nvcsrs

Six cost-efficient ways to tap into the power of

the stock market for long-term growth potential.


In This Report
Performance at a Glance		1
From the Chairman		2
From the President		3
The Investment Environment		4
Schwab S&P 500 Index Fund		6
Schwab Institutional Select^{^®} S&P 500 Fund		8
Schwab 1000 Index^{^®} Fund		10
Schwab Small-Cap Index Fund^{^®}		12
Schwab Total Stock Market Index Fund^{^®}		14
Schwab International Index Fund^{^®}		16
Fund Expenses		18
Financial Statements		20
Financial Notes		63
Trustees and Officers		70
Glossary		74
EXHIBIT 99.CERT
EXHIBIT 99.906CERT

Select Shares^® are available on many Schwab Funds^®

Schwab Funds offers Select Shares, a shares class that carries lower expenses than Investor Shares^tm in exchange for higher investment minimums on many of its funds. Select Shares are available for initial purchases of $50,000 or more of a single fund in a single account and for shareholders who add to their existing Investor Share position, bringing the value to or above $50,000.We encourage shareholders of Investor Shares to review their portfolio to see if they are eligible to exchange into Select Shares. If you believe you are eligible, you should contact Schwab or your financial intermediary to request a tax-free interclass exchange into Select Shares. Instructions for performing a tax-free interclass exchange can also be referenced on the Schwab Funds website at www.schwab.com/schwabfunds under Schwab Funds Investor Information. Select Shares may not be available through financial intermediaries other than Charles Schwab & Co., Inc.

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

The industry/sector classification of the funds’ portfolio holdings uses the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc.

Performance at a Glance

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


Total Return for
the Report Period



Schwab S&P 500 Index Fund

Investor Shares (Ticker Symbol: SWPIX)		8.47%
Select Shares^® (Ticker Symbol: SWPPX)		8.56%
e.Shares (Ticker Symbol: SWPEX)¹		8.53%
Benchmark: S&P 500^® Index		8.60%

Performance Details		pages 6-7



Schwab Institutional Select^® S&P 500 Fund
(Ticker Symbol: ISLCX)		8.52%

Benchmark: S&P 500^® Index		8.60%

Performance Details		pages 8-9



Schwab 1000 Index^® Fund

Investor Shares (Ticker Symbol: SNXFX)		8.75%
Select Shares^® (Ticker Symbol: SNXSX)		8.81%
Benchmark: Schwab 1000 Index^®		9.04%

Performance Details		pages 10-11



Schwab Small-Cap Index Fund^®

Investor Shares (Ticker Symbol: SWSMX)		8.92%
Select Shares^® (Ticker Symbol: SWSSX)		9.02%
Benchmark: Schwab Small-Cap Index^®		9.01%

Performance Details		pages 12-13



Schwab Total Stock Market Index Fund^®

Investor Shares (Ticker Symbol: SWTIX)		8.80%
Select Shares^® (Ticker Symbol: SWTSX)		8.86%
Benchmark: Dow Jones Wilshire 5000 Composite Index^SM		9.06%

Performance Details		pages 14-15



Schwab International Index Fund^®

Investor Shares (Ticker Symbol: SWINX)		13.30%
Select Shares^® (Ticker Symbol: SWISX)		13.39%
Benchmark: Schwab International Index^®		14.46%

Performance Details		pages 16-17



Minimum Initial Investment²

Investor Shares		$ 100
Select Shares^®		$50,000
e.Shares ($500 for retirement, education and custodial accounts)		$ 1,000
Institutional Select S&P 500 Fund		$75,000

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

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


¹	Return for the report period presented in the table differs from the return in the Financial Highlights. This is a result of the calculation of the Financial Highlights return adhering to GAAP presentation.

²	Please see prospectus for further detail and eligibility requirements.

Schwab Equity Index Funds 1

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment plan.

In fact, research has indicated that spreading your money across, and equally important, within, different asset classes, such as stocks, bond, and cash equivalents, can be the most important factor in determining overall portfolio performance.

With a broad range of investment strategies and styles, Schwab Funds provides an uncomplicated, effective way to build a well diversified portfolio. You can choose from an array of funds across a range of investment objectives and styles, including actively managed, sub-advised and index funds, to develop your own asset allocation strategy. Or, if you prefer a single investment solution, we offer asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With some of the highest quality funds and services, backed by the guidance and support you need—whatever type of investor you are—we can help you be financially fit today and in the future.

Thank you for investing with us.

Sincerely,

2 Schwab Equity Index Funds

From the President

Evelyn Dilsaver is President and CEO of Charles Schwab Investment Management, Inc. and of each of the funds covered in this report. She joined the firm in 1992 and has held a variety of executive positions at Schwab.

Dear Shareholder,

I am pleased to present the semiannual report for the Schwab Equity Index Funds for the six-month period ended April 30, 2007. These funds are part of the Schwab Funds Family, comprising over $190 billion in assets as of this report date. Our high–quality fund offering covers all asset classes and allows you to choose from more than 50 different funds to help you meet your specific investment goals.

Since I last wrote to you, we have added to our Schwab Funds offering with the April 2, 2007 launch of three Schwab Fundamental Index^tm Funds. These three funds provide access to the innovative FTSE RAFI Indexes which use four fundamental measures of company scale and success—sales, cash flow, book value and dividends—to weight and measure a company’s market value. This advanced indexing approach is designed to offset the risks of cap-weighted indexes while offering the potential for higher investment returns with lower volatility.

In addition, the Schwab Global Real Estate Fund^tm, which launched on May 31, 2007, provides an efficient way for investors to access both domestic and international real estate securities in a single fund. The fund leverages the investment expertise of Global Real Analytics, a leading firm in real estate analytics and commercial real estate index products that was acquired by Charles Schwab Investment Management earlier this year.

In closing, I speak for all of us at Schwab Funds when I say we want Schwab to be the place where you find the investments and ervices that can help you succeed.

Thank you for investing in Schwab Funds^®.

Sincerely,

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000. Please read the prospectus carefully before investing.

Schwab Equity Index Funds 3

The Investment Environment

Jeffrey Mortimer, CFA, senior vice president and chief investment officer, equities, is responsible for the overall management of the funds.

While the U.S. economy trended toward slower growth, the markets remained resilient and ended the report period in positive territory, aided by continued earnings growth, valuations, and global liquidity. However, recent economic data have given cause for uncertainty, reflected in a continued weakening of the housing market, higher energy prices, and increasing labor costs. In addition, several key issues continue to resonate in the market, including slowing economic growth, slightly elevated inflationary readings, and uncertainty of the Federal Reserve (the Fed) in its outlook on the broader economy.

Stable growth and moderate inflation in the U.S. economy provided a backdrop for a strong opening early in 2007. However, the markets experienced a spike in volatility at the end of February, driven by a strong correlation in global assets, as well as sub-prime mortgage headlines. This event, in effect, led to a flight-to-quality trade that drove up demand for Treasuries. Although the speed at which this correction hit the market took many by surprise, numerous indications for such a correction had been building, including historically low volatility, the lagged effect of Fed rate hikes on over-leveraged sub-prime borrowers, and a willingness to tolerate risk caused by excess liquidity. Although February’s event had wiped out most of 2007’s gains up to that point, the markets subsequently recovered, with major indexes nearing all-time highs.

Nevertheless, it’s become very clear that there is much uncertainty with regards to current economic conditions. The U.S. economy has certainly been slowing down, as GDP readings for the first quarter of 2007 came in at a mere 1.3% annually adjusted rate, half a percentage point below the median consensus estimate of 1.8%. As any growth rate below 3% is generally considered to be sub-par, the economy has underperformed for the fourth straight quarter. The recent reading is also at the lowest level since 2003, and reflected a number of factors, including an increase in imports, a decrease in exports, and a decrease in government spending. Higher food and energy costs have increasingly become a concern as well, and contributed to a decline in consumer spending. And given the current state of the housing market, it’s likely that consumer spending may remain strained in the near term.

Asset Class Performance Comparison % returns during the report period

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


8.60%	S&P 500^® Index: measures U.S. large-cap stocks


6.86%	Russell 2000^® Index: measures U.S. small-cap stocks


15.46%	MSCI-EAFE^® Index: measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East


2.64%	Lehman Brothers U.S. Aggregate Bond Index: measures the U.S. bond market

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

Data source: Charles Schwab & Co., Inc.

4 Schwab Equity Index Funds

The Investment Environment continued

In its March 2007 statement, the Fed noted that although adjustments to the housing sector are ongoing, the economy will likely maintain its path towards a moderate pace. However, unlike prior statements, they noted that their primary concern remained the risk that inflation will fail to moderate. Core Personal Consumption Expenditures (PCE), the Fed’s primary index used to monitor inflation, rose at an annualized rate of 2.2% in the first quarter of 2007, up from 1.8% in the fourth quarter of 2006. While their unofficial comfort zone for core inflation remains at 1% to 2%, the markets and Fed hope that the excess supply in houses will drive down rents, thereby reducing inflation.

The housing market continues to pose a significant headwind for the economy and recently has shown signs that the bottom may not have yet been reached. Existing home sales, which account for roughly 85% of the market, fell 8.4% in March to a seasonally adjusted annual rate of 6.12 million units, while new home sales were at a seasonally adjusted annual rate of 858,000 units, 23.5% below March 2006. In general, the market seems to be quite pessimistic with regards to a recovery, with even the National Association of Realtors predicting a decline in new home sales of 14.2% in 2007. In addition, the recent sub-prime debacle has caused many lenders to tighten standards, which could pose a further drag on homes sales.

Given the current condition of the housing market, and a slowdown in residential construction, the unemployment rate has the potential to creep higher throughout the year. It’s worth noting that employment conditions react with a lag to changes in monetary policy. And although March’s employment report came in above expectations (nonfarm payrolls rose by 180,000), this number has been trending lower and is likely to continue downward as the economy slows. March’s unemployment rate came in at 4.4%, down from 4.5% for February. The labor market has essentially sustained reasonable growth in the economy thus far, but the lagged effect of monetary policy could finally be catching up.

In addition to inflationary concerns, commodity prices have crept up on investors as well. Consumers have certainly felt a pinch at the pump, as OPEC production cuts, political tensions, and an increasing global demand for oil have put upward pressures on prices. In spite of increasing prices, it’s estimated that global oil consumption will grow at a rate of 1.4 million barrels per day in 2007 and 1.6 billion barrels per day in 2008, with half of the consumption growth stemming from China and the U.S. As a result of the colder weather earlier in the year, demand for natural gas and electricity crept ever higher, pushing residential prices up as well. Given an economy that is growing at a sub-par pace, the upward trend in energy prices may have less upward pressure on inflation than some think. Rather, the tax-like effect from elevated commodity prices may be the more dominant issue as it has the potential to take its toll on consumer discretionary income and spending.

Though at a sub-par pace, the economy nevertheless appears to be expanding moderately, in line with the Fed’s expectation. If this slight, upward trend is eventually accompanied by softer inflation readings, confidence could build that the Fed successfully engineered a soft landing. Rate-hike fears would likely vanish. Expectations of future economic growth could rise. Though history isn’t guaranteed to repeat, this economic backdrop has been associated with expanding P/E multiples as investors become more upbeat about an eventual rebound in earnings growth.

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

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

Schwab Equity Index Funds 5

Schwab S&P 500 Index Fund

Larry Mano, (right) managing director and portfolio manager, is responsible for the day-to-day co-management of the fund.

Tom Brown (left) portfolio manager, was responsible for the day-to-day co-management of the fund.

The Schwab S&P 500 Index Fund Investor Shares returned 8.47% for the period, tracking its benchmark, the S&P 500 Index, which was up 8.60%. Bear in mind that indices are unmanaged and unlike the fund, do not include operational and transaction costs. The S&P 500 Index includes the stocks of 500 leading U.S. publicly traded companies from a broad range of industries and is market-capitalization weighted. Therefore, its returns are most heavily influenced by the largest names in the index. For the report period, all sectors experienced positive returns, which benefited the fund. From an industry group standpoint, Energy, Materials, and Utilities were among the top performers. Better performing stocks for the period included Exxon Mobil Corporation, Chevron Corporation, and General Electric Company. Industry groups that appreciated the least during the period included Banks, Communication Services and Supplies, and Retailing. Positions in Office Depot, Inc., Best Buy Co., Inc., and Motorola, Inc. detracted from returns.

As of 4/30/07:

Style Assessment¹

Statistics


Number of Holdings	498

Weighted Average

Market Cap


($ x 1,000,000)	$100,830


Price/Earnings Ratio (P/E)	17.4


Price/Book Ratio (P/B)	2.9


Portfolio Turnover Rate²	1%

Sector Weightings % of Investments


Financials	21.5%


Information Technology	15.2%


Health Care	12.2%


Industrials	11.1%


Consumer Discretionary	10.1%


Energy	10.0%


Consumer Staples	9.6%


Utilities	3.7%


Telecommunication Services	3.6%


Materials	3.0%


Total	100.0%

Top Holdings % of Net Assets³


Exxon Mobil Corp.	3.4%


General Electric Co.	2.9%


Citigroup, Inc.	2.0%


Microsoft Corp.	2.0%


AT&T, Inc.	1.8%


Bank of America Corp.	1.7%


The Procter & Gamble Co.	1.6%


Pfizer, Inc.	1.4%


Johnson & Johnson	1.4%

American International Group,


Inc.	1.4%


Total	19.6%

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

Source of Sector Classification: S&P and MSCI.

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

Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 4/30/07, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future.

² Not annualized.

³ This list is not a recommendation of any security by the investment adviser.

6 Schwab Equity Index Funds

Schwab S&P 500 Index Fund

Performance Summary as of 4/30/07

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

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

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

Pre-Tax Average Annual Total Returns^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (5/1/96)		8.47%		14.95%		8.23%		7.70%		9.11%
Select Shares (5/19/97)		8.56%		15.13%		8.42%		n/a		7.48%
e.Shares (5/1/96)		8.53%		15.06%		8.35%		7.79%		9.22%
Benchmark: S&P 500^® Index		8.60%		15.24%		8.54%		8.04%		(5/1/96) 9.49%
										(5/19/97) 7.64%
Fund Category: Morningstar Large-Cap Blend		8.79%		13.20%		8.03%		7.78%		(5/1/96) 8.49%
										(5/19/97) 7.25%

Fund Expense Ratios³: Investor Shares: 0.36% / Select Shares⁴: Net 0.19%; Gross 0.21% / e.Shares³: 0.21%

Average Annual Total Returns After Tax^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (5/1/96)
Pre-Liquidation (still own shares)		8.23%		14.69%		7.72%		7.26%		8.67%
Post-Liquidation (shares were sold)		5.81%		10.04%		6.83%		6.52%		7.85%
Select Shares^® (5/19/97)
Pre-Liquidation (still own shares)		8.29%		14.84%		7.94%		n/a		7.02%
Post-Liquidation (shares were sold)		5.90%		10.19%		7.05%		n/a		6.32%
e.Shares^® (5/1/96)
Pre-Liquidation (still own shares)		8.26%		14.78%		7.88%		7.35%		8.77%
Post-Liquidation (shares were sold)		5.88%		10.14%		6.99%		6.62%		7.95%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		6.20%		10.39%		7.25%		6.51%		n/a
Post-Liquidation (shares were sold)		4.95%		7.86%		6.51%		6.16%		n/a

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


¹	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
²	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/07 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
³	As of 2/28/07 as stated in the prospectus.
⁴	Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/08. Gross Expense: Does not reflect the effect of contractual fee waivers.

Schwab Equity Index Funds 7

Schwab Institutional Select^® S&P 500 Fund

Larry Mano, (right) managing director and portfolio manager, is responsible for the day-to-day co-management of the fund.

Tom Brown (left) portfolio manager, was responsible for the day-to-day co-management of the fund.

Schwab Institutional Select S&P 500 Fund returned 8.52%, tracking its benchmark, the S&P 500 Index, which was up 8.60% for the period. Bear in mind that indices are unmanaged and unlike the fund, do not include operational and transaction costs. The S&P 500 Index includes the stocks of 500 leading U.S. publicly traded companies from a broad range of industries and is market-capitalization weighted. Therefore, its returns are most heavily influenced by the largest names in the index. For the report period, all sectors experienced positive returns, which benefited the fund. From an industry group standpoint, Energy, Materials, and Utilities were among the top performers. Better performing stocks for the period included Exxon Mobil Corporation, Chevron Corporation, and General Electric Company. Industry groups that appreciated the least during the period included Banks, Communication Services and Supplies, and Retailing. Positions in Office Depot, Inc., Best Buy Co., Inc., and Motorola, Inc. detracted from returns.

As of 4/30/07:

Style Assessment¹

Statistics


Number of Holdings	511

Weighted Average

Market Cap


($ x 1,000,000)	$100,627


Price/Earnings Ratio (P/E)	17.5


Price/Book Ratio (P/B)	2.9


Portfolio Turnover Rate²	0%

Sector Weightings % of Investments


Financials	21.4%


Health Care	12.2%


Industrials	11.0%


Consumer Discretionary	10.3%


Energy	10.1%


Consumer Staples	9.4%


Utilities	3.7%


Telecommunication Services	3.6%


Materials	3.0%


Information Technology	15.1%


Other	0.2%


Total	100.0%

Top Holdings % of Net Assets³


Exxon Mobil Corp.	3.5%


General Electric Co.	2.8%


Citigroup, Inc.	2.0%


Microsoft Corp.	1.9%


AT&T, Inc.	1.8%


Bank of America Corp.	1.7%


The Procter & Gamble Co.	1.5%


Pfizer, Inc.	1.5%


Johnson & Johnson	1.4%


JPMorgan Chase & Co.	1.4%


Total	19.5%

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

Source of Sector Classification: S&P and MSCI.


²	Not annualized. Less than 1%.


³	This list is not a recommendation of any security by the investment adviser.

8 Schwab Equity Index Funds

Schwab Institutional Select^® S&P 500 Fund

Performance Summary as of 4/30/07

Performance of a Hypothetical
$75,000 Investment¹

Pre-Tax Average Annual Total Returns^1,2


Fund and Inception Date	6 Months		1 Year		5 Years		Since Inception


Fund: Schwab Institutional Select^® S&P 500 Fund (2/1/99)		8.52%		15.23%		8.47%		3.33%
Benchmark: S&P 500^® Index		8.60%		15.24%		8.54%		3.43%
Fund Category: Morningstar Large-Cap Blend		8.79%		13.20%		8.03%		4.07%

Fund Expense Ratios³: Net 0.10%; Gross 0.23%

Average Annual Total Returns After Tax^1,2


	6 Months		1 Year		5 Years		Since Inception


Fund: Schwab Institutional Select^® S&P 500 Fund (2/1/99)
Pre-Liquidation (still own shares)		8.24%		14.94%		8.00%		2.89%
Post-Liquidation (shares were sold)		5.80%		10.18%		7.08%		2.60%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		6.20%		10.39%		7.25%		n/a
Post-Liquidation (shares were sold)		4.95%		7.86%		6.51%		n/a


¹	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
²	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/07 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
³	As of 2/28/07 as stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/08. Gross Expense: Does not reflect the effect of contractual fee waivers.

Schwab Equity Index Funds 9

Schwab 1000 Index^® Fund

Larry Mano, (right) managing director and portfolio manager is responsible for the day-to-day co-management of the fund.

Tom Brown (left) portfolio manager, was responsible for the day-to-day co-management of the fund.

The Schwab 1000 Index Fund Investor Shares returned 8.75% for the period, trailing its benchmark, the Schwab 1000 Index, which returned 9.04%. Bear in mind that indices are unmanaged and unlike the fund, do not include operational and transaction costs. The Schwab 1000 Index is comprised of the stocks of the largest 1,000 publicly traded companies in the United States. The Schwab 1000 Index is market-capitalization weighted, and therefore, its returns are most heavily influenced by the largest names in the index. For the report period, all sectors experienced positive returns, which benefited the fund. From an industry group perspective, Materials, Utilities, Energy, and Health Care Equipment and Services were among the top performers. Better performing stocks for the period included Exxon Mobil Corporation, AT&T, Inc., and Chevron Corporation. Industry groups that appreciated the least during the report period included Banks, Food and Staples Retailing, and Transportation. Positions in Bank of America Corporation, Starbucks Corporation, and Motorola, Inc. detracted from returns.

As of 4/30/07:

Style Assessment¹

Statistics


Number of Holdings	955

Weighted Average

Market Cap


($ x 1,000,000)	$89,041


Price/Earnings Ratio (P/E)	17.6


Price/Book Ratio (P/B)	2.9


Portfolio Turnover Rate²	0%

Sector Weightings % of Investments


Financials	22.2%


Information Technology	14.8%


Health Care	11.8%


Consumer Discretionary	11.4%


Industrials	10.7%


Energy	9.5%


Consumer Staples	9.4%


Utilities	3.5%


Telecommunication Services	3.4%


Materials	3.3%


Total	100.0%

Top Holdings % of Net Assets³


Exxon Mobil Corp.	2.9%


General Electric Co.	2.4%


Microsoft Corp.	1.8%


Citigroup, Inc.	1.7%


AT&T Corp.	1.5%


Bank of America Corp.	1.4%


The Procter & Gamble Co.	1.3%


Wal-Mart Stores, Inc.	1.2%


Pfizer, Inc.	1.2%


Johnson & Johnson	1.2%


Total	16.6%

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

Source of Sector Classification: S&P and MSCI.


²	Not annualized. Less than 1%.


³	This list is not a recommendation of any security by the investment adviser.

10 Schwab Equity Index Funds

Schwab 1000 Index^® Fund

Performance Summary as of 4/30/07

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

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

Pre-Tax Average Annual Total Returns^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (4/2/91)		8.75%		14.74%		8.69%		8.26%		10.97%
Select Shares (5/19/97)		8.81%		14.89%		8.83%		n/a		8.00%
Benchmark: Schwab 1000 Index^®		9.04%		15.17%		9.07%		8.63%		(4/2/91) 11.37%
										(5/19/97) 8.22%
Fund Category: Morningstar Large-Cap Blend		8.79%		13.20%		8.03%		7.78%		(4/2/91) 10.55%
										(5/19/97) 7.25%

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

Average Annual Total Returns After Tax^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (4/2/91)
Pre-Liquidation (still own shares)		8.54%		14.53%		8.31%		7.90%		10.48%
Post-Liquidation (shares were sold)		5.94%		9.84%		7.34%		7.10%		9.69%
Select Shares^® (5/19/97)
Pre-Liquidation (still own shares)		8.58%		14.65%		8.42%		n/a		7.60%
Post-Liquidation (shares were sold)		6.01%		9.98%		7.44%		n/a		6.83%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		6.20%		10.39%		7.25%		6.51%		n/a
Post-Liquidation (shares were sold)		4.95%		7.86%		6.51%		6.16%		n/a


¹	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
²	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/07 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies.
³	As of 2/28/07 as stated in the prospectus.

Schwab Equity Index Funds 11

Schwab Small-Cap Index Fund^®

Larry Mano, (right) managing director and portfolio manager is responsible for the day-to-day co-management of the fund.

Tom Brown (left) portfolio manager, was responsible for the day-to-day co-management of the fund.

The Schwab Small-Cap Index Fund Investor Shares returned 8.92% for the report period, closely tracking its benchmark, the Schwab Small-Cap Index, which returned 9.01%. The Schwab Small-Cap Index is comprised of the stocks of the second-largest 1,000 publicly traded companies in the United States. The index is market-capitalization weighted, and therefore, its returns are most heavily influenced by the largest names in the index. Bear in mind that indices are unmanaged and unlike the fund, do not include operational and transaction costs. For the report period, all sectors experienced positive returns, which benefited the fund. From an industry group perspective, Materials, Food Beverage and Tobacco, Automobile and Components, and Energy were among the top performers. Stocks that performed well for the period included Steel Dynamics, Inc., AK Steel Holding Corporation, and NBTY, Inc. Industry groups that appreciated the least during the period were Diversified Financials, Pharmaceuticals and Biotechnology, and Banks.

