

Performance and Fund Facts as of 8/31/14

August 31, 2004 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3

Average Annual Returns^1,2,3


Fund and Inception Date	1 Year			5 Years			10 Years


Fund: Schwab Tax-Free Bond Fund^tm (9/11/92)		7.86	%		4.97	%		4.31	%
S&P National AMT-Free Municipal Bond Index*		10.15	%		5.12	%		n/a
Barclays 7-Year Municipal Bond Index		7.52	%		4.96	%		4.71	%
Fund Category: Morningstar Municipal National Intermediate Bond		7.89	%		4.59	%		3.77	%

Fund Expense Ratios⁴: Net 0.49%; Gross 0.56%

Yields


30-Day SEC Yield^1,3			1.36%


30-Day SEC Yield-No Waiver^1,5			1.25%


Taxable-Equivalent Yield⁶			2.40%


12-Month Distribution Yield^1,3			2.29%

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

For index definitions, please see the Glossary.


*		Effective January 1, 2014, the fund uses the S&P National AMT-Free Municipal Bond Index as its primary benchmark index. The fund selected the S&P National AMT-Free Municipal Bond Index because the fund’s investment adviser believes that it provides a more accurate benchmark for comparing fund performance.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		As stated in the prospectus. 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.
⁵		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.
⁶		Taxable-equivalent yield assumes a federal regular income tax rate of 43.40%, which includes a Medicare surcharge rate of 3.8%. Your tax rate may be different.

Schwab Tax-Free Bond Funds 9

Schwab California Tax-Free Bond Fund™

The Schwab California Tax-Free Bond Fund (the fund) seeks high current income exempt from federal and California personal income tax that is consistent with capital preservation. To pursue its goal, the fund primarily invests in investment-grade municipal securities (munis)—those in the four highest credit rating categories (rated AAA to BBB- or the unrated equivalent as determined by the investment adviser)—from California issuers. The fund does not currently intend to invest in munis whose interest is subject to the alternative minimum tax. For more information on the fund’s investment objective, please see the fund’s prospectus.

Performance. The fund returned 8.74% for the 12-month period ended August 31, 2014, compared with the S&P California AMT-Free Municipal Bond Index (the comparative index), which returned 11.99%.

Market Highlights. U.S. bonds generated moderate overall total returns for the reporting period, as falling yields on intermediate- and longer-term bonds translated into gains for many fixed income sectors. Several factors drove yields lower and returns correspondingly higher, including a shift in expectations regarding Federal Reserve (Fed) policies.

The fund’s overall credit quality remained high. However, a careful assessment of holdings late in the first quarter of 2014 led to a decrease in munis with AA ratings, and an increase in holdings of securities with credit ratings below this level. These securities were carefully screened through a methodical review process and were added because securities in this ratings spectrum have historically performed well when economic conditions are improving.

As of 8/31/14:

Portfolio Composition % of investments

These tables show two different views of the fund’s portfolio: by type of security and credit quality of the security.


By Security Type¹


Fixed Rate Bonds			90.1%
Put Bonds			5.7%
Variable Rate Demand Obligations			1.2%
Floating Rate Notes			1.4%
Refunded Bonds			1.0%
Fixed Rate Notes			0.6%


By Credit Quality²


AAA			2.1%
AA			52.4%
A			39.1%
BBB			5.0%
BB			0.3%
Short-Term Ratings			0.6%
Unrated Securities			0.5%



Weighted Average Maturity³			5.6 Yrs
Weighted Average Duration³			5.0 Yrs

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


¹		The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
²		Based on ratings from Moody’s. The fund has selected Moody’s to provide credit ratings based on the recommendation from the fund’s investment adviser, who has determined that Moody’s strong depth and established expertise make it a reliable source for ratings of securities in which the fund may invest. Where Moody’s ratings are not available, Standard & Poor’s ratings are used. To the extent Standard & Poor’s does not provide a rating, the fund will use a rating provided by Fitch Ratings, Inc. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies.
³		See Glossary for definitions of maturity and duration.

10 Schwab Tax-Free Bond Funds

Schwab California Tax-Free Bond Fund^tm

Performance and Fund Facts as of 8/31/14

August 31, 2004 – August 31, 2014
Performance of Hypothetical
$10,000 Investment^1,3

Average Annual Returns^1,2,3


Fund and Inception Date	1 Year			5 Years			10 Years


Fund: Schwab California Tax-Free Bond Fund^tm (2/24/92)		8.74	%		4.99	%		4.26	%
S&P California AMT-Free Municipal Bond Index*		11.99	%		6.12	%		n/a
Barclays 7-Year Municipal Bond Index		7.52	%		4.96	%		4.71	%
Fund Category: Morningstar Municipal California Intermediate/Short Bond		7.92	%		4.52	%		3.73	%

Fund Expense Ratios⁴: Net 0.49%; Gross 0.59%

Yields


30-Day SEC Yield^1,3			1.28%


30-Day SEC Yield-No Waiver^1,5			1.16%


Taxable-Equivalent Yield⁶			2.58%


12-Month Distribution Yield^1,3			2.41%

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

For index definitions, please see the Glossary.


*		Effective January 1, 2014, the fund uses the S&P California AMT-Free Municipal Bond Index as its primary benchmark index. The fund selected the S&P California AMT-Free Municipal Bond Index because the fund’s investment adviser believes that it provides a more accurate benchmark for comparing fund performance.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Source for category information: Morningstar, Inc.
³		Fund expenses may have been partially absorbed by the investment adviser and its affiliates. Without these reductions, the total return/yield may have been lower.
⁴		As stated in the prospectus. 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.
⁵		Yield if fund expenses had not been partially absorbed by the investment adviser and its affiliates.
⁶		Taxable-equivalent yield assumes a federal regular income tax rate of 43.40%, which includes a Medicare surcharge rate of 3.8%, and effective California state personal income tax rate of 6.96%. Your tax rate may be different.

Schwab Tax-Free Bond Funds 11

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 3/1/14		at 8/31/14		3/1/14–8/31/14

Schwab Tax-Free Bond Fund^tm
Actual Return		0.49%	$	1,000.00	$	1,030.60	$	2.51
Hypothetical 5% Return		0.49%	$	1,000.00	$	1,022.74	$	2.50


Schwab California Tax-Free Bond Fund^tm
Actual Return		0.49%	$	1,000.00	$	1,032.40	$	2.51
Hypothetical 5% Return		0.49%	$	1,000.00	$	1,022.74	$	2.50


¹		Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period.
²		Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 184 days of the period, and divided by 365 days of the fiscal year.

12 Schwab Tax-Free Bond Funds

Schwab Tax-Free Bond Fund™

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		11.36			12.10			11.62			11.72			11.12

Income (loss) from investment operations:
Net investment income (loss)		0.27			0.27			0.30			0.31			0.31
Net realized and unrealized gains (losses)		0.61			(0.58	)		0.54			0.06			0.72

Total from investment operations		0.88			(0.31	)		0.84			0.37			1.03
Less distributions:
Distributions from net investment income		(0.27	)		(0.27	)		(0.30	)		(0.31	)		(0.31	)
Distributions from net realized gains		—			(0.16	)		(0.06	)		(0.16	)		(0.12	)

Total distributions		(0.27	)		(0.43	)		(0.36	)		(0.47	)		(0.43	)

Net asset value at end of period		11.97			11.36			12.10			11.62			11.72

Total return (%)		7.86			(2.65	)		7.34			3.34			9.43

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.49			0.49			0.49			0.49			0.49
Gross operating expenses		0.58			0.56			0.59			0.61			0.63
Net investment income (loss)		2.34			2.27			2.51			2.74			2.71
Portfolio turnover rate		81			110			102			128			122
Net assets, end of period ($ x 1,000,000)		627			602			684			484			446

See financial notes 13

Schwab Tax-Free Bond Fund

Portfolio Holdings as of August 31, 2014

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%

Fixed-Rate Obligations

552,339,356

583,905,578

.1%

Variable-Rate Obligations

50,215,000

50,580,552

101

.2%

Total Investments

602,554,356

634,486,130

.2)%

Other Assets and Liabilities, Net

(7,265,714

)

100

.0%

Net Assets

627,220,416


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)

Fixed-Rate Obligations 93.1% of net assets

ALABAMA 0.7%
Birmingham
GO Bonds Series 2013A		0.00%		03/01/43	(b)(f)		500,000		483,685
GO Refunding Warrants Series 2010A		5.00%		02/01/18	(e)		1,160,000		1,314,918
Huntsville
Water Revenue Warrant Series 2008		5.00%		11/01/15			250,000		264,118
Pell Special Care Facilities Financing Auth
RB (Noland Health Services) Series 2012A		5.00%		12/01/19			1,050,000		1,205,788
RB (Noland Health Services) Series 2012A		5.00%		12/01/20			950,000		1,102,960

									4,371,469

ALASKA 1.3%
Alaska Housing Finance Corp
State Capital Project Bonds II Series 2012A		5.00%		12/01/17			1,105,000		1,256,054
Alaska Industrial Development & Export Auth
RB (Greater Fairbanks Community Hospital Foundation) Series 2014		5.00%		04/01/22			500,000		585,355
RB (Greater Fairbanks Community Hospital Foundation) Series 2014		5.00%		04/01/23			630,000		741,075
North Slope Borough
GO Bonds Series 2013A		5.00%		06/30/19			1,000,000		1,177,270
Service Area 10 Water & Wastewater Facilities RB Series 2014		5.00%		06/30/20			820,000		967,018
Service Area 10 Water & Wastewater Facilities RB Series 2014		5.00%		06/30/22	(b)		805,000		945,231
Service Area 10 Water & Wastewater Facilities RB Series 2014		5.00%		06/30/23	(b)		1,890,000		2,198,618

									7,870,621

ARIZONA 1.5%
Arizona Health Facilities Auth
Hospital RB (Phoenix Children’s Hospital) Series 2013B		5.00%		02/01/43	(b)		1,000,000		1,067,930
Glendale IDA
RB (Midwestern Univ) Series 2010		5.00%		05/15/15			415,000		427,068
Payson USD No.10
GO Bonds Series 2008B		5.75%		07/01/28	(b)(e)		1,375,000		1,580,535
Pima Cnty
COP Series 2013A		5.00%		12/01/17			550,000		624,234
COP Series 2013A		5.00%		12/01/18			400,000		462,264
COP Series 2013A		5.00%		12/01/19			500,000		586,630
GO Bonds Series 2012A		4.00%		07/01/22			140,000		159,732
Refunding COP Series 2013B		5.00%		12/01/16			625,000		688,963
Tucson
Refunding COP Series 2014		4.00%		07/01/21			1,650,000		1,851,547
Refunding COP Series 2014		4.00%		07/01/22			700,000		781,459
Refunding COP Series 2014		4.00%		07/01/23			700,000		778,106

14 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Univ Medical Center Corp
Hospital RB Series 2009		5.00%		07/01/15			170,000		175,926
Hospital RB Series 2009		5.50%		07/01/16			100,000		107,929
Hospital RB Series 2009		6.00%		07/01/18			300,000		346,527

									9,638,850

ARKANSAS 1.3%
Cabot
Sales & Use Tax Refunding & Improvement Bonds Series 2013		2.55%		06/01/43	(b)		1,325,000		1,335,256
Fayetteville
Sales & Use Tax Bonds Series 2013		2.80%		11/01/24			2,655,000		2,694,533
Fort Smith
Sales & Use Tax Refunding Bonds Series 2012		2.38%		05/01/27	(b)		475,000		478,586
Little Rock
Library Construction & Refunding Bonds Series 2012		3.10%		03/01/32	(b)		1,785,000		1,785,054
Springdale
Sales & Use Tax Refunding Bonds Series 2013		2.60%		07/01/27	(b)		1,570,000		1,576,892

									7,870,321

CALIFORNIA 14.2%
ABAG Finance Auth
Insured Sr Living RB (Old Fellows Home of California) Series 2012A		5.00%		04/01/32	(a)(b)		1,380,000		1,561,898
Refunding RB (Episcopal Sr Communities) Series 2012B		5.00%		07/01/19			1,000,000		1,106,990
Anaheim Public Financing Auth
Lease Refunding RB Series 2008		5.00%		08/01/17			955,000		1,071,844
California
GO Bonds		5.00%		11/01/32	(b)(e)		1,240,000		1,368,042
GO Bonds		5.00%		04/01/38	(b)		500,000		552,880
California Dept of Water Resources
Power Supply RB Series 2005G4		5.00%		05/01/16	(e)		750,000		809,565
California Health Facilities Financing Auth
RB (Catholic Healthcare West) Series 2011A		5.25%		03/01/23	(b)		1,000,000		1,183,310
RB (Children’s Hospital Orange Cnty) Series 2009A		6.50%		11/01/38	(b)(e)		1,850,000		2,181,760
RB (St. Joseph Health) Series 2013A		5.00%		07/01/24	(b)		1,000,000		1,194,070
RB (St. Joseph Health) Series 2013A		5.00%		07/01/25	(b)		1,000,000		1,182,340
California Infrastructure & Economic Development Bank
RB (Sanford Consortium) Series 2010A		5.00%		05/15/27	(b)(e)		2,005,000		2,334,301
California Statewide Communities Development Auth
RB (St. Joseph Health) Series 2000		4.50%		07/01/18			1,320,000		1,418,485
Compton CCD
GO Refunding Bonds Series 2014		5.00%		07/01/25	(b)		1,450,000		1,708,999
GO Refunding Bonds Series 2014		5.00%		07/01/26	(b)		1,615,000		1,871,236
GO Refunding Bonds Series 2014		5.00%		07/01/27	(b)		3,395,000		3,911,889
East Bay Municipal Utility District
Water System Refunding RB Series 2013A		5.00%		06/01/19			220,000		261,499
Emery USD
GO Bonds Series 2011A		6.50%		08/01/31	(b)		2,500,000		3,063,350
Emeryville Successor RDA
Tax Allocation Refunding Bonds Series 2014A		5.00%		09/01/20			2,000,000		2,387,200
Tax Allocation Refunding Bonds Series 2014A		5.00%		09/01/21			2,000,000		2,407,040
Franklin-McKinley SD
GO Refunding Bonds Series 2014		5.00%		08/01/24			1,000,000		1,230,560
Fresno
Airport Refunding RB Series 2013A		5.00%		07/01/23			105,000		123,605
Airport Refunding RB Series 2013A		5.00%		07/01/30	(b)		290,000		321,300
Inglewood USD
GO Bonds Series A		5.25%		08/01/25	(b)		815,000		954,292
GO Bonds Series A		5.25%		08/01/27	(b)		1,135,000		1,304,978
Jefferson UHSD
GO Bonds Series 2006D		0.00%		08/01/37	(b)(f)		1,545,000		315,891
GO Bonds Series 2006D		0.00%		08/01/39	(b)(f)		3,750,000		646,725
Jurupa Public Finance Auth
Special Tax RB Series 2014A		5.00%		09/01/21			600,000		705,888
Special Tax RB Series 2014A		5.00%		09/01/22			460,000		541,443

See financial notes 15

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Kern Cnty
Refunding COP 2011 Series A		5.00%		11/01/16			1,935,000		2,105,319
Los Angeles
Judgment Obligation Bonds Series 2010A		4.00%		06/01/19			3,070,000		3,444,693
Los Angeles Community Facilities District #4
Special Tax Refunding Bonds (Playa Vista Phase 1) Series 2014		5.00%		09/01/26	(b)		1,500,000		1,759,290
Los Angeles Municipal Improvement Corp
Lease RB Series 2009A		5.00%		04/01/17			975,000		1,086,384
Lease RB Series 2009C		4.00%		09/01/16			1,050,000		1,122,985
Lease RB Series 2009C		4.00%		09/01/17			100,000		109,623
Lease RB Series 2009C		4.50%		09/01/19			125,000		144,265
Lease RB Series 2009E		5.13%		09/01/27	(b)		590,000		650,611
Los Angeles USD
Refunding COP Series 2012B		5.00%		10/01/30	(b)		100,000		114,615
Midpeninsula Regional Open Space District
RB Series 2011		6.00%		09/01/41	(b)		2,000,000		2,370,940
Oakland Redevelopment Successor Agency
Sub Tax Allocation Refunding Bonds (Central District) Series 2013		5.00%		09/01/17			3,500,000		3,927,280
Old Adobe USD
GO Bonds Series B		5.25%		08/01/43	(b)		1,220,000		1,408,148
Palo Alto
Limited Obligation Refunding Bonds Series 2012		4.00%		09/02/19			180,000		198,463
Limited Obligation Refunding Bonds Series 2012		4.00%		09/02/21			275,000		301,944
Pasadena Public Financing Auth
Lease RB Series 2010A		5.00%		03/01/22	(b)		360,000		421,006
Rancho Cucamonga Successor RDA
Tax Allocation Refunding Bonds Series 2014		5.00%		09/01/26	(b)		755,000		901,855
Riverside Cnty Transportation Commission
Limited Sales Tax RB Series 2010A		5.00%		06/01/32	(b)		3,530,000		4,006,974
Sacramento City Financing Auth
Lease Refunding RB Series 2013A		4.00%		05/01/17			2,000,000		2,178,600
Lease Refunding RB Series 2013A		5.00%		05/01/17			1,750,000		1,952,580
Sacramento City USD
GO Bonds Series 2013A		5.25%		08/01/29	(b)		150,000		174,648
San Diego Public Facilities Financing Auth
Lease Refunding RB Series 2010A		3.88%		03/01/18			2,165,000		2,375,676
San Diego USD
GO Bonds Series 2010C		0.00%		07/01/31	(f)		1,950,000		1,010,880
GO Bonds Series 2010C		0.00%		07/01/32	(f)		1,500,000		742,635
GO Bonds Series 2010C		0.00%		07/01/33	(f)		1,000,000		471,580
GO Bonds Series 2010C		0.00%		07/01/34	(f)		1,750,000		770,210
GO Bonds Series 2010C		0.00%		07/01/35	(f)		1,300,000		536,783
San Mateo-Foster City SD
GO Refunding Bonds Series 2012		3.00%		09/01/15			1,730,000		1,780,620
GO Refunding Bonds Series 2012		4.00%		09/01/18			1,885,000		2,126,393
GO Refunding Bonds Series 2012		5.00%		09/01/20			2,195,000		2,667,627
Santa Cruz Cnty Successor Redevelopment Agency
Tax Allocation Refunding Bonds 2014		5.00%		09/01/22			1,360,000		1,617,407
Tax Allocation Refunding Bonds 2014		5.00%		09/01/23			1,000,000		1,190,550
Tax Allocation Refunding Bonds 2014		5.00%		09/01/24			1,250,000		1,479,112
Tiburon/Belvedere Wastewater Financing Auth
RB (Marin Cnty Sanitary District No. 5) Series 2012		3.00%		10/01/21			140,000		153,800
Turlock Irrigation District
Sub Refunding RB Series 2011		5.00%		01/01/31	(b)		2,005,000		2,228,116
Upland
COP (San Antonio Community Hospital) Series 2011		5.50%		01/01/19			1,165,000		1,333,098
COP (San Antonio Community Hospital) Series 2011		5.50%		01/01/20			1,260,000		1,460,756
Woodland Finance Auth
Water RB Series 2011		6.00%		03/01/41	(b)		1,000,000		1,157,230

