-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dxt6hCxJIKyTqL1sN+vH8hZDuzDB36rQQZheSKwQsi/61DD7sfp35r2xK3gzifiV oUqSjVtRoAIoOLltontf4A== 0000950123-09-040410.txt : 20090902 0000950123-09-040410.hdr.sgml : 20090902 20090902145008 ACCESSION NUMBER: 0000950123-09-040410 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090902 DATE AS OF CHANGE: 20090902 EFFECTIVENESS DATE: 20090902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHARLES SCHWAB FAMILY OF FUNDS CENTRAL INDEX KEY: 0000857156 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05954 FILM NUMBER: 091050716 BUSINESS ADDRESS: STREET 1: 211 MAIN STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 415-627-7000 MAIL ADDRESS: STREET 1: 211 MAIN STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FORMER COMPANY: FORMER CONFORMED NAME: SCHWAB CHARLES FAMILY OF FUNDS DATE OF NAME CHANGE: 19920703 0000857156 S000004499 Schwab Money Market Fund C000012373 Schwab Money Market Fund SWMXX 0000857156 S000004500 Schwab AMT Tax-Free Money Fund C000012374 Sweep Shares SWFXX C000039063 Value Advantage Shares SWWXX 0000857156 S000004501 Schwab Massachusetts AMT Tax-Free Money Fund C000012375 Sweep Shares SWDXX 0000857156 S000004502 Schwab Pennsylvania Municipal Money Fund C000012376 Sweep Shares SWEXX 0000857156 S000004503 Schwab New Jersey AMT Tax-Free Money Fund C000012377 Sweep Shares SWJXX 0000857156 S000004504 Schwab Cash Reserves C000012378 Schwab Cash Reserves SWSXX 0000857156 S000004505 Schwab Advisor Cash Reserves C000012379 Sweep Shares SWQXX C000012380 Premier Sweep Shares SWZXX 0000857156 S000004506 Schwab Government Money Fund C000012381 Schwab Government Money Fund SWGXX 0000857156 S000004507 Schwab U.S. Treasury Money Fund C000012382 Schwab U.S. Treasury Money Fund SWUXX 0000857156 S000004508 Schwab Value Advantage Money Fund C000012383 Investor Shares SWVXX C000012384 Select Shares SWBXX C000012385 Institutional Shares SWAXX C000038267 Institutional Prime Shares SNAXX 0000857156 S000004509 Schwab Retirement Advantage Money Fund C000012386 Schwab Retirement Advantage Money Fund SWIXX 0000857156 S000004510 Schwab Investor Money Fund C000012387 Schwab Investor Money Fund SWRXX 0000857156 S000004511 Schwab Municipal Money Fund C000012388 Sweep Shares SWXXX C000012389 Value Advantage Shares SWTXX C000012390 Select Shares SWLXX C000012391 Institutional Shares SWOXX 0000857156 S000004512 Schwab California Municipal Money Fund C000012392 Sweep Shares SWCXX C000012393 Value Advantage Shares SWKXX 0000857156 S000004513 Schwab New York AMT Tax-Free Money Fund C000012394 Sweep Shares SWNXX C000012395 Value Advantage Shares SWYXX 0000857156 S000019114 Schwab California AMT Tax-Free Money Fund C000052863 Value Advantage Shares SNKXX N-CSRS 1 f53426nvcsrs.htm FORM N-CSRS FORM N-CSRS
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-5954
The Charles Schwab Family of Funds
(Exact name of registrant as specified in charter)
211 Main Street, San Francisco, California  94105
(Address of principal executive offices)                           (Zip code)
Randall W. Merk
The Charles Schwab Family of Funds
211 Main Street, San Francisco, California 94105
(Name and address of agent for service)
Registrant’s telephone number, including area code: (415) 636-7000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2009
 
 
Item 1: Report(s) to Shareholders.

 

Table of Contents

Schwab California Municipal Money Fundtm
Schwab California AMT Tax-Free Money Fundtm
 
Semiannual Report
June 30, 2009
 
 
 
(CHARLES SCHWAB LOGO)
 

Table of Contents

 
This page is intentionally left blank.
 

 

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

Table of Contents

 
From the President
 

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

 
Dear Shareholder,
 
In the past six months, investors have had to endure the continuing effects of a recessionary economy. Volatile equity prices and low yields on government-backed securities have been among the numerous market challenges. In addition, corporate bankruptcies, regulatory changes, and securitized-asset troubles have reshaped fixed income and equity markets causing us to reassess and reexamine where these markets stood before the crisis and where they might take us in the future.
 
Despite this economic backdrop, Schwab’s money funds provided shareholders with safety and liquidity and maintained a stable $1 Net Asset Value during the period. The funds also maintained a positive net yield. However, a low interest rate environment both for taxable and tax-free investments, as well as continued demand for government-backed securities has translated into relatively low yields. For more detail on yields for each fund, please see the fund managers’ discussion and analysis found in the following pages of this report.
 
Information specific to Schwab’s money funds, such as a question and answer document, recent holdings for select money funds, and information on Schwab’s participation in the Treasury’s Temporary Guarantee Program for Money Market Funds can be found on schwab.com under the Money Market Funds page and on schwabinstitutional.com
 
If you have any questions about Schwab’s money funds or other Schwab Funds, we are always available at 1-800-435-4000, while additional resources may be found on schwab.com
 
Thank you for investing with us.
 
Sincerely,
 
-s-Randall W. Merk
 
 
 
2 Schwab California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund

Table of Contents

 
The Investment Environment
 
 
Investment conditions in the U.S. financial marketplace remained difficult to gauge as a climate of economic recession persisted, but showed signs of improving during the latter half of the reporting period. Broad-market equity indexes, such as the S&P 500 Index® and Russell 1000 Index® displayed meaningful gains since their March lows. The Chicago Board Options Exchange Volatility Index (VIX) – a measure of U.S. stock market price fluctuations – declined from March through the end of the period, settling around 30 after touching the high 50s in January. On the fixed income side, demand for government-backed debt remained strong relative to corporate and other non-government debt. Treasury yields, though still relatively low, inched higher toward the end of the period. From a policy perspective, economic stability and stimulus measures enacted in the U.S. and around the world acted to slow the pace of economic degradation and have encouraged investors to reengage markets in some cases.
 
Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence reflected the recessionary environment, but some indicators improved during the period. GDP – the output of goods and services produced by labor and property located in the United States – decreased at an annual rate of 5.7% in the first quarter of 2009 compared with a decline of 6.3% in the fourth quarter of 2008, according to the Bureau of Economic Analysis. The unemployment rate continued to rise, increasing to 9.4% in May, driven by job losses in the manufacturing sector. However, the Consumer Confidence Index improved in both April and May. As of May 26, 2009 the Index stood at 54.9, compared to 26.9 in March.
 
In this environment, yields on most taxable and municipal money funds were extremely low during the reporting period when compared to historical averages. Money funds that invested exclusively in U.S. Treasury securities or other government-backed assets had the lowest yields. Strong demand for so-called “safe assets”, such as U.S. Treasuries and highly rated short-term commercial paper, in conjunction with a 0% to 0.25% target on the Federal Funds Rate acted to dampen yield on money fund eligible assets. At the close of the period, 3-month Treasuries yielded 0.16% and 2-year Treasuries yielded 1.12%.
 
Despite the depression in yields, the Fed signaled that lending and liquidity conditions were beginning to improve by making modifications to emergency lending programs. In late June, the Fed announced that the Schedule 1 Term Security Lending Facility – a program that lent Treasury securities – would be suspended on July 1, 2009. In addition, reductions were made in the amount of credit auctioned under the Term Auction Facility, which was designed to provide cash to commercial lenders, and the Term Security Lending Facility, which makes funds available to primary bond dealers.
 
Earlier in the period, the Fed extended the Money Market Funds Guarantee Program until September 18, 2009. However, no fund has had to draw on the insurance provided by the program. In a separate move, the U.S. Securities and Exchange Commission (SEC) proposed new rules for money market funds aimed at preventing a repeat of the scenario that caused the collapse of the Reserve Primary Fund. The proposal modifies current restrictions on money funds and requires that funds increase liquidity and lower the ceiling on Weighted Average Maturity (WAM), among other changes. As of the reporting date, the SEC was seeking public comment on the proposal.
 

 
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 California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund 3

Table of Contents

 
Fund Management
 
     
     
(PHOTO)   Kevin Shaughnessy, CFA, a managing director and portfolio manager of the investment adviser, has overall responsibility for the management of the funds. He joined the firm in 2000 and has worked in fixed-income and asset management since 1993.
     
(PHOTO)   Cameron Ullyatt, CFA, a portfolio manager of the investment adviser, has day-to-day co-responsibility for the management of the funds. He joined the firm in June 2008 and has worked in fixed-income asset management since 1999.
 
 
 
4 Schwab California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund

Table of Contents

 
State Investment Environment
 
 
California expected to report a negative general fund balance of $6.22 billion at June 30, 2009, or 6.6% of annual expenditures, based on Governor Arnold Schwarzenegger’s May Revision budget estimate. This is down from about $2.3 billion at the beginning of the fiscal year, despite major budgetary adjustments enacted on February 20, 2009. These adjustments were included in the budget act for fiscal year 2010 (7/1/09-6/30/10), which was completed nearly five months ahead of the required schedule to address an estimated $41.6 billion general fund shortfall through June 30, 2010. The budget closed the 18-month projected gap with $12.5 billion of new revenues, $15.7 billion of expenditure reductions, and $5.4 billion of borrowing. The budget also relied on $8 billion of federal stimulus funds, provided through the American Recovery and Reinvestment Act of 2009. The largest single new revenue item was a temporary 1-cent increase in the sales tax, but the plan also increased personal income tax rates and vehicle license fees, and cut general fund appropriations to K-12 education by $8.4 billion. The State expected to net $5 billion from the sale of bonds secured by future lottery revenues, but this was contingent upon voter approval. State voters soundly rejected both the lottery plan and extension of the new revenue solutions beyond June 30, 2011 at a May 19, 2009 special election.
 
At the end of the report period, California was projecting a budget shortfall of $26.3 billion through June 30, 2010, due to further weakening of California’s economy and general fund revenues, coupled with the failure of the lottery proposal at the May 19 election. On July 28, 2009, Gov. Schwarzenegger signed a $24.2 billion deficit reduction plan adopted by the State Legislature that cut roughly $14.4 billion in spending, accelerated $2.3 billion of revenue into the current fiscal year, and borrowed or transferred about $3.7 billion of revenue from local governments. The largest cut was to K-12 education at about $6.5 billion, but the budget also reduced higher education by $2 billion and social service programs by nearly $3.4 billion, as well as relied on $1 billion from the sale of the State Compensation Insurance Fund and another $1 billion from various accounting shifts.
 
On July 2, 2009 the State Controller began issuing registered warrants (also called IOUs) in lieu of payment for some obligations to conserve cash for higher priority spending such as K-12 education and general obligation debt service. Despite the passage of the deficit reduction plan, the Controller is likely to continue issuing IOUs until the state is able to sell revenue anticipation notes to augment its short term cash position. California’s general obligation debt has a continuing appropriation and is second in payment priority only to funding for public schools under the State Constitution.
 
California’s economy has weakened significantly over the past year, as the State and national recession deepened. The State lost 739,500 nonfarm payroll jobs from May 2008 to May 2009, or 4.9%. This compares to 179,000 lost jobs for all of calendar year 2008, or 1.2%. The construction sector accounted for over 149,000 of the lost jobs in the twelve months to May 2009, down nearly 19%. In addition, the professional and business services, manufacturing, and retail trade sectors each lost over 100,000 jobs in the past year. The educational and health services category is the only sector that registered job growth, up 23,000 jobs, or 1.4%. California’s seasonally adjusted unemployment rate rose to a record 11.5% in May 2009, up from 6.8% in May 2008, and was the fifth highest in the country. For the full calendar year 2009, California’s Department of Finance is projecting a 3.9% decline in nonfarm jobs and a 1.0% decline in personal income.
 
California’s ratings have fallen in conjunction with the State’s weakened cash position and persistent budget deficits, and are among the lowest of the U.S. states. At the end of the report period, the State’s ratings were A2 from Moody’s, A from Standard & Poor’s, and A from Fitch. However, Moody’s and Fitch downgraded the State’s ratings to Baa1 and BBB, respectively, in July 2009, and S&P has the State’s ratings on its watch list for possible downgrade.
 
California’s weakened economy and reduced State appropriations could pressure the credit quality of other municipal issuers in the State, though such impacts are likely to have wide variability. California school districts, in aggregate, receive about 60% of their total funding from the State, while community college districts rely on the State for about 50%. However, school district and community college district general obligation bonds are secured by separate local property tax levies, and most of those tax bases continued to show growth through 2009, albeit at lower rates than earlier in the decade. California cities and counties both receive State general fund support through appropriations for specific programs, though the county programs are more closely tied to the State. Cities that have relied on sales or transfer taxes to a significant degree have been forced to reduce their own budgets during this period, while counties have faced growing indigent health and social service caseloads. In contrast, California’s essential service enterprises are primarily funded with independent revenues, including water, sewer and electricity services rates and charges.

 
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 California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund 5

Table of Contents

 
 
Schwab California Municipal Money Fundtm
 
 
Schwab California Municipal Money Fund provided safety and liquidity to shareholders throughout the period, while emphasizing credit quality over yield. The fund’s Weighted Average Maturity (WAM) ranged between 27 and 47 days (from 12/31/08-6/30/09). The WAM of the fund followed a typical seasonal pattern of shortening during the first few months of the year before extending in June. This is consistent with the annual issuance of fixed rate notes by state and local government issuers. In general, the fund’s WAM was kept long relative to the peer group in an effort to partially offset the effects of a general market decline in yields. In addition, Charles Schwab & Co. and the fund’s investment adviser voluntarily waived and/or reimbursed certain fees or expenses in order to maintain a positive net yield*. For more information about the fund’s yield, please see the charts and relevant footnotes on the next page.
 
Yields on municipal money market funds declined to record low levels during the first half of 2009, due to the union of several factors. The highly accommodative monetary policies initiated by the Federal Reserve in late 2008, which focused on lowering lending rates and increasing the money supply, continued in 2009 and resulted in significant downward pressure on short-term municipal interest rates. Yields on variable-rate instruments were further depressed by a shortage of supply in securities considered acceptable for purchase by municipal money market funds. Fixed-rate yields also declined resulting in much lower reinvestment rates for positions which matured during the period.
 
As of 06/30/09, the Schwab California municipal money funds did not hold any State of California general obligation or appropriation securities that were not credit-enhanced, other than economic recovery bonds which are additionally secured by a dedicated sales tax. The funds also held high quality securities of other municipal issuers within the state, such as cities, universities, school districts, and utilities, each of which have independent revenue sources.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity
 
     
    % of Investments
1-15 Days
  73.10%
16-30 Days
  2.60%
31-60 Days
  4.50%
61-90 Days
  3.80%
91-120 Days
  1.80%
More than 120 Days
  14.20%
 
 Statistics
 
     
Weighted Average Maturity2
  47 days
Credit Quality of Holdings3
% of portfolio
  100% Tier 1
Credit-Enhanced Securities
% of portfolio
  55%
 
 Portfolio Composition by Security Type1
 
     
    % of Investments
Tender Option Bonds
  31.1%
Variable Rate Demand Notes
  41.3%
Commercial Paper
  14.1%
Fixed Rate Notes
  13.5%
Total
  100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
*Schwab and the investment adviser may recapture expenses or fees they waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 5 of the Financial Notes section.
 
Portfolio holdings may have changed since the report date.
 
1  Portfolio Composition is calculated using the Par Value of Investments.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
 
 
6 Schwab California Municipal Money Fundtm

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
         
    California Municipal
    Money Fund
        Value Advantage
    Sweep Shares   Shares®
 
Ticker Symbol
  SWCXX   SWKXX
Minimum Initial Investment1
  *   $25,0002
Seven-Day Yield3
  0.02%   0.03%
Seven-Day Yield—No Waiver4
  -0.07%   -0.08%
Seven-Day Effective Yield3
  0.02%   0.03%
Seven-Day Taxable-Equivalent Effective Yield3,5
  0.04%   0.06%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
* Subject to the eligibility terms and conditions of your Schwab account agreement.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Minimum initial investment for IRA and custodial accounts is $15,000. Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult with your tax advisor about your situation.
 
3  Fund expenses have been partially absorbed by CSIM and Schwab.
 
4  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
5  Taxable-equivalent effective yield assumes a 2009 maximum combined federal regular income and California state personal income tax rate of 45.55%. Investment income may be subject to the Alternative Minimum Tax.
 
 
 
Schwab California Municipal Money Fundtm 7

Table of Contents

 
Schwab California AMT Tax-Free Money Fundtm
 
 
Schwab California AMT Tax-Free Money Fund provided safety and liquidity to shareholders throughout the period, while emphasizing credit quality over yield. The fund’s Weighted Average Maturity (WAM) ranged between 44 and 55 days (from 12/31/08-6/30/09). The WAM of the fund followed a typical seasonal pattern of shortening during the first few months of the year before extending in June. This is consistent with the annual issuance of fixed rate notes by state and local government issuers. In general, the fund’s WAM was kept long relative to the peer group in an effort to partially offset the effects of a general market decline in yields.
 
Yields on municipal money market funds declined to record low levels during the first half of 2009, due to the union of several factors. The highly accommodative monetary policies initiated by the Federal Reserve in late 2008, which focused on lowering lending rates and increasing the money supply, continued in 2009 and resulted in significant downward pressure on short-term municipal interest rates. Yields on variable-rate instruments were further depressed by a shortage of supply in securities considered acceptable for purchase by municipal money market funds. Fixed-rate yields also declined resulting in much lower reinvestment rates for positions which matured during the period.
 
As of 06/30/09, the Schwab California municipal money funds did not hold any State of California general obligation or appropriation securities that were not credit-enhanced, other than economic recovery bonds which are additionally secured by a dedicated sales tax. The funds also held high quality securities of other municipal issuers within the state, such as cities, universities, school districts, and utilities, each of which have independent revenue sources.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity
 
     
    % of Investments
1-15 Days
  70.00%
16-30 Days
  3.20%
31-60 Days
  7.10%
61-90 Days
  2.60%
91-120 Days
  3.10%
More than 120 Days
  14.00%
 
 Statistics
 
     
Weighted Average Maturity2
  52 days
Credit Quality of Holdings3
% of portfolio
  100% Tier 1
Credit-Enhanced Securities
% of portfolio
  43%
 
 Portfolio Composition by Security Type1
 
     
    % of Investments
Tender Option Bonds
  32.9%
Variable Rate Demand Notes
  27.3%
Commercial Paper
  17.9%
Fixed Rate Notes
  21.9%
Total
  100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
1  Portfolio Composition is calculated using the Par Value of Investments.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
 
 
8 Schwab California AMT Tax-Free Money Fundtm

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
     
    California AMT Tax-Free Money Fund
    Value Advantage
    Shares®
 
Ticker Symbol
  SNKXX
Minimum Initial Investment1
  $25,0002
Seven-Day Yield3
  0.10%
Seven-Day Yield—No Waiver4
  -0.05%
Seven-Day Effective Yield3
  0.10%
Seven-Day Taxable-Equivalent Effective Yield3,5
  0.18%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Minimum initial investment for IRA and custodial accounts is $15,000. Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult with your tax advisor about your situation.
 
3  Fund expenses have been partially absorbed by CSIM and Schwab.
 
4  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
5  Taxable-equivalent effective yield assumes a 2009 maximum combined federal regular income and California state personal income tax rate of 45.55%. Investment income may be subject to the Alternative Minimum Tax.
 
 
 
Schwab California AMT Tax-Free Money Fundtm 9

Table of Contents

 
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 January 1, 2009 and held through June 30, 2009.
 
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.
 
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
 
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
 
                                 
            Ending
 		   
        Beginning
 		  Account Value
 		  Expenses Paid
    Expense Ratio 1
 		  Account Value
 		  (Net of Expenses)
 		  During Period 2
    (Annualized)   at 1/1/09   at 6/30/09   1/1/09–6/30/09
 
 
Schwab California Municipal Money Fundtm                                
Sweep Shares                                
Actual Return
    0.62%     $ 1,000     $ 1,000.90       3.08  
Hypothetical 5% Return
    0.62%     $ 1,000     $ 1,021.72       3.11  
Value Advantage Share®                                
Actual Return
    0.49%     $ 1,000     $ 1,001.60       2.43  
Hypothetical 5% Return
    0.49%     $ 1,000     $ 1,022.36       2.46  
 
Schwab California AMT Tax-Free Money Fundtm                                
Actual Return
    0.49%     $ 1,000     $ 1,001.80       2.43  
Hypothetical 5% Return
    0.49%     $ 1,000     $ 1,022.37       2.46  

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

 
 
 
10 Schwab California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund

Table of Contents

 
Schwab California Municipal Money Fundtm
 
Financial Statements
 
Financial Highlights
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Sweep Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.09 2     1.67       3.02       2.79       1.76       0.59      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.62 3,4     0.60       0.63       0.64       0.65       0.65      
Gross operating expenses
    0.73 3     0.70       0.69       0.82       0.82       0.82      
Net investment income (loss)
    0.18 3     1.65       2.98       2.77       1.74       0.58      
Net assets, end of period ($ x 1,000,000)
    5,615       6,019       5,745       4,539       4,134       4,147      
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Value Advantage Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.16 2     1.83       3.21       2.99       1.96       0.79      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.49 3,4     0.45       0.45       0.45       0.45       0.45      
Gross operating expenses
    0.60 3     0.56       0.56       0.58       0.59       0.59      
Net investment income (loss)
    0.32 3     1.83       3.16       2.95       1.96       0.78      
Net assets, end of period ($ x 1,000,000)
    3,060       3,923       5,267       4,201       3,240       2,825      

* Unaudited.
1 Per-share amount was less than $0.01.
2 Not annualized.
3 Annualized.
4 The ratio of net operating expenses would have been 0.58% for the Sweep Shares and 0.45% for the Value Advantage Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been included.
 
 
 
See financial notes 11

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings as of June 30, 2009, (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  101 .5%   Municipal Securities     8,804,971       8,804,971  
  0 .2%   Other Investment     17,700       17,700  
  101 .7%   Total Investments     8,822,671       8,822,671  
  (1 .7)%   Other Assets and Liabilities, Net             (148,172 )
  100 .0%   Net Assets             8,674,499  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Municipal Securities 101.5% of net assets
 
California 101.3%
Alameda Cnty IDA
RB (Aitchison Family)
Series 1993A
               
0.45%, 07/01/09 (a)(b)
    2,400       2,400  
RB (JMS Family)
Series 1995A
               
0.45%, 07/01/09 (a)(b)
    1,000       1,000  
Anaheim Housing Auth
M/F Housing RB (Casa Granada Apts)
Series 1997A
               
0.34%, 07/02/09 (a)(b)
    3,295       3,295  
M/F Housing RB (Port Trinidad Apts)
Series 1997C
               
0.34%, 07/02/09 (a)(b)
    1,840       1,840  
M/F Housing Refunding RB (Sage Park)
Series 1998A
               
0.30%, 07/02/09 (a)(b)
    5,500       5,500  
Association of Bay Area Governments
COP (Harker School Foundation)
Series 1998
               
0.18%, 07/01/09 (a)(b)
    3,730       3,730  
COP (Harker School)
Series 2007
               
0.18%, 07/01/09 (a)(b)
    10,585       10,585  
M/F Housing RB (Artech Building)
Series 1999A
               
0.28%, 07/02/09 (a)(b)
    3,200       3,200  
M/F Housing RB (Bachenheimer Building)
Series 2002A
               
0.28%, 07/02/09 (a)(b)
    6,945       6,945  
M/F Housing RB (Crossing Apts)
Series 2002A
               
0.30%, 07/02/09 (a)(b)(f)
    18,500       18,500  
M/F Housing RB (Darling Florist Building)
Series 2002A
               
0.28%, 07/02/09 (a)(b)
    4,710       4,710  
M/F Housing RB (GAIA Building)
Series 2000A
               
0.28%, 07/02/09 (a)(b)
    1,545       1,545  
M/F Housing RB (Miramar Apts)
Series 2000A
               
0.30%, 07/02/09 (a)(b)
    15,000       15,000  
M/F Housing RB (Mountain View Apts)
Series 1997A
               
0.80%, 07/02/09 (a)(b)
    5,655       5,655  
M/F Housing Refunding RB (The Berkeleyan)
Series 2003A
               
0.28%, 07/02/09 (a)(b)
    3,540       3,540  
RB (Brandeis Hillel Day School)
Series 2001
               
0.43%, 07/02/09 (a)(b)
    8,790       8,790  
RB (Francis Parker School)
Series 2005
               
0.20%, 07/02/09 (a)(b)
    5,000       5,000  
RB (Pacific Primary)
Series 2008
               
0.33%, 07/02/09 (a)(b)
    4,550       4,550  
RB (Public Policy Institute of California)
Series 2001A
               
0.20%, 07/02/09 (a)(b)
    9,950       9,950  
RB (San Francisco Univ High School)
Series A
               
0.43%, 07/02/09 (a)(b)
    5,820       5,820  
Refunding RB (Eskaton Properties)
Series 2008A
               
0.25%, 07/02/09 (a)(b)
    11,075       11,075  
Refunding RB (Eskaton Properties)
Series 2008B
               
0.25%, 07/02/09 (a)(b)
    15,900       15,900  
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB
Series 2003C
               
0.25%, 07/02/09 (a)(c)
    10,895       10,895  
San Francisco Bay Area Toll Bridge RB
Series 2006 & 2008F1
               
0.25%, 07/02/09 (a)(c)(d)
    16,910       16,910  
San Francisco Bay Area Toll Bridge RB
Series 2006F & 2007F
               
0.23%, 07/02/09 (a)(c)(d)
    27,000       27,000  
San Francisco Bay Area Toll Bridge RB
Series 2007B2
               
0.14%, 07/02/09 (a)(c)
    8,000       8,000  
San Francisco Bay Area Toll Bridge RB
Series 2007C1
               
0.25%, 07/02/09 (a)(c)
    5,000       5,000  
San Francisco Bay Area Toll Bridge RB
Series 2007E3
               
0.25%, 07/02/09 (a)(c)
    7,200       7,200  
San Francisco Bay Area Toll Bridge RB
Series 2007F & Series 2008 F1
               
0.25%, 07/02/09 (a)(c)(d)
    32,505       32,505  
 
 
 
12 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
San Francisco Bay Area Toll Bridge RB
Series 2007G1
               
0.35%, 07/02/09 (a)(c)
    2,200       2,200  
San Francisco Bay Area Toll Bridge RB
Series 2008B1
               
0.25%, 07/02/09 (a)(c)
    52,930       52,930  
San Francisco Bay Area Toll Bridge RB
Series 2008D1
               
0.13%, 07/02/09 (a)(c)
    4,300       4,300  
California
Economic Recovery Bonds
Series 2004C16
               
1.00%, 07/01/09 (a)(b)(c)
    4,500       4,500  
GO Bonds
0.17%, 07/02/09 (a)(b)(c)(d)
    10,000       10,000  
0.29%, 07/02/09 (a)(b)(c)(d)
    41,908       41,908  
0.65%, 12/10/09 (b)(c)(d)
    23,825       23,825  
GO Bonds
Series 2003B3
               
0.25%, 07/01/09 (a)(b)
    34,900       34,900  
GO Bonds
Series 2003C1
               
0.20%, 07/02/09 (a)(b)
    3,200       3,200  
GO Bonds
Series 2003C3
               
0.19%, 07/02/09 (a)(b)
    10,800       10,800  
GO Bonds
Series 2003C4
               
0.20%, 07/02/09 (a)(b)
    24,700       24,700  
GO Refunding Bonds
0.17%, 07/02/09 (a)(b)(c)(d)
    15,000       15,000  
1.00%, 07/30/09 (b)(c)(d)
    13,155       13,155  
GO Refunding Bonds
Series 2007
               
0.22%, 07/02/09 (a)(b)(c)(d)
    3,126       3,126  
Various Purpose GO Bonds
0.17%, 07/02/09 (a)(b)(c)(d)
    37,275       37,275  
0.40%, 07/02/09 (a)(b)(c)(d)
    17,520       17,520  
0.45%, 07/02/09 (a)(b)(c)(d)
    9,000       9,000  
California Dept of Veterans Affairs
Home Purchase RB
Series 2007A
               
0.41%, 07/02/09 (a)(c)(d)
    7,480       7,480  
California Dept of Water Resources
Power Supply RB
Series 2002C4
               
0.25%, 07/02/09 (a)(b)
    24,600       24,600  
Power Supply RB
Series 2002C10
               
0.19%, 07/02/09 (a)(b)
    73,810       73,810  
Power Supply RB
Series 2008I2
               
0.13%, 07/01/09 (a)(b)
    300       300  
Power Supply RB
Series 2008J2
               
0.16%, 07/02/09 (a)(b)
    61,900       61,900  
Water System RB (Central Valley)
Series AE
               
0.23%, 07/02/09 (a)(c)(d)
    4,895       4,895  
California Economic Development Financing Auth
Airport Facilities RB (Mercury Air Group)
Series 1998
               
0.45%, 07/02/09 (a)(b)
    8,600       8,600  
IDRB (Calco)
Series 1997
               
0.22%, 07/01/09 (a)(b)
    1,280       1,280  
California Educational Facilities Auth
RB (Univ of La Verne)
Series 2008
               
0.55%, 07/02/09 (a)(b)
    16,250       16,250  
RB (Univ of San Diego)
Series 1999 & Refunding RB (Loyola Marymount Univ)
               
Series 2001A
               
0.22%, 07/02/09 (a)(b)(c)(d)
    3,685       3,685  
RB (Univ of Southern California)
Series 2007A
               
0.23%, 07/02/09 (a)(c)(d)
    1,590       1,590  
RB (Univ of Southern California)
Series 2009A
               
0.23%, 07/02/09 (a)(c)(d)
    10,230       10,230  
RB (Univ of Southern California)
Series 2009B
               
0.23%, 07/02/09 (a)(c)(d)
    4,900       4,900  
0.25%, 07/02/09 (a)(c)(d)
    11,000       11,000  
California Enterprise Development Finance Auth
RB (Sconza Candy)
Series 2008A
               
0.48%, 07/02/09 (a)(b)
    10,000       10,000  
California Health Facilities Financing Auth
RB (Catholic Healthcare West)
Series 2004J
               
0.24%, 07/01/09 (a)(b)
    500       500  
RB (Catholic Healthcare West)
Series 2008A
               
0.24%, 07/01/09 (a)(b)
    9,600       9,600  
RB (Catholic Healthcare West)
Series 2008F
               
0.27%, 07/01/09 (a)(b)
    40,250       40,250  
RB (Cedars Sinai Medical Center)
Series 1999A
               
0.44%, 12/01/09 (b)
    10,210       10,554  
RB (Kaiser Permanente)
Series 2006E
               
0.43%, 11/20/09
    2,500       2,500  
RB (Scripps Health)
Series 2008G
               
0.24%, 07/01/09 (a)(b)
    4,245       4,245  
RB (Sisters of Charity Health System)
Series 2003
               
0.15%, 07/01/09 (a)(c)
    32,195       32,195  
California HFA
Home Mortgage RB
Series 2002B
               
4.00%, 07/01/09 (a)(b)(c)
    13,790       13,790  
Home Mortgage RB
Series 2002J
               
0.79%, 07/01/09 (a)(c)
    81,415       81,415  
Home Mortgage RB
Series 2003F
               
2.00%, 07/01/09 (a)(b)(c)
    20,480       20,480  
Home Mortgage RB
Series 2003K
               
0.79%, 07/01/09 (a)(c)
    26,905       26,905  
0.79%, 07/01/09 (a)(c)
    6,200       6,200  
 
 
 
See financial notes 13

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Home Mortgage RB
Series 2005A
               
0.80%, 07/01/09 (a)(c)
    57,075       57,075  
Home Mortgage RB
Series 2005H
               
1.50%, 07/01/09 (a)(c)
    10,805       10,805  
Home Mortgage RB
Series 2006I
               
0.36%, 07/02/09 (a)(c)(d)
    4,620       4,620  
Home Mortgage RB
Series 2007E
               
0.85%, 07/02/09 (a)(c)(d)
    8,535       8,535  
Home Mortgage RB
Series 2007G
               
0.85%, 07/02/09 (a)(c)(d)
    29,695       29,695  
Home Mortgage RB
Series 2008K
               
0.45%, 07/02/09 (a)(c)(d)
    4,360       4,360  
0.65%, 07/02/09 (a)(c)(d)
    19,931       19,931  
Home Mortgage RB
Series 2008M
               
0.85%, 07/02/09 (a)(c)(d)
    12,030       12,030  
California Infrastructure & Economic Development Bank
IDRB (Alegacy Foodservice Products Group & Eagleware Manufacturing)
Series 2005
               
0.51%, 07/02/09 (a)(b)
    5,775       5,775  
IDRB (American-De Rosa Lamp Arts)
Series 1999
               
0.70%, 07/01/09 (a)(b)
    4,950       4,950  
IDRB (Fairmont Sign)
Series 2000A
               
1.00%, 07/02/09 (a)(b)
    4,250       4,250  
IDRB (Nelson Name Plate)
Series 1999
               
0.40%, 07/01/09 (a)(b)
    1,850       1,850  
RB (Bay Area Toll Bridges Seismic Retrofit)
Series 2003A
               
1.61%, 07/02/09 (a)(b)(c)(d)
    31,130       31,130  
RB (Colburn School)
Series 2008
               
0.40%, 07/02/09 (a)(b)
    5,400       5,400  
RB (RAND Corp)
Series 2008A
               
0.17%, 07/01/09 (a)(b)
    15,500       15,500  
RB (Sage Hill School)
Series 2008
               
0.48%, 07/02/09 (a)(b)
    9,500       9,500  
Refunding RB (J. Paul Getty Trust)
Series 2007A2
               
0.50%, 04/01/10
    9,000       9,000  
Refunding RB (Pacific Gas & Electric)
Series 2008A
               
0.18%, 07/01/09 (a)(b)
    24,750       24,750  
Refunding RB (Pacific Gas & Electric)
Series 2008C
               
0.30%, 07/01/09 (a)(b)
    30,000       30,000  
Refunding RB (Pacific Gas & Electric)
Series 2008D
               
0.25%, 07/01/09 (a)(b)
    42,900       42,900  
California Municipal Finance Auth
RB (Republic Services)
Series 2008A
               
0.45%, 07/02/09 (a)(b)
    31,000       31,000  
RB (Santa Margarita Catholic High School)
Series 2009
               
0.40%, 07/02/09 (a)(b)
    12,000       12,000  
RB (Serra Catholic School)
Series 2009
               
0.43%, 07/02/09 (a)(b)
    7,000       7,000  
Solid Waste Disposal RB (Waste Management)
Series 2008A
               
0.35%, 07/02/09 (a)(b)
    8,900       8,900  
California Pollution Control Financing Auth
Environmental Improvement RB (BP West Coast Products)
Series 2008A
               
0.35%, 10/01/09
    27,500       27,500  
RB (Garaventa Enterprises)
Series 2008A
               
0.48%, 07/01/09 (a)(b)
    17,150       17,150  
Resource Recovery RB (Wadham Energy)
Series 1987B
               
0.26%, 07/01/09 (a)(b)
    1,500       1,500  
Solid Waste Disposal RB (Agrifab)
Series 2003
               
0.48%, 07/01/09 (a)(b)
    5,800       5,800  
Solid Waste Disposal RB (Alameda Cnty Industries)
Series 2000A
               
0.51%, 07/01/09 (a)(b)
    3,330       3,330  
Solid Waste Disposal RB (Athens Disposal Co)
Series 1995A
               
0.48%, 07/01/09 (a)(b)
    7,500       7,500  
Solid Waste Disposal RB (Athens Disposal Co)
Series 1999A
               
0.48%, 07/01/09 (a)(b)
    3,685       3,685  
Solid Waste Disposal RB (Athens Services)
Series 2001A
               
0.48%, 07/01/09 (a)(b)
    2,895       2,895  
Solid Waste Disposal RB (Athens Services)
Series 2006A
               
0.48%, 07/01/09 (a)(b)
    20,565       20,565  
Solid Waste Disposal RB (Atlas Disposal Industries)
Series 1999A
               
0.48%, 07/01/09 (a)(b)
    5,060       5,060  
Solid Waste Disposal RB (AVI-PGS)
Series 2008A
               
0.18%, 07/01/09 (a)(b)
    5,195       5,195  
Solid Waste Disposal RB (BLT Enterprises of Fremont)
Series 2005A
               
0.55%, 07/01/09 (a)(b)
    13,960       13,960  
Solid Waste Disposal RB (BLT Enterprises of Sacramento)
Series 1999A
               
0.48%, 07/01/09 (a)(b)
    6,425       6,425  
Solid Waste Disposal RB (Blue Line Transfer)
Series 1999A
               
0.48%, 07/01/09 (a)(b)
    3,455       3,455  
Solid Waste Disposal RB (Blue Line Transfer)
Series 2001A
               
0.48%, 07/01/09 (a)(b)
    3,175       3,175  
Solid Waste Disposal RB (Browning-Ferris Industries)
Series 1997A
               
0.30%, 07/01/09 (a)(b)
    15,400       15,400  
 
 
 
14 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Solid Waste Disposal RB (Burrtec Waste & Recycling Services)
Series 2006A
               
0.46%, 07/01/09 (a)(b)
    17,265       17,265  
Solid Waste Disposal RB (Burrtec Waste Group)
Series 2004
               
0.46%, 07/01/09 (a)(b)
    9,920       9,920  
Solid Waste Disposal RB (Burrtec Waste Group)
Series 2006A
               
0.46%, 07/01/09 (a)(b)
    18,445       18,445  
Solid Waste Disposal RB (Burrtec Waste Group)
Series 2008A
               
0.46%, 07/01/09 (a)(b)
    8,500       8,500  
Solid Waste Disposal RB (Burrtec Waste Industries)
Series 1997B
               
0.46%, 07/01/09 (a)(b)
    3,850       3,850  
Solid Waste Disposal RB (Burrtec Waste Industries)
Series 2000A
               
0.46%, 07/01/09 (a)(b)
    4,705       4,705  
Solid Waste Disposal RB (Burrtec Waste Industries)
Series 2002A
               
0.46%, 07/01/09 (a)(b)
    7,900       7,900  
Solid Waste Disposal RB (California Waste Solutions)
Series 2002A
               
0.48%, 07/01/09 (a)(b)
    7,785       7,785  
Solid Waste Disposal RB (California Waste Solutions)
Series 2004A
               
0.48%, 07/01/09 (a)(b)
    4,450       4,450  
Solid Waste Disposal RB (California Waste Solutions)
Series 2007A
               
0.48%, 07/01/09 (a)(b)
    25,905       25,905  
Solid Waste Disposal RB (Cedar Avenue Recycling & Transfer Station)
Series 2003A
               
0.48%, 07/01/09 (a)(b)
    2,500       2,500  
Solid Waste Disposal RB (Contra Costa Waste Service)
Series 1995A
               
0.48%, 07/01/09 (a)(b)
    1,625       1,625  
Solid Waste Disposal RB (CR&R)
Series 1995A
               
0.51%, 07/01/09 (a)(b)
    3,160       3,160  
Solid Waste Disposal RB (CR&R)
Series 2000A
               
0.51%, 07/01/09 (a)(b)
    2,610       2,610  
Solid Waste Disposal RB (CR&R)
Series 2002A
               
0.51%, 07/01/09 (a)(b)
    3,400       3,400  
Solid Waste Disposal RB (CR&R)
Series 2006A
               
0.51%, 07/01/09 (a)(b)
    7,840       7,840  
Solid Waste Disposal RB (CR&R)
Series 2007A
               
0.51%, 07/01/09 (a)(b)
    10,305       10,305  
Solid Waste Disposal RB (Desert Properties)
Series 2006B
               
0.53%, 07/01/09 (a)(b)
    2,245       2,245  
Solid Waste Disposal RB (EDCO Disposal)
Series 1996A
               
0.46%, 07/01/09 (a)(b)(f)
    8,345       8,345  
Solid Waste Disposal RB (EDCO Disposal)
Series 2004A
               
0.46%, 07/01/09 (a)(b)(f)
    18,940       18,940  
Solid Waste Disposal RB (EDCO Disposal)
Series 2007A
               
0.46%, 07/01/09 (a)(b)
    15,980       15,980  
Solid Waste Disposal RB (Escondido Disposal/Jemco Equipment)
Series 1998A
               
0.46%, 07/01/09 (a)(b)
    7,355       7,355  
Solid Waste Disposal RB (Garaventa Enterprises)
Series 2006A
               
0.48%, 07/01/09 (a)(b)
    8,970       8,970  
Solid Waste Disposal RB (Garden City Sanitation)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    6,340       6,340  
Solid Waste Disposal RB (Greenteam of San Jose)
Series 1997A
               
0.45%, 07/01/09 (a)(b)
    640       640  
Solid Waste Disposal RB (Greenteam of San Jose)
Series 2001A
               
0.45%, 07/01/09 (a)(b)
    6,380       6,380  
Solid Waste Disposal RB (Greenwaste of Tehama)
Series 1999A
               
0.45%, 07/01/09 (a)(b)
    515       515  
Solid Waste Disposal RB (GreenWaste Recovery)
Series 2006A
               
1.00%, 07/01/09 (a)(b)
    2,475       2,475  
Solid Waste Disposal RB (GreenWaste Recovery)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    11,140       11,140  
Solid Waste Disposal RB (Madera Disposal Systems)
Series 1998A
               
0.45%, 07/01/09 (a)(b)
    1,800       1,800  
Solid Waste Disposal RB (MarBorg Industries)
Series 2000A
               
0.48%, 07/01/09 (a)(b)
    2,720       2,720  
Solid Waste Disposal RB (MarBorg Industries)
Series 2002
               
0.48%, 07/01/09 (a)(b)
    3,400       3,400  
Solid Waste Disposal RB (MarBorg Industries)
Series 2004A
               
0.48%, 07/01/09 (a)(b)
    4,655       4,655  
Solid Waste Disposal RB (Marin Sanitary Service)
Series 2006A
               
1.00%, 07/01/09 (a)(b)
    3,315       3,315  
Solid Waste Disposal RB (Mid-Valley Disposal)
Series 2006A
               
0.55%, 07/01/09 (a)(b)
    3,465       3,465  
Solid Waste Disposal RB (Mill Valley Refuse Service)
Series 2003A
               
0.48%, 07/01/09 (a)(b)
    1,670       1,670  
Solid Waste Disposal RB (Mottra Corp)
Series 2002A
               
0.55%, 07/01/09 (a)(b)
    1,390       1,390  
Solid Waste Disposal RB (Napa Recycling & Waste Services)
Series 2005A
               
0.55%, 07/01/09 (a)(b)
    3,715       3,715  
Solid Waste Disposal RB (Northern Recycling & Waste Services)
Series 2007A
               
0.55%, 07/01/09 (a)(b)
    3,390       3,390  
Solid Waste Disposal RB (Orange Ave Disposal)
Series 2002A
               
0.48%, 07/01/09 (a)(b)
    5,610       5,610  
 
 
 
See financial notes 15

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Solid Waste Disposal RB (Placer Cnty Eastern Regional Sanitary Landfill)
Series 2003A
               
0.48%, 07/01/09 (a)(b)
    3,700       3,700  
Solid Waste Disposal RB (Rainbow Disposal)
Series 2006A
               
0.55%, 07/01/09 (a)(b)
    8,910       8,910  
Solid Waste Disposal RB (Ratto Group of Companies)
Series 2001A
               
0.48%, 07/01/09 (a)(b)
    2,910       2,910  
Solid Waste Disposal RB (Ratto Group of Companies)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    27,600       27,600  
Solid Waste Disposal RB (Republic Services)
Series 2003
               
0.40%, 07/02/09 (a)(b)
    24,205       24,205  
Solid Waste Disposal RB (Republic Services)
Series 2006
               
0.40%, 07/02/09 (a)(b)
    20,655       20,655  
Solid Waste Disposal RB (Sanco Services)
Series 2002A
               
0.46%, 07/01/09 (a)(b)
    5,185       5,185  
Solid Waste Disposal RB (Santa Clara Valley Industries)
Series 1998A
               
1.00%, 07/01/09 (a)(b)
    1,180       1,180  
Solid Waste Disposal RB (Solag Disposal)
Series 1997A
               
0.51%, 07/01/09 (a)(b)
    2,135       2,135  
Solid Waste Disposal RB (South Tahoe Refuse)
Series 2008A
               
0.55%, 07/01/09 (a)(b)
    5,540       5,540  
Solid Waste Disposal RB (Specialty Solid Waste & Recycling)
Series 2001A
               
1.00%, 07/01/09 (a)(b)
    100       100  
Solid Waste Disposal RB (Talco Plastics)
Series 1997A
               
0.45%, 07/01/09 (a)(b)
    2,675       2,675  
Solid Waste Disposal RB (Upper Valley Disposal Service)
Series 2008A
               
0.55%, 07/01/09 (a)(b)
    2,115       2,115  
Solid Waste Disposal RB (Valley Vista Services)
Series 2003A
               
1.00%, 07/01/09 (a)(b)
    2,585       2,585  
Solid Waste Disposal RB (Valley Vista Services)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    2,920       2,920  
Solid Waste Disposal RB (Vanderham Family Trust - J&D Wilson & Sons Dairy)
Series 2004
               
0.77%, 07/02/09 (a)(b)
    2,500       2,500  
Solid Waste Disposal RB (West Valley MRF)
Series 1997A
               
0.55%, 07/01/09 (a)(b)
    1,260       1,260  
Solid Waste Disposal RB (Zanker Road Landfill)
Series 1999C
               
1.00%, 07/01/09 (a)(b)
    3,005       3,005  
California Public Works Board
Lease Refunding RB (Univ of California)
Series 2007A
               
0.17%, 07/02/09 (a)(c)(d)
    8,880       8,880  
0.35%, 07/02/09 (a)(c)(d)
    23,490       23,490  
Lease Refunding RB (Univ of California)
Series 2007C
               
0.17%, 07/02/09 (a)(c)(d)
    11,225       11,225  
California Rural Home Mortgage Finance Auth Home Buyers Fund
S/F Mortgage RB
Series 2005A
               
1.50%, 07/01/09 (a)(c)
    11,575       11,575  
California School Cash Reserve Program Auth
Subordinate Bonds 2009-2010
Series A
               
0.53%, 07/01/10 (b)(e)
    10,000       10,193  
California State Univ
Systemwide RB
Series 2005C
               
0.40%, 07/02/09 (a)(b)(c)(d)
    1,000       1,000  
Systemwide RB
Series 2007A
               
0.68%, 07/02/09 (a)(b)(c)(d)
    24,750       24,750  
California Statewide Communities Development Auth
COP (International School of the Peninsula)
Series 1999
               
1.92%, 11/01/09 (b)
    7,045       7,245  
Health Facility RB (Catholic Healthcare West)
Series 2008F
               
0.24%, 07/01/09 (a)(b)
    40,000       40,000  
IDRB (RL Group)
Series 1998C
               
0.65%, 07/01/09 (a)(b)
    1,260       1,260  
Insured RB (St. Joseph Health System)
Series 2007D
               
0.25%, 07/02/09 (a)(c)(d)
    47,073       47,073  
M/F Housing RB (Agave at Elk Grove Apts)
Series 2003DD
               
0.30%, 07/02/09 (a)(b)
    14,900       14,900  
M/F Housing RB (Bay Vista at MeadowPark Apts)
Series 2003NN1
               
0.30%, 07/02/09 (a)(b)
    14,600       14,600  
M/F Housing RB (Campus Pointe Apts)
Series 2008J
               
0.36%, 07/02/09 (a)(b)
    7,550       7,550  
M/F Housing RB (Creekside at MeadowPark Apts)
Series 2002HH
               
0.30%, 07/02/09 (a)(b)
    9,595       9,595  
M/F Housing RB (Cypress Villa Apts)
Series 2000F
               
0.30%, 07/02/09 (a)(b)
    4,725       4,725  
M/F Housing RB (Dublin Ranch Sr Apts)
Series 2003OO
               
0.30%, 07/02/09 (a)(b)
    15,090       15,090  
M/F Housing RB (Dublin Ranch Sr Apts)
Series 2006G
               
0.30%, 07/02/09 (a)(b)
    5,010       5,010  
M/F Housing RB (Emerald Gardens Apts)
Series 2000E
               
0.30%, 07/02/09 (a)(b)
    7,320       7,320  
M/F Housing RB (Fairway Family Apts)
Series 2003PP
               
0.30%, 07/02/09 (a)(b)
    30,000       30,000  
M/F Housing RB (Fairway Family Apts)
Series 2006H
               
0.30%, 07/02/09 (a)(b)
    7,000       7,000  
 
 
 
16 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
M/F Housing RB (Heritage Oaks Apts)
Series 2004YY
               
0.30%, 07/02/09 (a)(b)
    6,900       6,900  
M/F Housing RB (Heritage Park Apts)
Series 2008C
               
0.30%, 07/02/09 (a)(b)
    9,000       9,000  
M/F Housing RB (Kimberly Woods Apts)
Series 1995B
               
0.30%, 07/01/09 (a)(b)
    13,400       13,400  
M/F Housing RB (Laurel Park Sr Apts)
Series 2002H
               
0.43%, 07/02/09 (a)(b)
    5,500       5,500  
M/F Housing RB (Los Padres Apts)
Series 2003E
               
0.30%, 07/02/09 (a)(b)
    10,750       10,750  
M/F Housing RB (Marlin Cove Apts)
Series 2000V
               
0.30%, 07/02/09 (a)(b)
    6,000       6,000  
M/F Housing RB (Martin Luther Tower)
Series 2005D
               
0.30%, 07/02/09 (a)(b)
    8,050       8,050  
M/F Housing RB (Oak Center Towers)
Series 2005L
               
0.30%, 07/02/09 (a)(b)
    3,820       3,820  
M/F Housing RB (Oakmont of Concord)
Series 2002Q
               
0.30%, 07/02/09 (a)(b)
    25,000       25,000  
M/F Housing RB (Plaza Club Apts)
Series 1997A
               
0.34%, 07/02/09 (a)(b)
    14,790       14,790  
M/F Housing RB (Rancho Santa Fe Village Apts)
Series 2004EE
               
0.22%, 07/02/09 (a)(b)
    12,300       12,300  
M/F Housing RB (Sagewood At Stonebridge Estates)
Series 2005CC
               
0.30%, 07/02/09 (a)(b)
    9,100       9,100  
M/F Housing RB (Sharps & Flats Apts)
Series 2002X
               
0.30%, 07/02/09 (a)(b)
    14,000       14,000  
M/F Housing RB (The Belmont)
Series 2005F
               
0.30%, 07/02/09 (a)(b)
    10,500       10,500  
M/F Housing RB (Valley Palms Apts)
Series 2002C
               
0.30%, 07/02/09 (a)(b)
    12,000       12,000  
M/F Housing RB (Villas at Hamilton Apts)
Series 2001HH
               
0.30%, 07/02/09 (a)(b)
    11,440       11,440  
M/F Housing RB (Wilshire Court Apts)
Series 2004AAA
               
0.30%, 07/02/09 (a)(b)
    15,000       15,000  
M/F Housing RB (Woodsong Apts)
Series 1997B
               
0.34%, 07/02/09 (a)(b)
    3,127       3,127  
M/F Housing RB (Wyndover Apts)
Series 2004LL
               
0.30%, 07/02/09 (a)(b)
    16,875       16,875  
M/F Housing Refunding RB (Arbor Ridge Apts)
Series 2008B
               
0.34%, 07/02/09 (a)(b)
    9,500       9,500  
M/F Housing Refunding RB (Brandon Place Apts)
Series 2006D
               
0.30%, 07/02/09 (a)(b)
    6,070       6,070  
M/F Housing Refunding RB (Corporate Fund for Housing/Five Seasons Multiple Facilities)
Series 1999A
               
1.23%, 12/01/09 (b)
    8,900       9,360  
M/F Housing Refunding RB (Crystal View Apts)
Series 2004A
               
0.30%, 07/02/09 (a)(b)
    7,075       7,075  
M/F Housing Refunding RB (Irvine Apartment Communities)
Series 2008C2 & 2008C3
               
0.45%, 07/02/09 (a)(b)(c)(d)
    40,000       40,000  
RB (Center for Early Education)
Series 2001
               
0.43%, 07/02/09 (a)(b)
    4,100       4,100  
RB (Childrens Hospital Los Angeles)
Series 2008A
               
0.25%, 07/02/09 (a)(b)
    7,600       7,600  
RB (Culinary Institute of America)
Series 2008
               
1.05%, 07/02/09 (a)(b)
    3,000       3,000  
RB (John Muir Health)
Series 2008B
               
0.16%, 07/02/09 (a)(b)
    10,000       10,000  
RB (Kaiser Permanente)
Series 2004K
               
0.55%, 07/24/09
    25,000       25,000  
0.65%, 09/03/09
    5,000       5,000  
0.43%, 11/20/09
    14,000       14,000  
0.43%, 03/04/10
    20,400       20,400  
RB (Kaiser Permanente)
Series 2006B
               
0.40%, 07/02/09 (a)(b)(c)(d)
    5,390       5,390  
RB (Kaiser Permanente)
Series 2006D
               
0.55%, 07/23/09
    20,000       20,000  
0.50%, 07/28/09
    25,000       25,000  
0.43%, 11/20/09
    21,500       21,500  
RB (Kaiser Permanente)
Series 2008B
               
0.53%, 08/20/09
    92,500       92,500  
0.65%, 09/03/09
    45,000       45,000  
RB (Kaiser Permanente)
Series 2008C
               
1.84%, 04/01/34
    58,865       59,985  
RB (Kaiser Permanente)
Series 2009B6
               
0.45%, 02/03/10
    30,000       30,000  
RB (Painted Turtle)
Series 2003
               
0.43%, 07/02/09 (a)(b)
    10,000       10,000  
RB (Rady Children’s Hospital-San Diego)
Series 2008A
               
0.42%, 07/02/09 (a)(b)
    11,945       11,945  
Refunding RB (Los Angeles Cnty Museum of Art)
Series 2008E
               
0.12%, 07/01/09 (a)(b)
    2,000       2,000  
TRAN Program Note Participations (Monterey Cnty)
Series 2009A3
               
0.42%, 06/30/10 (e)
    17,500       17,775  
California Transit Finance Auth
Bonds (California Finance Program)
Series 1997
               
1.75%, 07/01/09 (a)(b)(c)
    16,805       16,805  
 
 
 
See financial notes 17

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Carlsbad
M/F Housing Refunding RB (Santa Fe Ranch Apts)
Series 1993A
               
0.33%, 07/02/09 (a)(b)
    14,600       14,600  
Central California Joint Powers Health Financing Auth
COP (Community Hospitals of Central California)
Series 2000
               
0.95%, 02/01/10 (b)
    375       390  
5.49%, 02/01/10 (b)
    5,000       5,196  
Clovis USD
GO Bonds (Election of 2004)
Series B
               
0.17%, 07/02/09 (a)(b)(c)(d)
    9,795       9,795  
Coast Community College District
GO Bonds (Election of 2002)
Series 2006B
               
0.22%, 07/02/09 (a)(c)(d)
    3,940       3,940  
0.50%, 07/02/09 (a)(c)(d)
    12,095       12,095  
0.90%, 09/23/09 (c)(d)
    17,175       17,175  
GO Bonds (Election of 2002)
Series 2006C
               
0.22%, 07/02/09 (a)(c)(d)
    10,225       10,225  
Contra Costa Cnty
M/F Housing RB (Avalon Walnut Creek at Contra Costa Centre)
Series 2006A
               
0.30%, 07/02/09 (a)(b)
    25,000       25,000  
M/F Housing Refunding RB (Park Regency)
Series 2003F
               
0.25%, 07/02/09 (a)(b)
    10,800       10,800  
M/F Mortgage RB (El Cerrito Royale)
Series 1987A
               
0.45%, 07/02/09 (a)(b)
    2,480       2,480  
Contra Costa Water District
CP Notes
Series A
               
0.33%, 09/10/09 (c)
    18,500       18,500  
Water Refunding RB
Series K
               
0.35%, 07/02/09 (a)(c)(d)
    2,725       2,725  
Contra Costra Transportation Auth
Subordinate Sales Tax Revenue CP Notes (Limited Tax Bonds)
Series A
               
0.53%, 08/27/09 (b)
    20,000       20,000  
Desert Community College District
GO Bonds (Election of 2004)
Series 2007C
               
0.45%, 07/02/09 (a)(c)(d)
    54,450       54,450  
Diamond Bar Public Financing Auth
Lease RB (Community/Sr Center)
Series 2002A
               
0.30%, 07/01/09 (a)(b)
    3,650       3,650  
Dry Creek/Grant Joint Union SD
GO Bonds (Election of 2008)
Series 2008 & (Election of 2006)
               
Series 2008
               
0.29%, 07/02/09 (a)(b)(c)(d)
    6,249       6,249  
East Bay Municipal Utility District
Extendible CP (Wastewater
Series ) Notes
               
0.60%, 08/05/09
    9,400       9,400  
0.50%, 10/06/09
    2,000       2,000  
Extendible CP (Water
Series ) Notes
               
0.50%, 07/07/09
    22,200       22,200  
0.45%, 07/13/09
    17,000       17,000  
0.55%, 07/14/09
    10,000       10,000  
Wastewater System Subordinated RB
Series 2007A
               
0.35%, 07/02/09 (a)(c)(d)
    6,600       6,600  
Water System Subordinated RB
Series 2005A
               
0.35%, 07/02/09 (a)(c)(d)
    10,475       10,475  
Water System Subordinated RB
Series 2007A
               
0.35%, 07/02/09 (a)(c)(d)
    11,575       11,575  
0.35%, 07/02/09 (a)(c)(d)(f)
    66,000       66,000  
Water System Subordinated Refunding RB
Series 2008A1
               
0.60%, 07/01/09 (a)(c)
    24,000       24,000  
Water System Subordinated Refunding RB
Series 2008A4
               
0.60%, 07/01/09 (a)(c)
    11,000       11,000  
Water System Subordinated Refunding RB
Series 2009A1
               
0.00%, 03/01/10
    49,210       49,210  
Water System Subordinated Refunding RB
Series 2009A2
               
0.00%, 03/01/10
    44,310       44,310  
Eastern Municipal Water District
Water & Sewer Revenue COP
Series 2008A
               
0.16%, 07/01/09 (a)(c)
    4,900       4,900  
Water & Sewer Revenue COP
Series 2008F
               
0.16%, 07/01/09 (a)(c)
    23,450       23,450  
El Cajon Redevelopment Agency
M/F Housing RB (Park-Mollison & Madison Apts)
Series 1998
               
0.34%, 07/02/09 (a)(b)
    4,600       4,600  
El Camino Hospital District
GO Bonds
Series 2006
               
0.17%, 07/02/09 (a)(b)(c)(d)
    8,610       8,610  
0.22%, 07/02/09 (a)(b)(c)(d)
    3,180       3,180  
Elk Grove USD
Community Facilities District No.1 Special Tax Bonds (Election of 1998)
Series 2005
               
0.17%, 07/02/09 (a)(b)(c)(d)
    16,930       16,930  
Elsinore Valley Municipal Water District
COP
Series 2007A
               
0.11%, 07/02/09 (a)(b)(c)(d)
    12,945       12,945  
Refunding COP
Series 2008A
               
0.43%, 07/02/09 (a)(b)
    15,670       15,670  
Emeryville Redevelopment Agency
M/F Housing RB (Bay St Apts)
Series 2002A
               
0.34%, 07/02/09 (a)(b)(f)
    87,715       87,715  
Escondido
M/F Housing RB (Via Roble Apts)
Series 2003A
               
0.30%, 07/02/09 (a)(b)
    6,900       6,900  
 
 
 
18 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Fontana USD
GO Bonds (Election of 2006)
Series B
               
0.85%, 07/02/09 (a)(b)(c)(d)
    3,330       3,330  
Foothill-DeAnza Community College District
GO Bonds (Election of 1999)
Series B
               
0.22%, 07/02/09 (a)(c)(d)
    12,355       12,355  
GO Bonds (Election of 1999)
Series C
               
0.17%, 07/02/09 (a)(c)(d)
    20,975       20,975  
GO Bonds (Election of 2006)
Series A
               
0.22%, 07/02/09 (a)(c)(d)
    7,812       7,812  
Foothill-Eastern Transportation Corridor Agency
Toll Road RB
Series 1995A
               
0.44%, 01/01/10 (b)
    7,500       7,708  
Fresno Cnty
TRAN 2009-2010
0.45%, 06/30/10 (e)
    19,000       19,292  
Fresno IDA
IDRB (Keiser Corp)
Series 1997
               
0.70%, 07/01/09 (a)(b)
    965       965  
Golden State Tobacco Securitization Corp
Enhanced Tobacco Settlement Asset-Backed Bonds
Series 2005A
               
0.22%, 07/02/09 (a)(b)(c)(d)
    6,980       6,980  
0.40%, 07/02/09 (a)(b)(c)(d)
    33,940       33,940  
0.40%, 07/02/09 (a)(b)(c)(d)
    23,065       23,065  
Golden West Schools Financing Auth
GO RB (Beverly Hills USD)
Series 2005
               
1.60%, 07/02/09 (a)(c)(d)
    17,525       17,525  
Hayward
M/F Housing RB (Lord Tennyson Apts)
Series 2005A
               
0.22%, 07/02/09 (a)(b)
    13,915       13,915  
Hayward Housing Auth
M/F Mortgage Refunding RB (Huntwood Terrace Apts)
Series 1993A
               
0.13%, 07/01/09 (a)(b)
    4,955       4,955  
Hemet USD
COP
Series 2006
               
0.93%, 07/02/09 (a)(b)
    6,000       6,000  
Hercules Public Financing Auth
Lease RB
Series 2003A
               
0.43%, 07/02/09 (a)(b)
    6,630       6,630  
Huntington Beach
M/F Housing RB (Five Points Srs)
Series 1991A
               
0.34%, 07/02/09 (a)(b)
    9,500       9,500  
Huntington Park Redevelopment Agency
M/F Housing RB (Casa Rita Apts)
Series 1994A
               
0.34%, 07/02/09 (a)(b)
    4,600       4,600  
Irvine
Lease RB (Capital Improvement)
Series 1985
               
0.17%, 07/02/09 (a)(b)
    8,570       8,570  
Irvine Assessment District
Limited Obligation Improvement Bonds (Assessment District No. 93-14)
Series 2000
               
0.32%, 07/01/09 (a)(b)
    1,700       1,700  
Limited Obligation Improvement Bonds (Assessment District No. 97-16)
Series 1997
               
0.25%, 07/01/09 (a)(b)
    1,100       1,100  
Kern Community College Safety, Repair & Improvement District
GO Bonds (Election of 2002)
Series 2006
               
0.17%, 07/02/09 (a)(b)(c)(d)
    17,130       17,130  
Loma Linda
RB (Loma Linda Univ Medical Center)
Series 2007B2
               
0.30%, 07/02/09 (a)(b)
    12,600       12,600  
RB (Loma Linda Univ Medical Center)
Series 2008B
               
0.30%, 07/02/09 (a)(b)
    4,000       4,000  
Long Beach
Subordinate Airport Revenue CP Notes
Series A &
               
Series B
               
0.50%, 07/16/09 (b)
    7,600       7,600  
TRAN 2008-2009
2.75%, 09/30/09
    41,000       41,124  
Long Beach Harbor Department
CP
Series A
               
1.85%, 07/02/09 (c)
    31,400       31,400  
Los Angeles
COP (Loyola High School of Los Angeles)
Series 2005A
               
0.43%, 07/02/09 (a)(b)
    7,660       7,660  
COP (Windward School)
Series 2007A
               
0.43%, 07/02/09 (a)(b)
    17,075       17,075  
M/F Housing RB
Series 1985K
               
0.20%, 07/07/09 (a)(b)
    752       752  
M/F Housing RB (Beverly Park Apts)
Series 1988A
               
0.30%, 07/02/09 (a)(b)
    15,500       15,500  
M/F Housing RB (Fountain Park)
Series 1999P
               
0.30%, 07/02/09 (a)(b)
    9,800       9,800  
M/F Housing Refunding RB (Tri-City)
Series 2001I
               
0.45%, 07/02/09 (a)(b)
    1,800       1,800  
Wastewater System Refunding RB
Series 2002A
               
1.61%, 07/02/09 (a)(c)(d)
    7,685       7,685  
3.00%, 07/02/09 (a)(c)(d)
    16,445       16,445  
Wastewater System Refunding RB
Series 2003A
               
0.35%, 07/02/09 (a)(c)(d)
    9,620       9,620  
Wastewater System Refunding RB
Series 2005A
               