As of 4/30/07:

Style Assessment¹

Statistics


Number of Holdings	953

Weighted Average

Market Cap


($ x 1,000,000)	$1,816


Price/Earnings Ratio (P/E)	28.3


Price/Book Ratio (P/B)	2.4


Portfolio Turnover Rate²	0%

Sector Weightings % of Investments


Financials	19.7%


Consumer Discretionary	17.0%


Information Technology	16.0%


Industrials	15.3%


Energy	8.6%


Health Care	8.6%


Materials	5.5%


Consumer Staples	3.8%


Utilities Telecommunication	3.7%


Services	1.0%


Others	0.8%


Total	100.0%

Top Holdings % of Net Assets ³


Steel Dynamics, Inc.	0.3%


Albemarle Corp.	0.3%


AGCO Corp.	0.3%


Navistar International Corp.	0.3%

Varian Semiconductor Equipment


Associates, Inc.	0.3%


Big Lots, Inc.	0.3%


Holly Corp.	0.3%

Boardwalk Pipeline Partners


LP	0.3%


Guess?, Inc.	0.3%

American Real Estate Partners


L.P.	0.3%


Total	3.0%

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

Source of Sector Classification: S&P and MSCI.

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


²	Not annualized. Less than 1%.


³	This list is not a recommendation of any security by the investment adviser.

12 Schwab Equity Index Funds

Schwab Small-Cap Index Fund^®

Performance Summary as of 4/30/07

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

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

Pre-Tax Average Annual Total Returns^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (12/3/93)		8.92%		9.68%		10.68%		10.54%		10.35%
Select Shares (5/19/97)		9.02%		9.86%		10.86%		n/a		9.99%
Benchmark: Schwab Small-Cap Index^®		9.01%		9.92%		10.92%		11.22%		(12/3/93) 11.18%
										(5/19/97) 10.49%
Fund Category: Morningstar Small-Cap Blend		8.85%		7.49%		11.29%		11.88%		(12/3/93) 11.56%
										(5/19/97) 11.31%

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

Average Annual Total Returns After Tax^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (12/3/93)
Pre-Liquidation (still own shares)		6.26%		7.00%		9.92%		9.51%		9.53%
Post-Liquidation (shares were sold)		7.61%		8.12%		9.01%		8.84%		8.89%
Select Shares^® (5/19/97)
Pre-Liquidation (still own shares)		6.30%		7.13%		10.05%		n/a		8.91%
Post-Liquidation (shares were sold)		7.67%		8.24%		9.14%		n/a		8.29%
Fund Category: Morningstar Small-Cap Blend
Pre-Liquidation (still own shares)		5.71%		4.23%		9.90%		10.17%		n/a
Post-Liquidation (shares were sold)		5.91%		5.15%		9.25%		9.73%		n/a


¹	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
²	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/07 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
³	As of 2/28/07 as stated in the prospectus.

Schwab Equity Index Funds 13

Schwab Total Stock Market Index Fund^®

Larry Mano, managing director and portfolio manager, is responsible for the co-management of the fund.

The Schwab Total Stock Market Index Fund Investor Shares were up 8.80%, tracking its benchmark, the Dow Jones Wilshire 5000 Composite Index, which returned 9.06%. The Dow Jones Wilshire 5000 Composite Index includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available, currently more than 7,000 stocks. Bear in mind that indices are unmanaged and unlike the fund, do not include operational and transaction costs. For the report period, all sectors experienced positive returns, which benefited the fund. Among the top performing industry groups were Materials, Health Care Equipment and Services, and Utilities. Better performing securities included Exxon Mobil Corporation, General Electric Company, and AT&T, Inc. Conversely, Banks, Transportation, and Food and Staples Retailing appreciated the least during the report period. Stocks that detracted from the funds returns included Starbucks Corporation, Bank of America Corporation, and Wal-Mart Stores, Inc.

As of 4/30/07:

Style Assessment¹

Statistics


Number of Holdings	2523

Weighted Average

Market Cap


($ x 1,000,000)	$79,606


Price/Earnings Ratio (P/E)	18.4


Price/Book Ratio (P/B)	2.9


Portfolio Turnover Rate²	0%

Sector Weightings % of Investments


Financials	21.4%


Information Technology	14.9%


Consumer Discretionary	12.3%


Health Care	11.4%


Industrials	11.1%


Energy	9.2%


Consumer Staples	8.5%


Utilities	3.6%


Materials Telecommunication	3.4%


Services	3.1%


Others	1.1%


Total	100.0%

Top Holdings % of Net Assets³


Exxon Mobil Corp.	2.6%


General Electric Co.	2.0%


Microsoft Corp.	1.6%


Citigroup, Inc.	1.5%


AT&T, Inc.	1.3%


Bank of America Corp.	1.3%


The Procter & Gamble Co.	1.2%


Pfizer, Inc.	1.1%


Johnson & Johnson	1.0%


JPMorgan Chase & Co.	1.0%


Total	14.6%

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

Source of Sector Classification: S&P and MSCI.

“Dow Jones”, “Wilshire”, “The DJW 5000^SM”, “The Dow Jones Wilshire 5000^SM” and “The Dow Jones Wilshire 5000 Composite Index^SM” are service marks of Dow Jones & Company, Inc. and Wilshire Associates Incorp rated. The Schwab Total Stock Market Index Fund, based on The Dow Jones Wilshire 5000 Composite Index^SM, is not sponsored, endorsed, sold or promoted by Dow Jones or Wilshire; and, neither Dow Jones nor Wilshire makes any representation regarding the advisability of investing in such a product.


²	Not annualized. Less than 1%.


³	This list is not a recommendation of any security by the investment adviser.

14 Schwab Equity Index Funds

Schwab Total Stock Market Index Fund^®

Performance Summary as of 4/30/07

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

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

Pre-Tax Average Annual Total Returns^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception


Investor Shares (6/1/99)		8.80%		14.31%		9.30%		4.19%
Select Shares (6/1/99)		8.86%		14.46%		9.48%		4.34%
Benchmark: Dow Jones Wilshire 5000 Composite Index^SM		9.06%		14.52%		9.67%		4.38%
Fund Category: Morningstar Large-Cap Blend		8.79%		13.20%		8.03%		3.86%

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

Average Annual Total Returns After Tax^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		Since Inception


Investor Shares (6/1/99)
Pre-Liquidation (still own shares)		8.61%		14.12%		8.96%		3.88%
Post-Liquidation (shares were sold)		5.95%		9.55%		7.90%		3.44%
Select Shares^® (6/1/99)
Pre-Liquidation (still own shares)		8.65%		14.24%		9.05%		3.96%
Post-Liquidation (shares were sold)		6.02%		9.68%		7.98%		3.51%
Fund Category: Morningstar Large-Cap Blend
Pre-Liquidation (still own shares)		6.20%		10.39%		7.25%		n/a
Post-Liquidation (shares were sold)		4.95%		7.86%		6.51%		n/a


¹	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
²	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/07 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies.
³	As of 2/28/07 as stated in the prospectus.

Schwab Equity Index Funds 15

Schwab International Index Fund^®

Larry Mano, (right) managing director and portfolio manager is responsible for the day-to-day co-management of the fund.

Tom Brown (left) portfolio manager, was responsible for the day-to-day co-management of the fund.

The Schwab International Index Fund Investor Shares were up 13.30% for the period, tracking its benchmark, the Schwab International Index, which returned 14.46%. The Schwab International Index (the Index) is comprised of stocks of 350 of the largest publicly traded companies stocks within 21 developed countries. The Index is market-capitalization weighted and therefore, its returns are most heavily influenced by the largest names in the Index. Bear in mind that indices are unmanaged and unlike the fund, do not include operational and transaction costs. Within the fund, Sweden, Germany, and the Netherlands were among the top contributors to total return. Sectors that performed well included Materials and Industrials. From an individual stock perspective, positions in ABN AMRO Holding N.V. and Siemens AG contributed to returns. On the downside, Japan and Hong Kong were among the countries that appreciated the least during the report period. In terms of sector performance, Health Care and Energy gained the least relative to other sectors. Positions in Novartis AG and AstraZeneca plc detracted from returns.

As of 4/30/07:

Style Assessment¹

Country Weightings % of Investments


United Kingdom	23.0%


Japan	16.4%


France	11.3%


Germany	8.3%


Switzerland	7.3%


Canada	6.3%


Netherlands	4.6%


Spain	4.6%


Australia	4.5%


Italy	4.1%


Others	9.6%


Total	100.0%

Statistics


Number of Holdings	355

Weighted Average

Market Cap


($ x 1,000,000)	$72,569


Price/Earnings Ratio (P/E)	15.6


Price/Book Ratio (P/B)	2.4


Portfolio Turnover Rate²	3%

Sector Weightings % of Investments


Financials	34.6%


Energy	9.0%


Consumer Discretionary	8.7%


Materials	8.1%


Consumer Staples	8.0%


Industrials	7.4%


Health Care	6.7%


Utilities Telecommunication	6.1%


Services	5.9%


Information Technology	4.7%


Others	0.8%


Total	100.0%

Top Holdings % of Net Assets³


BP plc	1.8%


HSBC Holdings plc	1.8%


Total S.A.	1.5%


Toyota Motor Corp.	1.4%


GlaxoSmithKline plc	1.4%


Netle S.A.-Reg’d	1.3%


Novartis AG-Reg’d	1.3%


Vodafone Group plc	1.3%


UBS AG-Reg	1.1%


Roche Holding AG	1.1%


Total	14.0%

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

Source of Sector Classification: S&P and MSCI.

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


²	Not annualized.


³	This list is not a recommendation of any security by the investment adviser.

16 Schwab Equity Index Funds

Schwab International Index Fund^®

Performance Summary as of 4/30/07

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

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

Pre-Tax Average Annual Total Returns^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (9/9/93)		13.30%		17.93%		15.26%		8.12%		7.96%
Select Shares (5/19/97)		13.39%		18.14%		15.47%		n/a		7.41%
Benchmark: Schwab International Index^®		14.46%		19.17%		16.12%		8.72%		(9/9/93) 8.60%
										(5/19/97) 7.85%
Fund Category: Morningstar Foreign Large-Cap Blend		14.34%		16.69%		14.48%		7.99%		(9/9/93) 8.52%
										(5/19/97) 7.31%

Fund Expense Ratios³: Investor Shares: Net 0.69%; Gross 0.70% / Select Shares: Net 0.50%; Gross 0.55%

Average Annual Total Returns After Tax^1,2


Fund Class and Inception Date	6 Months		1 Year		5 Years		10 Years		Since Inception


Investor Shares (9/9/93)
Pre-Liquidation (still own shares)		12.69%		17.29%		14.59%		7.57%		7.43%
Post-Liquidation (shares were sold)		9.07%		12.10%		13.02%		6.82%		6.76%
Select Shares^® (5/19/97)
Pre-Liquidation (still own shares)		12.73%		17.45%		14.74%		n/a		6.81%
Post-Liquidation (shares were sold)		9.15%		12.25%		13.17%		n/a		6.13%
Fund Category: Morningstar Foreign Large-Cap Blend
Pre-Liquidation (still own shares)		11.07%		13.23%		13.57%		6.71%		n/a
Post-Liquidation (shares were sold)		8.53%		10.08%		12.13%		6.26%		n/a


¹	Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower.
²	The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 4/30/07 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund.
³	As of 2/28/07 as stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 2/27/08. Gross Expense: Does not reflect the effect of contractual fee waivers.

Schwab Equity Index Funds 17

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

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

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six-months beginning November 1, 2006 and held through April 30, 2007.

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

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

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

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


					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio¹		Account Value		(Net of Expenses)		During Period²
	(Annualized)		at 11/1/06		at 4/30/07		11/1/06 - 4/30/07



Schwab S&P 500 Index Fund
Investor Shares
Actual Return		0.35%	$	1,000	$	1,084.70	$	1.81
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.06	$	1.76
Select Shares^®
Actual Return		0.19%	$	1,000	$	1,085.60	$	0.98
Hypothetical 5% Return		0.19%	$	1,000	$	1,023.85	$	0.95
e.Shares^®
Actual Return		0.20%	$	1,000	$	1,084.80	$	1.03
Hypothetical 5% Return		0.20%	$	1,000	$	1,023.80	$	1.00


Institutional Select^® S&P 500 Fund
Actual Return		0.10%	$	1,000	$	1,085.20	$	0.52
Hypothetical 5% Return		0.10%	$	1,000	$	1,024.30	$	0.50


Schwab 1000 Index Fund^®
Investor Shares
Actual Return		0.48%	$	1,000	$	1,087.50	$	2.48
Hypothetical 5% Return		0.48%	$	1,000	$	1,022.41	$	2.41
Select Shares
Actual Return		0.33%	$	1,000	$	1,088.10	$	1.71
Hypothetical 5% Return		0.33%	$	1,000	$	1,023.16	$	1.66


Schwab Small-Cap Index Fund^®
Investor Shares
Actual Return		0.57%	$	1,000	$	1,089.20	$	2.95
Hypothetical 5% Return		0.57%	$	1,000	$	1,021.97	$	2.86
Select Shares
Actual Return		0.42%	$	1,000	$	1,090.20	$	2.18
Hypothetical 5% Return		0.42%	$	1,000	$	1,022.71	$	2.11


¹		Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.

²		Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year.

18 Schwab Equity Index Funds

Fund Expenses (Unaudited) continued

Ending

Beginning
Account Value
Expenses Paid

Expense Ratio¹ Account Value
(Net of Expenses)
During Period²

(Annualized) at 11/1/06 at 4/30/07 11/1/06 - 4/30/07

Schwab Total Stock Market Index Fund^®

Investor Shares

Actual Return
0.52% $ 1,000 $ 1,088.00 $ 2.69

Hypothetical 5% Return
0.52% $ 1,000 $ 1,022.22 $ 2.61

Select Shares

Actual Return
0.37% $ 1,000 $ 1,088.60 $ 1.92

Hypothetical 5% Return
0.37% $ 1,000 $ 1,022.96 $ 1.86

Schwab International Index Fund^®

Investor Shares

Actual Return
0.68% $ 1,000 $ 1,133.00 $ 3.60

Hypothetical 5% Return
0.68% $ 1,000 $ 1,021.42 $ 3.41

Select Shares

Actual Return
0.50% $ 1,000 $ 1,133.90 $ 2.65

Hypothetical 5% Return
0.50% $ 1,000 $ 1,022.32 $ 2.51

¹ Based on the most recent six-month expense ratio; may differ from the expense ratio provided in Financial Highlights.

² Expenses for each fund or Share Class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year.

Schwab Equity Index Funds 19

Schwab S&P 500 Index Fund

Financial Statements

Financial Highlights


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Investor Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		21.47			18.79			17.61			16.36			13.79			16.45

Income or loss from investment operations:
Net investment income		0.19			0.34			0.34			0.23			0.20			0.20
Net realized and unrealized gains or losses		1.61			2.64			1.14			1.23			2.57			(2.68	)

Total income or loss from investment operations		1.80			2.98			1.48			1.46			2.77			(2.48	)
Less distributions:
Distributions from net investment income		(0.33	)		(0.30	)		(0.30	)		(0.21	)		(0.20	)		(0.18	)

Net asset value at end of period		22.94			21.47			18.79			17.61			16.36			13.79

Total return (%)		8.47	¹		16.03			8.44			9.03			20.39			(15.32	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.35	²		0.36			0.37			0.37			0.36			0.35
Gross operating expenses		0.35	²		0.36			0.40			0.45			0.46			0.46
Net investment income		1.71	²		1.57			1.74			1.35			1.45			1.21
Portfolio turnover rate		1	¹		3			4			3			3			8
Net assets, end of period ($ x 1,000,000)		3,909			3,685			3,666			3,849			3,510			2,760


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Select Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		21.56			18.88			17.68			16.41			13.83			16.50

Income or loss from investment operations:
Net investment income		0.21			0.37			0.36			0.26			0.24			0.22
Net realized and unrealized gains or losses		1.62			2.65			1.16			1.24			2.57			(2.69	)

Total income or loss from investment operations		1.83			3.02			1.52			1.50			2.81			(2.47	)
Less distributions:
Distributions from net investment income		(0.37	)		(0.34	)		(0.32	)		(0.23	)		(0.23	)		(0.20	)

Net asset value at end of period		23.02			21.56			18.88			17.68			16.41			13.83

Total return (%)		8.56	¹		16.18			8.66			9.25			20.62			(15.20	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.19	²		0.19			0.19			0.19			0.19			0.19
Gross operating expenses		0.20	²		0.21			0.25			0.30			0.31			0.31
Net investment income		1.88	²		1.74			1.92			1.53			1.63			1.37
Portfolio turnover rate		1	¹		3			4			3			3			8
Net assets, end of period ($ x 1,000,000)		4,217			4,038			3,938			4,119			3,692			3,029


*	Unaudited.


¹	Not annualized.
²	Annualized.

20 See financial notes

Schwab S&P 500 Index Fund

Financial Highlights continued

11/01/06–
11/01/05–
11/01/04–
11/01/03–
11/01/02–
11/01/01–

e.Shares 4/30/07* 10/31/06 10/31/05 10/31/04 10/31/03 10/31/02

Per-Share Data ($)

Net asset value at beginning of period
21.50 18.81 17.62 16.37 13.79 16.46

Income or loss from investment operations:

Net investment income
0.21 0.35 0.39 0.26 0.23 0.23

Net realized and unrealized gains or losses
1.60 2.67 1.11 1.21 2.56 (2.71 )

Total income or loss from investment operations
1.81 3.02 1.50 1.47 2.79 (2.48 )

Less distributions:

Distributions from net investment income
(0.37 ) (0.33 ) (0.31 ) (0.22 ) (0.21 ) (0.19 )

Net asset value at end of period
22.94 21.50 18.81 17.62 16.37 13.79

Total return (%)
8.48 ¹ 16.25 8.58 9.10 20.55 (15.32 )

Ratios/Supplemental Data (%)

Ratios to average net assets:

Net operating expenses
0.20 ² 0.21 0.24 0.28 0.28 0.28

Gross operating expenses
0.20 ² 0.21 0.25 0.30 0.31 0.31

Net investment income
1.86 ² 1.72 1.88 1.44 1.54 1.28

Portfolio turnover rate
1 ¹ 3 4 3 3 8

Net assets, end of period ($ x 1,000,000)
256 241 220 249 246 220


*	Unaudited.
¹	Not annualized.
²	Annualized.

See financial notes 21

Schwab S&P 500 Index Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)

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

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

Cost

Value

Holdings by Category

($ x 1,000)

.9%

Common Stock

5,429,687

8,377,457

—%

Short-Term Investment

1,491

.9%

Total Investments

5,431,178

8,378,948

.9%

Collateral Invested for Securities on Loan

72,616

.8)%

Other Assets and Liabilities, Net

(69,568

)

100

.0%

Net Assets

8,381,996


Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)





Common Stock 99.9% of net assets




Automobiles & Components 0.6%


Other Securities	1,967,927		0.6		48,122


Banks 5.2%


U.S. Bancorp	1,134,532		0.5		38,971
Wachovia Corp.	1,202,870		0.8		66,807
Wells Fargo & Co.	2,136,976		0.9		76,696
Other Securities	5,417,271		3.0		250,314

			5.2		432,788


Capital Goods 8.8%


3M Co.	467,061		0.4		38,659
General Electric Co. (b)	6,503,767		2.8		239,729
The Boeing Co.	510,490		0.6		47,476
Tyco International Ltd.	1,292,015		0.5		42,158
United Technologies Corp.	647,334		0.5		43,456
Other Securities	5,068,426		4.0		325,701

			8.8		737,179


Commercial Services & Supplies 0.5%


Other Securities	1,153,419		0.5		44,241


Consumer Durables & Apparel 1.2%


Other Securities	2,354,261		1.2		101,708


Consumer Services 1.7%


Other Securities	3,134,780		1.7		138,288


Diversified Financials 10.4%


American Express Co.	782,434		0.6		47,470
Bank of America Corp.	2,871,232		1.7		146,146
Citigroup, Inc.	3,110,243		2.0		166,771
JPMorgan Chase & Co.	2,231,216		1.4		116,246
Merrill Lynch & Co., Inc.	568,790		0.6		51,322
Morgan Stanley	682,848		0.7		57,366
The Charles Schwab Corp. (c)	660,696		0.2		12,633
The Goldman Sachs Group, Inc.	260,167		0.7		56,875
Other Securities	3,667,550		2.5		219,737

			10.4		874,566


Energy 10.0%


Chevron Corp.	1,379,919		1.3		107,344
ConocoPhillips	1,037,904		0.9		71,979
Exxon Mobil Corp. (b)	3,600,831		3.4		285,834
Schlumberger Ltd.	755,559		0.7		55,783
Other Securities	6,302,418		3.7		319,899

			10.0		840,839


Food & Staples Retailing 2.4%


Wal-Mart Stores, Inc.	1,556,593		0.9		74,592
Other Securities	3,289,170		1.5		126,771

			2.4		201,363


Food, Beverage & Tobacco 4.8%


Altria Group, Inc.	1,326,689		1.1		91,435
PepsiCo, Inc.	1,044,258		0.8		69,015
The Coca-Cola Co.	1,312,447		0.8		68,497
Other Securities	4,637,456		2.1		177,089

			4.8		406,036


Health Care Equipment & Services 4.1%


Medtronic, Inc.	721,996		0.5		38,215
UnitedHealth Group, Inc.	868,708		0.6		46,094
Other Securities	4,910,167		3.0		258,981

			4.1		343,290


Household & Personal Products 2.3%


The Procter & Gamble Co. (b)	2,013,070		1.5		129,461

22 See financial notes

Schwab S&P 500 Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Other Securities
1,072,200 0.8 64,488

2.3 193,949

Insurance 4.9%

American International Group, Inc.
1,663,332 1.4 116,283

Other Securities
5,362,424 3.5 294,913

4.9 411,196

Materials 3.0%

Other Securities
4,953,111 3.0 255,178

Media 3.4%

Comcast Corp., Class A *
1,976,048 0.6 52,681

The Walt Disney Co.
1,345,276 0.6 47,058

Time Warner, Inc.
2,415,129 0.6 49,824

Other Securities
3,946,069 1.6 130,944

3.4 280,507

Pharmaceuticals & Biotechnology 8.1%

Abbott Laboratories
977,375 0.7 55,339

Amgen, Inc. *
740,018 0.6 47,465

Eli Lilly and Co.
632,625 0.5 37,407

Johnson & Johnson
1,835,295 1.4 117,863

Merck & Co. Inc.
1,401,827 0.9 72,110

Pfizer, Inc.
4,537,857 1.4 120,072

Wyeth
861,882 0.6 47,834

Other Securities
4,346,923 2.0 180,352

8.1 678,442

Real Estate 1.0%

Other Securities
1,156,391 1.0 82,182

Retailing 3.6%

The Home Depot, Inc.
1,284,313 0.6 48,637

Other Securities
6,245,982 3.0 251,209

3.6 299,846

Semiconductors & Semiconductor Equipment 2.5%

Intel Corp.
3,704,566 0.9 79,648

Other Securities
5,104,834 1.6 130,252

2.5 209,900

Software & Services 5.5%

Google, Inc., Class A *
135,170 0.8 63,716

Microsoft Corp. (b)
5,496,763 2.0 164,573

Oracle Corp. *
2,550,731 0.6 47,954

Other Securities
6,134,020 2.1 188,330

5.5 464,573

Technology Hardware & Equipment 6.9%

Apple, Inc. *
544,625 0.7 54,354

Cisco Systems, Inc. *
3,862,898 1.2 103,294

Hewlett-Packard Co.
1,761,058 0.9 74,211

International Business Machines Corp.
973,347 1.2 99,486

QUALCOMM, Inc.
1,048,358 0.6 45,918

Other Securities
11,772,216 2.3 200,474

6.9 577,737

Telecommunication Services 3.6%

AT&T, Inc.
3,962,312 1.8 153,421

Verizon Communications, Inc.
1,868,151 0.9 71,326

Other Securities
3,805,424 0.9 78,309

3.6 303,056

Transportation 1.7%

United Parcel Service, Inc., Class B
674,790 0.6 47,526

Other Securities
1,673,205 1.1 96,630

1.7 144,156

Utilities 3.7%

Other Securities
6,562,327 3.7 308,315

Total Common Stock
(Cost $5,429,687) 8,377,457

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

Short-Term Investment 0.0% of net assets

Other Securities
5.05% , 06/14/07
1,500 — 1,491

Total Short-Term Investment
(Cost $1,491) 1,491

End of Investments.