									89,204,076

COLORADO 1.4%
Aspen Valley Hospital District
Refunding RB Series 2012		5.00%		10/15/30	(b)		650,000		712,166

16 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Colorado Health Facilities Auth
RB (Catholic Health Initiatives) Series 2008D1		5.00%		10/01/14	(e)		550,000		552,376
Refunding RB (National Jewish Health) Series 2012		5.00%		01/01/18	(e)		1,630,000		1,779,406
Refunding RB (National Jewish Health) Series 2012		5.00%		01/01/19	(e)		1,735,000		1,914,503
Refunding RB (National Jewish Health) Series 2012		5.00%		01/01/21			1,900,000		2,109,703
Denver Health & Hospital Auth
Healthcare RB Series 2014A		5.00%		12/01/39	(b)		1,000,000		1,075,860
Univ of Colorado Hospital Auth
RB Series 2012A		4.00%		11/15/14			250,000		252,052
RB Series 2012A		5.00%		11/15/16			440,000		483,635

									8,879,701

CONNECTICUT 2.9%
Connecticut
GO Bonds Series 2013A		5.00%		10/15/22			3,000,000		3,663,990
Special Tax Obligation Bonds Series 2013A		5.00%		10/01/20			2,000,000		2,394,260
Connecticut Health & Educational Facilities Auth
RB (Hartford HealthCare) Series E		5.00%		07/01/25	(b)		2,220,000		2,595,802
Greater New Haven Pollution Control Auth
Wastewater System Refunding RB Series 2014B		5.00%		08/15/24			300,000		366,330
Wastewater System Refunding RB Series 2014B		5.00%		08/15/25	(b)		900,000		1,086,975
Wastewater System Refunding RB Series 2014B		5.00%		08/15/26	(b)		625,000		746,369
Hamden
GO Bonds 2014A		4.00%		08/15/22			250,000		276,475
GO Bonds 2014A		5.00%		08/15/24	(b)		500,000		575,180
GO Bonds 2014A		5.00%		08/15/25	(b)		300,000		342,642
New Haven
GO Bonds Series 2011A		5.00%		03/01/15			1,260,000		1,291,147
Oxford
GO Refunding Bonds 2011		3.00%		08/01/16			120,000		125,888
GO Refunding Bonds 2011		4.00%		08/01/17			1,405,000		1,538,152
GO Refunding Bonds 2011		4.00%		08/01/18			1,445,000		1,613,371
GO Refunding Bonds 2011		4.00%		08/01/19			450,000		508,311
Stamford
Water Pollution Control RB Series 2013A		5.00%		08/15/26	(b)		140,000		165,525
Water Pollution Control RB Series 2013A		5.00%		08/15/29	(b)		15,000		17,387
West Haven
GO Bonds 2012		5.00%		08/01/20			865,000		998,521

									18,306,325

DELAWARE 0.2%
Delaware State Housing Auth
Sr S/F Mortgage RB Series 2011A2		4.25%		07/01/29	(b)		1,400,000		1,462,706

DISTRICT OF COLUMBIA 0.3%
District of Columbia
Income Tax Secured RB Series 2009A		5.25%		12/01/27	(b)(e)		300,000		352,413
Income Tax Secured Refunding RB Series 2010A		5.00%		12/01/30	(b)		1,210,000		1,402,463

									1,754,876

FLORIDA 5.3%
Alachua Cnty Health Facilities Auth
Health Facilities RB (Shands HealthCare) Series 2008D1		6.25%		12/01/18			500,000		586,625
Escambia Cnty
Pollution Control Refunding RB (Gulf Power) Series 1997		2.10%		07/01/22	(b)		1,000,000		1,012,170
Florida Higher Educational Facilities Financing Auth
Refunding RB (Univ Tampa) Series 2012A		5.00%		04/01/19			1,220,000		1,373,147
Refunding RB (Univ Tampa) Series 2012A		5.25%		04/01/42	(b)		400,000		429,860
Florida Ports Financing Commission
Refunding RB Series 2011A		5.00%		10/01/28	(b)		1,500,000		1,727,670
Hillsborough Cnty School Board
Refunding COP Series 2010A		5.00%		07/01/24	(b)		3,485,000		4,028,242

See financial notes 17

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Kissimmee Utility Auth
Electric System Sub Refunding RB Series 2003		5.25%		10/01/18			150,000		173,970
Lee Cnty
Non-Ad Valorem Refunding RB Series 2012		3.00%		10/01/14			355,000		355,884
Non-Ad Valorem Refunding RB Series 2012		4.00%		10/01/15			950,000		987,914
Miami Beach Health Facilities Auth
Hospital Refunding & RB Series 2014		5.00%		11/15/21	(d)		100,000		116,320
Hospital Refunding & RB Series 2014		5.00%		11/15/22	(d)		150,000		174,921
Hospital Refunding & RB Series 2014		5.00%		11/15/24	(d)		400,000		465,976
Hospital Refunding & RB Series 2014		5.00%		11/15/25	(b)(d)		250,000		285,820
Hospital Refunding & RB Series 2014		5.00%		11/15/39	(b)(d)		1,000,000		1,087,470
Hospital Refunding & RB Series 2014		5.00%		11/15/44	(b)(d)		1,000,000		1,085,720
Miami-Dade Cnty
Aviation RB Series 2010A		5.00%		10/01/20			500,000		588,475
Aviation RB Series 2010A		5.50%		10/01/26	(b)		4,690,000		5,543,908
Rickenbacker Causeway RB Series 2014		5.00%		10/01/23	(d)		740,000		849,971
Rickenbacker Causeway RB Series 2014		5.00%		10/01/25	(b)(d)		810,000		925,644
Rickenbacker Causeway RB Series 2014		5.00%		10/01/35	(b)(d)		575,000		624,571
Rickenbacker Causeway RB Series 2014		5.00%		10/01/36	(b)(d)		890,000		962,873
Miami-Dade Cnty Educational Facilities Auth
RB (Univ of Miami) Series 2008A		5.25%		04/01/16	(e)		600,000		641,970
Miami-Dade Cnty Expressway Auth
Toll System RB Series 2014A		5.00%		07/01/22			550,000		654,654
Toll System RB Series 2014A		4.00%		07/01/23			1,730,000		1,936,112
Toll System RB Series 2014A		5.00%		07/01/24			625,000		749,963
Orange Cnty Health Facilities Auth
RB (Nemours Foundation) Series 2009A		4.00%		01/01/15			440,000		445,289
RB (Nemours Foundation) Series 2009A		5.00%		01/01/18			300,000		338,511
RB (Nemours Foundation) Series 2009A		5.00%		01/01/19			545,000		628,423
Palm Beach Cnty Solid Waste Auth
RB Series 2009		5.25%		10/01/18	(a)		1,900,000		2,235,217
Pasco Cnty
Water & Sewer RB Series 2009A		5.00%		10/01/16			75,000		82,235
Sumter County Industrial Development Auth
Hospital RB (Central Florida Health Alliance) Series 2014A		5.00%		07/01/22			200,000		224,780
Hospital RB (Central Florida Health Alliance) Series 2014A		5.00%		07/01/24	(b)		150,000		167,534
Hospital RB (Central Florida Health Alliance) Series 2014A		5.00%		07/01/26	(b)		270,000		295,151
Tampa
Sales Tax Refunding RB Series 2010		4.00%		10/01/20			535,000		606,460
Sales Tax Refunding RB Series 2010		5.00%		10/01/21	(b)		140,000		164,423
Tampa Bay Water
Utility System Refunding RB Series 2011		5.00%		10/01/18			850,000		989,765

									33,547,638

GEORGIA 0.7%
Burke Cnty Development Auth
Pollution Control RB (Georgia Power Plant Vogtle) Fourth Series 1994		2.20%		10/01/32	(b)		1,500,000		1,530,960
Fulton Cnty Development Auth
RB (Georgia State Univ) Series 2011		5.00%		10/01/15			825,000		866,233
RB (Georgia State Univ) Series 2011		5.00%		10/01/17			185,000		206,103
Macon-Bibb Cnty Hospital Auth
Revenue Anticipation Certificates (Medical Center of Central GA) Series 2009		4.00%		08/01/19			200,000		222,344
Monroe Cnty Development Auth
Pollution Control RB (Georgia Power Plant Scherer) First Series 1995		2.00%		07/01/25	(b)		1,000,000		1,016,600
Private Colleges & Universities Auth
RB (Mercer Univ) Series 2012C		5.00%		10/01/17			450,000		491,432

									4,333,672

HAWAII 0.9%
Hawaii
GO Bonds Series 2013EH		5.00%		08/01/20			3,000,000		3,612,960

18 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Hawaii State Housing Finance & Development Corp
S/F Mortgage Purchase RB Series 2011B		4.50%		01/01/26	(b)		1,940,000		2,092,135

									5,705,095

IDAHO 1.0%
Nampa SD No. 131
GO Refunding Bonds Series 2011B		3.50%		08/15/19	(a)(e)		1,535,000		1,693,274
GO Refunding Bonds Series 2011B		4.00%		08/15/21	(a)(e)		1,885,000		2,130,578
GO Refunding Bonds Series 2011B		4.00%		08/15/22	(a)(e)		1,000,000		1,129,860
Univ of Idaho
General RB Series 2014		5.00%		04/01/21			350,000		417,560
General RB Series 2014		5.00%		04/01/24	(b)		200,000		237,174
General RB Series 2014		5.00%		04/01/26	(b)		300,000		351,267
General RB Series 2014		5.25%		04/01/39	(b)		500,000		570,915

									6,530,628

ILLINOIS 5.0%
Arlington Heights Park District
GO Refunding Bonds Series 2010B		2.00%		12/01/15			200,000		204,070
Chicago
GO Refunding Bonds Series 2008A		4.00%		01/01/20	(b)		300,000		311,535
GO Refunding Bonds Series 2014A		5.00%		01/01/23			1,920,000		2,105,530
GO Refunding Bonds Series 2014A		5.00%		01/01/25	(b)		1,000,000		1,084,950
Passenger Facility Charge Refunding RB (O’Hare) Series 2010D		5.00%		01/01/17	(e)		1,000,000		1,102,400
Passenger Facility Charge Refunding RB (O’Hare) Series 2010D		5.00%		01/01/18	(e)		1,200,000		1,361,664
Passenger Facility Charge Refunding RB (O’Hare) Series 2010D		5.00%		01/01/19	(e)		750,000		869,962
Passenger Facility Charge Refunding RB (O’Hare) Series 2012A		5.00%		01/01/31	(b)		4,950,000		5,492,569
Chicago Park District
LT GO Refunding Bonds Series 2014D		5.00%		01/01/21	(d)		1,000,000		1,172,860
Illinois
GO Bonds Series March 2012		5.00%		03/01/20			1,000,000		1,120,220
GO Bonds Series May 2014		5.00%		05/01/34	(b)		500,000		528,440
GO Bonds Series May 2014		5.00%		05/01/35	(b)		1,000,000		1,052,830
GO Refunding Bonds Series February 2010		5.00%		01/01/18			2,325,000		2,563,010
GO Refunding Bonds Series June 2006		5.00%		01/01/19			1,220,000		1,360,861
Sales Tax Jr Obligation Bonds Series June 2010		5.00%		06/15/20			400,000		474,244
Illinois Finance Auth
RB (Ascension Health Alliance) Series 2012E2		5.00%		11/15/42	(b)		1,300,000		1,449,630
Kane McHenry Cook & DeKalb Cntys Community Unit SD No. 300
GO Refunding Bonds Series 2013		5.25%		01/01/31	(b)		4,940,000		5,577,458
Univ of Illinois
Health Services Facilities System RB Series 2013		6.00%		10/01/30	(b)		3,085,000		3,641,380

									31,473,613

INDIANA 2.3%
Indiana Finance Auth
Educational Facilities Refunding RB (Butler Univ) Series 2012A		5.00%		02/01/22			700,000		805,910
Educational Facilities Refunding RB (Butler Univ) Series 2012A		5.00%		02/01/24	(b)		1,940,000		2,194,315
Hospital RB (King’s Daughters’ Health) Series 2010		4.50%		08/15/15			1,370,000		1,407,538
RB (Community Foundation of Northwest IN) Series 2012		5.00%		03/01/16			400,000		423,748
RB (Community Foundation of Northwest IN) Series 2012		5.00%		03/01/17			480,000		523,944
RB (Community Foundation of Northwest IN) Series 2012		5.00%		03/01/18			1,000,000		1,116,940
RB (Community Foundation of Northwest IN) Series 2012		5.00%		03/01/19			1,000,000		1,134,220
State Revolving Fund Refunding Bonds Series 2010A		5.00%		02/01/19			945,000		1,109,732
Indiana Health Facility Financing Auth
Sub RB (Ascension Health) Series 2005A5		2.00%		11/01/27	(b)		1,000,000		1,036,640
Jasper City Hospital Auth
Refunding RB (Memorial Hospital & Health Care) Series 2013		5.75%		11/01/32	(b)		4,000,000		4,589,040

									14,342,027

See financial notes 19

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)

IOWA 0.1%
Iowa
Special Obligation Bonds Series 2010		5.00%		06/15/25	(b)		765,000		900,596

KANSAS 0.3%
Butler Cnty USD
GO Refunding Bonds Series 2014		4.00%		09/01/18	(d)		500,000		557,590
GO Refunding Bonds Series 2014		4.00%		09/01/22	(d)		500,000		561,755
GO Refunding Bonds Series 2014		4.00%		09/01/23	(b)(d)		200,000		221,108
Kansas Development Finance Auth
Hospital RB (Adventist Health/Sunbelt) Series 2009D		5.00%		11/15/14			50,000		50,509
Hospital RB (Adventist Health/Sunbelt) Series 2009D		5.00%		11/15/15			185,000		195,445
Olathe
Health Facilities RB (Olathe Medical Center) Series 2012A		4.00%		09/01/20			115,000		126,992
Health Facilities RB (Olathe Medical Center) Series 2012A		4.00%		09/01/21			220,000		242,123

									1,955,522

KENTUCKY 0.4%
Kentucky Economic Development Finance Auth
Hospital RB (Baptist Healthcare) Series 2009A		5.00%		08/15/18			750,000		856,575
Kentucky State Property & Buildings Commission
Refunding RB Series A		5.00%		08/01/20			1,210,000		1,433,656

									2,290,231

LOUISIANA 0.2%
New Orleans
Sewerage Service Refunding RB Series 2014		5.00%		06/01/20			550,000		642,037
Sewerage Service Refunding RB Series 2014		5.00%		06/01/21			400,000		468,256
Sewerage Service Refunding RB Series 2014		5.00%		06/01/22			250,000		293,408

									1,403,701

MARYLAND 0.5%
Baltimore
Water RB Series 2013A		5.00%		07/01/18			500,000		578,715
Water RB Series 2013A		5.00%		07/01/19			750,000		886,095
Water RB Series 2013A		5.00%		07/01/20			150,000		179,477
Water RB Series 2013A		5.00%		07/01/21			450,000		544,693
Maryland Community Development Admin
Housing RB Series 1996A		5.88%		07/01/16	(b)		25,000		25,084
Maryland Health & Higher Educational Facilities Auth
RB (Frederick Memorial Hospital) Series 2012A		5.00%		07/01/20			335,000		386,623
RB (Frederick Memorial Hospital) Series 2012A		5.00%		07/01/27	(b)		450,000		503,100

									3,103,787

MASSACHUSETTS 0.7%
Chatham
GO Refunding Bonds		5.00%		07/01/16	(e)		100,000		108,583
GO Refunding Bonds		5.00%		07/01/17	(e)		245,000		275,777
Massachusetts Development Finance Agency
RB (New England Conservatory of Music) Series 2008		4.00%		07/01/15			325,000		335,247
RB (Tufts Medical Center) Series 2011I		5.00%		01/01/17			1,000,000		1,080,610
RB (Tufts Medical Center) Series 2011I		5.00%		01/01/18			885,000		978,775
Massachusetts School Building Auth
Sr Dedicated Sales Tax Refunding Bonds Series 2012B		4.00%		08/15/17			550,000		605,616
Massachusetts Turnpike Auth
Turnpike RB Series 1993A		5.00%		01/01/20	(g)		635,000		712,070

									4,096,678

20 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)