0.55%, 07/02/09 (a)(c)(d)
    5,725       5,725  
 
 
 
See financial notes 19

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Wastewater System Refunding RB
Series 2009A
               
0.23%, 07/02/09 (a)(c)(d)
    7,500       7,500  
Wastewater System Subordinate Refunding RB
Series 2008F2
               
0.25%, 07/02/09 (a)(b)
    5,000       5,000  
Los Angeles Cnty
TRAN 2009-2010
Series A
               
0.80%, 06/30/10 (e)
    83,000       84,395  
Los Angeles Cnty Housing Auth
M/F Housing RB (Castaic Sr Apts)
Series 2003C
               
0.30%, 07/02/09 (a)(b)
    9,300       9,300  
Los Angeles Cnty Metropolitan Transportation Auth
First Tier Sr Sales Tax Refunding RB (Proposition A)
Series 2001B
               
0.35%, 07/02/09 (a)(c)(d)
    18,440       18,440  
First Tier Sr Sales Tax Refunding RB (Proposition A)
Series 2008A2
               
0.30%, 07/02/09 (a)(c)
    34,725       34,725  
First Tier Sr Sales Tax Refunding RB (Proposition A)
Series 2008A3
               
0.75%, 07/02/09 (a)(c)(e)
    8,500       8,500  
Second Sr Sales Tax RB (Proposition C)
Series 2004A
               
0.35%, 07/02/09 (a)(c)(d)
    38,665       38,665  
Second Sr Sales Tax Refunding RB (Proposition C)
Series 1993A
               
2.00%, 07/02/09 (b)
    8,000       8,000  
Second Subordinate Sales Tax Revenue CP
Series A
               
1.80%, 07/02/09 (b)
    30,389       30,389  
2.00%, 07/02/09 (b)
    47,343       47,343  
Subordinate Sales Tax Revenue CP Notes (Proposition C)
Series ATE
               
0.53%, 08/05/09 (b)
    22,000       22,000  
0.37%, 09/03/09 (b)
    4,500       4,500  
Los Angeles Cnty Sanitation Districts Financing Auth
RB (Capital Projects)
Series 2005B
               
0.40%, 07/02/09 (a)(b)(c)(d)
    15,670       15,670  
Los Angeles Community College District
GO Bonds (2001 Election)
Series 2007A
               
0.33%, 07/02/09 (a)(c)(d)
    39,600       39,600  
GO Bonds (2001 Election)
Series 2008E1
               
0.25%, 07/02/09 (a)(c)(d)
    11,250       11,250  
GO Bonds (2003 Election)
Series 2006E
               
0.55%, 07/02/09 (a)(c)(d)
    4,785       4,785  
GO Bonds (2003 Election)
Series 2008F1
               
0.23%, 07/02/09 (a)(c)(d)
    4,495       4,495  
Los Angeles Community Redevelopment Agency
M/F Housing RB (Security Building Project)
Series 2001A
               
0.34%, 07/02/09 (a)(b)
    3,455       3,455  
M/F Housing Refunding RB (Promenade Towers)
Series 2000
               
0.25%, 07/02/09 (a)(b)
    2,375       2,375  
Los Angeles Dept of Airports
Airport Sr RB
Series 2008A
               
0.25%, 07/02/09 (a)(c)(d)
    12,360       12,360  
0.25%, 07/02/09 (a)(c)(d)
    5,525       5,525  
0.38%, 07/02/09 (a)(c)(d)
    11,320       11,320  
0.38%, 07/02/09 (a)(c)(d)
    7,975       7,975  
Los Angeles Dept of Water & Power
Power System RB
Series 2001A1
               
0.45%, 07/02/09 (a)(c)(d)
    24,750       24,750  
Power System RB
Series 2002A8
               
0.20%, 07/02/09 (a)(c)
    28,900       28,900  
Power System RB
Series 2005A1
               
0.17%, 07/02/09 (a)(b)(c)(d)
    8,090       8,090  
0.35%, 07/02/09 (a)(c)(d)
    5,000       5,000  
Power System RB
Series 2005A2
               
0.25%, 07/02/09 (a)(c)(d)
    11,600       11,600  
Power System Revenue CP Notes
0.35%, 09/09/09 (c)
    47,500       47,500  
0.30%, 09/30/09 (c)
    33,000       33,000  
Water System RB
Series 2006A1
               
0.35%, 07/02/09 (a)(c)(d)
    25,000       25,000  
Water System RB
Series 2006A2
               
0.45%, 07/02/09 (a)(c)(d)
    45,700       45,700  
Water System RB
Series 2009A
               
0.23%, 07/02/09 (a)(c)(d)
    4,445       4,445  
Water Works RB Issue of 1999
0.63%, 10/15/09 (b)
    18,870       19,356  
0.63%, 10/15/09 (b)
    12,940       13,275  
Los Angeles Harbor
RB
Series 2006D
               
0.25%, 07/02/09 (a)(c)(d)
    7,390       7,390  
Refunding RB
Series 2002A
               
1.05%, 08/01/09
    5,025       5,044  
Refunding RB
Series 2006B
               
0.46%, 07/02/09 (a)(c)(d)
    3,060       3,060  
1.76%, 07/02/09 (a)(c)(d)
    13,585       13,585  
Los Angeles IDA
IDRB (KH Enerprises)
Series 2008
               
0.55%, 07/01/09 (a)(b)
    1,755       1,755  
RB (AAA Packing & Shipping)
Series 2000
               
0.35%, 07/02/09 (a)(b)
    3,000       3,000  
Los Angeles Municipal Improvement Corp
Lease Revenue CP
Series A1
               
0.35%, 07/24/09 (b)
    21,000       21,000  
 
 
 
20 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Los Angeles USD
GO Bonds (Election of 2002)
Series 2007B & GO Refunding Bonds
               
Series 2007B
               
0.45%, 07/02/09 (a)(c)(d)
    7,290       7,290  
GO Bonds (Election of 2002)
Series 2007C
               
0.27%, 07/02/09 (a)(c)(d)
    8,250       8,250  
GO Bonds (Election of 2002)
Series 2007C, GO Bonds (Election of 2004)
               
Series 2005E, 2006F&G & 2007H, GO Refunding Bonds
               
Series 2005A1
               
0.22%, 07/02/09 (a)(c)(d)
    10,450       10,450  
GO Bonds (Election of 2002)
Series 2009D
               
0.63%, 01/01/10
    1,800       1,817  
GO Bonds (Election of 2002)
Series 2009D & GO Bonds (Election of 2004)
               
Series 2009I
               
0.30%, 07/02/09 (a)(c)(d)
    4,160       4,160  
GO Bonds (Election of 2004)
Series 2004H
               
0.35%, 07/02/09 (a)(c)(d)
    24,750       24,750  
GO Bonds (Election of 2004)
Series 2006F
               
1.00%, 09/10/09 (b)(c)(d)
    25,990       25,990  
GO Bonds (Election of 2004)
Series 2007H
               
0.35%, 07/02/09 (a)(c)(d)
    13,200       13,200  
GO Bonds (Election of 2004)
Series 2009I
               
0.23%, 07/02/09 (a)(c)(d)
    6,920       6,920  
0.63%, 01/01/10
    3,750       3,785  
GO Bonds (Election of 2005)
Series 2009F
               
0.63%, 01/01/10
    1,035       1,045  
GO Refunding Bonds
Series 2007A1
               
0.25%, 07/02/09 (a)(c)(d)
    7,000       7,000  
0.25%, 07/02/09 (a)(c)(d)
    7,000       7,000  
0.40%, 07/02/09 (a)(c)(d)
    13,735       13,735  
0.45%, 07/02/09 (a)(c)(d)
    13,000       13,000  
GO Refunding Bonds
Series 2007A2
               
0.65%, 12/10/09 (c)(d)
    11,810       11,810  
TRAN 2008-2009
Series A
               
1.52%, 07/30/09
    97,000       97,113  
Madera Cnty
Lease RB (Madera Municipal Golf Course Refinancing)
Series 1993
               
0.23%, 07/02/09 (a)(b)
    2,595       2,595  
Madera/West Contra Costa/Santa Ana USDs & Tulare Joint/San Mateo Union High SDs
GO Bonds (Election of 2002)
Series 2005
               
0.29%, 07/02/09 (a)(b)(c)(d)
    14,390       14,390  
Modesto
Water Refunding Revenue COP
Series 2008A
               
0.17%, 07/02/09 (a)(b)(c)(d)
    37,335       37,335  
Morgan Hill Redevelopment Agency
Tax Allocation Bonds (Oyo De Agua Redevelopment Area)
Series 2008A
               
0.13%, 07/02/09 (a)(b)
    16,795       16,795  
Mountain View/Los Altos Union High SD
TRAN 2009
0.40%, 06/30/10 (e)
    5,000       5,000  
Mt. Diablo USD
TRAN 2008
1.24%, 11/20/09
    14,000       14,081  
Murrieta Valley USD
COP (School Facility Bridge Funding) 2009
0.86%, 05/03/10 (b)
    53,000       53,484  
Napa Valley Community College District
GO Bonds (Election of 2002)
Series B
               
0.22%, 07/02/09 (a)(b)(c)(d)
    4,925       4,925  
Newport Beach
Refunding RB (Hoag Memorial Hospital Presbyterian)
Series 2008D
               
0.24%, 07/01/09 (a)(b)
    7,300       7,300  
Refunding RB (Hoag Memorial Hospital Presbyterian)
Series 2008E
               
0.24%, 07/01/09 (a)(b)
    9,950       9,950  
Refunding RB (Hoag Memorial Hospital Presbyterian)
Series 2008F
               
0.24%, 07/01/09 (a)(b)
    37,300       37,300  
Newport-Mesa USD
GO Bonds (Election of 2005)
Series 2007
               
0.17%, 07/02/09 (a)(c)(d)
    31,425       31,425  
Norwalk-La Mirada USD
COP (2006 School Facility Bridge Funding Program)
3.00%, 07/02/09 (a)(b)(c)
    4,100       4,100  
Oakland
RB (1800 Harrison Foundation)
Series 1999A
               
1.08%, 01/01/10 (b)
    13,825       14,164  
RB (1800 Harrison Foundation)
Series 1999B
               
1.10%, 01/01/10 (b)
    13,470       13,799  
Oakland-Alameda Cnty Coliseum Auth
Refunding Lease RB (Oakland Coliseum)
Series 2000C1
               
0.30%, 07/01/09 (a)(b)
    21,000       21,000  
Oceanside
M/F Mortgage RB (Riverview Springs Apts)
Series 1990A
               
0.34%, 07/02/09 (a)(b)
    13,370       13,370  
Ontario Housing Auth
M/F Housing RB (Parc Vista)
Series 2006B
               
0.34%, 07/02/09 (a)(b)
    6,960       6,960  
M/F Housing RB (Terrace View)
Series 2006A
               
0.34%, 07/02/09 (a)(b)
    6,240       6,240  
 
 
 
See financial notes 21

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Orange Cnty
COP (Florence Crittenton Services)
Series 1990
               
0.17%, 07/01/09 (a)(b)
    3,500       3,500  
TRAN 2009-2010
Series A
               
0.40%, 06/30/10 (e)
    50,000       50,795  
Orange Cnty Housing Auth
Apartment Development RB (Lantern Pines)
Series 1985CC
               
0.31%, 07/01/09 (a)(b)(e)
    5,210       5,210  
Orange Cnty Sanitation District
COP
Series 2003
               
0.27%, 07/02/09 (a)(c)(d)
    3,595       3,595  
COP
Series 2007B
               
0.20%, 07/02/09 (a)(c)(d)
    7,788       7,789  
0.35%, 07/02/09 (a)(c)(d)
    6,980       6,980  
0.45%, 07/02/09 (a)(c)(d)
    16,665       16,665  
Refunding COP
Series 2008C
               
0.98%, 12/10/09
    17,000       17,114  
Oxnard Financing Auth
Lease RB
Series 2003B
               
0.30%, 07/02/09 (a)(b)
    6,320       6,320  
Lease RB (Civic Center Phase 2)
Series 2006
               
0.30%, 07/02/09 (a)(b)
    11,520       11,520  
Wastewater RB
Series 2004B
               
0.30%, 07/02/09 (a)(b)
    11,565       11,565  
Water Revenue Project Bonds
Series 2006
               
0.95%, 08/13/09 (b)(c)(d)
    20,665       20,665  
Palomar Pomerado Health
GO Bonds (Election of 2004)
Series 2007A
               
0.22%, 07/02/09 (a)(b)(c)(d)
    10,380       10,380  
0.29%, 07/02/09 (a)(b)(c)(d)
    11,615       11,615  
Pasadena
Refunding COP
Series 2008A
               
0.25%, 07/02/09 (a)(b)
    8,545       8,545  
Petaluma Community Development Commission
M/F Housing RB (Oakmont)
Series 1996A
               
0.48%, 07/02/09 (a)(b)
    3,050       3,050  
Pinole Redevelopment Agency
M/F Housing RB (East Bluff Apts)
Series 1998A
               
0.80%, 07/02/09 (a)(b)
    4,959       4,959  
Pittsburg Redevelopment Agency
Subordinate Tax Allocation Bonds (Los Medanos Community Development)
Series 2004A
               
0.40%, 07/01/09 (a)(b)
    3,200       3,200  
Placer Cnty Water Agency
Second Sr Water Revenue COP
Series 2007
               
0.65%, 12/10/09 (b)(c)(d)
    12,555       12,555  
Pleasanton
M/F Housing RB (Busch Sr Housing)
Series 2003A
               
0.30%, 07/02/09 (a)(b)
    2,360       2,360  
Port of Oakland
CP
Series D
               
0.40%, 08/10/09 (b)
    45,400       45,400  
Rancho Water District Financing Auth
Refunding RB
Series 2008B
               
0.16%, 07/01/09 (a)(b)
    4,500       4,500  
Redondo Beach Redevelopment Agency
M/F Housing Refunding RB (Heritage Pointe Apts)
Series 2004A
               
0.34%, 07/02/09 (a)(b)
    10,890       10,890  
Riverside
Electric Refunding RB
Series 2008A
               
0.17%, 07/01/09 (a)(b)
    15,000       15,000  
Electric Refunding RB
Series 2008C
               
0.17%, 07/01/09 (a)(b)
    14,300       14,300  
Refunding COP (Riverside Renaissance)
Series 2008
               
0.25%, 07/02/09 (a)(b)
    16,400       16,400  
Riverside Cnty
S/F Mortgage RB (GNMA Mortgage- Backed Securities Program)
Series 1989A
               
1.76%, 07/02/09 (a)(b)(c)(d)
    6,870       6,870  
Riverside Cnty Housing Auth
M/F Housing RB (Victoria Springs Apts)
Series 1989C
               
0.34%, 07/02/09 (a)(b)
    9,000       9,000  
Riverside Cnty Transportation Commission
CP Notes (Limited Tax Bonds)
0.42%, 07/15/09 (b)
    10,000       10,000  
0.35%, 08/04/09 (b)
    28,000       28,000  
Sales Tax RB
Series 2008A1
               
1.45%, 12/01/09
    3,300       3,352  
1.19%, 12/01/09
    15,000       15,235  
1.18%, 12/01/09
    15,000       15,235  
1.29%, 12/01/09
    500       508  
Sales Tax RB
Series 2008A2
               
1.32%, 12/01/09
    750       758  
Riverside Community College District
GO Bonds (Election of 2004)
Series 2007C
               
0.45%, 07/02/09 (a)(c)(d)
    8,600       8,600  
0.60%, 07/02/09 (a)(c)(d)
    5,940       5,940  
Roseville
Electric System Revenue COP
Series 2002
               
0.75%, 07/02/09 (a)(b)(c)
    4,375       4,375  
Sacramento Cnty
COP (Animal Care/Youth Detention Facilities)
Series 2007
               
1.00%, 09/10/09 (b)(c)(d)
    21,265       21,265  
 
 
 
22 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
M/F Housing RB (Ashford Heights Apts)
Series 2006H
               
0.30%, 07/02/09 (a)(b)
    21,850       21,850  
Special Facilities Airport RB (Cessna Aircraft)
Series 1998
               
0.34%, 07/02/09 (a)(b)
    8,800       8,800  
TRAN
Series 2008A
               
1.50%, 08/07/09
    25,000       25,031  
Sacramento Cnty Housing Auth
M/F Housing RB (Hastings Park Apts)
Series 2004G
               
0.30%, 07/02/09 (a)(b)
    16,500       16,500  
M/F Housing RB (Logan Park Apts)
Series 2007E
               
0.34%, 07/02/09 (a)(b)
    24,000       24,000  
M/F Housing Refunding RB (Chesapeake Commons Apts)
Series 2001C
               
0.34%, 07/02/09 (a)(b)
    33,000       33,000  
Sacramento Cnty Sanitation District Financing Auth
RB
Series 2005
               
0.55%, 07/02/09 (a)(c)(d)
    3,325       3,325  
Refunding RB
Series 2007B
               
0.27%, 07/02/09 (a)(c)(d)
    30,000       30,000  
0.33%, 07/02/09 (a)(b)(c)(d)
    7,800       7,800  
Subordinate Lien Refunding RB
Series 2008E
               
0.20%, 07/01/09 (a)(b)
    3,200       3,200  
Sacramento Finance Auth
Refunding RB (Master Lease Program Facilities)
Series 2006E
               
0.23%, 07/02/09 (a)(b)(c)(d)
    15,540       15,540  
Sacramento Housing Auth
M/F Housing RB (Atrium Court Apts) 2002G
0.30%, 07/02/09 (a)(b)
    17,200       17,200  
M/F Housing RB (Carlton Plaza of Sacramento Sr Apts)
Series 2003E
               
0.34%, 07/02/09 (a)(b)
    14,000       14,000  
M/F Housing RB (Hurley Creek Sr Apts)
Series 2006E
               
0.30%, 07/02/09 (a)(b)
    10,265       10,265  
M/F Housing RB (St Anton Building Apts)
Series 2003I
               
0.30%, 07/02/09 (a)(b)
    8,000       8,000  
M/F Housing RB (Valencia Point Apts)
Series 2006I
               
0.30%, 07/02/09 (a)(b)
    5,150       5,150  
Sacramento Municipal Utility District
CP
Series J
               
0.32%, 09/09/09 (b)
    6,500       6,500  
Electric Refunding RB
Series 2008U
               
0.68%, 07/02/09 (a)(b)(c)(d)
    15,500       15,500  
Subordinated Electric Refunding RB
Series 2008J
               
0.22%, 07/02/09 (a)(b)
    41,600       41,600  
Subordinated Electric Refunding RB
Series 2008K
               
0.17%, 07/02/09 (a)(b)
    33,500       33,500  
Sacramento Suburban Water District
COP
Series 2004
               
0.75%, 07/01/09 (a)(b)(c)
    22,175       22,175  
Sacramento Transportation Auth
Measure A Sales Tax Revenue Notes (Limited Tax Bonds)
Series 2007A
               
0.45%, 10/01/09
    13,000       13,149  
San Bernardino Cnty
TRAN 2009-2010
Series A
               
0.40%, 06/30/10 (e)
    29,000       29,461  
San Bernardino Community College District
GO Bonds (Election of 2002)
Series C
               
0.45%, 07/02/09 (a)(c)(d)
    9,335       9,335  
GO Bonds (Election of 2008)
Series B
               
0.30%, 07/02/09 (a)(c)(d)
    37,145       37,145  
San Diego
TRAN 2009-2010
Series B
               
0.52%, 01/29/10 (e)
    10,000       10,085  
TRAN 2009-2010
Series C
               
0.54%, 04/30/10 (e)
    9,635       9,751  
San Diego Cnty
COP (San Diego Jewish Academy)
0.55%, 07/02/09 (a)(b)
    8,825       8,825  
San Diego Cnty & School Districts Pool Program
TRAN
Series 2009A
               
0.37%, 06/30/10 (e)
    39,000       39,627  
0.40%, 06/30/10
    20,000       20,322  
San Diego Cnty Regional Airport Auth
Airport Refunding RB
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    1,195       1,195  
Subordinate Airport Revenue CP Notes
Series A&B
               
0.45%, 10/07/09 (b)
    15,000       15,000  
0.52%, 12/03/09 (b)
    22,254       22,254  
San Diego Cnty Regional Transportation Commission
Sales Tax RB (Limited Tax)
Series 2008A
               
0.35%, 07/02/09 (a)(c)
    26,530       26,530  
San Diego Cnty Water Auth
CP 2006
Series 2
               
0.50%, 07/08/09 (c)
    14,500       14,500  
0.45%, 07/22/09 (c)
    10,500       10,500  
0.45%, 08/27/09 (c)
    14,000       14,000  
0.30%, 09/09/09 (c)
    19,500       19,500  
0.30%, 09/16/09 (c)
    50,000       50,000  
CP 2006
Series 3
               
1.15%, 07/02/09 (c)
    3,250       3,250  
Water Revenue COP
Series 2004A
               
0.55%, 07/02/09 (a)(c)(d)
    8,710       8,710  
 
 
 
See financial notes 23

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Water Revenue COP
Series 2008A
               
0.33%, 07/02/09 (a)(c)(d)
    16,890       16,890  
0.35%, 07/02/09 (a)(c)(d)
    23,680       23,680  
San Diego Housing Auth
M/F Housing RB (Bay Vista Apts)
Series 2008A
               
0.30%, 07/02/09 (a)(b)
    4,800       4,800  
M/F Housing RB (Hillside Garden Apts)
Series 2004B
               
0.30%, 07/02/09 (a)(b)
    9,000       9,000  
M/F Housing RB (Villa Nueva Apts)
Series 2007F
               
0.30%, 07/02/09 (a)(b)
    34,100       34,100  
M/F Mortgage Refunding RB (Creekside Villa Apts)
Series 1999B
               
0.34%, 07/02/09 (a)(b)
    6,000       6,000  
San Francisco
GO Bonds (San Francisco General Hospital Improvement Bonds 2008)
Series 2009A
               
0.30%, 07/02/09 (a)(c)(d)
    35,905       35,905  
GO Refunding Bonds
Series 2008R1
               
0.55%, 06/15/10
    4,000       4,169  
GO Refunding Bonds (Laguna Honda Hospital)
Series 2008R3
               
0.50%, 07/02/09 (a)(c)(d)
    3,000       3,000  
M/F Housing RB (Carter Terrace Apts)
Series 2002B
               
0.50%, 07/02/09 (a)(b)
    740       740  
M/F Housing Refunding RB (City Heights Apts)
Series 1997A
               
0.30%, 07/01/09 (a)(b)
    20,800       20,800  
San Francisco Airport Commission
Second Series Refunding RB Issue 34E
0.25%, 07/02/09 (a)(b)(c)(d)
    5,120       5,120  
Second Series Refunding RB Issue 37C
1.00%, 07/01/09 (a)(b)(c)
    16,750       16,750  
Second Series Revenue Notes
Series 2008A1
               
0.95%, 05/01/10
    2,000       2,063  
1.72%, 05/01/10
    10,000       10,317  
1.75%, 05/01/10
    6,625       6,835  
Second Series Revenue Notes
Series 2008A2
               
1.72%, 05/01/10
    10,000       10,393  
1.72%, 05/01/10
    3,000       3,118  
Second Series Revenue Notes
Series 2008B
               
1.50%, 12/01/09
    17,640       17,749  
Subordinate CP Notes
Series A
               
0.40%, 09/03/09 (b)
    15,775       15,775  
0.45%, 09/03/09 (b)
    10,430       10,430  
0.50%, 09/03/09 (b)
    21,650       21,650  
Subordinate CP Notes
Series B
               
0.55%, 08/18/09 (b)
    24,500       24,500  
San Francisco Bay Area Rapid Transit District
GO Bonds (Election of 2004)
Series 2007B
               
0.23%, 07/02/09 (a)(c)(d)
    15,935       15,935  
0.30%, 07/02/09 (a)(c)(d)
    9,900       9,900  
Sales Tax Refunding RB
Series 2005A
               
0.55%, 07/02/09 (a)(c)(d)
    13,400       13,400  
Sales Tax Refunding RB
Series 2006A
               
0.55%, 07/02/09 (a)(c)(d)
    6,125       6,125  
San Francisco City & Cnty Redevelopment Agency
M/F Housing RB (Bayside Village) Issue D
Series 1985A
               
0.19%, 07/01/09 (a)(b)
    21,000       21,000  
San Francisco Finance Corp
Lease Refunding RB (Moscone Center Expansion)
Series 2008–1
               
0.25%, 07/02/09 (a)(b)
    29,880       29,880  
Lease Refunding RB (Moscone Center Expansion)
Series 2008–2
               
0.25%, 07/02/09 (a)(b)
    8,750       8,750  
San Francisco Public Utilities Commission
Wastewater CP
0.65%, 08/06/09 (b)
    2,500       2,500  
Water CP
0.38%, 08/12/09 (b)
    29,500       29,500  
0.53%, 08/27/09 (b)
    11,800       11,800  
0.45%, 09/03/09 (b)
    15,200       15,200  
0.32%, 09/10/09 (b)
    39,500       39,500  
San Francisco Redevelopment Agency
M/F Housing RB (Derek Silva Community)
Series 2002D
               
0.50%, 07/02/09 (a)(b)
    2,445       2,445  
M/F Housing RB (Third & Mission)
Series 1999C
               
0.25%, 07/01/09 (a)(b)(f)
    54,700       54,700  
M/F Housing Refunding RB (Fillmore Center)
Series 1992A2
               
0.37%, 07/01/09 (a)(b)
    3,750       3,750  
San Francisco USD
TRAN 2008
0.98%, 11/25/09
    10,000       10,082  
San Joaquin Cnty Public Facilities Financing Corp
COP (Cnty Administration Building)
Series 2007
               
1.00%, 09/09/09 (b)(c)(d)
    41,005       41,005  
San Jose
Airport RB
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    23,070       23,070  
0.25%, 07/02/09 (a)(b)(c)(d)
    20,870       20,870  
0.51%, 07/02/09 (a)(b)(c)(d)
    10,720       10,720  
GO Bonds
Series 2008
               
0.60%, 07/02/09 (a)(c)(d)
    5,440       5,440  
M/F Housing RB (Almaden Family Apts)
Series 2003D
               
0.30%, 07/02/09 (a)(b)
    4,000       4,000  
 
 
 
24 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
M/F Housing RB (Almaden Lake Village Apts)
Series 1997A
               
0.34%, 07/02/09 (a)(b)
    25,000       25,000  
M/F Housing RB (Raintree Apts)
Series 2005A
               
0.50%, 07/02/09 (a)(b)
    10,200       10,200  
M/F Housing RB (Siena at Renaissance Square Apts)
Series 1996A
               
0.30%, 07/02/09 (a)(b)
    10,500       10,500  
Subordinate CP Notes
Series A
               
1.90%, 07/02/09 (b)
    20,753       20,753  
Subordinate CP Notes
Series B
               
1.83%, 07/02/09 (b)
    43,193       43,193  
1.85%, 07/02/09 (b)
    43,000       43,000  
San Jose Financing Auth
Refunding Lease RB (Civic Center)
Series 2006A
               
0.17%, 07/02/09 (a)(b)(c)(d)
    10,600       10,600  
Refunding Lease RB (Civic Center)
Series 2008A
               
0.20%, 07/02/09 (a)(b)
    3,455       3,455  
San Jose Redevelopment Agency
Subordinate Tax Allocation Bonds (Merged Area Redevelopment)
Series 2005C
               
0.24%, 07/01/09 (a)(b)
    7,270       7,270  
Subordinate Tax Allocation Bonds (Merged Area Redevelopment)
Series 2005D
               
0.30%, 07/01/09 (a)(b)
    8,900       8,900  
Tax Allocation Refunding Bonds (Merged Area Redevelopment)
Series 2006D
               
0.46%, 07/02/09 (a)(b)(c)(d)
    34,995       34,995  
San Jose USD
GO Bonds (Election of 2002)
Series 2005B
               
0.45%, 07/02/09 (a)(c)(d)
    19,800       19,800  
San Luis Obispo Cnty Finance Auth
RB (Nacimiento Water)
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    27,320       27,320  
San Marcos Redevelopment Agency
M/F Housing RB (Grandon Village)
Series 2002A
               
0.22%, 07/02/09 (a)(b)
    13,390       13,390  
San Mateo Cnty Community College District
2006 GO Bonds (Election of 2005)
Series B
               
0.43%, 07/02/09 (a)(c)(d)
    8,870       8,870  
GO Bonds (Election of 2001)
Series 2005B
               
1.00%, 07/30/09 (c)(d)
    5,625       5,625  
2.25%, 07/30/09 (c)(d)
    3,205       3,205  
GO Bonds (Election of 2001)
Series 2005B & 2006A
               
0.90%, 09/23/09 (b)(c)(d)
    14,020       14,020  
GO Bonds (Election of 2005)
Series 2006B
               
0.22%, 07/02/09 (a)(c)(d)
    31,640       31,640  
San Mateo Joint Powers Financing Auth
Lease RB (Public Safety)
Series 2007A
               
0.27%, 07/02/09 (a)(b)
    14,750       14,750  
Santa Barbara Cnty
TRAN 2009-2010
Series A
               
0.33%, 06/30/10 (e)
    25,000       25,539  
Santa Clara Cnty
GO Bonds (Election of 2008)
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    55,260       55,260  
Santa Clara Cnty Financing Auth
Refunding Lease RB (Multiple Facilities)
Series 2007K
               
1.00%, 09/10/09 (b)(c)(d)
    47,830       47,830  
Refunding Lease RB (Multiple Facilities)
Series 2008M
               
0.17%, 07/01/09 (a)(b)
    26,350       26,350  
Santa Clara Cnty Housing Auth
M/F Housing RB (Monte Vista Terrace Apts)
Series 2005C
               
0.50%, 07/02/09 (a)(b)
    9,920       9,920  
Santa Clara Valley Transportation Auth
Refunding RB (2000 Measure A Sales Tax)
Series 2007A
               
0.45%, 07/02/09 (a)(c)(d)
    9,900       9,900  
Refunding RB (2000 Measure A Sales Tax)
Series 2008A
               
0.22%, 07/02/09 (a)(c)
    23,300       23,300  
Santa Cruz Cnty
TRAN 2009-2010
0.50%, 07/08/10 (e)
    10,000       10,149  
Santa Fe Springs IDA
IDRB (Tri-West)
Series 1983
               
0.50%, 07/01/09 (a)(b)
    4,000       4,000  
Santa Rosa Housing Auth
M/F Housing RB (Quail Run Apts)
Series 1997A
               
0.53%, 07/02/09 (a)(b)
    7,490       7,490  
Simi Valley USD
GO Bonds (Election of 2004)
Series 2007C
               
0.17%, 07/02/09 (a)(b)(c)(d)
    7,910       7,910  
Sonoma Cnty Jr College District
GO Bonds (Election of 2002)
Series B
               
0.17%, 07/02/09 (a)(b)(c)(d)
    21,275       21,275  
Southern California Home Financing Auth
S/F Mortgage RB
Series 2004A
               
0.79%, 07/01/09 (a)(c)
    17,200       17,200  
S/F Mortgage RB
Series 2004B
               
0.79%, 07/01/09 (a)(c)
    22,650       22,650  
0.79%, 07/01/09 (a)(c)
    58,930       58,930  
Southern California Metropolitan Water District
Water RB
Series 1997B
               
0.25%, 07/02/09 (a)(c)
    7,500       7,500  
 
 
 
See financial notes 25

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Water RB
Series 2005C
               
0.25%, 07/02/09 (a)(c)(d)
    8,970       8,970  
Water RB
Series 2006A
               
0.23%, 07/02/09 (a)(c)(d)
    2,225       2,225  
0.25%, 07/02/09 (a)(c)(d)
    13,050       13,050  
0.30%, 07/02/09 (a)(c)(d)(f)
    50,000       50,000  
Water Refunding RB
Series 2004A1
               
0.17%, 07/02/09 (a)(c)
    20,925       20,925  
Water Refunding RB
Series 2004C
               
0.75%, 07/02/09 (a)(c)
    7,470       7,470  
Water Refunding RB
Series 2008A1
               
0.25%, 07/02/09 (a)(c)
    21,095       21,095  
Water Refunding RB
Series 2009A1
               
0.00%, 06/01/10
    55,000       55,000  
Water Refunding RB
Series 2009A2
               
0.00%, 06/01/10
    40,000       40,000  
Water Refunding RB
Series 2009B
               
0.25%, 07/02/09 (a)(c)(d)
    11,445       11,445  
Southern California Public Power Auth
Refunding RB (Magnolia Power)
Series 2009 2
               
0.24%, 07/01/09 (a)(b)
    24,945       24,945  
Revenue Notes (Canyon Power)
Series 2008A
               
1.00%, 12/02/09
    25,000       25,157  
Subordinate Refunding RB (Palo Verde)
Series 2008A
               
0.14%, 07/01/09 (a)(b)
    2,400       2,400  
Stanton
M/F RB (Continental Gardens Apts)
Series 1997
               
4.25%, 08/01/09 (b)
    4,225       4,230  
Stockton Public Finance Auth
Lease RB (Building Acquisition Financing)
Series 2007A
               
2.32%, 07/02/09 (a)(b)(c)
    31,365       31,365  
Univ of California
CP Notes
Series A
               
0.40%, 11/05/09
    44,000       44,000  
General RB
Series 2005C
               
0.60%, 07/02/09 (a)(c)(d)
    7,500       7,500  
General RB
Series 2005F
               
0.27%, 07/02/09 (a)(c)(d)
    5,000       5,000  
General RB
Series 2007J
               
0.35%, 07/02/09 (a)(c)(d)
    6,505       6,505  
0.35%, 07/02/09 (a)(c)(d)
    6,200       6,200  
0.35%, 07/02/09 (a)(c)(d)
    39,365       39,365  
General RB
Series 2008L
               
0.23%, 07/02/09 (a)(c)(d)
    4,320       4,320  
General RB
Series 2009O
               
0.23%, 07/02/09 (a)(c)(d)
    16,000       16,000  
0.25%, 07/02/09 (a)(c)(d)
    10,000       10,000  
Limited Project RB
Series 2005B
               
0.17%, 07/02/09 (a)(b)(c)(d)
    10,300       10,300  
0.35%, 07/02/09 (a)(c)(d)
    6,470       6,470  
0.45%, 07/02/09 (a)(c)(d)
    49,500       49,500  
Limited Project RB
Series 2007D
               
0.45%, 07/02/09 (a)(c)(d)
    40,095       40,095  
Medical Center Pooled RB
Series 2007C2
               
0.34%, 07/02/09 (a)(c)(d)
    20,615       20,615  
Upland USD
GO Bonds (Election of 2008)
Series A
               
0.22%, 07/02/09 (a)(b)(c)(d)
    8,767       8,767  
Ventura Cnty
TRAN 2009-2010
0.37%, 07/01/10 (e)
    30,000       30,637  
Vernon Natural Gas Financing Auth
RB (Vernon Gas)
Series 2006A1
               
0.36%, 08/03/09 (b)
    13,765       13,822  
RB (Vernon Gas)
Series 2006A2
               
0.35%, 08/03/09 (b)
    14,725       14,786  
0.51%, 08/03/09 (b)
    1,880       1,888  
RB (Vernon Gas)
Series 2006A3
               
0.36%, 08/03/09 (b)
    11,720       11,769  
West Contra Costa USD
GO Bonds (Election of 2002)
Series C
               
0.17%, 07/02/09 (a)(b)(c)(d)
    10,545       10,545  
West Hills Community College District
COP (2008 Refunding Project)
0.30%, 07/01/09 (a)(b)
    10,000       10,000  
Westminster Redevelopment Agency
M/F Housing RB (Brookhurst Royale Sr Assisted Living)
Series 2000A
               
0.80%, 07/02/09 (a)(b)
    6,890       6,890  
Subordinate Tax Allocation Bonds (Police Facility)
Series 2009
               
0.25%, 07/02/09 (a)(b)(c)(d)
    15,875       15,875  
Whittier
Health Facility RB (Presbyterian Intercommunity Hospital)
Series 2009C
               
0.16%, 07/01/09 (a)(b)
    5,700       5,700  
Refunding RB (Whittier College)
Series 2008
               
0.18%, 07/02/09 (a)(b)
    16,000       16,000  
William S. Hart Union High SD
COP (2001 School Facility Bridge Funding Program)
1.35%, 07/02/09 (a)(b)(c)
    2,815       2,815  
1.35%, 07/02/09 (a)(b)(c)
    4,215       4,215  
1.35%, 07/02/09 (a)(b)(c)
    11,940       11,940  
GO Bonds (2008 Election)
Series A
               
0.34%, 07/02/09 (a)(b)(c)(d)
    19,515       19,515  
 
 
 
26 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Yosemite Community College District
GO Bonds (Election of 2004)
Series 2008C
               
0.35%, 07/02/09 (a)(b)(c)(d)
    2,000       2,000  
Yuba USD
TRAN 2008
1.32%, 11/25/09
    5,000       5,033  
                 
              8,784,714  
 
Puerto Rico 0.2%
Puerto Rico
GO Public Improvement Refunding Bonds
Series 2007A2
               
1.25%, 07/02/09 (a)(b)(c)
    735       735  
TRAN
Series 2009A2
               
1.65%, 07/30/09 (b)
    7,000       7,007  
Puerto Rico Aqueduct & Sewer Auth
RB
Series A
               
0.47%, 07/02/09 (a)(b)(c)(d)
    3,500       3,500  
Puerto Rico Highway & Transportation Auth
Transportation RB
Series A
               
0.49%, 07/01/09 (a)(b)
    4,000       4,000  
Transportation Refunding RB
Series N
               
0.50%, 07/02/09 (a)(b)(c)(d)
    4,300       4,300  
Puerto Rico Housing Finance Corp
Homeownership Mortgage RB
Series 2000A
               
0.50%, 07/02/09 (a)(b)(c)(d)
    715       715  
                 
              20,257  
                 
Total Municipal Securities
(Cost $8,804,971) 		    8,804,971  
         
                 
                 
 
 Other Investments 0.2% of net assets
Nuveen Insured California Tax-Free Advantage Municipal Fund
Variable Rate Demand Preferred Shares
Series 1
               
0.30%, 07/02/09 (a)(b)(d)
    17,700       17,700  
                 
Total Other Investments
(Cost $17,700) 		    17,700  
         
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $8,822,671.
 
(a) Variable-rate security.
(b) Credit-enhanced security.
(c) Liquidity-enhanced security.
(d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $2,747,760 or 31.7% of net assets.
(e) Delayed-delivery security.
(f) All or a portion of this security is held as collateral for delayed-delivery security.
 
COP – Certificate of participation
CP – Commercial paper
GO – General obligation
HFA – Housing finance agency/authority
IDA – Industrial development agency/authority
IDRB – Industrial development revenue bond
M/F – Multi-family
RB – Revenue bond
SD – School district
S/F – Single-family
TRAN – Tax and revenue anticipation note
USD – Unified school district
 
 
 
See financial notes 27

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $8,822,671  
Cash
        671  
Receivables:
           
Investments sold
        211,005  
Interest
        18,028  
Fund shares sold
        3,264  
Prepaid expenses
  +     865  
     
     
Total assets
        9,056,504  
             
 
Liabilities
Payables:
           
Investments bought
        372,871  
Investment adviser and administrator fees
        165  
Transfer agent and shareholder services fees
        104  
Fund shares redeemed
        8,687  
Distributions to shareholders
        107  
Trustees’ fees
        3  
Accrued expenses
  +     68  
     
     
Total liabilities
        382,005  
             
 
Net Assets
Total assets
        9,056,504  
Total liabilities
  −     382,005  
     
     
Net assets
        $8,674,499  
Net Assets by Source
           
Capital received from investors
        8,674,295  
Net realized capital gains
        204  
 
Net Asset Value (NAV) by Shares Class 
 
                         
            Shares
 		         
Share Class   Net Assets   ¸   Outstanding   =   NAV  
 
Sweep Shares
  $5,614,608       5,615,036         $1.00  
Value Advantage Shares
  $3,059,891       3,059,374         $1.00  
 
 
 
 
28 See financial notes

Table of Contents

 
 Schwab California Municipal Money Fund
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $37,902  
             
 
Net Realized Gains and Losses
Net realized gains on investments
        687  
             
 
Expenses
Investment adviser and administrator fees
        15,142  
Transfer agent and shareholder service fees:
           
Sweep Shares
        10,314  
Value Advantage Shares
        3,824  
Temporary Guarantee Program expense
        2,050  
Portfolio accounting fees
        137  
Shareholder reports
        124  
Interest expense
        123  
Custodian fees
        117  
Registration fees
        107  
Professional fees
        37  
Trustees’ fees
        29  
Other expenses
  +     48  
     
     
Total expenses
        32,052  
Expense reduction by adviser and Schwab
  —     5,105  
     
     
Net expenses
        26,947  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        37,902  
Net expenses
  —     26,947  
     
     
Net investment income
        10,955  
Net realized gains
  +     687  
     
     
Increase in net assets from operations
        $11,642  
 
 
 
 
See financial notes 29

Table of Contents

 
 Schwab California Municipal Money Fund
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $10,955   $184,109
Net realized gains
  +   687   1,600
     
     
Increase in net assets from operations
      11,642   185,709
             
 
Distributions to Shareholders
Distributions from net investment income
           
Sweep Shares
      5,374   96,639
Value Advantage Shares
  +   5,581   87,470
     
     
Total distributions from net investment income
      10,955   184,109
             
 
Transactions in Fund Shares*
Shares Sold
           
Sweep Shares
      9,922,934   27,187,350
Value Advantage Shares
  +   834,292   5,549,624
     
     
Total shares sold
      10,757,226   32,736,974
             
             
Shares Reinvested
Sweep Shares
      5,261   94,165
Value Advantage Shares
  +   4,891   76,083
     
     
Total shares reinvested
      10,152   170,248
             
             
Shares Redeemed
Sweep Shares
      (10,333,298)   (27,008,125)
Value Advantage Shares
  +   (1,702,103)   (6,971,025)
     
     
Total shares redeemed
      (12,035,401)   (33,979,150)
     
     
             
Net transactions in fund shares
      (1,268,023)   (1,071,928)
             
 
Net Assets
Beginning of period
      9,941,835   11,012,163
Total decrease
  +   (1,267,336)   (1,070,328)
     
     
End of period
      $8,674,499   $9,941,835
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
30 See financial notes

Table of Contents

 
Schwab California AMT Tax-Free Money Fundtm
 
Financial Statements
 
Financial Highlights
 
                         
    1/1/09–
 		  1/1/08–
 		  1/1/07–
    6/30/09*   12/31/08   12/31/071
 
                         
Per-Share Data ($)
                       
Net asset value at beginning of period
    1.00       1.00       1.00  
   
Income (loss) from investment operations:
                       
Net investment income (loss)
    0.00 2     0.02       0.00 2
   
Less distributions:
                       
Distributions from net investment income
    (0.00 )2     (0.02 )     (0.00 )2
   
Net asset value at end of period
    1.00       1.00       1.00  
   
Total return (%)
    0.18 3     1.65       0.36 3
                         
Ratios/Supplemental Data (%)
                       
Ratios to average net assets:
                       
Net operating expenses
    0.49 4, 5     0.45       0.46 4, 6
Gross operating expenses
    0.65 4     0.62       0.73 4
Net investment income (loss)
    0.36 4     1.60       2.72 4
Net assets, end of period ($ x 1,000,000)
    571       562       278  

* Unaudited.

1 Commencement of operations.
2 Per-share amount was less than $0.01.
3 Not annualized.
4 Annualized.
5 The ratio of net operating expenses would have been 0.45%, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been included.
6 The ratio of net operating expenses would have been 0.45%, if certain non-routine expenses (tax expense) had not been included.
 
 
 
See financial notes 31

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Portfolio Holdings as of June 30, 2009, (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  98 .8%   Municipal Securities     564,383       564,383  
  98 .8%   Total Investments     564,383       564,383  
  1 .2%   Other Assets and Liabilities, Net             6,786  
  100 .0%   Net Assets             571,169  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Municipal Securities 98.8% of net assets
 
California 97.5%
Association of Bay Area Governments
RB (Acacia Creek at Union City)
Series 2008A
               
0.30%, 07/01/09 (a)(c)
    2,000       2,000  
RB (Branson School)
Series 2008
               
0.43%, 07/02/09 (a)(b)
    8,000       8,000  
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB
Series 2007F & 2008F1
               
0.23%, 07/02/09 (a)(c)(d)
    5,900       5,900  
San Francisco Bay Area Toll Bridge RB
Series 2006F
               
0.80%, 04/01/10
    175       181  
0.85%, 04/01/10
    380       392  
1.00%, 04/01/10
    3,700       3,810  
San Francisco Bay Area Toll Bridge RB
Series 2006F & 2007F
               
0.23%, 07/02/09 (a)(c)(d)
    2,830       2,830  
San Francisco Bay Area Toll Bridge RB
Series 2006 & 2008F1
               
0.25%, 07/02/09 (a)(c)(d)
    8,665       8,665  
Berkeley
TRAN 2008-2009
2.25%, 10/29/09
    5,000       5,028  
California
Economic Recovery Bonds
Series 2004C16
               
1.00%, 07/01/09 (a)(b)(c)
    5,785       5,785  
GO Bonds
0.17%, 07/02/09 (a)(b)(c)(d)
    4,800       4,800  
0.80%, 03/01/10 (b)
    5,000       5,206  
GO Bonds
Series 2000
               
0.52%, 05/01/10 (b)
    2,530       2,662  
GO Bonds
Series 2003C3
               
0.19%, 07/02/09 (a)(b)
    2,700       2,700  
GO Refunding Bonds
0.17%, 07/02/09 (a)(b)(c)(d)
    4,995       4,995  
GO Refunding Bonds
Series 2007
               
0.22%, 07/02/09 (a)(b)(c)(d)
    3,124       3,124  
California Dept of Water Resources
Power Supply RB
Series 2002A
               
0.50%, 05/01/10
    7,770       8,092  
Power Supply RB
Series 2002C1
               
0.60%, 07/02/09 (a)(b)
    1,300       1,300  
Water System RB (Central Valley)
Series W
               
1.04%, 12/01/09
    1,495       1,523  
1.10%, 12/01/09
    1,745       1,777  
California Educational Facilities Auth
RB (Univ of Southern California)
Series 2009A
               
0.25%, 07/02/09 (a)(c)(d)
    2,220       2,220  
California Health Facilities Financing Auth
RB (Providence Health & Services)
Series 2008C
               
0.23%, 07/02/09 (a)(c)(d)
    5,020       5,020  
RB (Scripps Health)
Series 2008C
               
0.12%, 07/01/09 (a)(b)
    3,550       3,550  
RB (Scripps Health)
Series 2008D
               
0.24%, 07/01/09 (a)(b)
    1,000       1,000  
California Infrastructure & Economic Development Bank
RB (Asian-American Drug Abuse Program)
Series 2008
               
0.46%, 07/02/09 (a)(b)
    3,630       3,630  
RB (Bay Area Toll Bridges Seismic Retrofit)
Series 2003A
               
1.61%, 07/02/09 (a)(b)(c)(d)
    7,170       7,170  
RB (Casa Loma College)
Series 2009
               
0.60%, 07/02/09 (a)(b)
    2,000       2,000  
California Pollution Control Financing Auth
Pollution Control Refunding RB (Pacific Gas & Electric)
Series 1996E
               
0.13%, 07/01/09 (a)(b)
    1,400       1,400  
California School Cash Reserve Program Auth
COP (2008-2009 TRANS)
Series A
               
1.65%, 07/06/09 (b)
    3,000       3,001  
California Statewide Communities Development Auth
M/F Housing Refunding RB (Corporate Fund for Housing/Five Seasons Multiple Facilities)
Series 1999A
               
0.84%, 12/01/09 (b)
    200       211  
 
 
 
32 See financial notes

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
M/F Housing Refunding RB (Irvine Apartment Communities)
Series 2008C2 & 2008C3
               
0.45%, 07/02/09 (a)(b)(c)(d)
    2,000       2,000  
RB (Center for Early Education)
Series 2001
               
0.43%, 07/02/09 (a)(b)
    3,000       3,000  
RB (Kaiser Permanente)
Series 2004E
               
2.40%, 04/01/10
    500       505  
3.76%, 04/01/10
    2,200       2,229  
RB (Kaiser Permanente)
Series 2006D
               
0.43%, 11/20/09
    5,000       5,000  
0.43%, 11/20/09
    5,000       5,000  
0.51%, 08/20/09
    3,000       3,000  
RB (Kaiser Permanente)
Series 2008B
               
0.53%, 08/20/09
    7,500       7,500  
0.65%, 09/03/09
    5,000       5,000  
RB (National Public Radio)
Series 2002
               
2.45%, 07/01/09 (a)(b)
    1,245       1,245  
Chaffey Community College District
GO Bonds (Election of 2002)
Series 2005B
               
0.60%, 07/02/09 (a)(c)(d)
    6,600       6,600  
Clovis USD
GO Refunding Bonds 2008
1.59%, 08/01/09
    4,110       4,113  
Coast Community College District
GO Bonds (Election of 2002)
Series 2006C
               
0.22%, 07/02/09 (a)(c)(d)
    4,845       4,845  
Contra Costra Transportation Auth
Subordinate Sales Tax Revenue CP Notes (Limited Tax Bonds)
Series A
               
0.53%, 08/27/09 (b)
    4,945       4,945  
Diamond Bar Public Financing Auth
Lease RB (Community/Sr Center)
Series 2002A
               
0.30%, 07/01/09 (a)(b)
    1,430       1,430  
East Bay Municipal Utility District
Extendible CP (Wastewater Series ) Notes
0.70%, 08/07/09
    3,600       3,600  
Extendible CP (Water Series ) Notes
0.45%, 07/13/09
    3,700       3,700  
0.55%, 07/14/09
    2,500       2,500  
Water System Subordinated Refunding RB
Series 2008A1
               
0.60%, 07/01/09 (a)(c)
    1,000       1,000  
Water System Subordinated Refunding RB
Series 2008A3
               
0.75%, 07/01/09 (a)(c)
    750       750  
Water System Subordinated Refunding RB
Series 2009A1
               
0.35%, 03/01/10
    4,920       4,920  
Water System Subordinated Refunding RB
Series 2009A2
               
0.35%, 03/01/10
    5,490       5,490  
Eastern Municipal Water District
Revenue COP
Series 2008G
               
0.18%, 07/01/09 (a)(c)
    2,000       2,000  
Golden State Tobacco Securitization Corp
Enhanced Tobacco Settlement Asset-Backed Bonds
Series 2003B
               
0.63%, 06/01/10 (b)
    2,055       2,144  
Enhanced Tobacco Settlement Asset-Backed Bonds
Series 2005A
               
0.40%, 07/02/09 (a)(b)(c)(d)
    5,000       5,000  
Grossmont Union High SD
GO Bonds (Election of 2004)
Series 2006
               
0.22%, 07/02/09 (a)(c)(d)
    2,350       2,350  
Irvine
Lease RB (Capital Improvement)
Series 1985
               
0.17%, 07/02/09 (a)(b)
    495       495  
Irvine Assessment District
Limited Obligation Improvement Bonds (Assessment District No. 93-14)
Series 2000
               
0.32%, 07/01/09 (a)(b)
    8,013       8,013  
Limited Obligation Improvement Bonds (Assessment District No. 94-17)
Series 1994
               
0.25%, 07/01/09 (a)(b)
    334       334  
Irvine Ranch Water District
Consolidated Bonds
Series 2009A
               
0.10%, 07/02/09 (a)(b)
    5,000       5,000  
Irvine USD
Special Tax Notes (Portola Springs) 2009
0.25%, 07/01/09 (a)(b)
    2,300       2,300  
Loma Linda
RB (Loma Linda Univ Medical Center)
Series 2007B1
               
0.25%, 07/02/09 (a)(b)
    8,800       8,800  
Los Angeles
GO Bonds
Series 2005A
               
0.62%, 09/01/09
    2,000       2,010  
Wastewater System Refunding RB
Series 2002A
               
3.00%, 07/02/09 (a)(c)(d)
    800       800  
Wastewater System Refunding RB
Series 2005A
               
0.35%, 07/02/09 (a)(c)(d)
    10,000       10,000  
Los Angeles Cnty
TRAN 2009-2010
Series A
               
0.80%, 06/30/10 (e)
    2,000       2,034  
Los Angeles Cnty Metropolitan Transportation Auth
First Tier Sr Sales Tax Refunding RB (Proposition A)
Series 2008A4
               
0.75%, 07/02/09 (a)(c)
    10,765       10,765  
Second Sr Sales Tax Refunding RB (Proposition C)
Series 1993A
               
2.00%, 07/19/09 (b)
    2,000       2,000  
 
 
 
See financial notes 33

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Los Angeles Dept of Water & Power
Power System RB
Series 2001B1
               
0.30%, 07/02/09 (a)(c)
    1,000       1,000  
Power System RB
Series 2001B2
               
0.20%, 07/02/09 (a)(c)
    1,550       1,550  
Power System RB
Series 2002A6
               
0.18%, 07/02/09 (a)(c)
    5,000       5,000  
Power System RB
Series 2002A8
               
0.20%, 07/02/09 (a)(c)
    3,300       3,300  
Water System RB
Series 2006A1
               
0.35%, 07/02/09 (a)(c)(d)
    8,000       8,000  
Water System RB
Series 2006A2
               
0.45%, 07/02/09 (a)(c)(d)
    12,500       12,500  
Los Angeles Municipal Improvement Corp
Lease Revenue CP
Series A1
               
0.33%, 07/02/09 (b)
    6,735       6,735  
0.35%, 07/24/09 (b)
    9,000       9,000  
0.45%, 08/26/09 (b)
    9,000       9,000  
Los Angeles USD
GO Bonds (Election of 2002)
Series 2009D & GO Bonds (Election of 2004)
               
Series 2009I
               
0.30%, 07/02/09 (a)(c)(d)
    4,000       4,000  
GO Bonds (Election of 2002)
Series 2007C, GO Bonds (Election of 2004)
               
Series 2005E, 2006F&G & 2007H, GO Refunding Bonds
               
Series 2005A1
               
0.22%, 07/02/09 (a)(c)(d)
    900       900  
GO Bonds (Election of 2004)
Series 2009I
               
0.23%, 07/02/09 (a)(c)(d)
    5,000       5,000  
GO Bonds (Election of 2004)
Series 2007H
               
1.17%, 07/01/09
    2,355       2,355  
GO Bonds (Election of 2005)
Series 2007E
               
1.80%, 07/01/09
    2,250       2,250  
GO Refunding Bonds
Series 2007A1
               
0.25%, 07/02/09 (a)(c)(d)
    10,100       10,100  
0.45%, 07/02/09 (a)(c)(d)
    3,235       3,235  
Modesto
Water Refunding Revenue COP
Series 2008A
               
0.17%, 07/02/09 (a)(b)(c)(d)
    2,300       2,300  
Murrieta Valley USD
COP (School Facility Bridge Funding) 2009
0.86%, 05/03/10 (b)
    3,000       3,027  
Newport Beach
Refunding RB (Hoag Memorial Hospital Presbyterian)
Series 2008E
               
0.24%, 07/01/09 (a)(b)
    1,650       1,650  
Refunding RB (Hoag Memorial Hospital Presbyterian)
Series 2008D
               
0.24%, 07/01/09 (a)(b)(f)
    17,400       17,400  
Newport-Mesa USD
GO Bonds (Election of 2005)
Series 2007
               
0.17%, 07/02/09 (a)(c)(d)
    1,180       1,180  
Orange Cnty
Apartment Development Refunding RB (Villas Aliento)
Series 1998E
               
0.25%, 07/02/09 (a)(b)
    1,000       1,000  
Orange Cnty Sanitation District
COP
Series 2007B
               
0.35%, 07/02/09 (a)(c)(d)
    3,990       3,990  
Refunding COP
Series 2008C
               
0.40%, 12/10/09
    3,000       3,020  
Oxnard Financing Auth
Water Revenue Project Bonds
Series 2006
               
0.95%, 08/13/09 (b)(c)(d)
    2,995       2,995  
Pittsburg Redevelopment Agency
Subordinate Tax Allocation Bonds (Los Medanos Community Development)
Series 2004A
               
0.40%, 07/01/09 (a)(b)
    200       200  
Placer Cnty Water Agency
Second Sr Water Revenue COP
Series 2007
               
0.65%, 12/10/09 (b)(c)(d)
    3,000       3,000  
Richmond
Wastewater Refunding RB
Series 2008A
               
0.23%, 07/02/09 (a)(b)
    3,000       3,000  
Riverside
Electric RB
Series 2008D
               
0.23%, 07/01/09 (a)(c)(d)
    4,750       4,750  
Riverside Cnty
COP Type One
Series B
               
0.20%, 07/01/09 (a)(b)
    11,810       11,810  
Riverside Cnty Transportation Commission
Sales Tax RB
Series 2008A2
               
1.55%, 12/01/09
    1,000       1,010  
1.59%, 12/01/09
    2,445       2,469  
1.25%, 12/01/09
    2,000       2,023  
Sales Tax RB
Series 2008A1
               
1.20%, 12/01/09
    3,405       3,459  
Roseville
Electric System Revenue Refunding COP
Series 2008A
               
1.25%, 07/02/09 (a)(b)
    1,000       1,000  
Roseville Joint Union High SD
GO Bonds (Election of 2004)
Series C
               
0.22%, 07/02/09 (a)(c)(d)
    2,210       2,210  
 
 
 
34 See financial notes

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Sacramento Cnty Sanitation District Financing Auth
Refunding RB
Series 2007B
               
0.27%, 07/02/09 (a)(c)(d)
    5,000       5,000  
Sacramento Suburban Water District
Refunding Revenue COP
Series 2009A
               
0.28%, 07/01/09 (a)(b)
    6,000       6,000  
Sacramento Transportation Auth
Measure A Sales Tax Revenue Notes (Limited Tax Bonds)
Series 2007A
               
0.45%, 10/01/09
    3,000       3,034  
0.50%, 10/01/09
    300       303  
0.60%, 10/01/09
    1,500       1,517  
0.66%, 10/01/09
    2,000       2,017  
San Bernardino Cnty
TRAN 2009-2010
Series A
               
0.40%, 06/30/10 (e)
    1,000       1,016  
San Diego Cnty & School Districts Pool Program
TRAN
Series 2009A
               
0.37%, 06/30/10 (e)
    1,000       1,016  
San Diego Cnty Regional Airport Auth
Subordinate Airport Revenue CP Notes
Series A&B
               
0.42%, 12/02/09 (b)
    1,000       1,000  
San Diego Cnty Water Auth
CP 2006
Series 2
               
0.30%, 10/28/09 (c)
    7,500       7,500  
0.40%, 10/06/09 (c)
    1,000       1,000  
CP 2006
Series 3
               
1.15%, 07/02/09 (c)
    10,000       10,000  
Water Revenue COP
Series 2008A
               
0.55%, 07/02/09 (a)(c)(d)
    6,840       6,840  
San Diego USD
GO Bonds (Election of 1998)
Series 1999A
               
0.92%, 07/01/09
    6,270       6,270  
San Francisco
GO Bonds (San Francisco General Hospital Improvement Bonds 2008)
Series 2009A
               
0.30%, 07/02/09 (a)(c)(d)
    3,000       3,000  
GO Refunding Bonds
Series 2008R1
               
0.55%, 06/15/10
    1,700       1,772  
San Francisco Airport Commission
Subordinate CP Notes
0.40%, 09/03/09 (b)
    2,720       2,720  
San Francisco Public Utilities Commission
Wastewater CP
0.38%, 10/08/09 (b)
    2,000       2,000  
Water CP
0.32%, 09/10/09 (b)
    5,000       5,000  
San Francisco USD
TRAN 2008
0.98%, 11/25/09
    2,500       2,521  
San Jose Financing Auth
Refunding Lease RB (Civic Center)
Series 2008A
               
0.20%, 07/02/09 (a)(b)
    6,000       6,000  
San Mateo Cnty Community College District
GO Bonds (Election of 2005)
Series 2006B
               
0.22%, 07/02/09 (a)(c)(d)
    4,235       4,235  
San Mateo Joint Powers Financing Auth
Lease RB (Public Safety)
Series 2007A
               
0.27%, 07/02/09 (a)(b)
    2,650       2,650  
Santa Clara Valley Transportation Auth
Refunding RB (2000 Measure A Sales Tax)
Series 2008B
               
0.20%, 07/02/09 (a)(c)
    200       200  
Simi Valley USD
GO Bonds (Election of 2004)
Series 2007C
               
0.17%, 07/02/09 (a)(b)(c)(d)
    3,440       3,440  
Southern California Metropolitan Water District
Water Refunding RB
Series 2004C
               
0.75%, 07/02/09 (a)(c)
    200       200  
Water Refunding RB
Series 2008C
               
1.61%, 07/01/09
    5,830       5,830  
Water Refunding RB
Series 2009A2
               
0.40%, 07/02/09 (a)
    5,180       5,180  
Southern California Public Power Auth
Revenue Notes (Canyon Power)
Series 2008A
               
1.00%, 12/02/09
    5,000       5,031  
Subordinate Refunding RB (Palo Verde)
Series 2008A
               
0.14%, 07/01/09 (a)(b)
    1,100       1,100  
Subordinate Refunding RB (Transmission Project)
Series 1991
               
1.18%, 07/01/09 (a)(b)
    3,200       3,200  
Sunnyvale
Refunding COP (Government Center Site Acquisition)
Series 2009A
               
0.30%, 07/02/09 (a)(b)(f)
    5,865       5,865  
Univ of California
CP Notes
Series A
               
0.35%, 11/05/09
    6,000       6,000  
General RB
Series 2007J
               
0.35%, 07/02/09 (a)(c)(d)
    7,665       7,665  
0.35%, 07/02/09 (a)(c)(d)
    3,045       3,045  
General RB
Series 2008L
               
0.23%, 07/02/09 (a)(c)(d)
    1,695       1,695  
Ventura Cnty
TRAN 2009-2010
0.37%, 07/01/10 (e)
    2,000       2,042  
Vernon Natural Gas Financing Auth
RB (Vernon Gas)
Series 2006A2
               
0.36%, 08/03/09 (b)
    6,080       6,105  
 
 
 
See financial notes 35

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB (Vernon Gas)
Series 2006A3
               
0.45%, 08/03/09 (b)
    1,890       1,898  
West Contra Costa USD
GO Bonds (Election of 2002)
Series C
               
0.17%, 07/02/09 (a)(b)(c)(d)
    1,500       1,500  
West Hills Community College District
COP (2008 Refunding Project)
0.30%, 07/01/09 (a)(b)
    4,325       4,325  
Westminster Redevelopment Agency
Subordinate Tax Allocation Bonds (Police Facility)
Series 2009
               
0.25%, 07/02/09 (a)(b)(c)(d)
    1,000       1,000  
William S. Hart Union High SD
GO Bonds (2008 Election)
Series A
               
0.34%, 07/02/09 (a)(b)(c)(d)
    3,500       3,500  
                 
              557,039  
 
Puerto Rico 1.3%
Puerto Rico
TRAN
Series 2009 A2
               
1.65%, 07/30/09 (b)
    4,000       4,004  
Puerto Rico Housing Finance Corp
Homeownership Mortgage RB
Series 2000A
               
0.50%, 07/02/09 (a)(b)(c)(d)
    1,640       1,640  
Puerto Rico Sales Tax Financing Corp
Sales Tax RB
Series 2007A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    1,700       1,700  
                 
              7,344  
                 
Total Municipal Securities
(Cost $564,383) 		    564,383  
         
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $564,383.
 
(a) Variable-rate security.
(b) Credit-enhanced security.
(c) Liquidity-enhanced security.
(d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $184,739 or 32.3% of net assets.
(e) Delayed-delivery security.
(f) All or a portion of this security is held as collateral for delayed-delivery securities.
 