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Collateral Invested for Securities on Loan
0.9% of net assets

Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust
72,615,970 0.9 72,616

End of collateral invested for securities on loan.

At 04/30/07 the tax basis cost of the fund’s investments was $5,479,319 and the unrealized appreciation and depreciation were $3,290,630 and ($391,001), respectively, with a net unrealized appreciation of $2,899,629.

See financial notes 23

Schwab S&P 500 Index Fund

Statement of

Assets and Liabilities

As of April 30, 2007; unaudited. All numbers x 1,000 except NAV.




Assets
Investments, at value including securities on loan of $69,892 (cost $5,431,178)		$8,378,948
Collateral invested for securities on loan		72,616
Receivables:
Investments sold		1,167
Dividends		6,806
Fund shares sold		5,692
Income from securities on loan		10
Prepaid expenses	+	18


Total assets		8,465,257


Liabilities
Collateral held for securities on loan		72,616
Payables:
Investment adviser and administrator fees		63
Transfer agent and shareholder services fees		116
Fund shares redeemed		8,299
Payable to custodian		1,812
Due to brokers for futures		68
Trustees’ fees		2
Accrued expenses	+	285


Total liabilities		83,261


Net Assets
Total assets		8,465,257
Total liabilities	−	83,261


Net assets		$8,381,996
Net Assets by Source
Capital received from investors		6,295,310
Net investment income not yet distributed		43,862
Net realized capital losses		(905,364	)
Net unrealized capital gains		2,948,188

Net Asset Value (NAV) by Shares Class


			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV

Investor Shares	$3,909,334		170,450			$22.94
Select Shares	$4,216,595		183,196			$23.02
e.Shares	$256,067		11,160			$22.94

See financial notes 25

Schwab S&P 500 Index Fund

Statement of

Operations

For November 1, 2006 through April 30, 2007; unaudited. All numbers x 1,000.




Investment Income
Dividends (including $66 from affiliated issuer)		$82,916
Interest		642
Securities on loan	+	113


Total Investment Income		83,671


Net Realized Gains and Losses
Net realized gains on investments		5,865
Net realized gains on futures contracts	+	1,042


Net realized gains		6,907


Net Unrealized Gains and Losses
Net unrealized gains on investments		585,495
Net unrealized gains on futures contracts	+	30


Net unrealized gains		585,525


Expenses
Investment adviser and administrator fees		3,640
Transfer agent and shareholder service fees:
Investor Shares		4,719
Select Shares		2,044
e.Shares		122
Shareholder reports		145
Portfolio accounting fees		95
Custodian fees		82
Professional fees		39
Registration fees		26
Trustees’ fees		23
Overdraft expense		1
Other expenses	+	77


Total expenses		11,013
Expense reduction by adviser and Schwab	−	241


Net expenses		10,772


Increase in Net Assets from Operations
Total investment income		83,671
Net expenses	−	10,772


Net investment income		72,899
Net realized gains		6,907
Net unrealized gains	+	585,525


Increase in net assets from operations		$665,331

26 See financial notes

Schwab S&P 500 Index Fund

Statements of

Changes in Net Assets

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




Operations


		11/1/06-04/30/07		11/1/05-10/31/06
Net investment income			$72,899		$130,176
Net realized gains or losses			6,907		(93,757	)
Net unrealized gains	+		585,525		1,136,153


Increase in net assets from operations			665,331		1,172,572


Distributions Paid


Distributions from net investment income
Investor Shares			57,248		57,584
Select Shares			68,517		67,949
e.Shares	+		4,038		3,805


Total distributions from net investment income			$129,803		$129,338

Transactions in Fund Shares


		11/1/06-04/30/07						11/1/05-10/31/06
		SHARES			VALUE			SHARES			VALUE
Shares Sold
Investor Shares			11,489			$252,170			17,732			$353,074
Select Shares			13,472			297,605			30,407			606,896
e.Shares	+		1,328			29,201			2,578			51,641


Total shares sold			26,289			$578,976			50,717			$1,011,611


Shares Reinvested
Investor Shares			2,499			$54,840			2,823			$55,000
Select Shares			2,752			60,597			3,056			59,681
e.Shares	+		169			3,715			177			3,443


Total shares reinvested			5,420			$119,152			6,056			$118,124


Shares Redeemed
Investor Shares			(15,169	)		($334,349	)		(44,003	)		($874,140	)
Select Shares			(20,312	)		(447,718	)		(54,785	)		(1,094,191	)
e.Shares	+		(1,562	)		(34,389	)		(3,222	)		(63,959	)


Total shares redeemed			(37,043	)		($816,456	)		(102,010	)		($2,032,290	)

Net transactions in fund shares			(5,334	)		($118,328	)		(45,237	)		($902,555	)


Shares Outstanding and Net Assets

11/1/06-04/30/07

11/1/05-10/31/06

NET ASSETS

Beginning of period

370,140

$7,964,796

415,377

$7,824,117

Total increase or decrease

(5,334

)

417,200

(45,237

)

140,679

End of period

364,806

$8,381,996

370,140

$7,964,796

Net investment income not yet distributed

$43,862

$100,766

See financial notes 27

Schwab Institutional Select^® S&P 500 Fund

Financial Statements

Financial Highlights


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		10.99			9.57			8.95			8.30			7.00			8.36

Income or loss from investment operations:
Net investment income		0.11			0.16			0.15			0.13			0.12			0.12
Net realized and unrealized gains or losses		0.82			1.39			0.62			0.64			1.30			(1.37	)

Total income or loss from investment operations		0.93			1.55			0.77			0.77			1.42			(1.25	)
Less distributions:
Distributions from net investment income		(0.17	)		(0.13	)		(0.15	)		(0.12	)		(0.12	)		(0.11	)

Net asset value at end of period		11.75			10.99			9.57			8.95			8.30			7.00

Total return (%)		8.52	¹		16.39			8.64			9.36			20.65			(15.18	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.10	²		0.10			0.10			0.15			0.15			0.15
Gross operating expenses		0.23	²		0.28			0.33			0.35			0.36			0.37
Net investment income		2.01	²		1.84			1.82			1.56			1.65			1.38
Portfolio turnover rate		0	^1,3		2			3			3			4			12
Net assets, end of period ($ x 1,000,000)		2,726			2,080			1,246			348			272			203


*	Unaudited.


¹	Not annualized.
²	Annualized.
³	Less than 1%.

28 See financial notes

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)


				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)


	99	.6%	Common Stock		2,297,870		2,713,796
	0	.2%	Short-Term Investments		6,188		6,188
		—%	Warrants		—		2

	99	.8%	Total Investments		2,304,058		2,719,986
	7	.1%	Collateral Invested for Securities on Loan		193,412		193,412
	(6	.9)%	Other Assets and Liabilities, Net				(187,214	)

	100	.0%	Net Assets				2,726,184


Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)





Common Stock 99.6% of net assets




Automobiles & Components 0.6%


Other Securities	635,600		0.6		15,522


Banks 5.1%


U.S. Bancorp	359,232		0.4		12,340
Wachovia Corp.	389,450		0.8		21,630
Wells Fargo & Co.	689,779		0.9		24,756
Other Securities	1,766,061		3.0		81,377

			5.1		140,103


Capital Goods 8.7%


3M Co.	149,112		0.4		12,342
General Electric Co. (a)	2,102,850		2.8		77,511
The Boeing Co.	163,876		0.5		15,240
Tyco International Ltd.	406,233		0.5		13,255
United Technologies Corp.	208,174		0.5		13,975
Other Securities	1,625,551		4.0		104,598

			8.7		236,921


Commercial Services & Supplies 0.5%


Other Securities	386,090		0.5		14,337


Consumer Durables & Apparel 1.2%


Other Securities	774,534		1.2		34,217


Consumer Services 1.7%


McDonald’s Corp.	252,334		0.5		12,183
Other Securities	768,554		1.2		33,083

			1.7		45,266


Diversified Financials 10.3%


American Express Co.	246,104		0.6		14,931
Bank of America Corp.	919,046		1.7		46,780
Citigroup, Inc. (a)	1,003,787		2.0		53,823
JPMorgan Chase & Co.	713,139		1.4		37,155
Merrill Lynch & Co., Inc.	180,676		0.6		16,302
Morgan Stanley	217,465		0.7		18,269
The Charles Schwab Corp. (b)	208,936		0.1		3,995
The Goldman Sachs Group, Inc. (a)	86,904		0.7		18,998
Other Securities	1,175,683		2.5		70,398

			10.3		280,651


Energy 10.1%


Chevron Corp.	445,172		1.3		34,630
ConocoPhillips	334,689		0.8		23,211
Exxon Mobil Corp.	1,190,414		3.5		94,495
Schlumberger Ltd.	240,657		0.6		17,768
Other Securities	2,076,736		3.9		105,336

			10.1		275,440


Food & Staples Retailing 2.3%


Wal-Mart Stores, Inc.	502,359		0.9		24,073
Other Securities	1,033,047		1.4		39,834

			2.3		63,907


Food, Beverage & Tobacco 4.8%


Altria Group, Inc.	428,171		1.1		29,510
PepsiCo, Inc.	335,370		0.8		22,165
The Coca-Cola Co.	416,410		0.8		21,732
Other Securities	1,479,562		2.1		56,341

			4.8		129,748


Health Care Equipment & Services 4.0%


Medtronic, Inc.	235,277		0.5		12,453
UnitedHealth Group, Inc.	275,216		0.5		14,603
Other Securities	1,576,935		3.0		82,756

			4.0		109,812

See financial notes 29

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Household & Personal Products 2.3%

The Procter & Gamble Co.
647,307 1.5 41,628

Other Securities
356,795 0.8 21,246

2.3 62,874

Insurance 4.8%

American International Group, Inc.
531,218 1.4 37,137

Other Securities
1,729,057 3.4 94,744

4.8 131,881

Materials 3.0%

Other Securities
1,598,673 3.0 81,977

Media 3.4%

Comcast Corp., Class A *
637,597 0.6 16,998

The Walt Disney Co.
428,478 0.6 14,988

Time Warner, Inc.
814,131 0.6 16,796

Other Securities
1,388,153 1.6 44,945

3.4 93,727

Pharmaceuticals & Biotechnology 8.2%

Abbott Laboratories
313,604 0.7 17,756

Amgen, Inc. *
236,687 0.6 15,181

Johnson & Johnson
592,223 1.4 38,032

Merck & Co. Inc.
448,225 0.9 23,057

Pfizer, Inc.
1,480,229 1.4 39,167

Wyeth
275,067 0.6 15,266

Other Securities
1,678,646 2.6 74,331

8.2 222,790

Real Estate 1.1%

Other Securities
435,775 1.1 29,840

Retailing 3.6%

The Home Depot, Inc.
411,638 0.6 15,589

Other Securities
2,044,209 3.0 82,531

3.6 98,120

Semiconductors & Semiconductor Equipment 2.5%

Intel Corp.
1,178,074 0.9 25,329

Other Securities
1,633,670 1.6 41,679

2.5 67,008

Software & Services 5.5%

Google, Inc., Class A *
43,567 0.8 20,537

Microsoft Corp. (a)
1,767,228 1.9 52,911

Oracle Corp. (a) *
817,178 0.6 15,363

Other Securities
1,972,068 2.2 60,152

5.5 148,963

Technology Hardware & Equipment 6.8%

Apple, Inc. *
173,903 0.6 17,356

Cisco Systems, Inc. *
1,243,620 1.2 33,254

Hewlett-Packard Co.
564,170 0.9 23,774

International Business Machines Corp.
310,006 1.2 31,686

QUALCOMM, Inc.
337,610 0.6 14,787

Other Securities
3,787,189 2.3 64,563

6.8 185,420

Telecommunication Services 3.6%

AT&T, Inc.
1,278,805 1.8 49,516

Verizon Communications, Inc.
596,406 0.8 22,771

Other Securities
1,223,239 1.0 25,166

3.6 97,453

Transportation 1.8%

United Parcel Service, Inc., Class B
219,197 0.6 15,438

Other Securities
571,944 1.2 32,507

1.8 47,945

Utilities 3.7%

Other Securities
2,137,908 3.7 99,874

Total Common Stock
(Cost $2,297,870) 2,713,796

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

Short-Term Investments 0.2% of net assets

Other Securities
6,188 0.2 6,188

Total Short-Term Investments
(Cost $6,188) 6,188

30 See financial notes

Schwab Institutional Select S&P 500 Fund

Portfolio Holdings (Unaudited) continued

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

Warrants 0.0% of net assets

Other Securities
11,390 — 2

Total Warrants
(Cost $-) 2

End of Investments.

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Collateral Invested for Securities on Loan 7.1% of net assets

Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust
193,412,464 7.1 193,412

End of collateral invested for securities on loan.

At 04/30/07, the tax basis cost of the fund’s investments was $2,316,022 and the unrealized appreciation and depreciation were $435,301 and ($31,337), respectively, with a net unrealized appreciation of $403,964.


*		Non-income producing security.
(a)		All or a portion of security is on loan.
(b)		Issuer is affiliated with the fund’s adviser.

ADR — American Depositary Receipt

See financial notes 31

Schwab Institutional Select S&P 500 Fund

Statement of

Assets and Liabilities

As of April 30, 2007; unaudited. All numbers x 1,000 except NAV.




Assets
Investments, at value including securities on loan of $188,176 (cost $2,304,058)		$2,719,986
Collateral invested for securities on loan		193,412
Receivables:
Investments sold		25
Fund shares sold		5,597
Dividends		2,130
Income from securities on loan		12
Interest		4
Prepaid expenses	+	6


Total assets		2,921,172


Liabilities
Collateral held for securities on loan		193,412
Payables:
Transfer agent and shareholder services fees		20
Fund shares redeemed		1,475
Due to broker		24
Accrued expenses	+	57


Total liabilities		194,988


Net Assets
Total assets		2,921,172
Total liabilities	−	194,988


Net assets		$2,726,184
Net Assets by Source
Capital received from investors		2,350,136
Net investment income not yet distributed		15,468
Net realized capital losses		(55,348	)
Net unrealized capital gains		415,928

Net Asset Value (NAV)


		Shares
Net Assets	¸	Outstanding	=	NAV

$2,726,184		231,993			$11.75

32 See financial notes

Schwab Institutional Select S&P 500 Fund

Statement of

Operations

For November 1, 2006 through April 30, 2007; unaudited. All numbers x 1,000.




Investment Income
Dividends (including $18 from affiliated issuer)		$23,512
Interest		1,527
Securities on loan	+	73


Total Investment Income		25,112


Net Realized Gains and Losses
Net realized gains on investments		3,210
Net realized gains on futures contracts	+	3,085


Net realized gains		6,295


Net Unrealized Gains and Losses
Net unrealized gains on investments		171,033
Net unrealized losses on futures contracts	+	(307	)


Net unrealized gains		170,726


Expenses
Investment adviser and administrator fees		1,436
Transfer agent and shareholder service fees		1,190
Custodian fees		41
Portfolio accounting fees		40
Registration fees		36
Professional fees		18
Trustees’ fees		8
Shareholder reports		6
Other expenses	+	18


Total expenses		2,793
Expense reduction by adviser and Schwab	−	1,603


Net expenses		1,190


Increase in Net Assets from Operations
Total investment income		25,112
Net expenses	−	1,190


Net investment income		23,922
Net realized gains		6,295
Net unrealized gains	+	170,726


Increase in net assets from operations		$200,943

See financial notes 33

Schwab Institutional Select S&P 500 Fund

Statements of

Changes in Net Assets

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




Operations


		11/1/06-04/30/07		11/1/05-10/31/06
Net investment income			$23,922		$29,583
Net realized gains or losses			6,295		(9,637	)
Net unrealized gains	+		170,726		227,054


Increase in net assets from operations			200,943		247,000


Distributions Paid
Distributions from net investment income			$32,922		$18,248

Transactions in Fund Shares


		11/1/06-04/30/07						11/1/05-10/31/06
		SHARES			VALUE			SHARES			VALUE
Shares Sold			54,331			$610,386			85,032			$868,441
Shares Reinvested			2,614			29,386			1,660			16,500
Shares Redeemed	+		(14,322	)		(161,989	)		(27,532	)		(279,438	)


Net transactions in fund shares			42,623			$477,783			59,160			$605,503


Shares Outstanding and Net Assets

11/1/06-04/30/07

11/1/05-10/31/06

NET ASSETS

Beginning of period

189,370

$2,080,380

130,210

$1,246,125

Total increase

42,623

645,804

59,160

834,255

End of period

231,993

$2,726,184

189,370

$2,080,380

Net investment income not yet distributed

$15,468

$24,468

34 See financial notes

Schwab 1000 Index^® Fund

Financial Statements

Financial Highlights


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Investor Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		40.40			35.31			32.54			30.25			25.25			29.57

Income or loss from investment operations:
Net investment income		0.32			0.50	¹		0.55			0.37			0.33			0.31
Net realized and unrealized gains or losses		3.19			5.05	¹		2.70			2.26			4.99			(4.36	)

Total income or loss from investment operations		3.51			5.55			3.25			2.63			5.32			(4.05	)
Less distributions:
Distributions from net investment income		(0.52	)		(0.46	)		(0.48	)		(0.34	)		(0.32	)		(0.27	)

Net asset value at end of period		43.39			40.40			35.31			32.54			30.25			25.25

Total return (%)		8.75	²		15.84			10.04			8.78			21.34			(13.87	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.48	³		0.49			0.50			0.50			0.49			0.46
Gross operating expenses		0.48	³		0.49			0.50			0.50			0.51			0.52
Net investment income		1.47	³		1.34			1.49			1.15			1.27			1.04
Portfolio turnover rate		0	^2,4		5			6			5			5			9
Net assets, end of period ($ x 1,000,000)		4,034			3,918			4,166			4,258			3,974			3,223


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/02/02–			11/01/01–
Select Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		40.43			35.34			32.56			30.27			25.26			29.58

Income or loss from investment operations:
Net investment income		0.33			0.56	¹		0.56			0.42			0.37			0.35
Net realized and unrealized gains or losses		3.21			5.04	¹		2.74			2.25			4.99			(4.36	)

Total income or loss from investment operations		3.54			5.60			3.30			2.67			5.36			(4.01	)
Less distributions:
Distributions from net investment income		(0.59	)		(0.51	)		(0.52	)		(0.38	)		(0.35	)		(0.31	)

Net asset value at end of period		43.38			40.43			35.34			32.56			30.27			25.26

Total return (%)		8.81	²		16.01			10.21			8.90			21.52			(13.77	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.33	³		0.34			0.35			0.35			0.35			0.35
Gross operating expenses		0.33	³		0.34			0.35			0.35			0.36			0.37
Net investment income		1.62	³		1.48			1.63			1.30			1.41			1.15
Portfolio turnover rate		0	^2,4		5			6			5			5			9
Net assets, end of period ($ x 1,000,000)		3,100			2,924			2,328			2,138			1,996			1,588


*	Unaudited.


¹	Calculated based on the average shares outstanding during the period.
²	Not annualized.
³	Annualized.
⁴	Less than 1%.

See financial notes 35

Schwab 1000 Index Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)


				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)


	99	.8%	Common Stock		3,022,594		7,116,670
	0	.1%	Foreign Common Stock		4,103		8,262
	0	.1%	Short-Term Investments		4,625		4,625
		—%	Warrants		—		225

	100	.0%	Total Investments		3,031,322		7,129,782
	5	.0%	Collateral Invested for Securities on Loan		359,207		359,207
	(5	.0)%	Other Assets and Liabilities, Net				(354,552	)

	100	.0%	Net Assets				7,134,437


Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)





Common Stock 99.8% of net assets




Automobiles & Components 0.5%


Other Securities	1,528,696		0.5		38,212


Banks 4.8%


Wachovia Corp.	854,189		0.7		47,442
Wells Fargo & Co.	1,491,396		0.8		53,526
Other Securities	5,781,508		3.3		241,192

			4.8		342,160


Capital Goods 8.3%


General Electric Co. (b)	4,599,222		2.4		169,527
The Boeing Co.	366,089		0.5		34,046
United Technologies Corp.	455,163		0.4		30,555
Other Securities	6,064,562		5.0		354,551

			8.3		588,679


Commercial Services & Supplies 0.7%


Other Securities	1,330,051		0.7		52,455


Consumer Durables & Apparel 1.4%


Other Securities	2,119,099		1.4		98,292


Consumer Services 2.1%


Other Securities	3,381,244		2.1		152,420


Diversified Financials 9.4%


American Express Co.	545,577		0.5		33,100
Bank of America Corp. (b)	2,000,568		1.4		101,829
Citigroup, Inc.	2,216,762		1.7		118,863
JPMorgan Chase & Co.	1,577,338		1.2		82,179
Merrill Lynch & Co., Inc.	396,362		0.5		35,764
Morgan Stanley	480,548		0.6		40,371
The Charles Schwab Corp. (c)	558,615		0.2		10,681
The Goldman Sachs Group, Inc.	190,932		0.6		41,740
Other Securities	3,607,256		2.7		208,185

			9.4		672,712


Energy 9.6%


ChevronTexaco Corp.	978,977		1.1		76,155
ConocoPhillips	736,516		0.7		51,077
Exxon Mobil Corp.	2,581,722		2.9		204,937
Schlumberger Ltd.	529,506		0.6		39,093
Other Securities	6,055,358		4.2		302,590

			9.5		673,852


Food & Staples Retailing 2.4%


Wal-Mart Stores, Inc.	1,849,777		1.3		88,641
Other Securities	2,220,501		1.1		85,321

			2.4		173,962


Food, Beverage & Tobacco 4.9%


Altria Group, Inc.	918,915		0.9		63,332
Kraft Foods, Inc., Class A	1,380,564		0.6		46,207
PepsiCo, Inc.	734,687		0.7		48,555
The Coca-Cola Co.	1,046,504		0.8		54,617
Other Securities	3,474,582		1.9		138,091

			4.9		350,802


Health Care Equipment & Services 4.1%


UnitedHealth Group, Inc.	591,212		0.5		31,370

36 See financial notes

Schwab 1000 Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Other Securities
5,149,352 3.6 260,055

4.1 291,425

Household & Personal Products 2.0%

The Procter & Gamble Co. (b)
1,412,219 1.3 90,820

Other Securities
908,332 0.7 53,559

2.0 144,379

Insurance 6.1%

American International Group, Inc.
1,151,036 1.1 80,469

Berkshire Hathaway, Inc., Class A *
693 1.1 75,676

Other Securities
5,218,252 3.9 276,884

6.1 433,029

Materials 3.3%

Other Securities
4,919,721 3.3 234,019

Media 3.8%

Comcast Corp., Class A *
1,423,953 0.5 37,963

News Corp., Class A
1,415,628 0.5 31,696

The Walt Disney Co.
907,502 0.5 31,744

Time Warner, Inc.
1,821,801 0.5 37,584

Other Securities
4,036,602 1.8 134,575

3.8 273,562

Pharmaceuticals & Biotechnology 7.7%

Abbott Laboratories
680,546 0.6 38,533

Amgen, Inc. *
523,360 0.5 33,568

Eli Lilly & Co.
510,171 0.4 30,166

Genentech, Inc. *
462,819 0.5 37,021

Johnson & Johnson
1,293,317 1.2 83,057

Merck & Co., Inc.
994,585 0.7 51,161

Pfizer, Inc.
3,227,810 1.2 85,408

Wyeth
598,983 0.5 33,244

Other Securities
3,762,134 2.1 154,036

7.7 546,194

Real Estate 1.9%

Other Securities
2,520,295 1.9 137,217

Retailing 3.7%

The Home Depot, Inc.
914,295 0.5 34,624

Other Securities
5,887,726 3.2 232,375

3.7 266,999

Semiconductors & Semiconductor Equipment 2.4%

Intel Corp.
2,572,630 0.8 55,312

Other Securities
4,646,371 1.6 116,902

2.4 172,214

Software & Services 6.0%

Google, Inc., Class A *
132,196 0.9 62,315

Microsoft Corp.
4,360,588 1.8 130,556

Oracle Corp. *
2,348,610 0.6 44,154

Other Securities
6,236,245 2.7 190,392

6.0 427,417

Technology Hardware & Equipment 6.1%

Apple Computer, Inc. *
375,414 0.5 37,466

Cisco Systems, Inc. *
2,716,615 1.0 72,642

Hewlett-Packard Co.
1,235,718 0.7 52,073

International Business Machines Corp.
673,990 1.0 68,889

QUALCOMM, Inc.
730,628 0.5 32,002

Other Securities
9,289,703 2.4 171,914

6.1 434,986

Telecommunication Services 3.4%

AT&T Corp. (b)
2,833,727 1.5 109,722

Verizon Communications, Inc.
1,295,537 0.7 49,464

Other Securities
3,647,067 1.2 79,612

3.4 238,798

Transportation 1.7%

United Parcel Service, Inc., Class B
479,825 0.5 33,794

Other Securities
1,762,778 1.2 88,029

1.7 121,823

Utilities 3.5%

Other Securities
5,428,049 3.5 251,062

Total Common Stock
(Cost $3,022,594) 7,116,670

Foreign Common Stock 0.1% of net assets

Canada 0.0%

Consumer Services 0.0%

Other Securities
65,374 — 2,061

See financial notes 37

Schwab 1000 Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Cayman Islands 0.1%

Energy 0.1%

Other Securities
96,995 0.1 6,201

Total Foreign Common Stock
(Cost $4,103) 8,262

Security
Face Amount
Value

Rate, Maturity Date ($ x 1,000) ($ x 1,000)

Short-Term Investments 0.1% of net assets

Other Securities 4.98%, 06/14/07
4,632 0.1 4,625

Total Short-Term Investment
(Cost $4,625) 4,625

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Warrants 0.0% of net assets

Other Securities
12,506 — 225

Total Warrants
(Cost $-) 225

End of Investments.