MICHIGAN 3.2%
Grand Rapids
Sanitary Sewer System Refunding RB Series 2010		5.00%		01/01/25			750,000		926,423
Sanitary Sewer System Refunding RB Series 2010		5.00%		01/01/26			520,000		647,358
Sanitary Sewer System Refunding RB Series 2010		5.00%		01/01/27			1,445,000		1,809,877
Sanitary Sewer System Refunding RB Series 2013		5.00%		01/01/24	(b)		250,000		301,263
Sanitary Sewer System Refunding RB Series 2013		5.00%		01/01/25	(b)		135,000		161,210
Karegnondi Water Auth
Water Supply System Bonds (Karegnondi Water Pipeline) Series 2014A		5.00%		11/01/24	(b)		1,695,000		1,981,506
Water Supply System Bonds (Karegnondi Water Pipeline) Series 2014A		5.00%		11/01/25	(b)		2,625,000		3,036,259
Michigan
Refunding Bonds Series 2009		5.00%		11/01/22	(b)		2,200,000		2,566,300
Michigan Finance Auth
Refunding RB (Trinity Health) Series 2010A		5.00%		12/01/15			1,000,000		1,058,390
Michigan State Hospital Finance Auth
Refunding RB (Trinity Health) Series 2008A1		5.25%		12/01/15			1,500,000		1,592,370
Troy
LT GO Bonds Series 2013		5.00%		11/01/22	(b)		225,000		269,687
LT GO Bonds Series 2013		5.00%		11/01/23	(b)		150,000		177,921
LT GO Bonds Series 2013		5.00%		11/01/25	(b)		200,000		233,852
LT GO Bonds Series 2013		5.00%		11/01/26	(b)		250,000		290,855
Wayne Cnty Airport Auth
Airport RB Series 2014B		5.00%		12/01/32	(b)		600,000		663,600
Airport RB Series 2014B		5.00%		12/01/33	(b)		825,000		910,973
Airport RB Series 2014B		5.00%		12/01/34	(b)		1,145,000		1,258,183
Western Townships Utilities Auth
LT GO Refunding Bonds Series 2012		4.00%		01/01/19			1,265,000		1,407,768
LT GO Refunding Bonds Series 2012		4.00%		01/01/20			700,000		783,916

									20,077,711

MINNESOTA 1.2%
Minnetonka ISD No. 276
GO Refunding Bonds Series 2013H		2.00%		02/01/17			300,000		311,061
GO Refunding Bonds Series 2013H		4.00%		02/01/22			960,000		1,101,303
Olmsted Cnty
GO Refunding Bonds Series 2012A		4.00%		02/01/20			1,765,000		2,019,566
Shakopee ISD No. 720
GO Refunding Bonds Series 2012A		4.00%		02/01/19			790,000		891,033
GO Refunding Bonds Series 2012A		5.00%		02/01/21			1,000,000		1,205,340
St. Paul Port Authority
Lease Refunding RB Series 2013-3		5.00%		12/01/24	(b)		540,000		661,030
Univ of Minnesota
GO Bonds Series 2011D		5.00%		12/01/20			220,000		267,282
GO Bonds Series 2011D		5.00%		12/01/21			425,000		521,611
GO Bonds Series 2013A		4.00%		02/01/20			595,000		679,811

									7,658,037

MISSISSIPPI 1.5%
Mississippi Development Bank
Special Obligation Bonds (Jackson Water & Sewer) Series 2013		6.88%		12/01/40	(b)		4,250,000		5,630,782
Special Obligation Refunding Bonds (Jackson Public SD) Series 2012A		5.00%		04/01/15			250,000		256,185
Special Obligation Refunding Bonds (Jackson Public SD) Series 2012A		5.00%		04/01/16			400,000		425,156
Special Obligation Refunding Bonds (Jackson Public SD) Series 2012A		5.00%		04/01/17			50,000		54,581
Special Obligation Refunding Bonds (Jackson Public SD) Series 2012A		5.00%		04/01/28	(b)		950,000		1,070,280
Mississippi Home Corp
Homeownership Mortgage RB Series 2011A		4.50%		06/01/25	(b)		1,725,000		1,868,917

									9,305,901

MISSOURI 1.4%
Boone Cnty
Hospital Refunding RB (Boone Hospital Center) Series 2012		4.00%		08/01/18			400,000		437,040

See financial notes 21

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Missouri Health & Educational Facilities Auth
RB (St. Louis College of Pharmacy) Series 2013		5.00%		05/01/18			1,200,000		1,344,564
Sr Living Facilities RB (Lutheran Sr Services) Series 2014A		5.00%		02/01/21			565,000		652,202
Sr Living Facilities RB (Lutheran Sr Services) Series 2014A		5.00%		02/01/22			540,000		625,045
Sr Living Facilities RB (Lutheran Sr Services) Series 2014A		5.00%		02/01/23			585,000		672,931
Sr Living Facilities RB (Lutheran Sr Services) Series 2014A		5.00%		02/01/24			1,675,000		1,934,005
Sr Living Facilities RB (Lutheran Sr Services) Series 2014A		5.00%		02/01/25	(b)		1,760,000		2,008,970
St. Charles SD
GO Refunding Bonds Series 2011		4.00%		03/01/17	(a)		1,300,000		1,403,402

									9,078,159

NEBRASKA 0.8%
Nebraska Investment Finance Auth
S/F Housing RB Series 2013A		2.50%		09/01/34	(b)		1,500,000		1,558,050
S/F Housing RB Series 2013C		2.50%		03/01/35	(b)		2,045,000		2,108,947
S/F Housing RB Series 2013E		3.00%		03/01/43	(b)		900,000		940,896
Nebraska Public Power District
General RB Series 2010C		5.00%		01/01/19			250,000		292,295

									4,900,188

NEVADA 2.6%
Carson City
Hospital Refunding RB (Carson Tahoe Regional Healthcare) Series 2012		3.00%		09/01/14			550,000		550,071
Hospital Refunding RB (Carson Tahoe Regional Healthcare) Series 2012		4.00%		09/01/15			370,000		380,634
Hospital Refunding RB (Carson Tahoe Regional Healthcare) Series 2012		5.00%		09/01/18			1,265,000		1,420,557
Clark Cnty
Airport Passenger Facility Charge Sub Lien RB Series 2008A		5.00%		07/01/15	(e)		1,115,000		1,159,299
Airport System Jr Sub Lien Revenue Notes Series 2014B		5.00%		07/01/18			2,500,000		2,878,200
Airport System RB Sr Series 2010D		5.00%		07/01/17	(e)		1,000,000		1,121,700
Airport System RB Sr Series 2010D		5.00%		07/01/18	(e)		1,770,000		2,039,217
Nevada
Highway Improvement RB Series 2004		5.50%		12/01/18	(b)(g)		340,000		344,702
Nevada System of Higher Education
Univ RB Series 2011A		5.00%		07/01/18			5,375,000		6,230,055

									16,124,435

NEW HAMPSHIRE 0.5%
New Hampshire Health & Education Facilities Auth
RB (Dartmouth College) Series 2009		5.00%		06/01/19			180,000		213,201
RB (Dartmouth-Hitchcock Obligated Group) Series 2009		6.00%		08/01/38	(b)		400,000		449,652
New Hampshire HFA
S/F Mortgage Acquisition RB Series 2008E		6.63%		07/01/38	(b)		825,000		896,338
S/F Mortgage Acquisition RB Series 2011E		4.50%		01/01/28	(b)		1,220,000		1,299,605

									2,858,796

NEW JERSEY 4.1%
Cranbury Township
General Improvement Refunding Bonds		2.75%		12/01/15	(e)		430,000		443,502
General Improvement Refunding Bonds		3.00%		12/01/16			320,000		338,538
General Improvement Refunding Bonds		3.00%		12/01/17			285,000		306,281
General Improvement Refunding Bonds		4.00%		12/01/18			400,000		450,724
Gloucester Cnty Improvement Auth
Refunding RB Series 2012		4.00%		12/01/17			425,000		465,706
Refunding RB Series 2012		4.00%		12/01/18			465,000		516,322
Refunding RB Series 2012		4.00%		12/01/19			485,000		541,871
Refunding RB Series 2012		4.00%		12/01/20			510,000		569,833
Refunding RB Series 2012		4.00%		12/01/21			355,000		395,353
Refunding RB Series 2012		4.00%		12/01/22			480,000		536,362
Mercer Cnty Improvement Auth
Refunding RB Series 2011		4.00%		09/01/14			215,000		215,045
Refunding RB Series 2011		4.00%		09/01/15			1,000,000		1,037,690
Refunding RB Series 2011		4.00%		09/01/16			65,000		69,558

22 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Refunding RB Series 2011		4.00%		09/01/17			1,620,000		1,775,747
Middlesex Cnty
Refunding COP Series 2011		4.00%		06/15/20			900,000		1,002,429
Refunding COP Series 2011		4.00%		06/15/21			265,000		294,378
Middlesex Cnty Improvement Auth
Lease RB Series 2008		4.00%		12/15/15			415,000		435,543
Lease Refunding RB Series 2010		3.00%		07/01/16			225,000		235,814
RB Series 2011		3.00%		09/15/16			1,270,000		1,339,418
Refunding RB Series 2011		4.00%		09/15/21			625,000		715,937
Monmouth Cnty Improvement Auth
Governmental Loan RB Series 2008		5.25%		12/01/18			85,000		100,076
Morris Cnty Improvement Auth
County Guaranteed Bonds Series 2012A		3.00%		02/01/19			705,000		764,446
County Guaranteed Bonds Series 2012A		3.00%		02/01/20			695,000		753,449
New Jersey
COP Series 2009A		5.25%		06/15/29	(b)		50,000		54,695
New Jersey Building Auth
Refunding RB Series 2009B		4.00%		12/15/19			135,000		148,180
New Jersey Economic Development Auth
School Facilities Construction Refunding Bonds Series 2011GG		5.00%		09/01/16			920,000		999,506
School Facilities Construction Refunding Bonds Series 2011GG		5.00%		09/01/19			2,500,000		2,870,225
New Jersey Transportation Trust Fund Auth
Transportation System Bonds Series 2001C		5.50%		12/15/15			10,000		10,662
Transportation System Bonds Series 2011B		5.50%		06/15/31	(b)		100,000		115,892
New Jersey Turnpike Auth
RB Series 2012B		5.00%		01/01/25	(b)		2,400,000		2,844,072
Passaic Cnty
GO Refunding Bonds Series 2011		5.00%		05/01/17			4,180,000		4,648,954
GO Refunding Bonds Series 2012		4.00%		02/01/17			245,000		264,463
GO Refunding Bonds Series 2012		4.00%		02/01/19			500,000		556,830

									25,817,501

NEW MEXICO 0.3%
Bernalillo Cnty
GO Refunding Bonds Series 2010		4.00%		02/01/19			375,000		423,450
GO Refunding Bonds Series 2010		4.00%		02/01/20			105,000		119,543
New Mexico Hospital Equipment Loan Council
Hospital System RB (Presbyterian Healthcare) Series 2008A		5.25%		08/01/15			500,000		522,235
Hospital System RB (Presbyterian Healthcare) Series 2008A		5.50%		08/01/16			10,000		10,929
Santa Fe
Gross Receipt Tax Improvement & Refunding RB Series 2012A		4.00%		06/01/18			660,000		737,365

									1,813,522

NEW YORK 13.2%
Buffalo
School Refunding Bonds Series 2012E		3.00%		02/01/15			250,000		253,010
School Refunding Bonds Series 2012E		3.00%		02/01/16			175,000		181,598
Dutchess County Local Development Corp
RB (Health Quest Systems) Series 2014A		5.00%		07/01/22			135,000		159,521
RB (Health Quest Systems) Series 2014A		4.00%		07/01/23			160,000		176,722
RB (Health Quest Systems) Series 2014A		5.00%		07/01/24			150,000		178,773
RB (Health Quest Systems) Series 2014A		5.00%		07/01/25	(b)		125,000		146,160
RB (Health Quest Systems) Series 2014A		5.00%		07/01/34	(b)		250,000		276,153
RB (Health Quest Systems) Series 2014A		5.00%		07/01/44	(b)		750,000		814,920
Hempstead Local Development Corp
RB (Hofstra Univ) Series 2013		5.00%		07/01/24	(b)		1,420,000		1,668,543
RB (Hofstra Univ) Series 2013		5.00%		07/01/29	(b)		3,175,000		3,602,672
Lake Success
GO Refunding Bonds Series 2010B		4.00%		12/01/18			210,000		236,067
GO Refunding Bonds Series 2010B		4.00%		12/01/19			125,000		141,929
Metropolitan Transportation Auth
Dedicated Tax Fund Refunding Bonds Series 2008B2		5.00%		11/01/15			320,000		338,278
Transportation RB Series 2014B		5.00%		11/15/23			1,000,000		1,219,930
Transportation RB Series 2014B		5.00%		11/15/24	(b)		1,330,000		1,622,135

See financial notes 23

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Transportation Refunding RB Series 2012F		5.00%		11/15/18			3,550,000		4,135,714
Nassau Cnty Interim Finance Auth
Sales Tax Secured Bonds Series 2009A		5.00%		11/15/18			145,000		169,840
Nassau Cnty Local Economic Assistance Corp
RB (Catholic Health Services Long Island) Series 2014		5.00%		07/01/21			500,000		583,430
RB (Catholic Health Services Long Island) Series 2014		5.00%		07/01/23			535,000		625,447
RB (Catholic Health Services Long Island) Series 2014		5.00%		07/01/24			425,000		497,335
RB (Catholic Health Services Long Island) Series 2014		5.00%		07/01/25	(b)		1,000,000		1,158,200
RB (Catholic Health Services Long Island) Series 2014		5.00%		07/01/26	(b)		250,000		287,265
New York City
GO Bonds Fiscal 2006 Series F1		5.00%		09/01/17	(b)(g)		3,035,000		3,182,774
GO Bonds Fiscal 2006 Series F1		5.00%		09/01/17	(b)		55,000		57,665
GO Bonds Fiscal 2014 Series B		5.00%		08/01/22			1,700,000		2,052,087
GO Bonds Fiscal 2014 Series I1		5.00%		03/01/22			4,000,000		4,801,240
GO Bonds Fiscal 2014 Series I1		5.00%		03/01/23			2,000,000		2,418,520
GO Bonds Fiscal 2014 Series J		5.00%		08/01/20			3,000,000		3,575,040
New York City Housing Development Corp
M/F Housing RB Series 2012H		0.95%		05/01/16			425,000		427,414
New York City Municipal Water Finance Auth
Water & Sewer System RB Fiscal 2012 Series DD		4.00%		06/15/18	(b)		2,500,000		2,693,125
Water & Sewer System RB Fiscal 2014 Series CC2		5.00%		06/15/19	(b)		1,400,000		1,603,896
New York City Transitional Finance Auth
Future Tax Secured Sub Bonds Fiscal 2014 Series B1		5.00%		11/01/23			3,000,000		3,702,090
Future Tax Secured Sub RB Fiscal 2010 Series C1		4.00%		08/01/16			3,000,000		3,213,870
Future Tax Secured Sub RB Fiscal 2010 Series I2		5.00%		11/01/18			900,000		1,052,685
Future Tax Secured Sub RB Fiscal 2010 Series I2		5.00%		11/01/20	(b)		200,000		239,178
Future Tax Secured Sub RB Fiscal 2011 Series D1		5.00%		02/01/35	(b)		5,000,000		5,693,400
New York State Dormitory Auth
Master BOCES Program Lease RB (Oneida Herkimer Madison) Series 2008		5.25%		08/15/16			650,000		708,305
RB (Cornell Univ) Series 1990B		5.00%		07/01/18			80,000		92,627
RB (New York Univ Hospitals) Series 2011A		5.00%		07/01/15			1,000,000		1,040,380
RB (New York Univ Hospitals) Series 2011A		5.00%		07/01/19			1,370,000		1,590,186
State Personal Income Tax RB Series 2009A		5.00%		02/15/18			3,000,000		3,439,800
New York State Thruway Auth
General RB Series I		5.00%		01/01/20			500,000		589,315
General RB Series I		5.00%		01/01/21			1,000,000		1,191,860
General Revenue Jr Obligations Series 2013A		4.00%		05/01/19			1,000,000		1,111,050
General Revenue Jr Obligations Series 2013A		5.00%		05/01/19			2,500,000		2,918,200
Local Highway & Bridge Service Contract Bonds Series 2009		4.00%		04/01/16			505,000		533,931
Local Highway & Bridge Service Contract Bonds Series 2009		5.00%		04/01/16			1,540,000		1,652,589
Local Highway & Bridge Service Contract Bonds Series 2009		4.00%		04/01/17			700,000		761,999
New York State Tobacco Settlement Financing Corp
Asset-Backed RB Series 2013A		5.00%		06/01/21	(b)		6,250,000		6,744,000
New York State Urban Development Corp
State Personal Income Tax RB Series 2009A1		5.00%		12/15/17			570,000		650,661
Niagara Frontier Transportation Auth
Airport Refunding RB Series 2014B		4.00%		04/01/16	(d)		500,000		527,700
Airport Refunding RB Series 2014B		5.00%		04/01/17	(d)		600,000		664,440
Airport Refunding RB Series 2014B		4.00%		04/01/18	(d)		450,000		494,883
Airport Refunding RB Series 2014B		5.00%		04/01/19	(d)		400,000		462,920
North Syracuse CSD
GO Refunding Bonds Series 2012B		4.00%		06/15/17			800,000		870,664
Scarsdale UFSD
GO Refunding Bonds 2012		5.00%		02/01/18			350,000		400,134
GO Refunding Bonds 2012		4.00%		02/01/19			260,000		293,231
Westchester Cnty Local Development Corp
RB (Pace Univ) Series 2014A		5.00%		05/01/34	(b)		2,550,000		2,704,607