COP – Certificate of participation
CP – Commercial paper
GO – General obligation
M/F – Multi-family
RB – Revenue bond
SD – School district
TRAN – Tax and revenue anticipation note
USD – Unified school district
 
 
 
36 See financial notes

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $564,383  
Cash
        21  
Receivables:
           
Investments sold
        11,420  
Fund shares sold
        1,882  
Interest
        1,828  
Prepaid expenses
  +     44  
     
     
Total assets
        579,578  
             
 
Liabilities
Payables:
           
Investments bought
        6,108  
Investment adviser and administrator fees
        10  
Transfer agent and shareholder services fees
        10  
Fund shares redeemed
        2,216  
Distributions to shareholders
        25  
Trustees’ fees
        2  
Accrued expenses
  +     38  
     
     
Total liabilities
        8,409  
             
 
Net Assets
Total assets
        579,578  
Total liabilities
  −     8,409  
     
     
Net assets
        $571,169  
Net Assets by Source
           
Capital received from investors
        571,134  
Distribution in excess of net investment income
        (5 )
Net realized capital gains
        40  
 
Net Asset Value (NAV)
 
                     
        Shares
 		         
Net Assets   ¸   Outstanding   =   NAV  
 
$571,169
      571,083         $1.00  
 
 
 
 
See financial notes 37

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $2,336  
             
 
Net Realized Gains and Losses
Net realized gains on investments
        40  
             
 
Expenses
Investment adviser and administrator fees
        969  
Transfer agent and shareholder service fees
        609  
Temporary Guarantee Program expense
        103  
Portfolio accounting fees
        29  
Registration fees
        19  
Professional fees
        18  
Trustees’ fees
        17  
Tax expenses
        8  
Custodian fees
        7  
Interest expense
        5  
Shareholder reports
        1  
Other expenses
  +     3  
     
     
Total expenses
        1,788  
Expense reduction by adviser and Schwab
  −     440  
     
     
Net expenses
        1,348  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        2,336  
Net expenses
  −     1,348  
     
     
Net investment income
        988  
Net realized gains
  +     40  
     
     
Increase in net assets from operations
        $1,028  
 
 
 
 
38 See financial notes

Table of Contents

 
 Schwab California AMT Tax-Free Money Fund
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $988   $7,817
Net realized gains
  +   40   41
     
     
Increase in net assets from operations
      1,028   7,858
             
 
Distributions to Shareholders
Distributions from net investment income
      994   7,816
             
 
Transactions in Fund Shares*
Shares sold
      294,349   1,094,601
Shares reinvested
      870   6,921
Shares redeemed
  +   (285,868)   (817,711)
     
     
Net transactions in fund shares
      9,351   283,811
             
 
Net Assets
Beginning of period
      561,784   277,931
Total increase
  +   9,385   283,853
     
     
End of period
      $571,169   $561,784
             
Distribution in excess of net investment income/Net investment income not yet distributed
      ($5)   $1
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
See financial notes 39

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited
 
 
1. Business Structure of the Funds:
 
Each of the funds discussed in this report is a series of The Charles Schwab Family of Funds (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
 
     
 
The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Money Fund
  Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund
     
 
Schwab California Municipal Money Fund offers two share classes: Sweep Shares and Value Advantage Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums. Schwab California AMT Tax-Free Money Fund currently offers one share class: Value Advantage Shares.
 
Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
 
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund also may keep certain assets in segregated accounts, as required by securities laws.
 
2. Significant Accounting Policies:
       (All dollar amounts are x 1,000)
 
The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America.
 
(a) Security Valuation:
 
Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. In the event security valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.
 
(b) Portfolio Investments:
 
Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.
 
(c) Security Transactions:
 
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
 
(d) Investment Income:
 
Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.
 
 
 
40 

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
(e) Expenses:
 
Expenses that are specific to a fund or 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 declare distributions from net investment income every day they are open for business. These distributions are paid out to shareholders once a month. The funds may make distributions from any net realized capital gains once a year.
 
(g) Custody Credit:
 
Certain funds have an arrangement with their custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
 
(h) Accounting Estimates:
 
The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.
 
(i) Federal Income Taxes:
 
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
 
(j) Indemnification:
 
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
 
(k) Accounting Pronouncements:
 
The funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.
 
In addition, effective June 30, 2009, the funds adopted FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased.
 
 
 
 41

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:
 
  •  Level 1 — quoted prices in active markets for identical securities. — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of June 30, 2009:
 
California Municipal Money Fund:
 
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
 		  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Municipal Securities
    $—       $8,804,971       $—       $8,804,971  
Other Investment
    —       17,700       —       17,700  
                                 
Total
    $—       $8,822,671       $—       $8,822,671  
                                 
 
 
 
42 

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
California AMT Tax-Free Money Fund:
 
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
 		  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Municipal Securities
    $—       $564,383       $—       $564,383  
                                 
Total
    $—       $564,383       $—       $564,383  
                                 
 
*  The funds had no Other Financial Instruments.
 
3. Risk factors:
 
Investing in a fund may involve certain risks, as discussed in the fund’s prospectus, including, but not limited to, those described below:
 
Interest rates will rise and fall over time. As with any investment whose yield reflects current interest rates, a fund’s yield will change over time. During periods when interest rates are low, a fund’s yield (and total return) also will be low. An investment in a fund is not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the funds. A fund could lose money or underperform as a result of a default on the part of a portfolio investment. The manager’s maturity decisions also will affect a fund’s yield, and in unusual circumstances potentially affect its share price. To the extent that the manager anticipates interest rate trends imprecisely, a fund’s yield at times could lag those of other money market funds. State and regional factors could affect a fund’s performance. To the extent that a fund invests in securities from a given state or geographic region, its share price and performance could be affected by local, state and regional factors. National governmental actions, such as the elimination of tax-exempt status, also could affect performance. To the extent a fund invests a substantial portion of its assets in municipal securities financing similar projects, the fund may be more sensitive to adverse economic, business or political developments. Some of a fund’s income could be taxable. If certain types of investments a fund buys as tax-exempt are later rule to be taxable, a portion of the fund’s income could become taxable. Any defensive investments in taxable securities and securities whose interest is subject to AMT could generate taxable income. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
 
Please refer to a fund’s prospectus for a complete description of the principal risks of investing in the fund.
 
4. U.S. Treasury Temporary Guarantee Program:
       (All dollar amounts are x 1,000)
 
On September 19, 2008, The U.S. Treasury Department announced the establishment of a Temporary Guarantee Program for the U.S. Money Market Funds (the “Program”). The initial term of the Program was set to expire on December 18, 2008. On November 24, 2008, the Treasury announced an extension of the Program for the period December 19, 2008 through April 30, 2009; and on March 31, 2009, the Treasury announced a further extension of the Program for the period May 1, 2009 through September 18, 2009 (together, the “Program Extensions”). According to the Treasury, the Program will not be extended beyond September 18, 2009. The California Municipal Money Fund and California AMT Tax-Free Money Fund, with the approval of the Schwab Funds Board of Trustees, participated in the Program during the initial and extended Program periods. The California Municipal Money Fund and the California AMT Tax-Free Money Fund paid $1,024 and $52, respectively, to participate in the initial term of the Program, which covered the period September 19, 2008 through December 18, 2008. In addition, the California Municipal Money Fund and the California AMT Tax-Free Money Fund paid $1,537 and $77, respectively, to participate in the first extension of the Program, which covered the period December 19, 2008 through April 30, 2009. The California Municipal Money Fund and the California AMT Tax-Free Money Fund paid $1,537 and $77, respectively, to participate in the second Program Extension, which covers the period May 1, 2009 through September 18, 2009. Subject to provisions contained in the guarantee agreement signed by the fund, the Program guarantees that the shareholders in the fund
 
 
 
 43

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
4. U.S. Treasury Temporary Guarantee Program (continued):
       (All dollar amounts are x 1,000)
 
as of the close of business on September 19, 2008, will receive $1.00 for each fund share held. Shares not guaranteed under the program will be redeemed at net asset value per share. The guarantee applies only if a participating money market fund’s net asset value per share falls below $0.995 and the fund subsequently decides to liquidate. Any increase in shares in the account after the close of business on September 19, 2008, will not be guaranteed. If the amount of shares held fluctuates over the period, shareholders will be covered for either the number of shares held as of the close of business on September 19, 2008, or the current amount, whichever is less. The cost of participating in the Program and the Program Extensions is borne by each participating fund and will not be subject to any expense limitation or reimbursement agreement.
 
5. Affiliates and Affiliated Transactions:
       (All dollar amounts are x 1,000)
 
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the funds’ investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
 
For its advisory and administrative services to each fund, the investment adviser is entitled to receive an annual fee payable monthly based on the funds’ average daily net assets described as follows:
 
         
Average daily net assets
   
 
First $1 billion
    0.35%  
$1 billion to $10 billion
    0.32%  
$10 billion to $20 billion
    0.30%  
$20 billion to $40 billion
    0.27%  
Over $40 billion
    0.25%  
 
Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and during the reporting period was the trust’s transfer agent and shareholder services agent. Effective July 1, 2009, the trust has appointed Boston Financial Data Services Inc. (“BFDS”) as transfer agent of the funds. Prior to July 1, 2009, BFDS served as the funds’ sub-transfer agent.
 
For the transfer agent and shareholder services provided during the reporting period, Schwab received an annual fee payable monthly based on the funds’ average daily net assets as follows:
 
                 
 
Transfer Agent Fees
 
Shareholder Service Fees
 
California Municipal Money Fund
               
Sweep Shares
    0.15%       0.20%  
Value Advantage Shares
    0.05%       0.17%  
California AMT Tax-Free Fund
    0.05%       0.17%  
 
Effective July 1, 2009, the trust adopted a Shareholder Servicing Plan (the “Plan”) on behalf of certain funds of the trust. Pursuant to the Plan, each fund pays Schwab to provide certain account maintenance, customer liaison and shareholder services to fund shareholders. The California Municipal Money Fund also pays for certain administration services Schwab provides to fund shareholders invested in the Sweep Shares of the fund. Under the Plan, Schwab will be entitled to receive an annual fee payable monthly based on the average daily net assets described as follows:
 
         
 
Shareholder Service Fees
 
California Municipal Money Fund
       
Sweep Shares
    0.35%  
Value Advantage Shares
    0.22%  
California AMT Tax-Free Fund
    0.22%  
 
 
 
44 

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
5. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)
 
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, for so long as CSIM serves as the investment adviser of the funds as follows:
 
         
California Municipal Money Fund
       
Sweep Shares
    0.60%  
Value Advantage Shares
    0.45%  
California AMT Tax-Free Fund
    0.45%  
 
These additional agreements may only be amended or terminated with approval of the fund’s Board of Trustees. These agreements ensure that any increase in the funds’ “Other expenses” as a result of the appointment of BFDS as transfer agent and Schwab as a shareholder service provider will be offset by the expense limitation.
 
In addition, CSIM and Schwab agreed to voluntarily waive an additional 0.005% of the funds’ expenses. This voluntary waiver is for the period from January 1, 2009, through December 31, 2009.
 
In addition to the contractual expense limitation noted above, Schwab and the investment adviser also may waive and/or reimburse expenses to the extent necessary to maintain each fund’s net yield at a certain level as determined by Schwab and the investment adviser. Schwab and the investment adviser may recapture from a fund any of these expenses or fees they have waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. These reimbursement payments by a fund to Schwab and/or the investment adviser are considered “non-routine expenses” and are not subject to any net operating expense limitations in effect at the time of such payment. This recapture could negatively affect the fund’s future yield. As of June 30, 2009, the balance of the recoupable expenses is as follows:
 
                 
    California Municipal
 		  California AMT
Expiration
 
Money Fund
 
Tax-Free Fund
 
12/31/2012
    $496       $—  
 
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. For the period ended June 30, 2009, each fund’s aggregate security transactions with other Schwab Funds were as follow:
 
         
California Municipal Money Fund
    $2,437,648  
California AMT Tax-Free Fund
    $359,210  
 
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for the funds during the period.
 
6. Board of Trustees:
 
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in the funds’ Statement of Operations.
 
7. Borrowing from Banks:
 
The funds may borrow money from banks and custodians. The funds may obtain temporary bank loans through the trust to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The funds covered in this report have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an
 
 
 
 45

Table of Contents

 
 Schwab California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
7. Borrowing from Banks (continued):
 
uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.
 
There was no borrowing from the lines of credit for the funds during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds rate.
 
8. 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 December 31, 2008, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:
 
                 
    California Municipal
 		  California AMT
Expire
 
Money Fund
 
Tax-Free Fund
 
2013
    413       —  
2014
    70       —  
                 
Total
    $483       $—  
                 
 
As of December 31, 2008, capital losses utilized to offset capital gains were as follows.
 
                 
    California Municipal
 		  California AMT
 
Money Fund
 
Tax-Free Fund
 
Capital losses utilized
    $1,600       $—  
 
As of December 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended December 31, 2008, the funds did not incur any interest or penalties.
 
9. Subsequent Events:
 
In accordance with the provision set forth in FAS 165 Subsequent Events, management has evaluated the possibility of subsequent events existing in the funds’ financial statements through June 30, 2009. Management has determined that there are no material events that would require disclosure in the funds’ financial statements through August 14, 2009.
 
 
 
46 

Table of Contents

 
Investment Advisory Agreement Approval
 
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval.
 
In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the advisory agreement.
 
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between The Charles Schwab Family of Funds (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to existing funds in the Trust, including the Schwab California Municipal Money Fund and California AMT Tax-Free Money Fund, and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the funds that the Board reviews during the course of each year, including information that relates to fund operations and fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of fund management and participate in question and answer sessions with representatives of CSIM.
 
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement at meetings held on April 27, 2009 and May 15, 2009, and approved the renewal of the Agreement for an additional one year term at the meeting held on May 15, 2009. The Board’s approval of the Agreement was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
 
1.  the nature, extent and quality of the services provided to the funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the funds;
 
2.  each fund’s investment performance and how it compared to that of certain other comparable mutual funds;
 
3.  each fund’s expenses and how those expenses compared to those of certain other comparable mutual funds;
 
4.  the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and
 
5.  the extent to which economies of scale would be realized as the funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of fund investors.
 
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The information considered by the Trustees included specific information concerning changes in the nature, extent and quality of services provided by CSIM since the Trustees had last considered approval of the Agreement. The Trustees also considered the fact that Schwab’s extensive branch network, Internet access, investment and research tools, telephone services, and array of account features benefit the funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds supported renewal of the Agreement.
 
Fund Performance. The Board considered fund performance in determining whether to renew the Agreement. Specifically, the Trustees considered each fund’s performance relative to a peer group of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, when applicable, and market trends. As part of this review, the Trustees considered the composition of the peer group, selection criteria and the reputation of the third party who prepared the peer group analysis. In evaluating the performance of each fund, the Trustees considered both risk and shareholder risk expectations for such fund and the appropriateness of the benchmark used to compare the performance of each fund. The Trustees further considered the level of fund performance in the
 
 
 
 47

Table of Contents

context of its review of fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the funds supported renewal of the Agreement.
 
Fund Expenses. With respect to the funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each fund’s net operating expense ratio, in each case, in comparison to those of other comparable mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total fund expenses from exceeding a specified cap. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as wrap accounts and offshore funds, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the funds are reasonable and supported renewal of the Agreement.
 
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the funds, such as whether, by virtue of its management of the funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each fund by CSIM and its affiliates. The Board also considered information relating to changes to CSIM’s business operations and how these changes affected CSIM’s profitability under the Agreement. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement.
 
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of fund expenses, the Trustees considered that CSIM and Schwab have previously committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered CSIM’s agreement to contractual investment advisory fee schedules that include lower fees at higher graduated asset levels. The Board also considered certain commitments by CSIM and Schwab that are designed to pass along potential economies of scale to fund shareholders. Specifically, the Board considered CSIM and Schwab’s previously negotiated commitments, which may be changed only with Board approval, relating to: (i) reductions of contractual advisory fees or addition of breakpoints for certain funds within the fund complex, (ii) implementation, by means of expense limitation agreement, of additional reductions in net overall expenses for certain funds, and (iii) future net total operating expense reductions for taxable money funds as a group and non-taxable money funds as a group when aggregate assets of such group of funds exceed certain levels. In particular, the Board considered the actual expense reductions that resulted from CSIM and Schwab’s commitments set forth above. Based on this evaluation, and in consideration of the previously negotiated commitments made by CSIM and Schwab as discussed above, the Board concluded, within the context of its full deliberations, that the funds obtain reasonable benefit from economies of scale.
 
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously approved the continuation of the Agreement and concluded that the compensation under the Agreement is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
 
 
 
48 

Table of Contents

 
Trustees and Officers
 
The tables below give information about the trustees and officers for The Charles Schwab Family of Funds which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of June 30, 2009 the Fund Complex included 82 funds.
 
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
 
                 
Independent Trustees
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
                 
Mariann Byerwalter
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman of JDN Corporate Advisory LLC.     82     Board 1–Director, Redwood Trust, Inc.
 
John F. Cogan
1947
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University     68     Board 1–Director, Gilead Sciences, Inc.
Board 2–Director, Monaco Coach Corporation
Board 3–Director, Venture Lending and Leasing, Inc.
 
William A. Hasler
1941
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).     82     Board 1–Director, Mission West Properties
Board 2–Director, TOUSA
Board 3–Director, Harris-Stratex Networks
Board 4–Director, Genitope Corp.
Board 5– Director, Ditech Networks
Board 6–Director, Rubicon Limited
 
Gerald B. Smith
1950
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).     68     Board 1–Board of Cooper Industries
Board 2–Chairman of the Audit Committee of Oneok Partners LP
 
Donald R. Stephens
1938
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Managing Partner, D. R. Stephens & Company (investments).     68     None
 
Joseph H. Wender
1944
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007;     68     Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
 
 
 
 
 49

Table of Contents

                 
Independent Trustees continued
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
Michael W. Wilsey
1943
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).     68     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. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989.) 		  Founded Charles Schwab & Co., Inc. in 1971 and became Chairman in 1978. Since 1986, Chairman and Director, The Charles Schwab Corporation. Since 1989, Director, Charles Schwab Investment Management, Inc., and appointed as Chairman in 1991. Since 1996, Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. Since 1999, Director and Chief Executive Officer, Schwab Holdings, Inc. Since 2003, Chairman, Charles Schwab Bank, N. A.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, and the Charles Schwab & Co., Inc.     68     None
 
Walter W. Bettinger II2
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.     68     None
 
 
 
 
 
50 

Table of Contents

     
Officers of the Trust
 
Name, Year of Birth, and Position(s)
 		   
with the trust; (Terms of office, and
 		   
length of Time Served3)   Principal Occupations During the Past Five Years
 
     
Randall W. Merk
1954
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds since 2007.) 		  Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC.
 
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
 
Jeffrey Mortimer
1963
Senior Vice President and Chief Investment Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
 
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of The Charles Schwab Family of Funds since 1998.) 		  Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
 
Catherine MacGregor
1964
Vice President
(Officer of The Charles Schwab Family of Funds since 2005.) 		  Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., and Laudus Trust and Laudus Institutional Trust. Since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust.
 
Michael Haydel
1972
Vice President
(Officer of The Charles Schwab Family of Funds since 2006.) 		  Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust.
 
 
 
1  Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
 
2  Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
 
3  The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.
 
 
 
 51

Table of Contents

 
Glossary
 
Alternative Minimum Tax (AMT) A federal income tax designed to limit the extent to which high-income taxpayers (including individuals, estates, trusts and corporations) can benefit from certain deductions and exemptions. For example, some types of income that are exempt from regular federal income tax are not exempt from the AMT.
 
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 bond holder. 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 anticipation notes Obligations sold by a state or local government on a short-term basis in anticipation of the issuance of a longer-term bond in the future.
 
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.
 
commercial paper Promissory notes issued by banks, corporations and other entities to finance short-term credit needs. These securities generally are structured on a discounted basis but sometimes may be interest-bearing notes. Commercial paper, which may be unsecured, is subject to credit risk.
 
credit-enhanced securities Securities that are backed by the credit of an entity other than the issuer (such as a financial institution). Credit enhancements, which can equal up to 100% of the security’s value, are designed to help lower the risk of default on a security and may also make the security more liquid.
 
credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly regulate the credit quality of the securities a money market fund can buy.
 
credit ratings Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Standard & Poor’s, Fitch, Inc. and Moody’s Investor Service, to rate their creditworthiness and/or the creditworthiness of their debt issues. For example, an issuer may obtain a long-term rating within the investment grade rating category, which is, from high to low, AAA, AA, A and BBB for Standard & Poor’s and Fitch, and Aaa, Aa, A and Baa for Moody’s.
 
credit risk The risk that a debt issuer may be unable to pay interest or repay principal to its debt holders.
 
dollar-weighted average maturity (DWAM) See weighted average maturity.
 
effective yield A measurement of a fund’s yield that assumes that all interest income is reinvested in additional shares of the fund.
 
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 for the year.
 
face value The value of a bond, note, mortgage or other security as given on the certificate or instrument. Face value is also referred to as par value or nominal value.
 
fixed rate notes  A security with a fixed rate or coupon and a short maturity (typically within thirteen months). For example, bond, revenue or tax anticipation notes.
 
illiquid securities Securities are generally considered illiquid if they cannot be disposed of promptly (typically within seven days) and in the ordinary course of business at approximately the amount at which a fund has valued the instruments.
 
interest Payments to holders of debt securities as compensation for loaning a security’s principal to the issuer.
 
liquidity-enhanced security The security’s structure includes a liquidity arrangement that requires an entity other than the issuer (such as a large financial institution) to provide funds to pay a tender under most circumstances. Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities for repayment within a specified time period (usually one day or one week) at any time prior to their final maturity.
 
maturity The date a debt security is scheduled to be “retired” and its principal amount repaid to the bond holder. The Maturity of an investment will generally reflect the security’s final maturity date unless the security’s structure includes a maturity-shortening provision such as an interest rate reset, demand feature or put feature which reflects the security’s Effective Maturity Date. For those securities with a maturity-shortening provision, including variable-rate demand securities, the Maturity is determined by using the Effective Maturity Date.
 
money market securities High-quality, short-term debt securities that may be issued by states and local governments and their agencies. Money market securities must have an effective maturity of no longer than 397 days. Examples include bond and tax anticipation notes, commercial paper, variable-rate demand obligations and tender option bonds.

 
 
Portfolio terms
 
To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.
 
     
BAN
  Bond anticipation note
COP
  Certificate of participation
CP
  Commercial paper
GAN
  Grant anticipation note
GO
  General obligation
HDA
  Housing Development Authority
HFA
  Housing Finance Agency
IDA
  Industrial Development Authority
IDB
  Industrial Development Board
M/F
  Multi-family
RAN
  Revenue anticipation note
RB
  Revenue bond
S/F
  Single-family
TAN
  Tax anticipation note
TOB
  Tender option bond
TRAN
  Tax and revenue anticipation note
VRDO
  Variable-rate demand obligation

 
 
 
52 

Table of Contents

municipal securities Debt securities issued by a state, its counties, municipalities, authorities and other subdivisions, or the territories and possessions of the United States and the District of Columbia, including their subdivisions, agencies and instrumentalities and corporations. These securities may be issued to obtain money for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works.
 
net asset value per share (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. Money funds seek to maintain a steady NAV of $1.00.
 
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
 
restricted securities Securities that are subject to contractual restrictions on resale. These securities are often purchased in private placement transactions.
 
revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.
 
section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.
 
section 4(2)/144A securities Securities exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may be sold only to qualified institutional buyers under Securities Act Rule 144A.
 
taxable-equivalent yield The yield an investor would need to get from a taxable investment in order to match the yield paid by a given tax-exempt investment, once the effect of all applicable taxes is taken into account. For example, if your tax rate were 25%, a tax-exempt investment paying 4.5% would have a taxable-equivalent yield for you of 6.0% (4.5% ¸ [1 – 0.25%] = 6.0%).
 
tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.
 
tender option bond A security which is created by a financial institution by combining a long-term municipal bond with a liquidity facility which converts the long-term bond into a money-market eligible security. Tender option bonds are issued as section 144A securities.
 
Tier 1, Tier 2 Tier 1 is the highest category of credit quality, Tier 2 the second highest. A security’s tier can be established either by an independent rating organization or by a determination of the investment adviser. Money market fund shares and U.S. government securities are automatically considered Tier 1 securities. The Schwab Money Funds only purchase securities which are considered to be Tier 1.  
 
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
 
variable rate demand obligations (VRDOs) Securities that have long maturities but which, because of their structure, require them to repay principal plus accrued interest within a specified timeframe (usually one or seven days) upon the demand of the bond holder. Depending on their structure, the repayment may be made by the bond issuer or by a financial institution, such as a highly rated bank.
 
variable rate demand preferred shares (VRDP) Variable rate demand securities that are issued by single state or national closed-end municipal bond funds, which, in turn, invest primarily in portfolios of tax-exempt municipal bonds. It is anticipated that the interest on VRDPs will be exempt from federal income tax. These securities are considered “municipal money market securities” for purposes of the fund’s investment policy as stated in the prospectus. 
 
weighted average maturity For money market mutual funds as per rule 2a-7, the sooner of the maturity (see definition of maturity) of all the debt securities in its portfolio or the date the interest rate on those securities is reset or those securities that can be redeemed through demand, calculated as a weighted average. As a rule, the longer the fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.
 
yield The income paid out by an investment, expressed as a percentage of the investments market value.
 
 
 
 
 53

Table of Contents

 
Notes

Table of Contents

 
Notes

Table of Contents

 
Notes

Table of Contents

 
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.
 
An investor should consider a funds investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1.800.435.4000 for a prospectus and brochure. Please read the prospectus carefully before you invest. This report must be preceeded or accompanied by a current prospectus.
 
Proxy Voting Policies, Procedures and Results
 
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com/marketmasters, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.
 
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .
 
The Schwab Funds Family®
 
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedge Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab Institutional Select® S&P 500 Fund
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
 
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
 
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab Long-Term Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
 
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
 
 
  * SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.
  1 Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Table of Contents

(CHARLES SCHWAB LOGO)
 
 
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
 
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
 
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2008 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR25721-07

Table of Contents

 
Schwab Municipal Money Fundtm
Schwab AMT Tax-Free Money Fundtm
 
Semiannual Report
June 30, 2009
 
 
 
(CHARLES SCHWAB LOGO)
 

 

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

Table of Contents

 
From the President
 

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

 
Dear Shareholder,
 
In the past six months, investors have had to endure the continuing effects of a recessionary economy. Volatile equity prices and low yields on government-backed securities have been among the numerous market challenges. In addition, corporate bankruptcies, regulatory changes, and securitized-asset troubles have reshaped fixed income and equity markets causing us to reassess and reexamine where these markets stood before the crisis and where they might take us in the future.
 
Despite this economic backdrop, Schwab’s money funds provided shareholders with safety and liquidity and maintained a stable $1 Net Asset Value during the period. The funds also maintained a positive net yield. However, a low interest rate environment both for taxable and tax-free investments, as well as continued demand for government-backed securities has translated into relatively low yields. For more detail on yields for each fund, please see the fund managers’ discussion and analysis found in the following pages of this report.
 
Information specific to Schwab’s money funds, such as a question and answer document, recent holdings for select money funds, and information on Schwab’s participation in the Treasury’s Temporary Guarantee Program for Money Market Funds can be found on schwab.com under the Money Market Funds page and on schwabinstitutional.com
 
If you have any questions about Schwab’s money funds or other Schwab Funds, we are always available at 1-800-435-4000, while additional resources may be found on schwab.com
 
Thank you for investing with us.
 
Sincerely,
 
-s-Randall W. Merk
 
 
 
Schwab Municipal Money Fund & Schwab AMT Tax-Free Money Fund 1

Table of Contents

 
The Investment Environment
 
 
Investment conditions in the U.S. financial marketplace remained difficult to gauge as a climate of economic recession persisted, but showed signs of improving during the latter half of the reporting period. Broad-market equity indexes, such as the S&P 500 Index® and Russell 1000 Index® displayed meaningful gains since their March lows. The Chicago Board Options Exchange Volatility Index (VIX) – a measure of U.S. stock market price fluctuations – declined from March through the end of the period, settling around 30 after touching the high 50s in January. On the fixed income side, demand for government-backed debt remained strong relative to corporate and other non-government debt. Treasury yields, though still relatively low, inched higher toward the end of the period. From a policy perspective, economic stability and stimulus measures enacted in the U.S. and around the world acted to slow the pace of economic degradation and have encouraged investors to reengage markets in some cases.
 
Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence reflected the recessionary environment, but some indicators improved during the period. GDP – the output of goods and services produced by labor and property located in the United States – decreased at an annual rate of 5.7% in the first quarter of 2009 compared with a decline of 6.3% in the fourth quarter of 2008, according to the Bureau of Economic Analysis. The unemployment rate continued to rise, increasing to 9.4% in May, driven by job losses in the manufacturing sector. However, the Consumer Confidence Index improved in both April and May. As of May 26, 2009 the Index stood at 54.9, compared to 26.9 in March.
 
In this environment, yields on most taxable and municipal money funds were extremely low during the reporting period when compared to historical averages. Money funds that invested exclusively in U.S. Treasury securities or other government-backed assets had the lowest yields. Strong demand for so-called “safe assets”, such as U.S. Treasuries and highly rated short-term commercial paper, in conjunction with a 0% to 0.25% target on the Federal Funds Rate acted to dampen yield on money fund eligible assets. At the close of the period, 3-month Treasuries yielded 0.16% and 2-year Treasuries yielded 1.12%.
 
Despite the depression in yields, the Fed signaled that lending and liquidity conditions were beginning to improve by making modifications to emergency lending programs. In late June, the Fed announced that the Schedule 1 Term Security Lending Facility – a program that lent Treasury securities – would be suspended on July 1, 2009. In addition, reductions were made in the amount of credit auctioned under the Term Auction Facility, which was designed to provide cash to commercial lenders, and the Term Security Lending Facility, which makes funds available to primary bond dealers.
 
Earlier in the period, the Fed extended the Money Market Funds Guarantee Program until September 18, 2009. However, no fund has had to draw on the insurance provided by the program. In a separate move, the U.S. Securities and Exchange Commission (SEC) proposed new rules for money market funds aimed at preventing a repeat of the scenario that caused the collapse of the Reserve Primary Fund. The proposal modifies current restrictions on money funds and requires that funds increase liquidity and lower the ceiling on Weighted Average Maturity (WAM), among other changes. As of the reporting date, the SEC was seeking public comment on the proposal.
 

 
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.

 
 
 
2 Schwab Municipal Money Fund & Schwab AMT Tax-Free Money Fund

Table of Contents

 
Fund Management
 
     
     
(PHOTO)   Kevin Shaughnessy, CFA, a managing director and portfolio manager of the investment adviser, has overall responsibility for the management of the funds. He joined the firm in 2000 and has worked in fixed-income and asset management since 1993.
     
(PHOTO)   Cameron Ullyatt, CFA, a portfolio manager of the investment adviser, has day-to-day co-responsibility for the management of the funds. He joined the firm in June 2008 and has worked in fixed-income asset management since 1999.
 
 
 
Schwab Municipal Money Fund & Schwab AMT Tax-Free Money Fund 3

Table of Contents

 
 
Schwab Municipal Money Fundtm
 
 
Schwab Municipal Money Fund provided safety and liquidity to shareholders throughout the period, while emphasizing credit quality over yield. The fund’s Weighted Average Maturity (WAM) ranged between 25 and 37 days (from 12/31/08-6/30/09). The WAM of the fund followed a typical seasonal pattern of shortening during the first few months of the year before extending in June. This is consistent with the annual issuance of fixed rate notes by state and local government issuers. In general, the fund’s WAM was kept long relative to the peer group in an effort to partially offset the effects of a general market decline in yields. In addition, Charles Schwab & Co. and the fund’s investment adviser voluntarily waived and/or reimbursed certain fees or expenses in order to maintain a positive net yield*. For more information about the fund’s yield, please see the charts and relevant footnotes on the next page.
 
Yields on municipal money market funds declined to record low levels during the first half of 2009, due to the union of several factors. The highly accommodative monetary policies initiated by the Federal Reserve in late 2008, which focused on lowering lending rates and increasing the money supply, continued in 2009 and resulted in significant downward pressure on short-term municipal interest rates. Yields on variable-rate instruments were further depressed by a shortage of supply in securities considered acceptable for purchase by municipal money market funds. Fixed-rate yields also declined resulting in much lower reinvestment rates for positions which matured during the period.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity1
 
     
    % of Investments
1-15 Days
  80.1%
16-30 Days
  1.1%
31-60 Days
  3.9%
61-90 Days
  2.5%
91-120 Days
  1.9%
More than 120 Days
  10.5%
 
 Statistics
 
     
Weighted Average Maturity2
  36 days
Credit Quality of Holdings3
% of portfolio
  100% Tier 1
Credit-Enhanced Securities
% of portfolio
  61%
 
 
 Portfolio Composition by Security Type4
 
     
    % of Investments
Tender Option Bonds
  34.6%
Variable Rate Demand Notes
  44.0%
Commercial Paper
  8.9%
Fixed Rate Notes
  12.5%
Total
  100.0%
 
 Largest Holdings by State
 
     
    % of Investments
Texas
  10.8%
New York
  7.6%
California
  7.9%
Florida
  7.8%
Illinois
  5.4%
Washington
  4.7%
Other States
  55.8%
Total
  100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
*Schwab and the investment adviser may recapture expenses or fees they waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 5 of the Financial Notes section.
 
Portfolio holdings may have changed since the report date.
 
1  As shown in the Portfolio Holdings section of the shareholder report.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
4  Portfolio Composition is calculated using the Par Value of Investments.
 
 
 
4 Schwab Municipal Money Fundtm

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
                 
    Schwab Municipal Money Fund
        Value
        
    Sweep
   Advantage
   Select
   Institutional
    Shares   Sharestm   Shares®   Shares
 
Ticker Symbol
  SWXXX   SWTXX   SWLXX   SWOXX
Minimum Initial Investment1
  *   $25,0002   $1,000,000   $3,000,000
Seven-Day Yield3
  0.02%   0.13%   0.23%   0.33%
Seven-Day Yield—No Waiver4
  -0.06%   0.03%   0.03%   0.03%
Seven-Day Effective Yield3
  0.02%   0.13%   0.23%   0.33%
Seven-Day Taxable-Equivalent Effective Yield3,5
  0.03%   0.20%   0.35%   0.51%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
* Subject to the eligibility terms and conditions of your Schwab account agreement.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Minimum initial investment for IRA and custodial accounts is $15,000. Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult with your tax advisor about your situation.
 
3  Fund expenses have been partially absorbed by CSIM and Schwab.
 
4  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
5  Taxable-equivalent effective yield assumes a 2009 maximum federal regular income tax rate of 35.00%. Investment income may be subject to the Alternative Minimum Tax.
 
 
 
Schwab Municipal Money Fundtm 5

Table of Contents

 
Schwab AMT Tax-Free Money Fundtm
 
 
Schwab AMT Tax-Free Money Fund provided safety and liquidity to shareholders throughout the period, while emphasizing credit quality over yield. The fund’s Weighted Average Maturity (WAM) ranged between 30 and 41 days (from 12/31/08-6/30/09). The WAM of the fund followed a typical seasonal pattern of shortening during the first few months of the year before extending in June. This is consistent with the annual issuance of fixed rate notes by state and local government issuers. In general, the fund’s WAM was kept long relative to the peer group in an effort to partially offset the effects of a general market decline in yields. In addition, Charles Schwab & Co. and the fund’s investment adviser voluntarily waived and/or reimbursed certain fees or expenses in order to maintain a positive net yield*. For more information about the fund’s yield, please see the charts and relevant footnotes on the next page.
 
Yields on municipal money market funds declined to record low levels during the first half of 2009, due to the union of several factors. The highly accommodative monetary policies initiated by the Federal Reserve in late 2008, which focused on lowering lending rates and increasing the money supply, continued in 2009 and resulted in significant downward pressure on short-term municipal interest rates. Yields on variable-rate instruments were further depressed by a shortage of supply in securities considered acceptable for purchase by municipal money market funds. Fixed-rate yields also declined resulting in much lower reinvestment rates for positions which matured during the period.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity1
 
     
    % of Investments
1-15 Days
  78.3%
16-30 Days
  1.1%
31-60 Days
  3.7%
61-90 Days
  2.2%
91-120 Days
  1.3%
More than 120 Days
  13.4%
 
 Statistics
 
     
Weighted Average Maturity2
  40 days
Credit Quality of Holdings3
% of portfolio
  100% Tier 1
Credit-Enhanced Securities
% of portfolio
  57%
 
 
 Portfolio Composition by Security Type4
 
     
    % of Investments
Tender Option Bonds
  37.9%
Variable Rate Demand Notes
  41.0%
Commercial Paper
  7.9%
Fixed Rate Notes
  13.2%
Total
  100.0%
 
 Largest Holdings by State
 
     
    % of Investments
Illinois
  11.8%
Texas
  11.1%
New York
  8.9%
Florida
  7.5%
California
  6.3%
Pennsylvania
  4.2%
Other States
  50.2%
Total
  100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
*Schwab and the investment adviser may recapture expenses or fees they waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 5 of the Financial Notes section.
 
Portfolio holdings may have changed since the report date.
 
1  As shown in the Portfolio Holdings section of the shareholder report.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
4  Portfolio Composition is calculated using the Par Value of Investments.
 
 
 
6 Schwab AMT Tax-Free Money Fundtm

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
         
    Schwab AMT Tax-Free
    Money Fund
        Value
    Sweep
   Advantage
    Shares   Sharestm
 
Ticker Symbol
  SWFXX   SWWXX
Minimum Initial Investment1
  *   $25,0002
Seven-Day Yield3
  0.02%   0.14%
Seven-Day Yield—No Waiver4
  -0.07%   0.01%
Seven-Day Effective Yield3
  0.02%   0.14%
Seven-Day Taxable-Equivalent Effective Yield3,5
  0.03%   0.22%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
* Subject to the eligibility terms and conditions of your Schwab account agreement.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Minimum initial investment for IRA and custodial accounts is $15,000. Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult with your tax advisor about your situation.
 
3  Fund expenses have been partially absorbed by CSIM and Schwab.
 
4  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
5  Taxable-equivalent effective yield assumes a 2009 maximum federal regular income tax rate of 35.00%. Investment income may be subject to the Alternative Minimum Tax.
 
 
 
Schwab AMT Tax-Free Money Fundtm 7

Table of Contents

 
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 January 1, 2009 and held through June 30, 2009.
 
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.
 
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
 
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
 
                                 
            Ending
 		   
        Beginning
 		  Account Value
 		  Expenses Paid
    Expense Ratio 1
 		  Account Value
 		  (Net of Expenses)
 		  During Period 2
    (Annualized)   at 1/1/09   at 6/30/09   1/1/09–6/30/09
 
 
Schwab Municipal Money Fundtm                                
Sweep Shares                                
Actual Return
    0.62%     $ 1,000     $ 1,001.80     $ 3.08  
Hypothetical 5% Return
    0.62%     $ 1,000     $ 1,021.72     $ 3.11  
Value Advantage Sharestm                                
Actual Return
    0.48%     $ 1,000     $ 1,002.50     $ 2.38  
Hypothetical 5% Return
    0.48%     $ 1,000     $ 1,022.41     $ 2.41  
Select Shares®                                
Actual Return
    0.38%     $ 1,000     $ 1,003.00     $ 1.89  
Hypothetical 5% Return
    0.38%     $ 1,000     $ 1,022.91     $ 1.91  
Institutional Shares                                
Actual Return
    0.27%     $ 1,000     $ 1,003.50     $ 1.34  
Hypothetical 5% Return
    0.27%     $ 1,000     $ 1,023.46     $ 1.35  
 
Schwab AMT Tax-Free Money Fundtm                                
Sweep Shares                                
Actual Return
    0.64%     $ 1,000     $ 1,002.00     $ 3.18  
Hypothetical 5% Return
    0.64%     $ 1,000     $ 1,021.62     $ 3.21  
Value Advantage Shares                                
Actual Return
    0.47%     $ 1,000     $ 1,002.90     $ 2.33  
Hypothetical 5% Return
    0.47%     $ 1,000     $ 1,022.46     $ 2.36  

 
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.

 
 
 
8 Schwab Municipal Money Fund & Schwab AMT Tax-Free Money Fund

Table of Contents

 
Schwab Municipal Money Fundtm
 
Financial Statements
 
Financial Highlights
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Sweep Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.18 2     1.85       3.12       2.83       1.79       0.60      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.62 3,4     0.60       0.59       0.64       0.65       0.66      
Gross operating expenses
    0.71 3     0.69       0.68       0.81       0.82       0.81      
Net investment income (loss)
    0.35 3     1.81       3.07       2.79       1.77       0.60      
Net assets, end of period ($ x 1,000,000)
    10,647       10,856       8,491       7,230       7,467       7,563      
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Value Advantage Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.25 2     2.00       3.27       3.03       2.00       0.81      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.48 3,4     0.45       0.45       0.45       0.45       0.45      
Gross operating expenses
    0.58 3     0.56       0.55       0.58       0.59       0.58      
Net investment income (loss)
    0.50 3     1.96       3.22       2.98       1.97       0.80      
Net assets, end of period ($ x 1,000,000)
    3,031       3,219       2,786       2,798       3,007       3,245      
 

* Unaudited.
1 Per-share amount was less than $0.01.
2 Not annualized.
3 Annualized.
4 The ratio of net operating expenses would have been 0.59% for Sweep Shares and 0.45% for Value Advantage Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for the Money Market Funds) had not been included.
 
 
 
See financial notes 9

Table of Contents

 
 Schwab Municipal Money Fundtm
 

 
Financial Highlights continued
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Select Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.30 2     2.10       3.37       3.13       2.10       0.92      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.38 3,4     0.35       0.35       0.35       0.35       0.35      
Gross operating expenses
    0.58 3     0.56       0.55       0.58       0.59       0.58      
Net investment income (loss)
    0.59 3     2.05       3.31       3.10       2.11       0.93      
Net asset, end of period ($ x 1,000,000)
    1,849       1,700       1,428       1,244       966       727      
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Institutional Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.35 2     2.21       3.48       3.25       2.21       1.03      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.27 3,4     0.25 4     0.24       0.24       0.24       0.24      
Gross operating expenses
    0.58 3     0.56       0.55       0.58       0.59       0.58      
Net investment income (loss)
    0.70 3     2.15       3.41       3.21       2.20       1.08      
Net assets, end of period ($ x 1,000,000)
    4,626       4,811       3,840       2,494       1,783       1,459      

* Unaudited.
1 Per-share amount was less than $0.01.
2 Not annualized.
3 Annualized.
4 The ratio of net operating expenses would have been 0.35% for Select Shares and 0.24% for Institutional Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for the Money Market Funds) had not been included.
 
 
 
10 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings as of June 30, 2009, (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  100 .1%   Municipal Securities     20,172,549       20,172,549  
  1 .1%   Other Investments     232,500       232,500  
  101 .2%   Total Investments     20,405,049       20,405,049  
  (1 .2)%   Other Assets and Liabilities, Net             (251,381 )
  100 .0%   Net Assets             20,153,668  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Municipal Securities 100.1% of net assets
 
Alabama 1.4%
Alabama
GO Bonds
Series 2007A
               
0.65%, 12/10/09 (b)(c)(d)
    12,652       12,652  
Alabama HFA
M/F Housing RB (Chapel Ridge Apts)
Series 2005E
               
0.44%, 07/02/09 (a)(b)
    11,000       11,000  
Alabama Municipal Funding Corp
Municipal Funding Notes (Tranche 1)
Series 2008A
               
0.37%, 07/02/09 (a)(b)
    4,265       4,265  
Municipal Funding Notes Master
Series 2006A
               
0.37%, 07/02/09 (a)(b)
    24,135       24,135  
Alabama Special Care Facilities Financing Auth
RB (Ascension Health Sr Credit Group)
Series 2006
               
0.28%, 07/02/09 (a)(c)(d)
    6,780       6,780  
Decatur IDB
Exempt Facilities Refunding RB (Nucor Steel Decatur)
Series 2003A
               
0.60%, 07/01/09 (a)
    17,000       17,000  
Fultondale
GO Warrants
Series 2005B
               
1.38%, 07/02/09 (a)(b)
    11,650       11,650  
Homewood Educational Building Auth
Educational Facilities RB (Samford Univ)
Series 2008A
               
0.87%, 07/02/09 (a)(b)
    50,000       50,000  
Hoover
GO Sewer Warrants
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    11,965       11,965  
Indian Springs Village
RB (Joseph Bruno Montessori Academy)
Series 1999
               
3.25%, 07/01/09 (a)(b)
    400       400  
Jackson IDB
IDRB (Specialty Minerals)
Series 1999
               
0.50%, 07/02/09 (a)(b)
    8,200       8,200  
Mobile Board of Water & Sewer
Water & Sewer RB
Series 2006
               
0.21%, 07/02/09 (a)(b)(c)(d)
    30,590       30,590  
Mobile IDB
Pollution Control RB (Alabama Power) First
Series 2009
               
1.40%, 07/16/10
    6,000       6,000  
Montgomery Cnty Public Building Auth
Revenue Warrants
Series 2006
               
0.26%, 07/02/09 (a)(b)(c)(d)
    10,725       10,725  
Montgomery Downtown Redevelopment Auth
Bonds (Southern Poverty Law Center)
Series 2000
               
0.62%, 07/02/09 (a)
    15,000       15,000  
Tuscaloosa Cnty IDA
Gulf Opportunity Zone Bonds (Hunt Refining)
Series 2008C
               
0.49%, 07/01/09 (a)(b)
    10,000       10,000  
IDRB (Knight Specialties)
Series 1998
               
3.25%, 07/01/09 (a)(b)
    655       655  
Univ of Alabama at Birmingham
Hospital RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    15,975       15,975  
Wilsonville IDB
Solid Waste Disposal RB (Alabama Power Gaston Plant)
Series 2008
               
2.00%, 01/07/10
    34,000       34,000  
                 
              280,992  
 
Alaska 0.4%
Alaska
International Airports System Refunding RB
Series 2009A
               
0.28%, 07/01/09 (a)(b)
    7,500       7,500  
Alaska Housing Finance Corp
Collateralized Bonds (Veteran Mortgage Program) 2006
First Series A2
0.51%, 07/02/09 (a)(c)(d)
    5,500       5,500  
General Housing Purpose Bonds
Series 2005A
               
0.25%, 07/02/09 (a)(c)(d)
    8,535       8,535  
 
 
 
See financial notes 11

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
General Mortgage RB
Series 2002A
               
0.35%, 07/02/09 (a)(c)(d)
    5,995       5,995  
State Capital Project Bonds
Series 2006A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    27,595       27,595  
Alaska Industrial Development & Export Auth
RB (Providence Health & Services)
Series 2006H
               
0.25%, 07/02/09 (a)(c)(d)
    23,645       23,645  
Northern Tobacco Securitization Corp
Tobacco Settlement Asset-Backed Bonds
Series 2000
               
0.55%, 06/01/10 (b)
    5,220       5,503  
                 
              84,273  
 
Arizona 0.9%
Ak-Chin Indian Community
Bonds
Series 2008
               
0.32%, 07/02/09 (a)(b)
    17,650       17,650  
Arizona Board of Regents
RB (Arizona State Univ)
Series 2007A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    10,260       10,260  
Arizona Health Facilities Auth
RB (Banner Health)
Series 2008B
               
0.20%, 07/01/09 (a)(b)
    12,300       12,300  
Arizona SD
TAN
Series 2008
               
1.63%, 07/30/09
    13,000       13,014  
Chandler
GO Bonds
Series 2007
               
0.25%, 07/02/09 (a)(c)(d)
    10,570       10,570  
Glendale IDA
CP Revenue Notes (Midwestern Univ Financing Program)
0.45%, 09/03/09 (b)
    29,000       29,000  
Maricopa Cnty IDA
M/F Mortgage Refunding RB (San Fernando Apts)
Series 2004
               
0.40%, 07/02/09 (a)(b)
    7,750       7,750  
Solid Waste Disposal RB (Michael Pylman Dairy)
Series 2005
               
0.70%, 07/02/09 (a)(b)
    6,750       6,750  
Phoenix Civic Improvement Corp
Airport Revenue BAN
Series 2008A & 2008B
               
0.40%, 09/03/09 (b)
    17,000       17,000  
Jr Lien Wastewater System RB
Series 2007
               
0.21%, 07/02/09 (a)(b)(c)(d)
    10,310       10,310  
Subordinate Excise Tax RB (Civic Plaza Expansion)
Series 2005A
               
0.21%, 07/02/09 (a)(c)(d)
    6,820       6,820  
0.85%, 07/02/09 (a)(c)(d)
    9,350       9,350  
Salt River Project Agricultural Improvement & Power District
Electric System RB
Series 2006A
               
0.28%, 07/02/09 (a)(c)(d)
    8,500       8,500  
Electric System RB
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    4,000       4,000  
Scottsdale Municipal Property Corp
Excise Tax Refunding RB
Series 2006
               
0.26%, 07/02/09 (a)(c)(d)
    1,996       1,996  
Tempe IDA
RB (ASUF Brickyard)
Series 2004A
               
0.32%, 07/02/09 (a)(b)
    1,885       1,885  
Yavapai Cnty IDA
Hospital RB (Northern Arizona Healthcare System)
Series 2008B
               
0.27%, 07/02/09 (a)(b)
    4,000       4,000  
Solid Waste RB (Allied Waste North America)
Series 2007A
               
0.37%, 07/02/09 (a)(b)
    10,000       10,000  
                 
              181,155  
 
Arkansas 0.1%
Arkansas Development Finance Auth
IDRB (C&C Holding Co)
Series 1998
               
0.60%, 07/02/09 (a)(b)
    190       190  
Univ of Arkansas Board of Trustees
Various Facilities RB (UAMS Campus)
Series 2006
               
1.00%, 09/09/09 (b)(c)(d)
    14,475       14,475  
                 
              14,665  
 
California 7.9%
Alameda Cnty IDA
RB (Golden West Paper Converting Corp)
Series 2008A
               
1.00%, 07/01/09 (a)(b)
    3,315       3,315  
RB (Heat & Control)
Series 1995A
               
0.70%, 07/01/09 (a)(b)
    4,400       4,400  
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB
Series 2006C
               
0.17%, 07/02/09 (a)(c)
    3,000       3,000  
San Francisco Bay Area Toll Bridge RB
Series 2008D1
               
0.13%, 07/02/09 (a)(c)
    1,700       1,700  
San Francisco Bay Area Toll Bridge RB
Series 2008E1
               
0.25%, 07/02/09 (a)(c)
    51,000       51,000  
California
GO Bonds
Series 2004A10
               
0.16%, 07/02/09 (a)(b)
    5,300       5,300  
 
 
 
12 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
California Dept of Water Resources
Power Supply RB
Series 2002C4
               
0.25%, 07/02/09 (a)(b)
    1,700       1,700  
California Health Facilities Financing Auth
RB (Northern California Presbyterian Homes & Services)
Series 2004
               
0.19%, 07/02/09 (a)(b)
    27,055       27,055  
California HFA
Home Mortgage RB
Series 2001U
               
1.00%, 07/01/09 (a)(c)
    52,350       52,350  
Home Mortgage RB
Series 2002B
               
4.00%, 07/01/09 (a)(b)(c)
    20,160       20,160  
Home Mortgage RB
Series 2005A
               
0.80%, 07/01/09 (a)(c)
    29,100       29,100  
Home Mortgage RB
Series 2005H
               
1.50%, 07/01/09 (a)(c)(g)
    82,825       82,825  
1.50%, 07/01/09 (a)(c)
    63,360       63,360  
Home Mortgage RB
Series 2008C
               
1.00%, 07/01/09 (a)(c)
    70,565       70,565  
Home Mortgage RB
Series 2008D
               
1.80%, 07/01/09 (a)(c)
    1,685       1,685  
1.80%, 07/01/09 (a)(c)
    12,675       12,675  
California Infrastructure & Economic Development Bank
IDRB (Murrietta Circuits)
Series 2000A
               
0.70%, 07/01/09 (a)(b)
    3,460       3,460  
RB (Colburn School)
Series 2008
               
0.40%, 07/02/09 (a)(b)
    17,100       17,100  
RB (SRI International)
Series 2003A
               
0.15%, 07/02/09 (a)(b)
    1,455       1,455  
Refunding RB (Pacific Gas & Electric)
Series 2008D
               
0.25%, 07/01/09 (a)(b)
    4,100       4,100  
California Pollution Control Financing Auth
Solid Waste Disposal RB (BLT Enterprises of Fremont)
Series 2005A
               
0.55%, 07/01/09 (a)(b)
    6,980       6,980  
Solid Waste Disposal RB (Garden City Sanitation)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    2,740       2,740  
Solid Waste Disposal RB (GreenWaste of Palo Alto)
Series 2008B
               
1.00%, 07/01/09 (a)(b)
    13,465       13,465  
Solid Waste Disposal RB (GreenWaste Recovery)
Series 2006A
               
1.00%, 07/01/09 (a)(b)
    1,640       1,640  
Solid Waste Disposal RB (GreenWaste Recovery)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    17,140       17,140  
Solid Waste Disposal RB (GreenWaste Recovery)
Series 2008A
               
1.00%, 07/01/09 (a)(b)
    16,110       16,110  
Solid Waste Disposal RB (Napa Recycling & Waste Services)
Series 2005A
               
0.55%, 07/01/09 (a)(b)
    3,720       3,720  
Solid Waste Disposal RB (Ratto Group of Companies)
Series 2007A
               
1.00%, 07/01/09 (a)(b)
    15,000       15,000  
Solid Waste Disposal RB (Santa Clara Valley Industries)
Series 1998A
               
1.00%, 07/01/09 (a)(b)
    385       385  
California State Univ
Systemwide RB
Series 2005C
               
0.40%, 07/02/09 (a)(b)(c)(d)
    2,000       2,000  
Systemwide RB
Series 2008A
               
0.68%, 07/02/09 (a)(b)(c)(d)
    14,825       14,825  
California State Univ Institute
CP
Series A
               
0.35%, 09/03/09 (b)
    10,800       10,800  
California Statewide Communities Development Auth
M/F Housing RB (Park David Sr Apts)
Series 1999D
               
0.30%, 07/02/09 (a)(b)
    8,220       8,220  
RB (Elder Care Alliance)
Series 2000
               
0.90%, 07/01/09 (a)(b)
    12,560       12,560  
RB (Kaiser Permanente)
Series 2004E
               
0.46%, 04/01/10
    415       422  
3.88%, 04/01/10
    22,130       22,696  
RB (Kaiser Permanente)
Series 2004M
               
0.20%, 07/01/09 (a)
    28,000       28,000  
RB (Kaiser Permanente)
Series 2006D
               
0.45%, 11/19/09
    10,000       10,000  
RB (Kaiser Permanente)
Series 2008A
               
0.22%, 07/01/09 (a)
    33,200       33,200  
RB (Kaiser Permanente)
Series 2008B
               
0.45%, 10/15/09
    17,000       17,000  
RB (Kaiser Permanente)
Series 2009B2
               
0.45%, 02/11/10
    35,000       35,000  
RB (Kaiser Permanente)
Series 2009B6
               
0.45%, 02/03/10
    15,000       15,000  
RB (Rady Children’s Hospital-San Diego)
Series 2008A
               
0.42%, 07/02/09 (a)(b)
    29,050       29,050  
RB (Rady Children’s Hospital-San Diego)
Series 2008C
               
0.16%, 07/02/09 (a)(b)(d)
    27,175       27,175  
RB (Redlands Community Hospital)
Series 2005B
               
0.25%, 07/02/09 (a)(b)
    5,500       5,500  
RB (Robert Louis Stevenson School)
Series 2001
               
0.48%, 07/02/09 (a)(b)
    13,000       13,000  
 
 
 
See financial notes 13

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB (Western Univ of Health Sciences)
Series 2007A
               
0.55%, 07/02/09 (a)(b)
    14,500       14,500  
Refunding RB (Los Angeles Cnty Museum of Art)
Series 2008A
               
0.12%, 07/01/09 (a)(b)
    6,000       6,000  
Refunding RB (Los Angeles Cnty Museum of Art)
Series 2008B
               
0.12%, 07/01/09 (a)(b)
    19,300       19,300  
TRAN Program Note Participations (Fresno)
Series 2009A2
               
0.44%, 06/30/10 (f)
    56,300       57,172  
East Bay Municipal Utility District
Extendible CP (Water
Series ) Notes
               
0.50%, 07/21/09
    19,000       19,000  
Wastewater System Subordinated Refunding RB
Series 2008C
               
0.60%, 07/01/09 (a)(c)
    18,400       18,400  
Water System Subordinated Refunding RB
Series 2008A4
               
0.60%, 07/01/09 (a)(c)
    13,990       13,990  
Eden Healthcare District
RB (Eden Hospital Health Services)
Series 2004
               
0.90%, 07/02/09 (a)(b)
    16,520       16,520  
Elsinore Valley Municipal Water District
Refunding COP
Series 2008A
               
0.43%, 07/02/09 (a)(b)
    10,720       10,720  
Fresno Cnty
TRAN 2009-2010
0.45%, 06/30/10 (f)
    20,000       20,308  
Hayward
M/F Housing RB (Shorewood Apts)
Series 1984A
               
0.23%, 07/02/09 (a)(b)
    12,100       12,100  
Kern Community College Safety, Repair & Improvement District
GO Bonds (Election of 2002)
Series 2006
               
0.17%, 07/02/09 (a)(b)(c)(d)
    865       865  
Livermore
COP (Refunding & Capital Projects)
0.60%, 07/02/09 (a)(b)
    29,230       29,230  
Long Beach
RB (Memorial Health Services)
Series 1991
               
0.54%, 07/01/09 (a)
    10,300       10,300  
Refunding RB
Series 1998A
               
1.76%, 07/02/09 (a)(b)(c)(d)
    5,555       5,555  
Los Angeles
M/F Housing RB (Fountain Park Phase II)
Series 2000B
               
0.30%, 07/02/09 (a)(b)
    32,615       32,615  
Wastewater System Refunding RB
Series 2003A
               
0.35%, 07/02/09 (a)(c)(d)
    8,000       8,000  
Los Angeles Cnty
TRAN 2009-2010
Series A
               
0.80%, 06/30/10 (f)
    50,000       50,840  
Los Angeles Cnty Metropolitan Transportation Auth
First Tier Sr Sales Tax Refunding RB (Proposition A)
Series 2008A3
               
0.75%, 07/02/09 (a)(c)
    44,565       44,565  
First Tier Sr Sales Tax Refunding RB (Proposition A)
Series 2008A4
               
0.75%, 07/02/09 (a)(c)
    54,685       54,685  
Los Angeles Harbor
Refunding RB
Series 2006B
               
0.46%, 07/02/09 (a)(c)(d)
    13,060       13,060  
Los Angeles USD
GO Bonds (Election of 2002)
Series 2009D & GO Bonds (Election of 2004)
               
Series 2009I
               
0.30%, 07/02/09 (a)(c)(d)
    750       750  
GO Refunding Bonds
Series 2007A1
               
0.25%, 07/02/09 (a)(c)(d)
    3,200       3,200  
Oakland-Alameda Cnty Coliseum Auth
Refunding Lease RB (Oakland Coliseum)
Series 2000C1
               
0.30%, 07/01/09 (a)(b)
    4,500       4,500  
Orange Cnty
Apartment Development Refunding RB (Villa La Paz)
Series 1998F
               
0.25%, 07/02/09 (a)(b)
    11,155       11,155  
Orange Cnty Local Transportation Auth
Sales Tax Revenue CP Notes
1.00%, 07/01/09 (b)
    10,175       10,175  
Pittsburg Redevelopment Agency
Subordinate Tax Allocation Bonds (Los Medanos Community Development)
Series 2004A
               
0.40%, 07/01/09 (a)(b)
    8,100       8,100  
Richmond
M/F Housing RB (Baycliff Apts)
Series 2004A
               
0.30%, 07/02/09 (a)(b)
    28,800       28,800  
San Diego
TRAN 2009-2010
Series B
               
0.52%, 01/29/10 (f)
    10,000       10,085  
TRAN 2009-2010
Series C
               
0.54%, 04/30/10 (f)
    20,000       20,241  
San Diego Cnty & School Districts Pool Program
TRAN
Series 2009A
               
0.40%, 06/30/10 (f)
    50,000       50,795  
San Francisco Public Utilities Commission
Water CP
0.75%, 08/06/09 (b)
    22,000       22,000  
Santa Clara Cnty Financing Auth
Refunding Lease RB (Multiple Facilities)
Series 2008M
               
0.17%, 07/01/09 (a)(b)
    3,800       3,800  
Santa Cruz Cnty
TRAN 2009-2010
0.50%, 07/08/10 (f)
    15,000       15,223  
 
 
 
14 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Southern California Home Financing Auth
S/F Mortgage RB
Series 2006A
               
1.50%, 07/01/09 (a)(c)
    33,525       33,525  
Southern California Metropolitan Water District
Water RB
Series 2005C
               
0.30%, 07/02/09 (a)(c)(d)
    21,750       21,750  
Water Refunding RB
Series 2008A1
               
0.25%, 07/02/09 (a)(c)
    43,510       43,510  
Southern California Public Power Auth
Refunding RB (Magnolia Power)
Series 2009 2
               
0.24%, 07/01/09 (a)(b)
    23,480       23,480  
Vernon Natural Gas Financing Auth
RB (Vernon Gas)
Series 2006A1
               
0.50%, 08/03/09 (b)
    7,740       7,771  
RB (Vernon Gas)
Series 2006A2
               
0.50%, 08/03/09 (b)
    6,475       6,501  
                 
              1,601,019  
 
Colorado 2.4%
Arapahoe Cnty
Refunding IDRB (Denver Jetcenter)
Series 1997
               
1.75%, 07/01/09 (a)(b)
    3,500       3,500  
Aurora
Hospital Refunding RB (Children’s Hospital Association)
Series 2008B
               
0.45%, 07/02/09 (a)(b)
    30,375       30,375  
Colorado Educational & Cultural Facilities Auth
RB (Clyfford Still Museum)
Series 2008
               
0.27%, 07/02/09 (a)(b)
    2,000       2,000  
Colorado Health Facilities Auth
RB (Catholic Health Initiatives)
Series 2006A
               
0.30%, 07/02/09 (a)(c)(d)
    14,025       14,025  
RB (Catholic Health Initiatives)
Series 2008C2
               
3.65%, 11/10/09
    10,700       10,796  
Colorado HFA
Economic Development RB (Pemracs)
Series 2000A
               
0.70%, 07/02/09 (a)(b)
    1,795       1,795  
S/F Mortgage Bonds
Series 2006B3
               
0.50%, 07/01/09 (a)(c)
    12,500       12,500  
S/F Mortgage Bonds
Series 2007A2
               
0.50%, 07/01/09 (a)(c)
    23,000       23,000  
Colorado Regional Transportation District
Sales Tax Refunding RB
Series 2007A
               
0.22%, 07/02/09 (a)(c)(d)
    11,525       11,525  
Sales Tax Refunding RB (FasTracks)
Series 2007A
               
0.40%, 07/02/09 (a)(c)(d)
    18,085       18,085  
0.40%, 07/02/09 (a)(c)(d)
    29,700       29,700  
0.40%, 07/02/09 (a)(c)(d)
    16,830       16,830  
Colorado Springs
Subordinate Lien Improvement RB
Series 2005A
               
0.23%, 07/02/09 (a)(c)
    34,865       34,865  
Utilities System Subordinate Lien Improvement & Refunding RB
Series 2006A
               
1.00%, 07/02/09 (a)(c)
    18,575       18,575  
Commerce City Northern Infrastructure General Improvement District
GO Bonds
Series 2006
               
0.35%, 07/02/09 (a)(b)
    9,825       9,825  
Dawson Ridge Metropolitan District No. 1
Limited Tax Refunding Bonds
Series 1992A
               
1.00%, 07/30/09 (b)(c)(d)
    8,010       8,010  
Denver
Airport System RB
Series 1992G
               
0.42%, 07/01/09 (a)(b)
    1,950       1,950  
Airport System RB
Series 2007A
               
0.27%, 07/02/09 (a)(b)(c)(d)
    33,285       33,285  
0.28%, 07/02/09 (a)(b)(c)(d)
    52,640       52,640  
0.45%, 07/02/09 (a)(b)(c)(d)
    26,575       26,575  
Airport System RB
Series 2007D
               
0.28%, 07/02/09 (a)(b)(c)(d)
    12,450       12,450  
Airport System RB
Series 2007E
               
0.25%, 07/02/09 (a)(b)(c)(d)
    17,105       17,105  
Airport System RB
Series 2008A1, 2008A2 & 2008A4
               
0.28%, 07/02/09 (a)(b)(c)(d)
    68,775       68,775  
Denver Urban Renewal Auth
Stapleton Sr Tax Increment RB
Series 2008A2
               
0.29%, 07/02/09 (a)(b)
    10,000       10,000  
Douglas Cnty SD No. Re-1
GO Bonds
Series 1999
               
1.30%, 12/15/09 (b)
    2,000       2,036  
0.75%, 12/15/09 (b)
    5,000       5,097  
Moffat Cnty
Pollution Control Refunding RB (PacifiCorp)
Series 1994
               
0.30%, 07/01/09 (a)(b)
    7,400       7,400  
Triview Metropolitan District
GO Refunding & Improvement Bonds
Series 2006A
               
0.35%, 07/02/09 (a)(b)
    6,745       6,745  
                 
              489,464  
 
 
 
See financial notes 15

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
Connecticut 0.2%
Connecticut Health & Educational Facilities Auth
RB (Wesleyan Univ)
Series 2001D
               
0.35%, 07/01/09 (a)(c)
    19,400       19,400  
RB (Yale Univ)
Series Z3
               
0.18%, 07/02/09 (a)(c)(d)
    4,851       4,851  
Connecticut HFA
Mortgage Finance Program Bonds
Series 2002B3
               