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Collateral Invested for Securities on Loan 5.0% of net assets

State Street Navigator Security Lending Prime Portfolio
359,207,470 5.0 359,207

End of collateral invested for securities on loan.

At 04/30/2007 the tax basis cost of the fund’s investments was $3,034,106, and the unrealized appreciation and depreciation were $4,205,636 and ($109,960), respectively, with a net unrealized appreciation of $4,095,676.

In addition to the above, the fund held the following at 04/30/2007. All numbers are x1,000 except number of futures contracts.

Number of

Contract

Unrealized

Contracts

Value

Gains

Futures Contract

S & P 500 Index, e-mini, Long, expires 06/16/07

130

9,675

571


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

38 See financial notes

Schwab 1000 Index Fund

Statement of

Assets and Liabilities

As of April 30, 2007; unaudited. All numbers x 1,000 except NAV.




Assets
Investments, at value including securities on loan of $350,795 (cost $3,031,322)		$7,129,782
Collateral invested for securities on loan		359,207
Cash		1
Foreign currency, at value (cost $5)		4
Receivables:
Investments sold		90
Dividends		5,239
Fund shares sold		5,095
Income from securities on loan		80
Interest		1
Prepaid expenses	+	15


Total assets		7,499,514


Liabilities
Collateral held for securities on loan		359,207
Payables:
Investment adviser and administrator fees		132
Transfer agent and shareholder services fees		111
Fund shares redeemed		5,274
Due to brokers for futures		88
Trustees’ fees		2
Accrued expenses	+	263


Total liabilities		365,077


Net Assets
Total assets		7,499,514
Total liabilities	−	365,077


Net assets		$7,134,437
Net Assets by Source
Capital received from investors		3,245,691
Net investment income not yet distributed		31,847
Net realized capital losses		(242,132	)
Net unrealized capital gains		4,099,031

Net Asset Value (NAV) by Shares Class


			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV

Investor Shares	$4,034,345		92,985			$43.39
Select Shares	$3,100,092		71,456			$43.38

See financial notes 39

Schwab 1000 Index Fund

Statement of

Operations

For November 1, 2006 through April 30, 2007; unaudited. All numbers x 1,000.




Investment Income
Dividends (net of $4 foreign withholding tax)		$66,534
Interest		511
Securities on loan	+	368


Total Investment Income		67,413


Net Realized Gains and Losses
Net realized gains on investments		69,025
Net realized gains on foreign currency transactions		1
Net realized gains on futures contracts	+	456


Net realized gains		69,482


Net Unrealized Gains and Losses
Net unrealized gains on investments		463,569
Net unrealized gains on futures contracts	+	382


Net unrealized gains		463,951


Expenses
Investment adviser and administrator fees		7,601
Transfer agent and shareholder service fees:
Investor Shares		4,921
Select Shares		1,485
Shareholder reports		148
Portfolio accounting fees		88
Custodian fees		67
Registration fees		57
Professional fees		35
Trustees’ fees		22
Overdraft expense		4
Other expenses	+	42


Total expenses		14,470
Custody credit	−	2
Expense reduction by adviser and Schwab	−	1


Net expenses		14,467


Increase in Net Assets from Operations
Total investment income		67,413
Net expenses	−	14,467


Net investment income		52,946
Net realized gains		69,482
Net unrealized gains	+	463,951


Increase in net assets from operations		$586,379

40 See financial notes

Schwab 1000 Index Fund

Statements of

Changes in Net Assets

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




Operations


		11/1/06-04/30/07		11/1/05-10/31/06
Net investment income			$52,946		$92,450
Net realized gains			69,482		200,595
Net unrealized gains	+		463,951		688,962


Increase in net assets from operations			586,379		982,007


Distributions Paid


Distributions from net investment income
Investor Shares			49,741		53,026
Select Shares	+		42,503		33,855


Total distributions from net investment income			$92,244		$86,881

Transactions in Fund Shares


		11/1/06-04/30/07						11/1/05-10/31/06
		SHARES			VALUE			SHARES			VALUE

Shares Sold
Investor Shares			3,573			$148,792			7,114			$266,698
Select Shares	+		5,517			229,817			17,151			640,701


Total shares sold			9,090			$378,609			24,265			$907,399


Shares Reinvested
Investor Shares			1,107			$45,932			1,329			$48,830
Select Shares	+		856			35,483			769			28,221


Total shares reinvested			1,963			$81,415			2,098			$77,051


Shares Redeemed
Investor Shares			(8,673	)		($361,224	)		(29,454	)		($1,101,605	)
Select Shares	+		(7,241	)		(300,103	)		(11,469	)		(429,917	)


Total shares redeemed			(15,914	)		($661,327	)		(40,923	)		($1,531,522	)

Net transactions in fund shares			(4,861	)		($201,303	)		(14,560	)		($547,072	)


Shares Outstanding and Net Assets

11/1/06-04/30/07

11/1/05-10/31/06

NET ASSETS

Beginning of period

169,302

$6,841,605

183,862

$6,493,551

Total increase or decrease

(4,861

)

292,832

(14,560

)

348,054

End of period

164,441

$7,134,437

169,302

$6,841,605

Net investment income not yet distributed

$31,847

$71,145

See financial notes 41

Schwab Small-Cap Index Fund^®

Financial Statements

Financial Highlights


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Investor Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		25.92			22.31			19.92			18.22			13.27			15.98

Income or loss from investment operations:
Net investment income		0.13			0.23	¹		0.14			0.13			0.11			0.13
Net realized and unrealized gains or losses		2.04			3.67	¹		2.38			1.68			4.98			(2.17	)

Total income or loss from investment operations		2.17			3.90			2.52			1.81			5.09			(2.04	)
Less distributions:
Distributions from net investment income		(0.24	)		(0.14	)		(0.13	)		(0.11	)		(0.14	)		(0.09	)
Distributions from net realized gains		(3.05	)		(0.15	)		—			—			—			(0.58	)

Total distributions		(3.29	)		(0.29	)		(0.13	)		(0.11	)		(0.14	)		(0.67	)

Net asset value at end of period		24.80			25.92			22.31			19.92			18.22			13.27

Total return (%)		8.92	²		17.62			12.66			9.98			38.72			(13.66	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.57	³		0.57			0.58			0.59			0.56			0.49
Gross operating expenses		0.57	³		0.57			0.58			0.59			0.60			0.60
Net investment income		1.03	³		0.94			0.57			0.66			0.74			0.77
Portfolio turnover rate		0	^2,4		29			40			39			34			44
Net assets, end of period ($ x 1,000,000)		778			771			823			869			886			722


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/02/02–			11/01/01–
Select Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		25.97			22.36			19.96			18.25			13.28			16.00

Income or loss from investment operations:
Net investment income		0.15			0.27	¹		0.17			0.17			0.14			0.14
Net realized and unrealized gains or losses		2.04			3.67	¹		2.39			1.68			4.99			(2.18	)

Total income or loss from investment operations		2.19			3.94			2.56			1.85			5.13			(2.04	)
Less distributions:
Distributions from net investment income		(0.28	)		(0.18	)		(0.16	)		(0.14	)		(0.16	)		(0.10	)
Distributions from net realized gains		(3.05	)		(0.15	)		—			—			—			(0.58	)

Total distributions		(3.33	)		(0.33	)		(0.16	)		(0.14	)		(0.16	)		(0.68	)

Net asset value at end of period		24.83			25.97			22.36			19.96			18.25			13.28

Total return (%)		9.02	²		17.78			12.86			10.16			39.02			(13.62	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.42	³		0.42			0.41			0.42			0.41			0.38
Gross operating expenses		0.42	³		0.42			0.43			0.44			0.45			0.45
Net investment income		1.18	³		1.10			0.74			0.82			0.89			0.88
Portfolio turnover rate		0	^2,4		29			40			39			34			44
Net assets, end of period ($ x 1,000,000)		953			889			795			761			759			638


*	Unaudited.


¹	Calculated based on the average shares outstanding during the period.
²	Not annualized.
³	Annualized.
⁴	Less than 1%.

42 See financial notes

Schwab Small-Cap Index Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)

Cost

Value

Holdings by Category

($ x 1,000)

.1%

Common Stock

1,196,192

1,716,380

.8%

Short-Term Investments

14,089

.9%

Total Investments

1,210,281

1,730,469

.5%

Collateral Invested for Securities on Loan

631,637

(36

.4)%

Other Assets and Liabilities, Net

(630,448

)

100

.0%

Net Assets

1,731,658


Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)





Common Stock 99.1% of net assets




Automobiles & Components 1.0%


Other Securities	660,111		1.0		17,118


Banks 7.0%


Other Securities	5,256,788		7.0		120,571


Capital Goods 8.6%


Acuity Brands, Inc.	64,532		0.2		3,815
AGCO Corp. *	125,945		0.3		5,256
General Cable Corp. *	67,632		0.2		3,885
Navistar International Corp. *	94,419		0.3		5,243
Quanta Services, Inc. (a) *	170,136		0.3		4,677
Other Securities	3,353,917		7.3		126,297

			8.6		149,173


Commercial Services & Supplies 3.8%


Corrections Corp. of America *	81,973		0.3		4,656
TeleTech Holdings, Inc. (a) *	98,100		0.2		3,701
Other Securities	1,882,750		3.3		57,322

			3.8		65,679


Consumer Durables & Apparel 3.4%


Phillips-Van Heusen Corp.	72,875		0.2		4,074
Other Securities	2,040,115		3.2		54,770

			3.4		58,844


Consumer Services 4.9%


American Real Estate Partners L.P. (a)	55,192		0.3		4,946
Orient-Express Hotels Ltd., Class A (a)	77,272		0.2		4,068
Sotheby’s	78,741		0.2		4,065
Other Securities	2,310,084		4.2		72,214

			4.9		85,293


Diversified Financials 2.2%


Other Securities	1,244,439		2.2		37,749


Energy 8.6%


Boardwalk Pipeline Partners LP	136,435		0.3		4,992
Compagnie Generale de Geophysique-Veritas S.A. *	96,650		0.2		4,020
Holly Corp. (a)	79,906		0.3		5,082
Magellan Midstream Partners (a)	88,608		0.2		4,500
Overseas Shipholding Group, Inc. (a)	53,961		0.2		3,820
Superior Energy Services, Inc. (a) *	104,787		0.2		3,807
Western Refining, Inc. (a)	92,722		0.2		3,674
Other Securities	4,174,614		7.0		119,658

			8.6		149,553


Food & Staples Retailing 1.1%


Rite Aid Corp. (a) *	721,895		0.2		4,432
Other Securities	426,219		0.9		14,965

			1.1		19,397


Food, Beverage & Tobacco 2.0%


Corn Products International, Inc.	101,390		0.2		4,037
Hansen Natural Corp. (a) *	112,460		0.3		4,296
Seaboard Corp. (a)(b)	1,775		0.3		4,425
Other Securities	655,494		1.2		21,141

			2.0		33,899


Health Care Equipment & Services 4.8%


WellCare Health Plans, Inc. *	54,593		0.3		4,400

See financial notes 43

Schwab Small-Cap Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Other Securities
2,410,539 4.5 79,237

4.8 83,637

Household & Personal Products 0.8%

NBTY, Inc. *
94,529 0.3 4,671

Other Securities
927,732 0.5 8,389

0.8 13,060

Insurance 4.3%

Odyssey Re Holdings Corp. (a)
96,583 0.2 4,047

Other Securities
2,376,434 4.1 70,667

4.3 74,714

Materials 5.5%

AK Steel Holding Corp. (a) *
160,619 0.3 4,902

Albemarle Corp.
127,432 0.3 5,410

Carpenter Technology Corp. (a)
36,101 0.3 4,382

Chaparral Steel Co.
63,646 0.3 4,487

Cleveland-Cliffs, Inc.
54,698 0.2 3,790

Greif, Inc., Class A
67,862 0.2 3,773

Steel Dynamics, Inc.
129,724 0.3 5,748

Other Securities
2,687,821 3.6 62,755

5.5 95,247

Media 2.2%

Other Securities
2,499,016 2.2 37,262

Pharmaceuticals & Biotechnology 3.7%

Other Securities
2,975,968 3.7 64,744

Real Estate 6.3%

Taubman Centers, Inc. (a)
68,483 0.2 3,839

Other Securities
3,738,408 6.1 104,800

6.3 108,639

Retailing 5.5%

Big Lots, Inc. *
161,833 0.3 5,211

Dick’s Sporting Goods, Inc. *
68,840 0.2 3,861

Guess?, Inc.
125,772 0.3 4,955

OfficeMax, Inc.
96,592 0.3 4,754

Other Securities
3,256,762 4.4 76,044

5.5 94,825

Semiconductors & Semiconductor Equipment 3.6%

ON Semiconductor Corp. (a)(b) *
372,946 0.2 3,994

Varian Semiconductor Equipment Associates, Inc. *
78,714 0.3 5,223

Other Securities
4,731,643 3.1 53,323

3.6 62,540

Software & Services 7.1%

FactSet Research Systems, Inc. (a)
66,796 0.2 4,109

Gartner, Inc. (a) *
149,949 0.2 3,783

ValueClick, Inc. (a) *
133,043 0.2 3,805

WebEx Communications, Inc. *
64,659 0.2 3,669

Other Securities
5,679,294 6.3 107,777

7.1 123,143

Technology Hardware & Equipment 5.2%

CommScope, Inc. *
79,449 0.2 3,706

Polycom, Inc. (a) *
132,739 0.2 4,420

Trimble Navigation Ltd. *
149,602 0.2 4,291

Other Securities
5,267,060 4.6 78,032

5.2 90,449

Telecommunication Services 1.0%

Other Securities
1,458,213 1.0 17,956

Transportation 2.8%

Continental Airlines, Inc., Class B (a) *
126,711 0.3 4,633

Other Securities
1,641,911 2.5 44,569

2.8 49,202

Utilities 3.7%

Dynegy, Inc., Class A *
512,236 0.3 4,820

Sierra Pacific Resources *
214,037 0.2 3,908

Other Securities
2,070,934 3.2 54,958

3.7 63,686

Total Common Stock
(Cost $1,196,192) 1,716,380

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

Short-Term Investments 0.8% of net assets

Commercial Paper & Other Obligations 0.8%

Other Securities

5.03%, 05/01/07
13,592 0.8 13,592

U.S. Treasury Obligation 0.0%

Other Securities

44 See financial notes

Schwab Small-Cap Index Fund

Portfolio Holdings (Unaudited) continued

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

5.05% , 06/14/07
500 — 497

Total Short-Term Investments
(Cost $14,089) 14,089

End of Investments.

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Collateral Invested for Securities on Loan
36.5% of net assets

Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust
631,637,268 36.5 631,637

End of collateral invested for securities on loan.

At 4/30/07 the tax basis cost of the fund’s investments was $1,210,877, and the unrealized appreciation and depreciation were $607,415 and ($87,823), respectively, with a net unrealized appreciation of $519,592.

In addition to the above, the fund held the following at 04/30/2007. All numbers are x1,000 except number of futures contracts.

Number of

Contract

Unrealized

Contracts

Value

Losses

Futures Contract

Russell 2000 Index, e-mini Futures, Long expires 06/15/07

4,095

(75

)


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

ADR — American Depositary Receipt

See financial notes 45

Schwab Small Cap Index Fund

Statement of

Assets and Liabilities

As of April 30, 2007; unaudited. All numbers x 1,000 except NAV.




Assets
Investments, at value including securities on loan of $606,103 (cost $1,210,281)		$1,730,469
Collateral invested for securities on loan		631,637
Receivables:
Fund shares sold		1,388
Dividends		1,084
Income from securities on loan		267
Interest		2
Prepaid expenses	+	4


Total assets		2,364,851


Liabilities
Collateral held for securities on loan		631,637
Payables:
Investment adviser and administrator fees		43
Transfer agent and shareholder services fees		25
Fund shares redeemed		1,353
Due to brokers for futures		80
Trustees’ fees		1
Accrued expenses	+	54


Total liabilities		633,193


Net Assets
Total assets		2,364,851
Total liabilities	−	633,193


Net assets		$1,731,658
Net Assets by Source
Capital received from investors		1,176,598
Net investment income not yet distributed		5,642
Net realized capital gains		29,305
Net unrealized capital gains		520,113

Net Asset Value (NAV) by Shares Class


			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV

Investor Shares	$778,427		31,388			$24.80
Select Shares	$953,231		38,392			$24.83

46 See financial notes

Schwab Small Cap Index Fund

Statement of

Operations

For November 1, 2006 through April 30, 2007; unaudited. All numbers x 1,000.




Investment Income
Dividends (net of $6 foreign withholding tax)		$12,283
Interest		175
Securities on loan	+	1,023


Total Investment Income		13,481


Net Realized Gains and Losses
Net realized gains on investments		29,569
Net realized gains on futures contracts	+	321


Net realized gains		29,890


Net Unrealized Gains and Losses
Net unrealized gains on investments		106,974
Net unrealized losses on futures contracts	+	(257	)


Net unrealized gains		106,717


Expenses
Investment adviser and administrator fees		2,483
Transfer agent and shareholder service fees:
Investor Shares		960
Select Shares		458
Registration fees		50
Custodian fees		47
Portfolio accounting fees		41
Shareholder reports		37
Professional fees		24
Trustees’ fees		7
Overdraft Expense		2
Other expenses	+	13


Total expenses		4,122
Expense reduction by adviser and Schwab	−	4


Net expenses		4,118


Increase in Net Assets from Operations
Total investment income		13,481
Net expenses	−	4,118


Net investment income		9,363
Net realized gains		29,890
Net unrealized gains	+	106,717


Increase in net assets from operations		$145,970

See financial notes 47

Schwab Small Cap Index Fund

Statements of

Changes in Net Assets

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




Operations


		11/1/06-04/30/07		11/1/05-10/31/06
Net investment income			$9,363		$16,970
Net realized gains			29,890		192,404
Net unrealized gains	+		106,717		62,683


Increase in net assets from operations			145,970		272,057


Distributions Paid


Distributions from net investment income
Investor Shares			6,876		4,995
Select Shares	+		9,628		6,216


Total distributions from net investment income			16,504		11,211


Distributions from net realized gains
Investor Shares			88,653		5,339
Select Shares	+		104,007		5,156


Total distributions from net realized gains			192,660		10,495

Total distributions			$209,164		$21,706

Transactions in Fund Shares


		11/1/06-04/30/07						11/1/05-10/31/06
		SHARES			VALUE			SHARES			VALUE

Shares Sold
Investor Shares			1,756			$42,814			2,811			$68,930
Select Shares	+		2,343			56,994			5,327			128,328


Total shares sold			4,099			$99,808			8,138			$197,258


Shares Reinvested
Investor Shares			3,788			$89,541			414			$9,611
Select Shares	+		4,407			104,234			451			10,498


Total shares reinvested			8,195			$193,775			865			$20,109


Shares Redeemed
Investor Shares			(3,885	)		($95,333	)		(10,390	)		($251,597	)
Select Shares	+		(2,580	)		(62,886	)		(7,116	)		(174,607	)


Total shares redeemed			(6,465	)		($158,219	)		(17,506	)		($426,204	)

Net transactions in fund shares			5,829			$135,364			(8,503	)		($208,837	)


Shares Outstanding and Net Assets

11/1/06-04/30/07

11/1/05-10/31/06

NET ASSETS

Beginning of period

63,951

$1,659,488

72,454

$1,617,974

Total increase or decrease

5,829

72,170

(8,503

)

41,514

End of period

69,780

$1,731,658

63,951

$1,659,488

Net investment income not yet distributed

$5,642

$12,783

48 See financial notes

Schwab Total Stock Market Index Fund^®

Financial Statements

Financial Highlights


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Investor Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		23.83			20.77			19.04			17.48			14.35			16.62

Income or loss from investment operations:
Net investment income		0.18			0.30			0.29			0.19			0.16			0.16
Net realized and unrealized gains or losses		1.9			3.01			1.69			1.53			3.14			(2.27	)

Total income or loss from investment operations		2.08			3.31			1.98			1.72			3.30			(2.11	)
Less distributions:
Distributions from net investment income		(0.28	)		(0.25	)		(0.25	)		(0.16	)		(0.17	)		(0.16	)

Net asset value at end of period		25.63			23.83			20.77			19.04			17.48			14.35

Total return (%)		8.80	¹		16.05			10.45			9.93			23.24			(12.86	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.52	²		0.53			0.54			0.56			0.53			0.40
Gross operating expenses		0.52	²		0.53			0.54			0.56			0.59			0.62
Net investment income		1.42	²		1.27			1.37			1.07			1.18			1.11
Portfolio turnover rate		0	^1,3		3			2			2			3			2
Net assets, end of period ($ x 1,000,000)		650			607			600			592			469			263


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Select Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		23.90			20.83			19.09			17.52			14.37			16.65

Income or loss from investment operations:
Net investment income		0.19			0.31			0.31			0.22			0.20			0.19
Net realized and unrealized gains or losses		1.91			3.04			1.71			1.54			3.14			(2.29	)

Total income or loss from investment operations		2.10			3.35			2.02			1.76			3.34			(2.10	)
Less distributions:
Distributions from net investment income		(0.32	)		(0.28	)		(0.28	)		(0.19	)		(0.19	)		(0.18	)

Net asset value at end of period		25.68			23.90			20.83			19.09			17.52			14.37

Total return (%)		8.86	¹		16.23			10.63			10.10			23.50			(12.81	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.37	²		0.38			0.39			0.39			0.36			0.27
Gross operating expenses		0.37	²		0.38			0.39			0.41			0.44			0.47
Net investment income		1.57	²		1.41			1.52			1.23			1.35			1.24
Portfolio turnover rate		0	^1,3		3			2			2			3			2
Net assets, end of period ($ x 1,000,000)		856			762			617			548			429			264


*	Unaudited.