									82,630,108

NORTH CAROLINA 1.7%
Durham Cnty
COP Series 2009A		4.00%		06/01/18			1,610,000		1,798,096
North Carolina Housing Finance Agency
Home Ownership RB Series 2009-2		4.25%		01/01/28	(b)		1,330,000		1,399,665

24 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
North Carolina Medical Care Commission
Health Care Facilities Refunding RB (Blue Ridge) Series 2010A		4.00%		01/01/15			915,000		924,727
Health Care Facilities Refunding RB (WakeMed) Series 2012A		5.00%		10/01/21			5,000,000		5,906,100
Wake Cnty
GO Refunding Bonds Series 2009D		4.00%		02/01/17			525,000		570,460

									10,599,048

OHIO 1.8%
Butler Cnty
Hospital Facilities RB (UC Health) Series 2010		3.00%		11/01/14			585,000		587,141
Hospital Facilities RB (UC Health) Series 2010		3.00%		11/01/15			580,000		593,021
Cleveland Heights-Univ Heights City SD
ULT GO Bonds Series 2014		0.00%		12/01/23	(f)		250,000		194,125
ULT GO Bonds Series 2014		0.00%		12/01/24	(f)		400,000		298,532
ULT GO Bonds Series 2014		0.00%		12/01/25	(f)		550,000		392,320
Columbus
ULT GO Bonds Series 2011A		5.00%		07/01/18			2,000,000		2,321,460
Hamilton Cnty
Hospital Facilities RB (UC Health) Series 2014		5.00%		02/01/23			500,000		587,365
Hospital Facilities RB (UC Health) Series 2014		5.00%		02/01/24			500,000		588,490
Hospital Facilities RB (UC Health) Series 2014		5.00%		02/01/25	(b)		1,000,000		1,165,290
Toledo
GO Refunding Bonds Series 2012		3.00%		12/01/15			1,810,000		1,869,748
GO Refunding Bonds Series 2012		3.00%		12/01/16			240,000		252,523
Univ of Toledo
General Receipts Bonds Series 2011B		5.00%		06/01/18			1,100,000		1,256,871
General Receipts Bonds Series 2011B		5.00%		06/01/30	(b)		805,000		891,079
Westerville
GO LT Bonds Series 2010		4.00%		12/01/18			365,000		411,286

									11,409,251

OKLAHOMA 0.1%
Grady Cnty School Finance Auth
Educational Facilities Lease RB (Bridge Creek Public Schools) Series 2008		5.00%		09/01/16	(e)		545,000		590,388

OREGON 2.3%
Forest Grove
Campus Refunding RB (Pacific Univ) Series 2014A		5.25%		05/01/34	(b)		1,625,000		1,828,190
Campus Refunding RB (Pacific Univ) Series 2014A		5.00%		05/01/40	(b)		950,000		1,038,094
Gladstone SD No. 115
GO Refunding Bonds Series 2014		0.00%		06/15/25	(a)(f)		1,900,000		1,369,045
GO Refunding Bonds Series 2014		0.00%		06/15/26	(a)(f)		2,490,000		1,718,274
Jefferson Cnty SD No. 509J
GO Refunding Bonds Series 2013		4.00%		06/15/20	(a)		1,475,000		1,673,181
Lane Community College
GO Bonds Series 2012		4.00%		06/15/20	(a)		2,395,000		2,732,479
Oregon State Facilities Auth
Refunding RB (Legacy Health) Series 2011A		5.25%		05/01/21			2,000,000		2,416,640
Refunding RB (PeaceHealth) Series 2014A		5.00%		11/15/25	(b)		1,045,000		1,243,916
Pendleton SD No. 16R
GO Bonds Series 2014B		0.00%		06/15/25	(a)(f)		915,000		689,562

									14,709,381

PENNSYLVANIA 3.5%
Allegheny Cnty Higher Education Building Auth
RB (Duquesne Univ) Series 2013A		3.00%		03/01/15			360,000		365,188
RB (Duquesne Univ) Series 2013A		4.00%		03/01/16			600,000		632,160
RB (Duquesne Univ) Series 2013A		4.00%		03/01/17			500,000		541,245
RB (Duquesne Univ) Series 2013A		4.00%		03/01/20			1,455,000		1,624,406
Pennsylvania
COP Series 2010A		3.00%		04/01/18			245,000		261,248
COP Series 2010A		3.05%		10/01/18			1,530,000		1,640,053

See financial notes 25

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
COP Series 2010A		3.30%		10/01/19			705,000		764,227
COP Series 2010A		3.50%		04/01/20			365,000		397,646
Pennsylvania Economic Development Financing Auth
Unemployment Compensation RB Series 2012B		5.00%		01/01/23	(b)		2,500,000		2,647,650
Unemployment Compensation RB Series 2012B		5.00%		07/01/23	(b)		1,900,000		1,975,259
Pennsylvania Higher Educational Facilities Auth
RB (Temple Univ) First Series 2012		3.00%		04/01/15			660,000		670,949
RB (Temple Univ) First Series 2012		4.00%		04/01/16			250,000		264,178
RB (Temple Univ) First Series 2012		4.00%		04/01/17			410,000		444,489
RB (Temple Univ) First Series 2012		4.00%		04/01/18			95,000		104,757
Pennsylvania Intergovernmental Coop Auth
Special Tax Refunding RB (Philadelphia) Series 2010		5.00%		06/15/18			2,000,000		2,309,700
Special Tax Refunding RB (Philadelphia) Series 2010		5.00%		06/15/20			1,070,000		1,276,082
Philadelphia
GO Refunding Bonds Series 2008A		5.25%		12/15/19	(b)		2,105,000		2,432,580
Pittsburgh
GO Bonds Series 2014		5.00%		09/01/23			550,000		664,945
GO Bonds Series 2014		5.00%		09/01/31	(b)		1,320,000		1,519,003
GO Bonds Series 2014		5.00%		09/01/32	(b)		1,000,000		1,148,000

									21,683,765

SOUTH CAROLINA 0.7%
Beaufort-Jasper Water & Sewer Auth
Refunding RB Series 2010B		5.00%		03/01/22			95,000		115,725
Refunding RB Series 2010B		5.00%		03/01/23			495,000		609,192
Charleston Educational Excellence Financing Corporation
Installment Purchase Refunding RB Series 2013B		5.00%		12/01/22			1,050,000		1,281,283
Installment Purchase Refunding RB Series 2013B		5.00%		12/01/24	(b)		1,000,000		1,218,460
South Carolina Educational Facilities Auth
Educational Facilities RB (Wofford College) Series 2007B		2.00%		04/01/27	(b)		1,000,000		1,005,040

									4,229,700

SOUTH DAKOTA 0.2%
South Dakota Building Auth
RB Series 2011		3.00%		06/01/15			620,000		633,652
RB Series 2011		3.00%		06/01/16			165,000		172,768
RB Series 2011		4.00%		06/01/21	(b)		55,000		60,182
South Dakota Health & Educational Facilities Auth
RB (Sanford Health) Series 2009		5.00%		11/01/17			100,000		112,713

									979,315

TENNESSEE 0.8%
Franklin Cnty Health & Educational Facilities Board
Educational Facilities Refunding and Improvement RB (Univ of the South) Series 2014		3.00%		09/01/21	(d)		250,000		267,025
Educational Facilities Refunding and Improvement RB (Univ of the South) Series 2014		4.00%		09/01/25	(b)(d)		400,000		436,256
Educational Facilities Refunding and Improvement RB (Univ of the South) Series 2014		5.00%		09/01/28	(b)(d)		225,000		259,843
Educational Facilities Refunding and Improvement RB (Univ of the South) Series 2014		5.00%		09/01/29	(b)(d)		200,000		229,276
Educational Facilities Refunding and Improvement RB (Univ of the South) Series 2014		5.00%		09/01/30	(b)(d)		350,000		399,889
Memphis
Electric System Sub Refunding RB Series 2010		2.50%		12/01/14			70,000		70,440
Electric System Sub Refunding RB Series 2010		5.00%		12/01/14			900,000		911,403
Refunding Bonds Series 2011		5.00%		05/01/20			2,000,000		2,396,320
Metro Government of Nashville & Davidson Cnty Health & Educational Facilities Board
RB (Belmont Univ) Series 2012		4.00%		11/01/21			100,000		108,647

									5,079,099

26 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)

TEXAS 6.9%
Arlington ISD
ULT GO Bonds Series 2011A		5.00%		02/15/36	(a)(b)(e)		3,650,000		4,183,265
Burkburnett ISD
ULT Refunding Bonds Series 2012		2.00%		02/15/18	(a)(b)		250,000		250,277
Centerville ISD
ULT GO Bonds Series 2014		5.00%		08/15/39	(a)(b)(d)		780,000		869,131
ULT GO Bonds Series 2014		5.00%		08/15/44	(a)(b)(d)		1,315,000		1,456,599
Collin Cnty
LT & Refunding Bonds Series 2009A		4.00%		02/15/19	(e)		695,000		787,866
Dallas-Fort Worth
Airport Jt RB Series 2014C		5.00%		11/01/22			250,000		300,702
Airport Jt RB Series 2014C		5.00%		11/01/23			250,000		302,605
Airport Refunding RB Series 2012B		5.00%		11/01/22	(b)		1,530,000		1,808,032
Airport Refunding RB Series 2013D		5.25%		11/01/25	(b)		650,000		780,286
Denver City ISD
ULT Refunding Bonds Series 2012		2.00%		02/15/16	(a)(b)		580,000		580,812
ULT Refunding Bonds Series 2012		2.00%		02/15/17	(a)(b)		1,000,000		1,001,220
ULT Refunding Bonds Series 2012		2.00%		02/15/18	(a)(b)		1,220,000		1,221,244
ULT Refunding Bonds Series 2012		2.00%		02/15/19	(a)(b)		1,775,000		1,776,313
Falls City ISD
ULT GO Bonds Series 2014		5.00%		08/15/30	(a)(b)		930,000		1,080,009
ULT GO Bonds Series 2014		5.00%		08/15/32	(a)(b)		1,500,000		1,698,660
ULT GO Bonds Series 2014		5.00%		08/15/34	(a)(b)		830,000		906,227
Fort Bend Cnty
LT & Refunding Bonds Series 2009		5.00%		03/01/17			100,000		111,224
Fort Worth
Tax & Parking Revenue Bonds Series 2009		4.45%		03/01/18	(c)		1,430,000		1,541,240
Garland ISD
ULT Refunding Bonds Series 2012A		3.00%		02/15/23	(a)(b)		1,525,000		1,528,248
Gonzales ISD
ULT GO Bonds Series 2014		5.00%		02/01/23	(a)		205,000		249,401
Houston Community College System
LT Refunding Bonds Series 2011		5.00%		02/15/17			500,000		555,260
LT Refunding Bonds Series 2011		5.00%		02/15/18			1,000,000		1,146,140
Klein ISD
ULT Refunding Bonds Series 2009A		4.00%		08/01/17			560,000		614,611
Loop ISD
ULT GO Bonds Series 2012		2.00%		02/15/18	(a)(b)		350,000		350,357
Lubbock Health Facilities Development Corp
Refunding RB (St. Joseph Health) Series 2008B		5.00%		07/01/20			1,750,000		2,041,620
Midland ISD
ULT Refunding Bonds Series 2011		5.00%		02/15/18	(a)		115,000		131,859
ULT Refunding Bonds Series 2011		4.00%		02/15/20	(a)		860,000		980,942
ULT Refunding Bonds Series 2012		4.00%		02/15/20	(a)		150,000		170,756
North Texas Tollway Auth
System RB Series 2011A		5.00%		09/01/21			500,000		605,410
Plano
GO Refunding RB Series 2011		5.00%		09/01/21			650,000		789,899
Reagan Hospital District
LT & RB Series 2014A		4.50%		02/01/24			1,065,000		1,139,656
LT & RB Series 2014A		5.00%		02/01/29	(b)		2,000,000		2,112,220
Rockwall ISD
ULT Refunding Bonds Series 2012		5.00%		02/15/20	(a)		185,000		220,733
ULT Refunding Bonds Series 2012		5.00%		02/15/22	(a)(b)		450,000		544,500
San Antonio
Electric & Gas Systems Refunding RB Series 2009D		5.00%		02/01/17			880,000		976,413
Sienna Plantation Levee Improvement District
ULT Levee Improvement Refunding Bonds Series 2014		4.00%		09/01/24	(b)		500,000		555,445
Sunnyvale ISD
ULT GO Bonds Series 2011		5.00%		02/15/19	(a)		195,000		228,554
ULT GO Bonds Series 2011		3.00%		02/15/20	(a)		110,000		119,323
ULT GO Bonds Series 2011		5.00%		02/15/22	(a)(b)		120,000		142,660
Tarrant Cnty Cultural Education Facilities Finance Corp
Hospital RB (Hendrick Medical Center) Series 2013		3.00%		09/01/14			370,000		370,055

See financial notes 27

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Hospital RB (Hendrick Medical Center) Series 2013		4.00%		09/01/16			440,000		467,377
Hospital RB (Hendrick Medical Center) Series 2013		5.00%		09/01/21			1,200,000		1,384,188
Tatum ISD
ULT GO Bonds Series 2012		5.00%		02/15/23	(a)(b)		400,000		465,632
Texas State Affordable Housing Corp
S/F Mortgage RB Series 2011B		4.45%		09/01/28	(b)		645,000		686,532
Tomball ISD
ULT GO Bonds Series 2011		5.00%		02/15/21	(a)		150,000		181,009
Travis Cnty
LT Refunding Bonds Series 2009		5.00%		03/01/18			1,000,000		1,146,860
Williamson Cnty
LT GO Refunding Bonds Series 2011		5.00%		02/15/21			1,000,000		1,210,150
Wink Loving ISD
ULT GO Bonds Series 2012		3.00%		02/15/15	(a)		700,000		709,478
ULT GO Bonds Series 2012		3.00%		02/15/17	(a)		450,000		477,882

									42,958,882

UTAH 0.4%
Riverton
RB (IHC Health Services) Series 2009		5.00%		08/15/15			950,000		993,576
Salt Lake Cnty
Sales Tax Refunding RB Series 2010A		3.00%		02/01/15			725,000		733,823
Sales Tax Refunding RB Series 2010A		3.00%		02/01/16			250,000		259,625
West Valley City
Sales Tax Refunding RB Series 2013A		2.00%		07/15/16			410,000		421,173

									2,408,197

VERMONT 0.6%
Vermont HFA
Mortgage RB Series 2011A		4.50%		02/01/26	(b)		3,475,000		3,748,517

VIRGINIA 1.3%
Chesterfield Cnty Economic Development Auth
Public Facility Refunding RB Series 2010A		4.00%		01/01/19	(e)		455,000		508,804
Henrico Cnty
GO Refunding Bonds Series 2010		5.00%		07/15/17			500,000		564,165
Metropolitan Washington Airports Auth
Airport System RB Series 2009B		5.00%		10/01/18	(a)(e)		825,000		954,896
Second Sr Lien Refunding RB (Dulles Metrorail) Series 2014A		5.00%		10/01/53	(b)		3,000,000		3,151,230
Prince William Cnty IDA
RB (George Mason Univ) Series 2011AA		5.00%		09/01/17			345,000		383,457
RB (George Mason Univ) Series 2011AA		4.00%		09/01/20			275,000		303,322
RB (George Mason Univ) Series 2011AA		5.50%		09/01/34	(b)		220,000		254,263
Richmond
GO Bonds Series 2009A		4.00%		07/15/16			85,000		90,919
Richmond Metropolitan Auth
Expressway Refunding & RB Series 1998		5.25%		07/15/22	(g)		1,400,000		1,659,854
Virginia Housing Development Auth
Homeownership Mortgage Bonds Series 2010A		4.00%		03/01/20	(b)		175,000		194,063

									8,064,973

WASHINGTON 2.2%
Camas SD No. 117
ULT GO Refunding Bonds 2012		5.00%		12/01/17	(a)		2,850,000		3,245,694
Energy Northwest
Electric Refunding RB (Project No. 3) Series 2009A		5.25%		07/01/18			1,000,000		1,167,270
Naches Valley SD No. JT3
ULT GO Bonds Series 2014		5.00%		12/01/22	(a)		650,000		787,592
Ocosta SD No. 172
ULT GO Bonds 2013		3.13%		12/01/20	(a)		65,000		70,012
ULT GO Bonds 2013		5.00%		12/01/23	(a)		390,000		475,987

28 See financial notes

Schwab Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Washington
GO Bonds Series 1990A		6.75%		02/01/15			225,000		230,769
Washington Health Care Facilities Auth
RB (Providence Health & Services) Series 2012A		5.00%		10/01/22			1,800,000		2,148,750
Washougal SD No. 112-6
ULT GO Refunding Bonds 2012		5.00%		12/01/15	(a)		830,000		880,090
ULT GO Refunding Bonds 2012		5.00%		12/01/18	(a)		2,390,000		2,791,066
Whidbey Island Public Hospital District
ULT GO Bonds 2013		5.00%		12/01/19			745,000		857,547
ULT GO Bonds 2013		5.00%		12/01/20			720,000		833,652
ULT GO Bonds 2013		5.00%		12/01/22			510,000		590,876

									14,079,305

WISCONSIN 0.6%
Wisconsin Health & Educational Facilities Auth
Health Facilities RB (UnityPoint Health) Series 2014A		5.00%		12/01/21			1,125,000		1,331,201
Health Facilities RB (UnityPoint Health) Series 2014A		5.00%		12/01/24	(b)		1,000,000		1,198,100
RB (Aurora Health Care) Series 2009B2		5.13%		08/15/27	(b)		1,250,000		1,361,537
RB (Children’s Hospital of Wisconsin) Series 2008B		4.20%		08/15/18			150,000		168,428

									4,059,266

Total Fixed-Rate Obligations
(Cost $552,339,356)									583,905,578




Variable-Rate Obligations 8.1% of net assets

CALIFORNIA 0.6%
California
GO Bonds Series 2013C		0.60%		12/01/28	(b)		3,600,000		3,618,468

COLORADO 0.1%
Colorado Health Facilities Auth
RB (Catholic Health Initiatives) Series 2006C7		0.25%		03/01/16	(a)(b)(c)		700,000		700,000

CONNECTICUT 2.0%
Connecticut
GO Bonds Series 2011A		0.97%		05/15/18			5,275,000		5,368,104
GO Bonds Series 2011C		1.15%		05/15/19			5,000,000		5,117,500
GO Bonds Series 2012A		1.30%		04/15/20	(e)		1,000,000		1,026,390
GO Bonds Series 2012D		0.82%		09/15/18			1,000,000		1,011,430

									12,523,424

DISTRICT OF COLUMBIA 0.5%
District of Columbia
Income Tax Secured Refunding RB Series 2011E		0.80%		12/01/17	(b)		3,240,000		3,249,590

LOUISIANA 1.5%
Louisiana Public Facilities Auth
RB (Dynamic Fuels) Series 2008		0.03%		10/01/33	(a)(b)		9,600,000		9,600,000

MASSACHUSETTS 1.5%
Massachusetts
GO Bonds Consolidated Loan Series 2006A		0.03%		03/01/26	(a)(b)		4,500,000		4,500,000
Massachusetts Development Finance Agency
RB (Boston Univ) Series U1		0.63%		10/01/40	(b)		1,000,000		1,000,040
RB (Boston Univ) Series U6E		0.60%		10/01/42	(b)		4,000,000		4,008,480

									9,508,520

See financial notes 29

Schwab Tax-Free Bond Fund

Portfolio Holdings continued

Issuer

Face Amount

Value

Type of Security, Series

Rate

Maturity

($)

NEW JERSEY 0.8%

New Jersey Economic Development Auth

School Facilities Construction Refunding Notes Series 2013I

1.65%

03/01/28

(b)

5,000,000

5,080,550

NEW YORK 0.4%

New York City

GO Bonds Fiscal 1993 Series E2

0.04%

08/01/20

(a)(b)

2,500,000

2,500,000

PENNSYLVANIA 0.5%

Geisinger Auth

Health System RB (Geisinger Health) Series 2011C

0.03%

06/01/41

(a)(b)

2,800,000

2,800,000

TEXAS 0.2%

Harris Cnty Health Facilities Development Corp

RB (Methodist Hospital) Series 2008A2

0.04%

12/01/41

(b)

1,000,000

1,000,000

Total Variable-Rate Obligations

(Cost $50,215,000)

50,580,552

End of Investments.