0.38%, 07/02/09 (a)(c)
    7,900       7,900  
                 
              32,151  
 
Delaware 0.1%
Delaware Health Facilities Auth
RB (Christiana Care Health Services)
Series 2008B
               
0.30%, 07/02/09 (a)
    8,325       8,325  
New Castle Cnty
M/F Rental Housing RB (Fairfield English Village)
Series 2005
               
0.40%, 07/02/09 (a)(b)
    8,200       8,200  
Sussex Cnty
IDRB (Perdue-Agrirecycle)
Series 2000
               
2.70%, 07/01/09 (a)(b)
    5,300       5,300  
                 
              21,825  
 
District of Columbia 2.7%
District of Columbia
GO Bonds
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    21,405       21,405  
GO Bonds
Series 2007C
               
0.25%, 07/02/09 (a)(b)(c)(d)
    16,886       16,886  
GO Bonds
Series 2008E
               
0.30%, 07/02/09 (a)(b)(c)(d)
    6,030       6,030  
GO TRAN 2009
0.83%, 09/30/09
    500       502  
1.09%, 09/30/09
    45,000       45,157  
Income Tax Secured RB
Series 2009A&B
               
0.28%, 07/02/09 (a)(c)(d)
    4,000       4,000  
Pooled Loan Program RB
Series A
               
0.32%, 07/02/09 (a)(b)
    6,305       6,305  
RB (American Psychological Association)
Series 2003
               
0.34%, 07/02/09 (a)(b)
    2,510       2,510  
RB (American Society of Hematology)
Series 2009
               
2.50%, 07/01/09 (a)(b)
    7,565       7,565  
RB (Carnegie Endowment for International Peace)
Series 2006
               
0.60%, 07/02/09 (a)(b)
    10,950       10,950  
RB (Center for Strategic & International Studies)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    6,730       6,730  
RB (Pew Charitable Trusts)
Series 2008A
               
0.27%, 07/02/09 (a)(b)
    31,000       31,000  
RB (St Coletta Special Education Public Charter School)
Series 2005
               
0.32%, 07/02/09 (a)(b)
    3,415       3,415  
RB (The American National Red Cross)
Series 2000
               
0.40%, 09/09/09 (b)
    22,100       22,100  
Refunding RB (Howard Univ)
Series 2006A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    11,970       11,970  
District of Columbia HFA
M/F Housing RB (Pentacle Apts)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    3,850       3,850  
District of Columbia Water & Sewer Auth
Public Utility Sr Lien RB
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    4,330       4,330  
Public Utility Subordinated Lien RB
Series 2007A
               
0.55%, 07/02/09 (a)(b)(c)(d)
    23,050       23,050  
Metropolitan Washington Airports Auth
Airport System RB
Series 2003D1
               
0.37%, 07/02/09 (a)(b)
    29,535       29,535  
Airport System RB
Series 2004B
               
0.70%, 07/02/09 (a)(c)(d)
    4,060       4,060  
Airport System RB
Series 2005A
               
0.36%, 07/01/09 (a)(c)(d)
    12,525       12,525  
0.38%, 07/02/09 (a)(c)(d)
    27,225       27,225  
Airport System RB
Series 2006B
               
0.55%, 07/02/09 (a)(c)(d)
    8,695       8,695  
Airport System RB
Series 2007B
               
0.28%, 07/02/09 (a)(c)(d)
    15,045       15,045  
0.28%, 07/02/09 (a)(b)(c)(d)
    8,995       8,995  
Airport System RB
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    7,813       7,813  
0.28%, 07/02/09 (a)(c)(d)
    19,135       19,135  
0.50%, 07/02/09 (a)(c)(d)
    8,020       8,020  
Airport System Refunding RB
Series 2002C
               
0.90%, 07/01/09 (a)(b)(c)
    15,000       15,000  
Airport System Refunding RB
Series 2003A
               
0.28%, 07/02/09 (a)(b)(c)(d)
    9,365       9,365  
Airport System Refunding RB
Series 2004D
               
2.50%, 10/01/09
    11,695       11,767  
Airport System Refunding RB
Series 2007A
               
1.40%, 10/01/09
    7,300       7,366  
 
 
 
16 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Airport System Revenue CP
Series One A&B
               
0.65%, 08/27/09 (b)
    20,000       20,000  
0.70%, 10/08/09 (b)
    23,500       23,500  
Passenger Facility Charge Revenue Notes
Series A
               
0.75%, 07/02/09 (b)
    12,000       12,000  
Passenger Facility Charge Revenue Notes
Series C
               
1.00%, 07/01/09 (b)
    60,000       60,000  
0.75%, 07/02/09 (b)
    15,000       15,000  
                 
              542,801  
 
Florida 7.9%
Brevard Cnty HFA
M/F Housing Refunding RB (Shore View Apts)
Series 1995
               
0.30%, 07/02/09 (a)(b)
    1,900       1,900  
Broward Cnty
Airport System Refunding RB
Series 2008N
               
0.53%, 07/02/09 (a)(b)(c)
    5,300       5,300  
Subordinate Port Facilities Refunding RB (Port Everglades)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    10,420       10,420  
Broward Cnty Educational Facilities Auth
RB (Nova Southeastern Univ)
Series 2004A
               
0.20%, 07/01/09 (a)(b)
    4,120       4,120  
Broward Cnty HFA
M/F Housing RB (Sawgrass Pines Apts)
Series 1993A
               
0.95%, 07/02/09 (a)(b)
    11,000       11,000  
Broward Cnty SD/Board
COP
Series 2005A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,550       5,550  
Cape Coral
CP Notes
0.60%, 07/07/09 (b)
    36,925       36,925  
0.40%, 07/20/09 (b)
    59,842       59,842  
0.45%, 08/17/09 (b)
    32,317       32,317  
Charlotte Cnty HFA
M/F Housing RB (Murdock Circle Apts)
Series 2000
               
0.42%, 07/01/09 (a)(b)
    3,200       3,200  
Charlotte Cnty SD
TAN
Series 2008
               
2.35%, 10/01/09
    15,000       15,061  
Collier Cnty Health Facilities Auth
Health Facility RB (The Mooring)
Series 2005
               
0.28%, 07/01/09 (a)(b)
    16,200       16,200  
Collier Cnty HFA
M/F Housing RB (Brittany Bay Apts)
Series 2001A
               
0.30%, 07/01/09 (a)(b)
    3,800       3,800  
Dade Cnty IDA
IDRB (South Florida Stadium Corp)
Series 1985C
               
0.20%, 07/01/09 (a)(b)
    1,050       1,050  
Duval Cnty School Board
COP (Master Lease Program)
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    16,207       16,207  
Escambia HFA
S/F Mortgage RB
Series 2002A1
               
0.50%, 07/02/09 (a)(c)(d)
    2,655       2,655  
Florida Dept of Transportation
Turnpike RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    15,000       15,000  
1.00%, 07/23/09 (c)(d)
    7,110       7,110  
Turnpike RB
Series 2007A
               
0.40%, 07/02/09 (a)(c)(d)
    41,800       41,800  
Turnpike RB
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    3,555       3,555  
Florida HFA
Housing RB (Caribbean Key Apts)
Series 1996F
               
0.40%, 07/01/09 (a)(b)
    295       295  
Housing RB (Tiffany Club Apts)
Series 1996P
               
0.40%, 07/01/09 (a)(b)
    5,650       5,650  
Housing RB (Timberline Apts)
Series 1999P
               
0.40%, 07/01/09 (a)(b)
    5,835       5,835  
M/F Housing RB (Cameron Cove Apts)
Series 1985XX
               
0.38%, 07/01/09 (a)(b)
    400       400  
M/F Mortgage RB (Lynn Lake Apts)
Series 2005B1
               
0.36%, 07/02/09 (a)(b)
    20,315       20,315  
RB (Heritage Pointe Apts)
Series 1999I–1
               
0.40%, 07/01/09 (a)(b)
    4,460       4,460  
Florida Housing Finance Corp
M/F Mortgage RB (Clear Harbor Apts)
Series 2007H
               
0.45%, 07/02/09 (a)(b)
    3,295       3,295  
M/F Mortgage RB (Lakeshore Apts)
Series 2004H
               
0.36%, 07/02/09 (a)(b)
    7,900       7,900  
M/F Mortgage RB (Spring Haven Apts)
Series 2004F
               
0.36%, 07/02/09 (a)(b)
    6,200       6,200  
M/F Mortgage RB (Spring Haven Apts)
Series 2006G
               
0.45%, 07/02/09 (a)(b)
    3,965       3,965  
M/F Mortgage Refunding RB (Grand Reserve at Lee Vista)
Series 2004L
               
0.30%, 07/02/09 (a)(b)
    17,510       17,510  
Florida State Board of Education
Public Education Capital Outlay Bonds
Series 1999C
               
0.28%, 07/02/09 (a)(b)(c)(d)
    17,675       17,675  
Public Education Capital Outlay Bonds
Series 2000C
               
0.40%, 07/02/09 (a)(c)(d)
    7,920       7,920  
 
 
 
See financial notes 17

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Public Education Capital Outlay Bonds
Series 2002E
               
0.45%, 07/02/09 (a)(c)(d)
    6,565       6,565  
Public Education Capital Outlay Bonds
Series 2003B
               
0.45%, 07/02/09 (a)(c)(d)
    8,000       8,000  
Public Education Capital Outlay Bonds
Series 2006B
               
0.25%, 07/02/09 (a)(b)(c)(d)
    48,065       48,065  
Public Education Capital Outlay Bonds
Series 2006E
               
0.28%, 07/02/09 (a)(c)(d)
    4,360       4,360  
Public Education Capital Outlay Bonds
Series 2007D
               
0.28%, 07/02/09 (a)(c)(d)
    4,000       4,000  
Highlands Cnty Health Facilities Auth
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2005E
               
2.77%, 07/02/09 (a)(b)
    10,000       10,000  
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2005G
               
2.65%, 07/02/09 (a)(b)
    11,100       11,100  
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2008B2
               
2.65%, 07/02/09 (a)(b)
    8,000       8,000  
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2006B3
               
2.50%, 07/02/09 (a)(b)
    5,995       5,995  
Hillsborough Cnty Aviation Auth
RB (Tampa International Airport)
Series 2008A
               
0.28%, 07/02/09 (a)(b)(c)(d)
    50,005       50,005  
Hillsborough Cnty Educational Facilities Auth
RB (Univ of Tampa)
Series 2000
               
0.37%, 07/02/09 (a)(b)
    4,700       4,700  
Hillsborough Cnty HFA
M/F Housing RB (Lake Kathy Apts)
Series 2005
               
0.41%, 07/02/09 (a)(b)
    20,670       20,670  
Hillsborough Cnty IDA
IDRB (Univ Community Hospital)
Series 1994
               
0.31%, 07/02/09 (a)(b)(c)(d)
    8,730       8,730  
RB (Independent Day School)
Series 2000
               
0.37%, 07/02/09 (a)(b)
    600       600  
RB (Univ Community Hospital)
Series 1999A
               
1.30%, 08/15/09 (b)
    5,000       5,076  
Hillsborough Cnty School Board/SD
COP
Series 1999
               
6.00%, 07/01/09 (b)
    33,400       33,734  
COP
Series 2000
               
5.38%, 07/01/09 (b)
    12,600       12,600  
Sales Tax Refunding RB
Series 2007
               
0.30%, 07/02/09 (a)(b)(c)(d)
    10,895       10,895  
Indian River Cnty Hospital District
RB
Series 1988
               
0.40%, 09/10/09 (b)
    9,800       9,800  
Jacksonville
Excise Taxes Refunding RB
Series 2001A
               
3.75%, 10/01/09
    8,395       8,421  
Jacksonville Economic Development Commission
Educational Facilities RB (Episcopal High School)
Series 2002
               
0.32%, 07/01/09 (a)(b)
    4,800       4,800  
RB (Bolles School)
Series 1999A
               
0.47%, 07/02/09 (a)(b)
    1,000       1,000  
Refunding RB (Florida First Coast YMCA)
Series 2003
               
0.32%, 07/02/09 (a)(b)
    4,125       4,125  
Special Facility Airport RB (Holland Sheltair Aviation Group)
Series 2004A1
               
0.55%, 07/02/09 (a)(b)
    3,510       3,510  
Jacksonville Health Facilities Auth
RB (River Garden/The Coves)
Series 1994
               
0.47%, 07/02/09 (a)(b)
    2,685       2,685  
Jacksonville HFA
M/F Housing Refunding RB (St. Augustine Apts)
Series 2006
               
0.30%, 07/01/09 (a)(b)
    3,300       3,300  
Jacksonville Port Auth
RB
Series 2008
               
0.30%, 07/02/09 (a)(b)(c)(d)
    28,725       28,725  
JEA
Electric System RB
Series Three 2008B2
               
0.32%, 07/01/09 (a)(c)
    6,570       6,570  
Electric System RB
Series Three 2008B3
               
0.32%, 07/01/09 (a)(c)
    6,050       6,050  
Electric System RB
Series Three 2008D2A
               
0.20%, 07/01/09 (a)(c)
    9,900       9,900  
Water & Sewer System RB
Series 2008B
               
0.20%, 07/01/09 (a)(c)
    26,940       26,940  
Water & Sewer System Subordinated RB
Series 2008B1
               
0.20%, 07/01/09 (a)(c)
    9,680       9,680  
Kissimmee Utility Auth
Electric System Refunding RB Subordinate
Series 2003
               
1.20%, 07/01/09 (a)(b)(c)
    12,500       12,500  
Lee Memorial Health System
Hospital RB
Series 2009C
               
0.28%, 07/01/09 (a)(b)
    3,000       3,000  
 
 
 
18 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Manatee Cnty HFA
M/F Housing RB (Sabal Palm Harbor Apts)
Series 2000A
               
0.42%, 07/01/09 (a)(b)
    4,200       4,200  
Marion Cnty IDA
IDRB (Ocala Recycling)
Series 2006
               
0.57%, 07/02/09 (a)(b)
    5,000       5,000  
Miami-Dade Cnty
Aviation RB (Miami International Airport)
Series 2007A
               
0.27%, 07/02/09 (a)(b)(c)(d)
    38,145       38,145  
0.28%, 07/02/09 (a)(b)(c)(d)
    59,490       59,490  
Capital Asset Acquisition Special Obligation Bonds
Series 2007A
               
0.18%, 07/01/09 (a)(b)(c)(d)
    17,600       17,600  
Miami-Dade Cnty Expressway Auth
Toll System RB
Series 2006
               
0.45%, 07/02/09 (a)(b)(c)(d)
    35,000       35,000  
Miami-Dade Cnty IDA
Airport Facility RB (FlightSafety)
Series 1999A
               
0.73%, 07/01/09 (a)(b)
    11,750       11,750  
0.73%, 07/01/09 (a)(b)
    8,460       8,460  
Airport Facility RB (FlightSafety)
Series 1999B
               
0.73%, 07/01/09 (a)(b)
    11,750       11,750  
0.73%, 07/01/09 (a)(b)
    8,480       8,480  
IDRB (Airbus Service)
Series 1998A
               
0.48%, 07/02/09 (a)(b)
    80       80  
IDRB (Tarmac America)
Series 2004
               
0.55%, 07/02/09 (a)(b)
    2,600       2,600  
RB (Gulliver Schools)
Series 2000
               
0.34%, 07/02/09 (a)(b)
    9,400       9,400  
Miami-Dade Cnty School Board
COP
Series 2000A
               
1.50%, 10/01/09 (b)
    5,200       5,252  
COP
Series 2006A&B
               
0.21%, 07/02/09 (a)(b)(c)(d)
    28,050       28,050  
COP
Series 2007A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    13,640       13,640  
Ocean Highway & Port Auth
RB
Series 1990
               
0.50%, 07/01/09 (a)(b)
    8,700       8,700  
Okeechobee Cnty
IDRB (Okeechobee Landfill)
Series 1999
               
0.42%, 07/02/09 (a)(b)
    15,000       15,000  
Orange Cnty
RB (Tourist Development Tax)
Series 2000
               
1.08%, 10/01/09 (b)
    15,000       15,175  
Orange Cnty Educational Facilities Auth
Refunding RB (Rollins College)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    3,625       3,625  
Orange Cnty Health Facilities Auth
Hospital RB (Orlando Regional Healthcare System)
Series 2008E
               
0.29%, 07/01/09 (a)(b)
    4,500       4,500  
Hospital RB (Orlando Regional Healthcare System)
Series 2008F
               
2.00%, 07/01/09 (a)(b)
    5,550       5,550  
RB (Presbyterian Retirement Communities)
Series 2006B
               
0.24%, 07/02/09 (a)(b)
    6,700       6,700  
Orange Cnty HFA
M/F Housing RB (Charleston Club Apts)
Series 2001A
               
0.30%, 07/01/09 (a)(b)
    12,830       12,830  
M/F Housing RB (Windsor Pines)
Series 2000E
               
0.42%, 07/01/09 (a)(b)
    4,920       4,920  
Orange Cnty IDA
IDRB (Central Florida YMCA)
Series 2002A
               
0.34%, 07/02/09 (a)(b)
    3,800       3,800  
IDRB (Central Florida YMCA)
Series 2005
               
0.32%, 07/02/09 (a)(b)
    4,570       4,570  
RB (UCF Hospitality School Student Housing Foundation)
Series 2004
               
2.50%, 07/01/09 (a)(b)
    7,995       7,995  
Orange Cnty SD
COP
Series 2006A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    26,280       26,280  
TAN
Series 2008
               
2.38%, 10/01/09
    22,000       22,088  
Orlando & Orange Cnty Expressway Auth
RB
Series 2007A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    20,000       20,000  
1.00%, 09/09/09 (b)(c)(d)
    28,625       28,625  
Refunding RB
Series 2003C3
               
1.20%, 07/02/09 (a)(b)(c)
    28,000       28,000  
Orlando Utilities Commission
Water & Electric Subordinated RB
Series 1989D
               
1.61%, 07/02/09 (a)(b)(c)(d)
    5,690       5,690  
Palm Beach Cnty
Airport RB (Galaxy Aviation)
Series 2000A
               
0.80%, 07/01/09 (a)(b)
    6,380       6,380  
Public Improvement RB
Series 2008
               
0.20%, 07/02/09 (a)(c)(d)
    8,610       8,610  
RB (Norton Gallery & School of Art)
Series 1995
               
0.49%, 07/01/09 (a)(b)
    2,500       2,500  
 
 
 
See financial notes 19

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Palm Beach Cnty HFA
M/F Housing Refunding RB (Emerald Bay Club Apts)
Series 2004
               
0.28%, 07/02/09 (a)(b)
    7,000       7,000  
M/F Housing Refunding RB (Spinnaker Landing Apts)
Series 1998
               
0.40%, 07/02/09 (a)(b)
    2,445       2,445  
Palm Beach Cnty SD
RAN
Series 2009
               
0.77%, 03/10/10
    36,000       36,011  
Sales Tax Revenue CP
0.40%, 09/10/09 (b)
    22,500       22,500  
Palm Coast
Utility System RB
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    4,295       4,295  
Pinellas Cnty HFA
M/F Housing RB (Greenwood Apts)
Series 2002A
               
0.55%, 07/02/09 (a)(b)
    3,440       3,440  
Pinellas Cnty Industry Council
RB (Operation Par)
Series 1999
               
0.52%, 07/02/09 (a)(b)
    2,810       2,810  
Sarasota Cnty
RB (Sarasota Family YMCA)
Series 1999
               
0.32%, 07/02/09 (a)(b)
    440       440  
Seminole Cnty
Water & Sewer RB
Series 2006
               
0.20%, 07/02/09 (a)(c)(d)
    23,755       23,755  
South Florida Water Management District
COP
Series 2006
               
0.55%, 07/02/09 (a)(c)(d)
    9,760       9,760  
South Miami Health Facilities Auth
Hospital RB (Baptist Health South Florida Obligated Group)
Series 2007
               
0.28%, 07/02/09 (a)(c)(d)
    1,035       1,035  
0.30%, 07/02/09 (a)(c)(d)
    15,895       15,895  
St. Johns Cnty
Transportation Improvement RB
Series 2006
               
0.27%, 07/02/09 (a)(b)(c)(d)
    8,947       8,947  
Water & Sewer Refunding RB
Series 2006
               
0.26%, 07/02/09 (a)(b)(c)(d)
    10,930       10,930  
Tallahassee
Energy System RB
Series 2007
               
0.18%, 07/01/09 (a)(b)(c)(d)
    13,255       13,255  
Tampa Bay Water Auth
Utility System RB
Series 2002
               
0.55%, 07/02/09 (a)(b)
    1,300       1,300  
Utility System RB
Series 2008
               
0.20%, 07/02/09 (a)(c)(d)
    25,735       25,735  
Utility System Refunding & Improvement RB
Series 2005
               
0.38%, 07/02/09 (a)(b)(c)(d)
    18,455       18,455  
Tohopekaliga Water Auth
Utility System RB
Series 2007
               
0.26%, 07/02/09 (a)(b)
    7,550       7,550  
Univ of South Florida Research Foundation
RB (Interdisciplinary Research Building)
Series 2004A
               
0.42%, 07/01/09 (a)(b)
    17,455       17,455  
Volusia Cnty
Tourist Development Tax RB
Series 2004
               
0.25%, 07/02/09 (a)(b)(c)(d)
    14,315       14,315  
Volusia Cnty Health Facilities Auth
Hospital Facilities RB (Memorial Health Systems)
Series 1996
               
0.31%, 07/02/09 (a)(b)(c)(d)
    37,755       37,755  
Winter Haven
Utility System Improvement & Refunding RB
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    8,100       8,100  
                 
              1,582,151  
 
Georgia 2.3%
Atlanta Development Auth
Student Housing Facilities RB (Piedmont/Ellis)
Series 2005A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    24,175       24,175  
Atlanta Urban Residential Finance Auth
M/F Housing RB (Alta Coventry Station Apts)
Series 2007
               
0.45%, 07/02/09 (a)(b)
    16,000       16,000  
M/F Housing RB (Capitol Gateway Apts Phase I)
Series 2005
               
0.36%, 07/02/09 (a)(b)
    2,825       2,825  
M/F Housing RB (Delmonte/Brownlee Court)
Series 2001A
               
2.70%, 07/01/09 (a)(b)
    95       95  
M/F Housing RB (M St Apts)
Series 2003
               
0.41%, 07/02/09 (a)(b)
    21,000       21,000  
M/F Housing Refunding RB (City Plaza)
Series 1998
               
2.50%, 12/01/09 (b)
    10,110       10,110  
Burke Cnty Development Auth
Pollution Control RB (Georgia Power Plant Vogtle) Fifth
Series 1995
               
1.00%, 04/01/10
    10,000       10,251  
Pollution Control RB (Georgia Power Plant Vogtle) Second
Series 1995
               
0.45%, 07/16/09
    25,000       25,000  
Clarke Cnty Hospital Auth
Revenue Certificates (Athens Regional Medical Center)
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    33,405       33,405  
Clayton Cnty Housing Auth
M/F Housing RB (Hyde Park Club Apts)
Series 1997
               
0.42%, 07/01/09 (a)(b)
    11,295       11,295  
Cobb Cnty Housing Auth
M/F Housing RB (Walton Green Apts)
Series 1995
               
0.42%, 07/02/09 (a)(b)
    13,500       13,500  
 
 
 
20 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Columbus Housing Auth
M/F Housing RB (Eagles Trace Apts)
Series 2002
               
2.70%, 07/01/09 (a)(b)
    5,775       5,775  
Dalton Development Auth
Revenue Certificates (Hamilton Health Care System)
Series 2003B
               
0.32%, 07/02/09 (a)(b)
    5,220       5,220  
DeKalb Cnty
Water & Sewerage RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    9,935       9,935  
DeKalb Cnty Housing Auth
M/F Housing RB (Brittany Apts)
Series 2001
               
0.47%, 07/02/09 (a)(b)
    7,200       7,200  
Dekalb Private Hospital Auth
Revenue Anticipation Certificates (Children’s Healthcare of Atlanta)
Series 2008
               
0.32%, 07/01/09 (a)(c)
    29,400       29,400  
Fulton Cnty
Water & Sewerage RB
Series 2004
               
0.25%, 07/02/09 (a)(b)(c)(d)
    12,970       12,970  
Fulton Cnty Development Auth
RB (Pace Academy)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    4,300       4,300  
Fulton Cnty Housing Auth
M/F Housing RB (Walton Lakes Apts)
Series 2008A
               
2.70%, 07/01/09 (a)(b)
    6,400       6,400  
Gainesville & Hall Cnty Development Auth
RB (GHCDA Economic Development Corp)
Series 2007
               
3.12%, 07/02/09 (a)(b)
    6,265       6,265  
Georgia
GO Bonds
Series 2006G
               
0.17%, 07/02/09 (a)(c)(d)
    4,190       4,190  
GO Bonds
Series 2007B
               
1.00%, 08/13/09 (c)(d)
    11,705       11,705  
Gwinnett Cnty SD
GO Bonds
Series 2008
               
0.20%, 07/02/09 (a)(c)(d)
    5,200       5,200  
Jefferson Cnty Development Auth
IDRB (Grove River Mills)
Series 1997
               
0.57%, 07/02/09 (a)(b)
    300       300  
Lawrenceville Housing Auth
M/F Housing RB (Chatham Club Apts)
Series 2002
               
0.39%, 07/02/09 (a)(b)
    7,500       7,500  
Marietta Housing Auth
M/F Housing RB (Walton Village Apts)
Series 2005
               
0.44%, 07/02/09 (a)(b)
    14,300       14,300  
M/F Housing Refunding RB (Ashton Place Apts)
Series 1990
               
0.30%, 07/02/09 (a)(b)
    2,500       2,500  
McDonough Housing Auth
M/F Housing RB (Ashley Woods Apts)
Series 2008
               
0.57%, 07/02/09 (a)(b)
    6,300       6,300  
Metropolitan Atlanta Rapid Transit Auth
Sales Tax Refunding RB (Third Indenture)
Series 2007B
               
0.26%, 07/02/09 (a)(b)(c)(d)
    10,320       10,320  
0.45%, 07/02/09 (a)(c)(d)
    3,766       3,766  
Monroe Cnty Development Auth
RB (Georgia Power Plant Scherer) First
Series 2008
               
1.95%, 12/10/09
    15,000       15,000  
Municipal Electric Auth of Georgia
BAN (Plant Vogtle)
Series 2009A
               
0.60%, 05/25/10
    41,250       41,582  
Pooler Development Auth
M/F Housing RB (Alta Towne Lake Apts)
Series 2005
               
0.55%, 07/02/09 (a)(b)
    19,500       19,500  
Private Colleges & Univ Auth
RB (Emory Univ)
Series 2008C
               
0.20%, 07/02/09 (a)(c)(d)
    3,835       3,835  
0.32%, 07/02/09 (a)(c)(d)
    7,470       7,470  
Savannah Economic Development Auth
Exempt Facility RB (Georgia Kaolin Terminal)
Series 1997
               
0.55%, 07/02/09 (a)(b)
    6,000       6,000  
Exempt Facility RB (Home Depot)
Series 1995B
               
2.70%, 07/01/09 (a)(b)
    11,150       11,150  
Savannah Housing Auth
M/F Housing RB (Live Oak Plantation Apts)
Series 2001A1
               
2.70%, 07/01/09 (a)(b)
    5,000       5,000  
Summerville Development Auth
Exempt Facility RB (Image Industries)
Series 1997
               
0.55%, 07/02/09 (a)(b)
    11,000       11,000  
Valdosta & Lowndes Cntys Hospital Auth
Revenue Certificates (South Georgia Medical Center)
Series 1998
               
0.29%, 07/02/09 (a)(b)
    2,800       2,800  
Webster Cnty IDA
IDRB (Tolleson Lumber)
Series 1999
               
0.47%, 07/02/09 (a)(b)
    4,000       4,000  
Winder-Barrow Cnty Joint Development Auth
IDRB (Price Companies)
Series 2007
               
0.55%, 07/02/09 (a)(b)
    9,445       9,445  
                 
              457,984  
 
Hawaii 0.6%
Hawaii
GO Bonds
Series 1999CT
               
0.70%, 09/01/09 (b)
    6,000       6,112  
 
 
 
See financial notes 21

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
GO Bonds
Series 2002CX
               
0.50%, 07/02/09 (a)(c)(d)
    8,100       8,100  
GO Bonds
Series 2008D4
               
0.45%, 07/02/09 (a)(c)(d)
    19,800       19,800  
Hawaii State Dept of Budget & Finance
Special Purpose RB (Hawaii Pacific Health)
Series 2009A1
               
0.25%, 07/02/09 (a)(b)
    16,650       16,650  
Hawaii State Housing Finance & Development Corp
M/F Housing RB (Lokahi Ka’U)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    5,200       5,200  
Honolulu
GO Bonds
Series 2005A
               
1.20%, 07/01/09
    2,470       2,470  
GO Bonds
Series 2005A, C & D
               
0.50%, 07/02/09 (a)(c)(d)
    12,500       12,500  
Wastewater System RB (First Bond Resolution) Sr
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    16,425       16,425  
Wastewater System RB Sr
Series 2005A
               
0.40%, 07/02/09 (a)(c)(d)
    23,380       23,380  
Honolulu Board of Water Supply
Water System RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    7,000       7,000  
                 
              117,637  
 
Idaho 0.2%
Idaho
TAN
Series 2009
               
0.40%, 06/30/10 (f)
    25,000       25,521  
0.44%, 06/30/10 (f)
    12,780       13,042  
Idaho State Univ Foundation
RB (L.E. & Thelma E. Stephens Performing Arts Center)
Series 2001
               
0.27%, 07/02/09 (a)(b)
    1,770       1,770  
                 
              40,333  
 
Illinois 5.4%
Aurora
Collateralized S/F Mortgage RB
Series 2007D1
               
0.29%, 07/02/09 (a)(b)(c)(d)
    10,625       10,625  
Bridgeview
GO Project & Refunding Bonds
Series 2008A1
               
0.33%, 07/01/09 (a)(b)
    17,500       17,500  
Carol Stream
M/F Housing Refunding RB (St Charles Square)
Series 1997
               
0.44%, 07/01/09 (a)(b)
    4,415       4,415  
Chicago
General Airport Second Lien Refunding RB
Series 1999
               
0.90%, 01/01/10 (b)
    4,205       4,301  
General Airport Third Lien RB
Series 2005A
               
0.30%, 07/02/09 (a)(b)(c)(d)
    4,555       4,555  
General Airport Third Lien RB
Series 2008A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    24,340       24,340  
GO Project & Refunding Bonds
Series 2006A
               
0.55%, 07/02/09 (a)(c)(d)
    17,375       17,375  
GO Project & Refunding Bonds
Series 2007A
               
0.40%, 07/02/09 (a)(c)(d)
    35,245       35,245  
0.40%, 07/02/09 (a)(c)(d)
    33,000       33,000  
GO Refunding Bonds
Series 2000D
               
0.40%, 07/02/09 (a)(c)(d)
    9,900       9,900  
GO Refunding Bonds
Series 2008A
               
0.45%, 07/02/09 (a)(c)(d)
    15,980       15,980  
0.20%, 07/02/09 (a)(c)(d)
    9,445       9,445  
Second Lien Wastewater Transmission Refunding RB
Series 2006A&B
               
0.26%, 07/02/09 (a)(b)(c)(d)
    11,345       11,345  
Second Lien Water Refunding RB
Series 2004–2
               
0.30%, 07/02/09 (a)(b)
    12,400       12,400  
Special Facilities RB (O’Hare Tech Center II)
Series 2002
               
0.70%, 07/02/09 (a)(b)
    7,785       7,785  
Chicago Board of Education
Unlimited Tax GO Bonds (Dedicated Revenues) 
Series 1999A
               
0.32%, 07/02/09 (a)(b)(c)(d)
    14,720       14,720  
Unlimited Tax GO Refunding Bonds (Dedicated Revenues) 
Series 2009A2
               
0.25%, 07/02/09 (a)(b)
    5,900       5,900  
Community Unit SD No. 365-U
GO School Bonds (Valley View)
Series 2005
               
0.28%, 07/02/09 (a)(b)(c)(d)
    14,705       14,705  
Cook Cnty
RB (Catholic Theological Union)
Series 2005
               
0.47%, 07/01/09 (a)(b)
    2,500       2,500  
Sales TAN
Series 2008
               
1.58%, 08/03/09
    12,000       12,015  
Dupage Cnty
RB (Morton Arboretum)
Series 2003
               
0.32%, 07/02/09 (a)(b)
    24,050       24,050  
East Dundee, Kane & Cook Cntys
IDRB (Otto Engineering)
Series 1998
               
0.70%, 07/02/09 (a)(b)
    1,155       1,155  
Hampshire
IDRB (Poli-Film America)
Series 1998A
               
0.57%, 07/02/09 (a)(b)
    1,800       1,800  
 
 
 
22 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Hillside
Economic Development RB (L&J Technologies)
Series 1994
               
0.72%, 07/01/09 (a)(b)
    3,120       3,120  
Illinois Development Finance Auth
Economic Development RB (Korex)
Series 1990
               
0.72%, 07/02/09 (a)(b)
    4,000       4,000  
IDRB (Camcraft)
Series 1993
               
2.13%, 07/01/09 (a)(b)
    1,000       1,000  
Qualified Residential Rental Bonds (River Oaks)
Series 1989
               
0.46%, 07/01/09 (a)(b)
    32,000       32,000  
RB (Aurora Central Catholic High School)
Series 1994
               
0.42%, 07/01/09 (a)(b)
    5,000       5,000  
RB (Catholic Charities Housing Development)
Series 1993A
               
1.37%, 07/01/09 (a)(b)
    9,160       9,160  
RB (Catholic Charities Housing Development)
Series 1993B
               
1.37%, 07/01/09 (a)(b)
    910       910  
RB (FC Harris Pavilion)
Series 1994
               
0.46%, 07/01/09 (a)(b)
    14,960       14,960  
RB (Lake Forest Academy)
Series 1994A
               
0.42%, 07/01/09 (a)(b)
    4,000       4,000  
RB (Richard H. Driehaus Museum)
Series 2005
               
0.42%, 07/01/09 (a)(b)
    3,800       3,800  
RB (St. Ignatius College Prep)
Series 2002
               
0.42%, 07/01/09 (a)(b)
    2,800       2,800  
Illinois Educational Facilities Auth
RB (Northwestern Univ)
Series 2003
               
0.30%, 07/02/09 (a)(c)(d)
    14,020       14,020  
0.35%, 07/02/09 (a)(c)(d)
    9,900       9,900  
RB (Univ of Chicago)
Series 2001B1
               
1.85%, 07/28/09
    16,700       16,700  
RB (Univ of Chicago)
Series 2001B3
               
0.52%, 05/05/10
    22,265       22,265  
Illinois Finance Auth
RB (Elmhurst Memorial Healthcare)
Series 2008D
               
0.16%, 07/01/09 (a)(b)
    15,600       15,600  
RB (Advocate Health Care Network)
Series 2003C
               
0.77%, 02/26/10
    16,262       16,262  
RB (Advocate Health Care Network)
Series 2008B5
               
0.26%, 07/01/09 (a)(c)
    2,635       2,635  
RB (Advocate Health Care Network)
Series 2008C2A
               
0.22%, 07/01/09 (a)(c)
    12,500       12,500  
RB (Advocate Health Care Network)
Series 2008C3A
               
0.29%, 07/01/09 (a)(c)
    24,000       24,000  
RB (Advocate Health Care Network)
Series 2008C3B
               
Series 2008C3B
               
2.32%, 07/01/09 (a)(c)
    7,000       7,000  
RB (Art Institute of Chicago)
Series 2009B1
               
0.35%, 07/01/09 (a)(b)
    7,000       7,000  
RB (Erikson Institute)
Series 2007
               
0.32%, 07/02/09 (a)(b)
    6,000       6,000  
RB (Ingalls Memorial Hospital)
Series 1985C
               
0.18%, 07/01/09 (a)(b)
    11,900       11,900  
RB (Lake Forest College)
Series 2008
               
0.42%, 07/01/09 (a)(b)
    2,500       2,500  
RB (LifeSource Corp)
Series 2000
               
0.30%, 07/02/09 (a)(b)
    5,600       5,600  
RB (Little Co of Mary Hospital & Health Care Centers)
Series 2008A
               
0.27%, 07/02/09 (a)(b)
    4,890       4,890  
RB (Lutheran Home & Services)
Series 2001
               
0.55%, 07/02/09 (a)(b)
    12,505       12,505  
RB (Northwestern Memorial Hospital)
Series 2007A1
               
0.24%, 07/02/09 (a)(c)
    7,000       7,000  
RB (Northwestern Memorial Hospital)
Series 2009
               
0.28%, 07/02/09 (a)(c)(d)
    6,285       6,285  
RB (Northwestern Memorial Hospital)
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    4,995       4,995  
0.28%, 07/02/09 (a)(c)(d)
    6,000       6,000  
RB (Northwestern Memorial Hospital)
Series 2007A3
               
0.24%, 07/02/09 (a)(c)
    32,125       32,125  
RB (Northwestern Univ)
Series 2006
               
0.23%, 07/01/09 (a)(c)(d)
    6,200       6,200  
RB (OSF Healthcare System)
Series 1999
               
0.53%, 11/15/09 (b)
    2,500       2,578  
0.70%, 11/15/09 (b)
    2,000       2,061  
1.15%, 11/15/09 (b)
    8,500       8,746  
1.15%, 11/15/09 (b)
    5,000       5,145  
1.22%, 11/15/09 (b)
    800       823  
1.34%, 11/15/09 (b)
    7,000       7,197  
1.40%, 11/15/09 (b)
    1,700       1,748  
RB (OSF Healthcare System)
Series 2009C
               
0.23%, 07/01/09 (a)(b)
    8,000       8,000  
RB (OSF Healthcare System)
Series 2009D
               
0.20%, 07/01/09 (a)(b)
    5,000       5,000  
RB (Regency Park at Lincolnwood)
Series 1991B
               
0.28%, 07/02/09 (a)(b)(c)(d)
    5,975       5,975  
RB (Resurrection Health Care)
Series 1999A
               
0.70%, 07/02/09 (a)(b)(c)(d)
    11,250       11,250  
 
 
 
See financial notes 23

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB (Riverside Health System)
Series 2004
               
0.32%, 07/01/09 (a)(b)
    16,640       16,640  
RB (Rockford Memorial Hospital Obligated Group)
Series 2008
               
0.35%, 07/02/09 (a)(b)
    20,300       20,300  
RB (Univ of Chicago)
Series 2007
               
0.20%, 07/02/09 (a)(c)(d)
    5,135       5,135  
Refunding RB (Commonwealth Edison)
Series 2008D
               
0.30%, 07/01/09 (a)(b)
    3,000       3,000  
Refunding RB (Edward Hospital Obligated Group)
Series 2008B2
               
0.32%, 07/01/09 (a)(b)
    4,920       4,920  
Refunding RB (Swedish Covenant Hospital)
Series 2008B
               
0.31%, 07/01/09 (a)(b)
    4,000       4,000  
Refunding RB (Univ of Chicago Medical Center)
Series 2009A1
               
0.30%, 07/02/09 (a)(b)
    3,200       3,200  
Illinois Housing Development Auth
Homeowner Mortgage RB
Series 2007H2
               
1.98%, 08/01/09
    20,030       20,030  
M/F Mortgage Refunding RB (Hyde Park Tower Apts)
Series 2000A
               
0.49%, 07/01/09 (a)(b)
    11,215       11,215  
Illinois Regional Transportation Auth
GO Bonds
Series 2005A
               
0.35%, 07/02/09 (a)(c)(d)
    28,835       28,835  
GO Refunding Bonds
Series 1999
               
0.50%, 07/02/09 (a)(c)(d)
    9,900       9,900  
0.50%, 07/02/09 (a)(c)(d)
    12,055       12,055  
Lake Cnty
M/F Housing RB (Whispering Oaks Apts)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    3,250       3,250  
Lombard
Refunding IDRB (B&H Partnership)
Series 1995
               
0.59%, 07/02/09 (a)(b)
    1,850       1,850  
Metropolitan Pier & Exposition Auth
McCormick Place Expansion Project Bonds
Series 1999A
               
0.70%, 07/02/09 (a)(c)(d)
    9,900       9,900  
0.70%, 07/02/09 (a)(c)(d)
    9,635       9,635  
McCormick Place Expansion Project Bonds
Series 2002A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    6,210       6,210  
0.25%, 07/02/09 (a)(b)(c)(d)
    6,455       6,455  
0.27%, 07/02/09 (a)(c)(d)
    5,000       5,000  
0.27%, 07/02/09 (a)(c)(d)
    2,870       2,870  
0.33%, 07/02/09 (a)(c)(d)
    10,330       10,330  
0.38%, 07/02/09 (a)(c)(d)
    6,590       6,590  
0.55%, 07/02/09 (a)(c)(d)
    10,820       10,820  
RB (McCormick Place Convention Complex Hospitality Facilities)
Series 1996A
               
1.76%, 07/02/09 (a)(b)(c)(d)
    26,490       26,490  
Metropolitan Water Reclamation District of Greater Chicago
GO Refunding Bonds
Series of May 2006
               
0.28%, 07/02/09 (a)(c)(d)
    5,800       5,800  
Limited Tax GO Refunding Bonds
Series C of March 2007
               
0.20%, 07/02/09 (a)(c)(d)
    3,780       3,780  
Unlimited Tax GO Refunding Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    30,740       30,740  
Unlimited Tax GO Refunding Bonds
Series 2007B &
               
Series 2007C
               
0.45%, 07/02/09 (a)(c)(d)
    44,070       44,070  
Unlimited Tax GO Refunding Bonds
Series B of March 2007
               
1.75%, 07/02/09 (a)(c)(d)
    7,045       7,045  
Northern Illinois Municipal Power Agency
Power Project RB (Prairie State)
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    13,140       13,140  
Palatine
Special Facility RB (Little City for Community Development)
Series 1998
               
1.37%, 07/01/09 (a)(b)
    5,000       5,000  
Rockford
IDRB (Rockford Industrial Welding Supply)
Series 1996
               
1.50%, 07/02/09 (a)(b)
    2,000       2,000  
Schaumburg
GO Bonds
Series 2004B
               
0.40%, 07/02/09 (a)(b)(c)(d)
    18,675       18,675  
Southwestern Illinois Development Auth
Refunding IDRB (Holten Meat)
Series 2004
               
0.63%, 07/02/09 (a)(b)
    6,860       6,860  
Springfield
Sr Lien Electric RB
Series 2006
               
0.40%, 07/02/09 (a)(b)(c)(d)
    4,950       4,950  
Univ of Illinois
Refunding RB
Series 2008
               
0.35%, 07/01/09 (a)(b)
    9,500       9,500  
Village of Western Springs
Special Assessment Bonds (Timber Trails)
Series 2006
               
0.52%, 07/01/09 (a)(b)
    14,442       14,442  
Yorkville
IDRB (FE Wheaton & Co)
Series 1996
               
1.50%, 07/02/09 (a)(b)
    800       800  
                 
              1,093,643  
 
Indiana 2.0%
Columbia City
Economic Development RB (Precision Plastics of Indiana)
Series 1997
               
0.72%, 07/01/09 (a)(b)
    2,000       2,000  
 
 
 
24 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Elkhart Cnty
Economic Development RB (West Plains Apts)
Series 1998A
               
2.13%, 07/01/09 (a)(b)
    1,590       1,590  
Elkhart Cnty Hospital Auth
RB (Elkhart General Hospital)
Series 2008
               
0.23%, 07/01/09 (a)(b)
    13,400       13,400  
Franklin Cnty School Building Corp
First Mortgage Bonds
Series 2000
               
1.20%, 07/15/09 (b)
    1,235       1,237  
Indiana Development Finance Auth
IDRB (Big Sky Park)
Series 1999
               
0.70%, 07/02/09 (a)(b)
    3,200       3,200  
Indiana Finance Auth
Environmental RB (PSI Energy)
Series 2005B
               
0.34%, 07/01/09 (a)(b)
    10,500       10,500  
Health System Refunding RB (Sisters of St. Francis Health Services)
Series 2008C
               
1.00%, 07/30/09 (c)(d)
    14,705       14,705  
Highway Refunding RB
Series 2007A
               
0.20%, 07/02/09 (a)(c)(d)
    14,470       14,470  
RB (Ascension Health Sr Credit Group)
Series 2008E8
               
3.40%, 12/15/09
    25,000       25,215  
RB (Republic Services)
Series 2005
               
2.70%, 07/01/09 (a)(b)
    7,500       7,500  
RB (Sisters of St. Francis Health Services Obligated Group)
Series 2008F
               
0.20%, 07/02/09 (a)(b)
    5,000       5,000  
RB (Sisters of St. Francis Health Services Obligated Group)
Series 2008G
               
0.20%, 07/02/09 (a)(b)
    5,250       5,250  
Refunding RB (Duke Energy Indiana)
Series 2009A1
               
0.45%, 07/01/09 (a)(b)
    6,000       6,000  
Refunding RB (Duke Energy Indiana)
Series 2009A2
               
0.45%, 07/01/09 (a)(b)
    3,300       3,300  
Refunding RB (Duke Energy Indiana)
Series 2009A3
               
0.45%, 07/01/09 (a)(b)
    10,300       10,300  
Refunding RB (Sisters of St. Francis Health Services Obligated Group)
Series 2008A
               
0.23%, 07/02/09 (a)(b)
    34,865       34,865  
Refunding RB (Trinity Health Credit Group)
Series 2008D1
               
0.20%, 07/02/09 (a)
    14,200       14,200  
Refunding RB (Trinity Health Credit Group)
Series 2008D2
               
0.20%, 07/02/09 (a)
    21,250       21,250  
Indiana Health & Educational Facility Financing Auth
RB (Ascension Health Sr Credit Group)
Series 2006
               
0.26%, 07/02/09 (a)(b)(c)(d)
    30,840       30,840  
Indiana Health Facility Financing Auth
RB (Ascension Health Credit Group)
Series 2002E
               
0.58%, 05/04/10
    31,875       31,875  
RB (Ascension Health Credit Group)
Series 2003E6
               
0.60%, 03/15/10
    22,280       22,280  
RB (Ascension Health Credit Group)
Series 2005A7
               
0.91%, 04/01/10
    5,000       5,152  
Indiana HFA
S/F Mortgage RB
Series 2004B2 & 2005C2
               
0.60%, 07/02/09 (a)(c)(d)
    1,545       1,545  
Indiana Housing & Community Development Agency
S/F Mortgage RB
Series 2007A
               
0.48%, 07/02/09 (a)(c)(d)
    4,765       4,765  
Indiana Municipal Power Agency
Power Supply System RB
Series 2006A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    25,290       25,290  
Indianapolis
M/F Housing RB (Nora Pines Apts)
Series 2001
               
0.40%, 07/02/09 (a)(b)
    9,275       9,275  
Thermal Energy System RB
Series 2001A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    9,890       9,890  
Indianapolis Local Public Improvement Bond Bank
Bonds
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    3,000       3,000  
Waterworks Project Bonds
Series 2002A
               
0.28%, 07/02/09 (a)(b)(c)(d)
    6,255       6,255  
Indianapolis Public School Building Corp
First Mortgage Refunding Bonds
Series 2007
               
0.21%, 07/02/09 (a)(b)(c)(d)
    13,435       13,435  
Lawrenceburg
Pollution Control Refunding RB (Indiana Michigan Power)
Series H
               
0.35%, 07/02/09 (a)(b)
    15,900       15,900  
Middlebury Schools Building Corp
First Mortgage Bonds
Series 2006A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    10,117       10,117  
St. Joseph Cnty
Economic Development RB (Corby Apts)
Series 1997B
               
2.13%, 07/01/09 (a)(b)
    3,145       3,145  
Economic Development RB (Pin Oaks Apts)
Series 1997A
               
2.13%, 07/01/09 (a)(b)
    1,000       1,000  
Economic Development RB (Western Manor Apts)
Series 1997C
               
2.13%, 07/01/09 (a)(b)
    2,130       2,130  
Vigo Cnty
Economic Development RB (Sisters of Providence)
Series 2001
               
0.75%, 07/02/09 (a)(b)
    3,500       3,500  
 
 
 
See financial notes 25

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Wayne Township School Building Corp
First Mortgage Refunding Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,080       5,080  
                 
              398,456  
 
Iowa 0.4%
Des Moines Metropolitan Wastewater Reclamation Auth
Sewer RB
Series 2004B
               
0.21%, 07/02/09 (a)(b)(c)(d)
    6,445       6,445  
Iowa Finance Auth
M/F Housing RB (Country Club Village)
Series 2006
               
0.43%, 07/02/09 (a)(b)
    11,370       11,370  
Midwestern Disaster Area Economic Development RB (Cargill)
Series 2009A
               
0.46%, 07/02/09 (a)
    30,000       30,000  
Solid Waste Disposal RB (MidAmerican Energy)
Series 2008A
               
0.48%, 07/01/09 (a)
    11,000       11,000  
Subordinate RAN (Iowa School Cash Anticipation Program)
Series 2009B
               
2.50%, 06/23/10 (b)
    17,848       18,199  
Iowa Higher Education Loan Auth
Private College Facility RB (Graceland Univ)
Series 2003
               
0.32%, 07/02/09 (a)(b)
    2,000       2,000  
                 
              79,014  
 
Kansas 0.2%
Kansas Dept of Transportation
Highway RB
Series 2004C2
               
0.25%, 07/01/09 (a)(c)
    7,415       7,415  
Highway RB
Series 2004C3
               
0.25%, 07/01/09 (a)(c)
    10,000       10,000  
Highway Refunding RB
Series 2002A
               
1.30%, 09/01/09
    6,780       6,822  
Unified Government of Wyandotte Cnty & Kansas City
Utility System Refunding RB
Series 2004
               
0.45%, 07/02/09 (a)(b)(c)(d)
    20,730       20,730  
                 
              44,967  
 
Kentucky 0.9%
Boyle Cnty
Hospital RB (Ephraim McDowell Health)
Series 2006
               
4.25%, 07/02/09 (a)(b)
    50,450       50,450  
Carroll Cnty
Solid Waste Disposal Revenue & Refunding RB (Celotex Corp)
Series 2000
               
0.48%, 07/02/09 (a)(b)
    12,790       12,790  
Jefferson Cnty
M/F Housing Refunding RB (Camden Brookside Apts)
Series 2002
               
0.33%, 07/02/09 (a)(b)
    8,900       8,900  
Kentucky Economic Development Finance Auth
Health Care Refunding RB (Christian Care Communities)
Series 2007A
               
0.41%, 07/02/09 (a)(b)
    13,925       13,925  
Kentucky Housing Corp
Housing RB
Series 2002A
               
0.36%, 07/01/09 (a)(c)(d)
    2,350       2,350  
Kentucky State Property & Buildings Commission
Refunding RB Project No. 84
1.76%, 07/02/09 (a)(c)(d)
    34,390       34,390  
Kentucky Turnpike Auth
Economic Development Road RB (Revitalization Projects)
Series 2008A
               
0.20%, 07/02/09 (a)(c)(d)
    2,615       2,615  
Louisville & Jefferson Cnty Metropolitan Government
GO BAN 2008A
1.10%, 12/01/09
    8,800       8,851  
Louisville & Jefferson Cnty Metropolitan Sewer District
Sewage & Drainage System RB
Series 1999A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    5,600       5,600  
Mason Cnty
Pollution Control RB (East Kentucky Power Coop)
Pooled Series 1984B2
1.10%, 07/01/09 (a)(b)
    11,080       11,080  
Pollution Control RB (East Kentucky Power Coop)
Pooled Series 1984B3
1.10%, 07/01/09 (a)(b)
    10,040       10,040  
Richmond
IDRB (Mikron)
Series 1995
               
0.60%, 07/01/09 (a)(b)
    1,100       1,100  
Somerset
Industrial Building RB (Tibbals Flooring)
Series 1989
               
0.48%, 07/02/09 (a)(b)
    10,000       10,000  
Warren Cnty
Refunding RB (Bowling Green-Warren Cnty Community Hospital)
Series 2008
               
0.35%, 07/02/09 (a)(b)(c)
    16,700       16,700  
                 
              188,791  
 
Louisiana 2.0%
Jefferson Parish Hospital District No. 1
Hospital RB (West Jefferson Medical Center)
Series 1998B
               
1.45%, 07/02/09 (a)(b)(c)
    25,000       25,000  
Hospital RB (West Jefferson Medical Center)
Series 2004A
               
1.10%, 01/01/10 (b)
    40,000       40,948  
Jefferson Sales Tax District
Special Sales Tax RB
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    870       870  
Louisiana
Gasoline & Fuels Tax RB
Series 2005A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    3,395       3,395  
 
 
 
26 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Gasoline & Fuels Tax RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    20,715       20,715  
Louisiana HFA
M/F Housing RB (Belmont Village Apts)
Series 2009
               
0.32%, 07/02/09 (a)(b)
    8,950       8,950  
M/F Housing RB (Jefferson Lakes Apts)
Series 2007
               
0.44%, 07/02/09 (a)(b)
    14,900       14,900  
Louisiana Local Government Environmental Facilities & Community Development Auth
RB (City of Bossier Public Improvement)
Series 2007
               
0.26%, 07/02/09 (a)(b)(c)(d)
    18,155       18,155  
Louisiana Municipal Natural Gas Purchasing & Distribution Auth
RB (Gas Project No. 1)
Series 2006
               
0.35%, 07/02/09 (a)(b)(c)(d)
    45,040       45,040  
Louisiana Public Facilities Auth
RB (Diocese of Houma-Thibodaux)
Series 2006
               
1.37%, 07/01/09 (a)(b)
    7,800       7,800  
Refunding RB (Tulane Univ)
Series 2007A1
               
0.45%, 07/02/09 (a)(b)(c)(d)
    30,690       30,690  
Louisiana State Univ Agricultural & Mechanical College
Auxiliary RB
Series 2006
               
0.21%, 07/02/09 (a)(b)(c)(d)
    27,525       27,525  
New Orleans IDB
M/F Housing RB (3700 Orleans)
Series 2000
               
0.36%, 07/02/09 (a)(b)
    29,000       29,000  
Plaquemines Port, Harbor & Terminal District
Port Facilities Refunding RB (International Marine Terminal)
Series 1984B
               
3.21%, 03/15/10 (b)
    16,400       16,458  
St. James Parish
Pollution Control Refunding RB (Texaco)
Series 1988A
               
0.40%, 09/01/09
    59,030       59,030  
Pollution Control Refunding RB (Texaco)
Series 1988B
               
0.40%, 09/01/09
    39,030       39,030  
RB (NuStar Logistics)
Series 2008
               
0.28%, 07/01/09 (a)(b)
    10,000       10,000  
                 
              397,506  
 
Maine 0.3%
Maine Finance Auth
RB (Jackson Laboratory)
Series 2002
               
0.36%, 07/02/09 (a)(b)
    5,000       5,000  
Maine Health & Educational Facilities Auth
RB
Series 2006F
               
0.21%, 07/02/09 (a)(b)(c)(d)
    15,020       15,020  
Maine State Housing Auth
Mortgage Purchase Bonds
Series 2008I
               
2.00%, 12/16/09
    33,000       33,000  
                 
              53,020  
 
Maryland 0.9%
Maryland Community Development Administration
Housing RB
Series 2006D & 2007B
               
0.40%, 07/02/09 (a)(c)(d)
    9,265       9,265  
Residential RB
Series 2007D
               
1.00%, 07/01/09 (f)(a)(c)(d)
    5,635       5,635  
Maryland Health & Higher Educational Facilities Auth
CP Revenue Notes (The John Hopkins Health System)
Series F
               
0.60%, 08/11/09 (b)
    41,550       41,550  
Mortgage RB (Western Maryland Health System)
Series 2006A
               
1.00%, 09/09/09 (b)(c)(d)
    14,665       14,665  
Project & Refunding RB (Mercy Center)
Series 1996
               
0.31%, 07/02/09 (a)(b)(c)(d)
    18,185       18,185  
RB (De Matha Catholic High School)
Series 2008
               
0.33%, 07/02/09 (a)(b)
    9,110       9,110  
RB (Frederick Memorial Hospital)
Series 2008
               
0.29%, 07/01/09 (a)(b)
    8,000       8,000  
RB (John Hopkins Univ)
Series 2008A
               
0.20%, 07/02/09 (a)(c)(d)
    3,850       3,850  
RB (Kennedy Krieger)
Series 2006
               
2.50%, 07/02/09 (a)(b)
    8,975       8,975  
RB (LifeBridge Health)
Series 2008
               
0.45%, 07/02/09 (a)(b)(c)(d)
    9,000       9,000  
RB (Pooled Loan Program)
Series 1985B
               
0.26%, 07/01/09 (a)(b)
    10,275       10,275  
RB (Pooled Loan Program)
Series 1994D
               
0.30%, 07/02/09 (a)(b)
    4,722       4,722  
RB (Univ of Maryland Medical System)
Series 2007A
               
0.25%, 07/02/09 (a)(b)
    6,250       6,250  
RB (Univ of Maryland Medical System)
Series 2008E
               
2.45%, 07/02/09 (a)(b)
    7,000       7,000  
RB (Upper Chesapeake Hospitals)
Series 2008B
               
0.29%, 07/01/09 (a)(b)
    5,780       5,780  
Maryland State Economic Development Corp
RB (Constellation Energy)
Series 2007
               
0.48%, 07/02/09 (a)(b)
    13,000       13,000  
Montgomery Cnty Housing Opportunities Commission
Housing Development Bonds 2008 Issue A
1.04%, 01/01/10
    8,250       8,290  
 
 
 
See financial notes 27

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Housing RB (Oakfield Apts)
Series 2005I
               
0.28%, 07/01/09 (a)(b)
    6,550       6,550  
                 
              190,102  
 
Massachusetts 2.5%
Gloucester
BAN
2.40%, 09/18/09
    25,000       25,018  
Lowell
BAN
Series A
               
1.75%, 09/18/09
    5,110       5,121  
Massachusetts
GO Bonds Consolidated Loan of 1998
Series C
               
0.45%, 07/02/09 (a)(c)(d)
    3,485       3,485  
GO Bonds Consolidated Loan of 2000
Series A
               
0.62%, 02/01/10 (b)
    1,025       1,067  
1.00%, 02/01/10 (b)
    8,625       8,963  
GO Bonds Consolidated Loan of 2001
Series D
               
0.45%, 07/02/09 (a)(c)(d)
    2,785       2,785  
GO Bonds Consolidated Loan of 2007
Series C
               
0.29%, 07/02/09 (a)(c)(d)
    10,500       10,500  
0.39%, 07/02/09 (a)(c)(d)
    3,000       3,000  
GO Refunding Bonds
Series 2002A
               
0.40%, 02/01/10
    7,665       7,893  
GO Refunding Bonds
Series 2004A
               
0.60%, 07/02/09 (a)(c)(d)
    3,950       3,950  
GO Refunding Bonds
Series 2004B
               
1.75%, 07/02/09 (a)(c)(d)
    7,600       7,600  
Massachusetts Bay Transportation Auth
Assessment Bonds
Series 2006A
               
1.76%, 07/02/09 (a)(c)(d)
    7,955       7,955  
Assessment Bonds
Series 2008A
               
0.44%, 07/02/09 (a)(c)(d)
    2,300       2,300  
Sr Sales Tax Bonds
Series 2005A
               
1.76%, 07/02/09 (a)(c)(d)
    5,485       5,485  
Massachusetts Development Finance Agency
First Mortgage RB (Brookhaven at Lexington)
Series 2005B
               
0.28%, 07/02/09 (a)(b)
    4,300       4,300  
M/F Housing RB (Archstone Reading Apts)
Series 2004A
               
0.36%, 07/02/09 (a)(b)
    12,560       12,560  
M/F Housing Refunding RB (Kensington at Chelmsford)
Series 2002
               
0.32%, 07/02/09 (a)(b)
    15,650       15,650  
RB (Greater Boston Food Bank)
Series 2008A
               
0.28%, 07/01/09 (a)(b)
    11,700       11,700  
RB (Thayer Academy)
Series 2007
               
0.34%, 07/02/09 (a)(b)(c)
    2,295       2,295  
RB (Worcester Academy)
Series 2000
               
0.83%, 07/02/09 (a)(b)
    1,200       1,200  
Solid Waste Disposal RB (Newark Group)
Series 2001C
               
0.40%, 07/01/09 (a)(b)
    7,300       7,300  
Massachusetts Health & Educational Facilities Auth
RB (Amherst College)
Series H
               
2.85%, 07/09/09
    4,845       4,845  
RB (Baystate Medical Center)
Series 2009J2
               
0.15%, 07/01/09 (a)(b)
    1,700       1,700  
RB (Capital Asset Program)
Series M2
               
0.30%, 07/02/09 (a)(b)
    6,175       6,175  
RB (Dana-Farber Cancer Institute)
Series 2008L2
               
0.25%, 07/02/09 (a)(b)
    6,200       6,200  
RB (Massachusetts Institute of Technology)
Series K
               
0.29%, 07/02/09 (a)(c)(d)(f)
    5,198       5,198  
0.30%, 07/02/09 (a)(c)(d)
    5,000       5,000  
RB (Massachusetts Institute of Technology)
Series 2008O
               
0.44%, 07/02/09 (a)(c)(d)
    4,685       4,685  
RB (Partners HealthCare System)
Series 2003D2
               
0.17%, 07/02/09 (a)
    10,000       10,000  
RB (Partners HealthCare System)
Series 2005F4
               
0.25%, 07/02/09 (a)(c)
    68,110       68,110  
RB (Partners HealthCare System)
Series 2008H1
               
0.50%, 01/13/10
    5,000       5,000  
RB (South Shore Hospital)
Series 2008G
               
0.43%, 07/02/09 (a)(b)(c)
    55,460       55,460  
Refunding RB (Suffolk Univ)
Series 2007B
               
0.30%, 07/02/09 (a)(b)
    3,400       3,400  
Revenue Notes (Harvard Univ)
Series EE
               
0.35%, 02/24/10
    17,204       17,204  
Massachusetts HFA
Housing Bonds
Series 2005D
               
0.37%, 07/02/09 (a)(c)(d)
    7,830       7,830  
S/F Housing RB
Series 122
               
0.46%, 07/02/09 (a)(c)(d)
    20,215       20,215  
Massachusetts School Building Auth
CP
Series A
               
0.50%, 07/08/09 (b)
    23,385       23,385  
Dedicated Sales Tax Bonds
Series 2005A
               
0.39%, 07/02/09 (a)(c)(d)
    9,900       9,900  
0.39%, 07/02/09 (a)(c)(d)
    21,540       21,540  
0.55%, 07/02/09 (a)(c)(d)
    3,100       3,100  
 
 
 
28 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Dedicated Sales Tax Bonds
Series 2007A
               
0.39%, 07/02/09 (a)(c)(d)
    5,400       5,400  
Massachusetts Water Pollution Abatement Trust
Pool Program Refunding Bonds
Series 2006
               
0.31%, 07/02/09 (a)(c)(d)
    8,195       8,195  
State Revolving Fund Bonds
Series 14
               
0.31%, 07/02/09 (a)(c)(d)
    6,665       6,665  
Massachusetts Water Resources Auth
General RB
Series 2002J
               
0.31%, 07/02/09 (a)(c)(d)
    7,500       7,500  
0.31%, 07/02/09 (a)(c)(d)
    5,645       5,645  
General Refunding RB
Series 2005B
               
0.21%, 07/02/09 (a)(c)(d)
    10,700       10,700  
General Refunding RB
Series 2007B
               
0.20%, 07/02/09 (a)(c)(d)
    2,535       2,535  
Needham
GO BAN 2009
0.44%, 12/15/09
    5,169       5,195  
New Bedford
GO BAN 2009
0.80%, 02/12/10
    9,000       9,066  
Silver Lake Regional SD
GO BAN
2.10%, 08/21/09
    6,900       6,913  
                 
              496,888  
 
Michigan 2.4%
Detroit
Sewage Disposal System RB
Series 1999A
               
1.00%, 01/01/10 (b)
    36,095       37,357  
1.40%, 01/01/10 (b)
    750       775  
1.50%, 01/01/10 (b)
    200       206  
Detroit SD
Unlimited Tax GO School Building & Site Improvement Bonds
Series 2003B
               
0.35%, 07/02/09 (a)(b)(c)(d)
    12,375       12,375  
Grand Rapids
Sewer System Improvement & Refunding RB
Series 1998A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    6,900       6,900  
Hennepin Cnty Housing & Redevelopment Auth
M/F Housing RB (City Apts at Loring Park)
Series 2001
               
0.42%, 07/02/09 (a)(b)
    17,250       17,250  
Kent Hospital Finance Auth
Refunding RB (Spectrum Health System)
Series 2008B3
               