¹	Not annualized.
²	Annualized.
³	Less than 1%.

See financial notes 49

Schwab Total Stock Market Index Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)


				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)


	98	.6%	Common Stock		1,054,104		1,483,838
	0	.1%	Foreign Common Stock		424		1,225
	0	.1%	Preferred Stock		723		2,250
	1	.1%	Short-Term Investments		17,354		17,354

	99	.9%	Total Investments		1,072,605		1,504,667
	3	.0%	Collateral Invested for Securities on Loan		44,675		44,675
	(2	.9)%	Other Assets and Liabilities, Net				(43,750	)

	100	.0%	Net Assets				1,505,592


Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)





Common Stock 98.6% of net assets




Automobiles & Components 0.6%


Other Securities	375,736		0.6		9,412


Banks 5.1%


Wachovia Corp.	163,314		0.6		9,070
Wells Fargo & Co.	275,154		0.7		9,875
Other Securities	1,585,307		3.8		57,263

			5.1		76,208


Capital Goods 8.1%


General Electric Co. (c)	815,966		2.0		30,077
The Boeing Co.	68,800		0.4		6,398
United Technologies Corp.	84,068		0.4		5,643
Other Securities	1,505,164		5.3		79,479

			8.1		121,597


Commercial Services & Supplies 1.2%


Other Securities	519,845		1.2		17,774


Consumer Durables & Apparel 1.6%


Other Securities	649,939		1.6		24,700


Consumer Services 2.4%


Other Securities	892,130		2.4		36,315


Diversified Financials 8.8%


American Express Co.	105,150		0.4		6,379
Bank of America Corp. (c)	381,577		1.3		19,422
Citigroup, Inc. (c)	412,286		1.5		22,107
JPMorgan Chase & Co.	295,944		1.0		15,419
Merrill Lynch & Co., Inc.	79,800		0.5		7,200
Morgan Stanley	90,300		0.5		7,586
The Charles Schwab Corp. (d)	111,120		0.2		2,125
The Goldman Sachs Group, Inc. (a)	38,700		0.6		8,460
Other Securities	806,944		2.8		43,238

			8.8		131,936


Energy 9.1%


Chevron Corp.	178,939		0.9		13,920
ConocoPhillips	131,623		0.6		9,128
Exxon Mobil Corp. (c)	493,166		2.6		39,147
Schlumberger Ltd.	100,000		0.5		7,383
Other Securities	1,462,251		4.5		67,666

			9.1		137,244


Food & Staples Retailing 2.2%


Wal-Mart Stores, Inc.	309,100		1.0		14,812
Other Securities	504,808		1.2		17,870

			2.2		32,682


Food, Beverage & Tobacco 4.5%


Altria Group, Inc.	168,800		0.8		11,634
Kraft Foods, Inc., Class A	245,513		0.6		8,217
PepsiCo, Inc.	140,800		0.6		9,306
The Coca-Cola Co.	202,200		0.7		10,553
Other Securities	722,135		1.8		27,859

			4.5		67,569


Health Care Equipment & Services 4.3%


UnitedHealth Group, Inc.	118,880		0.4		6,308
Other Securities	1,297,587		3.9		59,066

			4.3		65,374

50 See financial notes

Schwab Total Stock Market Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Household & Personal Products 1.8%

The Procter & Gamble Co. (c)
269,915 1.2 17,358

Other Securities
192,647 0.6 10,452

1.8 27,810

Insurance 5.4%

American International Group, Inc.
211,922 1.0 14,815

Berkshire Hathaway, Inc., Class A *
121 0.9 13,213

Other Securities
1,090,865 3.5 53,671

5.4 81,699

Materials 3.4%

Other Securities
1,204,048 3.4 51,159

Media 3.9%

Comcast Corp., Class A *
227,004 0.4 6,052

News Corp., Class A
253,950 0.4 5,686

The Walt Disney Co.
195,410 0.5 6,835

Time Warner, Inc.
367,052 0.5 7,572

Other Securities
1,018,208 2.1 31,890

3.9 58,035

Pharmaceuticals & Biotechnology 7.0%

Abbott Laboratories
125,705 0.5 7,117

Amgen, Inc. *
103,268 0.5 6,624

Genentech, Inc. *
83,300 0.5 6,663

Johnson & Johnson
246,370 1.1 15,822

Merck & Co. Inc.
183,552 0.6 9,442

Pfizer, Inc.
610,192 1.1 16,146

Wyeth
109,400 0.4 6,072

Other Securities
1,023,840 2.3 38,283

7.0 106,169

Real Estate 2.0%

Other Securities
655,352 2.0 29,729

Retailing 4.0%

The Home Depot, Inc.
162,300 0.4 6,146

Other Securities
1,496,025 3.6 53,577

4.0 59,723

Semiconductors & Semiconductor Equipment 2.5%

Intel Corp.
483,832 0.7 10,402

Other Securities
1,234,131 1.8 26,823

2.5 37,225

Software & Services 6.1%

Google, Inc., Class A *
23,900 0.8 11,266

Microsoft Corp. (c)
800,850 1.6 23,977

Oracle Corp. *
434,449 0.6 8,168

Other Securities
1,860,640 3.1 48,640

6.1 92,051

Technology Hardware & Equipment 6.1%

Apple, Inc. *
65,000 0.5 6,487

Cisco Systems, Inc. *
511,909 0.9 13,688

Hewlett-Packard Co.
249,636 0.7 10,520

International Business Machines Corp.
131,510 0.9 13,442

QUALCOMM, Inc.
135,100 0.4 5,917

Other Securities
2,291,391 2.7 41,477

6.1 91,531

Telecommunication Services 3.1%

AT&T, Inc.
520,056 1.4 20,137

Verizon Communications, Inc.
247,572 0.6 9,452

Other Securities
840,876 1.1 16,659

3.1 46,248

Transportation 1.8%

United Parcel Service, Inc., Class B
91,480 0.5 6,443

Other Securities
478,619 1.3 20,564

1.8 27,007

Utilities 3.6%

Other Securities
1,298,135 3.6 54,641

Total Common Stock
(Cost $1,054,104) 1,483,838

Foreign Common Stock 0.1% of net assets

Cayman Islands 0.1%

Energy 0.1%

Other Securities
19,155 0.1 1,225

Total Foreign Common Stock
(Cost $424) 1,225

Preferred Stock 0.1% of net assets

Real Estate 0.1%

Other Securities
19,520 0.1 2,250

Total Preferred Stock
(Cost $723) 2,250

See financial notes 51

Schwab Total Stock Market Index Fund

Portfolio Holdings (Unaudited) continued

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

Short-Term Investments 1.1% of net assets

Commercial Paper & Other Obligations 1.1%

Bank of America, London Time Deposit
16,738 1.1 16,738

U.S. Treasury Obligation 0.0%

Other Securities
620 — 616

Total Short-Term Investment
(Cost $17,354) 17,354

End of Investments.

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Collateral Invested for Securities on Loan
3.0% of net assets

Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust.
44,674,629 3.0 44,675

End of collateral invested for securities on loan.

At 04/30/07 the tax basis cost of the fund’s investments was $1,073,439 and the unrealized appreciation and depreciation were $509,797 and ($78,569), respectively, with a net unrealized appreciation of $431,228.

In addition to the above, the fund held the following at 04/30/07. All numbers are x 1,000 except number of futures contracts.

Number of

Contract

Unrealized

Contracts

Value

Gains

Futures Contracts

Russell 2000 Index, e-mini, Long expires 06/15/07

7,780

193

S & P 500 Index, e-mini, Long expires 06/16/07

7,070

304

497


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

ADR — American Depositary Receipt

52 See financial notes

Schwab Total Stock Market Index Fund

Statement of

Assets and Liabilities

As of April 30, 2007; unaudited. All numbers x 1,000 except NAV.




Assets
Investments, at value including securities on loan of $42,873 (cost $1,072,605)		$1,504,667
Collateral invested for securities on loan		44,675
Cash		1
Receivables:
Investments sold		96
Fund shares sold		1,578
Dividends		1,063
Income from securities on loan		20
Interest		3
Prepaid expenses	+	3


Total assets		1,552,106


Liabilities
Collateral held for securities on loan		44,675
Payables:
Investment adviser and administrator fees		31
Transfer agent and shareholder services fees		21
Fund shares redeemed		1,519
Due to brokers for futures		217
Accrued expenses	+	51


Total liabilities		46,514


Net Assets
Total assets		1,552,106
Total liabilities	−	46,514


Net assets		$1,505,592
Net Assets by Source
Capital received from investors		1,075,826
Net investment income not yet distributed		6,692
Net realized capital losses		(9,485	)
Net unrealized capital gains		432,559

Net Asset Value (NAV) by Shares Class


			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV

Investor Shares	$650,019		25,360			$25.63
Select Shares	$855,573		33,311			$25.68

See financial notes 53

Schwab Total Stock Market Index Fund

Statement of

Operations

For November 1, 2006 through April 30, 2007; unaudited. All numbers x 1,000.




Investment Income
Dividends (net of $2 foreign withholding tax)		$13,400
Interest		308
Securities on loan	+	151


Total Investment Income		13,859


Net Realized Gains and Losses
Net realized gains on investments		4,891
Net realized losses on futures contracts	+	(15	)


Net realized gains		4,876


Net Unrealized Gains and Losses
Net unrealized gains on investments		105,845
Net unrealized gains on futures contracts	+	405


Net unrealized gains		106,250


Expenses
Investment adviser and administrator fees		1,764
Transfer agent and shareholder service fees:
Investor Shares		776
Select Shares		402
Portfolio accounting fees		56
Registration fees		40
Custodian fees		28
Shareholder reports		28
Professional fees		24
Trustees’ fees		6
Other expenses	+	8


Total expenses		3,132


Increase in Net Assets from Operations
Total investment income		13,859
Net expenses	−	3,132


Net investment income		10,727
Net realized gains		4,876
Net unrealized gains	+	106,250


Increase in net assets from operations		$121,853

54 See financial notes

Schwab Total Stock Market Index Fund

Statements of

Changes in Net Assets

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




Operations


		11/1/06-04/30/07		11/1/05-10/31/06
Net investment income			$10,727		$17,272
Net realized gains			4,876		3,650
Net unrealized gains	+		106,250		172,034


Increase in net assets from operations			121,853		192,956


Distributions Paid


Distributions from net investment income
Investor Shares			7,170		7,046
Select Shares	+		10,364		8,255


Total distributions from net investment income			$17,534		$15,301

Transactions in Fund Shares


		11/1/06-4/30/07						11/1/05-10/31/06
		SHARES			VALUE			SHARES			VALUE

Shares Sold
Investor Shares			2,381			$58,601			3,959			$87,655
Select Shares	+		4,158			102,447			8,052			178,696


Total shares sold			6,539			$161,048			12,011			$266,351


Shares Reinvested
Investor Shares			273			$6,688			302			$6,537
Select Shares	+		349			8,568			315			6,824


Total shares reinvested			622			$15,256			617			$13,361


Shares Redeemed
Investor Shares			(2,747	)		($67,616	)		(7,691	)		($169,892	)
Select Shares	+		(3,085	)		(76,030	)		(6,111	)		(136,146	)


Total shares redeemed			(5,832	)		($143,646	)		(13,802	)		($306,038	)

Net transactions in fund shares			1,329			$32,658			(1,174	)		($26,326	)


Shares Outstanding and Net Assets

11/1/06-4/30/07

11/1/05-10/31/06

NET ASSETS

Beginning of period

57,342

$1,368,615

58,516

$1,217,286

Total increase or decrease

1,329

136,977

(1,174

)

151,329

End of period

58,671

$1,505,592

57,342

$1,368,615

Net investment income not yet distributed

$6,692

$13,499

See financial notes 55

Schwab International Index Fund^®

Financial Statements

Financial Highlights


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/01/02–			11/01/01–
Investor Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		21.12			17.07			14.82			12.74			10.47			12.22

Income or loss from investment operations:
Net investment income		0.21			0.48			0.35			0.26			0.23			0.21
Net realized and unrealized gains or losses		2.55			3.92			2.18			2.05			2.25			(1.82	)

Total income or loss from investment operations		2.76			4.40			2.53			2.31			2.48			(1.61	)
Less distributions:
Distributions from net investment income		(0.62	)		(0.35	)		(0.28	)		(0.23	)		(0.21	)		(0.14	)

Net asset value at end of period		23.26			21.12			17.07			14.82			12.74			10.47

Total return (%)		13.30	¹		26.15			17.30			18.40			24.24			(13.34	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.68	²		0.69			0.68			0.69			0.65			0.58
Gross operating expenses		0.68	²		0.70			0.72			0.73			0.74			0.76
Net investment income		1.91	²		2.41			2.05			1.78			2.01			1.70
Portfolio turnover rate		3	¹		11			10			1			7			13
Net assets, end of period ($ x 1,000,000)		793			706			595			550			494			443


	11/01/06–			11/01/05–			11/01/04–			11/01/03–			11/02/02–			11/01/01–
Select Shares	4/30/07*			10/31/06			10/31/05			10/31/04			10/31/03			10/31/02


Per-Share Data ($)

Net asset value at beginning of period		21.14			17.09			14.83			12.75			10.47			12.23

Income or loss from investment operations:
Net investment income		0.24			0.50			0.38			0.28			0.25			0.21
Net realized and unrealized gains or losses		2.54			3.93			2.19			2.05			2.26			(1.82	)

Total income or loss from investment operations		2.78			4.43			2.57			2.33			2.51			(1.61	)
Less distributions:
Distributions from net investment income		(0.66	)		(0.38	)		(0.31	)		(0.25	)		(0.23	)		(0.15	)

Net asset value at end of period		23.26			21.14			17.09			14.83			12.75			10.47

Total return (%)		13.39	¹		26.35			17.56			18.56			24.50			(13.31	)

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.50	²		0.50			0.50			0.50			0.49			0.47
Gross operating expenses		0.53	²		0.55			0.57			0.58			0.59			0.61
Net investment income		2.11	²		2.60			2.23			1.97			2.19			1.81
Portfolio turnover rate		3	¹		11			10			1			7			13
Net assets, end of period ($ x 1,000,000)		1,113			954			776			687			629			536


*	Unaudited.


¹	Not annualized.
²	Annualized.

56 See financial notes

Schwab International Index Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)


				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)


	98	.7%	Common Stock		1,008,900		1,880,116
	0	.1%	Preferred Stock		1,742		2,226
		—%	Rights		—		52
	0	.8%	Short-Term Investment		16,184		16,184

	99	.6%	Total Investments		1,026,826		1,898,578
	21	.2%	Collateral Invested for Securities on Loan		403,640		403,640
	(20	.8)%	Other Assets and Liabilities, Net				(396,471	)

	100	.0%	Net Assets				1,905,747


Security and Number		% of Net		Value
of Shares		Assets		($ x 1,000)





Common Stock 98.7% of net assets




Australia 4.5%


BHP Billiton Ltd.	561,860		0.7		13,717
National Australia Bank Ltd.	262,211		0.5		9,314
Other Securities	2,998,472		3.3		62,370

			4.5		85,401


Austria 0.1%


Other Securities	33,336		0.1		2,669


Belgium 1.3%


Other Securities	404,897		1.3		24,881


Canada 6.3%


Royal Bank of Canada	201,446		0.5		10,494
Other Securities	2,343,821		5.8		109,694

			6.3		120,188


Denmark 0.5%


Other Securities	111,938		0.5		10,173


Finland 1.3%


Nokia Oyj (a)	653,383		0.9		16,482
Other Securities	319,741		0.4		8,069

			1.3		24,551


France 11.3%


Axa	292,677		0.7		13,438
BNP Paribas	129,357		0.8		15,007
Sanofi-Aventis	154,055		0.7		14,102
Societe Generale (a)	64,365		0.7		13,640
Suez S.A. (a)	202,911		0.6		11,564
Total S.A.	384,190		1.5		28,322
Other Securities	1,717,111		6.3		118,383

			11.3		214,456


Germany 8.3%


Allianz SE - Reg’d (a)	68,800		0.8		15,651
BASF AG (a)	81,412		0.5		9,713
DaimlerChrysler AG - Reg’d	162,404		0.7		13,147
Deutsche Bank AG - Reg’d	82,735		0.7		12,691
E.ON AG	110,617		0.9		16,546
Siemens AG - Reg’d	142,378		0.9		17,179
Other Securities	1,437,526		3.8		72,673

			8.3		157,600


Greece 0.3%


Other Securities	123,264		0.3		5,241


Hong Kong 0.8%


Other Securities	1,467,426		0.8		15,555


Ireland 0.7%


Other Securities	491,102		0.7		13,824


Italy 4.1%


Eni S.p.A.	398,643		0.7		13,220
Intesa Sanpaolo S.p.A.	1,516,907		0.7		12,710
UniCredito Italiano S.p.A.	1,641,816		0.9		16,869
Other Securities	4,100,940		1.8		34,288

			4.1		77,087


Japan 16.3%


Canon, Inc.	190,995		0.6		10,716
Mitsubishi UFJ Financial Group, Inc.	1,582		0.9		16,457
Mizuho Financial Group, Inc.	1,765		0.6		10,621

See financial notes 57

Schwab International Index Fund

Portfolio Holdings (Unaudited) continued

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Sumitomo Mitsui Financial Group, Inc.
1,218 0.6 10,641

Toyota Motor Corp.
437,003 1.4 26,543

Other Securities
11,682,100 12.2 236,381

16.3 311,359

Netherlands 4.6%

ABN AMRO Holding N.V. (a)
300,416 0.7 14,576

ING Groep N.V. CVA
351,762 0.8 16,022

Other Securities
1,930,756 3.1 57,633

4.6 88,231

Norway 0.6%

Other Securities
457,834 0.6 10,867

Portugal 0.4%

Other Securities
1,103,432 0.4 6,999

Singapore 0.5%

Other Securities
1,753,676 0.5 10,015

Spain 4.6%

Banco Bilbao Vizcaya Argentaria S.A.
559,475 0.7 13,378

Banco Santander Central Hispano S.A.
994,916 0.9 17,908

Telefonica S.A.
777,060 0.9 17,454

Other Securities
911,072 2.1 38,085

4.6 86,825

Sweden 2.1%

Other Securities
3,781,274 2.1 39,340

Switzerland 7.2%

Credit Suisse Group - Reg’d
194,266 0.8 15,247

Nestle S.A. - Reg’d
63,620 1.3 25,185

Novartis AG - Reg’d (a)
432,497 1.3 25,126

Roche Holding AG (a)
112,992 1.1 21,277

UBS AG - Reg’d
334,498 1.1 21,739

Other Securities
512,727 1.6 29,316

7.2 137,890

United Kingdom 22.9%

Anglo American plc
240,109 0.7 12,644

AstraZeneca plc
245,264 0.7 13,339

Barclays plc
1,043,819 0.8 15,069

BP plc
3,086,610 1.8 34,628

Diageo plc
440,768 0.5 9,291

GlaxoSmithKline plc
913,667 1.4 26,353

HBOS plc
605,157 0.7 12,987

HSBC Holdings plc
1,851,018 1.8 34,154

Lloyds TSB Group plc
895,483 0.5 10,341

Rio Tinto plc
167,659 0.5 10,188

Royal Bank of Scotland Group plc
501,714 1.0 19,210

Royal Dutch Shell plc - Class A
588,320 1.1 20,431

Royal Dutch Shell plc, Class B
434,049 0.8 15,285

Tesco plc
1,249,243 0.6 11,488

Vodafone Group plc
8,348,655 1.2 23,752

Other Securities
12,790,706 8.8 167,804

22.9 436,964

Total Common Stock
(Cost $1,008,900) 1,880,116

Preferred Stock 0.1% of net assets

Germany 0.1%

Other Securities
1,311 0.1 2,189

United Kingdom 0.0%

Other Securities
18,103,596 — 37

Total Preferred Stock
(Cost $1,742) 2,226

Rights 0.0% of net assets

Other Securities
12,567 — 52

Total Rights
(Cost $-) 52

Security
Face Amount
% of Net
Value

Rate, Maturity Date ($ x 1,000) Assets ($ x 1,000)

Short-Term Investment 0.8% of net assets

Bank of America, London Time Deposit
5.03%, 05/01/07
16,184 0.8 16,184

Total Short-Term Investment
(Cost $16,184) 16,184

End of Investments.

Security and Number
% of Net
Value

of Shares Assets ($ x 1,000)

Collateral Invested for Securities on Loan
21.2% of net assets

Securities Lending Investment Fund, a series of the Brown Brothers Investment Trust
403,640,269 21.2 403,640

End of collateral invested for securities on loan.

58 See financial notes

Schwab International Index Fund

Statement of

Assets and Liabilities

As of April 30, 2007; unaudited. All numbers x 1,000 except NAV.




Assets
Investments, at value including securities on loan of $375,250 (cost $1,026,826)		$1,898,578
Collateral invested for securities on loan		403,640
Foreign currency, at value (cost $832)		832
Receivables:
Investments sold		8,299
Dividends		8,506
Fund shares sold		3,222
Reclaims		593
Income from securities on loan		144
Interest		2
Prepaid expenses	+	3


Total assets		2,323,819


Liabilities
Collateral held for securities on loan		403,640
Payables:
Investments bought		12,340
Investment adviser and administrator fees		63
Transfer agent and shareholder services fees		23
Fund shares redeemed		1,337
Accrued expenses	+	669


Total liabilities		418,072


Net Assets
Total assets		2,323,819
Total liabilities	−	418,072


Net assets		$1,905,747
Net Assets by Source
Capital received from investors		1,276,833
Net investment income not yet distributed		2,461
Net realized capital losses		(245,352	)
Net unrealized capital gains		871,805

Net Asset Value (NAV) by Shares Class


			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV

Investor Shares	$793,135		34,098			$23.26
Select Shares	$1,112,612		47,830			$23.26

60 See financial notes

Schwab International Index Fund

Statement of

Operations

For November 1, 2006 through April 30, 2007; unaudited. All numbers x 1,000.