At 08/31/14, the tax basis cost of the fund’s investments was $602,558,176 and the unrealized appreciation and depreciation were $31,934,546 and ($6,592), respectively, with a net unrealized appreciation of $31,927,954.


(a)		Credit-enhanced or liquidity-enhanced.
(b)		The effective maturity may be shorter than the final maturity shown because the security is subject to a put, demand or call feature.
(c)		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $2,241,240 or 0.4% of net assets.
(d)		Security or a portion of the security purchased on a delayed delivery or when-issued basis.
(e)		All or a portion of this security is designated as collateral for delayed-delivery securities.
(f)		Zero coupon bond.
(g)		Refunded bond.


CCD —		Community college district
COP —		Certificate of participation
CSD —		Central school district
GO —		General obligation
HFA —		Housing finance agency/authority
IDA —		Industrial development agency/authority
ISD —		Independent school district
LT —		Limited Tax
M/F —		Multi-family
RB —		Revenue bond
SD —		School district
S/F —		Single-family
UFSD —		Union free school district
UHSD —		Union high school district
ULT —		Unlimited Tax
USD —		Unified school district

30 See financial notes

Schwab Tax-Free Bond Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$14,093,134			$15,806,790
Net realized gains		2,577,857			340,988
Net change in unrealized appreciation (depreciation)	+	29,009,632			(33,722,901	)

Increase (decrease) in net assets from operations		45,680,623			(17,575,123	)

Distributions to shareholders

Distributions from net investment income		(14,100,227	)		(15,796,789	)
Distributions from net realized gains	+	—			(9,852,011	)

Total distributions		($14,100,227	)		($25,648,800	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			13,575,225		$158,724,584			22,294,858		$266,874,048
Shares reinvested			724,546		8,491,616			1,375,164		16,434,059
Shares redeemed	+		(14,910,782	)	(173,514,019	)		(27,150,629	)	(321,651,789	)

Net transactions in fund shares			(611,011	)	($6,297,819	)		(3,480,607	)	($38,343,682	)

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			52,992,613		$601,937,839			56,473,220		$683,505,444
Total increase (decrease)	+		(611,011	)	25,282,577			(3,480,607	)	(81,567,605	)

End of period			52,381,602		$627,220,416			52,992,613		$601,937,839


Net investment income not yet distributed					$47,752					$47,752

34 See financial notes

Schwab California Tax-Free Bond Fund™

Financial Statements

Financial Highlights


	9/1/13–			9/1/12–			9/1/11–			9/1/10–			9/1/09–
	8/31/14			8/31/13			8/31/12			8/31/11			8/31/10


Per-Share Data ($)

Net asset value at beginning of period		11.49			12.31			11.77			11.94			11.30

Income (loss) from investment operations:
Net investment income (loss)		0.29			0.30			0.34			0.36			0.35
Net realized and unrealized gains (losses)		0.70			(0.59	)		0.56			(0.07	)		0.64

Total from investment operations		0.99			(0.29	)		0.90			0.29			0.99
Less distributions:
Distributions from net investment income		(0.29	)		(0.30	)		(0.34	)		(0.36	)		(0.35	)
Distributions from net realized gains		—			(0.23	)		(0.02	)		(0.10	)		—

Total distributions		(0.29	)		(0.53	)		(0.36	)		(0.46	)		(0.35	)

Net asset value at end of period		12.19			11.49			12.31			11.77			11.94

Total return (%)		8.74			(2.49	)		7.75			2.55			8.89

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.49			0.49			0.49			0.49			0.49
Gross operating expenses		0.60			0.59			0.59			0.59			0.59
Net investment income (loss)		2.47			2.46			2.84			3.12			2.99
Portfolio turnover rate		107			118			101			68			88
Net assets, end of period ($ x 1,000,000)		426			395			434			379			446

See financial notes 35

Schwab California Tax-Free Bond Fund

Portfolio Holdings as of August 31, 2014

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

Cost

Value

Holdings by Category

($)

.0%

Fixed-Rate Obligations

371,938,447

395,819,184

.4%

Variable-Rate Obligations

26,986,855

27,079,314

.4%

Total Investments

398,925,302

422,898,498

.6%

Other Assets and Liabilities, Net

2,706,053

100

.0%

Net Assets

425,604,551


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)

Fixed-Rate Obligations 93.0% of net assets

CALIFORNIA 93.0%
ABAG Finance Auth
RB (Casa de las Campanas) Series 2010		5.13%		09/01/20	(a)		3,500,000		3,952,725
RB (Sharp HealthCare) Series 2012A		5.00%		08/01/28	(b)		235,000		265,061
Refunding RB (Episcopal Sr Communities) Series 2012B		3.00%		07/01/15			410,000		417,282
Refunding RB (Episcopal Sr Communities) Series 2012B		3.00%		07/01/16			815,000		842,050
Refunding RB (Episcopal Sr Communities) Series 2012B		4.00%		07/01/17			1,580,000		1,680,725
Refunding RB (Episcopal Sr Communities) Series 2012B		5.00%		07/01/20			530,000		589,826
Refunding RB (Eskaton Properties) Series 2013		3.00%		11/15/15			1,175,000		1,203,458
Alameda Cnty Jt Powers Auth
Lease RB Series 2013A		5.25%		12/01/25	(b)		720,000		880,171
Lease RB Series 2013A		5.25%		12/01/26	(b)		775,000		936,208
Alameda Cnty Transportation Commission
LT Sales RB Series 2014		5.00%		03/01/20			800,000		962,936
LT Sales RB Series 2014		5.00%		03/01/21			500,000		610,710
Alameda Corridor Transportation Auth
Sr Lien Refunding RB Series 2013A		5.00%		10/01/20			450,000		538,056
Alhambra USD
Refunding GO Bonds Series 2012A		5.00%		08/01/22			435,000		527,037
Refunding GO Bonds Series 2012A		5.00%		08/01/24	(b)		675,000		800,206
Anaheim Public Financing Auth
Electric System RB Series 2011A		5.00%		10/01/25	(b)		2,000,000		2,320,080
Lease Refunding RB Series 2008		4.50%		08/01/17			115,000		127,411
Bay Area Toll Auth
Toll Bridge RB Series 2012F1		4.00%		04/01/18			600,000		672,786
Berkeley Joint Powers Financing Auth
Refunding Lease RB Series 2012		4.00%		10/01/16			750,000		805,043
Beverly Hills Public Finance Auth
Lease RB Series 2010A		4.00%		06/01/16			100,000		106,589
Beverly Hills USD
GO Bonds Series 2009		0.00%		08/01/26	(c)		2,830,000		2,019,403
Bret Harte UHSD
GO BAN 2012		3.00%		03/15/15			2,500,000		2,534,000
California
Economic Recovery Refunding Bonds Series 2009A		5.00%		07/01/20	(b)		5,000,000		5,941,050
GO Bonds		4.00%		09/01/17			1,245,000		1,372,650
GO Bonds		5.00%		09/01/18			3,000,000		3,497,580
GO Bonds		5.00%		11/01/18			1,000,000		1,170,840
GO Bonds		5.50%		04/01/19			900,000		1,082,781
GO Bonds		5.00%		11/01/19			2,425,000		2,902,046
GO Bonds		5.00%		09/01/20			2,560,000		3,099,136
GO Bonds		5.00%		11/01/24	(b)		750,000		893,212
GO Bonds		5.00%		12/01/24	(b)		2,990,000		3,662,481

36 See financial notes

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
GO Bonds		5.00%		09/01/25	(b)		3,535,000		4,278,022
GO Bonds		5.00%		11/01/25	(b)		495,000		584,625
GO Bonds		4.00%		12/01/26	(b)		1,000,000		1,063,760
GO Bonds		6.50%		04/01/33	(b)		1,425,000		1,742,989
GO Bonds		6.00%		11/01/35	(b)		4,190,000		5,098,057
GO Bonds		5.00%		09/01/36	(b)		2,635,000		2,974,572
GO Bonds Series 2000		5.63%		05/01/18	(b)		25,000		25,115
GO Refunding Bonds		5.00%		09/01/21			1,355,000		1,654,292
GO Refunding Bonds		5.25%		10/01/32	(b)		2,965,000		3,436,287
California Dept of Water Resources
Power Supply RB Series 2008H		4.50%		05/01/17			1,550,000		1,717,074
Power Supply RB Series 2010M		4.00%		05/01/19			750,000		856,823
Water System RB (Central Valley) Series AI		5.00%		12/01/16			2,000,000		2,213,280
California Educational Facilities Auth
RB (Pomona College) Series 2011		4.00%		01/01/15			280,000		283,760
RB (Pomona College) Series 2011		4.00%		01/01/16			400,000		420,616
RB (Pomona College) Series 2011		4.00%		01/01/17			200,000		217,258
RB (Univ of Southern California) Series 2009C		5.25%		10/01/24			2,000,000		2,591,140
Refunding RB (Univ of San Diego) Series 2011		4.50%		10/01/17			1,230,000		1,349,359
Refunding RB (Univ of San Diego) Series 2011		5.00%		10/01/18			680,000		785,441
Refunding RB (Univ of San Diego) Series 2011		5.00%		10/01/21			500,000		593,765
California Health Facilities Financing Auth
Insured RB Series 2011A		5.25%		02/01/20	(a)		145,000		169,646
RB (City of Hope) Series 2012A		5.00%		11/15/21			500,000		602,820
RB (Memorial Health Services) Series 2012A		4.00%		10/01/17			750,000		828,038
RB (NCROC Paradise Valley Estates) Series 2005		4.63%		12/01/15	(a)		150,000		157,517
RB (NCROC Paradise Valley Estates) Series 2005		5.00%		12/01/18	(a)		125,000		145,030
RB (Providence Health & Services) Series 2014A		5.00%		10/01/21			700,000		846,237
RB (Rady Children’s Hospital) Series 2011		5.50%		08/15/26	(b)		3,285,000		3,871,734
RB (Scripps Health) Series 2008A		5.00%		10/01/16			2,735,000		3,000,350
RB (St. Joseph Health) Series 2009C		5.00%		07/01/34	(b)		3,000,000		3,019,050
RB (St. Joseph Health) Series 2013C		5.00%		07/01/43	(b)		2,000,000		2,378,540
Refunding RB (Marshall Medical Center) Series 2012A		4.00%		11/01/16	(a)		1,330,000		1,428,114
Refunding RB (NCROC - Paradise Valley Estates) Series 2013		3.00%		01/01/15	(a)		500,000		504,945
California HFA
M/F Housing RB III Series 2014A		0.85%		08/01/16			1,000,000		1,001,410
California Infrastructure & Economic Development Bank
RB (California ISO) Series 2009A		5.25%		02/01/21	(b)(d)		1,925,000		1,966,869
RB (Sanford Consortium) Series 2010A		4.00%		05/15/17			215,000		234,571
RB (Sanford Consortium) Series 2010A		4.00%		05/15/18			775,000		863,877
RB (Sanford Consortium) Series 2010A		5.00%		05/15/20			245,000		293,353
RB (USC) Series 2010		5.00%		12/01/19			470,000		564,136
RB (USC) Series 2010		3.25%		12/01/21	(b)		750,000		823,253
RB (USC) Series 2010		5.00%		12/01/23	(b)		720,000		856,562
Refunding RB (Cal ISO Corp) Series 2013		5.00%		02/01/30	(b)		1,300,000		1,467,947
California Public Works Board
Lease RB (Univ of California) Series 2011G		5.25%		12/01/26	(b)(d)		1,000,000		1,245,950
Lease RB Series 1993E		5.50%		06/01/15			125,000		128,640
Lease RB Series 2011C		5.75%		10/01/31	(b)		1,000,000		1,208,100
Lease RB Series 2011D		5.00%		12/01/22	(b)		1,000,000		1,199,830
Lease RB Series 2012A		5.00%		04/01/23	(b)		2,050,000		2,462,255
Lease RB Series 2012G		4.00%		11/01/16			885,000		954,862
Lease RB Series 2013F		4.00%		09/01/16			500,000		536,735
Lease RB Series 2013F		3.00%		09/01/17			750,000		803,025
Lease RB Series 2013G		5.00%		09/01/16			500,000		546,615
Lease RB Series 2013G		5.00%		09/01/17			600,000		678,288
Lease RB Series 2013I		5.00%		11/01/19			1,250,000		1,487,812
Lease RB Series 2013I		5.00%		11/01/20			1,335,000		1,615,096
Lease RB Series 2014B		5.00%		10/01/23			1,700,000		2,096,066
Lease RB Series 2014B		5.00%		10/01/24			1,000,000		1,237,530
Lease Refunding RB Series 2012C		5.00%		06/01/18			1,500,000		1,730,685
California Statewide Communities Development Auth
Health Facility RB (Monterey Peninsula Community Hospital) Series 2011A		6.00%		06/01/33	(b)		1,000,000		1,170,830
RB (Cottage Health) Series 2010		5.00%		11/01/17			325,000		366,317
RB (Cottage Health) Series 2010		5.00%		11/01/18			350,000		402,105
RB (Kaiser Permanente) Series 2009A		4.63%		04/01/19			100,000		115,007