0.21%, 07/01/09 (a)(c)
    4,000       4,000  
Michigan Higher Education Facilities Auth
Limited Obligation Refunding RB (Hope College)
Series 2004
               
0.32%, 07/02/09 (a)(b)
    3,265       3,265  
Michigan Housing Development Auth
Rental Housing RB
Series 2000A
               
0.38%, 07/01/09 (a)(c)
    24,790       24,790  
Rental Housing RB
Series 2006D
               
0.56%, 07/02/09 (a)(c)(d)
    5,250       5,250  
S/F Mortgage RB
Series 2007D
               
0.50%, 07/02/09 (a)(c)
    16,600       16,600  
S/F Mortgage RB
Series 2007F
               
0.55%, 07/01/09 (a)(c)
    30,000       30,000  
S/F Mortgage RB
Series 2009D
               
0.30%, 07/01/09 (a)(c)
    14,900       14,900  
Michigan Job Development Auth
Limited Obligation RB (Frankenmuth Bavarian Inn Motor Lodge)
Series 1985
               
0.70%, 07/01/09 (a)(b)
    7,100       7,100  
Michigan State Building Auth
Refunding RB (Facilities Program)
Series 2005I
               
0.26%, 07/02/09 (a)(b)(c)(d)
    4,485       4,485  
Michigan State Hospital Finance Auth
Hospital RB (Henry Ford Health System)
Series 1999A
               
1.30%, 11/15/09 (b)
    1,945       1,998  
Hospital Refunding RB (Henry Ford Health System)
Series 2006B
               
0.32%, 07/01/09 (a)(b)
    19,100       19,100  
RB (Ascension Health Credit Group)
Series 1999A
               
0.75%, 11/15/09 (b)
    26,000       26,783  
0.80%, 11/15/09 (b)
    200       206  
1.08%, 11/15/09 (b)
    10,000       10,287  
1.30%, 11/15/09 (b)
    2,000       2,053  
RB (Ascension Health Credit Group)
Series 1999B1
               
0.70%, 01/06/10
    20,000       20,000  
Michigan State Strategic Fund
Limited Obligation RB (American Cancer Society)
Series 2000
               
0.85%, 07/02/09 (a)(b)
    2,745       2,745  
Limited Obligation RB (Consumers Energy)
Series 2005
               
0.30%, 07/01/09 (a)(b)
    7,000       7,000  
Limited Obligation RB (Metaltec Steel Abrasive)
Series 2006
               
0.80%, 07/02/09 (a)(b)
    2,230       2,230  
Limited Obligation RB (United Machining)
Series 1998
               
1.00%, 07/02/09 (a)(b)
    2,600       2,600  
Limited Obligation Refunding RB (Van Andel Research Institute)
Series 2008
               
0.32%, 07/01/09 (a)(b)(g)
    90,780       90,780  
Oakland Cnty
Limited Obligation RB (Husky Envelope Products)
Series 1999
               
1.00%, 07/02/09 (a)(b)
    800       800  
 
 
 
See financial notes 29

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Wayne Cnty Airport Auth
Airport RB (Detroit Metropolitan Airport)
Series 2005
               
0.35%, 07/02/09 (a)(b)(c)(d)
    11,330       11,330  
1.00%, 07/02/09 (a)(b)(c)(d)
    12,000       12,000  
Airport RB (Detroit Metropolitan Airport)
Series 2007
               
0.63%, 07/02/09 (a)(b)(c)(d)
    26,320       26,320  
Airport RB (Detroit Metropolitan Airport)
Series 2008A
               
0.28%, 07/02/09 (a)(b)(c)(d)
    47,800       47,800  
Airport Refunding RB (Detroit Metropolitan Airport)
Series 2008C
               
0.32%, 07/02/09 (a)(b)
    14,290       14,290  
0.32%, 07/02/09 (a)(b)
    9,975       9,975  
                 
              493,550  
 
Minnesota 1.4%
Duluth Econ Dev Auth & Brainerd
Health Care Facilities RB (Benedictine Health System)
Series 1993C & 1993E
               
0.39%, 07/02/09 (a)(b)(c)(d)
    14,360       14,360  
East Grand Forks
Solid Waste Disposal Refunding RB (American Crystal Sugar Co)
Series 2009
               
0.35%, 07/02/09 (a)(b)
    19,350       19,350  
Eden Prairie
M/F Housing RB (Eden Prairie Leased Housing Associates I)
Series 2003A
               
0.44%, 07/03/09 (a)(b)
    17,500       17,500  
Hennepin Cnty Housing & Redevelopment Auth
M/F Housing Refunding RB (Stone Arch Apts)
Series 2002
               
0.43%, 07/02/09 (a)(b)
    2,800       2,800  
Mendota Heights
Refunding IDRB (Dakota Business Plaza)
Series 2000
               
0.52%, 07/02/09 (a)(b)
    2,300       2,300  
Minneapolis
RB (Fairview Health Services)
Series 2008C
               
0.16%, 07/01/09 (a)(b)
    5,800       5,800  
RB (Fairview Health Services)
Series 2008D
               
0.16%, 07/01/09 (a)(b)
    2,300       2,300  
Minneapolis-St. Paul Metropolitan Airports Commission
Subordinate Airport RB
Series 2005A
               
0.29%, 07/02/09 (a)(b)(c)(d)
    3,405       3,405  
Minnesota
COP Aid Anticipation
Series 2008
               
1.65%, 09/04/09
    12,000       12,028  
Minnesota Agricultural & Economic Development Board
RB (Evangelical Lutheran Good Samaritan Society)
Series 1996
               
0.65%, 07/02/09 (a)(b)
    7,200       7,200  
Minnesota HFA
Residential Housing Finance Bonds
Series 2005M
               
0.39%, 07/02/09 (a)(c)
    1,720       1,720  
Residential Housing Finance Bonds
Series 2006G
               
1.00%, 07/02/09 (a)(c)(d)
    4,985       4,985  
Minnesota Higher Education Facilities Auth
RB (Hamline Univ of Minnesota)
Series Six–E1
               
0.29%, 07/02/09 (a)(b)
    2,135       2,135  
RB (Hamline Univ of Minnesota)
Series Six–E2
               
0.29%, 07/02/09 (a)(b)
    3,715       3,715  
Rochester
Health Care Facilities RB (Mayo Foundation)
Series 2000A
               
0.55%, 07/13/09
    31,000       31,000  
0.60%, 07/13/09
    23,000       23,000  
Health Care Facilities RB (Mayo Foundation)
Series 2001A
               
0.60%, 07/13/09 (c)
    3,600       3,600  
Health Care Facilities RB (Mayo Foundation)
Series 2002C
               
0.25%, 07/01/09 (a)(c)
    9,000       9,000  
Health Care Facilities RB (Mayo Clinic)
Series 2008D
               
0.55%, 05/10/10
    30,000       30,000  
St. Cloud
Health Care RB (CentraCare Health System)
Series 2008A
               
0.38%, 07/02/09 (a)(b)(c)
    7,780       7,780  
Health Care RB (CentraCare Health System)
Series 2008B
               
0.40%, 07/02/09 (a)(b)(c)
    31,560       31,560  
Health Care RB (CentraCare Health System)
Series 2008C
               
0.30%, 07/02/09 (a)(b)(c)
    6,000       6,000  
St. Louis Park
M/F Housing RB (At The Park)
Series 2002A
               
0.45%, 07/03/09 (a)(b)
    3,300       3,300  
Refunding RB (Park Nicollet Health Services)
Series 2008 B1
               
0.27%, 07/02/09 (a)(b)
    8,500       8,500  
St. Paul Housing & Redevelopment Auth
District Heating RB
Series 1999D
               
2.00%, 07/03/09 (a)(b)
    2,590       2,590  
Western Minnesota Municipal Power Agency
Power Supply RB
Series 2006A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    27,625       27,625  
                 
              283,553  
 
Mississippi 0.6%
Mississippi Business Finance Corp
IDRB (Electric Mills Wood Preserving)
Series 1999
               
0.57%, 07/02/09 (a)(b)
    5,000       5,000  
RB (Chevron USA)
Series 2007C
               
0.65%, 08/03/09
    17,000       17,000  
RB (Jackson Medical Mall Foundation)
Series 2008A
               
0.35%, 07/02/09 (a)(b)
    5,105       5,105  
 
 
 
30 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB (PSL North America)
Series 2007A
               
0.32%, 07/02/09 (a)(b)
    58,000       58,000  
Mississippi Home Corp
M/F Housing RB (Edgewood Manor Apts)
Series 2008–2
               
0.44%, 07/02/09 (a)(b)
    6,750       6,750  
Mississippi Hospital Equipment & Facilities Auth
RB (North Mississippi Health Services)
Series 2001–1
               
0.15%, 07/02/09 (a)
    13,200       13,200  
RB (North Mississippi Health Services)
Series 2003–1
               
0.15%, 07/02/09 (a)
    9,258       9,258  
RB (North Mississippi Health Services)
Series 2003–2
               
0.15%, 07/02/09 (a)
    9,725       9,725  
                 
              124,038  
 
Missouri 2.3%
Bi-State Development Agency of the Missouri-Illinois Metropolitan District
Subordinate Mass Transit Sales Tax Appropriation Bonds (Metrolink Cross Cnty Extension)
Series 2005A
               
3.83%, 10/01/09 (b)
    29,575       29,733  
3.88%, 10/01/09 (b)
    275       276  
Blue Springs IDA
M/F Housing RB (Autumn Place Apts)
Series 2004
               
0.40%, 07/02/09 (a)(b)
    8,600       8,600  
Kansas City
Special Obligation Refunding Bonds (H. Roe Bartle Convention Center)
Series 2008E
               
0.28%, 07/01/09 (a)(b)
    14,250       14,250  
Kansas City IDA
M/F Housing RB (Clay Terrace Apts)
Series 2006
               
0.70%, 07/02/09 (a)(b)
    10,500       10,500  
M/F Housing RB (Timberlane Village Apts)
Series 1986
               
0.40%, 07/02/09 (a)(b)
    18,400       18,400  
RB (Kansas City Downtown Redevelopment District)
Series 2006A
               
0.35%, 07/01/09 (a)(b)
    17,900       17,900  
RB (Kansas City Downtown Redevelopment District)
Series 2006B
               
0.35%, 07/01/09 (a)(b)
    7,900       7,900  
Missouri Development Finance Board
Air Cargo Facility Improvement & Refunding RB (St. Louis Air Cargo Services)
Series 2000
               
0.45%, 07/02/09 (a)(b)
    12,000       12,000  
Missouri Health & Educational Facilities Auth
Educational Facilities RB (Diocese of Kansas City - St. Joseph & St. Pius X High School)
Series 2004A
               
0.80%, 07/02/09 (a)(b)
    2,680       2,680  
Educational Facilities RB (Rockhurst High School)
Series 2002
               
0.55%, 07/02/09 (a)(b)
    4,985       4,985  
Educational Facilities RB (Rockhurst High School)
Series 2006
               
0.55%, 07/02/09 (a)(b)
    5,000       5,000  
Educational Facilities RB (Washington Univ)
Series 2003A
               
0.35%, 07/02/09 (a)(c)(d)
    6,325       6,325  
Health Facilities RB (Barnes Hospital)
Series 1985B
               
0.33%, 07/01/09 (a)(b)
    8,365       8,365  
Health Facilities RB (SSM Health Care)
Series 2005B
               
0.45%, 07/02/09 (a)(c)(d)
    11,800       11,800  
Health Facilities RB (SSM Health Care)
Series 2005C4
               
0.62%, 07/01/09 (a)(b)(c)
    7,150       7,150  
Health Facilities RB (St. Luke’s Health System)
Series 2008A
               
0.30%, 07/01/09 (a)(b)
    8,350       8,350  
Health Facilities RB (St. Luke’s Health System)
Series 2008B
               
0.30%, 07/01/09 (a)(b)
    22,500       22,500  
RB (Ascension Health Credit Group)
Series 2003C2
               
0.73%, 03/03/10
    17,000       17,000  
RB (Ascension Health Credit Group)
Series 2003C3
               
0.73%, 03/03/10
    18,200       18,200  
Missouri Higher Education Loan Auth
Student Loan RB Sr
Series 2008 A2
               
0.48%, 07/02/09 (a)(b)
    56,250       56,250  
Missouri Housing Development Commission
S/F Mortgage RB (Homeownership Loan Program)
Series 2004A1
               
0.60%, 07/02/09 (a)(c)(d)
    2,960       2,960  
Missouri Joint Municipal Electric Utility Commission
Power Project RB (Prairie State)
Series 2007A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    12,150       12,150  
Missouri Public Utilities Commission
Interim Construction Notes
Series 2008
               
2.00%, 08/15/09
    8,390       8,400  
Springfield
Public Utility RB
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    30,445       30,445  
St. Charles Cnty IDA
M/F Housing Refunding RB (Time Centre Apts Phase I)
Series 2004A
               
0.40%, 07/02/09 (a)(b)
    15,600       15,600  
M/F Housing Refunding RB (Time Centre Apts Phase II)
Series 2004B
               
0.43%, 07/02/09 (a)(b)
    4,500       4,500  
St. Louis 
TRAN
Series 2009
               
0.60%, 06/30/10 (f)
    10,000       10,139  
St. Louis Cnty IDA
IDRB (Kessler Container)
Series 1997A
               
0.55%, 07/02/09 (a)(b)
    1,300       1,300  
 
 
 
See financial notes 31

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
M/F Housing RB (Black Forest Apts)
Series 1997
               
0.41%, 07/02/09 (a)(b)
    4,000       4,000  
M/F Housing RB (Southwest Crossing)
Series 2001
               
0.36%, 07/02/09 (a)(b)
    9,500       9,500  
M/F Housing RB (Whispering Lakes Apts)
Series 1995
               
0.41%, 07/02/09 (a)(b)
    7,435       7,435  
M/F Housing Refunding RB (Merchandise Mart Apts)
Series 2005A
               
0.36%, 07/02/09 (a)(b)
    20,475       20,475  
Univ of Missouri
Capital Projects Notes Fiscal 2009-2010
Series A
               
0.40%, 06/30/10 (f)
    40,000       40,635  
Washington IDA
IDRB (Clemco Industries)
Series 1997
               
0.60%, 07/02/09 (a)(b)
    2,710       2,710  
IDRB (Pauwels Transformers)
Series 1995
               
0.45%, 07/02/09 (a)(b)
    1,800       1,800  
                 
              460,213  
 
Montana 0.0%
Richland Cnty
Hospital RB (Sidney Health Center)
Series 2007A
               
1.35%, 07/02/09 (a)(b)
    9,600       9,600  
 
Nebraska 0.9%
Madison Cnty Hospital Auth No. 1
Hospital RB (Faith Regional Health Services)
Series 2008B
               
0.32%, 07/02/09 (a)(b)
    4,000       4,000  
Nebraska Investment Finance Auth
S/F Housing RB
Series 2006F
               
0.43%, 07/02/09 (a)(c)(d)
    7,880       7,880  
S/F Housing RB
Series 2007D
               
0.50%, 07/01/09 (a)(c)
    11,755       11,755  
Nebraska Public Power District
General RB
Series 2003A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    3,455       3,455  
General RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    24,740       24,740  
0.45%, 07/02/09 (a)(b)(c)(d)
    17,995       17,995  
Omaha Public Power District
Electric System RB
Series 2005A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    22,135       22,135  
Electric System RB
Series 2006A
               
1.00%, 07/23/09 (c)(d)
    10,070       10,070  
Electric System Subordinated RB
Series 2006B
               
0.32%, 07/02/09 (a)(c)(d)
    3,570       3,570  
Public Power General Agency
RB (Whelan Energy Center Unit 2)
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    47,260       47,260  
Stanton Cnty
IDRB (Nucor Corp)
Series 1996
               
0.60%, 07/01/09 (a)
    19,300       19,300  
                 
              172,160  
 
Nevada 2.7%
Clark Cnty
Airport System Jr Subordinate Lien Revenue Notes
Series 2009A
               
0.78%, 07/01/10 (f)
    40,000       40,681  
Airport System Subordinate Lien RB
Series 2007A1
               
0.28%, 07/02/09 (a)(b)(c)(d)
    7,160       7,160  
GO (Limited Tax) Bond Bank Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    26,160       26,160  
0.40%, 07/02/09 (a)(c)(d)
    18,965       18,965  
GO (Limited Tax) Bond Bank Bonds
Series 2008
               
0.30%, 07/02/09 (a)(c)(d)
    8,400       8,400  
IDRB (Southwest Gas)
Series 2003A
               
0.50%, 07/01/09 (a)(b)
    44,000       44,000  
Passenger Facility Charge RB (Las Vegas McCarran International Airport)
Series 2007A1
               
0.54%, 07/02/09 (a)(b)(c)(d)
    4,780       4,780  
Passenger Facility Charge RB (Las Vegas McCarran International Airport)
Series 2007A2
               
1.00%, 09/09/09 (b)(c)(d)
    35,060       35,060  
RB (Bishop Gorman High School)
Series 2006
               
0.95%, 07/02/09 (a)(b)
    14,335       14,335  
Sales & Excise Tax Revenue CP Notes
Series 2008A&B
               
0.50%, 07/06/09 (b)
    33,500       33,500  
0.55%, 08/05/09 (b)
    10,000       10,000  
0.52%, 10/07/09 (b)
    2,500       2,500  
Clark Cnty SD
GO (Limited Tax) Building Bonds
Series 2006B
               
0.28%, 07/02/09 (a)(b)(c)(d)
    7,125       7,125  
Clark Cnty Special Improvement District No. 121
Local Improvement Bonds (Southern Highlands Area)
Series 1999
               
1.25%, 12/01/09 (b)
    12,415       12,984  
Las Vegas Valley Water District
GO (Limited Tax) Water Improvement Bonds
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    27,995       27,995  
GO Limited Tax Water CP
Series 2004A
               
0.45%, 10/15/09 (c)
    30,000       30,000  
GO Limited Tax Water CP
Series 2004B
               
0.20%, 07/07/09 (c)
    95,000       95,000  
 
 
 
32 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Nevada Dept of Business & Industry
RB (LVE Energy Partners)
Series 2007
               
0.50%, 07/02/09 (a)(b)
    13,100       13,100  
RB (Nevada Cancer Institute)
Series 2003
               
0.32%, 07/02/09 (a)(b)
    1,000       1,000  
Nevada Housing Division
M/F Housing RB (Apache Pines Apts)
Series 1999A
               
0.43%, 07/02/09 (a)(b)
    7,415       7,415  
M/F Housing RB (Banbridge Apts)
Series 2000A
               
0.50%, 07/02/09 (a)(b)
    3,960       3,960  
M/F Housing RB (Sierra Pointe Apts)
Series 2005
               
0.43%, 07/02/09 (a)(b)
    6,065       6,065  
M/F Housing RB (Silver Pines Apts)
Series 2002A
               
0.43%, 07/02/09 (a)(b)
    8,600       8,600  
M/F Housing RB (St. Rose Srs Apts)
Series 2002AB
               
0.43%, 07/02/09 (a)(b)
    14,770       14,770  
M/F Housing Refunding RB (Oakmont)
Series 2002
               
0.55%, 07/02/09 (a)(b)
    4,350       4,350  
Nevada System of Higher Education
Univ RB
Series 2005B
               
1.00%, 09/09/09 (c)(d)
    13,075       13,075  
North Las Vegas
GO Building Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    30,560       30,560  
Reno
Hospital Refunding RB (Renown Regional Medical Center)
Series 2009A
               
0.20%, 07/01/09 (a)(b)
    5,475       5,475  
Hospital Refunding RB (Renown Regional Medical Center)
Series 2009B
               
0.21%, 07/01/09 (a)(b)
    5,975       5,975  
Truckee Meadows Water Auth
Water Refunding RB
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    10,300       10,300  
Water Revenue CP
Series 2006B
               
0.45%, 07/20/09 (b)
    5,300       5,300  
0.45%, 08/14/09 (b)
    2,000       2,000  
                 
              550,590  
 
New Hampshire 0.3%
New Hampshire Business Finance Auth
RB (Cottage Hospital)
Series 2005
               
0.95%, 07/02/09 (a)(b)
    7,105       7,105  
Solid Waste Disposal RB (Lonza Biologics)
Series 2003
               
0.48%, 07/02/09 (a)(b)
    30,000       30,000  
New Hampshire Health & Educational Facilities Auth
RB (Frisbie Memorial Hospital)
Series 2005
               
0.36%, 07/02/09 (a)(b)
    3,220       3,220  
RB (Riverwoods at Exeter)
Series 2003
               
0.30%, 07/02/09 (a)(b)
    3,085       3,085  
RB (Riverwoods at Exeter)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    15,000       15,000  
RB (Southern New Hampshire Univ)
Series 2008
               
0.27%, 07/02/09 (a)(b)
    8,000       8,000  
                 
              66,410  
 
New Jersey 1.2%
East Brunswick Township
BAN 2009
0.54%, 04/28/10
    15,000       15,118  
New Jersey Economic Development Auth
Exempt Facility RB (Chambers Co-Generation)
Series 1991
               
1.50%, 07/06/09 (b)
    10,000       10,000  
IDRB (Advanced Drainage Systems)
Series 2007
               
0.60%, 07/02/09 (a)(b)
    7,750       7,750  
RB (Hamilton Industrial Development)
Series 1998
               
0.57%, 07/01/09 (a)(b)
    4,425       4,425  
RB (Jewish Home at Rockleigh)
Series 1998B
               
0.70%, 07/02/09 (a)(b)
    8,875       8,875  
RB (Research & Manufacturing Corp of America)
Series 2006
               
0.57%, 07/02/09 (a)(b)
    3,510       3,510  
School Facilities Construction Bonds
Series 2008X
               
0.18%, 07/01/09 (a)(b)
    5,550       5,550  
School Facilities Construction Notes
Series 2009A
               
0.46%, 06/18/10
    25,000       25,487  
0.47%, 06/18/10
    48,000       48,937  
School Facilities Construction Refunding Bonds
Series 2008V2
               
0.75%, 07/01/09 (a)(b)
    7,625       7,625  
School Facilities Construction Refunding Bonds
Series 2008V5
               
0.32%, 07/01/09 (a)(b)
    30,000       30,000  
Thermal Energy Facilities RB (Marina Energy LLC-2001)
Series A
               
0.32%, 07/02/09 (a)(b)
    8,400       8,400  
New Jersey Health Care Facilities Financing Auth
RB (Meridian Health Care System Obligated Group)
Series 2007
               
0.23%, 07/01/09 (a)(b)(c)
    18,000       18,000  
RB (Robert Wood Johnson Univ Hospital)
Series 2004
               
0.22%, 07/02/09 (a)(b)
    4,200       4,200  
New Jersey Housing & Mortgage Finance Agency
M/F RB
Series 2008F
               
0.25%, 07/02/09 (a)(b)
    12,400       12,400  
 
 
 
See financial notes 33

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
New Jersey State Higher Education Assistance Auth
Student Loan RB
Series 2008A
               
0.54%, 07/02/09 (a)(b)(c)(d)
    7,640       7,640  
New Jersey Tobacco Settlement Financing Corp
Tobacco Settlement Asset-Backed Bonds
Series 2002
               
0.33%, 07/02/09 (a)(b)(c)(d)
    450       450  
New Jersey Transportation Trust Fund Auth
Transportation System Bonds
Series 2005A
               
1.05%, 12/15/09
    6,500       6,624  
Transportation System Bonds
Series 2006A
               
3.35%, 07/02/09 (a)(b)(c)(d)
    1,610       1,610  
Transportation System Bonds
Series 2006C
               
0.24%, 07/02/09 (a)(b)(c)(d)
    15,250       15,250  
0.24%, 07/02/09 (a)(b)(c)(d)
    1,735       1,735  
New Jersey Turnpike Auth
Turnpike RB
Series 2003A & Refunding RB
               
Series 2005A
               
0.85%, 07/02/09 (a)(b)(c)(d)
    5,335       5,335  
                 
              248,921  
 
New Mexico 0.3%
Bernalillo Cnty
M/F Housing Refunding RB (Desert Willow Apts)
Series 2008
               
0.50%, 07/02/09 (a)(b)
    3,750       3,750  
Farmington
Hospital RB (San Juan Regional Medical Center)
Series 2004B
               
0.28%, 07/02/09 (a)(b)
    5,000       5,000  
New Mexico Finance Auth
State Transportation Subordinate Lien Refunding RB
Series 2008B1
               
0.30%, 07/02/09 (a)(b)
    10,800       10,800  
New Mexico Hospital Equipment Loan Council
Hospital System RB (Presbyterian Healthcare Services)
Series 2008B
               
0.30%, 07/02/09 (a)(c)
    18,750       18,750  
Hospital System RB (Presbyterian Healthcare Services)
Series 2008D
               
0.23%, 07/02/09 (a)(c)
    10,800       10,800  
Santa Fe
Subordinate Lien Wastewater System RB (Gross Receipts Tax)
Series 1997B
               
0.28%, 07/01/09 (a)(b)
    14,900       14,900  
                 
              64,000  
 
New York 7.7%
Albany Cnty Airport Auth
Airport Refunding RB
Series 2008A
               
0.49%, 07/02/09 (a)(b)
    8,080       8,080  
Metropolitan Transportation Auth
Dedicated Tax Fund Bonds
Series 2002A
               
0.69%, 07/02/09 (a)(b)(c)(d)
    6,410       6,410  
Dedicated Tax Fund Refunding Bonds
Series 2008A
               
0.80%, 07/02/09 (a)(b)(c)
    75,000       75,000  
Nassau Health Care Corp
Bonds
Series 2009D2
               
0.50%, 07/26/09 (b)
    9,000       9,000  
New Rochelle IDA
IDRB (West End Phase I Facility)
Series 2006
               
0.70%, 07/02/09 (a)(b)
    9,000       9,000  
New York City
GO Bonds Fiscal 1995
Series F3
               
0.23%, 07/01/09 (a)(b)
    7,375       7,375  
GO Bonds Fiscal 1995
Series F6
               
0.23%, 07/01/09 (a)(b)
    18,925       18,925  
GO Bonds Fiscal 2002
Series A1
               
0.49%, 07/02/09 (a)(c)(d)
    24,750       24,750  
GO Bonds Fiscal 2004
Series F
               
0.85%, 07/02/09 (a)(c)(d)(g)
    190,000       190,000  
GO Bonds Fiscal 2005
Series C3
               
0.28%, 07/02/09 (a)(c)(d)
    12,700       12,700  
GO Bonds Fiscal 2005
Series G&O
               
0.26%, 07/02/09 (a)(c)(d)
    9,115       9,115  
GO Bonds Fiscal 2006
Series F4
               
0.19%, 07/02/09 (a)(b)
    29,125       29,125  
GO Bonds Fiscal 2008
Series D3
               
0.16%, 07/02/09 (a)(c)
    1,000       1,000  
New York City Housing Development Corp
M/F Housing RB
Series 2008I1
               
0.60%, 08/13/09
    5,150       5,150  
M/F Housing RB
Series 2008I2
               
0.73%, 05/13/10
    43,250       43,250  
M/F Rental Housing RB (Sierra)
Series 2003A
               
0.30%, 07/01/09 (a)(b)
    12,205       12,205  
M/F Rental Housing RB (The Nicole)
Series 2005A
               
0.30%, 07/01/09 (a)(b)
    10,200       10,200  
M/F Rental Housing RB (West End Towers)
Series 2004A
               
0.30%, 07/01/09 (a)(b)
    29,500       29,500  
New York City IDA
Empowerment Zone RB (Tiago Holdings)
Series 2007
               
0.44%, 07/02/09 (a)(b)
    16,000       16,000  
Refunding IDRB (Allway Tools)
Series 1997
               
0.70%, 07/02/09 (a)(b)
    1,120       1,120  
New York City Municipal Water Finance Auth
CP
Series 6
               
0.50%, 08/20/09
    50,000       50,000  
 
 
 
34 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
CP
Series 7
               
0.50%, 08/13/09
    37,000       37,000  
Water & Sewer System RB (Second General Resolution) Fiscal 2009
Series AA
               
0.26%, 07/02/09 (a)(c)(d)
    7,295       7,295  
Water & Sewer System RB (Second General Resolution) Fiscal 2009
Series FF2
               
0.26%, 07/02/09 (a)(c)(d)
    1,870       1,870  
Water & Sewer System RB (Second General Resolution) Fiscal 2009
Series GG1
               
0.26%, 07/02/09 (a)(c)(d)
    3,745       3,745  
Water & Sewer System RB Fiscal 2002
Series G
               
0.39%, 07/02/09 (a)(c)(d)
    7,500       7,500  
Water & Sewer System RB Fiscal 2003
Series A
               
0.39%, 07/02/09 (a)(c)(d)
    9,900       9,900  
0.49%, 07/02/09 (a)(c)(d)
    14,900       14,900  
Water & Sewer System RB Fiscal 2003
Series E
               
0.34%, 07/02/09 (a)(c)(d)
    24,100       24,100  
Water & Sewer System RB Fiscal 2005
Series D
               
0.26%, 07/02/09 (a)(c)(d)
    5,000       5,000  
Water & Sewer System RB Fiscal 2008
Series B1
               
0.18%, 07/02/09 (a)(c)
    3,800       3,800  
Water & Sewer System RB Fiscal 2009
Series A
               
0.44%, 07/02/09 (a)(c)(d)
    15,320       15,320  
0.44%, 07/02/09 (a)(c)(d)
    1,000       1,000  
New York City Transitional Finance Auth
Future Tax Secured Bonds Fiscal 2003
Series D
               
0.34%, 07/02/09 (a)(c)(d)
    13,700       13,700  
New York State Dormitory Auth
State Personal Income Tax RB
Series 2005B
               
1.73%, 07/02/09 (a)(c)(d)
    7,815       7,815  
State Personal Income Tax RB
Series 2005F
               
0.26%, 07/02/09 (a)(c)(d)
    4,525       4,525  
0.44%, 07/02/09 (a)(c)(d)
    3,000       3,000  
New York State Energy Research & Development Auth
Facilities RB (Consolidated Edison Co of New York)
Series 2005A1
               
0.14%, 07/01/09 (a)(b)
    10,050       10,050  
New York State Environmental Facilities Corp
State Clean Water & Drinking Water Revolving Funds RB (Second Resolution)
Series 2002B
               
0.34%, 07/02/09 (a)(c)(d)
    16,500       16,500  
New York State HFA
Housing RB (101 West End Ave)
Series 1998A
               
0.27%, 07/01/09 (a)(b)
    14,600       14,600  
Housing RB (150 E 44th St)
Series 2000A
               
0.27%, 07/01/09 (a)(b)
    20,800       20,800  
Housing RB (250 W 50th St)
Series 1997A
               
0.30%, 07/01/09 (a)(b)
    5,395       5,395  
Housing RB (345 E 94th St)
Series 1998A
               
0.27%, 07/01/09 (a)(b)
    165       165  
Housing RB (600 West 42nd St)
Series 2007A
               
0.25%, 07/01/09 (a)(b)
    45,000       45,000  
Housing RB (88 Leonard St)
Series 2005A
               
0.17%, 07/01/09 (a)(b)
    21,100       21,100  
Housing RB (900 Eighth Avenue)
Series 2002A
               
0.25%, 07/01/09 (a)(b)
    22,400       22,400  
Housing RB (Archstone Westbury)
Series 2004A
               
0.35%, 07/01/09 (a)(b)
    17,000       17,000  
Housing RB (Avalon Bowery Place II)
Series 2006A
               
0.53%, 07/01/09 (a)(b)
    10,000       10,000  
Housing RB (Helena Housing)
Series 2003A
               
0.40%, 07/01/09 (a)(b)
    30,000       30,000  
Housing RB (Normandie Court II)
Series 1999A
               
0.30%, 07/01/09 (a)(b)
    7,330       7,330  
Housing RB (Ocean Park Apts)
Series 2005A
               
0.40%, 07/01/09 (a)(b)
    6,100       6,100  
Housing RB (The Helena)
Series 2004A
               
0.40%, 07/01/09 (a)(b)
    50,000       50,000  
New York State Local Assistance Corp
Sr Lien Refunding Bonds
Series 2008BBV2
               
1.00%, 07/01/09 (a)(c)
    45,470       45,470  
New York State Mortgage Agency
Homeowner Mortgage RB
Series 101
               
0.45%, 07/02/09 (a)(c)(d)
    5,085       5,085  
Homeowner Mortgage RB
Series 109
               
0.41%, 07/02/09 (a)(c)(d)
    9,925       9,925  
Homeowner Mortgage RB
Series 115
               
1.15%, 07/01/09 (a)(c)
    20,975       20,975  
Homeowner Mortgage RB
Series 145 & 148
               
0.46%, 07/02/09 (a)(c)(d)
    3,650       3,650  
Homeowner Mortgage RB
Series 153
               
1.15%, 07/01/09 (a)(c)
    17,850       17,850  
Mortgage RB 29th
Series 
               
0.41%, 07/02/09 (a)(c)(d)
    20,440       20,440  
Mortgage RB 31st
Series A
               
0.23%, 07/01/09 (a)(c)(d)
    7,745       7,745  
 
 
 
See financial notes 35

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
New York State Power Auth
CP
Series 1
               
0.64%, 08/13/09
    41,760       41,760  
0.45%, 09/02/09
    18,212       18,212  
0.50%, 09/08/09
    4,000       4,000  
0.55%, 10/06/09
    38,200       38,200  
CP
Series 2
               
0.90%, 09/04/09
    10,500       10,500  
0.95%, 09/15/09
    20,500       20,500  
New York State Thruway Auth
State Personal Income Tax RB
Series 2009A
               
0.26%, 07/02/09 (a)(c)(d)
    10,000       10,000  
New York State Urban Development Corp
State Personal Income Tax RB
Series 2004A3D
               
0.75%, 07/02/09 (a)(c)
    28,300       28,300  
Port Auth of New York & New Jersey
Consolidated Bonds 137th
Series 
               
0.70%, 07/02/09 (a)(c)(d)
    4,050       4,050  
Consolidated Bonds 141st
Series 
               
0.46%, 07/02/09 (a)(c)(d)
    18,165       18,165  
Consolidated Bonds 143rd
Series 
               
0.41%, 07/02/09 (a)(c)(d)
    5,245       5,245  
Consolidated Bonds 146th
Series 
               
1.88%, 07/02/09 (a)(b)(c)(d)
    49,860       49,860  
Consolidated Bonds 147th
Series 
               
0.46%, 07/02/09 (a)(c)(d)
    36,820       36,820  
Consolidated Bonds 151st
Series 
               
0.41%, 07/02/09 (a)(c)(d)
    6,660       6,660  
Consolidated Bonds 152nd
Series 
               
0.35%, 07/02/09 (a)(c)(d)
    3,555       3,555  
0.41%, 07/02/09 (a)(c)(d)
    5,555       5,555  
0.41%, 07/02/09 (a)(c)(d)
    22,985       22,985  
CP
Series A
               
1.25%, 07/16/09
    14,840       14,840  
0.53%, 08/03/09
    19,860       19,860  
0.60%, 08/07/09
    3,055       3,055  
CP
Series B
               
0.55%, 10/09/09
    14,120       14,120  
Suffolk Cnty
TAN
Series 2009I
               
0.78%, 08/13/09
    15,000       15,021  
Triborough Bridge & Tunnel Auth
General RB
Series 2008C
               
0.44%, 07/02/09 (a)(c)(d)
    4,615       4,615  
General RB
Series 2009A1
               
1.95%, 01/20/10
    10,000       10,075  
Subordinate Refunding RB
Series 2002E
               
0.54%, 07/02/09 (a)(b)(c)(d)
    9,000       9,000  
Troy IDA
Civic Facility RB (Rensselaer Polytechnic Institute)
Series 2008B
               
0.32%, 07/02/09 (a)(b)
    3,100       3,100  
Yonkers IDA
IDRB (Greyston Bakery)
Series 2001
               
2.00%, 07/02/09 (a)(b)
    2,440       2,440  
                 
              1,556,448  
 
North Carolina 2.4%
Charlotte
Refunding RB (Charlotte Douglas International Airport)
Series 2008D
               
0.35%, 07/01/09 (a)(b)
    9,345       9,345  
Durham Housing Auth
M/F Housing RB (Pendleton Townhomes)
Series 2001
               
2.70%, 07/01/09 (a)(b)
    5,135       5,135  
Hertford Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Nucor)
Series 2000A
               
0.55%, 07/01/09 (a)
    26,500       26,500  
Johnston Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Flanders Corp)
Series 1998
               
0.55%, 07/01/09 (a)(b)
    4,500       4,500  
Mecklenburg Cnty
GO Bonds
Series 2006A
               
1.94%, 11/05/09
    12,000       12,041  
M/F Housing RB (Sycamore Green Apts)
Series 2001
               
0.55%, 07/02/09 (a)(b)
    6,040       6,040  
North Carolina
Limited Obligation Bonds
Series 2008A
               
0.20%, 07/02/09 (a)(c)(d)
    3,620       3,620  
North Carolina Capital Facilities Finance Agency
RB (Duke Univ)
Series 2005A
               
0.45%, 07/02/09 (a)(c)(d)
    8,600       8,600  
RB (Duke Univ)
Series 2005A & 2006A
               
0.18%, 07/01/09 (a)(c)(d)
    7,290       7,290  
RB (Republic Services)
Series 2007
               
2.70%, 07/01/09 (a)(b)
    10,000       10,000  
Solid Waste Disposal RB (Duke Energy Carolinas)
Series 2006A
               
0.55%, 07/02/09 (a)(b)
    16,000       16,000  
Student Housing RB (UNCP Univ Foundation)
Series 2001A
               
0.32%, 07/02/09 (a)(b)
    9,300       9,300  
 
 
 
36 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
North Carolina Medical Care Commission
First Mortgage RB (Deerfield Episcopal Retirement Community)
Series 2008B
               
0.29%, 07/02/09 (a)(b)
    5,000       5,000  
First Mortgage Refunding RB (Well Spring Retirement Community)
Series 2003C
               
0.50%, 07/02/09 (a)(b)
    7,600       7,600  
Health Care Facilities RB (Novant Health)
Series 2006
               
0.40%, 07/02/09 (a)(b)(c)(d)
    11,420       11,420  
0.40%, 07/02/09 (a)(b)(c)(d)
    17,335       17,335  
Health Care Facilities Refunding RB (FirstHealth of the Carolinas)
Series 2008B
               
0.25%, 07/01/09 (a)(c)
    37,515       37,515  
Health Care Facilities Refunding RB (Univ Health Systems of Eastern Carolina)
Series 2008A1
               
0.28%, 07/01/09 (a)(b)
    8,000       8,000  
Health Care Facilities Refunding RB (Univ Health Systems of Eastern Carolina)
Series 2008A2
               
0.35%, 07/01/09 (a)(b)
    22,540       22,540  
Health Care Facilities Refunding RB (Univ Health Systems of Eastern Carolina)
Series 2008B1
               
0.18%, 07/01/09 (a)(b)
    4,900       4,900  
North Carolina State Education Assistance Auth
Student Loan Refunding RB
Series 2008–2A1
               
0.38%, 07/02/09 (a)(b)
    25,000       25,000  
Student Loan Refunding RB
Series 2008–2A2
               
0.38%, 07/02/09 (a)(b)
    10,000       10,000  
Student Loan Refunding RB
Series 2008–3A1
               
0.48%, 07/02/09 (a)(b)
    30,000       30,000  
Student Loan Refunding RB
Series 2008–3A2
               
0.48%, 07/02/09 (a)(b)
    22,945       22,945  
Student Loan Refunding RB
Series 2008–5
               
0.38%, 07/02/09 (a)(b)
    27,870       27,870  
Piedmont Triad Airport Auth
Airport RB
Series 2008A
               
0.32%, 07/02/09 (a)(b)
    4,340       4,340  
Airport RB
Series 2008B
               
0.55%, 07/02/09 (a)(b)
    3,845       3,845  
Raleigh
Downtown Improvement COP
Series 2005B1
               
0.28%, 07/01/09 (a)(c)
    47,000       47,000  
Raleigh Utilities
Combined Enterprise System RB
Series 2008A
               
0.28%, 07/01/09 (a)(c)
    5,000       5,000  
Rowan Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Taylor Clay Products)
Series 2007A
               
0.57%, 07/02/09 (a)(b)
    8,490       8,490  
Sampson Cnty
COP
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    2,480       2,480  
Sampson Cnty Industrial Facilities & Pollution Control Finance Auth
IDRB (Crumpler Plastic Pipe)
Series 1999
               
0.57%, 07/02/09 (a)(b)
    1,000       1,000  
Surry Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Ottenweller Co)
Series 2007A
               
0.41%, 07/02/09 (a)(b)
    4,730       4,730  
Union Cnty
COP
Series 2006
               
0.21%, 07/02/09 (a)(b)(c)(d)
    10,385       10,385  
Wake Cnty
GO BAN
Series 2008
               
1.70%, 10/15/09
    17,500       17,590  
Wake Cnty Housing Auth
M/F Housing RB (Grove at Cary Park Apts)
Series 2001A
               
2.90%, 07/01/09 (a)(b)
    6,840       6,840  
M/F Housing RB (Walnut Ridge Apts)
Series 2000
               
2.70%, 07/01/09 (a)(b)
    9,405       9,405  
Wilmington Housing Auth
M/F Housing RB (Garden Lakes Estates)
Series 1999
               
2.70%, 07/01/09 (a)(b)
    6,415       6,415  
Winston-Salem
Water & Sewer System RB
Series 2002B
               
0.25%, 07/01/09 (a)(c)
    6,000       6,000  
Water & Sewer System Refunding RB
Series 2002C
               
0.25%, 07/01/09 (a)(c)
    11,300       11,300  
                 
              493,316  
 
North Dakota 0.2%
North Dakota HFA
Home Mortgage Finance Program
Series 2005A
               
0.37%, 07/01/09 (a)(c)
    22,100       22,100  
Home Mortgage Finance Program
Series 2005C
               
0.37%, 07/01/09 (a)(c)
    12,000       12,000  
Richland Cnty
Solid Waste Disposal RB (Minn-Dak Farmers Coop)
Series 1996A
               
0.75%, 07/02/09 (a)(b)
    2,355       2,355  
 
 
 
See financial notes 37

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Solid Waste Disposal RB (Minn-Dak Farmers Coop)
Series 1996B
               
0.75%, 07/02/09 (a)(b)
    215       215  
                 
              36,670  
 
Ohio 2.5%
Akron
Limited Tax BAN
Series 2008B
               
1.45%, 12/10/09
    10,000       10,046  
Akron, Bath & Copley Joint Township Hospital District
RB (Summa Health System)
Series 2004B
               
0.32%, 07/02/09 (a)(b)
    7,270       7,270  
Buckeye Tobacco Settlement Financing Auth
Tobacco Settlement Asset-Backed Bonds
Series 2007A2
               
0.25%, 07/02/09 (a)(b)(c)(d)
    56,410       56,410  
Bulter Cnty
Hospital Facilities RB (Fort Hamilton Hospital)
Series 2001D
               
1.16%, 07/02/09 (a)(b)(c)(d)
    8,330       8,330  
Cincinnati SD
Classroom Facilities Construction & Improvement Refunding Bonds
Series 2006
               
1.75%, 07/02/09 (a)(c)(d)
    26,470       26,470  
Cleveland
Airport System RB
Series 2000C
               
0.21%, 07/02/09 (a)(b)(c)(d)
    31,580       31,580  
Airport System RB
Series 2008C
               
1.00%, 07/02/09 (a)(b)
    5,710       5,710  
Water RB
Series 2007O
               
0.38%, 07/02/09 (a)(c)(d)
    14,850       14,850  
Cleveland-Cuyahoga Cnty Port Auth
Development Refunding RB Converted
Series 2005B
               
0.41%, 07/02/09 (a)(b)
    8,080       8,080  
Refunding RB (Judson )
Series 2005A
               
0.41%, 07/02/09 (a)(b)
    21,845       21,845  
Clinton Cnty
Hospital Refunding RB (McCullough-Hyde Memorial Hospital)
Series 2003B1
               
4.00%, 07/01/09 (a)(b)
    7,345       7,345  
Columbus
Sewerage System RB
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    1,400       1,400  
Columbus Regional Airport Auth
Airport Refunding RB
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,000       5,000  
Columbus SD
School Facilities Construction & Improvement BAN
Series 2009B
               
0.70%, 12/16/09
    10,000       10,037  
Cuyahoga Falls
Various Purpose GO (Limited Tax) Notes
Series 2008
               
1.45%, 12/09/09
    4,250       4,274  
Franklin Cnty
Health Care Facilities Improvement RB (Ohio Presbyterian Retirement Services)
Series 2006A
               
0.30%, 07/02/09 (a)(b)
    32,000       32,000  
Hospital Facilities RB (Doctors OhioHealth Corp)
Series 1998B
               
0.29%, 07/02/09 (a)(b)
    23,520       23,520  
Hospital Facilities Refunding RB (OhioHealth)
Series 2009B
               
0.32%, 07/01/09 (a)(c)
    32,200       32,200  
Hospital RB (Holy Cross Health System)
Series 1995
               
0.18%, 07/02/09 (a)
    4,900       4,900  
Geauga Cnty
RB
Series (South Franklin Circle) 2007B
               
1.65%, 07/01/09 (a)(b)
    31,100       31,100  
Lancaster Port Auth
Gas Supply RB
Series 2008
               
0.27%, 07/02/09 (a)(c)
    47,225       47,225  
Lucas Cnty
Hospital RB (ProMedica Healthcare Obligated Group)
Series 2008A
               
0.25%, 07/01/09 (a)(b)
    7,800       7,800  
Hospital RB (ProMedica Healthcare Obligated Group)
Series 2008B
               
0.20%, 07/01/09 (a)(b)
    5,500       5,500  
Maple Heights City SD
GO Unlimited Tax School Facilities Improvement Notes
Series 2008
               
2.60%, 11/05/09
    16,500       16,550  
Ohio
Air Quality Development Refunding RB (Dayton Power & Light Co)
Series 2008A
               
0.35%, 07/01/09 (a)(b)
    21,000       21,000  
Air Quality Development Refunding RB (Dayton Power & Light Co)
Series 2008B
               
0.40%, 07/01/09 (a)(b)
    8,350       8,350  
Higher Education GO Bonds
Series 2006B
               
0.20%, 07/02/09 (a)(c)(d)
    5,745       5,745  
Ohio Higher Educational Facility Commission
Higher Educational Facility RB (Lake Erie College)
Series 2003
               
4.25%, 07/02/09 (a)(b)
    11,315       11,315  
Higher Educational Facility RB (Pooled Financing)
Series 2002A
               
3.50%, 07/02/09 (a)(b)
    17,745       17,745  
Hospital RB (Univ Hospital Health Systems)
Series 2008A
               
0.31%, 07/01/09 (a)(b)
    1,700       1,700  
 
 
 
38 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Ohio Hospital RB (Cleveland Clinic Health System Obligated Group)
Series 2008AB
               
0.28%, 07/02/09 (a)(c)(d)
    5,175       5,175  
South-Western City SD
School Building Construction GO Bonds
Series 1999
               
1.28%, 12/01/09 (b)
    10,000       10,144  
                 
              500,616  
 
Oklahoma 0.2%
Oklahoma Development Finance Auth
Health System Refunding RB (INTEGRIS Baptist Medical Center)
Series 2007A1
               
0.40%, 08/28/09
    10,000       10,000  
Health System Refunding RB (INTEGRIS Baptist Medical Center)
Series 2007A2
               
0.27%, 07/02/09 (a)(b)(c)
    1,000       1,000  
RB (Shawnee Funding)
Series 1996
               
0.48%, 07/01/09 (a)(b)
    3,100       3,100  
Oklahoma State Student Loan Auth
Student Loan Bonds & Notes Sr Obligations
Series 2008IIA1
               
0.45%, 07/01/09 (a)(b)
    20,000       20,000  
Oklahoma State Turnpike Auth
Turnpike System Refunding RB Second Sr
Series 2006D
               
0.28%, 07/02/09 (a)(c)(d)
    12,650       12,650  
Tulsa Cnty Industrial Auth
Health Care RB (Saint Francis Health System)
Series 2006
               
0.30%, 07/02/09 (a)(c)(d)
    2,010       2,010  
                 
              48,760  
 
Oregon 0.6%
Oregon Dept of Administrative Services
COP
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    15,535       15,535  
Oregon Economic Development Commission
RB (Pendleton Flour Mills)
Series 1997–182
               
0.60%, 07/01/09 (a)(b)
    1,935       1,935  
Oregon Housing & Community Services Dept
S/F Mortgage RB
Series 2004L
               
0.39%, 07/01/09 (a)(c)
    5,000       5,000  
S/F Mortgage RB
Series 2005F
               
0.39%, 07/01/09 (a)(c)
    13,685       13,685  
Oregon State Facilities Auth
RB (Lewis & Clark College)
Series 2008A
               
0.34%, 07/02/09 (a)(b)
    21,960       21,960  
Port of Portland
Portland International Airport Refunding RB
Series 18A
               
0.35%, 07/01/09 (a)(b)
    9,500       9,500  
Portland International Airport Refunding RB
Series 18B
               
0.30%, 07/01/09 (a)(b)
    22,100       22,100  
Portland
M/F Housing RB (Village of Lovejoy Fountain)
Series 1997
               
3.15%, 07/01/09 (a)(b)
    11,560       11,560  
Salem Hospital Facility Auth
RB (Salem Hospital)
Series 2008B
               
0.20%, 07/02/09 (a)(b)
    10,000       10,000  
RB (Salem Hospital)
Series 2008C
               
0.31%, 07/01/09 (a)(b)
    5,800       5,800  
                 
              117,075  
 
Pennsylvania 3.3%
Adams Cnty IDA
RB (Gettysburg College)
Series 2008B
               
0.20%, 07/01/09 (a)(b)
    3,000       3,000  
Allegheny Cnty Hospital Development Auth
RB (Univ of Pittsburgh Medical Center)
Series 2005B
               
0.49%, 04/15/10 (e)
    12,294       12,294  
RB (Univ of Pittsburgh Medical Center)
Series 2006A
               
0.55%, 07/02/09 (a)(c)(d)
    19,000       19,000  
RB (Univ of Pittsburgh Medical Center)
Series 2007B1
               
0.35%, 07/02/09 (a)(b)(c)(d)
    30,000       30,000  
RB (Univ of Pittsburgh Medical Center)
Series 2007C
               
0.35%, 07/02/09 (a)(b)(c)(d)
    30,410       30,410  
RB (Univ of Pittsburgh Medical Center)
Series 2007D
               
0.31%, 07/02/09 (a)(b)(c)(d)
    52,965       52,965  
Butler Cnty IDA
Refunding RB (Concordia Lutheran Health & Human Care)
Series 2008A
               
0.30%, 07/02/09 (a)(b)
    4,000       4,000  
Cambria Cnty IDA
Refunding RB (American National Red Cross)
Series 2008
               
0.20%, 07/01/09 (a)(b)
    500       500  
Crawford Cnty IDA
RB (Greenleaf Corp)
Series 2007
               
0.65%, 07/02/09 (a)(b)
    8,780       8,780  
Cumberland Cnty Municipal Auth
RB (Diakon Lutheran Social Ministries)
Series 2007B
               
0.32%, 07/02/09 (a)(b)
    1,775       1,775  
RB (LSN/TLS Obligated Group)
Series 2003D
               
0.27%, 07/02/09 (a)(b)(d)
    10,000       10,000  
Delaware River Port Auth
Refunding RB
Series 2008A
               
0.27%, 07/02/09 (a)(b)
    1,600       1,600  
 
 
 
See financial notes 39

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Emmaus General Auth
Local Government RB (Bond Pool Program Lower Merion SD)
Series 1989B27
               
0.30%, 07/01/09 (a)(b)
    12,500       12,500  
Local Government RB (Bond Pool Program Pennridge SD)
Series 1989F22
               
0.30%, 07/01/09 (a)(b)
    16,500       16,500  
Franklin Cnty IDA
Bonds (Menno Haven)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    10,705       10,705  
Lackawanna Cnty
GO Notes
Series 2008A
               
2.60%, 07/02/09 (a)(b)(c)
    14,190       14,190  
Lehigh Cnty General Purpose Auth
College RB (Muhlenberg College)
Series 2008
               
0.23%, 07/02/09 (a)(b)
    12,415       12,415  
Montgomery Cnty IDA
Pollution Control Refunding RB (Peco Energy)
Series 1996A
               
0.67%, 08/05/09 (b)
    14,000       14,000  
Montgomery Cnty Redevelopment Auth
M/F Housing RB (Kingswood Apts)
Series 2001A
               
0.30%, 07/02/09 (a)(b)
    6,400       6,400  
Northeastern Pennsylvania Hospital & Education Auth
RB (Commonwealth Medical College)
Series 2009
               
0.27%, 07/02/09 (a)(b)
    5,725       5,725  
Northhampton Cnty
RB (Binney & Smith)
Series 1997B
               
0.57%, 07/01/09 (a)(b)
    675       675  
Pennsylvania
GO Bonds
First Series 2009
0.26%, 07/02/09 (a)(c)(d)
    4,000       4,000  
GO Bonds
Second Series 2009
0.26%, 07/02/09 (a)(c)(d)
    10,780       10,780  
Pennsylvania Economic Development Financing Auth
Exempt Facilities RB (Amtrak)
Series 2001B
               
0.40%, 07/02/09 (a)(b)
    14,000       14,000  
Exempt Facilities RB (PSEG Power)
Series 2007
               
0.40%, 07/01/09 (a)(b)
    5,500       5,500  
Pennsylvania Energy Development Auth
RB (B&W Ebensburg)
Series 1986
               
0.40%, 07/01/09 (a)(b)
    1,555       1,555  
Pennsylvania HFA
Rental Housing Refunding Bonds
Series 2008C
               
0.35%, 07/01/09 (a)(c)
    9,105       9,105  
S/F Mortgage RB
Series 2001–72A
               
0.50%, 07/02/09 (a)(c)(d)
    2,250       2,250  
S/F Mortgage RB
Series 2002–73A & 2002–74B
               
0.46%, 07/02/09 (a)(c)(d)
    2,240       2,240  
S/F Mortgage RB
Series 2004–77B
               
0.45%, 07/01/09 (a)(c)
    5,975       5,975  
S/F Mortgage RB
Series 2004–82B
               
0.28%, 07/01/09 (a)(c)
    9,185       9,185  
S/F Mortgage RB
Series 2004–83B
               
0.45%, 07/01/09 (a)(c)
    1,780       1,780  
S/F Mortgage RB
Series 2004-86B
               
0.30%, 07/01/09 (a)(c)
    17,160       17,160  
S/F Mortgage RB
Series 2004-86C
               
0.30%, 07/01/09 (a)(c)
    4,950       4,950  
Pennsylvania Higher Educational Facilities Auth
RB (Assoc of Independent Colleges & Universities)
Series 2004M3
               
0.47%, 07/02/09 (a)(b)
    5,000       5,000  
RB (Bloombsburg Student Housing Univ of Pennsylvania)
Series 2004A
               
0.36%, 07/02/09 (a)(b)
    7,525       7,525  
RB (Univ of Pennsylvania Health System)
Series 2008A
               
0.20%, 07/01/09 (a)(b)
    2,380       2,380  
RB (Univ of Pennsylvania)
Series 2005C
               
0.26%, 07/02/09 (a)(c)(d)
    3,650       3,650  
Pennsylvania Intergovernmental Coop Auth
Special Tax Refunding RB (Philadelphia Funding Program)
Series 2008A
               
0.50%, 07/02/09 (a)(b)(c)
    1,805       1,805  
Pennsylvania State Turnpike Commission
Turnpike RB
Series 2004A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    35,765       35,765  
Turnpike RB
Series 2008B2
               
0.30%, 07/02/09 (a)(b)
    5,000       5,000  
Turnpike RB
Series 2008B4
               
0.30%, 07/02/09 (a)(b)
    4,000       4,000  
Turnpike RB
Series 2008B6
               
0.29%, 07/02/09 (a)(b)
    4,000       4,000  
Pennsylvania State Univ
Bonds
Series 2007A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    18,350       18,350  
Philadelphia
Airport RB
Series 2007A
               
0.27%, 07/02/09 (a)(b)(c)(d)
    20,060       20,060  
Airport Refunding RB
Series 2007B
               
0.28%, 07/02/09 (a)(b)(c)(d)
    2,860       2,860  
GO Refunding Bonds
Series 2007B
               
3.50%, 07/02/09 (a)(b)(c)
    48,100       48,100  
Philadelphia Auth for Industrial Development
RB (Fox Chase Cancer Center Obligated Group)
Series 2007B
               
0.35%, 07/02/09 (a)(b)(c)(d)
    5,000       5,000  
 
 
 
40 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Philadelphia Redevelopment Auth
Qualified Redevelopment RB (Philadelphia Neighborhood Transformation Initiative)
Series 2005B
               
0.28%, 07/02/09 (a)(b)(c)(d)
    30,450       30,450  
Philadelphia SD
GO Refunding Bonds
Series 2008A1
               
0.30%, 07/02/09 (a)(b)
    14,000       14,000  
GO Refunding Bonds
Series 2008A2
               
0.32%, 07/02/09 (a)(b)
    20,000       20,000  
Pittsburgh & Allegheny Cnty Sports & Exhibition Auth
Lease RB (Allegheny Cnty)
Series 2007A
               
0.70%, 07/02/09 (a)(b)(c)(g)
    75,210       75,210  
Washington Cnty Hospital Auth
Hospital RB (Washington Hospital)
Series 2008A
               
0.30%, 07/02/09 (a)(b)
    4,280       4,280  
                 
              663,349  
 
Puerto Rico 0.1%
Puerto Rico
GO Public Improvement Refunding Bonds
Series 2007A8
               
0.07%, 07/02/09 (a)(b)
    20,300       20,300  
GO Public Improvement Refunding Bonds
Series 2007A9
               
0.07%, 07/02/09 (a)(b)
    2,200       2,200  
                 
              22,500  
 
Rhode Island 0.1%
Rhode Island Student Loan Auth
Student Loan Program RB
Series 2008B3
               
0.34%, 07/01/09 (a)(b)
    4,000       4,000  
Student Loan Program RB
Series 2008B4
               
0.34%, 07/01/09 (a)(b)
    13,000       13,000  
                 
              17,000  
 
South Carolina 1.8%
Charleston
Waterworks & Sewer System Capital Improvement RB
Series 2006B
               
0.32%, 07/02/09 (a)(c)
    21,150       21,150  
Greenville Hospital System
Hospital Refunding RB
Series 2008C
               
0.32%, 07/02/09 (a)(b)
    18,000       18,000  
Greenville IDA
IDRB (Stevens Aviation Technical Services)
Series 1997
               
0.62%, 07/02/09 (a)(b)
    8,300       8,300  
South Carolina Association of Governmental Organizations
Installment Purchase RB (Pickens Cnty SD)
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    12,165       12,165  
South Carolina Housing & Development Auth
M/F Rental Housing RB (Piedmont Manor Apts)
Series 2000B1
               
2.70%, 07/01/09 (a)(b)
    5,515       5,515  
M/F Rental Housing Refunding RB (Fairway Apts)
Series 2001A
               
0.30%, 07/01/09 (a)(b)
    7,735       7,735  
South Carolina Jobs Economic Development Auth
Economic Development RB (Ashley Hall)
Series 2007
               
0.32%, 07/02/09 (a)(b)
    19,000       19,000  
Economic Development RB (Bon Secours Health System)
Series 2008A
               
0.85%, 07/01/09 (a)(b)(c)
    69,525       69,525  
Economic Development RB (Holcim)
Series 2003
               
1.00%, 07/02/09 (a)(b)
    25,000       25,000  
Economic Development RB (Innovative Fibers)
Series 2007
               
0.47%, 07/02/09 (a)(b)
    7,050       7,050  
Economic Development RB (The Arts Partnership of Greater Spartanburg Inc)
Series 2006
               
0.32%, 07/02/09 (a)(b)
    5,745       5,745  
Hospital Refunding RB (AnMed Health)
Series 2009A
               
0.18%, 07/01/09 (a)(b)
    3,000       3,000  
Industrial RB (South Carolina Electric & Gas Co)
Series 2008
               
0.39%, 07/02/09 (a)(b)
    7,000       7,000  
South Carolina Public Service Auth
CP Revenue Notes
0.43%, 09/04/09
    11,200       11,200  
0.37%, 12/03/09
    12,090       12,090  
Revenue Obligations
Series 2004A
               
0.40%, 07/02/09 (a)(c)(d)
    33,660       33,660  
Revenue Obligations
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,940       5,940  
Revenue Obligations
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    20,535       20,535  
South Carolina Transportation Infrastructure Bank
RB
Series 1999A
               
0.70%, 10/01/09 (b)
    1,500       1,532  
0.70%, 10/01/09 (b)
    5,000       5,109  
RB
Series 2000A
               
0.70%, 10/01/09 (b)
    5,000       5,110  
Refunding RB
Series 2003B1
               
0.32%, 07/01/09 (a)(b)
    9,975       9,975  
Spartanburg Cnty IDA
Refunding IDRB (Bemis Co)
Series 1991
               
0.47%, 07/02/09 (a)(b)
    4,750       4,750  
Spartanburg Regional Health Services District
Hospital Refunding RB
Series 2008B
               
0.37%, 07/01/09 (a)(b)(c)
    15,125       15,125  
 
 
 
See financial notes 41

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Hospital Refunding RB
Series 2008C
               
0.37%, 07/01/09 (a)(b)(c)
    19,415       19,415  
Three Rivers Solid Waste Auth
Solid Waste Disposal Facilities COP (TRA)
Series 2007A
               
1.60%, 10/01/09 (b)
    5,685       5,685  
                 
              359,311  
 
South Dakota 1.0%
South Dakota Health & Educational Facilities Auth
RB (Avera Health)
Series 2008A1
               
0.35%, 07/03/09 (a)(b)
    36,050       36,050  
RB (Avera Health)
Series 2008C
               
0.65%, 07/03/09 (a)(b)
    25,000       25,000  
South Dakota Housing Development Auth
Homeownership Mortgage Bonds
Series 1997J, 2006E & 2008B
               
0.43%, 07/02/09 (a)(c)(d)
    26,255       26,255  
Homeownership Mortgage Bonds
Series 2003B
               
0.43%, 07/02/09 (a)(c)(d)
    10,380       10,380  
Homeownership Mortgage Bonds
Series 2003E, 2005B, 2007B & 2007E
               
0.43%, 07/02/09 (a)(c)(d)
    56,960       56,960  
Homeownership Mortgage Bonds
Series 2003I
               
0.30%, 07/01/09 (a)(c)
    7,720       7,720  
Homeownership Mortgage Bonds
Series 2004G
               
0.40%, 07/01/09 (a)(c)
    11,000       11,000  
Homeownership Mortgage Bonds
Series 2005K
               
1.00%, 07/02/09 (a)(c)(d)
    6,015       6,015  
Homeownership Mortgage Bonds
Series 2008C
               
0.28%, 07/01/09 (a)(c)
    5,000       5,000  
Homeownership Mortgage Bonds
Series 2008H
               
1.15%, 01/04/10
    10,000       10,068  
Homeownership Mortgage Bonds
Series 2009A
               
0.27%, 07/02/09 (a)(c)
    5,000       5,000  
M/F Housing RB (Harmony Heights)
Series 2001
               
0.42%, 07/02/09 (a)(b)
    6,500       6,500  
                 
              205,948  
 
Tennessee 4.2%
Blount Cnty Industrial Development Board
Local Government Public Improvement Bonds (Maryville Civic Arts Center)
Series 2009A
               
0.29%, 07/02/09 (a)(b)
    3,000       3,000  
Blount Cnty Public Building Auth
Local Government Public Improvement Bonds
Series E5A
               
0.29%, 07/01/09 (a)(b)
    7,895       7,895  
Local Government Public Improvement Bonds
Series E5B
               
0.29%, 07/01/09 (a)(b)
    14,910       14,910  
Chattanooga
Electric System RB
Series 2008A
               
0.20%, 07/02/09 (a)(c)(d)
    15,620       15,620  
Clarksville Public Building Auth
Pooled Financing RB (Tennessee Municipal Bond Fund)
Series 1997
               
0.32%, 07/02/09 (a)(b)
    2,230       2,230  
Grundy Cnty IDB
Limited Obligation RB (Toyo Seat USA)
Series 2001
               
1.00%, 07/02/09 (a)(b)
    1,430       1,430  
Hamilton Cnty
CP BAN
Series 2006
               
2.75%, 07/02/09 (c)
    13,060       13,060  
Jackson Health, Educational & Housing Facility Board
M/F Housing RB (Patrician Terrace Apts)
Series 2005
               
0.36%, 07/02/09 (a)(b)
    2,300       2,300  
Jackson IDB
Solid Waste Facility Bonds (Ameristeel)
Series 1997
               