Investment Income
Dividends		$22,189
Interest		245
Securities on loan	+	425


Total Investment Income		22,859


Net Realized Gains and Losses
Net realized gains on investments		14,922
Net realized gains on foreign currency transactions	+	196


Net realized gains		15,118


Net Unrealized Gains and Losses
Net unrealized gains on investments		189,491
Net unrealized gains on foreign currency transactions	+	47


Net unrealized gains		189,538


Expenses
Investment adviser and administrator fees		3,465
Transfer agent and shareholder service fees:
Investor Shares		923
Select Shares		510
Custodian fees		139
Registration fees		68
Portfolio accounting fees		47
Shareholder reports		40
Professional fees		24
Trustees’ fees		7
Other expenses	+	8


Total expenses		5,231
Expense reduction by adviser and Schwab	−	166


Net expenses		5,065


Increase in Net Assets from Operations
Total investment income		22,859
Net expenses	−	5,065


Net investment income		17,794
Net realized gains		15,118
Net unrealized gains	+	189,538


Increase in net assets from operations		$222,450

See financial notes 61

Schwab International Index Fund

Statements of

Changes in Net Assets

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




Operations


		11/1/06-04/30/07		11/1/05-10/31/06
Net investment income			$17,794		$38,610
Net realized gains			15,118		36,595
Net unrealized gains	+		189,538		278,207


Increase in net assets from operations			222,450		353,412


Distributions Paid


Distributions from net investment income
Investor Shares			20,568		12,022
Select Shares	+		29,711		17,265


Total distributions from net investment income			$50,279		$29,287

Transactions in Fund Shares


		11/1/06-04/30/07						11/1/05-10/31/06
		SHARES			VALUE			SHARES			VALUE


Shares Sold
Investor Shares			3,645			$80,189			5,781			$111,778
Select Shares	+		4,738			104,803			7,746			148,437


Total shares sold			8,383			$184,992			13,527			$260,215


Shares Reinvested
Investor Shares			875			$18,799			619			$11,010
Select Shares	+		1,257			26,990			882			15,675


Total shares reinvested			2,132			$45,789			1,501			$26,685


Shares Redeemed
Investor Shares			(3,832	)		($83,974	)		(7,861	)		($150,978	)
Select Shares	+		(3,265	)		(72,510	)		(8,930	)		(171,954	)


Total shares redeemed			(7,097	)		($156,484	)		(16,791	)		($322,932	)

Net transactions in fund shares			3,418			$74,297			(1,763	)		($36,032	)


Shares Outstanding and Net Assets

11/1/06-04/30/07

11/1/05-10/31/06

NET ASSETS

Beginning of period

78,510

$1,659,279

80,273

$1,371,186

Total increase or decrease

3,418

246,468

(1,763

)

288,093

End of period

81,928

$1,905,747

78,510

$1,659,279

Net investment income not yet distributed

$2,461

$34,946

62 See financial notes

Schwab Equity Index Funds

Financial Notes, unaudited

1. Business Structure of the Funds

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



Schwab Capital Trust (organized May 7, 1993) Schwab S&P 500 Index Fund Schwab Institutional Select S&P 500 Fund Schwab Small-Cap Index Fund Schwab Total Stock Market Index Fund Schwab International Index Fund Schwab MarketTrack All Equity Portfolio Schwab MarketTrack Growth Portfolio Schwab MarketTrack Balanced Portfolio Schwab MarketTrack Conservative Portfolio Laudus U.S. MarketMasters Fund Laudus Small-Cap MarketMasters Fund Laudus International MarketMasters Fund Schwab Viewpoints Fund Schwab Premier Equity Fund Schwab Core Equity Fund Schwab Dividend Equity Fund Schwab Large-Cap Growth Fund Schwab Small-Cap Equity Fund Schwab Hedged Equity Fund Schwab Financial Services Fund Schwab Health Care Fund		Schwab Target 2010 Fund Schwab Target 2020 Fund Schwab Target 2030 Fund Schwab Target 2040 Fund Schwab Retirement Income Fund Schwab Fundamental US Large Company Index Fund Schwab Fundamental US Small-Mid Company Index Fund Schwab Fundamental International Large Company Index Fund Schwab Investments (organized October 26, 1990) Schwab 1000 Index Fund Schwab YieldPlus Fund Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab Inflation Protected Fund Schwab GNMA Fund Schwab Tax-Free YieldPlus Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Tax-Free YieldPlus Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund

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

Shares are bought and sold at net asset value, or NAV, which is the price for all outstanding shares. Each share has a par value of 1/1,000 of a cent, and the trustees may issue as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

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


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

	•	Securities for which no quoted value is available or when a significant event has occurred between the time of the security’s last close and the time the fund calculates net asset value: valued at fair value, as determined in good faith by the funds’ investment adviser using guidelines adopted by the funds’ Board of Trustees and the Pricing Committee.

Schwab Equity Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

Some of the more common reasons that may necessitate that a security be valued at fair value include: the security’s trading has been halted or suspended; the security has been de-listed from a national exchange; the security’s primary trading market is temporarily closed at a time when under normal conditions it would be open; the security’s primary pricing source is not able or willing to provide a price.


	•	Futures and forwards: open contracts are valued at their settlement prices as of the close of their exchanges (for futures) or at a market value based on that day’s exchange rates (for forwards). When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end, and records a realized gain or loss accordingly.

	•	Short-term securities (60 days or less to maturity): valued at amortized cost.

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

(b) Portfolio Investments:

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

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

Because futures contracts carry inherent risks, a fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another, but it is generally a percentage of the contract amount.

Futures are traded publicly on exchanges, and their market value changes daily. A fund records the change in market value of futures, and also the change in the amount of margin deposit required (“due to / from broker”).

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

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

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

(c) Security Transactions:

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

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date.

Schwab Equity Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(d) Investment Income:

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

(e) Expenses:

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

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

Each fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts are disclosed in the statement of operations as a reduction to the fund’s operating expenses.

(h) Accounting Estimates:

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

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

(i) Federal Income Taxes:

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

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. A fund with a fiscal year ending October 31 will implement FIN 48 no later than April 30, 2008, and it will apply to all open tax years. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. We have not yet completed our evaluation of the impact, if any, of adopting FIN 48 on the funds’ financial statements.

Schwab Equity Index Funds

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact the adoption of SFAS No. 157 will have on the funds’ financial statement disclosures.

3. Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

Charles Schwab Investment Management, Inc. (CSIM or the investment adviser), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (Advisory Agreement) between it and the trust. Charles Schwab & Co., Inc. (“Schwab”), an affiliate of the investment adviser and is the trust’s shareholder services agent and transfer agent.

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


			Institutional						Total Stock
	S&P 500		Select		1000		Small-Cap		Market		International
Average daily net assets	Index Fund		S&P 500 Fund		Index Fund		Index Fund		Index Fund		Index Fund

First $500 million		0.15%		0.15%		0.30%		0.33%		0.30%		0.43%
Over $500 million		0.09%		0.09%		0.22%		0.28%		0.22%		0.38%
Over $1 billion		0.09%		0.09%		0.22%		n/a		n/a		n/a
Over $5 billion		0.08%		0.08%		0.20%		n/a		n/a		n/a
Over $10 billion		0.07%		0.07%		0.18%		n/a		n/a		n/a

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


	Transfer Agent Fees	Shareholder Service Fees

Investor Shares	0.05%		0.20%
Select Shares	0.05%		0.05%
e.Shares*	0.05%		0.05%
Institutional Select Shares	0.05%		0.05%

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

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses, through February 27, 2008, as follows:

Institutional

Total Stock

S&P 500

Select

1000

Small-Cap

Market

International

Index Fund

S&P 500 Fund

Index Fund

Investor Shares

0.37%

n/a

0.51%

0.60%

0.58%

0.69%

Select Shares

0.19%

n/a

0.36%

0.42%

0.39%

0.50%

e.Shares*

0.28%

n/a

Institutional Select Shares

n/a

0.10%

n/a

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

The funds may engage in certain transactions involving related parties. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. The funds also may let other Schwab Funds buy and sell fund

Schwab Equity Index Funds

Financial Notes, unaudited (continued)

3. Affiliates and Affiliated Transactions (continued):

shares, particularly Schwab MarketTrack Portfolios, which seek to provide investors with allocated portfolios of Schwab Index funds. As of April 30, 2007, the percentages of fund shares owned by other Schwab Funds are:


			Institutional						Total Stock
	S&P 500		Select		1000		Small-Cap		Market		International
	Index Fund		S&P 500 Fund		Index Fund		Index Fund		Index Fund		Index Fund

Schwab MarketTrack Portfolios:
All Equity Portfolio		—		9.8%		—		8.6%		—		9.4%
Growth Portfolio		—		7.4%		—		9.0%		7.8%		8.2%
Balanced Portfolio		—		3.5%		—		4.9%		13.2%		4.5%
Conservative Portfolio		0.6%		0.2%		—		2.0%		12.4%		1.9%
Schwab Annuity Portfolios:
Growth Portfolio II		—		0.5%		—		0.6%		—		0.5%

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. As of April 30, 2007, each fund’s total security transactions with other Schwab Funds were as follows:


S&P 500 Index Fund			$2,407
Institutional Select S&P 500 Fund			85,870
1000 Index Fund			85,870
Small-Cap Index Fund			405
Total Stock Market Index Fund			1,394
International Index Fund			—

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

Trustees

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


4.	Purchases and Sales of Investment Securities:

(All dollar amounts are x 1,000)

For the period ended April 30, 2007, purchases and sales of securities (excluding short-term obligations) were as follows:


	Purchases of Securities		Sales/Maturities of Securities

S&P 500 Index Fund		$43,371		$134,240
Institutional Select S&P 500 Fund		506,136		3,198
1000 Index Fund		12,677		183,095
Small-Cap Index Fund		3,244		30,388
Total Stock Market Index Fund		30,220		1,888
International Index Fund		91,451		58,574

Schwab Equity Index Funds

Financial Notes, unaudited (continued)

5. Redemption Fee:

(All dollar amounts are x 1,000)

The funds may impose a short-term redemption fee on any fund shares that are redeemed or exchanged by a shareholder within a specified number of days of the purchase date. The funds charge a redemption fee of 2.00% on shares held 30 days or less. The redemption amounts are net of the redemption fee proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current period and prior fiscal year are:


	Current Period		Prior Period
	(11/01/06 — 04/30/07)		(11/01/05 — 10/31/06)

S&P 500 Index Fund
Investor Shares		$45		$57
Select Shares		26		60
e.Shares		2		2
Institutional Select S&P 500 Fund		30		31
1000 Index Fund
Investor Shares		58		87
Select Shares		25		22
Small-Cap Index Fund
Investor Shares		10		19
Select Shares		1		5
Total Stock Market Index Fund
Investor Shares		12		15
Select Shares		8		28
International Index Fund
Investor Shares		13		18
Select Shares		12		63


6.	Borrowing:

(All dollar amounts are x 1,000)

The funds may borrow money from banks and custodians. The funds may obtain temporary bank loans through the trusts to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. There were no borrowings from the line of credit for the funds during the period.


7.	Federal Income Taxes:

(All dollar amounts are x 1,000)

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2006, the following funds had capital loss carry forwards expiring in:


			Institutional						Total Stock
	S&P 500		Select		1000		Small-Cap		Market		International
Expire	Index Fund		S&P 500 Fund		Index Fund		Index Fund		Index Fund		Index Fund

2008		$26,504		$—		$—		$—		$—		$—
2009		50,224		16,907		—		—		—		97,628
2010		400,268		27,646		132,657		—		8,568		112,722
2011		72,381		1,609		164,037		—		3,976		39,016
2012		29,212		—		11,942		—		874		8,278
2013		175,896		—		—		—		—		—
2014		109,257		2,359		—		—		—		—

Total		$863,742		$48,521		$308,636		—		$13,418		$257,644

Trustees and Officers

The tables below gives information about the trustees and officers for the Schwab Capital Trust, which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust, Excelsior Funds, Inc., Excelsior tax-Exempt Funds, Inc., and Excelsior Funds Trust. As of April 30, 2007, the Fund Complex included 98 funds.

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


Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Term of		Fund Complex
office, and Length of	Principal Occupations	Overseen by
Time Served¹)	During the Past Five Years	the Trustee		Other Directorships


Mariann Byerwalter 1960 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman of JDN Corporate Advisory LLC. From 1996 to 2001, Vice President for Business Affairs and Chief Financial Officer of Stanford University, and in 2001, Special Advisor to the President of Stanford University.		98	Board 1—Director, Redwood Trust, Inc. Board 2—Director, PMI Group, Inc.


Donald F. Dorward 1931 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chief Executive Officer, Dorward & Associates (corporate management, marketing and communications consulting firm). From 1996-1999, Executive Vice President and Managing Director, Grey Advertising. Prior to 1996, President and Chief Executive Officer, Allen & Dorward Advertising.		60	None.


William A. Hasler 1941 Trustee (Trustee of Schwab Capital Trust since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals). Prior to August 1998, Dean of the Haas School of Business, University of California, Berkeley (higher education).		98	Board 1—Director, Director, Mission West Properties Board 2—Director, TOUSA Board 3—Director, Harris-Stratex Networks Board 4—Director, Genitope Corp. Board 5—Director & Non-Executive Chairman, Solectron Corp. Board 6—Director, Ditech Networks


Robert G. Holmes 1931 (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer and Director, Semloh Financial, Inc. (international financial services and investment advisory firm).		60	None.


Gerald B. Smith 1950 Trustee (Trustee of Schwab Capital Trust since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		60	Board 1—Board of Cooper Industries Board 2—Chairman of the Audit Committee of Oneok Partners, LP.


Donald R. Stephens 1938 Trustee (Trustee of Schwab Capital Trust since 1989.)	Managing Partner, D. R. Stephens & Company (investments). Prior to 1996, Chairman and Chief Executive Officer of North American Trust (real estate investment trust).		60	None.


Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Term of		Fund Complex
office, and Length of	Principal Occupations	Overseen by
Time Served¹)	During the Past Five Years	the Trustee		Other Directorships


Michael W. Wilsey 1943 Trustee (Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		60	None.


Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served )	During the Past Five Years	the Trustee		Other Directorships


Charles R. Schwab²1937 Chairman and Trustee (Chairman and Trustee of Schwab Capital Trust since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officers and Director, Schwab Holdings Inc.; Director, U.S. Trust Company, N.A., U.S. Trust Corporation, United States Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		60	None


Randall W. Merk²1954 Trustee (Trustee of Schwab Capital Trust since 2005.)	Executive Vice President and President, Schwab Financial Products, Charles Schwab & Co. Inc.; Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc. Prior to September 2002, President and Chief Investment Officer, American Century Investment Management, and Director, American Century Companies, Inc.		98	None.


Officers of the Trust
Name, Year of Birth, and Position(s)
with the Trust; (Terms of Office, and
Length of Time Served³)		Principal Occupations During the Past Five Years


Evelyn Dilsaver 1955 President and Chief Executive Officer (Officer of Schwab Capital Trust since 2004.)		President, Chief Executive Officer, and Director, Charles Schwab Investment Management, Inc.; Executive Vice President, Charles Schwab & Co., Inc.; President and Chief Executive Officer, Laudus Trust and Laudus Variable Insurance Trust; President Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; President Mutual Fund Division, UST Advisors, Inc. From June 2003 to July 2004, Senior Vice President, Asset Management Products and Services, Charles Schwab & Co., Inc. Prior to June 2003, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer, U.S. Trust, a subsidiary of The Charles Schwab Corporation.


George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Capital Trust since 2004.)		Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc. Excelsior tax-Exempt Funds, Inc. and Excelsior Funds Trust, Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) limited. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.


Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of Schwab Capital Trust since 2004.)		Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management Inc.


Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of Schwab Capital Trust since 2004.)		Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.


Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of Schwab Capital Trust since 2002.)		Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President Charles Schwab & Co. Inc., Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust; Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc., and Charles Schwab Investment Management, Inc. From 2000 to 2002, Vice President, Internal Audit, Charles Schwab & Co. Inc.


Koji E. Felton 1961 Secretary and Chief Legal Officer (Officer of Schwab Capital Trust since 1998.)		Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc.; Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust. Prior to June 1998, Branch Chief in Enforcement at U.S. Securities and Exchange Commission in San Francisco.


Catherine MacGregor 1964 Vice President (Officer of Schwab Capital Trust since 2005.)		Vice President, Charles Schwab & Co., Inc. Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; Chief Legal Officer, Laudus Trust and Laudus Variable Insurance Trust, Chief Counsel, Laudus Trust and Laudus Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.


Cathy Sabo 1964 Vice President (Officer of Schwab Capital Trust since 2005.)		Vice President, Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President , Sales & Services Controls, Charles Schwab & Co., Inc.


Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the Trust; (Terms of Office, and
Length of Time Served³)		Principal Occupations During the Past Five Years


Michael Haydel 1972 Vice President (Officer of Schwab Capital Trust since 2006.)		Vice President, Assets Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.


¹	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Holmes and Dorward will retire on December 31, 2007, and Messrs. Stephens and Wilsey will retire on December 31, 2010.

²	In addition to their employment with the investment adviser and the distributor, Messrs. Schwab and Merk also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Merk are Interested Trustees because they are employees of Schwab and/or the 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 other officer 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. Add new words.

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

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500T). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

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

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

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

cap, capitalization See “market cap.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com/schwabfunds, the SEC’s website at www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedge Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints 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 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Short/Intermediate Tax-Free Bond Fund^tm

Schwab Long-Term Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Short/Intermediate Tax-Free Bond Fund^tm

Schwab California Long-Term Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.¹ 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

Schwab 1000 Index Fund

Portfolio Holdings as of April 30, 2007 (Unaudited)

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

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


				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)

	99.8	%	Common Stock		3,022,594		7,116,670
	0.1	%	Foreign Common Stock		4,103		8,262
	0.1	%	Short-Term Investments		4,625		4,625
	—	%	Warrants		—		225

	100.0	%	Total Investments		3,031,322		7,129,782
			Collateral Invested for
	5.0	%	Securities on Loan		359,207		359,207
			Other Assets and
	(5.0	)%	Liabilities, Net				(354,552	)

	100.0	%	Net Assets				7,134,437


	Number of		Value
Security	Shares		($ x 1,000)

Common Stock 99.8% of net assets

Automobiles & Components 0.5%

BorgWarner, Inc.		20,849		1,624
Ford Motor Co.		872,613		7,016
General Motors Corp. (a)		242,705		7,580
Gentex Corp. (a)		43,972		783
Harley-Davidson, Inc.		121,792		7,712
Johnson Controls, Inc.		81,458		8,336
The Goodyear Tire & Rubber Co. (a)*		76,800		2,554
Thor Industries, Inc. (a)		24,664		982
TRW Automotive Holdings Corp. *		43,843		1,625

				38,212

Banks 4.8%


Associated Banc-Corp		57,148		1,850
Astoria Financial Corp.		40,304		1,071
Bank of Hawaii Corp.		26,332		1,393
BB&T Corp.		237,600		9,889
BOK Financial Corp.		29,306		1,504
Capitol Federal Financial (a)		32,791		1,266
City National Corp.		20,632		1,511
Comerica, Inc. (a)		78,828		4,880
Commerce Bancorp, Inc. (a)		48,153		1,610
Commerce Bancshares, Inc. (a)		37,951		1,797
Compass Bancshares, Inc.		56,687		3,865
Countrywide Financial Corp.		247,672		9,184
Cullen/Frost Bankers, Inc.		24,800		1,269
Fannie Mae		431,734		25,438
First Horizon National Corp. (a)		52,600		2,062
Freddie Mac		308,005		19,953
Fulton Financial Corp. (a)		22,544		332
Hudson City Bancorp, Inc. (a)		250,240		3,333
Huntington Bancshares, Inc.		105,277		2,335
IndyMac Bancorp, Inc. (a)		21,795		659
KeyCorp		184,614		6,587
M&T Bank Corp.		51,843		5,772
Marshall & Ilsley Corp.		82,531		3,963
MGIC Investment Corp. (a)		37,705		2,323
National City Corp. (a)		284,576		10,401
New York Community Bancorp, Inc.		107,882		1,884
People’s United Financial, Inc. (a)		136,993		2,728
PNC Financial Services Group, Inc.		156,213		11,575
Popular, Inc. (a)		118,486		1,992
Radian Group, Inc.		35,654		2,072
Regions Financial Corp. (a)		336,806		11,819
Sky Financial Group, Inc.		39,082		1,065
Sovereign Bancorp, Inc. (a)		173,520		4,211
SunTrust Banks, Inc.		161,993		13,675
Synovus Financial Corp.		142,741		4,505
TCF Financial Corp. (a)		62,684		1,698
The Colonial BancGroup, Inc.		68,176		1,640
The PMI Group, Inc. (a)		43,264		2,097
U.S. Bancorp		777,555		26,709
UnionBanCal Corp.		62,165		3,822
Valley National Bancorp (a)		43,136		1,094
Wachovia Corp.		854,189		47,442
Washington Mutual, Inc. (a)		418,093		17,552
Webster Financial Corp.		19,239		855
Wells Fargo & Co.		1,491,396		53,526
Whitney Holding Corp.		29,023		893
Wilmington Trust Corp.		30,237		1,223
Zions Bancorp		46,898		3,836

				342,160

Capital Goods 8.3%


3M Co.		332,134		27,491
Alliant Techsystems, Inc. (a)*		13,438		1,251
American Standard Cos., Inc.		88,795		4,889
AMETEK, Inc.		19,747		716
Carlisle Cos, Inc. (a)		20,236		833
Caterpillar, Inc.		290,076		21,065
Cooper Industries Ltd., Class A		143,000		7,116
Crane Co. (a)		40,584		1,725
Cummins, Inc. (a)		43,566		4,015

See financial notes. 1

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

Danaher Corp.		143,720		10,231
Deere & Co.		102,273		11,189
Donaldson Co., Inc. (a)		35,800		1,286
Dover Corp.		99,237		4,775
Eaton Corp.		65,959		5,884
Emerson Electric Co.		377,788		17,752
Fastenal Co. (a)		50,900		2,093
Flowserve Corp. *		25,341		1,546
Fluor Corp.		36,979		3,536
Foster Wheeler Ltd. *		35,128		2,418
General Dynamics Corp.		181,524		14,250
General Electric Co. (b)		4,599,222		169,527
Goodrich Corp. (a)		38,098		2,166
Graco, Inc.		25,194		995
Harsco Corp.		40,600		2,071
Honeywell International, Inc.		373,299		20,225
Hubbell, Inc., Class B (a)		26,832		1,387
IDEX Corp.		22,771		1,195
Illinois Tool Works, Inc. (a)		251,004		12,879
Ingersoll-Rand Co., Ltd., Class A		135,628		6,056
ITT Industries, Inc.		90,394		5,768
Jacobs Engineering Group, Inc. (a)*		51,956		2,620
Joy Global, Inc.		54,008		2,734
Kennametal, Inc.		17,599		1,242
L-3 Communications Holdings, Inc.		50,924		4,580
Lockheed Martin Corp.		195,654		18,810
Masco Corp. (a)		175,736		4,782
McDermott International, Inc. *		44,056		2,364
MSC Industrial Direct Co., Class A (a)		27,758		1,353
Mueller Water Products, Inc., Class B		25,637		367
Northrop Grumman Corp.		159,232		11,726
Oshkosh Truck Corp. (a)		33,828		1,892
PACCAR, Inc. (a)		107,460		9,025
Pall Corp.		54,033		2,267
Parker Hannifin Corp. (a)		52,969		4,881
Pentair, Inc.		40,200		1,292
Precision Castparts Corp.		61,301		6,382
Raytheon Co.		209,590		11,221
Rockwell Automation, Inc.		75,349		4,486
Rockwell Collins, Inc. (a)		76,953		5,054
Roper Industries, Inc.		39,091		2,191
SPX Corp.		38,114		2,702
Teleflex, Inc.		25,246		1,813
Terex Corp. *		45,582		3,549
Textron, Inc. (a)		61,069		6,209
The Boeing Co.		366,089		34,046
The Manitowoc Co., Inc.		35,623		2,431
The Shaw Group, Inc. (a)*		30,669		995
The Timken Co.		32,794		1,082
Thomas & Betts Corp. *		35,929		1,957
Trinity Industries, Inc. (a)		33,691		1,563
Tyco International Ltd.		902,594		29,452
United Rentals, Inc. *		24,282		813
United Technologies Corp.		455,163		30,555
USG Corp. (a)*		20,406		942
W.W. Grainger, Inc.		38,076		3,146
Walter Industries, Inc. (a)		15,515		461
WESCO International, Inc. *		21,593		1,364