See financial notes 37

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
RB (St. Joseph Health) Series 2000		4.50%		07/01/18			3,190,000		3,428,006
RB (Sutter Health) Series 2011A		6.00%		08/15/42	(b)		875,000		1,054,646
RB (The Redwoods) Series 2013		3.00%		11/15/16	(a)		200,000		210,040
RB (The Redwoods) Series 2013		3.00%		11/15/17	(a)		325,000		343,268
RB (The Redwoods) Series 2013		4.00%		11/15/19	(a)		150,000		164,229
RB (The Redwoods) Series 2013		4.00%		11/15/20	(a)		125,000		136,778
RB (The Redwoods) Series 2013		5.00%		11/15/22	(a)		435,000		503,325
RB (The Redwoods) Series 2013		5.00%		11/15/23	(a)		200,000		232,566
Refunding RB (Episcopal Communities & Services) Series 2012		5.00%		05/15/21			300,000		343,365
Refunding RB (Episcopal Communities & Services) Series 2012		5.00%		05/15/24	(b)		440,000		492,259
Sr Living Health Facility RB (LA Jewish Home for the Aging) Series 2014C		2.50%		08/01/20	(a)(b)		3,500,000		3,594,570
Sr Living RB (Southern California Presbyterian Homes) Series 2009		5.25%		11/15/14			235,000		236,645
Centinela Valley UHSD
GO Bonds Series 2013B		6.00%		08/01/36	(b)		1,400,000		1,716,148
Centralia SD
GO Refunding Bonds Series 2012		4.00%		08/01/21			100,000		113,093
GO Refunding Bonds Series 2012		4.00%		08/01/24	(b)		75,000		86,081
Cerritos CCD
GO Bonds Series 2012D		0.00%		08/01/26	(c)		515,000		341,697
Citrus Heights Water District
Revenue Refunding COP Series 2010		4.00%		10/01/20			120,000		129,982
Clovis
Wastewater Refunding RB Series 2013		5.00%		08/01/22			515,000		616,857
Compton CCD
GO Refunding Bonds Series 2014		5.00%		07/01/24			1,000,000		1,191,360
GO Refunding Bonds Series 2014		5.00%		07/01/28	(b)		3,695,000		4,237,315
Contra Costa CCD
GO Bonds Series 2014A		3.00%		08/01/23			800,000		866,320
GO Bonds Series 2014A		3.00%		08/01/24			1,370,000		1,470,051
GO Bonds Series 2014A		4.00%		08/01/25	(b)		325,000		371,462
GO Bonds Series 2014A		4.00%		08/01/26	(b)		350,000		392,609
GO Refunding Bonds Series 2011		5.00%		08/01/22	(b)		975,000		1,183,923
Contra Costa Transportation Auth
Sales Tax RB Series 2012B		5.00%		03/01/24	(b)		1,500,000		1,792,080
Sales Tax RB Series 2012B		5.00%		03/01/25	(b)		500,000		596,190
Cotati-Rohnert Park USD
GO Refunding Bonds 2013		4.00%		08/01/15			775,000		800,947
Cupertino Union SD
GO Refunding Bonds Series 2011A		5.00%		08/01/23	(b)		190,000		229,976
GO Refunding Bonds Series 2011A		5.00%		08/01/24	(b)		350,000		420,861
GO Refunding Bonds Series 2011A		5.00%		08/01/26	(b)		50,000		59,223
El Camino CCD
GO Bonds Series 2012C		0.00%		08/01/22	(c)		1,680,000		1,402,078
El Dorado Irrigation District
Refunding RB Series 2014A		4.00%		03/01/17			750,000		815,063
Refunding RB Series 2014A		5.00%		03/01/18			1,000,000		1,145,250
Refunding RB Series 2014A		5.00%		03/01/19			750,000		878,805
Refunding RB Series 2014A		5.00%		03/01/34	(b)		800,000		907,744
Emery USD
GO Bonds Series 2011A		6.50%		08/01/31	(b)		2,500,000		3,063,350
Emeryville Successor RDA
Tax Allocation Refunding Bonds Series 2014A		5.00%		09/01/19			1,000,000		1,180,390
Tax Allocation Refunding Bonds Series 2014A		5.00%		09/01/22			2,000,000		2,423,400
Tax Allocation Refunding Bonds Series 2014A		5.00%		09/01/26	(b)		2,000,000		2,383,220
Evergreen Elementary SD
GO Bonds Series 2009B		0.00%		08/01/27	(c)		3,255,000		2,091,240
Franklin-McKinley SD
GO Bonds Series C		0.00%		08/01/40	(b)(c)		1,000,000		234,530
GO Bonds Series D		5.25%		08/01/37	(b)		1,500,000		1,715,025
GO Refunding Bonds Series 2014		4.00%		08/01/21			500,000		570,155
GO Refunding Bonds Series 2014		5.00%		08/01/22			800,000		969,912
GO Refunding Bonds Series 2014		5.00%		08/01/23			900,000		1,098,783
Fresno
Airport Refunding RB Series 2013A		4.00%		07/01/20			300,000		329,868
Airport Refunding RB Series 2013A		5.00%		07/01/22			350,000		408,814

38 See financial notes

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Garden Grove USD
GO Bonds Series C		5.00%		08/01/26	(b)		750,000		899,767
GO Bonds Series C		5.00%		08/01/27	(b)		520,000		618,758
GO Bonds Series C		5.00%		08/01/28	(b)		400,000		472,680
Glendale Successor Redevelopment Agency
Sub Tax Allocation Refunding Bonds Series 2013		4.00%		12/01/19			900,000		1,017,072
Sub Tax Allocation Refunding Bonds Series 2013		5.00%		12/01/21			1,250,000		1,500,012
Golden West Schools Financing Auth
GO RB (Rowland USD) Series 2005		5.25%		09/01/24			1,675,000		2,093,130
Goleta Water District
Refunding Revenue COP Series 2014A		5.00%		12/01/19			250,000		296,368
Refunding Revenue COP Series 2014A		5.00%		12/01/21			340,000		407,245
Refunding Revenue COP Series 2014A		5.00%		12/01/22			375,000		451,605
Refunding Revenue COP Series 2014A		5.00%		12/01/23			500,000		606,030
Refunding Revenue COP Series 2014A		5.00%		12/01/24	(b)		1,000,000		1,199,130
Healdsburg Redevelopment Agency
Tax Allocation Bonds (Sotoyome) Series 2010		5.25%		08/01/30	(b)		1,000,000		1,150,780
Imperial Irrigation District
Electric System Refunding RB Series 2011C		5.00%		11/01/14			200,000		201,696
Electric System Refunding RB Series 2011C		5.00%		11/01/15			365,000		385,717
Electric System Refunding RB Series 2011C		5.00%		11/01/18			425,000		494,564
Electric System Refunding RB Series 2011D		5.00%		11/01/19			720,000		852,466
Electric System Refunding RB Series 2011D		5.00%		11/01/20			750,000		897,142
Inglewood USD
GO Bonds Series A		5.00%		08/01/15			1,880,000		1,961,517
GO Bonds Series A		5.00%		08/01/16			150,000		162,885
GO Bonds Series A		5.00%		08/01/17			205,000		226,937
GO Bonds Series A		5.00%		08/01/18			90,000		103,486
GO Bonds Series A		6.25%		08/01/37	(b)		2,250,000		2,723,490
Jurupa Public Finance Auth
Special Tax RB Series 2014A		5.00%		09/01/19			475,000		550,430
Special Tax RB Series 2014A		5.00%		09/01/20			550,000		643,770
Kern Cnty
Refunding COP 2011 Series A		5.00%		11/01/17			1,460,000		1,627,374
Refunding COP 2011 Series A		5.00%		11/01/18			1,235,000		1,404,738
Lee Lake Public Financing Auth
Sr Lien Special Tax Refunding RB Series 2013A		3.00%		09/01/14			1,165,000		1,165,151
Lodi Public Financing Auth
Wastewater Refunding RB Series 2012A		4.00%		10/01/16			300,000		321,660
Wastewater Refunding RB Series 2012A		4.00%		10/01/19			450,000		502,101
Wastewater Refunding RB Series 2012A		4.00%		10/01/20			450,000		500,387
Wastewater Refunding RB Series 2012A		4.00%		10/01/21			725,000		802,430
Long Beach CCD
GO Refunding Bonds Series 2014E		5.00%		05/01/27	(b)		1,000,000		1,219,440
GO Refunding Bonds Series 2014E		5.00%		05/01/28	(b)		1,000,000		1,206,810
GO Refunding Bonds Series 2014E		5.00%		05/01/29	(b)		1,000,000		1,195,000
GO Refunding Bonds Series 2014E		5.00%		05/01/30	(b)		1,000,000		1,185,260
Los Angeles
Judgment Obligation Bonds Series 2010A		5.00%		06/01/20			5,150,000		6,071,489
Wastewater System Sub Refunding RB Series 2012B		4.00%		06/01/18			150,000		168,344
Wastewater System Sub Refunding RB Series 2012B		5.00%		06/01/20			500,000		604,655
Wastewater System Sub Refunding RB Series 2012B		4.00%		06/01/22			440,000		512,371
Los Angeles CCD
GO Bonds Series 2009A		6.00%		08/01/33	(b)		1,545,000		1,857,816
Los Angeles Cnty Metropolitan Transportation Auth
Sr Refunding RB Series 2014A		5.00%		07/01/30	(b)		2,645,000		3,130,701
Los Angeles Cnty Redevelopment Refunding Auth
Tax Allocation Refunding RB (South Gate Redevelopment Project No.1) Series 2014A		4.00%		09/01/17			1,710,000		1,880,658
Tax Allocation Refunding RB (South Gate Redevelopment Project No.1) Series 2014A		4.00%		09/01/18			830,000		929,301
Tax Allocation Refunding RB (South Gate Redevelopment Project No.1) Series 2014A		5.00%		09/01/20			1,000,000		1,193,600
Tax Allocation Refunding RB (South Gate Redevelopment Project No.1) Series 2014A		5.00%		09/01/24			1,390,000		1,697,982

See financial notes 39

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Los Angeles Cnty Regional Financing Auth
Insured RB (MonteCedro) Series 2014B1		3.00%		11/15/21	(a)(b)		750,000		762,968
Insured RB (MonteCedro) Series 2014B3		2.50%		11/15/20	(a)(b)		750,000		764,550
Los Angeles Community Facilities District #4
Special Tax Refunding Bonds (Playa Vista Phase 1) Series 2014		5.00%		09/01/22			750,000		894,367
Special Tax Refunding Bonds (Playa Vista Phase 1) Series 2014		5.00%		09/01/23			1,000,000		1,193,800
Special Tax Refunding Bonds (Playa Vista Phase 1) Series 2014		5.00%		09/01/24			1,250,000		1,494,725
Los Angeles Dept of Airports
Airport Sub RB Series 2010B		5.00%		05/15/21	(b)		30,000		35,240
Los Angeles Dept of Water & Power
Power System RB Series 2011A		4.00%		07/01/16			515,000		551,050
Power System RB Series 2011A		5.00%		07/01/18			3,380,000		3,937,227
Power System RB Series 2012A		5.00%		07/01/29	(b)		675,000		786,848
Power System RB Series 2014B		5.00%		07/01/23			480,000		598,555
Power System RB Series 2014B		5.00%		07/01/24	(b)		600,000		748,290
Power System RB Series 2014B		5.00%		07/01/32	(b)		2,565,000		3,015,440
Los Angeles Harbor Dept
Refunding RB Series 2011B		5.00%		08/01/24	(b)		1,000,000		1,215,490
Los Angeles USD
GO Refunding Bonds Series 2014D		5.00%		07/01/19			2,500,000		2,964,025
GO Refunding Bonds Series 2014D		5.00%		07/01/21			2,500,000		3,050,400
Refunding COP Series 2012A		5.00%		10/01/20			2,150,000		2,566,240
Refunding COP Series 2012A		5.00%		10/01/22			2,800,000		3,387,804
Los Gatos
COP 2010		5.00%		08/01/21	(b)		500,000		570,170
M-S-R Public Power Agency
Sub Lien RB Series 2008L		5.00%		07/01/16			180,000		194,963
Sub Lien RB Series 2008L		5.00%		07/01/17			855,000		958,284
Malibu
COP Series 2009A		4.00%		07/01/17			100,000		108,507
COP Series 2009A		4.00%		07/01/18			75,000		82,632
COP Series 2009A		5.00%		07/01/20	(b)		75,000		85,886
Midpeninsula Regional Open Space District
RB Series 2011		6.00%		09/01/41	(b)		3,000,000		3,556,410
Refunding Promissory Notes 2012		5.00%		09/01/26	(b)		1,205,000		1,417,393
Modesto Irrigation District
Electric System Refunding RB Series 2011A		5.00%		07/01/15			945,000		984,189
Electric System Refunding RB Series 2012A		5.00%		07/01/16			200,000		217,786
Electric System Refunding RB Series 2012A		5.00%		07/01/17			100,000		112,835
Electric System Refunding RB Series 2012A		5.00%		07/01/19			200,000		237,226
Moraga
COP 2013		4.00%		04/01/18			120,000		131,969
COP 2013		4.00%		04/01/25	(b)		145,000		166,609
COP 2013		5.00%		04/01/26	(b)		360,000		437,947
COP 2013		5.00%		04/01/27	(b)		430,000		516,116
Moreno Valley Public Financing Auth
Lease Refunding RB Series 2013		5.00%		11/01/18			1,100,000		1,269,477
Lease Refunding RB Series 2013		5.00%		11/01/22			810,000		975,621
Mountain View Shoreline Regional Park Community
RB Series 2011A		5.00%		08/01/19			420,000		487,826
RB Series 2011A		5.00%		08/01/20			200,000		233,896
RB Series 2011A		5.00%		08/01/21			550,000		648,054
RB Series 2011A		5.75%		08/01/40	(b)		700,000		788,046
Novato Successor Redevelopment Agency
Tax Allocation Bonds (Hamilton Field) Series 2011		6.75%		09/01/40	(b)		1,000,000		1,160,610
Oakland
Sewer Refunding RB Series 2014A		4.00%		06/15/17			650,000		713,141
Sewer Refunding RB Series 2014A		5.00%		06/15/18			600,000		696,348
Sewer Refunding RB Series 2014A		5.00%		06/15/27	(b)		1,000,000		1,206,440
Oakland Redevelopment Successor Agency
Sub Tax Allocation Refunding Bonds (Central District) Series 2013		5.00%		09/01/15			2,000,000		2,091,560
Sub Tax Allocation Refunding Bonds (Central District) Series 2013		5.00%		09/01/19			3,050,000		3,566,822
Sub Tax Allocation Refunding Bonds (Central District) Series 2013		5.00%		09/01/20			2,000,000		2,350,880
Palo Alto
Limited Obligation Refunding Bonds Series 2012		5.00%		09/02/27	(b)		440,000		488,497
Limited Obligation Refunding Bonds Series 2012		5.00%		09/02/30	(b)		240,000		261,713

40 See financial notes

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Pomona
S/F Mortgage Refunding RB Series 1990B		7.50%		08/01/23	(d)		785,000		1,006,174
Rancho Cucamonga Successor RDA
Tax Allocation Refunding Bonds Series 2014		4.00%		09/01/17			920,000		1,011,328
Tax Allocation Refunding Bonds Series 2014		5.00%		09/01/18			750,000		869,243
Tax Allocation Refunding Bonds Series 2014		5.00%		09/01/19			1,370,000		1,618,833
Tax Allocation Refunding Bonds Series 2014		5.00%		09/01/20			1,175,000		1,405,699
Riverside Cnty Transportation Commission
Limited Sales Tax RB Series 2013A		5.00%		06/01/18			800,000		928,784
Limited Sales Tax RB Series 2013A		5.25%		06/01/24	(b)		710,000		888,643
Roseville
Special Tax Refunding RB Series 2010		3.00%		09/01/14			2,200,000		2,200,242
Roseville City SD
GO Refunding Bonds Series 2011		5.00%		08/01/25	(b)		510,000		590,662
Ross Valley Public Financing Auth
RB (Marin Cnty Sanitary District No. 1) Series 2013		5.00%		10/01/27	(b)		350,000		408,881
RB (Marin Cnty Sanitary District No. 1) Series 2013		5.00%		10/01/43	(b)		1,000,000		1,122,920
Ross Valley SD
GO Bonds Series A		5.00%		08/01/31	(b)		1,000,000		1,109,960
Sacramento City Financing Auth
Lease Refunding RB Series 2013A		4.00%		05/01/16			1,000,000		1,059,330
Lease Refunding RB Series 2013A		4.00%		05/01/18			4,000,000		4,433,920
Sacramento Cnty Sanitation District Financing Auth
RB (Sacramento Regional Cnty Sanitation District) Series 2014A		5.00%		12/01/26	(b)		1,030,000		1,263,655
San Diego CCD
GO Bonds Series 2011		5.00%		08/01/36	(b)		1,800,000		2,041,398
San Diego Cnty Regional Airport Auth
Airport Sr RB Series 2013A		5.00%		07/01/23			100,000		121,751
Airport Sr RB Series 2013A		5.00%		07/01/24	(b)		250,000		300,823
Airport Sr RB Series 2013A		5.00%		07/01/25	(b)		455,000		541,132
San Diego Convention Center Expansion Financing Auth
Lease Refunding RB Series 2012A		4.00%		04/15/17			575,000		623,743
Lease Refunding RB Series 2012A		4.00%		04/15/18			1,000,000		1,100,290
Lease Refunding RB Series 2012A		5.00%		04/15/19			1,000,000		1,159,380
San Diego Public Facilities Financing Auth
Lease Refunding RB Series 2010A		4.25%		03/01/20			900,000		1,012,347
Lease Refunding RB Series 2010A		5.00%		09/01/20			745,000		872,015
San Diego Regional Building Auth
Lease RB Series 2009A		4.00%		02/01/16			415,000		435,829
Lease RB Series 2009A		4.00%		02/01/17			840,000		907,225
San Diego Unified Port District
Refunding RB Series 2013A		5.00%		09/01/22			300,000		358,713
Refunding RB Series 2013A		5.00%		09/01/23			750,000		899,797
Refunding RB Series 2013A		5.00%		09/01/24	(b)		500,000		592,185
Refunding RB Series 2013A		5.00%		09/01/25	(b)		1,500,000		1,756,500
San Diego USD
GO Refunding Bonds Series 2005C2		5.50%		07/01/21			1,790,000		2,248,455
San Francisco
COP Series 2009A		5.00%		04/01/15			550,000		565,961
COP Series 2009A		5.00%		04/01/21	(b)		3,325,000		3,827,673
San Francisco Airport Commission
Refunding RB Series 2011B		5.50%		05/01/21			750,000		926,662
Refunding RB Series 2012A		5.00%		05/01/26	(b)		340,000		395,352
San Francisco Bay Area Rapid Transit District
GO Bonds Series 2007B		5.00%		08/01/35	(b)		2,565,000		2,827,887
San Francisco CCD
GO Bonds Series 2004B		5.00%		06/15/21	(b)		500,000		501,975
GO Bonds Series 2004B		4.38%		06/15/23	(b)		2,700,000		2,708,586
GO Bonds Series 2007B		5.00%		06/15/28	(b)		3,500,000		3,513,160
San Francisco Public Utilities Commission
Water RB Series 2010F		4.00%		11/01/19			2,535,000		2,897,328
Water RB Series 2011A		5.00%		11/01/20			2,360,000		2,863,954
San Francisco Redevelopment Financing Auth
Tax Allocation RB Series 2011B		6.63%		08/01/41	(b)		1,060,000		1,224,936
Tax Allocation Refunding RB Series 2007B		5.00%		08/01/15			1,000,000		1,041,000