0.55%, 07/02/09 (a)(b)
    3,800       3,800  
Lewisburg IDB
Solid Waste Disposal RB (Waste Management)
Series 2003
               
0.48%, 07/02/09 (a)(b)
    15,000       15,000  
McMinn Cnty
Solid Waste Disposal Facilities RB (Bowater)
Series 1999
               
0.37%, 07/02/09 (a)(b)
    33,500       33,500  
Memphis
BAN 2009
0.53%, 05/18/10
    24,700       25,018  
Memphis & Shelby Cnty IDB
Exempt Facilities RB (Nucor)
Series 2007
               
0.60%, 07/01/09 (a)
    28,000       28,000  
Metropolitan Government of Nashville & Davidson Cnty Health & Educational Facilities Board
M/F Housing RB (Burning Tree Apts)
Series 2005
               
0.36%, 07/02/09 (a)(b)
    8,360       8,360  
M/F Housing RB (Chippington Tower Apts I & II)
Series 2005A
               
0.52%, 07/02/09 (a)(b)
    13,325       13,325  
Metropolitan Government of Nashville & Davidson Cnty IDB
M/F Housing RB (Arbor Crest)
Series 1985B
               
0.30%, 07/02/09 (a)(b)
    12,750       12,750  
M/F Housing RB (Arbor Knoll)
Series 1985A
               
0.30%, 07/02/09 (a)(b)
    13,400       13,400  
RB (Nashville Symphony Hall)
Series 2004
               
0.32%, 07/02/09 (a)(b)
    16,355       16,355  
 
 
 
42 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB (YMCA)
Series 2007
               
0.32%, 07/02/09 (a)(b)
    15,600       15,600  
Metropolitan Nashville Airport Auth
Passenger Facility Charge Refunding Bonds
Series 2003
               
2.70%, 07/01/09 (a)(b)
    7,590       7,590  
Montgomery Cnty Public Building Auth
Pooled Financing RB (Tennessee Cnty Loan Pool)
Series 1997
               
0.32%, 07/02/09 (a)(b)
    14,975       14,975  
Municipal Energy Acquisition Corp
Gas RB
Series 2006A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    96,625       96,625  
Gas RB
Series 2006B
               
0.35%, 07/02/09 (a)(b)(c)(d)
    128,425       128,425  
Sevier Cnty Public Building Auth
Public Improvement Bonds
Series VA1
               
0.41%, 07/01/09 (a)(b)
    13,590       13,590  
Public Improvement Bonds
Series VIIB1
               
0.39%, 07/01/09 (a)(b)
    15,895       15,895  
Public Improvement Bonds
Series VIIC1
               
0.39%, 07/01/09 (a)(b)
    9,375       9,375  
Public Improvement Bonds
Series VIIC2
               
0.39%, 07/01/09 (a)(b)
    9,160       9,160  
Shelby Cnty Health, Educational & Housing Facility Board
RB (Methodist Healthcare)
Series 2004B
               
0.43%, 07/02/09 (a)(b)(c)(d)
    7,495       7,495  
RB (Methodist Le Bonheur Healthcare)
Series 2008A
               
0.30%, 07/02/09 (a)(b)(c)
    20,000       20,000  
RB (Methodist Le Bonheur Healthcare)
Series 2008B
               
0.40%, 07/02/09 (a)(b)(c)
    54,800       54,800  
RB (Rhodes College)
Series 2000
               
0.33%, 07/02/09 (a)(b)
    9,210       9,210  
RB (The Hutchison School)
Series 2005
               
0.33%, 07/02/09 (a)(b)
    9,720       9,720  
RB (Trezevant Manor)
Series 2007A
               
0.31%, 07/02/09 (a)(b)
    7,225       7,225  
Tennergy Corp
Gas RB
Series 2006A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    195,660       195,660  
                 
              845,298  
 
Texas 10.9%
Aledo ISD
Unlimited Tax School Building Bonds
Series 2006A
               
1.75%, 08/01/09 (b)(c)
    7,795       7,797  
Amarillo Health Facility Corp
Refunding RB (Evangelical Lutheran Good Samaritan Society)
Series 1997
               
0.65%, 07/02/09 (a)(b)
    3,155       3,155  
Austin
Airport System Refunding RB
Series 2005–1
               
1.00%, 07/02/09 (a)(b)(c)
    44,850       44,850  
Airport System Refunding RB
Series 2005–2
               
1.00%, 07/02/09 (a)(b)(c)
    67,700       67,700  
Airport System Refunding RB
Series 2005–4
               
1.25%, 07/02/09 (a)(b)(c)
    12,500       12,500  
Brownsville
Revenue Improvement & Refunding Bonds
Series 2005A
               
0.30%, 07/02/09 (a)(b)(c)(d)
    1,780       1,780  
Caddo Mills ISD
Unlimited Tax School Building Bonds
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,258       5,258  
Calhoun Port Auth
Environmental Facilities RB (Formosa Plastics)
Series 2008
               
0.40%, 07/02/09 (a)(b)
    10,000       10,000  
Clear Creek ISD
Unlimited Tax School Building & Refunding Bonds
Series 2008
               
0.30%, 07/02/09 (a)(b)(c)(d)
    16,685       16,685  
Unlimited Tax School Building & Refunding Bonds
Series 2008A
               
0.30%, 07/02/09 (a)(b)(c)(d)
    5,000       5,000  
Collin Cnty HFA
M/F Housing RB (Huntington Apts)
Series 1996
               
0.35%, 07/02/09 (a)(b)
    6,150       6,150  
Conroe ISD
Unlimited Tax Refunding Bonds
Series 2004B
               
1.80%, 08/15/09 (b)(c)
    18,855       18,855  
Cypress-Fairbanks ISD
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2001
               
0.35%, 07/02/09 (a)(b)(c)(d)
    4,600       4,600  
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    3,830       3,830  
Dallas
Waterworks & Sewer System CP
Series B
               
0.48%, 08/20/09 (c)
    30,000       30,000  
0.75%, 09/03/09 (c)
    10,000       10,000  
Dallas Area Rapid Transit
Sr Lien Sales Tax RB
Series 2008
               
0.45%, 07/02/09 (a)(c)(d)
    14,400       14,400  
Sr Lien Sales Tax Refunding RB
Series 2007
               
0.21%, 07/02/09 (a)(b)(c)(d)
    9,835       9,835  
1.76%, 07/02/09 (a)(c)(d)
    18,530       18,530  
 
 
 
See financial notes 43

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Dallas Water & Sewer Utilities
Waterworks & Sewer System Refunding & Improvement RB
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    6,485       6,485  
0.50%, 07/02/09 (a)(c)(d)
    39,795       39,795  
Denton ISD
Unlimited Tax Refunding Bonds
Series 2006
               
1.89%, 07/02/09 (a)(b)(c)(d)
    6,005       6,005  
El Paso
GO Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    10,800       10,800  
El Paso Cnty Hospital District
Combination Tax & Revenue Certificates of Obligation
Series 2005
               
0.21%, 07/02/09 (a)(b)(c)(d)
    20,005       20,005  
GO Bonds
Series 2008A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    8,930       8,930  
Fort Worth ISD
Unlimited Tax School Building Bonds
Series 2000
               
0.55%, 02/15/10 (b)
    7,435       7,681  
Galveston Cnty
GO Refunding Bonds
Series 2007
               
1.00%, 07/30/09 (b)(c)(d)
    3,090       3,090  
2.30%, 07/30/09 (b)(c)(d)
    6,240       6,240  
Garland ISD
Unlimited Tax School Building Bonds
Series 2004B
               
0.60%, 09/09/09 (b)(c)(e)
    18,000       18,000  
Georgetown Health Facilities Development Corp
Hospital RB (Georgetown Healthcare System Obligated Group)
Series 1999
               
5.81%, 08/15/09 (b)
    10,975       11,262  
Grand Prairie IDA
IDRB (NTA Leasing)
Series 1994
               
0.47%, 07/01/09 (a)(b)
    745       745  
Grapevine IDA
Airport Improvement RB (Simuflite Training International)
Series 1983A
               
1.35%, 04/01/10 (b)
    19,000       19,000  
Greater Texas Student Loan Corp
RB
Series 1992B
               
2.20%, 07/01/09 (a)(b)
    14,000       14,000  
RB
Series 1995B
               
2.20%, 07/01/09 (a)(b)
    10,000       10,000  
RB
Series 1998A
               
0.46%, 07/02/09 (a)(b)
    10,250       10,250  
Gulf Coast IDA
IDRB (Gruma Corp)
Series 1994
               
0.47%, 07/01/09 (a)(b)
    6,440       6,440  
Hale Cnty Industrial Development Corp
Economic Development RB (Silverado Developments)
Series 2008
               
0.70%, 07/02/09 (a)(b)
    5,400       5,400  
Harris Cnty
TAN
Series 2009
               
0.37%, 02/25/10
    30,000       30,319  
0.39%, 02/25/10
    30,000       30,217  
0.41%, 02/25/10
    35,000       35,250  
Toll Road Sr Lien RB
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    3,845       3,845  
Toll Road Sr Lien Refunding RB
Series 2004A
               
0.50%, 07/02/09 (a)(c)(d)
    5,575       5,575  
0.95%, 08/20/09 (b)(c)(d)
    23,705       23,705  
Toll Road Subordinate Lien Unlimited Tax Refunding RB
Series 2007C
               
0.55%, 07/02/09 (a)(c)(d)
    4,050       4,050  
Harris Cnty Cultural Education Facilities Finance Corp
Hospital RB (Texas Children’s Hospital)
Series 2009
               
0.28%, 07/02/09 (a)(c)(d)
    4,995       4,995  
0.28%, 07/02/09 (a)(c)(d)
    4,000       4,000  
Hospital Refunding RB (Memorial Hermann Healthcare System)
Series 2008D1
               
0.25%, 07/02/09 (a)(b)
    7,500       7,500  
Hospital Refunding RB (Memorial Hermann Healthcare System)
Series 2008D2
               
1.00%, 07/02/09 (a)(b)
    6,000       6,000  
Refunding RB (Methodist Hospital System)
Series 2009C1
               
0.45%, 11/04/09
    10,000       10,000  
0.48%, 12/02/09
    10,000       10,000  
0.55%, 01/05/10
    10,000       10,000  
0.55%, 01/28/10
    10,000       10,000  
0.55%, 02/25/10
    10,000       10,000  
Special Facilities Refunding RB (Texas Medical Center)
Series 2008B2
               
0.25%, 07/02/09 (a)(b)
    4,125       4,125  
Harris Cnty Flood Control District
Improvement Bonds
Series 2007
               
0.28%, 07/02/09 (a)(c)(d)
    985       985  
Harris Cnty Health Facilities Development Corp
Hospital RB (Texas Children’s Hospital)
Series 1999B1
               
0.25%, 07/01/09 (a)(c)
    21,165       21,165  
Hospital RB (Texas Children’s Hospital)
Series 2008–1
               
0.27%, 07/02/09 (a)(c)
    5,000       5,000  
RB (Sisters of Charity of the Incarnate Word)
Series 1997B
               
1.77%, 07/02/09 (a)(b)(c)(d)
    9,480       9,480  
Harris Cnty HFA
M/F Housing RB (Dominion Square Apts)
Series 2000
               
0.65%, 07/02/09 (a)(b)
    2,825       2,825  
M/F Housing RB (Lafayette Village Apts)
Series 2006
               
0.40%, 07/02/09 (a)(b)
    7,000       7,000  
M/F Housing RB (Village At Cornerstone Apts)
Series 2004
               
0.40%, 07/02/09 (a)(b)
    8,155       8,155  
 
 
 
44 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Houston
Airport System Subordinate Lien Refunding RB
Series 2007B
               
0.25%, 07/02/09 (a)(b)(c)(d)
    28,225       28,225  
0.70%, 07/02/09 (a)(b)(c)(d)
    23,000       23,000  
Combined Utility System First Lien Refunding RB
Series 2004A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    9,900       9,900  
0.45%, 07/02/09 (a)(b)(c)(d)
    13,895       13,895  
Combined Utility System First Lien Refunding RB
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,145       5,145  
0.70%, 07/02/09 (a)(b)(c)(d)
    7,955       7,955  
Public Improvement Refunding Bonds
Series 2002
               
0.72%, 03/01/10
    5,000       5,143  
TRAN
Series 2009
               
0.41%, 06/30/10 (f)
    20,000       20,316  
Water & Sewer System Jr Lien Refunding RB
Series 2002A
               
0.50%, 07/02/09 (a)(b)(c)(d)
    6,530       6,530  
Houston ISD
Limited Tax School Building Bonds
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    17,165       17,165  
Limited Tax Schoolhouse Bonds
Series 2008
               
0.45%, 07/02/09 (a)(b)(c)(d)
    9,900       9,900  
Houston Port Auth
Unlimited Tax Refunding Bonds
Series 2008A
               
0.43%, 07/02/09 (a)(c)(d)
    12,610       12,610  
Hunt Memorial Hospital District
RB
Series 1998
               
1.85%, 07/02/09 (a)(b)(c)
    8,570       8,570  
Jewett Economic Development Corp
IDRB (Nucor Corp)
Series 2003
               
0.60%, 07/01/09 (a)
    6,200       6,200  
Katy ISD
Unlimited Tax School Building Bonds
Series 2000
               
0.25%, 07/02/09 (a)(b)(c)
    9,000       9,000  
Kendall Cnty Health Facilities Development Corp
Health Care RB (Morningside Ministries)
Series 2008
               
0.75%, 07/02/09 (a)(b)
    35,160       35,160  
Lamar Consolidated ISD
Unlimited Tax Schoolhouse Bonds
Series 2004
               
1.85%, 09/08/09 (b)(c)
    7,380       7,380  
Unlimited Tax Schoolhouse Bonds
Series 2007
               
0.35%, 07/02/09 (a)(b)(c)(d)
    4,950       4,950  
Laredo ISD
Unlimited Tax School Building Bonds
Series 1999
               
1.20%, 08/01/09 (b)
    2,290       2,301  
Lavaca-Navidad River Auth
Water Supply System Contract RB (Formosa Plastics)
Series 1990
               
0.43%, 07/01/09 (a)(b)
    13,600       13,600  
Lovejoy ISD
Unlimited Tax School Building Bonds
Series 2008
               
0.25%, 07/02/09 (a)(b)(c)(d)
    3,270       3,270  
Lower Colorado River Auth
Refunding RB
Series 1999A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    10,895       10,895  
Lubbock Health Facilities Development Corp
Refunding RB (St. Joseph Health System)
Series 2008A
               
0.26%, 07/02/09 (a)
    6,695       6,695  
Montgomery Cnty
Unlimited Tax Adjustable Rate Road Bonds
Series 2008B
               
1.81%, 09/01/09 (c)
    10,000       10,020  
New Caney ISD
Unlimited Tax School Building Bonds
Series 2006
               
0.32%, 07/02/09 (a)(b)(c)(d)
    6,595       6,595  
North East ISD
Unlimited Tax Refunding Bonds
Series 2007
               
0.35%, 07/02/09 (a)(b)(c)(d)
    13,380       13,380  
1.75%, 07/02/09 (a)(b)(c)(d)
    4,155       4,155  
Unlimited Tax School Building Bonds
Series 2004
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,790       5,790  
Unlimited Tax School Building Bonds
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,515       5,515  
0.30%, 07/02/09 (a)(b)(c)(d)
    9,060       9,060  
North Texas Higher Education Auth
Student Loan RB
Series 1998
               
0.50%, 07/01/09 (a)(b)
    9,000       9,000  
Student Loan RB
Series 2007A
               
0.48%, 07/01/09 (a)(b)
    49,280       49,280  
North Texas Tollway Auth
System Refunding RB
Series 2008D
               
0.25%, 07/02/09 (a)(b)(c)(d)
    37,830       37,830  
0.25%, 07/02/09 (a)(b)(c)(d)
    12,099       12,099  
Northside ISD
Unlimited Tax School Building & Refunding Bonds
Series 2004
               
0.32%, 07/02/09 (a)(b)(c)(d)
    4,022       4,023  
Northwest ISD
Unlimited Tax Refunding Bonds
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    28,880       28,880  
Parmer Cnty Industrial Development Corp
Economic Development RB (Visser Family Trust)
Series 2008
               
0.65%, 07/02/09 (a)(b)
    3,000       3,000  
 
 
 
See financial notes 45

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Port of Corpus Christi Industrial Development Corp
Environmental Facilities RB (CITGO Petroleum Corp)
Series 2003
               
0.30%, 07/01/09 (a)(b)
    39,200       39,200  
San Antonio
Electric & Gas Systems Refunding RB New
Series 2007
               
0.35%, 07/02/09 (a)(c)(d)
    27,560       27,560  
Hotel Tax Subordinate Lien Refunding RB
Series 2008
               
0.28%, 07/01/09 (a)(b)
    15,000       15,000  
Water System CP Notes
Series A
               
0.45%, 07/07/09 (c)
    5,000       5,000  
0.40%, 09/03/09 (c)
    15,000       15,000  
Water System Refunding RB
Series 2005
               
0.40%, 07/02/09 (a)(c)(d)
    46,055       46,055  
San Antonio Empowerment Zone Development Corp
Contract RB (Drury Southwest Hotel)
Series 2005
               
0.45%, 07/02/09 (a)(b)
    10,450       10,450  
San Antonio Housing Finance Corp
M/F Housing RB (Artisan At San Pedro Creek Apts)
Series 2008
               
0.35%, 07/02/09 (a)(b)
    15,000       15,000  
San Antonio IDA
IDRB (Gruma Corp)
Series 1994
               
0.47%, 07/01/09 (a)(b)
    4,095       4,095  
San Antonio ISD
Unlimited Tax Refunding Bonds
Series 2001B
               
0.45%, 07/02/09 (a)(b)(c)(d)
    4,900       4,900  
San Jacinto Community College District
Limited Tax GO Bonds
Series 2008
               
0.30%, 07/02/09 (a)(c)(d)
    5,600       5,600  
Southeast Texas Housing Finance Corp
M/F Housing RB (Piedmont Apts)
Series 2006
               
0.40%, 07/02/09 (a)(b)
    14,000       14,000  
Spring Branch ISD
Limited Tax Schoolhouse Bonds
Series 2008
               
0.30%, 07/02/09 (a)(b)(c)(d)
    2,250       2,250  
Spring ISD
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2008A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    3,830       3,830  
Unlimited Tax Schoolhouse Bonds
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    26,550       26,550  
Tarrant Cnty Cultural Education Facilities Finance Corp
Refunding RB (CHRISTUS Health)
Series 2008 C1
               
0.26%, 07/01/09 (a)(b)
    25,000       25,000  
Refunding RB (CHRISTUS Health)
Series 2008 C2
               
0.26%, 07/01/09 (a)(b)
    23,675       23,675  
Refunding RB (CHRISTUS Health)
Series 2008 C5
               
0.23%, 07/01/09 (a)(b)
    13,450       13,450  
Refunding RB (Texas Health Resources System)
Series 2007A
               
0.30%, 07/02/09 (a)(c)(d)
    8,625       8,625  
Tarrant Cnty Housing Finance Corp
M/F Housing Refunding RB (SF Apts LP)
Series 1993
               
0.40%, 07/01/09 (a)(b)
    7,050       7,050  
Texas
GO Bonds (Veterans Housing Assistance Fund II)
Series 2002A2
               
0.45%, 07/01/09 (a)
    6,000       6,000  
GO Bonds (Veterans Housing Assistance Fund II)
Series 2007A
               
0.35%, 07/01/09 (a)(c)
    15,555       15,555  
TRAN
Series 2008
               
0.91%, 08/28/09
    250       251  
1.24%, 08/28/09
    14,600       14,640  
1.61%, 08/28/09
    47,000       47,101  
Texas A&M Univ
Permanent Univ Fund Bonds
Series 1998
               
1.76%, 07/02/09 (a)(c)(d)
    31,530       31,530  
Texas Dept of Housing & Community Affairs
M/F Housing RB (Atascocita Pines Apts)
Series 2005
               
0.40%, 07/02/09 (a)(b)
    11,800       11,800  
M/F Housing RB (Bristol Apts)
Series 2004
               
0.40%, 07/02/09 (a)(b)
    8,400       8,400  
M/F Housing RB (Creek Point Apts)
Series 2000
               
0.44%, 07/01/09 (a)(b)
    6,365       6,365  
M/F Housing RB (Montgomery Pines Apts)
Series 2004
               
0.40%, 07/02/09 (a)(b)
    12,300       12,300  
M/F Housing RB (Pinnacle Apts)
Series 2004AB
               
0.40%, 07/02/09 (a)(b)
    6,900       6,900  
M/F Housing RB (Tower Ridge Apts)
Series 2005
               
0.44%, 07/02/09 (a)(b)
    15,000       15,000  
M/F Housing Refunding RB (Alta Cullen Apts)
Series 2008
               
0.36%, 07/02/09 (a)(b)
    14,000       14,000  
RB (Addison Park Apts)
Series 2008BB
               
0.44%, 07/02/09 (a)(b)
    13,900       13,900  
S/F Mortgage RB
Series 2007A
               
0.35%, 07/02/09 (a)(c)
    48,300       48,300  
Texas Municipal Gas Acquisition & Supply Corp II
Gas Supply RB
Series 2007B
               
0.45%, 07/02/09 (a)(b)(c)(d)
    111,525       111,525  
Texas Public Finance Auth
Unemployment Compensation Assessment RB
Series 2003C4
               
0.40%, 08/14/09 (c)
    12,600       12,600  
Texas State Univ System
Revenue Financing System RB
Series 2006
               
0.26%, 07/02/09 (a)(b)(c)(d)
    19,285       19,285  
 
 
 
46 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Texas Tech Univ
Refunding Revenue & Improvement Bonds 12th
Series 2009
               
0.68%, 02/15/10
    5,985       6,108  
Texas Transportation Commission
GO Mobility Fund Bonds
Series 2005A
               
0.30%, 07/02/09 (a)(c)(d)
    4,700       4,700  
GO Mobility Fund Bonds
Series 2006
               
0.30%, 07/02/09 (a)(c)(d)
    8,750       8,750  
GO Mobility Fund Bonds
Series 2007
               
0.28%, 07/02/09 (a)(c)(d)
    3,805       3,805  
0.30%, 07/02/09 (a)(c)(d)
    30,500       30,500  
State Highway Fund First Tier RB
Series 2007
               
0.35%, 07/02/09 (a)(c)(d)
    12,550       12,550  
State Highway Fund Revenue CP Notes
Series A
               
0.45%, 08/05/09 (b)
    15,000       15,000  
0.40%, 08/13/09 (b)
    65,000       65,000  
0.35%, 08/14/09 (b)
    25,000       25,000  
Texas Water Development Board
Water Financial Assistance GO Bonds
Series 2007D
               
0.28%, 07/02/09 (a)(c)(d)
    5,800       5,800  
Travis Cnty
Limited Tax Refunding Bonds
Series 2009
               
0.48%, 03/01/10 (f)
    7,135       7,203  
Travis Cnty Health Facilities Development Corp
RB (Ascension Health Credit Group)
Series 1999A
               
1.30%, 11/15/09 (b)
    6,420       6,593  
1.40%, 11/15/09 (b)
    1,050       1,079  
1.50%, 11/15/09 (b)
    250       257  
Trinity River Auth
Solid Waste Disposal RB (Community Waste Disposal)
Series 1999
               
0.55%, 07/01/09 (a)(b)
    1,860       1,860  
Univ of North Texas
Revenue Financing System Bonds
Series 2007
               
0.27%, 07/02/09 (a)(b)(c)(d)
    12,905       12,905  
Univ of Texas
Permanent Univ Fund Notes
Series A
               
0.50%, 07/23/09
    26,500       26,500  
Permanent Univ Fund Refunding Bonds
Series 2006A
               
2.20%, 07/01/09
    5,795       5,795  
Permanent Univ Fund Refunding Bonds
Series 2006B
               
0.17%, 07/02/09 (a)(c)(d)
    3,990       3,990  
0.26%, 07/02/09 (a)(c)(d)
    16,672       16,672  
Revenue Financing System Bonds
Series 1999B
               
1.10%, 08/15/09
    1,000       1,005  
Waco Health Facilities Development Corp
Mortgage RB (Hillcrest Health System)
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    10,870       10,870  
                 
              2,205,360  
 
Utah 0.9%
Carbon Cnty
Pollution Control Refunding RB (PacifiCorp)
Series 1994
               
0.28%, 07/01/09 (a)(b)
    1,800       1,800  
Clearfield Cnty
M/F Housing Refunding RB (Oakstone Apts)
Series 2008
               
0.44%, 07/02/09 (a)(b)
    12,100       12,100  
Emery Cnty
Pollution Control Refunding RB (PacifiCorp)
Series 1994
               
0.33%, 07/01/09 (a)(b)
    10,000       10,000  
Nephi City
IDRB (Fibertek Insulation West)
Series 2008
               
3.15%, 07/02/09 (a)(b)
    4,000       4,000  
Salt Lake City Metropolitan Water District
Water RB
Series 1999
               
5.35%, 07/01/09 (b)
    5,000       5,000  
Salt Lake Cnty Housing Auth
M/F Housing Refunding RB (Bridgeside Landing Apts)
Series 2008
               
0.44%, 07/02/09 (a)(b)
    14,225       14,225  
Utah Housing Corp
S/F Mortgage Bonds
Series 2009-2
               
0.60%, 10/01/09 (b)
    3,250       3,250  
Utah State Board of Regents
Hospital Refunding RB (Univ of Utah)
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    49,260       49,260  
Student Loan RB Sr
Series 2008A
               
0.42%, 07/02/09 (a)(b)
    30,000       30,000  
Utah Transit Auth
Sales Tax RB
Series 2008A
               
1.00%, 07/30/09 (c)(d)
    39,310       39,310  
Subordinated Sales Tax Refunding RB
Series 2007A
               
1.76%, 07/02/09 (a)(c)(d)
    18,565       18,565  
                 
              187,510  
 
Vermont 0.1%
Vermont Economic Development Auth
IDRB (Agri-Mark)
Series 1999A
               
0.65%, 07/02/09 (a)(b)
    17,000       17,000  
IDRB (Agri-Mark)
Series 1999B
               
0.65%, 07/02/09 (a)(b)
    1,000       1,000  
 
 
 
See financial notes 47

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Vermont Educational & Health Buildings Financing Agency
RB (Middlebury College)
Series 2002
               
1.75%, 11/02/09
    9,300       9,300  
                 
              27,300  
 
Virginia 2.3%
Fairfax Cnty IDA
Health Care RB (Inova Health System)
Series 2009B2
               
0.55%, 04/12/10
    50,000       50,000  
Hampton Roads Sanitation District
Wastewater RB
Series 2008
               
0.20%, 07/02/09 (a)(c)(d)
    3,870       3,870  
Hanover Cnty Economic Development Auth
Refunding RB (Bon Secours Health System)
Series 2008D2
               
0.16%, 07/01/09 (a)(b)
    6,880       6,880  
Harrisonburg Redevelopment & Housing Auth
M/F Housing RB (Woodman West Apts)
Series 2008
               
0.43%, 07/02/09 (a)(b)
    9,950       9,950  
Henrico Economic Development Auth
RB (Bon Secours Health System )
Series 2008B1
               
0.80%, 07/01/09 (a)(b)(c)
    18,745       18,745  
RB (Bon Secours Health System)
Series 2008B2
               
0.80%, 07/01/09 (a)(b)(c)
    8,800       8,800  
King George Cnty
Solid Waste Disposal Facility RB (Garnet)
Series 1996
               
0.45%, 07/02/09 (a)(b)
    3,700       3,700  
Montgomery Cnty IDA
RB (Virginia Tech Foundation)
Series 2009A
               
0.40%, 07/02/09 (a)(c)
    15,200       15,200  
Newport News IDA
RB (CNU Warwick Student Apts)
Series 2004
               
0.32%, 07/02/09 (a)(b)
    4,000       4,000  
Norfolk Economic Development Auth
CP Revenue Notes (Sentara Healthcare)
0.45%, 10/13/09
    65,000       65,000  
Hospital Facilities Refunding RB (Sentara Healthcare)
Series 2009A
               
0.70%, 02/03/10
    25,000       25,000  
Portsmouth Redevelopment & Housing Auth
M/F Housing RB (Churchland North Apts)
Series 1999
               
2.70%, 07/01/09 (a)(b)
    5,715       5,715  
Richmond
Public Utility RB
Series 2009A
               
0.30%, 07/02/09 (a)(c)(d)
    18,410       18,410  
Southeastern Public Service Auth of Virginia
Sr Parity RB (Regional Solid Waste System)
Series 2007A
               
0.37%, 07/02/09 (a)(b)
    23,435       23,435  
Suffolk Economic Development Auth
Hospital Facilities Refunding RB (Sentara Healthcare)
Series 2008
               
0.45%, 07/02/09 (a)(c)(d)
    98,545       98,545  
Virginia College Building Auth
Educational Facilities RB
Series 2007A
               
0.20%, 07/02/09 (a)(c)(d)
    3,110       3,110  
Virginia Housing Development Auth
Commonwealth Mortgage Bonds
Series 2001H1
               
0.50%, 07/02/09 (a)(c)(d)
    6,600       6,600  
Commonwealth Mortgage Bonds
Series 2005A3
               
2.45%, 10/01/09
    2,000       2,005  
Commonwealth Mortgage Bonds
Series 2005C1
               
0.43%, 07/02/09 (a)(c)(d)
    5,100       5,100  
Commonwealth Mortgage Bonds
Series 2006D1
               
0.36%, 07/01/09 (a)(c)(d)
    875       875  
1.40%, 01/01/10
    6,000       6,079  
Commonwealth Mortgage Bonds
Series 2006D2
               
0.36%, 07/01/09 (a)(c)(d)
    890       890  
Virginia Port Auth
BAN
Series 2008
               
1.95%, 07/01/09
    32,500       32,500  
Port Facilities RB
Series 2006
               
0.43%, 07/02/09 (a)(b)(c)(d)
    3,285       3,285  
1.03%, 07/02/09 (a)(b)(c)(d)
    3,000       3,000  
Subordinate Port Facilities Revenue BAN
Series 2009
               
0.48%, 05/18/10
    20,000       20,266  
Virginia Resources Auth
State Revolving Fund RB Subordinate
Series 2008
               
0.20%, 07/02/09 (a)(c)(d)
    2,995       2,995  
Virginia State Public Building Auth
Public Facilities RB
Series 2007A
               
1.08%, 08/01/09
    10,795       10,831  
Winchester IDA
Hospital RB (Winchester Medical Center)
Series 1991
               
0.31%, 07/02/09 (a)(c)(d)
    12,540       12,540  
                 
              467,326  
 
Washington 4.8%
Cascade Water Alliance
Water System RB
Series 2006
               
0.26%, 07/02/09 (a)(b)(c)(d)
    8,625       8,625  
Central Puget Sound Regional Transit Auth
Sales Tax Bonds
Series 2007A
               
0.20%, 07/02/09 (a)(c)(d)
    3,110       3,110  
0.55%, 07/02/09 (a)(c)(d)
    8,285       8,285  
 
 
 
48 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Chelan Cnty Public Utility District No. 1
RB (Chelan Hydro Consolidated System)
Series 2001A
               
0.55%, 07/02/09 (a)(b)(c)(d)
    1,500       1,500  
RB (Chelan Hydro Consolidated System)
Series 2001A&B & Refunding RB
               
Series 2001C
               
0.70%, 07/02/09 (a)(c)(d)
    9,970       9,970  
Douglas Cnty Development Corp
RB (Executive Flight)
Series 1998
               
0.55%, 07/02/09 (a)(b)
    5,500       5,500  
Energy Northwest
Electric Refunding RB (Columbia Generating Station)
Series 2006A
               
1.76%, 07/02/09 (a)(c)(d)
    15,975       15,975  
Grant Cnty Public Utility District No. 2
Refunding RB (Wanapum Hydroelectric Development)
Series 2006A
               
0.18%, 07/01/09 (a)(b)(c)(d)
    12,450       12,450  
King Cnty
Limited Tax GO Refunding Bonds
Series 2008
               
0.25%, 07/02/09 (a)(c)(d)
    3,545       3,545  
0.28%, 07/02/09 (a)(c)(d)
    2,850       2,850  
Sewer RB
Series 2002A
               
0.32%, 07/02/09 (a)(c)(d)
    7,500       7,500  
Sewer RB
Series 2004A
               
0.38%, 07/02/09 (a)(c)(d)
    5,200       5,200  
Sewer RB
Series 2007
               
0.40%, 07/02/09 (a)(c)(d)
    31,250       31,250  
Sewer RB Second
Series 2006
               
0.50%, 07/02/09 (a)(c)(d)
    10,000       10,000  
Sewer Refunding RB
Series 2006A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    22,870       22,870  
Sewer Refunding RB Second
Series 2006
               
0.40%, 07/02/09 (a)(c)(d)
    25,555       25,555  
King Cnty Public Hospital District No. 1
Limited Tax GO Refunding Bonds
Series 2008A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    7,850       7,850  
Lewis Cnty
Limited Tax GO & Refunding Bonds 1999
1.30%, 12/01/09 (b)
    1,805       1,838  
Olympia
Solid Waste RB (LeMay Enterprises)
Series 1999
               
0.53%, 07/01/09 (a)(b)
    2,330       2,330  
Pierce Cnty Economic Development Corp
IDRB (McFarland Cascade)
Series 1996
               
0.63%, 07/02/09 (a)(b)
    3,945       3,945  
RB (Flex-A-Lite Consolidated)
Series 1996A
               
0.60%, 07/01/09 (a)(b)
    1,650       1,650  
Port of Seattle
Intermediate Lien Refunding RB
Series 2005A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    24,855       24,855  
Intermediate Lien Refunding RB
Series 2005C
               
1.17%, 09/01/09
    3,860       3,885  
RB
Series 2003A
               
0.32%, 07/02/09 (a)(c)(d)
    5,345       5,345  
RB
Series 2003B
               
0.70%, 07/02/09 (a)(c)(d)
    5,140       5,140  
RB
Series 2007B
               
0.36%, 07/01/09 (a)(c)(d)
    5,845       5,845  
Subordinate Lien Refunding RB
Series 2008
               
0.65%, 07/01/09 (a)(b)
    10,000       10,000  
Port of Tacoma
RB
Series 2005
               
0.40%, 07/02/09 (a)(b)(c)(d)
    28,135       28,135  
Subordinate Lien RB CP
Series 2002A
               
0.50%, 09/09/09 (b)
    23,685       23,685  
Seattle
Drainage & Wastewater RB 2008
0.40%, 07/02/09 (a)(c)(d)
    8,090       8,090  
Water System RB
Series 1999B
               
Series 1999B
               
5.75%, 07/01/09 (b)
    3,075       3,106  
Seattle Housing Auth
RB (CHHIP & HRG Projects)
Series 1996
               
0.60%, 07/01/09 (a)(b)
    3,035       3,035  
Snohomish Cnty Public Utility District #1
Electric System BAN Second
Series 2008A
               
0.55%, 05/26/10
    25,000       25,325  
2.30%, 08/05/09
    15,000       15,021  
Tacoma Housing Auth
RB (Crown Assisted Living)
Series 1998
               
3.25%, 07/01/09 (a)(b)
    2,660       2,660  
Univ of Washington
RB
Series 2007
               
0.21%, 07/02/09 (a)(b)(c)(d)
    38,515       38,515  
Vancouver Housing Auth
Pooled Housing Refunding RB
Series 2008
               
0.32%, 07/02/09 (a)(b)
    4,495       4,495  
Washington
GO Bonds
Series 2003C
               
0.32%, 07/02/09 (a)(c)(d)
    6,150       6,150  
GO Bonds
Series 2005D
               
0.98%, 01/01/10
    7,575       7,727  
 
 
 
See financial notes 49

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
GO Bonds
Series 2007C
               
0.50%, 07/02/09 (a)(c)(d)
    22,825       22,825  
GO Bonds
Series 2008A
               
0.35%, 07/02/09 (a)(c)(d)
    15,295       15,295  
Motor Vehicle Fuel Tax GO Bonds
Series 2003C
               
0.48%, 07/02/09 (a)(c)(d)
    3,700       3,700  
Motor Vehicle Fuel Tax GO Bonds
Series 2006E
               
0.25%, 07/02/09 (a)(c)(d)
    6,130       6,130  
Various Purpose GO Bonds
Series 2002B
               
0.50%, 07/02/09 (a)(c)(d)
    29,540       29,540  
Various Purpose GO Bonds
Series 2005D
               
0.55%, 07/02/09 (a)(c)(d)
    995       995  
Various Purpose GO Bonds
Series 2006D
               
0.25%, 07/02/09 (a)(b)(c)(d)
    13,615       13,615  
Various Purpose GO Bonds
Series 2008C
               
0.20%, 07/02/09 (a)(c)(d)
    3,851       3,851  
0.25%, 07/02/09 (a)(c)(d)
    4,945       4,945  
Various Purpose GO Bonds
Series 2009A
               
0.45%, 07/02/09 (a)(c)(d)
    39,100       39,100  
Various Purpose GO Bonds
Series 2009E
               
0.28%, 07/02/09 (a)(c)(d)
    5,000       5,000  
Washington Economic Development Finance Auth
Refunding RB (Puget Sound Blood Center)
Series 2008D
               
0.27%, 07/02/09 (a)(b)
    2,500       2,500  
Solid Waste Disposal RB (Heirborne Investments)
Series 2006K
               
0.55%, 07/01/09 (a)(b)
    5,730       5,730  
Solid Waste Disposal RB (Lemay Enterprises)
Series 2005B
               
0.53%, 07/01/09 (a)(b)
    10,585       10,585  
Solid Waste Disposal RB (Specialty Chemical Products)
Series 2007
               
0.55%, 07/02/09 (a)(b)
    20,800       20,800  
Solid Waste Disposal RB (Waste Management)
Series 2000C
               
0.55%, 07/01/09 (a)(b)
    17,900       17,900  
Solid Waste Disposal RB (Waste Management)
Series 2000H
               
0.55%, 07/01/09 (a)(b)
    9,825       9,825  
Solid Waste Disposal RB (Waste Management)
Series 2000I
               
0.55%, 07/01/09 (a)(b)
    7,235       7,235  
Solid Waste Disposal RB (Waste Management)
Series 2005D
               
0.55%, 07/02/09 (a)(b)
    18,000       18,000  
Washington Health Care Facilities Auth
RB (Catholic Health Initiatives)
Series 2008D
               
0.28%, 07/02/09 (a)(c)(d)
    7,505       7,505  
RB (Children’s Hospital & Regional Medical Center)
Series 2008A
               
0.32%, 07/01/09 (a)(b)
    8,930       8,930  
RB (Fred Hutchinson Cancer Research Center)
Series 2001A
               
0.65%, 07/01/09 (a)(b)
    57,875       57,875  
RB (Kadlec Medical Center)
Series 2006B
               
3.50%, 07/01/09 (a)(b)(c)
    10,000       10,000  
RB (MultiCare Health System)
Series 2009A
               
0.20%, 07/02/09 (a)(b)
    9,000       9,000  
RB (MultiCare Health System)
Series 2009B
               
0.17%, 07/02/09 (a)(b)
    6,875       6,875  
RB (Swedish Health Services)
Series 2009C
               
0.16%, 07/01/09 (a)(b)
    13,000       13,000  
RB (Yakima Valley Farm Workers Clinic)
Series 1997
               
0.35%, 07/01/09 (a)(b)
    1,800       1,800  
Washington Housing Finance Commission
M/F Housing RB (Anchor Village Apts)
Series 1997
               
0.40%, 07/02/09 (a)(b)
    10,750       10,750  
M/F Housing RB (Brittany Park Phase II)
Series 1998A
               
0.40%, 07/02/09 (a)(b)
    3,480       3,480  
M/F Housing RB (Brittany Park)
Series 1996A
               
0.40%, 07/02/09 (a)(b)
    8,930       8,930  
M/F Housing RB (Fairwinds Redmond)
Series 2005A
               
0.40%, 07/02/09 (a)(b)
    7,500       7,500  
M/F Housing RB (Forest Creek Apts)
Series 2006
               
0.40%, 07/02/09 (a)(b)
    13,815       13,815  
M/F Housing RB (Highlander Apts)
Series 2004A
               
0.40%, 07/02/09 (a)(b)
    7,000       7,000  
M/F Housing RB (Lakewood Meadows Apts)
Series 2000A
               
0.43%, 07/02/09 (a)(b)
    6,280       6,280  
M/F Housing RB (Merrill Gardens at Queen Anne)
Series 2004A
               
0.40%, 07/02/09 (a)(b)
    25,180       25,180  
M/F Housing RB (Merrill Gardens)
Series 1997A
               
0.40%, 07/02/09 (a)(b)
    6,125       6,125  
M/F Housing RB (Parkview Apts)
Series 2008
               
0.50%, 07/02/09 (a)(b)
    3,060       3,060  
M/F Housing RB (Rainier Court Apts)
Series 2003A
               
0.40%, 07/02/09 (a)(b)
    12,750       12,750  
M/F Housing RB (Seasons Apts)
Series 2006
               
0.43%, 07/02/09 (a)(b)
    20,000       20,000  
M/F Housing RB (Silver Creek Apts)
Series 2004
               
0.40%, 07/02/09 (a)(b)
    4,100       4,100  
M/F Housing RB (Vintage at Burien)
Series 2004A
               
0.40%, 07/02/09 (a)(b)
    6,570       6,570  
 
 
 
50 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
M/F Housing RB (Vintage at Chehalis Sr Living)
Series 2006
               
0.40%, 07/02/09 (a)(b)
    8,190       8,190  
M/F Housing RB (Woodrose Apts)
Series 1999A
               
0.40%, 07/02/09 (a)(b)
    6,750       6,750  
M/F Mortgage RB (Canyon Lakes)
Series 1993
               
0.37%, 07/02/09 (a)(b)
    3,820       3,820  
M/F Mortgage RB (Meridian Court Apts)
Series 1996
               
0.40%, 07/01/09 (a)(b)
    6,700       6,700  
M/F RB (Cedar Ridge Retirement)
Series 2005A
               
0.37%, 07/02/09 (a)(b)
    5,030       5,030  
Non-Profit Refunding RB (Horizon House)
Series 2005
               
0.40%, 07/02/09 (a)(b)
    11,360       11,360  
Washington State Univ
Student Fee RB
Series 2006A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    16,796       16,796  
Yakima Cnty Public Corp
IDRB (Cowiche Growers)
Series 1998
               
0.55%, 07/02/09 (a)(b)
    1,300       1,300  
                 
              960,854  
 
West Virginia 0.4%
Marion Cnty
Solid Waste Disposal Facility RB (Grant Town Cogeneration)
Series 1990B
               
0.30%, 07/01/09 (a)(b)
    9,285       9,285  
Solid Waste Disposal Facility RB (Grant Town Cogeneration)
Series 1990C
               
0.30%, 07/01/09 (a)(b)
    12,300       12,300  
Solid Waste Disposal Facility RB (Grant Town Cogeneration)
Series 1990D
               
0.30%, 07/01/09 (a)(b)
    2,400       2,400  
West Virginia Economic Development Auth
Refunding RB (Appalachian Power Co-Mountaineer)
Series 2008B
               
0.48%, 07/02/09 (a)(b)
    21,275       21,275  
Refunding RB (Ohio Power Co-Kammer)
Series 2008BB
               
0.30%, 07/02/09 (a)(b)
    6,665       6,665  
West Virginia Higher Education Policy Commission
RB (Higher Education Facilities)
Series 2004B
               
0.26%, 07/02/09 (a)(b)(c)(d)
    15,545       15,545  
West Virginia Water Development Auth
Water Development RB (Loan Program IV)
Series 2005A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    9,240       9,240  
                 
              76,710  
 
Wisconsin 2.2%
Brokaw
Sewage & Solid Waste RB (Wausau Paper Mills)
Series 1995
               
0.60%, 07/02/09 (a)(b)
    9,500       9,500  
Kenosha
IDRB (Asyst Technologies)
Series 1997
               
0.70%, 07/02/09 (a)(b)
    5,000       5,000  
Milwaukee
GO CP Promissory Notes
Series 2008C2
               
0.50%, 10/01/09 (b)
    6,000       6,000  
New Richmond SD
BAN 2008
2.20%, 11/16/09
    8,425       8,425  
Red Cedar
IDRB (Fairmount Minerals)
Series 2007
               
0.55%, 07/02/09 (a)(b)
    10,000       10,000  
Wisconsin
GO Bonds
Series 2006C
               
0.46%, 07/02/09 (a)(c)(d)
    5,525       5,525  
GO Bonds
Series 2007A
               
1.00%, 09/10/09 (b)(c)(d)
    24,285       24,285  
GO Bonds
Series 2007C
               
0.20%, 07/02/09 (a)(c)(d)
    6,395       6,395  
GO CP Notes 2005A
0.40%, 08/03/09 (c)
    19,600       19,600  
0.40%, 09/09/09 (c)
    22,715       22,715  
GO CP Notes 2006A
0.40%, 08/04/09 (c)
    50,494       50,494  
0.35%, 09/10/09 (c)
    27,500       27,500  
GO Refunding Bonds
Series 1998–1
               
0.98%, 11/01/09
    3,475       3,527  
Operating Notes
Series 2009
               
0.45%, 06/15/10 (f)
    25,000       25,488  
0.48%, 06/15/10
    38,000       38,730  
Transportation RB
Series 2005A
               
0.35%, 07/02/09 (a)(c)(d)
    7,497       7,497  
Transportation RB
Series 2007A
               
0.90%, 09/23/09 (b)(c)(d)
    8,065       8,065  
Wisconsin Health & Educational Facilities Auth
RB (Aurora Health Care)
Series 2008B
               
1.60%, 11/13/09 (b)
    18,000       18,000  
RB (Children’s Hospital of Wisconsin)
Series 2008B
               
2.50%, 03/15/10 (e)
    35,000       35,000  
RB (Gundersen Lutheran)
Series 2000B
               
1.70%, 07/01/09 (a)(b)(c)
    8,950       8,950  
RB (Upland Hills Health)
Series 2006C
               
1.10%, 07/01/09 (a)(b)
    10,050       10,050  
Refunding RB (Concordia Univ)
Series 2009
               
0.35%, 07/02/09 (a)(b)
    3,150       3,150  
 
 
 
See financial notes 51

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Wisconsin Housing & Economic Development Auth
Homeownership RB
Series 2002C
               
0.35%, 07/01/09 (a)(c)
    1,330       1,330  
Homeownership RB
Series 2003B
               
0.50%, 07/01/09 (a)(c)
    37,210       37,210  
Homeownership RB
Series 2003C
               
0.46%, 07/01/09 (a)(c)
    12,630       12,630  
0.46%, 07/01/09 (a)(c)
    14,715       14,715  
Homeownership RB
Series 2005C
               
0.50%, 07/01/09 (a)(c)
    11,000       11,000  
Homeownership RB
Series 2006E
               
1.00%, 07/02/09 (a)(c)(d)
    2,100       2,100  
Housing RB
Series 2007C
               
0.62%, 07/02/09 (a)(c)
    3,815       3,815  
Housing RB
Series 2008A
               
0.60%, 07/02/09 (a)(c)
    6,580       6,580  
Housing RB
Series 2008D
               
0.60%, 07/02/09 (a)(c)
    4,500       4,500  
Housing RB
Series 2008E
               
0.60%, 07/02/09 (a)(c)
    3,200       3,200  
                 
              450,976  
 
Wyoming 0.3%
Green River
RB (Rhone-Poulenc)
Series 1994
               
1.10%, 07/02/09 (a)(b)
    11,400       11,400  
Sweetwater Cnty
Pollution Control Refunding RB (PacifiCorp)
Series 1994
               
0.40%, 07/01/09 (a)(b)
    3,750       3,750  
Wyoming Student Loan Corp
Refunding RB Sr
Series 2008A1
               
0.38%, 07/02/09 (a)(b)
    8,200       8,200  
Refunding RB Sr
Series 2008A2
               
0.38%, 07/02/09 (a)(b)
    35,000       35,000  
Refunding RB Sr
Series 2008A3
               
0.38%, 07/02/09 (a)(b)
    10,000       10,000  
                 
              68,350  
                 
Total Municipal Securities
(Cost $20,172,549) 		    20,172,549  
         
                 
                 
 
 Other Investments 1.1% of net assets
Nuveen Dividend Advantage Municipal Fund 2
Variable Rate Demand Preferred Shares
0.45%, 07/02/09 (a)(b)(d)
    98,000       98,000  
Nuveen Insured New York Dividend Advantage Municipal Fund
Variable Rate Demand Preferred Shares
0.35%, 07/02/09 (a)(b)(d)
    25,000       25,000  
Nuveen Insured Premium Income Municipal Fund 2
Variable Rate Demand Preferred Shares
0.45%, 07/02/09 (a)(b)(d)
    109,500       109,500  
                 
Total Other Investments
(Cost $232,500) 		    232,500  
         
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $20,405,049.
 
(a) Variable-rate security.
(b) Credit-enhanced security.
(c) Liquidity-enhanced security.
(d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $7,283,019 or 36.1% of net assets.
(e) Illiquid security. At the period end, the value of these amounted to $65,294 or 0.3% of net assets.
(f) Delayed-delivery security.
(g) All or a portion of this security is held as collateral for delayed-delivery securities.
 
BAN – Bond anticipation note
COP – Certificate of participation
CP – Commercial paper
GO – General obligation
HFA – Housing finance agency/authority
IDA – Industrial development agency/authority
IDB – Industrial development board
IDRB – Industrial development revenue bond
ISD – Independent school district
M/F – Multi-family
RB – Revenue bond
SD – School district
S/F – Single-family
TAN – Tax anticipation note
TRAN – Tax and revenue anticipation note
USD – Unified school district
 
 
 
52 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $20,405,049  
Cash
        382  
Receivables:
           
Investments sold
        213,104  
Fund shares sold
        27,553  
Interest
        41,758  
Prepaid expenses
  +     1,412  
     
     
Total assets
        20,689,258  
             
 
Liabilities
Payables:
           
Investments bought
        484,033  
Investment adviser and administrator fees
        384  
Transfer agent and shareholder services fees
        304  
Fund shares redeemed
        49,369  
Distributions to shareholders
        1,182  
Trustees’ fees
        4  
Accrued expenses
  +     314  
     
     
Total liabilities
        535,590  
             
 
Net Assets
Total assets
        20,689,258  
Total liabilities
  −     535,590  
     
     
Net assets
        $20,153,668  
Net Assets by Source
           
Capital received from investors
        20,152,571  
Distribution in excess of net investment income
        (94 )
Net realized capital gains
        1,191  
 
Net Asset Value (NAV) by Shares Class 
 
                         
            Shares
 		         
Share Class   Net Assets   ¸   Outstanding   =   NAV  
 
Sweep Shares
  $10,646,860       10,648,024         $1.00  
Value Advantage Shares
  $3,031,470       3,031,050         $1.00  
Select Shares
  $1,849,116       1,848,747         $1.00  
Institutional Shares
  $4,626,222       4,625,200         $1.00  
 
 
 
 
See financial notes 53

Table of Contents

 
 Schwab Municipal Money Fund
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $99,406  
             
 
Net Realized Gains and Losses
Net realized gains on investments
        1,192  
             
 
Expenses
Investment adviser and administrator fees
        31,632  
Transfer agent and shareholder service fees:
           
Sweep Shares
        18,918  
Value Advantage Shares
        3,413  
Select Shares
        1,938  
Institutional Shares
        5,182  
Temporary Guarantee Program expense
        3,364  
Registration fees
        736  
Portfolio accounting fees
        277  
Custodian fees
        177  
Shareholder reports
        140  
Tax expenses
        118  
Professional fees
        62  
Trustees’ fees
        43  
Interest expense
        15  
Other expenses
  +     83  
     
     
Total expenses
        66,098  
Expense reduction by adviser and Schwab
  −     15,198  
Custody credits
  −     1  
     
     
Net expenses
        50,899  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        99,406  
Net expenses
  −     50,899  
     
     
Net investment income
        48,507  
Net realized gains
  +     1,192  
     
     
Increase in net assets from operations
        $49,699  
 
 
 
 
54 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $48,507   $344,362
Net realized gains
  +   1,192   2,072
     
     
Increase in net assets from operations
      49,699   346,434
             
 
Distributions to Shareholders
Distributions from net investment income
           
Sweep Shares
      19,123   164,890
Value Advantage Shares
      7,701   58,135
Select Shares
      5,219   30,984
Institutional Shares
  +   16,558   90,353
     
     
Total distributions from net investment income
      48,601   344,362
             
 
Transactions in Fund Shares*
Shares Sold
           
Sweep Shares
      22,463,716   48,352,276
Value Advantage Shares
      1,744,463   5,220,149
Select Shares
      1,375,822   3,135,399
Institutional Shares
  +   2,790,874   8,714,110
     
     
Total shares sold
      28,374,875   65,421,934
             
             
Shares Reinvested
Sweep Shares
      18,730   160,570
Value Advantage Shares
      6,240   48,230
Select Shares
      4,188   26,082
Institutional Shares
  +   13,515   75,172
     
     
Total shares reinvested
      42,673   310,054
             
             
Shares Redeemed
Sweep Shares
      (22,691,682)   (46,149,530)
Value Advantage Shares
      (1,937,990)   (4,835,870)
Select Shares
      (1,230,753)   (2,889,742)
Institutional Shares
  +   (2,989,323)   (7,818,560)
     
     
Total shares redeemed
      (28,849,748)   (61,693,702)
     
     
             
Net transactions in fund shares
      (432,200)   4,038,286
             
 
Net Assets
Beginning of period
      20,584,770   16,544,412
Total increase (decrease)
  +   (431,102)   4,040,358
     
     
End of period
      $20,153,668   $20,584,770
             
Distributions in excess of net investment income
      ($94)   $−
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
See financial notes 55

Table of Contents

 
Schwab AMT Tax-Free Money Fundtm
 
Financial Statements
 
Financial Highlights
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
 Sweep Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.03       0.03       0.02       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.03 )     (0.02 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.20 2     1.78       3.07       2.83       1.81       0.60      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.64 3,4     0.63 4     0.63       0.65       0.65       0.66      
Gross operating expenses
    0.73 3     0.74       0.75       0.86       0.85       0.85      
Net investment income (loss)
    0.40 3     1.74       3.02       2.77       1.78       0.59      
Net assets, end of period ($ x 1,000,000)
    3,105       2,446       1,680       1,045       1,973       1,905      
 
                                 
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  11/6/065–
 Value Advantage Shares   6/30/09*   12/31/08   12/31/07   12/31/06
 
                                 
Per-Share Data ($)
                               
Net asset value at beginning of period
    1.00       1.00       1.00       1.00  
   
Income (loss) from investment operations:
                               
Net investment income (loss)
    0.00 1     0.02       0.03       0.00 1
   
Less distributions:
                               
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.03 )     (0.00 )1
   
Net asset value at end of period
    1.00       1.00       1.00       1.00  
   
Total return (%)
    0.29 2     1.95       3.26       0.49 2
                                 
Ratios/Supplemental Data (%)
                               
Ratios to average net assets:
                               
Net operating expenses
    0.47 3,4     0.46 4     0.45       0.44 3,6
Gross operating expenses
    0.60 3     0.61       0.63       0.68 3
Net investment income (loss)
    0.55 3     1.88       3.19       3.22 3
Net assets, end of period ($ x 1,000,000)
    3,014       1,901       1,224       85  

* Unaudited.

1 Per-share amount was less than $0.01.
2 Not annualized.
3 Annualized.
4 The ratio of net operating expenses would have been 0.62% for Sweep Shares and 0.45% for Value Advantage Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for the Money Market Funds) had not been included.
5 Commencement of operations.
6 The ratio of net operating expenses would have been 0.45% if custody credits had not been included.
 