				588,679

Commercial Services & Supplies 0.7%

Allied Waste Industries, Inc. *		101,043		1,351
Avery Dennison Corp.		57,460		3,574
ChoicePoint, Inc. (a)*		23,182		880
Cintas Corp.		68,510		2,567
Copart, Inc. *		10,214		296
Covanta Holding Corp. *		64,748		1,589
Equifax, Inc. (a)		68,000		2,706
Herman Miller, Inc.		28,955		996
HNI Corp. (a)		21,273		888
Manpower, Inc.		40,291		3,233
Monster Worldwide, Inc. *		56,300		2,367
Pitney Bowes, Inc.		98,241		4,716
R.R. Donnelley & Sons Co.		99,419		3,997
Republic Services, Inc.		94,972		2,653
Robert Half International, Inc. (a)		69,691		2,321
Steelcase, Inc., Class A		74,242		1,449
Stericycle, Inc. (a)*		16,849		1,468
The Brink’s Co.		18,815		1,195
The Corporate Executive Board Co.		17,344		1,104
The Dun & Bradstreet Corp. *		35,225		3,181
Waste Management, Inc.		265,277		9,924

				52,455

Consumer Durables & Apparel 1.4%

Beazer Homes USA, Inc.		3,198		107
Black & Decker Corp.		36,580		3,319
Brunswick Corp. (a)		33,961		1,113
Centex Corp. (a)		52,500		2,350
Coach, Inc. *		170,310		8,316
D.R. Horton, Inc. (a)		111,397		2,471
Eastman Kodak Co. (a)		124,621		3,104
Fortune Brands, Inc.		59,628		4,776
Garmin Ltd. (a)		99,486		5,789
Harman International Industries, Inc. (a)		32,997		4,022
Hasbro, Inc.		97,925		3,095
Hovnanian Enterprises, Inc., Class A (a)*		4,611		111
Jones Apparel Group, Inc.		56,320		1,881
KB Home (a)		28,176		1,243
Leggett & Platt, Inc.		79,244		1,864
Lennar Corp., Class A		66,375		2,835
Liz Claiborne, Inc.		42,800		1,914
M.D.C. Holdings, Inc.		14,679		752

2 See financial notes.

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

Mattel, Inc.		186,297		5,272
Mohawk Industries, Inc. (a)*		26,739		2,411
Newell Rubbermaid, Inc.		136,926		4,200
Nike, Inc., Class B		237,068		12,768
NVR, Inc. (a)*		2,498		2,058
Polo Ralph Lauren Corp.		52,595		4,845
Pool Corp. (a)		5,927		238
Pulte Homes, Inc.		94,712		2,548
Snap-On, Inc.		34,850		1,899
Standard Pacific Corp. (a)		4,050		84
The Ryland Group, Inc. (a)		18,050		800
The Stanley Works (a)		35,994		2,098
Timberland Co., Class A (a)*		27,760		716
Toll Brothers, Inc. *		63,200		1,882
VF Corp. (a)		44,982		3,950
Whirlpool Corp. (a)		32,643		3,461

				98,292

Consumer Services 2.1%

Apollo Group, Inc., Class A *		74,721		3,534
Boyd Gaming Corp.		35,200		1,602
Brinker International, Inc.		51,900		1,614
Career Education Corp. *		45,200		1,335
Carnival Corp. (a)		277,210		13,553
Choice Hotels International, Inc. (a)		24,514		923
Darden Restaurants, Inc. (a)		64,615		2,680
H&R Block, Inc. (a)		118,798		2,686
Harrah’s Entertainment, Inc.		73,756		6,291
Hilton Hotels Corp.		157,465		5,354
International Game Technology		159,726		6,092
International Speedway Corp., Class A		18,769		927
ITT Educational Services, Inc. *		21,101		2,051
Las Vegas Sands Corp. *		156,663		13,346
Laureate Education, Inc. *		14,678		867
Marriott International, Inc., Class A		174,956		7,910
McDonald’s Corp.		553,736		26,734
MGM Mirage (a)*		109,687		7,377
OSI Restaurant Partners, Inc. (a)		13,397		533
Panera Bread Co., Class A (a)*		8,339		464
Penn National Gaming, Inc. *		34,060		1,647
Royal Caribbean Cruises Ltd.		93,491		3,887
Scientific Games Corp., Class A *		19,143		637
Service Corp. International		162,900		1,979
Starbucks Corp. *		331,127		10,272
Starwood Hotels & Resorts Worldwide, Inc.		93,842		6,289
Station Casinos, Inc.		16,774		1,459
The Cheesecake Factory, Inc. (a)*		28,674		791
The ServiceMaster Co. (a)		115,153		1,772
Weight Watchers International, Inc. (a)		41,329		1,983
Wendy’s International, Inc. (a)		42,173		1,590
Wyndham Worldwide Corp. (a)*		94,517		3,270
Wynn Resorts Ltd. (a)		36,342		3,715
YUM! Brands, Inc. (a)		117,288		7,256

				152,420

Diversified Financials 9.4%

A.G. Edwards, Inc.		35,385		2,564
Affiliated Managers Group, Inc. (a)*		13,459		1,583
AllianceBernstein Holding LP		39,989		3,637
American Express Co.		545,577		33,100
AmeriCredit Corp. (a)*		71,000		1,791
Ameriprise Financial, Inc.		114,957		6,836
Bank of America Corp. (b)		2,000,568		101,829
BlackRock, Inc., Class A (a)		39,465		5,908
Capital One Financial Corp.		176,653		13,118
CBOT Holdings, Inc., Class A (a)*		24,362		4,596
Chicago Mercantile Exchange Holdings, Inc.		16,141		8,341
CIT Group, Inc. (a)		88,368		5,271
Citigroup, Inc.		2,216,762		118,863
ETRADE Financial Corp.		182,900		4,038
Eaton Vance Corp.		34,884		1,333
Federated Investors, Inc., Class B		48,250		1,841
Fifth Third Bancorp (a)		234,484		9,518
Franklin Resources, Inc.		118,286		15,532
IntercontinentalExchange, Inc. *		25,589		3,250
Investors Financial Services Corp. (a)		16,590		1,027
Janus Capital Group, Inc. (a)		110,800		2,772
Jefferies Group, Inc.		52,252		1,656
JPMorgan Chase & Co.		1,577,338		82,179
Legg Mason, Inc.		53,714		5,328
Lehman Brothers Holdings, Inc.		240,288		18,089
Leucadia National Corp. (a)		96,964		2,923
Mellon Financial Corp.		182,925		7,853
Merrill Lynch & Co., Inc.		396,362		35,764
Moody’s Corp.		141,126		9,331
Morgan Stanley		480,548		40,371
Nasdaq Stock Market, Inc. *		39,737		1,294
Nelnet, Inc., Class A (a)		20,511		552
Northern Trust Corp.		105,476		6,640
Nuveen Investments, Inc., Class A (a)		29,300		1,562
Raymond James Financial, Inc.		51,849		1,591
SEI Investments Co.		43,974		2,684
SLM Corp.		182,624		9,831
State Street Corp.		154,686		10,653
Student Loan Corp.		8,927		1,818
T. Rowe Price Group, Inc.		116,350		5,780
TD Ameritrade Holding Corp. (a)*		268,731		4,582
The Bank of New York Co., Inc.		332,610		13,464
The Bear Stearns Cos., Inc.		51,936		8,086

See financial notes. 3

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

The Charles Schwab Corp. (c)		558,615		10,681
The First Marblehead Corp. (a)		41,714		1,512
The Goldman Sachs Group, Inc.		190,932		41,740

				672,712

Energy 9.6%

Anadarko Petroleum Corp.		211,348		9,862
Apache Corp.		145,150		10,523
Arch Coal, Inc.		42,200		1,522
Baker Hughes, Inc.		141,907		11,408
BJ Services Co.		132,346		3,793
Cabot Oil & Gas Corp.		10,174		371
Cameron International Corp. *		54,400		3,513
Cheniere Energy, Inc. (a)*		5,187		173
Chesapeake Energy Corp.		140,997		4,759
ChevronTexaco Corp.		978,977		76,155
Cimarex Energy Co.		19,215		757
CNX Gas Corp. (a)*		49,394		1,386
ConocoPhillips		736,516		51,077
CONSOL Energy, Inc.		78,198		3,274
Denbury Resources, Inc. *		42,942		1,421
Devon Energy Corp.		194,882		14,201
Diamond Offshore Drilling, Inc.		56,729		4,856
Dresser-Rand Group, Inc. *		35,119		1,121
El Paso Corp.		276,981		4,155
ENSCO International, Inc.		67,928		3,830
Enterprise GP Holdings L.P. (a)		23,859		923
Enterprise Products Partners L.P. (a)		179,858		5,836
EOG Resources, Inc.		107,652		7,906
Exxon Mobil Corp.		2,581,722		204,937
FMC Technologies, Inc. *		26,892		1,906
Forest Oil Corp. (a)*		10,215		360
Frontier Oil Corp.		35,758		1,263
Grant Prideco, Inc. *		59,316		3,057
Halliburton Co.		444,788		14,131
Helix Energy Solutions Group, Inc. (a)*		12,626		483
Helmerich & Payne, Inc.		46,192		1,492
Hess Corp.		114,423		6,494
Hugoton Royalty Trust (a)		9,368		249
Kinder Morgan Manage (a)*		29,674		1,577
Kinder Morgan Management, LLC		58,563		6,240
Marathon Oil Corp.		160,973		16,347
Mariner Energy, Inc. *		66		1
Massey Energy Co. (a)		26,201		706
Murphy Oil Corp.		82,544		4,576
Nabors Industries Ltd. *		132,288		4,249
National-Oilwell Varco, Inc. *		74,973		6,361
Newfield Exploration Co. *		53,066		2,322
Noble Corp.		56,850		4,787
Noble Energy, Inc.		76,961		4,526
NuStar Energy L.P. (a)*		21,595		1,493
Occidental Petroleum Corp.		375,316		19,029
Patterson-UTI Energy, Inc.		70,321		1,715
Peabody Energy Corp.		116,021		5,567
Pioneer Natural Resources Co. (a)		53,111		2,666
Plains All American Pipeline L.P.		34,032		2,008
Plains Exploration & Production Co. *		22,858		1,074
Pogo Producing Co. (a)		22,700		1,096
Pride International, Inc. (a)*		72,494		2,379
Quicksilver Resources, Inc (a)*		17,945		751
Range Resources Corp. (a)		27,028		988
Rowan Cos., Inc.		44,283		1,623
Schlumberger Ltd.		529,506		39,093
Smith International, Inc. (a)		86,959		4,560
Southwestern Energy Co. *		61,844		2,597
Spectra Energy Corp.		271,971		7,098
St. Mary Land & Exploration Co.		20,513		751
Sunoco, Inc.		54,500		4,116
Teekay Shipping Corp. (a)		38,268		2,283
TEPPCO Partners L.P. (a)		32,277		1,470
Tesoro Corp. (a)		25,056		3,037
Tidewater, Inc. (a)		28,568		1,806
Todco, Class A *		27,839		1,266
Transocean, Inc. *		129,413		11,155
Ultra Petroleum Corp. *		56,612		3,211
Unit Corp. (a)*		5,200		297
Valero Energy Corp.		267,470		18,784
W&T Offshore, Inc. (a)		26,134		793
Weatherford International Ltd. *		141,248		7,414
Williams Cos., Inc.		223,521		6,594
XTO Energy, Inc.		152,058		8,252

				673,852

Food & Staples Retailing 2.4%

BJ’s Wholesale Club, Inc. *		16,100		556
Costco Wholesale Corp.		202,699		10,858
CVS Corp.		657,261		23,819
Safeway, Inc.		197,397		7,165
Supervalu, Inc.		50,756		2,330
Sysco Corp. (a)		256,190		8,388
The Kroger Co.		336,213		9,922
Wal-Mart Stores, Inc.		1,849,777		88,641
Walgreen Co.		447,669		19,653
Whole Foods Market, Inc. (a)		56,216		2,630

				173,962

Food, Beverage & Tobacco 4.9%

Altria Group, Inc.		918,915		63,332
Anheuser-Busch Cos., Inc. (b)		339,166		16,684
Archer-Daniels-Midland Co.		290,185		11,230
Brown-Forman Corp., Class B (a)		54,332		3,473
Bunge Ltd.		46,192		3,500
Campbell Soup Co.		184,958		7,232
Coca-Cola Enterprises, Inc.		209,772		4,602
ConAgra Foods, Inc.		239,397		5,884

4 See financial notes.

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

Constellation Brands, Inc., Class A (a)*		90,132		2,020
Dean Foods Co. *		61,833		2,253
Del Monte Foods Co.		91,938		1,067
General Mills, Inc.		167,050		10,006
H.J. Heinz Co.		160,798		7,575
Hormel Foods Corp.		63,747		2,428
Kellogg Co.		175,481		9,285
Kraft Foods, Inc., Class A		1,380,564		46,207
Loews Corp. — Carolina Group		47,771		3,656
McCormick & Co., Inc.		70,654		2,623
Molson Coors Brewing Co., Class B		38,136		3,595
PepsiAmericas, Inc.		54,736		1,321
PepsiCo, Inc.		734,687		48,555
Reynolds American, Inc. (a)		138,084		8,873
Sara Lee Corp.		359,772		5,904
Smithfield Foods, Inc. (a)*		34,235		1,047
The Coca-Cola Co.		1,046,504		54,617
The Hershey Co. (a)		102,624		5,640
The J.M. Smuckers Co.		27,401		1,530
The Pepsi Bottling Group, Inc.		104,232		3,420
Tyson Foods, Inc. Class A		146,259		3,066
UST, Inc. (a)		76,225		4,320
Wm. Wrigley Jr. Co. (a)		99,472		5,857

				350,802

Health Care Equipment & Services 4.1%

Advanced Medical Optics, Inc. *		10,934		442
Aetna, Inc.		261,277		12,249
AmerisourceBergen Corp.		100,310		5,014
Bausch & Lomb, Inc.		24,539		1,444
Baxter International, Inc.		291,095		16,485
Beckman Coulter, Inc.		27,428		1,723
Becton Dickinson & Co.		119,665		9,416
Biomet, Inc.		107,904		4,661
Boston Scientific Corp. *		589,707		9,105
C.R. Bard, Inc.		47,000		3,907
Cardinal Health, Inc.		179,410		12,550
Cerner Corp. (a)*		45,226		2,408
CIGNA Corp.		60,118		9,354
Community Health Systems, Inc. (a)*		40,206		1,480
Coventry Health Care, Inc. (a)*		70,362		4,069
Cytyc Corp. *		44,020		1,551
Dade Behring Holdings, Inc.		43,458		2,134
DaVita, Inc. *		43,625		2,382
Dentsply International, Inc.		79,300		2,649
Edwards Lifesciences Corp. *		29,896		1,465
Emdeon Corp. (a)*		65,979		1,065
Express Scripts, Inc. *		66,956		6,398
Gen-Probe, Inc. *		22,670		1,159
Health Management Associates, Inc., Class A (a)		71,122		760
Health Net, Inc. *		51,000		2,757
Henry Schein, Inc. *		39,919		2,081
Hillenbrand Industries, Inc.		27,448		1,678
Hologic, Inc. (a)*		10,011		576
Hospira, Inc. (a)*		69,140		2,804
Humana, Inc. *		77,691		4,913
IDEXX Laboratories, Inc. *		14,149		1,276
IMS Health, Inc.		106,589		3,126
Intuitive Surgical, Inc. (a)*		12,415		1,610
Kinetic Concepts, Inc. *		30,492		1,525
Laboratory Corp. of America Holdings (a)*		61,322		4,841
Lincare Holdings, Inc. *		44,650		1,761
Manor Care, Inc.		16,982		1,102
McKesson Corp. (a)		144,147		8,480
Medco Health Solutions, Inc. (a)*		130,043		10,146
Medtronic, Inc.		520,518		27,551
Omnicare, Inc.		43,433		1,441
Patterson Cos., Inc. (a)*		53,200		1,918
Pediatrix Medical Group, Inc. (a)*		21,754		1,241
Quest Diagnostics, Inc. (a)		86,347		4,221
ResMed, Inc. (a)*		26,708		1,129
Respironics, Inc. *		11,167		455
Sierra Health Services, Inc. *		41,004		1,698
St. Jude Medical, Inc. *		147,605		6,316
Stryker Corp. (a)		169,354		10,998
Tenet Healthcare Corp. *		207,156		1,537
The Cooper Cos., Inc. (a)		7,447		380
Triad Hospitals, Inc. *		33,057		1,757
UnitedHealth Group, Inc.		591,212		31,370
Universal Health Services, Inc., Class B		22,337		1,356
Varian Medical Systems, Inc. *		58,271		2,460
VCA Antech, Inc. *		37,554		1,481
WellPoint, Inc. *		277,623		21,924
Zimmer Holdings, Inc. *		106,612		9,646

				291,425

Household & Personal Products 2.0%

Alberto-Culver Co., Class B		31,550		766
Avon Products, Inc.		183,336		7,297
Church & Dwight Co., Inc. (a)		28,997		1,471
Clorox Co.		69,525		4,664
Colgate-Palmolive Co.		232,527		15,751
Energizer Holdings, Inc. (a)*		26,100		2,536
Herbalife Ltd. *		31,709		1,271
Kimberly-Clark Corp.		209,634		14,920
The Estee Lauder Cos., Inc., Class A (a)		94,954		4,883
The Procter & Gamble Co. (b)		1,412,219		90,820

				144,379

Insurance 6.1%

ACE Ltd.		146,101		8,687

See financial notes. 5

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

AFLAC, Inc.		233,313		11,978
Alleghany Corp. (a)*		3,870		1,385
Ambac Financial Group, Inc. (a)		51,728		4,749
American Financial Group, Inc. (a)		51,405		1,813
American International Group, Inc.		1,151,036		80,469
American National Insurance Co.		11,837		1,545
AON Corp.		137,063		5,311
Arthur J. Gallagher & Co. (a)		35,720		999
Assurant, Inc.		69,992		4,027
Axis Capital Holdings Ltd.		66,062		2,451
Berkshire Hathaway, Inc., Class A *		693		75,676
Brown & Brown, Inc. (a)		63,576		1,637
Cincinnati Financial Corp.		76,917		3,480
CNA Financial Corp. (a)*		120,900		5,642
Conseco, Inc. *		67,673		1,197
Endurance Specialty Holdings Ltd. (a)		30,453		1,140
Erie Indemnity Co., Class A		19,985		1,050
Everest Re Group Ltd.		28,420		2,860
Fidelity National Financial, Inc., Class A		84,769		2,161
First American Corp.		44,360		2,285
Genworth Financial, Inc., Class A		215,039		7,847
Hanover Insurance Group, Inc.		26,400		1,213
HCC Insurance Holdings, Inc.		48,957		1,501
Lincoln National Corp.		133,159		9,474
Loews Corp.		261,558		12,377
Markel Corp. *		4,931		2,263
Marsh & McLennan Cos., Inc. (a)		225,520		7,162
MBIA, Inc. (a)		59,334		4,127
Mercury General Corp.		24,135		1,307
MetLife, Inc.		348,144		22,873
Nationwide Financial Services, Inc., Class A (a)		79,873		4,563
Old Republic International Corp.		105,309		2,240
PartnerRe Ltd. (a)		25,169		1,813
Philadelphia Consolidated Holding Corp. *		30,745		1,334
Principal Financial Group, Inc.		136,909		8,692
Protective Life Corp.		34,757		1,630
Prudential Financial, Inc.		230,197		21,869
Reinsurance Group of America, Inc.		31,210		1,945
RenaissanceRe Holdings Ltd.		32,807		1,776
SAFECO Corp.		59,478		3,970
StanCorp Financial Group, Inc.		28,442		1,354
The Allstate Corp.		280,398		17,474
The Chubb Corp.		189,492		10,200
The Hartford Financial Services Group, Inc.		140,595		14,228
The Progressive Corp.		357,592		8,250
The Travelers Cos., Inc.		318,197		17,214
Torchmark Corp.		47,877		3,270
Transatlantic Holdings, Inc.		32,429		2,253
Unitrin, Inc.		31,571		1,489
Unum Corp. (a)		151,514		3,770
W. R. Berkley Corp.		94,725		3,078
Wesco Financial Corp.		3,565		1,586
White Mountains Insurance Group Ltd.		3,613		2,070
XL Capital Ltd., Class A (a)		80,467		6,275

				433,029

Materials 3.3%

Air Products & Chemicals, Inc.		102,278		7,824
Airgas, Inc.		34,351		1,530
Alcoa, Inc.		376,020		13,345
Allegheny Technologies, Inc.		29,252		3,205
Ashland, Inc.		32,240		1,933
Ball Corp.		41,588		2,108
Bemis Co.		31,149		1,035
Cabot Corp.		14,616		662
Celanese Corp., Series A		73,143		2,426
Chemtura Corp.		36,747		405
Commercial Metals Co. (a)		53,294		1,787
Crown Holdings, Inc. *		82,776		2,001
Cytec Industries, Inc.		14,200		780
E. I. du Pont de Nemours and Co. (a)		409,707		20,145
Eagle Materials, Inc.		3,490		156
Eastman Chemical Co. (a)		37,591		2,545
Ecolab, Inc.		112,168		4,822
Florida Rock Industries, Inc.		18,667		1,290
FMC Corp.		25,076		1,929
Freeport-McMoran Copper & Gold, Inc., Class B		145,865		9,796
Huntsman Corp.		62,754		1,230
International Flavors & Fragrances, Inc.		43,608		2,122
International Paper Co.		208,907		7,880
Louisiana-Pacific Corp.		48,798		962
Lyondell Chemical Co. (a)		110,057		3,425
Martin Marietta Materials, Inc.		18,349		2,676
MeadWestvaco Corp. (a)		84,883		2,832
Meridian Gold, Inc. *		45,756		1,155
Monsanto Co.		241,834		14,266
Nalco Holding Co.		62,643		1,665
Newmont Mining Corp.		177,208		7,390
Nucor Corp.		150,276		9,537
Owens-Illinois, Inc. *		67,777		2,039
Packaging Corp. of America		49,530		1,226
Pactiv Corp. (a)*		75,260		2,603
PPG Industries, Inc.		73,206		5,387
Praxair, Inc.		148,528		9,588
Reliance Steel & Aluminum Co.		33,322		1,979
Rohm & Haas Co.		110,401		5,649
Sealed Air Corp. (a)		84,102		2,767
Sigma-Aldrich Corp.		48,608		2,045
Smurfit-Stone Container Corp. *		112,330		1,354

6 See financial notes.

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

Sonoco Products Co.		55,770		2,378
Southern Copper Corp. (a)		115,982		9,313
Temple-Inland, Inc.		58,208		3,448
The Dow Chemical Co.		430,556		19,207
The Lubrizol Corp.		38,960		2,335
The Mosaic Co. *		130,695		3,856
The Scotts Miracle-Gro Co., Class A (a)		14,668		660
Titanium Metals Corp. (a)*		48,485		1,674
Tronox, Inc., Class B		90		1
United States Steel Corp.		57,768		5,866
Valhi, Inc. (a)		16,058		269
Valspar Corp. (a)		46,946		1,269
Vulcan Materials Co.		41,782		5,167
Westlake Chemical Corp.		26,683		779
Weyerhaeuser Co.		104,715		8,296