See financial notes 41

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
San Gorgonio Memorial Healthcare District
GO Refunding Bonds Series 2014		4.00%		08/01/19			1,000,000		1,113,640
GO Refunding Bonds Series 2014		5.00%		08/01/21			275,000		325,399
GO Refunding Bonds Series 2014		5.00%		08/01/22			500,000		594,135
San Joaquin Cnty
Refunding Revenue COP (Solid Waste System) 2014		3.00%		04/01/17			150,000		157,610
Refunding Revenue COP (Solid Waste System) 2014		4.00%		04/01/18			285,000		311,214
Refunding Revenue COP (Solid Waste System) 2014		4.00%		04/01/19			225,000		248,225
Refunding Revenue COP (Solid Waste System) 2014		4.00%		04/01/20			350,000		385,378
Refunding Revenue COP (Solid Waste System) 2014		5.00%		04/01/21			350,000		406,196
Refunding Revenue COP (Solid Waste System) 2014		5.00%		04/01/22			350,000		406,795
San Jose
Airport RB Series 2011A2		5.00%		03/01/19			210,000		245,057
San Lorenzo Valley USD
GO Bonds Series 2008A		0.00%		08/01/30	(c)		150,000		80,466
San Mateo Cnty Jt Powers Financing Auth
Lease RB (Maple Street Correctional Center) Series 2014A		5.00%		06/15/24			1,500,000		1,859,040
Lease RB (Maple Street Correctional Center) Series 2014A		5.00%		06/15/25	(b)		3,150,000		3,868,452
Lease Refunding RB Series 2008A		4.00%		07/15/17			125,000		137,745
San Mateo-Foster City SD
GO Refunding Bonds Series 2012		4.00%		09/01/17			1,840,000		2,031,746
GO Refunding Bonds Series 2012		4.00%		09/01/19			1,960,000		2,243,749
San Pablo Successor Redevelopment Agency
Tax Allocation Refunding Bonds Series 2014A		5.00%		06/15/21			500,000		591,785
Tax Allocation Refunding Bonds Series 2014A		5.00%		06/15/22			610,000		723,186
Tax Allocation Refunding Bonds Series 2014A		5.00%		06/15/23			1,000,000		1,190,510
Tax Allocation Refunding Bonds Series 2014A		5.00%		06/15/24			1,000,000		1,195,670
Santa Clara Cnty Financing Auth
RB (El Camino Hospital) Series 2007A		5.00%		02/01/17			230,000		250,521
RB (El Camino Hospital) Series 2007B		5.00%		02/01/17			115,000		125,868
RB (El Camino Hospital) Series 2007C		5.00%		02/01/17			300,000		328,350
Santa Cruz Cnty Capital Financing Auth
Lease RB Series 2014		5.00%		08/01/21			125,000		147,285
Lease RB Series 2014		5.00%		08/01/22			165,000		193,982
Lease RB Series 2014		3.00%		08/01/23			140,000		143,562
Lease RB Series 2014		3.00%		08/01/24			175,000		177,986
Lease RB Series 2014		5.00%		08/01/25	(b)		175,000		205,868
Lease RB Series 2014		5.00%		08/01/26	(b)		165,000		191,727
Lease RB Series 2014		5.00%		08/01/27	(b)		320,000		368,509
Santa Cruz Cnty Successor Redevelopment Agency
Tax Allocation Bonds Series 2009A		7.00%		09/01/36	(b)		900,000		1,056,798
Santa Maria-Bonita SD
COP Series 2013		2.00%		06/01/16			200,000		204,040
Santa Monica Public Financing Auth
Lease RB Series 2011A		5.00%		06/01/30	(b)		2,320,000		2,687,442
Santa Monica Successor Redevelopment Agency
Tax Allocation Bonds Series 2011		5.88%		07/01/36	(b)		945,000		1,097,542
Santa Monica-Malibu USD
GO Bonds Series B		5.00%		08/01/17			115,000		130,233
GO Bonds Series B		5.00%		08/01/19			75,000		89,672
Sequoia UHSD
GO Refunding Bonds 2014		5.00%		07/01/23			1,160,000		1,452,923
Sonoma-Marina Area Rail Transit District
Sales Tax RB Series 2011A		5.00%		03/01/18			500,000		574,810
Sales Tax RB Series 2011A		5.00%		03/01/20			500,000		600,650
South Orange Cnty Public Financing Auth
Facility Lease Refunding RB Series 2012		4.00%		06/01/16			1,400,000		1,488,242
Southern California Metropolitan Water District
Water Refunding RB Series 1993A		5.75%		07/01/21			4,505,000		5,381,222
Water Refunding RB Series 2014G2		3.00%		07/01/37	(b)		1,500,000		1,592,865
Southern California Public Power Auth
RB (Windy Point/Windy Flats) Series 2010-1		5.00%		07/01/25	(b)		2,375,000		2,811,050
Tamalpais UHSD
GO Refunding Bonds Series 2011		5.00%		08/01/27	(b)		950,000		1,140,285
Tustin USD
GO Bonds Series B		6.00%		08/01/36	(b)		950,000		1,143,049

42 See financial notes

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


Issuer						Face Amount		Value
Type of Security, Series	Rate		Maturity			($)		($)
Univ of California
General RB Series 2009Q		5.25%		05/15/26	(b)		3,980,000		4,490,753
General RB Series 2011AB		3.00%		05/15/18			565,000		613,793
Medical Center Pooled RB Series 2013J		3.00%		05/15/16			100,000		104,781
Medical Center Pooled RB Series 2013J		4.00%		05/15/17			100,000		109,679
Medical Center Pooled RB Series 2013J		5.00%		05/15/18			100,000		115,749
Medical Center Pooled RB Series 2013J		5.00%		05/15/19			100,000		118,342
Medical Center Pooled RB Series 2013J		4.00%		05/15/20			250,000		285,810
Upland
COP (San Antonio Community Hospital) Series 2011		5.50%		01/01/19			915,000		1,047,025
COP (San Antonio Community Hospital) Series 2011		5.75%		01/01/21			1,890,000		2,246,719
COP (San Antonio Community Hospital) Series 2011		6.38%		01/01/32	(b)		1,875,000		2,159,419
COP (San Antonio Community Hospital) Series 2011		6.50%		01/01/41	(b)		1,385,000		1,592,972
West Kern Water District
Revenue COP Series 2011		4.00%		06/01/18			70,000		76,967
Revenue COP Series 2011		5.00%		06/01/20			275,000		321,019
Revenue COP Series 2011		5.00%		06/01/28	(b)		300,000		334,779
Westlands Water District
Refunding RB Series 2012A		3.00%		09/01/14			575,000		575,092
Whittier
Health Facility RB (Presbyterian Intercommunity Hospital) Series 2009D		5.00%		06/01/15			700,000		723,324
Health Facility RB (Presbyterian Intercommunity Hospital) Series 2009D		5.00%		06/01/16			2,100,000		2,255,085
Health Facility RB (Presbyterian Intercommunity Hospital) Series 2009D		5.00%		06/01/17			2,050,000		2,265,680
Woodland Finance Auth
Water RB Series 2011		3.85%		03/01/18			145,000		158,043
Water RB Series 2011		4.15%		03/01/19			130,000		145,070
Water RB Series 2011		4.65%		03/01/21			115,000		132,436

Total Fixed-Rate Obligations
(Cost $371,938,447)									395,819,184




Variable-Rate Obligations 6.4% of net assets

CALIFORNIA 6.4%
Bay Area Toll Auth
Toll Bridge RB Series 2006C1		0.95%		04/01/45	(b)		5,000,000		4,964,000
Toll Bridge RB Series 2007A1		0.75%		04/01/47	(b)		1,000,000		1,000,490
Toll Bridge RB Series 2014C		1.88%		04/01/47	(b)		2,500,000		2,557,575
California
GO Bonds Series 2013C		0.60%		12/01/28	(b)		2,400,000		2,412,312
GO Refunding Bonds 2012B		0.95%		05/01/18	(b)		1,000,000		1,012,470
GO Refunding Bonds 2012B		1.20%		05/01/20	(b)		1,000,000		1,018,750
California Educational Facilities Auth
Refunding RB (Loyola Marymount Univ) Series 2010B		0.85%		10/01/15	(b)		3,970,000		3,973,771
California Statewide Communities Development Auth
RB (Kaiser Permanente) Series 2012B		1.00%		04/01/52	(b)		2,620,000		2,622,882
East Bay Municipal Utility District
Wastewater System Refunding RB Series 2011A		0.37%		06/01/38	(b)		515,000		514,784
Water System Refunding RB Series 2008A4		0.03%		06/01/38	(a)(b)		5,000,000		5,000,000
Southern California Metropolitan Water District
Water Refunding RB Series 2012B1		0.40%		07/01/27	(b)		2,000,000		2,002,280

Total Variable-Rate Obligations
(Cost $26,986,855)									27,079,314



End of Investments.

At 08/31/14, the tax basis cost of the fund’s investments was $398,924,128 and the unrealized appreciation and depreciation were $24,027,622 and ($53,252), respectively, with a net unrealized appreciation of $23,974,370.


(a)		Credit-enhanced or liquidity-enhanced.
(b)		The effective maturity may be shorter than the final maturity shown because the security is subject to a put, demand or call feature.
(c)		Zero coupon bond.
(d)		Refunded bond.

See financial notes 43

Schwab California Tax-Free Bond Fund

Portfolio Holdings continued


BAN —		Bond anticipation note
CCD —		Community college district
COP —		Certificate of participation
GO —		General obligation
HFA —		Housing finance agency/authority
LT —		Limited Tax
M/F —		Multi-family
RB —		Revenue bond
SD —		School district
S/F —		Single-family
UHSD —		Union high school district
USD —		Unified school district

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2014 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Other Significant

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total

Fixed-Rate Obligations¹

$—

$395,819,184

$—

$395,819,184

Variable-Rate Obligations¹

—

27,079,314

—

27,079,314

Total

$—

$422,898,498

$—

$422,898,498


¹		As categorized in Portfolio Holdings.

44 See financial notes

Schwab California Tax-Free Bond Fund

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


9/1/13-8/31/14				9/1/12-8/31/13
Net investment income		$9,979,435			$10,941,813
Net realized gains		4,154,385			952,670
Net change in unrealized appreciation (depreciation)	+	19,419,900			(22,550,231	)

Increase (decrease) in net assets from operations		33,553,720			(10,655,748	)

Distributions to shareholders

Distributions from net investment income		(9,975,616	)		(10,929,861	)
Distributions from net realized gains	+	—			(8,666,317	)

Total distributions		($9,975,616	)		($19,596,178	)

Transactions in Fund Shares


		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			7,233,411		$85,947,435			9,072,187		$110,280,574
Shares reinvested			498,084		5,933,803			1,009,552		12,229,765
Shares redeemed	+		(7,158,052	)	(84,584,975	)		(10,985,392	)	(131,340,506	)

Net transactions in fund shares			573,443		$7,296,263			(903,653	)	($8,830,167	)

Shares Outstanding and Net Assets

		9/1/13-8/31/14					9/1/12-8/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			34,342,470		$394,730,184			35,246,123		$433,812,277
Total increase (decrease)	+		573,443		30,874,367			(903,653	)	(39,082,093	)

End of period			34,915,913		$425,604,551			34,342,470		$394,730,184


Distributions in excess of net investment income					($511	)				($511	)

See financial notes 47

Schwab Tax-Free Bond Funds

Financial Notes

1. Business Structure of the Funds:



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

Each fund in this report offers one share class. Shares are bought and sold at closing net asset value per share (“NAV”), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the funds’ Board of Trustees (the “Board”) may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

(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:


	•	Bonds and notes: Bonds and notes are valued at halfway between the most recent bid and ask quotes or, if such quotes are unavailable, at prices for securities of comparable maturity, credit quality and type. Valuations for bonds and notes are provided by independent bond-pricing services.

	•	Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it 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 Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.

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

Schwab Tax-Free Bond Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

The three levels of the fair value hierarchy are 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.

	•	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 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 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 fund’s results of operations.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The levels associated with valuing the funds’ investments as of August 31, 2014 are disclosed in the Portfolio Holdings.

(b) Accounting Policies for certain Portfolio Investments (if held):

(c) Security Transactions:

Schwab Tax-Free Bond Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(d) Investment Income:

(e) Expenses:

(f) Distributions to Shareholders:

The funds declare distributions from net investment income, if any, every day they are open for business. These distributions, which are substantially equal to the funds’ net investment income for that day, are paid out to shareholders once a month. The funds make distributions from net realized capital gains, if any, once a year.

(g) Custody Credit:

(h) Accounting Estimates:

(i) Federal Income Taxes:

(j) Indemnification:

3. Risk Factors:

The funds invest primarily in investment-grade municipal bond securities. These investments may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below:

Investment Style Risk. The funds are not designed to offer substantial capital appreciation. In exchange for its goal of capital preservation, a fund may offer lower long-term performance than stock investments or certain other types of bond investments. The funds’ emphasis on quality and preservation of capital also could cause it to underperform certain other types of bond

Schwab Tax-Free Bond Funds

Financial Notes (continued)

3. Risk Factors (continued):

investments, particularly those that take greater maturity and credit risks. At the same time, some of the funds’ investments may have greater risks than securities in taxable bond funds.

Liquidity Risk. A particular investment may be difficult to purchase or sell. The funds may be unable to sell illiquid securities at an advantageous time or price.

Leverage Risk. Certain fund transactions, such as derivatives, may give rise to a form of leverage and may expose the funds to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of a fund’s portfolio securities. The use of leverage may cause a fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations.

Municipal Securities Risk. The funds primarily invest in municipal securities whose interest, in the opinion of the issuers’ counsel, is exempt from federal income tax and from the AMT. Neither the investment adviser nor the funds guarantee that this opinion is correct, and there is no assurance that the Internal Revenue Service (IRS) will agree with such counsel’s opinion. If certain types of investments a fund buys as tax-exempt are later ruled to be taxable, a portion of the fund’s income could be taxable. To the extent that a fund invests in municipal securities from a given state or geographic region, its share price and performance could be affected by local, state and regional factors, including erosion of the tax base and changes in the economic climate. In addition, many municipal securities are issued to finance specific projects (especially those relating to education, health care, transportation and utilities) and conditions in those sectors can affect the overall municipal market. National governmental actions, such as the elimination of tax-exempt status, or the reduction of financial support to municipalities, also could affect performance. Municipalities continue to experience difficulties in the current economic and political environment.

Management Risk. As actively managed mutual funds, the funds are subject to the risk that their investment adviser will make poor security selections. The funds’ investment adviser applies its own investment techniques and risk analyses in making investment decisions for each fund, but there can be no guarantee that they will produce the desired results.

Schwab Tax-Free Bond Funds

Financial Notes (continued)

3. Risk Factors (continued):

California State-Specific Risk. Because the Schwab California Tax-Free Bond Fund concentrates its investments in California municipal securities, the fund may be affected significantly by economic, regulatory or political developments affecting the ability of California issuers to pay interest or repay principal.

Taxable Investments. A fund may invest a portion of its assets in securities that generate income that is not exempt from federal income tax and, in addition, with respect to any temporary defensive investments by the fund, in securities whose interest is subject to the AMT. These investments could generate taxable income for shareholders.

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

4. Affiliates and Affiliated Transactions:

For its advisory and administrative services to the funds, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:


	Schwab		Schwab
	Tax-Free		California Tax-Free
Average Daily Net Assets	Bond Fund		Bond Fund

First $500 million		0.30%		0.30%
Over $500 million		0.22%		0.22%

Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.25%. 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), and the funds will pay no more than 0.25% of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service providers. 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 payment received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.

Although these agreements specify certain fees for these services, CSIM and its affiliates have made an additional agreement with the funds, 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 Board, to limit the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses (“expense limitation”) to 0.49%.

Schwab Tax-Free Bond Funds

Financial Notes (continued)

5. Board of Trustees:

6. Borrowing from Banks:

The funds have access to custodian overdraft facilities, a committed line of credit of $150 million with State Street, 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 & Co. 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 for the committed line of credit.

7. Purchases and Sales/Maturities of Investment Securities:

For the period ended August 31, 2014, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:


	Purchases of Securities		Sales/Maturities of Securities

Schwab Tax-Free Bond Fund		$511,027,561		$488,291,998
Schwab California Tax-Free Bond Fund		446,101,223		433,663,026

8. Federal Income Taxes:

As of August 31, 2014, the components of distributable earnings on a tax-basis were as follows:


	Schwab			Schwab
	Tax-Free			California Tax-Free
	Bond Fund			Bond Fund

Undistributed tax-exempt income		$512,082			$327,505
Undistributed ordinary income		—			1,159,888
Undistributed long-term capital gains		1,044,433			2,521,594
Unrealized appreciation		31,934,546			24,027,622
Unrealized depreciation		(6,592	)		(53,252	)
Other unrealized appreciation/(depreciation)		1			—

Net unrealized appreciation/(depreciation)		$31,927,955			$23,974,370

Net investment income and realized capital gains and losses may differ for financial statement and tax purposes primarily due to differing treatments of amortization of bond discounts and premiums.

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of August 31, 2014, the funds had no capital loss carryforwards.

For tax purposes, realized net capital losses and late-year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended August 31, 2014, the funds had no capital losses deferred and no capital losses utilized.

Schwab Tax-Free Bond Funds

Financial Notes (continued)

8. Federal Income Taxes (continued):

The tax-basis components of distributions paid during the current and prior fiscal years were as follows:


	Schwab		Schwab
	Tax-Free		California Tax-Free
	Bond Fund		Bond Fund

Current Period Distributions
Tax-exempt income		$14,100,227		$9,975,616
Long-term capital gains		—		—
Return of capital		—		—

Prior Period Distributions
Tax-exempt income		$15,796,789		$10,929,861
Ordinary income		5,464,975		2,108,014
Long-term capital gains		4,387,036		6,558,303
Return of capital		—		—

Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of August 31, 2014, the funds made the following reclassifications:


	Schwab			Schwab
	Tax-Free			California Tax-Free
	Bond Fund			Bond Fund

Capital shares		$—			$—
Undistributed net investment income		7,093			(3,819	)
Net realized capital gains and losses		(7,093	)		3,819

9. Subsequent Events:

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:

Schwab Tax-Free Bond Fund

Schwab California Tax-Free Bond Fund

In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Tax-Free Bond Fund and Schwab California Tax-Free Bond Fund (two of the funds constituting Schwab Investments, hereafter referred to as the “Funds”) at August 31, 2014, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 17, 2014

Investment Advisory Agreement Approval

The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Investments (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to existing funds in the Trust, including Schwab Tax-Free Bond Fund and Schwab California Tax-Free Bond Fund (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.