 
 
56 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings as of June 30, 2009, (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  100 .0%   Municipal Securities     6,122,041       6,122,041  
  100 .0%   Total Investments     6,122,041       6,122,041  
  0 .0%   Other Assets and Liabilities, Net             (2,836 )
  100 .0%   Net Assets             6,119,205  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Municipal Securities 100.0% of net assets
 
Alabama 1.5%
Alabama
GO Bonds
Series 2007A
               
0.65%, 12/10/09 (b)(c)(d)
    6,280       6,280  
Alabama Municipal Funding Corp
Municipal Funding Notes (Tranche 1)
Series 2008A
               
0.37%, 07/02/09 (a)(b)
    29,885       29,885  
Municipal Funding Notes Master
Series 2006A
               
0.37%, 07/02/09 (a)(b)
    14,315       14,315  
Bessemer Government Utility Services Corp
Water Supply Refunding RB
Series 2008
               
0.75%, 07/02/09 (a)(b)(c)(d)
    5,085       5,085  
Mobile IDB
Pollution Control RB (Alabama Power) First
Series 2009
               
1.40%, 07/16/10
    6,000       6,000  
Mobile Special Care Facilities Financing Auth
RB (Ascension Health Sr Credit Group)
Series 2006D
               
0.30%, 07/02/09 (a)(c)(d)
    27,000       27,000  
Pell Special Care Facilities Financing Auth
RB (Noland Health Services)
Series 2009A
               
0.29%, 07/02/09 (a)(b)
    5,000       5,000  
                 
              93,565  
 
Alaska 0.2%
Alaska Industrial Development & Export Auth
Refunding RB (Greater Fairbanks Community Hospital Foundation)
Series 2009A
               
0.26%, 07/02/09 (a)(b)
    11,625       11,625  
Anchorage
GO School Bonds
Series 1999
               
1.50%, 12/01/09 (b)
    1,340       1,360  
                 
              12,985  
 
Arizona 1.2%
Arizona Health Facilities Auth
Health Facility RB (Catholic Healthcare West)
Series 2008B
               
0.27%, 07/01/09 (a)(b)
    14,800       14,800  
Arizona Transportation Board
Highway RB
Series 2003
               
0.70%, 07/01/09
    1,000       1,000  
Maricopa Cnty USD No. 11
School Improvement Bonds
Series 2008
               
1.87%, 07/01/09 (b)
    8,750       8,750  
Nogales
Revenue Obligations (Wastewater System)
Series 2006A
               
3.65%, 10/01/09 (b)
    2,140       2,152  
Pima Cnty
COP
Series 2009
               
1.25%, 06/01/10
    4,000       4,064  
Salt River Project Agricultural Improvement & Power District
Electric System RB
Series 2005A
               
0.35%, 07/02/09 (a)(c)(d)
    6,035       6,035  
Scottsdale Municipal Property Corp
Excise Tax Refunding RB
Series 2006
               
0.26%, 07/02/09 (a)(c)(d)
    10,097       10,097  
Yuma Municipal Property Corp
Sr Lien Utility System RB
Series 2007
               
0.26%, 07/02/09 (a)(b)(c)(d)
    29,045       29,045  
                 
              75,943  
 
California 6.3%
Anaheim Redevelopment Agency
Tax Allocation Refunding Bonds
Series 2007A
               
0.30%, 07/02/09 (a)(b)(c)(d)
    5,300       5,300  
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB
Series 2007F
               
0.23%, 07/02/09 (a)(c)(d)
    7,245       7,245  
 
 
 
See financial notes 57

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
California
GO Bonds
Series 2003C2
               
0.17%, 07/02/09 (a)(b)
    4,000       4,000  
California Educational Facilities Auth
RB (Chapman Univ)
Series 2000
               
0.40%, 07/01/09 (a)(b)
    11,850       11,850  
Refunding RB (Pepperdine Univ)
Series 2005A
               
0.17%, 07/02/09 (a)(b)(c)(d)
    8,065       8,065  
California Health Facilities Financing Auth
RB (Northern California Presbyterian Homes & Services)
Series 2004
               
0.19%, 07/02/09 (a)(b)
    10,380       10,380  
California Infrastructure & Economic Development Bank
RB (Casa Loma College)
Series 2009
               
0.60%, 07/02/09 (a)(b)
    3,760       3,760  
California Public Works Board
Lease Refunding RB (Univ of California)
Series 2007A
               
0.35%, 07/02/09 (a)(c)(d)
    9,885       9,885  
California State Univ
Systemwide RB
Series 2005C
               
0.40%, 07/02/09 (a)(b)(c)(d)
    2,420       2,420  
California Statewide Communities Development Auth
RB (John Muir Health)
Series 2008B
               
0.16%, 07/02/09 (a)(b)
    11,000       11,000  
RB (Kaiser Permanente)
Series 2003B
               
0.20%, 07/01/09 (a)
    6,200       6,200  
RB (Kaiser Permanente)
Series 2004K
               
0.68%, 09/03/09
    26,000       26,000  
RB (Kaiser Permanente)
Series 2009B2
               
0.45%, 02/11/10
    40,000       40,000  
East Bay Municipal Utility District
Water System Subordinated Refunding RB
Series 2008A1
               
0.60%, 07/01/09 (a)(c)
    6,480       6,480  
Water System Subordinated Refunding RB
Series 2008A4
               
0.60%, 07/01/09 (a)(c)
    23,000       23,000  
Livermore
COP (Refunding & Capital Projects)
0.60%, 07/02/09 (a)(b)
    5,000       5,000  
Los Angeles
Wastewater System Refunding RB
Series 2003A
               
0.35%, 07/02/09 (a)(c)(d)
    18,000       18,000  
Wastewater System Refunding RB
Series 2005A
               
0.35%, 07/02/09 (a)(c)(d)
    9,730       9,730  
Los Angeles Cnty
TRAN 2009-2010
Series A
               
0.80%, 06/30/10 (f)
    25,000       25,420  
Los Angeles USD
GO Bonds (Election of 2002)
Series 2009D & GO Bonds (Election of 2004)
               
Series 2009I
               
0.30%, 07/02/09 (a)(c)(d)
    4,495       4,495  
Newport Beach
Refunding RB (Hoag Memorial Hospital Presbyterian)
Series 2008F
               
0.24%, 07/01/09 (a)(b)
    14,400       14,400  
Riverside Community College District
GO Bonds (Election of 2004)
Series 2007C
               
0.45%, 07/02/09 (a)(c)(d)
    8,725       8,725  
Sacramento Cnty Sanitation District Financing Auth
Subordinate Lien Refunding RB
Series 2008E
               
0.20%, 07/01/09 (a)(b)
    1,800       1,800  
San Francisco Public Utilities Commission
Wastewater CP
0.70%, 08/05/09 (b)
    2,500       2,500  
Water CP
0.75%, 08/06/09 (b)
    8,000       8,000  
Santa Clara Valley Transportation Auth
Refunding RB (2000 Measure A Sales Tax)
Series 2008A
               
0.22%, 07/02/09 (a)(c)
    6,100       6,100  
Southern California Metropolitan Water District
Water RB
Series 2005C
               
0.30%, 07/02/09 (a)(c)(d)
    3,000       3,000  
Southern California Public Power Auth
Refunding RB (Magnolia Power)
Series 2009 2
               
0.24%, 07/01/09 (a)(b)
    58,070       58,070  
West Hills Community College District
COP (2008 Refunding Project)
0.30%, 07/01/09 (a)(b)
    1,700       1,700  
Whittier
Health Facility RB (Presbyterian Intercommunity Hospital)
Series 2009B
               
0.12%, 07/01/09 (a)(b)
    36,600       36,600  
William S. Hart Union High SD
GO Bonds (2008 Election)
Series A
               
0.34%, 07/02/09 (a)(b)(c)(d)
    5,000       5,000  
                 
              384,125  
 
Colorado 2.1%
Aurora
Hospital Refunding RB (Children’s Hospital Association)
Series 2008B
               
0.45%, 07/02/09 (a)(b)
    8,100       8,100  
Bachelor Gulch Metropolitan District
GO Bonds
Series 2004
               
0.35%, 07/02/09 (a)(b)
    3,335       3,335  
Colorado Educational & Cultural Facilities Auth
RB (Caldwell Academy)
Series 2007
               
0.32%, 07/02/09 (a)(b)
    9,850       9,850  
 
 
 
58 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB (Lutheran Church Extension Fund - Missouri Synod)
Series 2008
               
0.40%, 07/01/09 (a)(b)
    12,150       12,150  
RB (Rehoboth Christian School Association)
Series 2007
               
2.95%, 07/02/09 (a)(b)
    7,735       7,735  
Colorado Health Facilities Auth
RB (Catholic Health Initiatives)
Series 2008C2
               
3.64%, 11/10/09
    2,500       2,524  
Colorado HFA
S/F Mortgage Bonds
Series 2006B2
               
0.35%, 07/01/09 (a)(c)
    9,800       9,800  
S/F Mortgage Bonds
Series 2006C2
               
0.35%, 07/01/09 (a)(c)
    11,000       11,000  
Colorado Regional Transportation District
Sales Tax RB
Series 2004A
               
0.62%, 11/01/09
    1,800       1,826  
Colorado Springs
Utilities System Improvement & Refunding RB
Series 2007B
               
0.90%, 07/02/09 (a)(c)
    10,000       10,000  
Commerce City Northern Infrastructure General Improvement District
GO Bonds
Series 2006
               
0.35%, 07/02/09 (a)(b)
    1,000       1,000  
Concord Metropolitan District
GO Refunding & Improvement Bonds
Series 2004
               
2.00%, 12/01/09 (b)
    3,800       3,800  
Denver Urban Renewal Auth
Stapleton Sr Tax Increment RB
Series 2008A1
               
0.29%, 07/02/09 (a)(b)
    3,100       3,100  
Erie
COP
Series 2005
               
3.50%, 07/01/09 (a)(b)
    4,080       4,080  
Lowry Economic Redevelopment Auth
RB
Series 2008A
               
0.33%, 07/01/09 (a)(b)
    7,965       7,965  
Meridian Ranch Metropolitan District
GO Limited Tax Refunding Bonds
Series 2009
               
0.35%, 07/02/09 (a)(b)
    3,135       3,135  
Moffat Cnty
Pollution Control Refunding RB (Tri State Generation & Transmission Association)
Series 2009
               
0.33%, 07/02/09 (a)(b)
    11,275       11,275  
NBC Metropolitan District
GO Bonds
Series 2004
               
2.25%, 12/01/09 (b)
    3,570       3,570  
Parker Automotive Metropolitan District
GO Bonds
Series 2005
               
0.35%, 07/02/09 (a)(b)
    3,500       3,500  
Southglenn Metropolitan District
Special RB
Series 2007
               
0.35%, 07/02/09 (a)(b)
    10,150       10,150  
                 
              127,895  
 
Connecticut 0.1%
Connecticut
GO Bonds
Series 2005D
               
0.65%, 07/02/09 (a)(c)(d)
    3,300       3,300  
GO Refunding Bonds
Series 2007C
               
0.49%, 03/15/10
    3,000       3,095  
                 
              6,395  
 
District of Columbia 1.5%
District of Columbia
GO Bonds
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    18,230       18,230  
GO Bonds
Series 2007C
               
0.70%, 07/02/09 (a)(b)(c)(d)
    4,985       4,985  
Income Tax Secured RB
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    10,500       10,500  
RB (Population Services International)
Series 2007
               
2.50%, 07/01/09 (a)(b)
    7,300       7,300  
RB (St Coletta Special Education Public Charter School)
Series 2005
               
0.32%, 07/02/09 (a)(b)
    4,480       4,480  
District of Columbia Water & Sewer Auth
Public Utility RB
Series 1998
               
0.40%, 07/02/09 (a)(c)(d)
    6,155       6,155  
0.50%, 07/02/09 (a)(c)(d)
    19,800       19,800  
Public Utility Sr Lien RB
Series 2009A
               
0.32%, 07/02/09 (a)(c)(d)
    9,330       9,330  
Public Utility Subordinated Lien Refunding RB
Series 2008A
               
0.33%, 07/02/09 (a)(b)(c)(d)
    14,270       14,270  
                 
              95,050  
 
Florida 7.5%
Brevard Cnty Health Facilities Auth
RB (Wuesthoff Health Systems)
Series 2004
               
2.50%, 07/01/09 (a)(b)
    5,900       5,900  
Broward Cnty
Professional Sports Facilities Tax & Refunding RB
Series 2006A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    7,115       7,115  
Broward Cnty HFA
M/F Housing Refunding RB (Island Club Apts)
Series 2001A
               
0.42%, 07/02/09 (a)(b)
    3,000       3,000  
 
 
 
See financial notes 59

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Cape Coral
CP Notes
0.35%, 08/12/09 (b)
    14,056       14,056  
Capital Trust Agency
Housing RB (Atlantic Housing Foundation Properties)
Series 2008A
               
0.30%, 07/02/09 (a)(b)
    10,000       10,000  
Charlotte Cnty SD
TAN
Series 2008
               
2.35%, 10/01/09
    2,000       2,008  
Collier Cnty Educational Facilities Auth
Limited Obligation RB (Ave Maria Univ)
Series 2006
               
0.55%, 07/01/09 (a)(b)
    12,000       12,000  
Collier Cnty Health Facilities Auth
Health Facility RB (The Mooring)
Series 2005
               
0.28%, 07/01/09 (a)(b)
    9,000       9,000  
Duval Cnty School Board
COP (Master Lease Program)
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    16,203       16,203  
Escambia Cnty
Solid Waste Disposal RB (Gulf Power) Second
Series 2009
               
0.40%, 07/01/09 (a)
    3,100       3,100  
Escambia Cnty Health Facilities Auth
RB (Ascension Health Credit Group)
Series 1999A2
               
1.15%, 11/15/09 (b)
    11,000       11,298  
1.15%, 11/15/09 (b)
    2,310       2,372  
Florida Dept of Transportation
Bonds (Right-of-Way Acquisition & Bridge Construction)
Series 2008A
               
0.50%, 07/01/10
    1,450       1,490  
Turnpike RB
Series 2006A
               
1.00%, 07/23/09 (c)(d)
    11,645       11,645  
Turnpike RB
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    4,520       4,520  
Turnpike Refunding RB
Series 2003A
               
0.72%, 07/01/09
    1,500       1,500  
1.24%, 07/01/09
    1,325       1,325  
Florida State Board of Education
Public Education Capital Outlay Bonds
Series 1999E
               
0.35%, 07/02/09 (a)(c)(d)
    15,820       15,820  
Public Education Capital Outlay Bonds
Series 2001H
               
0.53%, 06/01/10
    4,135       4,304  
Public Education Capital Outlay Bonds
Series 2006B
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,990       5,990  
Public Education Capital Outlay Bonds
Series 2006D
               
0.64%, 06/01/10
    3,345       3,478  
Public Education Capital Outlay Bonds
Series 2006D&E
               
0.28%, 07/02/09 (a)(c)(d)
    1,500       1,500  
Public Education Capital Outlay Bonds
Series 2007D
               
0.55%, 06/01/10
    3,390       3,497  
Public Education Capital Outlay Refunding Bonds
Series 1993A
               
0.80%, 06/01/10
    5,000       5,225  
Public Education Capital Outlay Refunding Bonds
Series 2001A
               
0.65%, 06/01/10
    690       721  
Public Education Capital Outlay Refunding Bonds
Series 2001J
               
0.55%, 06/01/10
    4,120       4,287  
Public Education Capital Outlay Refunding Bonds
Series 2005C
               
0.50%, 06/01/10
    1,000       1,041  
Highlands Cnty Health Facilities Auth
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2005A
               
1.40%, 11/15/09
    500       507  
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2005B
               
4.00%, 11/15/09
    435       437  
Hospital RB (Adventist Health System/Sunbelt Obligated Group)
Series 2005I
               
1.40%, 11/16/09 (g)
    7,775       7,877  
1.44%, 11/16/09
    11,500       11,651  
1.50%, 11/16/09
    10,580       10,719  
1.50%, 11/16/09
    115       117  
2.50%, 11/16/09
    150       152  
3.25%, 11/16/09
    500       507  
Indian River Cnty
RB (Saint Edwards School)
Series 1999
               
0.32%, 07/02/09 (a)(b)
    9,950       9,950  
Jacksonville
Transportation RB
Series 2007
               
0.25%, 07/02/09 (a)(c)(d)
    28,995       28,995  
JEA
Electric System RB
Series Three 2008B3
               
0.32%, 07/01/09 (a)(c)
    8,000       8,000  
Water & Sewer System RB
Series 2008B
               
0.20%, 07/01/09 (a)(c)
    700       700  
Lakeland
Hospital RB (Lakeland Regional Health Systems)
Series 1999A
               
1.90%, 11/15/09 (b)
    2,000       2,046  
Miami-Dade Cnty Educational Facilities Auth
RB (Univ of Miami)
Series A
               
0.52%, 04/01/10 (b)
    4,600       4,834  
Miami-Dade Cnty Health Facilities Auth
Hospital Revenue & Refunding RB (Miami Children’s Hospital)
Series 2006B3
               
0.33%, 07/01/09 (a)(b)
    18,950       18,950  
 
 
 
60 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
North Broward Hospital District
Refunding RB
Series 2007
               
0.27%, 07/02/09 (a)(b)
    17,600       17,600  
Orange Cnty HFA
Refunding RB (Highland Pointe Apts)
Series 1998J
               
0.30%, 07/02/09 (a)(b)
    7,455       7,455  
Orange Cnty IDA
RB (Univ of Central Florida Foundation)
Series 2000A
               
0.47%, 07/02/09 (a)(b)
    7,830       7,830  
Orlando & Orange Cnty Expressway Auth
RB
Series 2007A
               
1.00%, 09/09/09 (b)(c)(d)
    14,940       14,940  
Orlando Utilities Commission
Utility System Refunding RB
Series 2009B
               
0.30%, 07/02/09 (a)(c)(d)
    11,250       11,250  
Palm Beach Cnty
RB (Palm Beach Day Academy)
Series 2006
               
0.32%, 07/02/09 (a)(b)
    9,970       9,970  
Palm Beach Cnty SD
Sales Tax Revenue CP
0.40%, 09/10/09 (b)
    12,700       12,700  
0.53%, 08/05/09 (b)
    6,500       6,500  
Palm Beach Cnty Solid Waste Auth
Improvement RB
Series 2009A
               
0.40%, 07/02/09 (a)(b)(c)(d)
    4,545       4,545  
Polk Cnty School Board
COP (Master Lease Program)
Series 2003A
               
1.00%, 07/02/09 (a)(b)(c)
    40,010       40,010  
COP (Master Lease Program)
Series 2008A
               
1.00%, 07/02/09 (a)(b)(c)
    35,425       35,425  
South Miami Health Facilities Auth
Hospital RB (Baptist Health South Florida Obligated Group)
Series 2007
               
0.28%, 07/02/09 (a)(c)(d)
    3,995       3,995  
Tampa Bay Water Auth
Utility System RB
Series 2008
               
0.28%, 07/02/09 (a)(c)(d)
    3,495       3,495  
Utility System Refunding & Improvement RB
Series 2001A
               
3.00%, 07/02/09 (a)(c)(d)
    5,200       5,200  
Volusia Cnty School Board
COP
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    1,955       1,955  
Walton County School Board
COP
Series 1999
               
5.25%, 07/01/09 (b)
    2,500       2,525  
Winter Haven
Utility System Improvement & Refunding RB
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    4,670       4,670  
                 
              457,902  
 
Georgia 2.4%
Atlanta
Tax Allocation Bonds
Series 2001
               
0.32%, 07/02/09 (a)(b)
    9,555       9,555  
Atlanta Development Auth
RB (Georgia Aquarium)
Series 2009
               
0.29%, 07/08/09 (a)(b)
    11,250       11,250  
Burke Cnty Development Auth
Pollution Control RB (Georgia Power Plant Vogtle) Second
Series 1995
               
0.45%, 07/16/09
    25,000       25,000  
Clayton Cnty Housing Auth
M/F Refunding RB
Series 1990E
               
2.33%, 07/01/09 (a)(b)
    7,160       7,160  
Cobb Cnty Housing Auth
M/F Housing RB (Post Bridge)
Series 1996
               
0.28%, 07/01/09 (a)(b)
    8,150       8,150  
Dalton Development Auth
Revenue Certificates (Hamilton Health Care System)
Series 2003B
               
0.32%, 07/02/09 (a)(b)
    1,405       1,405  
Dekalb Cnty Housing Auth
M/F Housing RB (Highland Place Apts)
Series 2008
               
0.32%, 07/02/09 (a)(b)
    27,000       27,000  
DeKalb, Newton & Gwinnett Cntys Joint Development Auth
Incremental Draw RB (GPC Real Estate Student Support I)
Series 2007
               
0.27%, 07/02/09 (a)(b)
    13,905       13,905  
Fayette Cnty Hospital Auth
Revenue Anticipation Certificates (Fayette Community Hospital)
Series 2001
               
2.50%, 07/01/09 (a)(b)
    2,840       2,840  
Fulton Cnty Development Auth
RB (Georgia Tech Athletic Association)
Series 2008A
               
1.25%, 12/02/09 (b)
    6,150       6,150  
Georgia
GO Bonds
Series 2006G
               
0.17%, 07/02/09 (a)(c)(d)
    4,900       4,900  
GO Bonds
Series 2007E
               
0.36%, 07/02/09 (a)(c)(d)
    6,977       6,977  
GO Bonds 1993C
0.48%, 07/01/10
    1,000       1,045  
Metropolitan Atlanta Rapid Transit Auth
Sales Tax Refunding RB (Third Indenture)
Series 2007B
               
0.45%, 07/02/09 (a)(c)(d)
    1,882       1,882  
 
 
 
See financial notes 61

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Monroe Cnty Development Auth
RB (Georgia Power Plant Scherer) First
Series 2008
               
1.95%, 12/10/09
    6,700       6,700  
Municipal Electric Auth of Georgia
BAN (Plant Vogtle)
Series 2009A
               
0.48%, 06/21/10
    12,760       12,947  
                 
              146,866  
 
Hawaii 1.1%
Hawaii
GO Bonds
Series 2002CY
               
0.64%, 02/01/10
    1,000       1,027  
GO Refunding Bonds
Series 2005DG
               
0.58%, 07/01/10
    1,000       1,044  
Hawaii State Dept of Budget & Finance
Special Purpose RB (Hawaii Pacific Health)
Series 2005A
               
5.65%, 07/01/09 (b)
    40,000       40,100  
Special Purpose RB (Hawaii Pacific Health)
Series 2009A1
               
0.25%, 07/02/09 (a)(b)
    5,600       5,600  
Honolulu
GO Bonds
Series 2005A, C & D
               
0.50%, 07/02/09 (a)(c)(d)
    5,520       5,520  
GO Bonds
Series 2009A
               
0.28%, 07/02/09 (a)(c)(d)
    4,000       4,000  
Wastewater System RB Sr
Series 2005A
               
0.40%, 07/02/09 (a)(c)(d)
    11,690       11,690  
                 
              68,981  
 
Idaho 0.2%
Idaho
TAN
Series 2009
               
0.44%, 06/30/10 (f)
    7,000       7,143  
Idaho Health Facilities Auth
Refunding RB (Valley Vista Care Obligated Group)
Series 1999A
               
6.54%, 11/15/09 (b)
    1,220       1,272  
6.69%, 11/15/09 (b)
    1,000       1,043  
7.30%, 11/15/09 (b)
    1,000       1,047  
                 
              10,505  
 
Illinois 11.8%
Bolingbrook
GO Bonds
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    9,340       9,340  
Jr Lien Tax Increment RB
Series 2005
               
1.12%, 07/01/09 (a)(b)
    8,880       8,880  
Chicago
General Airport Third Lien RB
Series 2005A
               
0.75%, 07/02/09 (a)(b)(c)(d)
    20,290       20,290  
GO Project & Refunding Bonds
Series 2006A
               
0.55%, 07/02/09 (a)(c)(d)
    2,505       2,505  
GO Project & Refunding Bonds
Series 2007A
               
0.27%, 07/02/09 (a)(c)(d)
    26,195       26,195  
0.40%, 07/02/09 (a)(c)(d)
    10,355       10,355  
GO Project & Refunding Bonds
Series 2008C
               
0.28%, 07/02/09 (a)(c)(d)
    5,000       5,000  
GO Refunding Bonds
Series 1993B
               
0.26%, 07/01/09 (a)(b)(c)(d)
    4,030       4,030  
Sales Tax RB
Series 1998
               
0.50%, 07/02/09 (a)(c)(d)
    9,900       9,900  
Second Lien Water Refunding RB
Series 2004–1
               
0.30%, 07/02/09 (a)(b)
    20,000       20,000  
Second Lien Water Refunding RB
Series 2004–2
               
0.30%, 07/02/09 (a)(b)
    2,500       2,500  
Chicago Board of Education
Unlimited Tax GO Refunding Bonds (Dedicated Revenues) 
Series 2004A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    12,900       12,900  
Chicago Park District
GO Limited Tax Refunding Bonds
Series 2008G
               
1.35%, 01/01/10
    2,275       2,316  
GO Unlimited Tax Refunding Bonds
Series 2008H
               
1.35%, 01/01/10
    1,475       1,502  
GO Unlimited Tax Refunding Bonds
Series 2008I
               
1.35%, 01/01/10
    1,120       1,135  
Community Unit SD No. 308
GO Bonds
Series 2008
               
0.25%, 07/02/09 (a)(b)(c)(d)
    6,699       6,699  
Community Unit SD No. 365-U
GO School Bonds (Valley View)
Series 2005
               
0.28%, 07/07/09 (a)(b)(c)(d)
    9,775       9,775  
Cook Cnty
RB (Catholic Theological Union)
Series 2005
               
0.47%, 07/01/09 (a)(b)
    1,500       1,500  
Sales TAN
Series 2008
               
1.58%, 08/03/09
    5,500       5,507  
Duquoin
Industrial Revenue Refunding & Improvement Bonds (Marshall Browning Hospital)
Series 2006
               
0.85%, 07/02/09 (a)(b)
    10,005       10,005  
 
 
 
62 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Illinois
GO Bonds
Series of April 2009
               
0.45%, 07/02/09 (a)(b)(c)(d)
    4,895       4,895  
Illinois Development Finance Auth
RB (Perspectives Charter School)
Series 2003
               
0.45%, 07/02/09 (a)(b)
    5,200       5,200  
Illinois Educational Facilities Auth
RB (Northwestern Univ)
Series 1993
               
0.70%, 12/01/09
    1,575       1,607  
RB (Univ of Chicago)
Series 1998B
               
4.05%, 07/01/09
    29,850       29,850  
RB (Concordia Univ River Forest)
Series 2001
               
0.50%, 07/01/09 (a)(b)
    14,105       14,105  
RB (Univ of Chicago)
Series 2001B3
               
0.52%, 05/05/10
    10,000       10,000  
RB (Northwestern Univ)
Series 2003
               
0.28%, 07/02/09 (a)(c)(d)
    3,465       3,465  
Illinois Finance Auth
CP Revenue Notes (DePaul Univ Financing Program)
0.40%, 07/14/09 (b)
    28,000       28,000  
RB (Advocate Health Care Network)
Series 2003
               
1.82%, 07/02/09
    13,650       13,650  
RB (Advocate Health Care Network)
Series 2008A1
               
0.65%, 01/14/10 (g)
    20,840       20,840  
RB (Art Institute of Chicago)
Series 2009B2
               
0.35%, 07/01/09 (a)(b)
    3,000       3,000  
RB (Carle Foundation)
Series 2009B
               
0.15%, 07/02/09 (a)(b)
    1,875       1,875  
RB (Carle Foundation)
Series 2009D
               
0.20%, 07/02/09 (a)(b)
    6,875       6,875  
RB (Elmhurst Memorial Healthcare)
Series 2008D
               
0.16%, 07/01/09 (a)(b)
    1,600       1,600  
RB (Ingalls Memorial Hospital)
Series 1985C
               
0.18%, 07/01/09 (a)(b)
    1,600       1,600  
RB (Northwestern Univ)
Series 2003
               
0.45%, 07/02/09 (a)(c)(d)
    5,200       5,200  
RB (Regency Park at Lincolnwood)
Series 1991B
               
0.28%, 07/02/09 (a)(b)(c)(d)
    5,400       5,400  
0.28%, 07/02/09 (a)(b)(c)(d)
    15,925       15,925  
RB (Resurrection Health Care)
Series 2005C
               
0.35%, 07/02/09 (a)(b)
    29,965       29,965  
RB (St. Vincent de Paul Center)
Series 2000A
               
0.73%, 03/03/10
    9,400       9,400  
RB (The Clare at Water Tower)
Series 2005D
               
0.30%, 07/02/09 (a)(b)
    16,350       16,350  
RB (Univ of Chicago)
Series 2007
               
0.25%, 07/02/09 (a)(c)(d)
    10,295       10,295  
RB (Univ of Chicago)
Series 2008B
               
0.28%, 07/02/09 (a)(c)(d)
    2,995       2,995  
Refunding RB (Bradley Univ)
Series 2008B
               
0.30%, 07/02/09 (a)(b)
    4,200       4,200  
Refunding RB (Swedish Covenant Hospital)
Series 2008A
               
0.32%, 07/01/09 (a)(b)
    5,500       5,500  
Illinois Housing Development Auth
M/F Housing RB (Brookhaven Apts)
Series 2008
               
0.43%, 07/02/09 (a)(b)
    10,000       10,000  
Illinois Regional Transportation Auth
GO Bonds
Series 2004A
               
0.55%, 07/02/09 (a)(c)(d)
    5,300       5,300  
GO Refunding Bonds
Series 1999
               
0.49%, 06/01/10
    5,000       5,240  
Illinois Toll Highway Auth
Toll Highway Sr Priority RB
Series 2007A2
               
0.65%, 07/02/09 (a)(c)
    23,600       23,600  
Jacksonville
Industrial Improvement RB (Passavant Memorial Area Hospital Association)
Series 2006B
               
0.85%, 07/02/09 (a)(b)
    11,795       11,795  
Industrial Refunding RB (Passavant Memorial Area Hospital Association)
Series 2006A
               
0.85%, 07/02/09 (a)(b)
    18,955       18,955  
Metropolitan Pier & Exposition Auth
McCormick Place Expansion Project Bonds
Series 2002A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    11,366       11,366  
0.25%, 07/02/09 (a)(b)(c)(d)
    11,560       11,560  
0.25%, 07/02/09 (a)(b)(c)(d)
    10,355       10,355  
0.27%, 07/02/09 (a)(c)(d)
    81,825       81,825  
0.33%, 07/02/09 (a)(c)(d)
    12,405       12,405  
0.33%, 07/02/09 (a)(c)(d)
    11,260       11,260  
0.60%, 07/02/09 (a)(c)(d)
    10,315       10,315  
0.38%, 07/02/09 (a)(c)(d)
    33,010       33,010  
McCormick Place Expansion Project Bonds
Series 2002B
               
0.55%, 07/02/09 (a)(c)(d)
    4,160       4,160  
Metropolitan Water Reclamation District of Greater Chicago
GO Refunding Bonds
Series of May 2006
               
0.28%, 07/02/09 (a)(c)(d)
    2,995       2,995  
Limited Tax GO Refunding Bonds
Series C of March 2007
               
0.28%, 07/02/09 (a)(c)(d)
    2,800       2,800  
 
 
 
See financial notes 63

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
St. Clair Cnty
Industrial Building Refunding RB (Winchester Apts)
Series 1994
               
0.35%, 07/02/09 (a)(b)
    15,550       15,550  
Village of Western Springs
Special Assessment Bonds (Timber Trails)
Series 2006
               
0.52%, 07/01/09 (a)(b)
    15,842       15,842  
                 
              720,459  
 
Indiana 3.5%
Boone Cnty Hospital Association
Lease Refunding RB
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,855       5,855  
Decatur Township Multi-School Building Corp
First Mortgage Refunding Bonds
Series 2006B
               
0.25%, 07/02/09 (a)(b)(c)(d)
    4,115       4,115  
Franklin
Economic Development Refunding & Improvement RB (Franklin United Methodist Home)
Series 2007
               
0.45%, 07/02/09 (a)(b)
    24,580       24,580  
Indiana Finance Auth
RB (Ascension Health Sr Credit Group)
Series 2008E8
               
1.42%, 12/15/09
    8,440       8,515  
1.60%, 12/15/09
    5,565       5,614  
1.85%, 12/15/09
    300       303  
2.70%, 12/15/09
    450       454  
Refunding RB (Trinity Health Credit Group)
Series 2008D1
               
0.20%, 07/02/09 (a)
    6,800       6,800  
Indiana Health & Educational Facility Financing Auth
Hospital RB (Howard Regional Health System)
Series 2005A
               
1.70%, 07/01/09 (a)(b)
    19,345       19,345  
RB (Ascension Health Sr Credit Group)
Series 2006B4&B6
               
0.23%, 07/01/09 (a)(c)(d)
    5,200       5,200  
RB (Clarian Health Obligated Group)
Series 2005B
               
1.50%, 07/01/09 (a)(b)(c)
    75,250       75,250  
RB (Clarian Health Obligated Group)
Series 2005D
               
0.19%, 07/01/09 (a)(b)
    8,900       8,900  
Indiana Health Facility Financing Auth
RB (Ascension Health Credit Group)
Series 2005A7
               
0.80%, 04/01/10
    1,350       1,392  
0.90%, 04/01/10
    1,600       1,649  
RB (Memorial Hospital)
Series 2004A
               
0.45%, 07/02/09 (a)(b)
    17,965       17,965  
Indiana Univ
Consolidated RB
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    1,125       1,125  
Indianapolis Airport Auth
Subordinate CP Notes
0.65%, 11/02/09 (b)
    12,500       12,500  
Indianapolis Local Public Improvement Bond Bank
Waterworks Project Bonds
Series 2002A
               
0.28%, 07/02/09 (a)(b)(c)(d)
    8,735       8,735  
Wayne Township School Building Corp
First Mortgage Refunding Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    3,945       3,945  
                 
              212,242  
 
Iowa 0.3%
Iowa Finance Auth
Pollution Control Facility Refunding RB (MidAmerican Energy)
Series 2008B
               
0.31%, 07/01/09 (a)
    14,000       14,000  
Iowa Higher Education Loan Auth
Private College Facility RB (Graceland Univ)
Series 2003
               
0.32%, 07/02/09 (a)(b)
    1,600       1,600  
                 
              15,600  
 
Kansas 0.2%
Topeka
Temporary Notes
Series 2008A
               
4.10%, 11/01/09
    12,000       12,000  
 
Kentucky 0.6%
Kentucky State Property & Buildings Commission
Refunding RB Project No. 84
1.76%, 07/02/09 (a)(c)(d)
    14,970       14,970  
Louisville & Jefferson Cnty Metropolitan Sewer District
Sewage & Drainage System RB
Series 1999A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    5,600       5,600  
Mason Cnty
Pollution Control RB (East Kentucky Power Coop) Pooled
Series 1984B1
               
1.10%, 07/01/09 (a)(b)
    17,150       17,150  
                 
              37,720  
 
Louisiana 0.5%
Jefferson Sales Tax District
Special Sales Tax RB
Series 2005
               
0.25%, 07/02/09 (a)(b)(c)(d)
    2,610       2,610  
Lafayette
Communications System RB
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    19,730       19,730  
Louisiana
Gasoline & Fuels Tax RB
Series 2005A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    6,920       6,920  
                 
              29,260  
 
 
 
64 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
Maryland 2.3%
Maryland Health & Higher Educational Facilities Auth
Mortgage RB (Western Maryland Health System)
Series 2006A
               
1.00%, 09/09/09 (b)(c)(d)
    14,665       14,665  
RB (Doctors Community Hospital)
Series 2008
               
0.42%, 07/01/09 (a)(b)(g)
    51,160       51,160  
RB (Frederick Memorial Hospital)
Series 2008
               
0.29%, 07/01/09 (a)(b)
    1,060       1,060  
RB (Goucher College)
Series 2007
               
0.30%, 07/02/09 (a)(b)
    6,060       6,060  
RB (LifeBridge Health)
Series 2008
               
0.45%, 07/02/09 (a)(b)(c)(d)
    7,755       7,755  
RB (Pooled Loan Program)
Series 1985B
               
0.26%, 07/01/09 (a)(b)
    17,800       17,800  
RB (Pooled Loan Program)
Series 1994D
               
0.30%, 07/02/09 (a)(b)
    31,690       31,690  
Montgomery Cnty
Economic Development RB (George Meany Center For Labor Studies)
Series 2004
               
0.32%, 07/02/09 (a)(b)
    5,100       5,100  
Univ System of Maryland
Revolving Loan Bonds
Series 2003A
               
0.55%, 06/01/10
    5,560       5,560  
                 
              140,850  
 
Massachusetts 3.4%
Gloucester
BAN
2.40%, 09/18/09
    5,000       5,004  
Malden
GO BAN
Series A
               
0.59%, 04/30/10
    5,000       5,048  
Massachusetts
GO Bonds Consolidated Loan of 2000
Series A
               
0.95%, 02/01/10 (b)
    5,000       5,196  
Special Obligation RB Consolidated Loan of 2005
Series A
               
1.76%, 07/02/09 (a)(b)(c)(d)
    9,735       9,735  
Massachusetts Bay Transportation Auth
Assessment Bonds
Series 2006A
               
0.25%, 07/02/09 (a)(c)(d)
    42,960       42,960  
General Transportation System Refunding Bonds
Series 1994A
               
0.71%, 03/01/10
    9,000       9,377  
Massachusetts Development Finance Agency
RB (Boston Univ)
Series T1
               
0.39%, 07/02/09 (a)(b)(c)(d)
    7,900       7,900  
RB (Clark Univ)
Series 2008
               
0.20%, 07/01/09 (a)(b)
    16,185       16,185  
RB (Eaglebrook School)
Series 2007
               
0.28%, 07/01/09 (a)(b)
    9,400       9,400  
Massachusetts Health & Educational Facilities Auth
RB (Dana-Farber Cancer Institute)
Series 2008L2
               
0.25%, 07/02/09 (a)(b)
    3,800       3,800  
RB (Harvard Univ)
Series 2008B
               
0.25%, 07/02/09 (a)(c)(d)
    2,810       2,810  
RB (Hebrew Rehabilitation Center)
Series 2007D
               
0.30%, 07/02/09 (a)(b)
    14,730       14,730  
RB (Massachusetts Institute of Technology)
Series K
               
0.29%, 07/02/09 (a)(c)(d)
    6,782       6,782  
RB (Suffolk Univ)
Series 2008A
               
0.26%, 07/02/09 (a)(b)
    5,250       5,250  
Refunding RB (Suffolk Univ)
Series 2007B
               
0.30%, 07/02/09 (a)(b)
    7,400       7,400  
Massachusetts School Building Auth
Dedicated Sales Tax Bonds
Series 2005A
               
0.39%, 07/02/09 (a)(c)(d)
    4,900       4,900  
Dedicated Sales Tax Bonds
Series 2007A
               
0.39%, 07/02/09 (a)(c)(d)
    19,800       19,800  
Massachusetts Water Resources Auth
General RB
Series 2008B
               
0.37%, 07/02/09 (a)(c)(d)
    19,800       19,800  
General Refunding RB
Series 2007B
               
1.76%, 07/02/09 (a)(b)(c)(d)
    10,700       10,700  
                 
              206,777  
 
Michigan 1.5%
Clinton Cnty Economic Development Corp
Limited Obligation RB (Clinton Area Care Center)
Series 1999
               
0.45%, 07/02/09 (a)(b)
    8,240       8,240  
Detroit
Sewage Disposal System RB
Series 1999A
               
0.60%, 01/01/10 (b)
    5,775       5,981  
0.60%, 01/01/10 (b)
    3,110       3,224  
Grand Rapids Economic Development Corp
RB (Sisters of the Order of St. Dominic of Grand Rapids)
Series 2005
               
1.35%, 07/02/09 (a)(b)
    10,765       10,765  
Kalamazoo Hospital Finance Auth
Hospital Refunding RB (Bronson Methodist Hospital)
Series 2009A
               
0.30%, 07/01/09 (a)(b)
    11,685       11,685  
 
 
 
See financial notes 65

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Michigan Hospital Financing Auth
Refunding RB (Crittenton Hospital Medical Center)
Series 2003A
               
0.55%, 07/01/09 (a)(b)
    14,935       14,935  
Michigan Housing Development Auth
S/F Mortgage RB
Series 2006C
               
0.30%, 07/01/09 (a)(c)
    8,700       8,700  
Michigan State Hospital Finance Auth
RB (Ascension Health Credit Group)
Series 2008B8
               
0.17%, 07/01/09 (a)
    5,100       5,100  
Michigan State Strategic Fund
Limited Obligation RB (Legal Aid & Defender Association)
Series 2007
               
0.38%, 07/02/09 (a)(b)
    12,440       12,440  
Sanilac Cnty Economic Development Corp
Limited Obligation RB (Marlette Community Hospital)
Series 2001
               
0.85%, 07/02/09 (a)(b)
    10,795       10,795  
                 
              91,865  
 
Minnesota 1.0%
Duluth Econ Dev Auth & Brainerd
Health Care Facilities RB (Benedictine Health System)
Series 1993C & 1993E
               
0.39%, 07/02/09 (a)(b)(c)(d)
    14,360       14,360  
Minneapolis-St. Paul Housing & Redevelopment Auth
M/F Housing Refunding RB (Highland Ridge)
Series 2003
               
0.33%, 07/02/09 (a)(b)
    6,625       6,625  
Minnesota
COP Aid Anticipation
Series 2008
               
1.75%, 09/04/09
    3,000       3,006  
GO State Bonds
0.28%, 07/02/09 (a)(c)(d)
    5,985       5,985  
0.70%, 11/01/09
    1,500       1,522  
Minnetonka
M/F Housing Refunding RB (Minnetonka Hills Apts)
Series 2001
               
0.33%, 07/02/09 (a)(b)
    5,000       5,000  
Rochester
Health Care Facilities RB (Mayo Clinic)
Series 2008D
               
0.70%, 04/01/10
    10,000       10,000  
Health Care Facilities RB (Mayo Foundation)
Series 2001D
               
0.30%, 07/09/09 (c)
    9,500       9,500  
Roseville
Sr Housing Refunding RB (Eaglecrest)
Series 2009
               
0.30%, 07/02/09 (a)(b)
    4,000       4,000  
Univ of Minnesota
GO Bonds
Series 2009C
               
0.58%, 12/01/09
    2,400       2,409  
                 
              62,407  
 
Mississippi 0.9%
Mississippi
GO Capital Improvements Bonds
Series 2005
               
0.50%, 07/01/09 (a)(c)
    10,620       10,620  
Mississippi Business Finance Corp
Gulf Opportunity Zone RB (King Edward Hotel)
Series 2009
               
0.30%, 07/02/09 (a)(b)
    6,040       6,040  
RB (Chevron USA)
Series 2007C
               
0.65%, 08/03/09
    10,000       10,000  
RB (Mississippi Methodist Sr Services)
Series 2008A
               
0.35%, 07/02/09 (a)(b)
    22,180       22,180  
Mississippi Development Bank
Special Obligation Refunding Bonds (Harrison Cnty GO Bonds Refunding Project)
Series 2008C
               
4.00%, 10/01/09 (b)
    1,520       1,525  
Special Obligation Refunding Bonds (Magnolia Regional Health Center)
Series 2009
               
0.25%, 07/02/09 (a)(b)
    5,000       5,000  
                 
              55,365  
 
Missouri 1.9%
Bi-State Development Agency of the Missouri-Illinois Metropolitan District
Subordinate Mass Transit Sales Tax Appropriation Bonds (Metrolink Cross Cnty Extension)
Series 2005A
               
3.86%, 10/01/09 (b)
    8,400       8,459  
Kansas City
Special Obligation Refunding Bonds (H. Roe Bartle Convention Center)
Series 2008E
               
0.28%, 07/01/09 (a)(b)
    2,000       2,000  
Kansas City IDA
Industrial Development Refunding RB (Plaza Manor Nursing Home)
Series 2004
               
0.50%, 07/02/09 (a)(b)
    2,225       2,225  
Missouri Health & Educational Facilities Auth
Health Facilities RB (BJC Health System)
Series 2008C
               
0.17%, 07/02/09 (a)(f)
    27,500       27,500  
Health Facilities RB (SSM Healthcare)
Series 2005B
               
0.45%, 07/02/09 (a)(c)(d)
    11,900       11,900  
Health Facilities RB (St. Luke’s Health System)
Series 2008A
               
0.30%, 07/01/09 (a)(b)
    7,325       7,325  
Health Facilities RB (St. Luke’s Health System)
Series 2008C
               
0.30%, 07/01/09 (a)(b)
    3,500       3,500  
RB (Ascension Health Credit Group)
Series 2002C1
               
0.56%, 05/04/10
    11,075       11,075  
 
 
 
66 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Missouri Public Utilities Commission
Interim Construction Notes
Series 2008
               
2.00%, 08/15/09 (g)
    28,110       28,144  
St. Charles Cnty Public Water Supply District #2
COP
Series 2005
               
0.32%, 07/02/09 (a)(b)
    8,200       8,200  
St. Louis 
TRAN
Series 2009
               
0.60%, 06/30/10 (f)
    8,300       8,415  
                 
              118,743  
 
Montana 0.3%
Richland Cnty
Hospital RB (Sidney Health Center)
Series 2006
               
1.35%, 07/02/09 (a)(b)
    15,565       15,565  
 
Nebraska 0.8%
Douglas Cnty Hospital Auth No. 2
Health Facilities Refunding RB (Children’s Hospital)
Series 2008A
               
0.30%, 07/01/09 (a)(b)
    8,000       8,000  
Nebraska Public Power District
General RB
Series 2003A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    9,380       9,380  
General RB
Series 2005 B2
               
0.69%, 01/01/10
    10,000       10,216  
Omaha Public Power District
Electric System RB
Series 2006A
               
1.00%, 07/23/09 (c)(d)
    10,080       10,080  
Public Power General Agency
RB (Whelan Energy Center Unit 2)
Series 2007A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    4,955       4,955  
Univ of Nebraska
RB (Univ of Nebraska at Omaha Student Facilities)
Series 2007
               
0.25%, 07/02/09 (a)(c)(d)
    7,640       7,640  
                 
              50,271  
 
Nevada 2.2%
Clark Cnty
Airport System Jr Subordinate Lien Revenue Notes
Series 2009A
               
0.78%, 07/01/10 (f)
    10,000       10,170  
GO (Limited Tax) Bond Bank Bonds
Series 2006
               
1.00%, 07/30/09 (b)(c)(d)
    5,755       5,755  
GO (Limited Tax) Transportation Refunding Bonds
Series 2006B
               
0.60%, 06/01/10
    3,000       3,121  
Highway Revenue (Motor Vehicle Fuel Tax) Improvement & Refunding Bonds
Series 2007
               
0.28%, 07/02/09 (a)(b)(c)(d)
    3,555       3,555  
Passenger Facility Charge RB (Las Vegas McCarran International Airport)
Series 2007A2
               
1.00%, 07/02/09 (b)(c)(d)
    15,835       15,835  
Sales & Excise Tax Revenue CP Notes
Series 2008A&B
               
0.58%, 08/05/09 (b)
    5,000       5,000  
0.50%, 07/06/09 (b)
    6,500       6,500  
Clark Cnty SD
GO (Limited Tax) Building Bonds
Series 2002C
               
0.60%, 06/15/10
    1,655       1,724  
GO (Limited Tax) Building Bonds
Series 2005C
               
0.80%, 06/15/10
    3,000       3,120  
GO (Limited Tax) Building Bonds
Series 2006B
               
0.28%, 07/02/09 (a)(c)(d)
    22,820       22,820  
0.28%, 07/02/09 (a)(b)(c)(d)
    7,125       7,125  
0.28%, 07/02/09 (a)(b)(c)(d)
    4,875       4,875  
Clark Cnty Special Improvement District No. 121
Local Improvement Bonds (Southern Highlands Area)
Series 1999
               
1.81%, 12/01/09 (b)
    5,400       5,649  
Clark Cnty Water Reclamation District
GO (Limited Tax) Bonds
0.28%, 07/02/09 (a)(c)(d)
    4,800       4,800  
Las Vegas Valley Water District
GO (Limited Tax) Water Improvement & Refunding Bonds
Series 2003A
               
0.40%, 07/02/09 (a)(b)(c)(d)
    5,115       5,115  
Nevada
Limited Tax GO Bonds (Capital Improvement & Cultural Affairs)
Series 2008C
               
0.50%, 07/02/09 (a)(c)(d)
    9,400       9,400  
Nevada Dept of Business & Industry
RB (Nevada Cancer Institute)
Series 2003
               
0.32%, 07/02/09 (a)(b)
    22,550       22,550  
                 
              137,114  
 
New Hampshire 0.5%
New Hampshire Business Finance Auth
RB (Mark H. Wentworth Home)
Series 2006
               
0.27%, 07/02/09 (a)(b)
    2,000       2,000  
New Hampshire Health & Educational Facilities Auth
RB (Androscoggin Valley Hospital)
Series 2007
               
0.33%, 07/02/09 (a)(b)
    14,480       14,480  
RB (Riverwoods at Exeter)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    15,000       15,000  
                 
              31,480  
 
 
 
See financial notes 67

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
New Jersey 3.4%
East Brunswick Township
BAN 2009
0.54%, 04/28/10
    15,000       15,118  
Gloucester Cnty
BAN
Series 2009A
               
1.25%, 10/15/09
    7,000       7,030  
Livingston Township
BAN
0.50%, 04/29/10
    9,500       9,559  
Montclair Township
BAN
1.43%, 12/18/09
    10,000       10,049  
New Jersey Economic Development Auth
Economic Development Bonds (Ranney School)
Series 2007
               
0.15%, 07/02/09 (a)(b)
    7,310       7,310  
RB (Cooper Health System)
Series 2008A
               
0.16%, 07/02/09 (a)(b)
    6,400       6,400  
RB (Crane’s Mill)
Series 2008B
               
0.20%, 07/02/09 (a)(b)
    7,300       7,300  
RB (Princeton Day School)
Series 2005
               
0.30%, 07/01/09 (a)(b)
    1,500       1,500  
Refunding RB (Crane’s Mill)
Series 2005B
               
0.20%, 07/02/09 (a)(b)
    3,605       3,605  
School Facilities Construction Bonds
Series 2008X
               
0.18%, 07/01/09 (a)(b)
    12,375       12,375  
School Facilities Construction Notes
Series 2009A
               
0.44%, 06/18/10
    10,000       10,196  
0.47%, 06/18/10
    17,000       17,333  
School Facilities Construction Refunding Bonds
Series 2008V3
               
0.23%, 07/01/09 (a)(b)
    9,400       9,400  
New Jersey Health Care Facilities Financing Auth
RB (AHS Hospital)
Series 2008B
               
0.20%, 07/02/09 (a)(b)
    14,000       14,000  
RB (Hackensack Univ Medical Center)
Series 2008
               
0.43%, 07/02/09 (a)(b)(c)(d)
    3,420       3,420  
RB (Robert Wood Johnson Univ Hospital)
Series 2004
               
0.22%, 07/02/09 (a)(b)
    2,325       2,325  
RB (Somerset Medical Center)
Series 2008
               
0.16%, 07/02/09 (a)(b)
    3,915       3,915  
RB (Virtua Health)
Series 2009D
               
0.16%, 07/02/09 (a)(b)
    7,000       7,000  
RB (Virtua Health)
Series 2009E
               
0.19%, 07/01/09 (a)(b)
    2,000       2,000  
Refunding RB (Underwood-Memorial Hospital)
Series 2008
               
0.28%, 07/01/09 (a)(b)
    5,550       5,550  
New Jersey Transportation Trust Fund Auth
Transportation System Bonds
Series 2004B
               
0.83%, 12/15/09
    500       510  
Transportation System Bonds
Series 2006C
               
0.24%, 07/02/09 (a)(b)(c)(d)
    15,490       15,490  
0.24%, 07/02/09 (a)(b)(c)(d)
    4,205       4,205  
0.25%, 07/02/09 (a)(b)(c)(d)
    275       275  
0.30%, 07/02/09 (a)(b)(c)(d)
    5,000       5,000  
1.00%, 07/30/09 (b)(c)(d)
    320       320  
Transportation System Bonds
Series 2009A
               
0.34%, 07/02/09 (a)(b)(c)(d)
    6,160       6,160  
New Jersey Turnpike Auth
Turnpike RB
Series 2009A
               
0.28%, 07/02/09 (a)(b)
    8,000       8,000  
Rutgers State Univ
GO Bonds
Series 2009G
               
0.25%, 07/01/09 (a)(c)
    1,310       1,310  
GO Refunding Bonds
Series 2002A
               
0.15%, 07/01/09 (a)(c)
    6,175       6,175  
Salem Cnty Pollution Control Financing Auth
Pollution Control Refunding RB (Public Service Electric & Gas)
Series 2003B2
               
0.27%, 07/01/09 (a)(b)
    5,800       5,800  
                 
              208,630  
 
New Mexico 0.0%
Santa Fe
Subordinate Lien Wastewater System RB (Gross Receipts Tax)
Series 1997B
               
0.28%, 07/01/09 (a)(b)
    2,500       2,500  
 
New York 8.9%
Long Island Power Auth
Electric System General RB
Series 2003K
               
1.25%, 07/06/09 (a)(b)(c)
    9,800       9,800  
Electric System Subordinated RB
Series 2001–3A
               
0.25%, 07/01/09 (a)(b)
    12,500       12,500  
Metropolitan Transportation Auth
Transportation RB
Series 2005B
               
0.43%, 07/02/09 (a)(b)(c)(d)
    4,995       4,995  
Transportation Refunding RB
Series 2002A
               
0.69%, 07/02/09 (a)(b)(c)(d)
    7,000       7,000  
Nassau Cnty Interim Finance Auth
Sales Tax Secured Bonds
Series 2008D1
               
0.36%, 07/01/09 (a)(c)
    48,400       48,400  
Nassau Health Care Corp
Bonds
Series 2009B1
               
0.15%, 07/01/09 (a)(b)
    5,500       5,500  
 
 
 
68 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
New York City
GO Bonds Fiscal 1995
Series F3
               
0.23%, 07/01/09 (a)(b)
    2,100       2,100  
GO Bonds Fiscal 1995
Series F6
               
0.23%, 07/01/09 (a)(b)
    6,000       6,000  
GO Bonds Fiscal 1999
Series F
               
1.69%, 08/01/09
    1,000       1,002  
GO Bonds Fiscal 2002
Series A6
               
0.18%, 07/01/09 (a)(b)(c)
    1,210       1,210  
GO Bonds Fiscal 2005
Series O
               
0.77%, 06/01/10
    2,720       2,825  
GO Bonds Fiscal 2006
Series I4
               
0.21%, 07/01/09 (a)(b)
    4,700       4,700  
GO Bonds Fiscal 2008
Series E
               
0.35%, 07/02/09 (a)(c)(d)
    18,695       18,695  
0.62%, 08/01/09
    3,000       3,011  
GO Bonds Fiscal 2009
Series I1
               
0.34%, 07/02/09 (a)(b)(c)(d)(g)
    24,385       24,385  
GO Bonds Fiscal 2009
Series J1
               
0.26%, 07/02/09 (a)(c)(d)
    4,250       4,250  
0.34%, 07/02/09 (a)(c)(d)
    5,500       5,500  
New York City Health & Hospitals Corp
Health System Bonds
Series 2008D
               
0.23%, 07/01/09 (a)(b)
    4,200       4,200  
New York City Housing Development Corp
M/F Rental Housing RB (2 Gold Street)
Series 2006A
               
0.18%, 07/01/09 (a)(b)
    19,500       19,500  
New York City IDA
Civic Facility RB (Lycee Francais de New York)
Series 2002B
               
0.14%, 07/02/09 (a)(b)
    630       630  
New York City Municipal Water Finance Auth
CP
Series 5
               
0.50%, 11/23/09
    15,750       15,750  
Extendible CP Notes
Series 8
               
0.55%, 08/17/09
    14,500       14,500  
Water & Sewer System RB (Second General Resolution) Fiscal 2009
Series FF2
               
0.26%, 07/02/09 (a)(c)(d)
    8,000       8,000  
Water & Sewer System RB (Second General Resolution) Fiscal 2009
Series GG1
               
0.26%, 07/02/09 (a)(c)(d)
    3,745       3,745  
Water & Sewer System RB Fiscal 2003
Series A
               
0.49%, 07/02/09 (a)(c)(d)
    4,900       4,900  
Water & Sewer System RB Fiscal 2003
Series E
               
0.34%, 07/02/09 (a)(c)(d)
    8,955       8,955  
Water & Sewer System RB Fiscal 2004
Series A
               
0.49%, 07/02/09 (a)(c)(d)
    10,425       10,425  
Water & Sewer System RB Fiscal 2005
Series B
               
0.39%, 07/02/09 (a)(c)(d)
    14,850       14,850  
Water & Sewer System RB Fiscal 2005
Series D
               
0.37%, 07/02/09 (a)(c)(d)(f)
    3,435       3,435  
0.34%, 07/02/09 (a)(c)(d)
    9,600       9,600  
New York City Transitional Finance Auth
Future Tax Secured Bonds Fiscal 1999
Series A
               
0.30%, 07/01/09 (a)(c)
    7,100       7,100  
Future Tax Secured Bonds Fiscal 2002
Series B
               
0.49%, 07/02/09 (a)(c)(d)
    18,915       18,915  
New York City Trust for Cultural Resources
RB (Museum of Modern Art)
Series 2001–1D
               
0.34%, 07/02/09 (a)(c)(d)
    1,000       1,000  
New York State Dormitory Auth
City Univ System Consolidated RB (Fifth General Resolution)
Series 2008D
               
0.14%, 07/02/09 (a)(b)
    8,700       8,700  
RB (New York Law School)
Series 2009
               
0.16%, 07/02/09 (a)(b)
    4,500       4,500  
RB (New York Univ)
Series 2001–2
               
0.34%, 07/02/09 (a)(c)(d)
    1,695       1,695  
RB (Royal Charter Properties-East)
Series 2006A
               
0.20%, 07/01/09 (a)(b)
    36,300       36,300  
State Personal Income Tax RB
Series 2006B
               
0.59%, 03/15/10
    1,350       1,392  
New York State HFA
Housing RB (320 West 39th St)
Series 2009A
               
0.23%, 07/01/09 (a)(b)
    60       60  
Housing RB (88 Leonard St)
Series 2005A
               
0.17%, 07/01/09 (a)(b)
    10,000       10,000  
Housing RB (Shore Hill)
Series 2008A
               
0.18%, 07/01/09 (a)(b)
    7,200       7,200  
New York State Power Auth
CP
Series 1
               
0.55%, 10/06/09
    8,000       8,000  
1.00%, 09/02/09
    10,775       10,775  
1.00%, 11/04/09
    4,136       4,136  
CP
Series 2
               
0.63%, 08/13/09
    17,500       17,500  
0.65%, 08/13/09
    2,405       2,405  
0.75%, 09/04/09
    10,000       10,000  
0.80%, 09/08/09
    2,500       2,500  
0.80%, 10/15/09
    1,350       1,350  
0.95%, 09/10/09
    2,500       2,500  
0.95%, 09/15/09
    25,000       25,000  
 
 
 
See financial notes 69

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
RB
Series 2007A
               
0.37%, 07/02/09 (a)(c)(d)
    9,475       9,475  
New York State Thruway Auth
State Personal Income Tax RB
Series 2009A
               
0.26%, 07/02/09 (a)(c)(d)
    6,710       6,710  
New York State Urban Development Corp
State Personal Income Tax RB
Series 2007B
               
0.26%, 07/02/09 (a)(c)(d)
    5,995       5,995  
State Personal Income Tax RB
Series 2008A1
               
0.60%, 12/15/09
    500       510  
Port Auth of New York & New Jersey
Consolidated Bonds 148th
Series 
               
0.39%, 07/02/09 (a)(c)(d)
    4,900       4,900  
Consolidated Bonds 156th
Series 
               
0.26%, 07/02/09 (a)(c)(d)
    5,090       5,090  
CP
Series B
               
0.45%, 07/14/09
    4,000       4,000  
Ramapo Housing Auth
RB (Fountainview at College Road)
Series 1998
               
0.45%, 07/02/09 (a)(b)
    6,910       6,910  
Syracuse IDA
Civic Facility Refunding RB (Crouse Health Hospital)
Series 2003A
               
3.50%, 07/01/09 (a)(b)
    1,425       1,425  
Triborough Bridge & Tunnel Auth
General RB
Series 2008C
               
0.44%, 07/02/09 (a)(c)(d)
    3,000       3,000  
General Refunding RB
Series 2002B
               
0.34%, 07/02/09 (a)(c)(d)
    7,600       7,600  
Subordinate RB
Series 2003A
               
0.64%, 07/02/09 (a)(c)(d)
    20,800       20,800  
Subordinate Refunding RB
Series 2002E
               
0.54%, 07/02/09 (a)(b)(c)(d)
    5,850       5,850  
Troy IDA
Civic Facility RB (Rensselaer Polytechnic Institute)
Series 2002B
               
0.18%, 07/02/09 (a)(b)
    1,240       1,240  
                 
              544,896  
 
North Carolina 0.9%
Charlotte-Mecklenburg Cnty Hospital Auth
Health Care RB (Carolinas HealthCare System)
Series 2007G
               
2.50%, 07/02/09 (a)(b)(c)
    11,625       11,625  
North Carolina Capital Facilities Finance Agency
RB (Duke Univ)
Series 2006A
               
0.25%, 07/02/09 (a)(c)(d)
    6,045       6,045  
North Carolina Medical Care Commission
First Mortgage RB (Deerfield Episcopal Retirement Community)
Series 2008B
               
0.29%, 07/02/09 (a)(b)
    5,000       5,000  
Health Care Facilities RB (Lenoir Memorial Hospital)
Series 2005
               
0.27%, 07/02/09 (a)(b)
    1,250       1,250  
Health Care Facilities RB (Novant Health)
Series 2006
               
0.40%, 07/02/09 (a)(b)(c)(d)
    4,000       4,000  
0.40%, 07/02/09 (a)(b)(c)(d)
    19,100       19,100  
Health Care Facilities Refunding RB (Univ Health Systems of Eastern Carolina)
Series 2008A1
               
0.28%, 07/01/09 (a)(b)
    6,600       6,600  
                 
              53,620  
 
Ohio 3.1%
Bellefontaine
Refunding & Improvement RB (Mary Rutan Hospital)
Series 2005
               
0.45%, 07/02/09 (a)(b)
    12,195       12,195  
Buckeye Tobacco Settlement Financing Auth
Tobacco Settlement Asset-Backed Bonds
Series 2007A2
               
0.25%, 07/02/09 (a)(b)(c)(d)
    13,960       13,960  
Cincinnati SD
School Improvement Bonds
Series 2002
               
0.65%, 06/01/10
    1,450       1,507  
Clinton Cnty
Hospital Refunding RB (McCullough-Hyde Memorial Hospital)
Series 2003B1
               
4.00%, 07/01/09 (a)(b)
    5,670       5,670  
Columbus SD
School Facilities Construction & Improvement BAN
Series 2009B
               
0.70%, 12/16/09
    4,000       4,015  
Franklin Cnty
Health Care Facilities Improvement RB (Ohio Presbyterian Retirement Services)
Series 2006A
               
0.30%, 07/02/09 (a)(b)
    28,000       28,000  
Hospital Facilities Refunding RB (OhioHealth)
Series 2009A
               
0.32%, 07/01/09 (a)(c)
    11,100       11,100  
Geauga Cnty
RB
Series (South Franklin Circle) 2007A
               
1.65%, 07/01/09 (a)(b)
    10,800       10,800  
Hamilton Cnty
Economic Development RB (Contemporary Arts Center)
Series 2001
               
0.35%, 07/02/09 (a)(b)
    5,000       5,000  
Hocking Technical College District
COP (Residence Hall Facilities)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    15,510       15,510  
 
 
 
70 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Lorain Cnty
Hospital Facilities RB (EMH Regional Medical Center)
Series 2001
               
0.40%, 07/02/09 (a)(b)
    9,880       9,880  
Maple Heights City SD
GO Unlimited Tax School Facilities Improvement Notes
Series 2008
               
2.60%, 11/05/09
    11,000       11,034  
Middleburg Heights
Hospital Improvement RB (Southwest General Health Center)
Series 1997
               
4.25%, 07/02/09 (a)(b)
    1,130       1,130  
Ohio Higher Educational Facility Commission
Higher Educational Facility RB (Antioch Univ)
Series 2006
               
0.30%, 07/02/09 (a)(b)
    13,080       13,080  
Ohio Hospital RB (Cleveland Clinic Health System Obligated Group)
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    6,225       6,225  
Ohio Water Development Auth
Refunding RB (Timken)
Series 2001
               
0.33%, 07/01/09 (a)(b)
    10,200       10,200  
Port of Greater Cincinnati Development Auth
Special Obligation Development RB (Springdale Public Infrastructure)
Series 2006
               
2.25%, 02/01/10 (b)
    9,460       9,460  
Sandusky
GO Various Purpose Improvement BAN
Series 2008–1
               
4.25%, 10/21/09
    6,915       6,921  
South-Western City SD
School Building Construction GO Bonds
Series 1999
               
1.14%, 12/01/09 (b)
    13,250       13,449  
                 
              189,136  
 
Oklahoma 0.1%
Oklahoma Development Finance Auth
Health System Refunding RB (INTEGRIS Baptist Medical Center)
Series 2007A1
               
0.35%, 08/28/09
    6,475       6,475  
Oklahoma Industries Auth
Health System Refunding RB (INTEGRIS Baptist Medical Center)
Series 1999A
               
2.51%, 08/15/09
    2,500       2,509  
                 
              8,984  
 
Oregon 0.3%
Astoria Hospital Facilities Auth
Hospital RB (Columbia Memorial)
Series 2007
               
0.40%, 07/02/09 (a)(b)
    18,440       18,440  
 
Pennsylvania 4.2%
Adams Cnty IDA
RB (Brethren Home Community)
Series 2007
               
0.40%, 07/02/09 (a)(b)
    5,200       5,200  
Allegheny Cnty Hospital Development Auth
RB (Univ of Pittsburgh Medical Center)
Series 2006A
               
0.55%, 07/02/09 (a)(c)(d)
    11,185       11,185  
RB (Univ of Pittsburgh Medical Center)
Series 2007B1
               
0.35%, 07/02/09 (a)(b)(c)(d)
    5,360       5,360  
RB (Univ of Pittsburgh Medical Center)
Series 2007D
               
0.31%, 07/02/09 (a)(b)(c)(d)
    25,505       25,505  
Berks Cnty Municipal Auth
RB (Reading Hospital & Medical Center)
Series 2009A1
               
0.22%, 07/02/09 (a)(c)
    2,250       2,250  
RB (Reading Hospital & Medical Center)
Series 2009A2
               
0.24%, 07/02/09 (a)(c)
    395       395  
Butler Cnty General Auth
School RB (Butler Area SD)
Series 2007
               
0.30%, 07/02/09 (a)(b)(c)(d)
    10,185       10,185  
Butler Cnty Hospital Auth
Hospital RB (Butler Health System)
Series 2009A
               
0.24%, 07/02/09 (a)(b)
    4,500       4,500  
Butler Cnty IDA
Economic Development RB (Butler Cnty Family YMCA)
Series 2005
               
0.35%, 07/02/09 (a)(b)
    1,740       1,740  
Cumberland Cnty Municipal Auth
RB (LSN/TLS Obligated Group)
Series 2003D
               
0.27%, 07/02/09 (a)(b)(d)
    23,060       23,060  
Emmaus General Auth
Bonds (Pennsylvania Loan Program)
Series 1996
               
0.52%, 07/01/09 (a)(b)(c)
    8,000       8,000  
Erie Higher Education Building Auth
RB (Mercyhurst College)
Series 2003
               
0.30%, 07/02/09 (a)(b)
    4,600       4,600  
Indiana Cnty IDA
Pollution Control Refunding RB (New York State Electric & Gas)
Series 2006
               
0.35%, 07/01/09 (a)(b)
    4,900       4,900  
Lancaster Cnty Convention Center Auth
Hotel Room Rental Tax RB
Series 2007
               
0.27%, 07/02/09 (a)(b)
    1,955       1,955  
Lehigh Cnty General Purpose Auth
College RB (Muhlenberg College)
Series 2008
               
0.23%, 07/02/09 (a)(b)
    5,055       5,055  
Hospital RB (Lehigh Valley Health Network)
Series 2005B
               
1.05%, 07/02/09 (a)(b)(c)(d)
    4,990       4,990  
 
 
 
See financial notes 71

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Montgomery Cnty IDA
Pollution Control Refunding RB (Peco Energy)
Series 1996A
               
0.67%, 08/05/09 (b)
    7,000       7,000  
RB (LaSalle College High School)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    1,875       1,875  
Pennsylvania
GO Bonds Second
Series of 2009
               
0.26%, 07/02/09 (a)(c)(d)
    4,830       4,830  
GO Bonds Second
Series 2007A
               
0.22%, 07/02/09 (a)(c)(d)
    13,740       13,740  
Pennsylvania Economic Development Financing Auth
Exempt Facilities Refunding RB (PPL Energy Supply)
Series 2009A
               
0.90%, 07/01/09 (b)
    5,000       5,000  
Exempt Facilities Refunding RB (PPL Energy Supply)
Series 2009B
               
1.25%, 10/01/09 (b)
    6,000       6,000  
Pennsylvania HFA
Rental Housing Refunding Bonds
Series 2008B
               
0.35%, 07/01/09 (a)(c)
    7,030       7,030  
Pennsylvania Higher Educational Facilities Auth
RB (Holy Family Univ)
Series 2008
               
0.29%, 07/02/09 (a)(b)
    3,000       3,000  
RB (Univ of Pennsylvania Health System)
Series 2008A
               
0.20%, 07/01/09 (a)(b)
    10,000       10,000  
Pennsylvania State Turnpike Commission
Refunding RB (Registration Fee)
Series 2005A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    6,905       6,905  
Turnpike BAN
Series 2007A
               
3.75%, 10/15/09
    18,460       18,460  
Pennsylvania State Univ
Bonds
Series 2007A
               
0.21%, 07/02/09 (a)(b)(c)(d)
    8,340       8,340  
Philadelphia Auth for Industrial Development
RB (Fox Chase Cancer Center Obligated Group)
Series 2007B
               
0.35%, 07/02/09 (a)(b)(c)(d)
    30,010       30,010  
Philadelphia SD
GO Refunding Bonds
Series 2009C
               
0.16%, 07/02/09 (a)(b)
    2,855       2,855  
Ridley SD
GO Bonds
Series 2009
               
0.29%, 07/02/09 (a)(b)
    3,000       3,000  
Somerset Cnty Hospital Auth
RB (Somerset Community Hospital)
Series 2007A
               
0.30%, 07/02/09 (a)(b)
    5,345       5,345  
Washington Cnty Hospital Auth
Hospital RB (Washington Hospital)
Series 2008A
               
0.30%, 07/02/09 (a)(b)
    2,185       2,185  
                 
              254,455  
 
Puerto Rico 0.2%
Puerto Rico Aqueduct & Sewer Auth
Sr Lien RB RB
Series A
               
0.30%, 07/02/09 (a)(b)(c)(d)
    3,000       3,000  
Puerto Rico Sales Tax Financing Corp
Sales Tax RB
Series 2007A
               
0.24%, 07/02/09 (a)(b)(c)(d)
    12,040       12,040  
                 
              15,040  
 
South Carolina 1.5%
Greenville
Parking Facilities Refunding RB
Series 2005A
               
2.15%, 07/01/09 (a)(b)(c)
    13,495       13,495  
Piedmont Municipal Power Agency
Electric Refunding RB
Series 2008D
               
1.77%, 07/02/09 (a)(b)(c)
    29,450       29,450  
South Carolina Association of Governmental Organizations
Installment Purchase RB (Pickens Cnty SD)
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    3,990       3,990  
South Carolina Public Service Auth
CP Revenue Notes
0.48%, 09/10/09
    26,752       26,752  
Refunding Revenue Obligations
Series 2002A
               
0.55%, 01/01/10
    1,500       1,537  
Revenue Obligations
Series 2004A
               
0.73%, 01/01/10
    6,090       6,220  
South Carolina State Housing Finance & Development Auth
M/F Rental Housing RB (Franklin Square Apts)
Series 2008
               
0.35%, 07/02/09 (a)(b)
    9,800       9,800  
                 
              91,244  
 
Tennessee 3.3%
Blount Cnty Public Building Auth
Local Government Public Improvement Bonds
Series E5A
               
0.29%, 07/01/09 (a)(b)
    4,425       4,425  
Chattanooga
Electric System RB
Series 2008A
               
0.20%, 07/02/09 (a)(c)(d)
    8,800       8,800  
Clarksville Public Building Auth
Financing RB (Murfreesboro Loans)
Series 2008
               
2.50%, 07/02/09 (a)(b)
    10,210       10,210  
 
 
 
72 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Pooled Financing RB (Tennessee Municipal Bond Fund)
Series 1997
               
0.32%, 07/02/09 (a)(b)
    7,575       7,575  
Metropolitan Government of Nashville & Davidson Cnty
GO Bonds
Series 2005A
               
0.54%, 01/01/10
    1,000       1,022  
GO Multi-Purpose Improvement Bonds
Series 2001A
               
0.45%, 10/15/09
    1,000       1,014  
Metropolitan Government of Nashville & Davidson Cnty Health & Educational Facilities Board
M/F Housing Refunding RB (Brentwood Oaks Apts)
Series 1991
               
0.30%, 07/02/09 (a)(b)
    11,320       11,320  
RB (Ascension Health Credit Group)
Series 1999A
               
1.30%, 11/15/09 (b)
    3,500       3,595  
Montgomery Cnty Public Building Auth
Pooled Financing RB (Tennessee Cnty Loan Pool)
Series 1997
               