				234,019

Media 3.8%

Adelphia Recovery Trust		75,707		—
Belo Corp., Class A		40,900		788
Cablevision Systems Corp., Class A *		127,910		4,193
CBS Corp., Class B		360,205		11,444
Clear Channel Communications, Inc.		220,896		7,826
Clear Channel Outdoor Holdings, Inc., Class A (a)*		108,217		3,090
Comcast Corp., Class A *		1,423,953		37,963
Discovery Holding Co., Class A (a)*		67,197		1,462
Dow Jones & Co., Inc. (a)		34,348		1,248
DreamWorks Animation SKG, Inc., Class A (a)*		45,845		1,342
EchoStar Communications Corp., Class A *		200,772		9,342
Gannett Co., Inc.		103,654		5,914
Getty Images, Inc. *		24,937		1,297
Harte-Hanks, Inc.		34,016		888
Idearc, Inc.		65,936		2,291
Interactive Data Corp. *		13,830		396
Interpublic Group of Cos., Inc. (a)*		172,664		2,189
John Wiley & Sons, Inc., Class A		27,380		1,025
Lamar Advertising Co., Class A		44,170		2,665
Liberty Global, Inc., Class A *		177,066		6,355
Liberty Media Corp. — Capital, Series A *		47,961		5,418
McGraw-Hill Cos., Inc. (a)		166,836		10,933
Meredith Corp. (a)		16,639		964
New York Times Co., Class A (a)		56,925		1,332
News Corp., Class A		1,415,628		31,696
Omnicom Group, Inc.		84,869		8,887
R.H. Donnelley Corp. (a)*		31,186		2,435
Regal Entertainment Group, Class A (a)		42,691		929
Sirius Satellite Radio, Inc. (a)*		442,485		1,310
The DIRECTV Group, Inc. *		580,345		13,835
The E.W. Scripps Co., Class A (a)		65,773		2,848
The McClatchy Co., Class A (a)		23,405		676
The Walt Disney Co.		907,502		31,744
Time Warner, Inc.		1,821,801		37,584
Tribune Co.		105,700		3,467
Viacom, Inc., Class B *		318,946		13,157
Warner Music Group Corp.		50,986		877
Washington Post, Class B		4,226		3,144
XM Satellite Radio Holdings, Inc., Class A *		51,979		608

				273,562

Pharmaceuticals & Biotechnology 7.7%

Abbott Laboratories		680,546		38,533
Abraxis Bioscience, Inc. (a)*		47,356		1,303
Affymetrix, Inc. *		1,490		39
Alkermes, Inc. (a)*		7,142		117
Allergan, Inc.		63,081		7,645
Amgen, Inc. *		523,360		33,568
Amylin Pharmaceuticals, Inc. *		33,747		1,395
Applied Biosystems Group — Applera Corp.		100,500		3,140
Barr Pharmaceuticals, Inc. *		49,638		2,401
Biogen Idec, Inc. *		161,355		7,618
Bristol-Myers Squibb Co.		866,839		25,017
Celgene Corp. *		138,646		8,480
Cephalon, Inc. (a)*		27,000		2,149
Charles River Laboratories, Inc. *		25,115		1,189
Covance, Inc. *		24,300		1,470
Eli Lilly & Co.		510,171		30,166
Endo Pharmaceutical Holdings, Inc. *		59,028		1,826
Forest Laboratories, Inc. *		150,046		7,984
Genentech, Inc. *		462,819		37,021
Genzyme Corp. *		119,131		7,780
Gilead Sciences, Inc. *		203,956		16,667
ImClone Systems, Inc. *		23,380		979
Invitrogen Corp. *		21,302		1,395
Johnson & Johnson		1,293,317		83,057
King Pharmaceuticals, Inc. *		119,766		2,449
MedImmune, Inc. (a)*		89,756		5,087
Merck & Co., Inc.		994,585		51,161
Millennium Pharmaceuticals, Inc. (a)*		141,504		1,568
Millipore Corp. (a)*		22,874		1,689
Mylan Laboratories, Inc. (a)		93,000		2,039
Neurocrine Biosciences, Inc. (a)*		4,383		56
PDL BioPharma, Inc. (a)*		23,895		604
PerkinElmer, Inc.		63,500		1,537
Pfizer, Inc.		3,227,810		85,408

See financial notes. 7

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

Pharmaceutical Product Development, Inc. (PPD)		47,746		1,722
Schering-Plough Corp. (b)		680,516		21,593
Sepracor, Inc. *		43,869		2,355
Techne Corp. *		17,563		1,036
Thermo Electron Corp. *		163,898		8,533
Vertex Pharmaceuticals, Inc. (a)*		21,412		658
Waters Corp. *		51,000		3,031
Watson Pharmaceuticals, Inc. *		54,400		1,485
Wyeth		598,983		33,244

				546,194

Real Estate 1.9%

AMB Property Corp.		39,425		2,401
Apartment Investment & Management Co., Class A		43,665		2,415
Archstone-Smith Trust		97,600		5,086
AvalonBay Communities, Inc.		33,551		4,102
Boston Properties, Inc.		51,905		6,102
Brandywine Realty Trust		40,050		1,317
BRE Properties, Class A (a)		23,424		1,406
Camden Property Trust		23,864		1,662
CapitalSource, Inc.		69,479		1,790
CB Richard Ellis Group, Inc., Class A *		101,337		3,430
CBL & Associates Properties, Inc.		29,241		1,329
Colonial Properties Trust		20,534		1,019
Crescent Real Estate Equity Co. (a)		45,568		935
Developers Diversified Realty Corp. (a)		48,900		3,183
Duke Realty Corp. (a)		65,937		2,843
Equity Residential		132,472		6,151
Essex Property Trust, Inc. (a)		10,517		1,355
Federal Realty Investment Trust		24,196		2,182
Forest City Enterprises, Inc., Class A		39,988		2,672
General Growth Properties, Inc.		109,593		6,998
Health Care Property Investors, Inc.		62,680		2,218
Health Care REIT, Inc. (a)		26,421		1,195
Hospitality Properties Trust		33,081		1,506
Host Hotels & Resorts, Inc. (a)*		224,534		5,757
HRPT Properties Trust		88,774		1,087
iStar Financial, Inc.		51,293		2,458
Jones Lang LaSalle, Inc.		16,005		1,720
Kimco Realty Corp. (a)		108,931		5,236
Liberty Property Trust		40,104		1,941
Mack-Cali Realty Corp.		28,347		1,388
New Century Financial Corp. (a)		23,820		21
Plum Creek Timber Co., Inc. (a)		84,798		3,366
ProLogis		111,861		7,249
Public Storage, Inc. (a)		71,159		6,641
Rayonier, Inc.		34,923		1,515
Regency Centers Corp.		28,082		2,314
Simon Property Group, Inc.		97,678		11,260
SL Green Realty Corp.		22,601		3,184
The Macerich Co.		31,678		3,013
The St. Joe Co. (a)		21,800		1,235
Thornburg Mortgage, Inc. (a)		46,418		1,290
UDR, Inc. (a)		63,289		1,901
Ventas, Inc.		47,419		1,999
Vornado Realty Trust		62,151		7,373
Weingarten Realty Investors (a)		41,202		1,972

				137,217

Retailing 3.7%

Abercrombie & Fitch Co., Class A		34,819		2,843
Advance Auto Parts, Inc.		44,702		1,842
Amazon.com, Inc. *		179,941		11,036
American Eagle Outfitters, Inc.		115,385		3,400
AnnTaylor Stores Corp. *		32,337		1,244
AutoNation, Inc. *		91,966		1,880
AutoZone, Inc. *		32,733		4,355
Barnes & Noble, Inc.		23,118		914
Bed, Bath & Beyond, Inc. *		124,920		5,089
Best Buy Co., Inc.		210,276		9,809
CarMax, Inc. *		66,800		1,665
Chico’s FAS, Inc. *		46,194		1,218
Circuit City Stores, Inc.		65,937		1,151
Claire’s Stores, Inc.		41,419		1,349
Dillard’s, Inc., Class A (a)		35,164		1,218
Dollar General Corp. (a)		98,205		2,097
Dollar Tree Stores, Inc. *		45,108		1,774
eBay, Inc. *		621,520		21,094
Expedia, Inc. *		148,709		3,513
Family Dollar Stores, Inc.		53,600		1,707
Federated Department Stores, Inc.		235,276		10,333
Foot Locker, Inc.		67,009		1,594
GameStop Corp., Class A *		27,000		896
Genuine Parts Co.		75,430		3,727
Home Depot, Inc.		914,295		34,624
IAC/InterActiveCorp *		145,260		5,537
J.C. Penney Co., Inc.		111,122		8,789
Kohl’s Corp. *		152,165		11,266
Liberty Media Corp. — Interactive *		8		—
Limited Brands, Inc.		174,523		4,812
Lowe’s Cos., Inc.		676,546		20,675
Nordstrom, Inc.		135,500		7,442
O’Reilly Automotive, Inc. (a)*		24,566		875
Office Depot, Inc. *		136,330		4,583
PETsMART, Inc.		61,195		2,031
RadioShack Corp. (a)		45,340		1,318
Ross Stores, Inc.		68,156		2,259
Saks, Inc. (a)		60,179		1,260
Sally Beauty Holdings, Inc. *		31,550		310
Sears Holdings Corp. *		68,194		13,019
Staples, Inc.		318,070		7,888
Target Corp.		379,442		22,527

8 See financial notes.

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

The Gap, Inc.		363,575		6,526
The Sherwin-Williams Co.		62,790		4,004
The TJX Cos., Inc.		214,065		5,970
Tiffany & Co.		61,173		2,917
Tractor Supply Co. (a)*		4,484		232
TravelCenters of America LLC (a)*		3,308		146
Urban Outfitters, Inc. *		33,496		863
Williams-Sonoma, Inc. (a)		39,121		1,378

				266,999

Semiconductors & Semiconductor Equipment 2.4%

Advanced Micro Devices, Inc. (a)*		196,331		2,713
Altera Corp. *		160,319		3,614
Analog Devices, Inc.		151,274		5,842
Applied Materials, Inc.		637,489		12,253
Atmel Corp. *		172,417		917
Broadcom Corp., Class A *		226,725		7,380
Cypress Semiconductor Corp. (a)*		13,168		301
Fairchild Semiconductor International, Inc. *		59,000		1,038
Integrated Device Technology, Inc. *		114,071		1,709
Intel Corp.		2,572,630		55,312
International Rectifier Corp. *		23,542		831
Intersil Corp., Class A		82,067		2,445
KLA-Tencor Corp. (a)		90,738		5,041
Lam Research Corp. *		60,600		3,259
Linear Technology Corp. (a)		132,266		4,949
LSI Logic Corp. (a)*		334,498		2,843
Marvell Technology Group Ltd. *		261,462		4,217
Maxim Integrated Products, Inc.		131,721		4,178
MEMC Electronic Materials, Inc. *		96,877		5,317
Microchip Technology, Inc.		93,566		3,774
Micron Technology, Inc. (a)*		301,400		3,457
National Semiconductor Corp.		143,458		3,773
Novellus Systems, Inc. (a)*		71,495		2,314
NVIDIA Corp. *		155,800		5,124
Rambus, Inc. (a)*		20,164		399
Silicon Laboratories, Inc. *		24,236		795
Teradyne, Inc. *		89,557		1,563
Texas Instruments, Inc.		656,375		22,560
Verigy Ltd. *		50		1
Xilinx, Inc. (a)		145,705		4,295

				172,214

Software & Services 6.0%

Accenture Ltd., Class A (a)		366,742		14,340
Activision, Inc. *		102,269		2,045
Acxiom Corp.		43,076		973
Adobe Systems, Inc. *		268,413		11,155
Affiliated Computer Services, Inc., Class A *		52,467		3,143
Akamai Technologies, Inc. *		39,209		1,728
Alliance Data Systems Corp. *		31,271		1,991
Autodesk, Inc. *		102,272		4,221
Automatic Data Processing, Inc.		254,551		11,394
BEA Systems, Inc. *		172,306		2,031
BMC Software, Inc. *		111,712		3,616
Broadridge Financial Solutions, Inc. *		63,637		1,275
CA, Inc.		254,981		6,951
Cadence Design Systems, Inc. *		150,387		3,339
Ceridian Corp. *		61,500		2,076
CheckFree Corp. (a)*		39,180		1,319
Citrix Systems, Inc. *		78,500		2,559
Cognizant Technology Solutions Corp., Class A *		59,383		5,309
Computer Sciences Corp. (a)*		76,031		4,223
Compuware Corp. (a)*		178,164		1,758
Convergys Corp. *		60,909		1,539
DST Systems, Inc. *		22,480		1,755
Electronic Arts, Inc. *		138,281		6,971
Electronic Data Systems Corp. (a)		251,895		7,365
Fair Isaac Corp.		31,051		1,109
Fidelity National Information Services, Inc.		102,270		5,168
First Data Corp.		337,990		10,951
Fiserv, Inc. *		87,289		4,641
Global Payments, Inc.		44,138		1,676
Google, Inc., Class A *		132,196		62,315
Hewitt Associates, Inc., Class A (a)*		51,138		1,521
Intuit, Inc. *		170,344		4,846
Iron Mountain, Inc. *		73,387		2,062
McAfee, Inc. (a)*		78,229		2,542
Microsoft Corp.		4,360,588		130,556
MoneyGram International, Inc.		37,761		1,074
NAVTEQ Corp. (a)*		34,692		1,227
Novell, Inc. *		150,024		1,095
Oracle Corp. *		2,348,610		44,154
Paychex, Inc.		168,578		6,254
Red Hat, Inc. (a)*		84,383		1,784
Salesforce Com, Inc. *		25,321		1,063
Symantec Corp. *		414,974		7,304
Synopsys, Inc. *		85,000		2,351
Total System Services, Inc. (a)		87,115		2,706
Unisys Corp. *		151,521		1,188
VeriSign, Inc. *		99,505		2,721
Western Union Co.		340,290		7,163
Yahoo! Inc. *		601,629		16,870

				427,417

Technology Hardware & Equipment 6.1%

ADC Telecommunications, Inc. (a)*		43,267		796
ADTRAN, Inc.		28,105		715
Agilent Technologies, Inc. *		195,031		6,703

See financial notes. 9

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

Amphenol Corp., Class A		77,420		2,718
Andrew Corp. *		65,900		720
Apple Computer, Inc. *		375,414		37,466
Arrow Electronics, Inc. *		45,400		1,794
Avaya, Inc. *		260,398		3,364
Avnet, Inc. (a)*		66,746		2,730
AVX Corp. (a)		105,132		1,749
CDW Corp.		31,200		2,247
Ciena Corp. (a)*		37,753		1,101
Cisco Systems, Inc. *		2,716,615		72,642
Comverse Technology, Inc. *		92,867		2,106
Corning, Inc. *		679,563		16,119
Dell, Inc. *		1,007,899		25,409
Diebold, Inc.		25,318		1,207
Dolby Laboratories Inc., Class A *		47,529		1,684
EMC Corp. *		974,124		14,787
F5 Networks, Inc. *		4,559		350
Harris Corp. (a)		66,646		3,422
Hewlett-Packard Co.		1,235,718		52,073
Ingram Micro, Inc., Class A *		34,851		684
International Business Machines Corp.		673,990		68,889
Jabil Circuit, Inc. (a)		86,900		2,025
JDS Uniphase Corp. (a)*		81,305		1,340
Juniper Networks, Inc. *		206,894		4,626
Lexmark International, Inc., Class A *		62,559		3,410
Molex, Inc.		81,621		2,439
Motorola, Inc.		1,093,588		18,952
National Instruments Corp.		38,765		1,080
NCR Corp. *		83,044		4,185
Network Appliance, Inc. *		158,900		5,913
QLogic Corp. *		73,400		1,312
QUALCOMM, Inc.		730,628		32,002
SanDisk Corp. *		69,258		3,009
Sanmina — SCI Corp. (a)*		240,427		830
Seagate Technology		220,237		4,878
Solectron Corp. (a)*		399,405		1,338
Sun Microsystems, Inc. (a)(b)*		1,555,739		8,121
SunPower Corp., Class A (a)*		22,992		1,395
Tech Data Corp. *		25,152		894
Tektronix, Inc.		46,217		1,358
Tellabs, Inc. *		201,275		2,138
Vishay Intertechnology, Inc. *		81,450		1,356
Western Digital Corp. *		99,512		1,759
Xerox Corp. *		451,130		8,346
Zebra Technologies Corp., Class A (a)*		20,225		805

				434,986

Telecommunication Services 3.4%

ALLTEL Corp.		174,914		10,965
American Tower Corp., Class A *		189,989		7,220
AT&T Corp. (b)		2,833,727		109,722
CenturyTel, Inc.		67,187		3,094
Citizens Communications Co.		176,758		2,752
Crown Castle International Corp. *		140,227		4,815
Leap Wireless International, Inc. *		27,680		2,113
Level 3 Communications, Inc. (a)*		365,340		2,031
NII Holdings, Inc. *		54,341		4,171
Qwest Communications International, Inc. (a)*		870,635		7,731
Sprint Nextel Corp. (b)		1,306,207		26,163
Telephone & Data Systems, Inc.		53,101		3,024
U.S. Cellular Corp. *		39,840		2,889
Verizon Communications, Inc.		1,295,537		49,464
Windstream Corp.		180,848		2,644

				238,798

Transportation 1.7%

Alexander & Baldwin, Inc. (a)		15,426		825
AMR Corp. *		100,651		2,626
Avis Budget Group, Inc. *		44,258		1,245
Burlington Northern Santa Fe Corp.		161,381		14,127
C.H. Robinson Worldwide, Inc.		76,848		4,108
Con-way, Inc.		16,208		886
CSX Corp.		192,542		8,312
Expeditors International of Washington, Inc. (a)		84,098		3,515
FedEx Corp.		138,928		14,649
J.B. Hunt Transport Services, Inc.		48,791		1,320
Laidlaw International, Inc.		51,982		1,781
Landstar Systems, Inc.		26,430		1,277
Norfolk Southern Corp.		175,606		9,349
Ryder System, Inc.		8,764		461
Southwest Airlines Co.		347,688		4,989
UAL Corp. (a)*		49,067		1,639
Union Pacific Corp.		118,391		13,526
United Parcel Service, Inc., Class B		479,825		33,794
US Airways Group, Inc. *		38,548		1,424
UTI Worldwide, Inc.		43,080		1,011
YRC Worldwide, Inc. (a)*		24,091		959

				121,823

Utilities 3.5%

AGL Resources, Inc.		17,800		775
Allegheny Energy, Inc. *		80,053		4,280
Alliant Energy Corp.		56,200		2,462
Ameren Corp.		71,685		3,769
American Electric Power Co., Inc.		176,431		8,860
Aqua America, Inc. (a)		43,134		954
Atmos Energy Corp.		14,818		470
CenterPoint Energy, Inc. (a)		114,911		2,164
CMS Energy Corp. (a)*		83,533		1,547
Consolidated Edison, Inc.		96,706		4,957
Constellation Energy Group, Inc.		79,041		7,044
Dominion Resources, Inc.		152,529		13,911
DPL, Inc. (a)		50,061		1,569

10 See financial notes.

Schwab 1000 Index Fund

Portfolio Holdings continued


	Number of		Value
Security	Shares		($ x 1,000)

DTE Energy Co.		75,397		3,814
Duke Energy Corp.		543,943		11,162
Dynegy, Inc., Class A *		2,199		21
Edison International		156,454		8,190
Energen Corp.		11,496		644
Energy East Corp.		36,053		873
Entergy Corp.		91,022		10,298
Equitable Resources, Inc.		37,500		1,950
Exelon Corp.		296,656		22,371
FirstEnergy Corp.		149,370		10,223
FPL Group, Inc.		178,808		11,510
Hawaiian Electric Industries, Inc. (a)		18,448		486
Integrys Energy Group, Inc.		14,155		794
KeySpan Corp.		80,439		3,331
MDU Resources Group, Inc.		44,617		1,352
Mirant Corp. *		113,702		5,102
National Fuel Gas Co. (a)		27,047		1,271
NiSource, Inc.		113,480		2,790
Northeast Utilities		45,314		1,458
NRG Energy, Inc. *		53,565		4,230
NSTAR		21,712		779
OGE Energy Corp. (a)		29,180		1,122
Oneok, Inc.		32,162		1,557
Pepco Holdings, Inc.		83,974		2,479
PG&E Corp. (a)		162,137		8,204
Pinnacle West Capital Corp.		36,487		1,762
PPL Corp.		168,211		7,336
Progress Energy, Inc. (a)		109,085		5,514
Public Service Enterprise Group, Inc.		109,961		9,506
Puget Energy, Inc.		46,219		1,193
Questar Corp.		35,560		3,454
Reliant Energy, Inc. *		111,797		2,490
SCANA Corp. (a)		32,431		1,412
Sempra Energy		108,478		6,886
Southern Union Co.		40,862		1,245
TECO Energy, Inc.		92,117		1,654
The AES Corp. (b)*		320,202		7,041
The Southern Co. (a)		316,118		11,946
TXU Corp.		213,364		13,992
UGI Corp.		50,848		1,442
Wisconsin Energy Corp.		43,168		2,106
Xcel Energy, Inc.		137,409		3,310

				251,062

Total Common Stock
(Cost $3,022,594)				7,116,670


	Number of		Value
Security	Shares		($ x 1,000)

Foreign Common Stock 0.1% of net assets

Canada 0.0%

Consumer Services 0.0%

Tim Hortons, Inc.		65,374		2,061

Cayman Islands 0.1%

Energy 0.1%

GlobalSantaFe Corp.		96,995		6,201


Total Foreign Common Stock
(Cost $4,103)				8,262

Security

Face Amount

Value

Rate, Maturity Date

($ x 1,000)

Short-Term Investments 0.1% of net assets

Repurchase Agreement 0.1%

Fixed Income Clearing Corp. dated 04/30/07,

due 05/01/07 at 5.0%,

with a maturity value of $3,472 (fully collateralized by Federal

Home Loan Bank with a value of $3,545.)

3,472

3,472

U.S. Treasury Obligation 0.0%

U.S. Treasury Bill

4.98%, 06/14/07

1,160

1,153

Total Short-Term Investments

(Cost $4,625)

4,625


	Number of		Value
Security	Shares		($ x 1,000)

Warrants 0.0% of net assets

Raytheon Co. *		12,506		225

Total Warrants
(Cost $—)				225

End of Investments.

Collateral Invested for Securities on Loan 5.0% of net assets


State Street Navigator Security
Lending Prime Portfolio	359,207,470	359,207

See financial notes. 11

Schwab 1000 Index Fund

Portfolio Holdings continued

End of collateral invested for securities on loan.

At 04/30/07, the tax basis cost of the fund’s investments was $3,034,106, and the unrealized appreciation and depreciation were $4,205,636 and ($109,960), respectively, with a net unrealized appreciation of $4,095,676.

In addition to the above, the fund held the following at 04/30/07. All numbers are x1,000 except number of futures contracts.

Number of

Contract

Unrealized

Contracts

Value

Gains

Futures Contract

S&P 500 Index, e-mini,

Long, expires 06/16/07

130

9,675

571


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

12 See financial notes.

Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8: Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10: Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11: Controls and Procedures.

(a)		Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Evelyn Dilsaver and Registrant’s Principal Financial Officer, George Pereira, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above.

(b)		During the second fiscal quarter of the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting.

Item 12: Exhibits.

(a)

(1)

Code of ethics — not applicable to this semi-annual report.

	(2)		Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached.

	(3)		Not applicable.

(b)

A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission.




At 04/30/07 the tax basis cost of the fund’s investments was $1,029,651, and the unrealized appreciation and depreciation were $897,272 and ($28,345), respectively, with a net unrealized appreciation of $868,927.

At 4/30/07, the prices of certain foreign securities held by the fund aggregating $1,697,830 were adjusted from their closing market prices following the guidelines adopted by the fund’s Board of Trustees.


*		Non-income producing security. Please see the complete schedule of holdings.
(a)		All or a portion of this security is on loan.


(Registrant) Schwab Investments

By:		/s/ Evelyn Dilsaver
		Evelyn Dilsaver
		Chief Executive Officer

Date:		June 12, 2007