1.	the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds;

2.	each Fund’s investment performance and how it compared to that of certain other comparable mutual funds;

3.	each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds;

4.	the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and

5.	the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors.

The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.

review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of such Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation, the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.

Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of other comparable mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.

Trustees and Officers

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 Investments since 2000.)	Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 – present).	75	Director, WageWorks, Inc. (2010 – present) Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009)


John F. Cogan 1947 Trustee (Trustee of Schwab Investments 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. 2000 – present).	75	Director, Gilead Sciences, Inc. (2005 – present) Director, Monaco Coach Corporation (2005 – 2009)


David L. Mahoney 1954 Trustee (Trustee of Schwab Investments since 2011.)	Private Investor.	75	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present)


Kiran M. Patel 1948 Trustee (Trustee of Schwab Investments since 2011.)	Retired. Formerly, Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 – Sept. 2013).	75	Director, KLA-Tencor Corporation (2008 – present)


Gerald B. Smith 1950 Trustee (Trustee of Schwab Investments since 2000.)	Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present).	75	Director, Eaton (2012-present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present) Director, Oneok, Inc. (2009 – present) Lead Independent Director, Board of Cooper Industries (2002 – 2012)


Joseph H. Wender 1944 Trustee (Trustee of Schwab Investments since 2008.)	Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present).	75	Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)

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 Investments since 1991.)	Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.	75	None


Walter W. Bettinger II²1960 Trustee (Trustee of Schwab Investments since 2008.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. 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. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. 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.	96	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

Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Investments since 2010.)		Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010).


George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Investments since 2004.)		Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).


Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer of Schwab Investments since 2011.)		Senior Vice President and Chief Investment Officer — Equities, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds and Laudus Funds (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).

Officers of the Trust (continued)


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

Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of Schwab Investments since 2011.)		Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds and Laudus Funds (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 – Jan. 2008).


David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Investments since 2011.)		Senior Vice President (Sept. 2011 – present), Vice President (March 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.


Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Investments 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), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (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 retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first.
²		Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser.
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-backed securities Bond or other debt securities that represent ownership in a pool of assets such as credit card debt.

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

average rate The average rate of interest paid annually by the fixed-income securities in a fund or portfolio.

Barclays 7-Year Municipal Bond Index An index that includes the 7-Year (6 − 8) component of the Barclays Capital General Municipal Bond Index.

Barclays California Exempt Municipal Bond Index An index that is the California component of the Barclays Municipal Bond Index.

Barclays Municipal Bond Index An index that covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.

call An early repayment of a bond’s principal by the issuer, usually done because the issuer is able to refinance its bond debt at a lower rate.

certificate of participation A municipal bond that is repaid from an annual budget appropriation rather than being backed by the full faith and credit of the issuer.

coupon, coupon rate The annual rate of interest paid until maturity by the issuer of a debt security.

credit quality The capacity of an issuer to make its interest and principal payments. See chart below.

credit risk The risk that a bond issuer may be unable to pay interest or principal to its bondholders.

discount rate The implied rate on a debt security that does not pay interest but is bought at a discount and redeemed at face value when it matures.

Credit Ratings

general obligation bonds Municipal bonds that are secured by the issuer’s full faith and credit, which typically is backed by the power of the issuer to levy taxes.

interest Payments to bondholders (usually made twice a year) as compensation for loaning the bond principal to the issuer.

mortgage-backed securities Bond or other debt securities that represent ownership in a pool of mortgage loans.

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.

refunded bond A bond for which the principal and interest payments are secured or guaranteed by cash or U.S. government securities held in an escrow account.

restricted securities Securities that are subject to contractual restrictions on resale. These securities are often purchased in private placement transactions.

S&P California AMT-Free Municipal Bond Index A broad, comprehensive market value-weighted index designed to measure the performance of investment-grade tax-exempt bonds issues within California.

S&P National AMT-Free Municipal Bond Index A broad, comprehensive market value-weighted index designed to measure the performance of the investment-grade tax-exempt U.S. municipal bond market.

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.

PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT

A Commitment to Your Privacy

Your Privacy Is Not for Sale

We do not and will not sell your personal information to anyone, for any reason.

How We Collect Information About You

We collect personal information about you in a number of ways.


•	APPLICATION AND REGISTRATION INFORMATION.


•	TRANSACTION AND EXPERIENCE INFORMATION.


•	WEBSITE USAGE.

How We Share and Use Your Information

We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:


•	to help us process transactions for your account;

•	when we use other companies to provide services for us, such as printing and mailing your account statements;

•	when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control).

State Laws

We will comply with state laws that apply to the disclosure or use of information about you.

Safeguarding Your Information — Security Is a Partnership

We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.

We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.

We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

Contact Us

To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call the number below.

Schwab Funds^® direct investors: 1-800-407-0256

Proxy Voting Policies, Procedures and Results

The Schwab Funds Family^®

Stock Funds

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 Company Index Fund

Schwab Fundamental International Large Company Index Fund

Schwab Fundamental International Small Company Index Fund

Schwab Fundamental Emerging Markets Large Company 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 Target 2045 Fund

Schwab Target 2050 Fund

Schwab Target 2055 Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab Short-Term Bond Market Fund^tm

Schwab Intermediate-Term Bond Fund^tm

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab^® Treasury Inflation Protected Securities Index Fund

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds


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.

Item 2: Code of Ethics.

(a)		Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other persons who perform a similar function, regardless of whether these individuals are employed by Registrant or a third party.

(c)		During the period covered by the report, no amendments were made to the provisions of this code of ethics.

(d)		During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics.

(f)(1)		Registrant has filed this code of ethics as an exhibit pursuant to Item 12(a)(1) of Form N-CSR.

Item 3: Audit Committee Financial Expert.

(a) (1)

Disclose that the registrant’s board of directors has determined that the registrant either:

(i) Has at least one audit committee financial expert serving on its audit committee; or

(ii) Does not have an audit committee financial expert serving on its audit committee.

(2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is “independent.” In order to be considered “independent” for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee:

(i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or

(ii) Be an “interested person” of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).

(3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert.

3(a)(1) THE REGISTRANT’S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT HAS AT LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE.

3(a)(2) THE AUDIT COMMITTEE FINANCIAL EXPERTS ARE MARIANN BYERWALTER, WILLIAM HASLER AND KIRAN PATEL WHO ARE “INDEPENDENT” FOR PURPOSES OF THIS ITEM 3 OF FORM N-CSR.

Item 4: Principal Accountant Fees and Services.

Registrant is composed of nine series. Seven series have a fiscal year-end of August 31, whose annual financial statements are reported in Item 1, and one series has a fiscal year-end of October 31 and one series has a fiscal year-end of February 28. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to each of the eleven series, based on their respective 2013 and 2012 fiscal years, as applicable.

(a) Below are the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.


Audit Fees

2014: $325,971		2013: $317,611

(b) Below are the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of Registrant’s financial statements and are not reported under paragraph (a) above.


Audit-Related Fees

For services rendered to Registrant:

2014: $21,058		2013: $20,511

Nature of these services: tax provision review.

In each of the last two fiscal years there were no “Audit-Related Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(c) Below are the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.


Tax Fees

For services rendered to Registrant:


2014: $23,279		2013: $22,671

Nature of these services: preparation and review of tax returns.

In each of the last two fiscal years there were no “Tax Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(d) Below are the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.


All Other Fees

For services rendered to Registrant:

2014: $1,082		2013: $2,960

Nature of these services:		review of the methodology of allocation of Charles Schwab & Co., Inc. (“Schwab”) expenses for purposes of Section 15(c) of the Investment Company Act of 1940.

In each of the last two fiscal years there were no “All Other Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(e)(1) Registrant’s audit committee does not have pre-approval policies and procedures as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

(2) There were no services described in each of paragraphs (b) through (d) above (including services required to be approved by Registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by Registrant’s audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not applicable.

(g) Below are the aggregate non-audit fees billed in each of the last two fiscal years by Registrant’s principal accountant for services rendered to Registrant, to Registrant’s investment adviser, and to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant.


2014: $45,419		2013: $46,396

(h) During the past fiscal year, all non-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant were pre-approved. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence.

Item 5: Audit Committee of Listed Registrants.

Not applicable.

Item 6: Schedule of Investments.

The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.

Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8: Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10: Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11: Controls and Procedures.

(a)

Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Marie Chandoha and Registrant’s Principal Financial Officer, George Pereira, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized

and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above.

(b)

During the second fiscal quarter of the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting.

Item 12: Exhibits.

(a)

(1) Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached.

	(2)		Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached.

	(3)		Not applicable.

(b)

A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant) Schwab Investments

Schwab Bond Funds

By:		/s/ Marie Chandoha Marie Chandoha
		Chief Executive Officer

Date: October 16, 2014

Schwab Tax-Free Bond Funds

By:		/s/ Marie Chandoha Marie Chandoha
		Chief Executive Officer

Date: October 16, 2014


Schwab Bond Funds

By:		/s/ George Pereira George Pereira
		Principal Financial Officer

Date: October 16, 2014

Schwab Tax-Free Bond Funds

By:		/s/ George Pereira George Pereira
		Principal Financial Officer

Date: October 16, 2014



Assets

Investments, at value (cost $432,566,472)		$434,181,999
Receivables:
Investments sold		19,543,462
Interest		2,192,643
Fund shares sold		286,761
Due from investment adviser		2,449
Prepaid expenses	+	3,748

Total assets		456,211,062

Liabilities

Payables:
Investments bought		11,494,070
Shareholder service fees		18,177
Fund shares redeemed		6,237,247
Distributions to shareholders		42,685
Accrued expenses	+	63,562

Total liabilities		17,855,741

Net Assets

Total assets		456,211,062
Total liabilities	−	17,855,741

Net assets		$438,355,321

Net Assets by Source
Capital received from investors		489,969,131
Net realized capital losses		(53,229,337	)
Net unrealized capital appreciation		1,615,527

Net Asset Value (NAV)



Investment Income

Interest		$4,882,922
Securities on loan	+	704

Total investment income		4,883,626

Expenses

Investment adviser and administrator fees		1,290,181
Shareholder service fees		1,064,506
Portfolio accounting fees		100,115
Shareholder reports		54,140
Professional fees		44,019
Registration fees		38,628
Transfer agent fees		26,672
Custodian fees		11,814
Independent trustees’ fees		10,512
Interest expense		2
Other expenses	+	10,436

Total expenses		2,651,025
Expense reduction by CSIM and its affiliates	−	1,403,848

Net expenses	−	1,247,177

Net investment income		3,636,449

Realized and Unrealized Gains (Losses)

Net realized gains on investments		1,376,519
Net change in unrealized appreciation (depreciation) on investments	+	2,039,521

Net realized and unrealized gains		3,416,040

Increase in net assets resulting from operations		$7,052,489



Assets

Investments, at value (cost $1,039,687,346)		$1,072,150,637
Receivables:
Investments sold		10,840,813
Fund shares sold		10,226,324
Interest		6,003,430
Due from investment adviser		1,062
Income from securities on loan		3
Prepaid expenses	+	11,341

Total assets		1,099,233,610

Liabilities

Payables:
Investments bought		25,545,059
Investments bought - Delayed delivery		52,170,645
Shareholder service fees		41,205
Fund shares redeemed		451,453
Distributions to shareholders		81,139
Due to custodian		9,800
Accrued expenses	+	77,214

Total liabilities		78,376,515

Net Assets

Total assets		1,099,233,610
Total liabilities	−	78,376,515

Net assets		$1,020,857,095

Net Assets by Source
Capital received from investors		1,109,017,759
Net realized capital losses		(120,623,955	)
Net unrealized capital appreciation		32,463,291

Net Asset Value (NAV)



Assets

Investments, at value (cost $257,437,911)		$273,203,219
Receivables:
Investments sold		3,425,257
Fund shares sold		1,357,290
Interest		448,323
Due from investment adviser	+	1,895

Total assets		278,435,984

Liabilities

Payables:
Investments bought		3,534,125
Shareholder service fees		11,229
Fund shares redeemed		1,319,808
Accrued expenses	+	149,583

Total liabilities		5,014,745

Net Assets

Total assets		278,435,984
Total liabilities	−	5,014,745

Net assets		$273,421,239

Net Assets by Source
Capital received from investors		255,539,602
Net investment income not yet distributed		3,627,584
Net realized capital losses		(1,511,255	)
Net unrealized capital appreciation		15,765,308

Net Asset Value (NAV)



Investment Income

Interest		$7,038,332

Expenses

Investment adviser and administrator fees		805,280
Shareholder service fees		655,646
Professional fees		51,264
Portfolio accounting fees		51,144
Registration fees		26,534
Transfer agent fees		26,311
Independent trustees’ fees		9,452
Custodian fees		9,149
Interest expense		1
Other expenses	+	8,603

Total expenses		1,643,384
Expense reduction by CSIM and its affiliates	−	1,133,372

Net expenses	−	510,012

Net investment income		6,528,320

Realized and Unrealized Gains (Losses)

Net realized gains on investments		994,973
Net change in unrealized appreciation (depreciation) on investments	+	6,676,669

Net realized and unrealized gains		7,671,642

Increase in net assets resulting from operations		$14,199,962



		Kenneth Salinger, CFA, Managing Director and Head of Tax-Exempt Strategies, leads the portfolio management team for Schwab’s national and state-specific tax-free bond funds and municipal money market funds. He also has overall responsibility for all aspects of the management of each of the tax-free bond funds. Prior to joining CSIM in 2008, Mr. Salinger was a senior portfolio manager at Wells Capital Management, working on a team that managed municipal bond assets. He worked at American Century Investments from 1992 to 2006, where he was a vice president and senior portfolio manager, responsible for daily management of a number of national and state specific municipal bond funds. Mr. Salinger has worked in fixed-income asset management since 1994.

		John Shelton, CFA, Portfolio Manager, is responsible for the day-to-day co-management of each of the funds. Prior to joining CSIM in 2000, Mr. Shelton worked as a client-services representative in Schwab’s Atlanta office for more than a year.



Assets

Investments, at value (cost $602,554,356)		$634,486,130
Cash		1,785,649
Receivables:
Investments sold		1,456,143
Interest		5,768,127
Fund shares sold		766,172
Prepaid expenses	+	5,172

Total assets		644,267,393

Liabilities

Payables:
Investments bought - Delayed delivery		16,097,814
Investment adviser and administrator fees		17,673
Shareholder service fees		24,872
Distributions to shareholders		464,330
Fund shares redeemed		376,631
Accrued expenses	+	65,657

Total liabilities		17,046,977

Net Assets

Total assets		644,267,393
Total liabilities	−	17,046,977

Net assets		$627,220,416

Net Assets by Source
Capital received from investors		594,200,276
Net investment income not yet distributed		47,752
Net realized capital gains		1,040,614
Net unrealized capital appreciation		31,931,774

Net Asset Value (NAV)



Investment Income

Interest		$17,038,440

Expenses

Investment adviser and administrator fees		1,722,320
Shareholder service fees		1,426,376
Portfolio accounting fees		103,460
Professional fees		57,957
Shareholder reports		56,133
Registration fees		40,410
Transfer agent fees		35,435
Custodian fees		17,416
Independent trustees’ fees		11,774
Interest expense		139
Other expenses	+	15,435

Total expenses		3,486,855
Expense reduction by CSIM and its affiliates	−	541,549

Net expenses	−	2,945,306

Net investment income		14,093,134

Realized and Unrealized Gains (Losses)

Net realized gains on investments		2,577,857
Net change in unrealized appreciation (depreciation) on investments	+	29,009,632

Net realized and unrealized gains		31,587,489

Increase in net assets resulting from operations		$45,680,623



Assets

Investments, at value (cost $398,925,302)		$422,898,498
Cash		358,680
Receivables:
Investments sold		1,500,000
Interest		4,341,930
Fund shares sold	+	186,741

Total assets		429,285,849

Liabilities

Payables:
Investments bought		3,031,927
Investment adviser and administrator fees		12,699
Shareholder service fees		16,478
Distributions to shareholders		328,016
Fund shares redeemed		245,864
Accrued expenses	+	46,314

Total liabilities		3,681,298

Net Assets

Total assets		429,285,849
Total liabilities	−	3,681,298

Net assets		$425,604,551

Net Assets by Source
Capital received from investors		397,949,212
Distributions in excess of net investment income		(511	)
Net realized capital gains		3,682,654
Net unrealized capital appreciation		23,973,196

Net Asset Value (NAV)



Investment Income

Interest		$11,955,729

Expenses

Investment adviser and administrator fees		1,209,851
Shareholder service fees		975,594
Portfolio accounting fees		84,211
Professional fees		49,716
Transfer agent fees		25,519
Shareholder reports		22,596
Custodian fees		11,931
Independent trustees’ fees		10,338
Registration fees		8,229
Interest expense		204
Other expenses	+	10,481

Total expenses		2,408,670
Expense reduction by CSIM and its affiliates	−	432,376

Net expenses	−	1,976,294

Net investment income		9,979,435

Realized and Unrealized Gains (Losses)

Net realized gains on investments		4,154,385
Net change in unrealized appreciation (depreciation) on investments	+	19,419,900

Net realized and unrealized gains		23,574,285

Increase in net assets resulting from operations		$33,553,720


	Percentage

Schwab Tax-Free Bond Fund		100.0	%
Schwab California Tax-Free Bond Fund		100.0	%