0.32%, 07/02/09 (a)(b)
    8,345       8,345  
Municipal Energy Acquisition Corp
Gas RB
Series 2006A
               
0.35%, 07/02/09 (a)(b)(c)(d)
    46,270       46,270  
Gas RB
Series 2006B
               
0.35%, 07/02/09 (a)(b)(c)(d)
    33,830       33,830  
Sevier Cnty Public Building Auth
Public Improvement Bonds
Series VIIB1
               
0.39%, 07/01/09 (a)(b)
    3,980       3,980  
Shelby Cnty
GO Public Improvement & School Bonds
Series 2000A
               
0.50%, 04/01/10 (b)
    3,000       3,109  
Shelby Cnty Health, Educational & Housing Facilities Board
RB (St Jude Children’s Research Hospital)
Series 1999
               
5.50%, 07/01/09 (b)
    5,500       5,610  
Tennergy Corp
Gas RB
Series 2006A
               
0.35%, 07/02/09 (a)(b)(c)(d)(g)
    51,980       51,980  
                 
              201,085  
 
Texas 11.1%
Aledo ISD
Unlimited Tax School Building Bonds
Series 2006A
               
1.75%, 08/01/09 (b)(c)
    7,790       7,792  
Alief ISD
Unlimited Tax Schoolhouse Bonds
Series 2001
               
0.75%, 02/15/10 (b)
    1,210       1,252  
Birdville ISD
Unlimited Tax Refunding Bonds
Series 2003
               
0.72%, 02/15/10 (b)
    1,200       1,232  
Brownsville
Revenue Improvement & Refunding Bonds
Series 2005A
               
0.30%, 07/02/09 (a)(b)(c)(d)
    1,775       1,775  
Comal ISD
Unlimited Tax School Building & Refunding Bonds
Series 1999
               
1.85%, 08/01/09 (b)
    8,105       8,131  
0.52%, 08/01/09 (b)
    810       814  
Cypress-Fairbanks ISD
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2001
               
0.35%, 07/02/09 (a)(b)(c)(d)
    2,050       2,050  
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2002A
               
0.70%, 02/15/10 (b)
    4,490       4,610  
0.82%, 02/15/10 (b)
    200       205  
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2008
               
0.30%, 07/02/09 (a)(b)(c)(d)
    2,495       2,495  
Unlimited Tax Schoolhouse Bonds
Series 2002B
               
1.80%, 08/15/09 (b)(c)
    8,150       8,150  
Dallas
Waterworks & Sewer System CP
Series B
               
0.50%, 08/20/09 (c)
    1,556       1,556  
0.63%, 08/27/09 (c)
    30,000       30,000  
Dallas Area Rapid Transit
Sr Lien Sales Tax RB
Series 2008
               
0.28%, 07/02/09 (a)(c)(d)
    4,495       4,495  
0.45%, 07/02/09 (a)(c)(d)
    7,600       7,600  
Sr Lien Sales Tax Refunding RB
Series 2007
               
0.60%, 07/02/09 (a)(c)(d)
    8,605       8,605  
Dallas Water & Sewer Utilities
Waterworks & Sewer System Refunding & Improvement RB
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    4,990       4,990  
0.50%, 07/02/09 (a)(c)(d)
    4,790       4,790  
Denton ISD
Unlimited Tax School Building & Refunding Bonds
Series 2002
               
0.30%, 07/02/09 (a)(b)(c)(d)
    3,475       3,475  
Dickinson ISD
Unlimited Tax Schoolhouse Bonds
Series 2008A
               
1.65%, 08/01/09 (b)(c)
    15,000       15,017  
El Paso ISD
Unlimited Tax School Building & Refunding Bonds
Series 2008
               
2.11%, 08/15/09 (b)
    500       498  
Frisco ISD
Unlimited Tax School Building Bonds
Series 2008A
               
0.38%, 07/02/09 (a)(b)(c)(d)
    1,745       1,745  
Garland ISD
Unlimited Tax School Building & Refunding Bonds
Series 2003A
               
0.72%, 02/15/10 (b)
    1,000       1,027  
 
 
 
See financial notes 73

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Harris Cnty
TAN
Series 2009
               
0.37%, 02/25/10
    10,000       10,106  
0.39%, 02/25/10
    10,000       10,072  
0.41%, 02/25/10
    15,000       15,108  
Toll Road Sr Lien Refunding RB
Series 2002
               
0.40%, 07/02/09 (a)(c)(d)
    9,900       9,900  
Toll Road Sr Lien Refunding RB
Series 2004A
               
0.50%, 07/02/09 (a)(c)(d)
    5,580       5,580  
Toll Road Subordinate Lien Unlimited Tax Refunding RB
Series 2007C
               
1.00%, 07/23/09 (c)(d)
    12,955       12,955  
Harris Cnty Cultural Education Facilities Finance Corp
Refunding RB (Methodist Hospital System)
Series 2009C1
               
0.43%, 10/06/09
    8,000       8,000  
0.48%, 12/02/09
    10,000       10,000  
0.55%, 01/05/10
    10,000       10,000  
0.55%, 01/28/10
    10,000       10,000  
0.55%, 02/25/10
    10,000       10,000  
Harris Cnty Health Facilities Development Corp
Hospital RB (Texas Children’s Hospital)
Series 1999B1
               
0.25%, 07/01/09 (a)(c)
    4,385       4,385  
Hospital RB (Texas Children’s Hospital)
Series 2008–1
               
0.27%, 07/02/09 (a)(c)
    45,000       45,000  
Hospital Refunding RB (Memorial Hermann Healthcare System)
Series 2008A
               
1.75%, 07/01/09 (a)(b)(c)
    7,400       7,400  
RB (Brazos Presbyterian Homes)
Series 2000
               
1.35%, 07/02/09 (a)(b)
    8,600       8,600  
Houston
Combined Utility System First Lien Refunding RB
Series 2004A
               
0.45%, 07/02/09 (a)(b)(c)(d)
    7,000       7,000  
Combined Utility System First Lien Refunding RB
Series 2007A
               
0.70%, 07/02/09 (a)(b)(c)(d)
    4,300       4,300  
0.70%, 07/02/09 (a)(b)(c)(d)
    16,795       16,795  
Public Improvement Forward Refunding Bonds
Series 2001B
               
0.65%, 03/01/10
    5,295       5,465  
Public Improvement Refunding Bonds
Series 2007A
               
0.75%, 03/01/10
    5,000       5,141  
TRAN
Series 2009
               
0.41%, 06/30/10 (f)
    20,000       20,316  
Water & Sewer System Jr Lien Refunding RB
Series 1998A
               
0.25%, 07/02/09 (a)(c)(d)
    6,330       6,330  
Houston Community College
Maintenance Tax Notes
Series 2008
               
0.25%, 07/02/09 (a)(b)(c)(d)
    4,145       4,145  
Houston ISD
Limited Tax Schoolhouse Bonds
Series 2008
               
0.30%, 07/02/09 (a)(b)(c)(d)
    4,995       4,995  
0.45%, 07/02/09 (a)(b)(c)(d)
    4,950       4,950  
Jewett Economic Development Corp
IDRB (Nucor Corp)
Series 2002B
               
0.60%, 07/01/09 (a)
    5,400       5,400  
Kendall Cnty Health Facilities Development Corp
Health Care RB (Morningside Ministries)
Series 2008
               
0.75%, 07/02/09 (a)(b)
    5,970       5,970  
Lamar Consolidated ISD
Unlimited Tax School House Bonds
Series 2007
               
0.35%, 07/02/09 (a)(b)(c)(d)
    15,365       15,365  
Unlimited Tax Schoolhouse & Refunding Bonds
Series 2008
               
0.25%, 07/02/09 (a)(b)(c)(d)
    3,235       3,235  
Unlimited Tax Schoolhouse Bonds
Series 2004
               
1.85%, 09/08/09 (b)(c)
    2,680       2,680  
Lubbock Health Facilities Development Corp
Refunding RB (St. Joseph Health System)
Series 2008A
               
0.26%, 07/02/09 (a)
    10,565       10,565  
Mansfield ISD
Unlimited Tax School Building & Refunding Bonds
Series 2003
               
0.30%, 07/02/09 (a)(b)(c)(d)
    7,960       7,960  
Metropolitan Higher Education Auth
Higher Education RB (Univ of Dallas)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    4,000       4,000  
North East ISD
Unlimited Tax Refunding Bonds
Series 2007
               
1.75%, 07/02/09 (a)(b)(c)(d)
    5,740       5,740  
Port Arthur ISD
Unlimited Tax School Building Bonds
Series 2008
               
0.45%, 07/02/09 (a)(b)(c)(d)
    3,100       3,100  
Red River Education Finance Corp
Higher Education RB (Texas Christian Univ)
Series 2007
               
0.25%, 07/02/09 (a)(b)(c)(d)
    5,175       5,175  
Round Rock ISD
Unlimited Tax School Building Bonds
Series 2007
               
0.36%, 07/02/09 (a)(b)(c)(d)
    10,755       10,755  
San Antonio
Combination Tax & Revenue Certificates of Obligation
Series 2006
               
1.05%, 07/23/09 (c)(d)
    8,950       8,950  
Electric & Gas Systems RB New
Series 2006A
               
0.70%, 02/01/10
    2,890       2,963  
Refunding RB New
Series 1991B
               
0.96%, 02/01/10 (b)
    6,000       5,966  
 
 
 
74 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Water System CP Notes
Series A
               
0.45%, 07/07/09 (c)
    5,000       5,000  
0.51%, 08/05/09 (c)
    4,500       4,500  
San Jacinto Community College District
Limited Tax GO Bonds
Series 2008
               
0.30%, 07/02/09 (a)(c)(d)
    7,000       7,000  
Tarrant Cnty Cultural Education Facilities Finance Corp
Hospital RB (Valley Baptist Medical Center)
Series 2007
               
0.23%, 07/01/09 (a)(b)
    33,570       33,570  
RB (Texas Health Resources System)
Series 2008E
               
0.17%, 07/01/09 (a)(c)
    3,700       3,700  
RB (Texas Health Resources System)
Series 2008F
               
0.50%, 07/01/09 (a)(c)
    10,775       10,775  
Texas Southmost College District
Limited Tax Bonds
Series 2006
               
0.25%, 07/02/09 (a)(b)(c)(d)
    10,720       10,720  
Texas Transportation Commission
First Tier RB
Series 2007
               
0.22%, 07/02/09 (a)(c)(d)
    15,620       15,620  
GO Mobility Fund Bonds
Series 2005A
               
0.28%, 07/02/09 (a)(c)(d)
    2,285       2,285  
GO Mobility Fund Bonds
Series 2006A
               
0.28%, 07/02/09 (a)(c)(d)
    5,550       5,550  
GO Mobility Fund Bonds
Series 2007
               
0.28%, 07/02/09 (a)(c)(d)
    27,805       27,805  
0.28%, 07/02/09 (a)(c)(d)
    10,210       10,210  
GO Mobility Fund Bonds
Series 2008
               
0.28%, 07/02/09 (a)(c)(d)
    9,900       9,900  
State Highway Fund First Tier RB
Series 2006
               
0.28%, 07/02/09 (a)(c)(d)
    7,495       7,495  
State Highway Fund First Tier RB
Series 2007
               
0.28%, 07/02/09 (a)(c)(d)
    3,330       3,330  
State Highway Fund First Tier RB
Series 2008
               
0.28%, 07/02/09 (a)(c)(d)
    12,825       12,825  
Travis Cnty Health Facilities Development Corp
RB (Ascension Health Credit Group)
Series 1999A
               
1.78%, 11/15/09
    2,850       2,892  
0.71%, 11/15/09 (b)
    2,025       2,087  
Univ of Houston System
Consolidated Refunding RB
Series 2008
               
0.50%, 07/02/09 (a)(c)(d)
    5,540       5,540  
Univ of Texas
Permanent Univ Fund Refunding Bonds
Series 2006B
               
0.26%, 07/02/09 (a)(c)(d)
    16,676       16,676  
Revenue Financing System Refunding Bonds
Series 2004B
               
0.70%, 08/15/09
    3,400       3,418  
                 
              677,569  
 
Utah 0.8%
Intermountain Power Agency
Power Supply Refunding RB
Series 2003A
               
0.50%, 07/02/09 (a)(c)(d)
    6,450       6,450  
Salt Lake Cnty Municipal Building Auth
Lease RB (Salt Lake Cnty)
Series 1999
               
1.60%, 10/01/09 (b)
    2,315       2,338  
South Valley Sewer District
Sewer RB
Series 2008
               
0.26%, 07/01/09 (a)(b)(c)(d)
    6,180       6,180  
Utah Housing Corp
M/F Housing RB (Timbergate Apts)
Series 2009A
               
0.35%, 07/02/09 (a)(b)
    3,125       3,125  
S/F Mortgage Bonds
Series 2009-1
               
0.50%, 10/01/09 (b)
    9,400       9,400  
Utah Transit Auth
Sales Tax RB
Series 2008A
               
0.28%, 07/02/09 (a)(c)(d)
    3,845       3,845  
0.30%, 07/02/09 (a)(c)(d)
    9,720       9,720  
0.40%, 07/02/09 (a)(c)(d)
    7,230       7,230  
                 
              48,288  
 
Virginia 1.7%
Chesterfield Cnty Economic Development Auth
RB (Bon Secours Health System)
Series 2008C2
               
0.80%, 07/01/09 (a)(b)(c)
    45,370       45,370  
Henrico Economic Development Auth
RB (Bon Secours Health System)
Series 2008B2
               
0.80%, 07/01/09 (a)(b)(c)
    4,600       4,600  
Montgomery Cnty IDA
RB (Virginia Tech Foundation)
Series 2009A
               
0.40%, 07/02/09 (a)(c)
    18,120       18,120  
Norfolk Redevelopment & Housing Auth
RB (E2F Student Housing I)
Series 2005
               
0.32%, 07/02/09 (a)(b)
    4,190       4,190  
Portsmouth Redevelopment & Housing Auth
M/F Housing RB (Phoebus Square Apts)
Series 2008
               
0.30%, 07/02/09 (a)(b)
    9,000       9,000  
Virginia College Building Auth
Educational Facilities RB
Series 2006A
               
0.37%, 07/02/09 (a)(c)(d)
    4,125       4,125  
 
 
 
See financial notes 75

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Virginia Housing Development Auth
Commonwealth Mortgage Bonds
Series 2001H1
               
0.50%, 07/02/09 (a)(c)(d)
    3,330       3,330  
Winchester IDA
Hospital RB (Winchester Medical Center)
Series 1991
               
0.31%, 07/02/09 (a)(c)(d)
    12,540       12,540  
                 
              101,275  
 
Washington 2.8%
Cascade Water Alliance
Water System RB
Series 2006
               
0.26%, 07/02/09 (a)(b)(c)(d)(g)
    8,630       8,630  
Energy Northwest
Electric Refunding RB (Columbia Generating Station)
Series 2004A
               
0.57%, 07/01/10
    3,805       3,982  
Electric Refunding RB (Project No. 3)
Series 2001A
               
0.55%, 07/01/10
    1,315       1,380  
King Cnty
Sewer RB
Series 2004A
               
0.38%, 07/02/09 (a)(c)(d)
    5,690       5,690  
King Cnty Public Hospital District No. 1
Limited Tax GO Refunding Bonds
Series 2008A
               
0.25%, 07/02/09 (a)(b)(c)(d)
    7,850       7,850  
Marysville SD No. 25
Unlimited Tax GO Bonds
Series 2007
               
0.50%, 12/01/09 (b)
    5,000       5,094  
Seattle
Drainage & Wastewater RB 2008
0.40%, 07/02/09 (a)(c)(d)
    8,100       8,100  
Limited Tax GO Improvement & Refunding Bonds
Series 2008
               
0.28%, 07/02/09 (a)(c)(d)
    4,535       4,535  
Seattle Museum Development Auth
Special Obligation Bonds
Series 2005
               
0.45%, 07/02/09 (a)(c)(d)
    9,750       9,750  
Snohomish Cnty Public Utility District #1
Electric System BAN Second
Series 2008A
               
0.55%, 05/26/10
    5,400       5,470  
Washington
GO Bonds
Series 1992B & AT7
               
0.50%, 06/01/10
    1,450       1,526  
GO Bonds
Series 2008A
               
0.35%, 07/02/09 (a)(c)(d)
    24,000       24,000  
GO Bonds
Series 2009B
               
0.28%, 07/02/09 (a)(c)(d)
    3,035       3,035  
GO Refunding Bonds
Series R93A
               
1.75%, 09/01/09
    1,500       1,510  
Motor Vehicle Fuel Tax GO Bonds
Series 2003C
               
0.48%, 07/02/09 (a)(c)(d)
    85       85  
Various Purpose GO Bonds
Series 2005D
               
0.40%, 07/02/09 (a)(c)(d)
    5,200       5,200  
Various Purpose GO Bonds
Series 2006D
               
0.25%, 07/02/09 (a)(b)(c)(d)
    20,350       20,350  
Various Purpose GO Bonds
Series 2009C
               
0.28%, 07/02/09 (a)(c)(d)
    2,825       2,825  
Washington Economic Development Finance Auth
Solid Waste Disposal RB (CleanScapes)
Series 2009
               
0.37%, 07/01/09 (a)(b)
    7,895       7,895  
Washington Health Care Facilities Auth
RB (Catholic Health Initiatives)
Series 2008D
               
0.28%, 07/02/09 (a)(c)(d)
    7,995       7,995  
RB (Children’s Hospital & Regional Medical Center)
Series 2008A
               
0.32%, 07/01/09 (a)(b)
    5,000       5,000  
RB (Fred Hutchinson Cancer Research Center)
Series 2001A
               
0.65%, 07/01/09 (a)(b)
    10,000       10,000  
RB (Kadlec Medical Center)
Series 2006B
               
3.50%, 07/01/09 (a)(b)(c)
    4,000       4,000  
RB (Providence Health & Services)
Series 2006A
               
0.26%, 07/02/09 (a)(b)(c)(d)
    19,795       19,795  
                 
              173,697  
 
West Virginia 0.0%
Monongalia Cnty Building Commission
Hospital Refunding & Improvement RB (Monongalia General Hospital)
Series 2008A
               
0.35%, 07/02/09 (a)(b)(d)
    195       195  
 
Wisconsin 1.9%
Milwaukee
GO CP Promissory Notes
Series 2008C2
               
0.56%, 08/18/09 (b)
    6,000       6,000  
Milwaukee Redevelopment Auth
Redevelopment Lease RB (Univ of Wisconsin)
Series 2005
               
0.35%, 07/02/09 (a)(b)
    6,375       6,375  
Wisconsin
GO Bonds
Series 2001F
               
0.49%, 05/01/10
    1,000       1,029  
0.66%, 05/01/10
    1,325       1,373  
Master Lease COP of 2006
Series A
               
1.90%, 09/01/09
    4,475       4,498  
Operating Notes
Series 2009
               
0.48%, 06/15/10 (f)
    12,000       12,000  
 
 
 
76 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Transportation RB
Series 2007A
               
0.90%, 07/02/09 (b)(c)(d)
    8,065       8,065  
Wisconsin Health & Educational Facilities Auth
RB (Aurora Health Care)
Series 2008B
               
1.58%, 11/13/09 (b)
    1,000       1,000  
1.60%, 11/13/09 (b)
    8,665       8,667  
RB (Children’s Hospital of Wisconsin)
Series 2008B
               
2.50%, 03/15/10 (e)
    17,300       17,300  
RB (Gundersen Lutheran)
Series 2000A
               
1.70%, 07/01/09 (a)(b)(c)
    13,000       13,000  
RB (Marquette Univ)
Series 2008B2
               
0.35%, 07/02/09 (a)(b)
    10,000       10,000  
RB (Marquette Univ)
Series 2008 B3
               
0.35%, 07/02/09 (a)(b)
    4,100       4,100  
RB (Pine Haven Christian Home)
Series 2006
               
4.80%, 07/02/09 (a)(b)
    7,505       7,505  
Refunding RB (Lawrence Univ)
Series 2009
               
0.35%, 07/02/09 (a)(b)
    4,145       4,145  
Refunding RB (Marquette Univ)
Series 2008B1
               
0.35%, 07/02/09 (a)(b)
    10,000       10,000  
                 
              115,057  
                 
Total Municipal Securities
(Cost $6,122,041) 		    6,122,041  
         
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $6,122,041
 
(a) Variable-rate security.
(b) Credit-enhanced security.
(c) Liquidity-enhanced security.
(d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $2,273,202 or 37.1% of net assets.
(e) Illiquid security. At the period end, the value of these amounted to $17,300 or 0.3% of net assets.
(f) Delayed-delivery security.
(g) All or a portion of this security is held as collateral for delayed-delivery security.
 
BAN – Bond anticipation note
COP – Certificate of participation
CP – Commercial paper
GO – General obligation
HFA – Housing finance agency/authority
IDA – Industrial development agency/authority
IDB – Industrial development board
IDRB – Industrial development revenue bond
ISD – Independent school district
M/F – Multi-family
RB – Revenue bond
SD – School district
TAN – Tax anticipation note
TRAN – Tax and revenue anticipation note
USD – Unified school district
 
 
 
See financial notes 77

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $6,122,041  
Cash
        10  
Receivables:
           
Investments sold
        92,636  
Fund shares sold
        37,864  
Interest
        14,910  
Prepaid expenses
  +     539  
     
     
Total assets
        6,268,000  
             
 
Liabilities
Payables:
           
Investments bought
        131,749  
Investment adviser and administrator fees
        115  
Transfer agent and shareholder services fees
        108  
Fund shares redeemed
        16,544  
Distributions to shareholders
        278  
Trustees’ fees
  +     1  
     
     
Total liabilities
        148,795  
             
 
Net Assets
Total assets
        6,268,000  
Total liabilities
  −     148,795  
     
     
Net assets
        $6,119,205  
Net Assets by Source
           
Capital received from investors
        6,118,843  
Distribution in excess of net investment income
        (13 )
Net realized capital gains
        375  
 
Net Asset Value (NAV) by Shares Class 
 
                         
            Shares
 		         
Share Class   Net Assets   ¸   Outstanding   =   NAV  
 
Sweep Shares
  $3,105,292       3,104,910         $1.00  
Value Advantage Shares
  $3,013,913       3,013,507         $1.00  
 
 
 
 
78 See financial notes

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $26,879  
             
 
Net Realized Gains and Losses
Net realized gains on investments
        373  
             
 
Expenses
Investment adviser and administrator fees
        8,524  
Transfer agent and shareholder service fees:
           
Sweep Shares
        4,960  
Value Advantage Shares
        2,640  
Registration fees
        634  
Temporary Guarantee Program expense
        633  
Portfolio accounting fees
        75  
Custodian fees
        40  
Shareholder reports
        38  
Professional fees
        23  
Trustees’ fees
        22  
Tax expenses
        20  
Interest expense
        13  
Other expenses
  +     17  
     
     
Total expenses
        17,639  
Expense reduction by adviser and Schwab
  −     2,948  
     
     
Net expenses
        14,691  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        26,879  
Net expenses
  −     14,691  
     
     
Net investment income
        12,188  
Net realized gains
  +     373  
     
     
Increase in net assets from operations
        $12,561  
 
 
 
 
See financial notes 79

Table of Contents

 
 Schwab AMT Tax-Free Money Fund
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $12,188   $59,634
Net realized gains
  +   373   410
     
     
Increase in net assets from operations
      12,561   60,044
             
 
Distributions to Shareholders
Distributions from net investment income
           
Sweep Shares
      5,624   31,572
Value Advantage Shares
  +   6,589   28,062
     
     
Total distributions from net investment income
      12,213   59,634
             
 
Transactions in Fund Shares*
Shares Sold
           
Sweep Shares
      6,246,406   9,828,223
Value Advantage Shares
  +   2,559,919   2,988,644
     
     
Total shares sold
      8,806,325   12,816,867
             
             
Shares Reinvested
Sweep Shares
      5,500   30,700
Value Advantage Shares
  +   5,461   24,489
     
     
Total shares reinvested
      10,961   55,189
             
             
Shares Redeemed
Sweep Shares
      (5,592,658)   (9,093,342)
Value Advantage Shares
  +   (1,453,042)   (2,335,625)
     
     
Total shares redeemed
      (7,045,700)   (11,428,967)
     
     
             
Net transactions in fund shares
      1,771,586   1,443,089
             
 
Net Assets
Beginning of period
      4,347,271   2,903,772
Total increase
  +   1,771,934   1,443,499
     
     
End of period
      $6,119,205   $4,347,271
     
     
             
Distribution in excess of net investment income/ Net investment income not yet distributed
      ($13)   $12
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
80 See financial notes

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited
 
 
1. Business Structure of the Funds:
 
Each of the funds discussed in this report is a series of The Charles Schwab Family of Funds (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
 
     
 
The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Fund
  Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund
     
 
Schwab Municipal Money Fund offers four share classes: Sweep Shares, Value Advantage Shares, Select Shares and Institutional Shares. Schwab AMT Tax-Free Money Fund offers two share classes: Sweep Shares and Value Advantage Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums.
 
Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
 
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund also may keep certain assets in segregated accounts, as required by securities laws.
 
2. Significant Accounting Policies:
       (All dollar amounts are x 1,000)
 
The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with the principles generally accepted in the United States of America.
 
(a) Security Valuation:
 
Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. In the event that security valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.
 
(b) Portfolio Investments:
 
Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.
 
(c) Security Transactions:
 
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
 
(d) Investment Income:
 
Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.
 
 
 
 81

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
(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 declare distributions from net investment income every day they are open for business. These distributions are paid out to shareholders once a month. The funds may make distributions from any net realized capital gains once a year.
 
(g) Custody Credit:
 
Certain funds have an arrangement with their custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
 
(h) Accounting Estimates:
 
The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It is possible that once the results are known, they may turn out to be different from these estimates.
 
(i) Federal Income Taxes:
 
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
 
(j) Indemnification:
 
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
 
(k) Accounting Pronouncements:
 
The funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.
 
In addition, effective June 30, 2009, the funds adopted FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased.
 
 
 
82 

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
Various inputs are used in determining the value of the fund’s investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:
 
  •  Level 1 — quoted prices in active markets for identical securities. — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of June 30, 2009:
 
Municipal Money Fund
 
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
 		  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Municipal Securities
    $—       $20,172,549       $—       $20,172,549  
Other Investments
    —       232,500       —       232,500  
                                 
Total
    $—       $20,405,049       $—       $20,405,049  
                                 
 
 
 
 83

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
AMT Tax-Free Money Fund
 
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
 		  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Municipal Securities
    $—       $6,122,041       $—       $6,122,041  
                                 
Total
    $—       $6,122,041       $—       $6,122,041  
                                 
 
*  The fund had no Other Financial Instruments
 
3. Risk factors:
 
Investing in a fund may involve certain risks, as discussed in the fund’s prospectus, including, but not limited to, those described below:
 
Interest rates will rise and fall over time. As with any investment whose yield reflects current interest rates, a fund’s yield will change over time. During periods when interest rates are low, a fund’s yield (and total return) also will be low. An investment in a fund is not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the funds. A fund could lose money or underperform as a result of a default on the part of a portfolio investment. The manager’s maturity decisions also will affect a fund’s yield, and in unusual circumstances potentially affect its share price. To the extent that the manager anticipates interest rate trends imprecisely, a fund’s yield at times could lag those of other money market funds. State and regional factors could affect a fund’s performance. To the extent that a fund invests in securities from a given state or geographic region, its share price and performance could be affected by local, state and regional factors. National governmental actions, such as the elimination of tax-exempt status, also could affect performance. To the extent a fund invests a substantial portion of its assets in municipal securities financing similar projects, the fund may be more sensitive to adverse economic, business or political developments. Some of a fund’s income could be taxable. If certain types of investments a fund buys as tax-exempt are later rule to be taxable, a portion of the fund’s income could become taxable. Any defensive investments in taxable securities and securities whose interest is subject to AMT could generate taxable income. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
 
Please refer to a fund’s prospectus for a complete description of the principal risks of investing in the fund.
 
4. U.S. Treasury Temporary Guarantee Program:
       (All dollar amounts are x 1,000)
 
On September 19, 2008, The U.S. Treasury Department announced the establishment of a Temporary Guarantee Program for the U.S. Money Market Mutual Funds (the “Program”). The initial term of the Program was set to expire on December 18, 2008. On November 24, 2008, the Treasury announced an extension of the Program for the period December 19, 2008 through April 30, 2009; and on March 31, 2009, the Treasury announced a further extension of the Program for the period from May 1, 2009 through September 18, 2009 (together, the “Program Extensions”). According to the Treasury, the Program will not be extended beyond September 18, 2009. The Municipal Money Fund and AMT Tax-Free Money Fund, with the approval of the Schwab Funds Board of Trustees, participated in the Program during the initial and extended Program periods. The Municipal Money Fund and the AMT Tax-Free Money Fund paid $1,681 and $316, respectively, to participate in the initial term of the Program, which covered the period September 19, 2008 through December 18, 2008. In addition, the Municipal Money Fund and the AMT Tax-Free Money Fund paid $2,521 and $475, respectively, to participate in the first extension of the Program, which covered the period December 19, 2008 through April 30, 2009. The Municipal Money Fund and the AMT Tax-Free Money Fund paid $2,521 and $475, respectively, to participate in the second Program Extension, which covers the period May 1, 2009 through September 18, 2009. Subject to provisions contained in the guarantee agreement signed by the funds, the Program guarantees that the shareholders in the funds as of the close of business on September 19, 2008, will receive $1.00 for each fund
 
 
 
84 

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
4. U.S. Treasury Temporary Guarantee Program (continued):
       (All dollar amounts are x 1,000)
 
share held. Shares not guaranteed under the Program will be redeemed at net asset value per share. The guarantee applies only if a participating money market fund’s net asset value per share falls below $0.995 and the fund subsequently decides to liquidate. Any increase in shares in the account after the close of business on September 19, 2008, will not be guaranteed. If the amount of shares held fluctuates over the period, shareholders will be covered for either the number of shares held as of the close of business September 19, 2008, or the current amount, whichever is less. The cost of participating in the Program and the Program Extensions is borne by each participating fund and will not be subject to any expense limitation or reimbursement agreement.
 
5. Affiliates and Affiliated Transactions:
       (All dollar amounts are x 1,000)
 
Charles Schwab Investment Management, Inc. (“CSIM” or “the investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the funds’ investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
 
For its advisory and administrative services to the funds, the investment adviser is entitled to receive an annual fee payable monthly based on the funds’ average daily net assets described as follows:
 
         
Average daily net assets
   
 
First $1 billion
    0.35%  
$1 billion to $10 billion
    0.32%  
$10 billion to $20 billion
    0.30%  
$20 billion to $40 billion
    0.27%  
Over $40 billion
    0.25%  
 
Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and during the reporting period was the trust’s transfer agent and shareholder services agent. Effective July 1, 2009, the trust has appointed Boston Financial Data Services Inc. (“BFDS”) as transfer agent of the funds. Prior to July 1, 2009, BFDS served as the funds’ sub-transfer agent.
 
For the transfer agent and shareholder services provided during the reporting period, Schwab received an annual fee payable monthly based on the funds’ average daily net assets described as follows:
 
                 
   
Transfer Agent Fees
 
Shareholder Service Fees
 
Sweep Shares
    0.15%       0.20%  
Value Advantage Shares
    0.05%       0.17%  
Select Shares*
    0.05%       0.17%  
Institutional Shares*
    0.05%       0.17%  
 
Effective July 1, 2009, the trust adopted a Shareholder Servicing Plan (the “Plan”) on behalf of certain funds of the trust. Pursuant to the Plan, each fund pays Schwab to provide certain account maintenance, customer liaison and shareholder services to fund shareholders. The funds also pay for certain administration services Schwab provides to fund shareholders invested in the Sweep Shares of each fund. Under the Plan, Schwab will be entitled to receive an annual fee payable monthly based on the funds’ average daily net assets as follows:
 
         
   
Shareholder Service Fees
 
Sweep Shares
    0.35%  
Value Advantage Shares
    0.22%  
Select Shares*
    0.22%  
Institutional Shares*
    0.22%  
 
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 April 29, 2011 for
 
 
 
 85

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
5. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)
 
Select Shares and Institutional Shares, and for so long as CSIM is the investment adviser to the applicable funds for Sweep Shares and Value Advantage Shares as follows:
 
                 
   
Municipal Money Fund
 
AMT Tax-Free Money Fund
 
Sweep Shares
    0.62%       0.62%  
Value Advantage Shares
    0.45%       0.45%  
Select Shares*
    0.35%       n/a  
Institutional Shares*
    0.24%       n/a  
 
*  Select Shares and Institutional Shares are only offered by Municipal Money Fund.
 
These additional agreements as to Sweep Shares and Value Advantage Shares may only be amended or terminated with approval of the fund’s Board of Trustees. These agreements ensure that any increase in the funds’ “Other expenses” as a result of the appointment of BFDS as transfer agent and Schwab as a shareholder service provider will be offset by the expense limitation.
 
In addition, CSIM and Schwab agreed to voluntarily waive an additional 0.005% of the Municipal Money Fund’s Select Shares, Value Advantage Shares and Sweep Shares expenses and the AMT Tax-Free Fund’s Value Advantage Shares and Sweep Shares expenses. This voluntary waiver is for the period from January 1, 2009 through December 31, 2009.
 
In addition to the contractual expense limitation noted above, Schwab and the investment adviser also may waive and/or reimburse expenses to the extent necessary to maintain the fund’s net yield at a certain level as determined by Schwab and the investment adviser. Schwab and the investment adviser may recapture from the funds any of these expenses or fees they have waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. The reimbursement payments by the funds to Schwab and/or the investment adviser are considered “non-routine expenses” and are not subject to any net operating expense limitations in effect at the time of such payment. This recapture could negatively affect a fund’s future yield. As of June 30, 2009, the balance of the recoupable expenses is as follows:
 
                 
Expiration
 
Schwab Municipal Money Fund
 
Schwab AMT Tax-Free Money Fund
 
12/31/2012
    $79       $30  
 
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. For the period ended June 30, 2009, each fund’s aggregate security transactions with other Schwab Funds were as follow:
 
         
Municipal Money Fund
    $3,938,045  
AMT Tax-Free Money Fund
    $2,772,604  
 
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for the funds during the period.
 
6. Board of Trustees:
 
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but the trust did pay non-interested persons (independent trustees), as noted in the funds’ Statement of Operations.
 
 
 
86 

Table of Contents

 
 Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund
 

 
Financial Notes, unaudited (continued)
 
7. Borrowings from Banks:
 
The funds may borrow money from banks and custodians. The funds covered in this report have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.
 
There was no borrowing from the lines of credit for the funds during the period. However, certain funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
 
8. 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 December 31, 2008, the funds had no capital loss carry forwards.
 
For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following year. For the year ended December 31, 2008, the funds had no deferred realized net capital losses and the capital losses utilized to offset capital gains were as follows:
 
                 
   
Municipal Money Fund
 
AMT Tax-Free Money Fund
 
Capital losses utilized
    $1,395       $72  
 
As of December 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended December 31, 2008, the funds did not incur any interest or penalties.
 
9. Subsequent Events:
 
In accordance with the provision set forth in FAS 165 Subsequent Events, management has evaluated the possibility of subsequent events existing in the Funds’ financial statements through June 30, 2009. Management has determined that there are no material events that would require disclosure in the Funds’ financial statements through August 14, 2009.
 
 
 
 87

Table of Contents

 
Investment Advisory Agreement Approval
 
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the advisory agreement.
 
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between The Charles Schwab Family of Funds (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to existing funds in the Trust, including the Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund, and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the funds that the Board reviews during the course of each year, including information that relates to fund operations and fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of fund management and participate in question and answer sessions with representatives of CSIM.
 
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement at meetings held on April 27, 2009 and May 15, 2009, and approved the renewal of the Agreement for an additional one year term at the meeting held on May 15, 2009. The Board’s approval of the Agreement was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
 
1.  the nature, extent and quality of the services provided to the funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the funds;
 
2.  each fund’s investment performance and how it compared to that of certain other comparable mutual funds;
 
3.  each fund’s expenses and how those expenses compared to those of certain other comparable mutual funds;
 
4.  the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and
 
5.  the extent to which economies of scale would be realized as the funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of fund investors.
 
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The information considered by the Trustees included specific information concerning changes in the nature, extent and quality of services provided by CSIM since the Trustees had last considered approval of the Agreement. The Trustees also considered the fact that Schwab’s extensive branch network, Internet access, investment and research tools, telephone services, and array of account features benefit the funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds supported renewal of the Agreement.
 
Fund Performance. The Board considered fund performance in determining whether to renew the Agreement. Specifically, the Trustees considered each fund’s performance relative to a peer group of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, when applicable, and market trends. As part of this review, the Trustees considered the composition of the peer group, selection criteria and the reputation of the third party who prepared the peer group analysis. In evaluating the performance of each fund, the Trustees considered both risk and shareholder risk expectations for such fund and the appropriateness of the benchmark used to compare the performance of each fund. The Trustees further considered the level of fund performance in the context of its review of fund expenses and adviser profitability discussed below. Following such evaluation the
 
 
 
88 

Table of Contents

Board concluded, within the context of its full deliberations, that the performance of the funds supported renewal of the Agreement.
 
Fund Expenses. With respect to the funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each fund’s net operating expense ratio, in each case, in comparison to those of other comparable mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total fund expenses from exceeding a specified cap. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as wrap accounts and offshore funds, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the funds are reasonable and supported renewal of the Agreement.
 
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the funds, such as whether, by virtue of its management of the funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each fund by CSIM and its affiliates. The Board also considered information relating to changes to CSIM’s business operations and how these changes affected CSIM’s profitability under the Agreement. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement.
 
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of fund expenses, the Trustees considered that CSIM and Schwab have previously committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered CSIM’s agreement to contractual investment advisory fee schedules that include lower fees at higher graduated asset levels. The Board also considered certain commitments by CSIM and Schwab that are designed to pass along potential economies of scale to fund shareholders. Specifically, the Board considered CSIM and Schwab’s previously negotiated commitments, which may be changed only with Board approval, relating to: (i) reductions of contractual advisory fees or addition of breakpoints for certain funds within the fund complex, (ii) implementation, by means of expense limitation agreement, of additional reductions in net overall expenses for certain funds, and (iii) future net total operating expense reductions for taxable money funds as a group and non-taxable money funds as a group when aggregate assets of such group of funds exceed certain levels. In particular, the Board considered the actual expense reductions that resulted from CSIM and Schwab’s commitments set forth above. Based on this evaluation, and in consideration of the previously negotiated commitments made by CSIM and Schwab as discussed above, the Board concluded, within the context of its full deliberations, that the funds obtain reasonable benefit from economies of scale.
 
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously approved the continuation of the Agreement and concluded that the compensation under the Agreement is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
 
 
 
 89

Table of Contents

 
Trustees and Officers
 
The tables below give information about the trustees and officers for The Charles Schwab Family of Funds which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of June 30, 2009 the Fund Complex included 82 funds.
 
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
 
                 
Independent Trustees
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
                 
Mariann Byerwalter
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman of JDN Corporate Advisory LLC.     82     Board 1–Director, Redwood Trust, Inc.
 
John F. Cogan
1947
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University     68     Board 1–Director, Gilead Sciences, Inc.
Board 2–Director, Monaco Coach Corporation
Board 3–Director, Venture Lending and Leasing, Inc.
 
William A. Hasler
1941
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).     82     Board 1–Director, Mission West Properties
Board 2–Director, TOUSA
Board 3–Director, Harris-Stratex Networks
Board 4–Director, Genitope Corp.
Board 5– Director, Ditech Networks
Board 6–Director, Rubicon Limited
 
Gerald B. Smith
1950
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).     68     Board 1–Board of Cooper Industries
Board 2–Chairman of the Audit Committee of Oneok Partners LP
 
Donald R. Stephens
1938
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Managing Partner, D. R. Stephens & Company (investments).     68     None
 
Joseph H. Wender
1944
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007;     68     Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
 
 
 
 
90 

Table of Contents

                 
Independent Trustees continued
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
Michael W. Wilsey
1943
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).     68     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. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989.) 		  Founded Charles Schwab & Co., Inc. in 1971 and became Chairman in 1978. Since 1986, Chairman and Director, The Charles Schwab Corporation. Since 1989, Director, Charles Schwab Investment Management, Inc., and appointed as Chairman in 1991. Since 1996, Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. Since 1999, Director and Chief Executive Officer, Schwab Holdings, Inc. Since 2003, Chairman, Charles Schwab Bank, N. A.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, and the Charles Schwab & Co., Inc.     68     None
 
Walter W. Bettinger II2
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.     68     None
 
 
 
 
 
 91

Table of Contents

     
Officers of the Trust
 
Name, Year of Birth, and Position(s)
 		   
with the trust; (Terms of office, and
 		   
length of Time Served3)   Principal Occupations During the Past Five Years
 
     
Randall W. Merk
1954
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds since 2007.) 		  Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC.
 
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
 
Jeffrey Mortimer
1963
Senior Vice President and Chief Investment Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
 
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of The Charles Schwab Family of Funds since 1998.) 		  Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
 
Catherine MacGregor
1964
Vice President
(Officer of The Charles Schwab Family of Funds since 2005.) 		  Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., and Laudus Trust and Laudus Institutional Trust. Since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust.
 
Michael Haydel
1972
Vice President
(Officer of The Charles Schwab Family of Funds since 2006.) 		  Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust.
 
 
 
1  Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
 
2  Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
 
3  The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.
 
 
 
92 

Table of Contents

 
Glossary
 
Alternative Minimum Tax (AMT) A federal income tax designed to limit the extent to which high-income taxpayers (including individuals, estates, trusts and corporations) can benefit from certain deductions and exemptions. For example, some types of income that are exempt from regular federal income tax are not exempt from the AMT.
 
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 bond holder. 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 anticipation notes Obligations sold by a state or local government on a short-term basis in anticipation of the issuance of a longer-term bond in the future.
 
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.
 
commercial paper Promissory notes issued by banks, corporations and other entities to finance short-term credit needs. These securities generally are structured on a discounted basis but sometimes may be interest-bearing notes. Commercial paper, which may be unsecured, is subject to credit risk.
 
credit-enhanced securities Securities that are backed by the credit of an entity other than the issuer (such as a financial institution). Credit enhancements, which can equal up to 100% of the security’s value, are designed to help lower the risk of default on a security and may also make the security more liquid.
 
credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly regulate the credit quality of the securities a money market fund can buy.
 
credit ratings Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Standard & Poor’s, Fitch, Inc. and Moody’s Investor Service, to rate their creditworthiness and/or the creditworthiness of their debt issues. For example, an issuer may obtain a long-term rating within the investment grade rating category, which is, from high to low, AAA, AA, A and BBB for Standard & Poor’s and Fitch, and Aaa, Aa, A and Baa for Moody’s.
 
credit risk The risk that a debt issuer may be unable to pay interest or repay principal to its debt holders.
 
dollar-weighted average maturity (DWAM) See weighted average maturity.
 
effective yield A measurement of a fund’s yield that assumes that all interest income is reinvested in additional shares of the fund.
 
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 for the year.
 
face value The value of a bond, note, mortgage or other security as given on the certificate or instrument. Face value is also referred to as par value or nominal value.
 
fixed rate notes  A security with a fixed rate or coupon and a short maturity (typically within thirteen months). For example, bond, revenue or tax anticipation notes.
 
illiquid securities Securities are generally considered illiquid if they cannot be disposed of promptly (typically within seven days) and in the ordinary course of business at approximately the amount at which a fund has valued the instruments.
 
interest Payments to holders of debt securities as compensation for loaning a security’s principal to the issuer.
 
liquidity-enhanced security The security’s structure includes a liquidity arrangement that requires an entity other than the issuer (such as a large financial institution) to provide funds to pay a tender under most circumstances. Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities for repayment within a specified time period (usually one day or one week) at any time prior to their final maturity.
 
maturity The date a debt security is scheduled to be “retired” and its principal amount repaid to the bond holder. The Maturity of an investment will generally reflect the security’s final maturity date unless the security’s structure includes a maturity-shortening provision such as an interest rate reset, demand feature or put feature which reflects the security’s Effective Maturity Date. For those securities with a maturity-shortening provision, including variable-rate demand securities, the Maturity is determined by using the Effective Maturity Date.
 
money market securities High-quality, short-term debt securities that may be issued by states and local governments and their agencies. Money market securities must have an effective maturity of no longer than 397 days. Examples include bond and tax anticipation notes, commercial paper, variable-rate demand obligations and tender option bonds.

 
 
Portfolio terms
 
To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.
 
     
BAN
  Bond anticipation note
COP
  Certificate of participation
CP
  Commercial paper
GAN
  Grant anticipation note
GO
  General obligation
HDA
  Housing Development Authority
HFA
  Housing Finance Agency
IDA
  Industrial Development Authority
IDB
  Industrial Development Board
M/F
  Multi-family
RAN
  Revenue anticipation note
RB
  Revenue bond
S/F
  Single-family
TAN
  Tax anticipation note
TOB
  Tender option bond
TRAN
  Tax and revenue anticipation note
VRDO
  Variable-rate demand obligation

 
 
 
 93

Table of Contents

municipal securities Debt securities issued by a state, its counties, municipalities, authorities and other subdivisions, or the territories and possessions of the United States and the District of Columbia, including their subdivisions, agencies and instrumentalities and corporations. These securities may be issued to obtain money for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works.
 
net asset value per share (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. Money funds seek to maintain a steady NAV of $1.00.
 
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
 
restricted securities Securities that are subject to contractual restrictions on resale. These securities are often purchased in private placement transactions.
 
revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.
 
section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.
 
section 4(2)/144A securities Securities exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may be sold only to qualified institutional buyers under Securities Act Rule 144A.
 
taxable-equivalent yield The yield an investor would need to get from a taxable investment in order to match the yield paid by a given tax-exempt investment, once the effect of all applicable taxes is taken into account. For example, if your tax rate were 25%, a tax-exempt investment paying 4.5% would have a taxable-equivalent yield for you of 6.0% (4.5% ¸ [1 – 0.25%] = 6.0%).
 
tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.
 
tender option bond A security which is created by a financial institution by combining a long-term municipal bond with a liquidity facility which converts the long-term bond into a money-market eligible security. Tender option bonds are issued as section 144A securities.
 
Tier 1, Tier 2 Tier 1 is the highest category of credit quality, Tier 2 the second highest. A security’s tier can be established either by an independent rating organization or by a determination of the investment adviser. Money market fund shares and U.S. government securities are automatically considered Tier 1 securities. The Schwab Money Funds only purchase securities which are considered to be Tier 1.  
 
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
 
variable rate demand obligations (VRDOs) Securities that have long maturities but which, because of their structure, require them to repay principal plus accrued interest within a specified timeframe (usually one or seven days) upon the demand of the bond holder. Depending on their structure, the repayment may be made by the bond issuer or by a financial institution, such as a highly rated bank.
 
variable rate demand preferred shares (VRDP) Variable rate demand securities that are issued by single state or national closed-end municipal bond funds, which, in turn, invest primarily in portfolios of tax-exempt municipal bonds. It is anticipated that the interest on VRDPs will be exempt from federal income tax. These securities are considered “municipal money market securities” for purposes of the fund’s investment policy as stated in the prospectus. 
 
weighted average maturity For money market mutual funds as per rule 2a-7, the sooner of the maturity (see definition of maturity) of all the debt securities in its portfolio or the date the interest rate on those securities is reset or those securities that can be redeemed through demand, calculated as a weighted average. As a rule, the longer the fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.
 
yield The income paid out by an investment, expressed as a percentage of the investments market value.
 
 
 
 
94 

Table of Contents

 
Notes

Table of Contents

 
Notes

Table of Contents

 
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.
 
An investor should consider a funds investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1.800.435.4000 for a prospectus and brochure. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
 
Proxy Voting Policies, Procedures and Results
 
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com/marketmasters, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.
 
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov.
 
The Schwab Funds Family®
 
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedge Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab Institutional Select® S&P 500 Fund
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
 
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
 
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab Long-Term Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
 
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
 
 
  * SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.
  1 Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Table of Contents

(CHARLES SCHWAB LOGO)
 
 
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
 
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
 
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2008 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR25720-07

Table of Contents

 
Schwab Retirement Advantage Money Fund ®
Schwab Investor Money Fund ®
 
Semiannual Report
June 30, 2009
 
 
 
(CHARLES SCHWAB LOGO)
 

 

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

Table of Contents

 
From the President
 

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

 
Dear Shareholder,
 
In the past six months, investors have had to endure the continuing effects of a recessionary economy. Volatile equity prices and low yields on government-backed securities have been among the numerous market challenges. In addition, corporate bankruptcies, regulatory changes, and securitized-asset troubles have reshaped fixed income and equity markets causing us to reassess and reexamine where these markets stood before the crisis and where they might take us in the future.
 
Despite this economic backdrop, Schwab’s money funds provided shareholders with safety and liquidity and maintained a stable $1 Net Asset Value during the period. The funds also maintained a positive net yield. However, a low interest rate environment both for taxable and tax-free investments, as well as continued demand for government-backed securities has translated into relatively low yields. For more detail on yields for each fund, please see the fund managers’ discussion and analysis found in the following pages of this report.
 
Information specific to Schwab’s money funds, such as a question and answer document, recent holdings for select money funds, and information on Schwab’s participation in the Treasury’s Temporary Guarantee Program for Money Market Funds can be found on schwab.com under the Money Market Funds page and on schwabinstitutional.com
 
If you have any questions about Schwab’s money funds or other Schwab Funds, we are always available at 1-800-435-4000, while additional resources may be found on schwab.com
 
Thank you for investing with us.
 
Sincerely,
 
-s-Randall W. Merk
 
 
 
Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 1

Table of Contents

 
The Investment Environment
 
 
Investment conditions in the U.S. financial marketplace remained difficult to gauge as a climate of economic recession persisted, but showed signs of improving during the latter half of the reporting period. Broad-market equity indexes, such as the S&P 500 Index® and Russell 1000 Index® displayed meaningful gains since their March lows. The Chicago Board Options Exchange Volatility Index (VIX) – a measure of U.S. stock market price fluctuations – declined from March through the end of the period, settling around 30 after touching the high 50s in January. On the fixed income side, demand for government-backed debt remained strong relative to corporate and other non-government debt. Treasury yields, though still relatively low, inched higher toward the end of the period. From a policy perspective, economic stability and stimulus measures enacted in the U.S. and around the world acted to slow the pace of economic degradation and have encouraged investors to reengage markets in some cases.
 
Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence reflected the recessionary environment, but some indicators improved during the period. GDP – the output of goods and services produced by labor and property located in the United States – decreased at an annual rate of 5.7% in the first quarter of 2009 compared with a decline of 6.3% in the fourth quarter of 2008, according to the Bureau of Economic Analysis. The unemployment rate continued to rise, increasing to 9.4% in May, driven by job losses in the manufacturing sector. However, the Consumer Confidence Index improved in both April and May. As of May 26, 2009 the Index stood at 54.9, compared to 26.9 in March.
 
In this environment, yields on most taxable and municipal money funds were extremely low during the reporting period when compared to historical averages. Money funds that invested exclusively in U.S. Treasury securities or other government-backed assets had the lowest yields. Strong demand for so-called “safe assets”, such as U.S. Treasuries and highly rated short-term commercial paper, in conjunction with a 0% to 0.25% target on the Federal Funds Rate acted to dampen yield on money fund eligible assets. At the close of the period, 3-month Treasuries yielded 0.16% and 2-year Treasuries yielded 1.12%.
 
Despite the depression in yields, the Fed signaled that lending and liquidity conditions were beginning to improve by making modifications to emergency lending programs. In late June, the Fed announced that the Schedule 1 Term Security Lending Facility – a program that lent Treasury securities – would be suspended on July 1, 2009. In addition, reductions were made in the amount of credit auctioned under the Term Auction Facility, which was designed to provide cash to commercial lenders, and the Term Security Lending Facility, which makes funds available to primary bond dealers.
 
Earlier in the period, the Fed extended the Money Market Funds Guarantee Program until September 18, 2009. However, no fund has had to draw on the insurance provided by the program. In a separate move, the U.S. Securities and Exchange Commission (SEC) proposed new rules for money market funds aimed at preventing a repeat of the scenario that caused the collapse of the Reserve Primary Fund. The proposal modifies current restrictions on money funds and requires that funds increase liquidity and lower the ceiling on Weighted Average Maturity (WAM), among other changes. As of the reporting date, the SEC was seeking public comment on the proposal.
 

 
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.

 
 
 
2 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Table of Contents

 
Fund Management
 
     
     
(PHOTO)   Linda Klingman, a managing director and portfolio manager of the investment adviser, has overall responsibility for the management of the funds. She joined the firm in 1990 and has managed money market funds since 1988.
     
(PHOTO)   Mike Neitzke, a managing director and portfolio manager of the investment adviser, has day-to-day responsibility for the management of the funds. He joined the firm in March 2001 and has worked in the financial industry as a portfolio manager since 1986.
     
(PHOTO)   Michael Lin, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of the funds. He joined the firm in 2000 and was named to his current position in 2004.
 
 
 
Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 3

Table of Contents

 
 
Schwab Retirement Advantage Money Fund®
 
 
The Schwab Retirement Advantage Money Fund provided safety and liquidity to shareholders throughout the reporting period, while emphasizing credit quality over yield. The fund’s low yield is a product of both a low interest rate environment and the fund managers’ conservative investment strategy. The Federal Funds Rate, which stood at a target range of 0% to 0.25% during the period, in conjunction with high market demand acted to suppress yields on government agency and other securities that the fund invests in to provide safety and liquidity. In addition, yields on the majority of securities in which the fund invests are pegged to the London Interbank Offered Rate (LIBOR)—a key benchmark for short term interest rates—which declined during the period.
 
The fund’s Weighted Average Maturity (WAM)—an indication of the portfolio’s sensitivity to interest rate changes—ranged between 43 and 66 days (from 12/31/08-6/30/09). Due to the low interest rate environment, the WAM was extended toward the long end of this range in the last several months of the period in an effort to bolster yield.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity1
 
     
    % of Investments
1-15 Days
  26.2%
16-30 Days
  5.5%
31-60 Days
  27.4%
61-90 Days
  23.0%
91-120 Days
  6.5%
More than 120 Days
  11.4%
 
 
 Statistics
 
     
Weighted Average Maturity2
  60 days
Credit Quality of Holdings3
% of portfolio
  99.9% Tier 1
 
 Portfolio Composition by Security Type4
 
         
        % of Investments
Government Agency
      28.4%
Repurchase Agreements
      5.6%
Commercial Paper (CP)
       
Asset Backed CP
      17.3%
Bank/Financial CP
      4.0%
TLGP CP5
      8.3%
Certificates of Deposit
      32.0%
Bank Notes (BN)
       
TLGP BN5
      1.1%
Corporate Notes (CN)
       
TLGP CN5
      0.5%
Other CN
      1.0%
Time Deposits
      1.0%
Other
      0.8%
Total
      100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
1  As shown in the Portfolio Holdings section of the shareholder report.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
4  Portfolio Composition is calculated using the Par Value of Investments.
 
5  This is debt of banks, thrifts and/or certain holding companies guaranteed under the FDIC Temporary Liquidity Guarantee Program (TLGP), and the FDIC has stated that the debt is backed by the full faith and credit of the United States Government.
 
 
 
4 Schwab Retirement Advantage Money Fund®

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
     
    Schwab Retirement
    Advantage
    Money Fund
 
Ticker Symbol
  SWIXX
Minimum Initial Investment1
  $25,000
Seven-Day Yield2
  0.07%
Seven-Day Yield—No Waiver3
  -0.07%
Seven-Day Effective Yield2
  0.07%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Fund expenses have been partially absorbed by CSIM and Schwab.
 
3  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
 
 
Schwab Retirement Advantage Money Fund® 5

Table of Contents

 
Schwab Investor Money Fund®
 
 
The Schwab Investor Money Fund provided safety and liquidity to shareholders throughout the reporting period, while emphasizing credit quality over yield. The fund’s low yield is a product of both a low interest rate environment and the fund managers’ conservative investment strategy. The Federal Funds Rate, which stood at a target range of 0% to 0.25% during the period, in conjunction with high market demand acted to suppress yields on government agency and other securities that the fund invests in to provide safety and liquidity. In addition, yields on the majority of securities in which the fund invests are pegged to the London Interbank Offered Rate (LIBOR)—a key benchmark for short term interest rates—which declined during the period.
 
The fund’s Weighted Average Maturity (WAM)—an indication of the portfolio’s sensitivity to interest rate changes—ranged between 47 and 66 days (from 12/31/08-6/30/09). Due to the low interest rate environment, the WAM was extended toward the long end of this range in the last several months of the period in an effort to bolster yield. In addition, Charles Schwab & Co. and the fund’s investment adviser voluntarily waived and/or reimbursed certain fees or expenses to maintain a positive net yield*. For more information about the fund’s yield, please see the charts and relevant footnotes on the next page.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity1
 
     
    % of Investments
1-15 Days
  24.0%
16-30 Days
  8.8%
31-60 Days
  24.5%
61-90 Days
  25.1%
91-120 Days
  5.5%
More than 120 Days
  12.1%
 
 
 Statistics
 
     
Weighted Average Maturity2
  61 days
Credit Quality of Holdings3
% of portfolio
  99.9% Tier 1
 
 Portfolio Composition by Security Type4
 
         
        % of Investments
Government Agency
      26.3%
Repurchase Agreements
      5.0%
Commercial Paper (CP)
       
Asset Backed CP
      21.4%
Bank/Financial CP
      3.4%
Corporate CP
      1.1%
TLGP CP5
      7.1%
Certificates of Deposit
      34.4%
Corporate Notes (CN)
       
TLGP CN5
      0.4%
Other CN
      0.8%
Other
      0.1%
Total
      100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
*Schwab and the investment adviser may recapture expenses or fees they waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 5 of the Financial Notes Section.
 
Portfolio holdings may have changed since the report date.
 
1  As shown in the Portfolio Holdings section of the shareholder report.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
4  Portfolio Composition is calculated using the Par Value of Investments.
 
5  This is debt of banks, thrifts and/or certain holding companies guaranteed under the FDIC Temporary Liquidity Guarantee Program (TLGP), and the FDIC has stated that the debt is backed by the full faith and credit of the United States Government.
 
 
 
6 Schwab Investor Money Fund®

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
     
    Schwab Investor
    Money Fund
 
Ticker Symbol
  SWRXX
Minimum Initial Investment1
  $1 Retirement Plan Participants
    $2,500 Other Investors
Seven-Day Yield2
  0.02%
Seven-Day Yield—No Waiver3
  -0.02%
Seven-Day Effective Yield2
  0.02%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Fund expenses have been partially absorbed by CSIM and Schwab.
 
3  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
 
 
Schwab Investor Money Fund® 7

Table of Contents

 
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 January 1, 2009 and held through June 30, 2009.
 
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.
 
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
 
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
 
                                 
            Ending
 		   
        Beginning
 		  Account Value
 		  Expenses Paid
    Expense Ratio 1
 		  Account Value
 		  (Net of Expenses)
 		  During Period 2
    (Annualized)   at 1/1/09   at 6/30/09   1/1/09–6/30/09
 
 
Schwab Retirement Advantage Money Fund®                                
Actual Return
    0.49%     $ 1,000     $ 1,001.90     $ 2.43  
Hypothetical 5% Return
    0.49%     $ 1,000     $ 1,022.36     $ 2.46  
 
Schwab Investor Money Fund®                                
Actual Return
    0.61%     $ 1,000     $ 1,001.50     $ 3.03  
Hypothetical 5% Return
    0.61%     $ 1,000     $ 1,021.77     $ 3.06  

 
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 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.

 
 
 
8 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Table of Contents

 
Schwab Retirement Advantage Money Fund®
 
Financial Statements
 
Financial Highlights
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
    6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.03       0.05       0.05       0.03       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.03 )     (0.05 )     (0.05 )     (0.03 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.19 2     2.56       4.96       4.67       2.81       0.95      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.49 3,4     0.48 5     0.48       0.49       0.49       0.49      
Gross operating expenses
    0.62 3     0.60       0.62       0.64       0.63       0.63      
Net investment income (loss)
    0.38 3     2.52       4.85       4.59       2.75       0.94      
Net assets, end of period ($ x 1,000,000)
    1,006       984       946       802       571       680      

* Unaudited.
1 Per-share amount was less than $0.01.
2 Not annualized.
3 Annualized.
4 The ratio of net operating expenses would have been 0.46% if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been included.
5 The ratio of net operating expenses would have been 0.47% if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been included.
 
 
 
See financial notes 9

Table of Contents

 
 Schwab Retirement Advantage Money Fund
 

 
Portfolio Holdings as of June 30, 2009 (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  85 .6%   Fixed-Rate Obligations     860,923       860,923  
  9 .2%   Variable-Rate Obligations     92,624       92,624  
  5 .6%   Other Investment     56,593       56,593  
  100 .4%   Total Investments     1,010,140       1,010,140  
  (0 .4)%   Other Assets and Liabilities, Net             (3,813 )
  100 .0%   Net Assets             1,006,327  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Fixed-Rate Obligations  85.6% of net assets
 
Bank Note 1.1%
Bank of America, N.A., (FDIC Insured)
0.75%, 08/24/09 (a)(e)
    11,000       11,000  
 
Certificates of Deposit 29.3%
Abbey National Treasury Services PLC
0.32%, 08/27/09 (a)
    5,000       5,000  
Australia & New Zealand Banking Group Ltd.
0.40%, 08/12/09
    1,000       1,000  
0.50%, 12/15/09
    1,000       1,000  
0.48%, 12/16/09
    8,000       8,000  
Banco Bilbao Vizcaya Argentaria S.A.
0.60%, 07/20/09
    8,000       8,000  
Bank of America, N.A.
0.62%, 07/24/09
    2,000       2,000  
1.39%, 09/04/09
    6,000       6,000  
0.60%, 09/24/09
    1,000       1,000  
0.55%, 10/16/09
    2,000       2,000  
0.50%, 10/23/09
    8,000       8,000  
Bank of Nova Scotia
0.60%, 07/13/09
    5,000       5,000  
0.63%, 07/14/09
    1,000       1,000  
0.55%, 07/24/09
    2,000       2,000  
0.48%, 08/11/09
    5,000       5,000  
Bank of the West
0.32%, 09/14/09
    5,000       5,000  
Bank of Tokyo Mitsubishi UFJ Ltd.
0.99%, 07/07/09
    5,000       5,000  
0.64%, 08/11/09
    1,000       1,000  
BNP Paribas
1.05%, 07/09/09
    1,000       1,000  
1.05%, 07/10/09
    1,000       1,000  
1.00%, 08/14/09
    9,000       9,000  
1.01%, 08/14/09
    18,000       18,000  
0.68%, 09/04/09
    1,000       1,000  
0.39%, 10/05/09
    10,000       10,000  
Citibank, N.A.
0.75%, 08/12/09
    5,000       5,000  
0.60%, 09/24/09
    4,000       4,000  
0.57%, 10/05/09
    4,000       4,000  
0.55%, 10/09/09
    2,000       2,000  
Commonwealth Bank of Australia
0.41%, 08/21/09
    9,000       9,000  
0.55%, 08/27/09
    1,000       1,000  
Credit Agricole S.A.
0.52%, 09/18/09
    5,000       5,000  
0.53%, 10/09/09
    6,000       6,000  
0.54%, 10/15/09
    4,000       4,000  
Deutsche Bank AG
0.62%, 07/06/09
    2,000       2,000  
0.50%, 08/04/09
    3,000       3,000  
DnB NOR Bank ASA
0.32%, 09/17/09
    5,000       5,000  
HSBC Bank PLC
0.66%, 07/07/09
    4,000       4,000  
Intesa Sanpaolo
0.43%, 10/08/09
    2,000       2,000  
0.46%, 10/13/09
    2,000       2,000  
0.43%, 10/14/09
    2,000       2,000  
0.44%, 10/19/09
    4,000       4,000  
Lloyds TSB Bank PLC
0.58%, 09/09/09
    3,000       3,000  
0.59%, 09/14/09
    1,000       1,000  
Mitsubishi UFJ Trust & Banking Corp.
1.10%, 07/08/09
    4,000       4,000  
0.73%, 08/12/09
    4,000       4,000  
Mizuho Corporate Bank Ltd.
0.40%, 09/22/09
    2,000       2,000  
National Australia Bank Ltd.
0.50%, 12/21/09
    10,000       10,001  
0.50%, 01/04/10
    1,000       1,000  
0.52%, 01/07/10
    4,000       4,000  
Rabobank Nederland
1.00%, 09/03/09
    4,000       4,000  
1.00%, 09/09/09
    1,000       1,000  
1.00%, 09/10/09
    13,000       13,000  
1.00%, 09/17/09
    2,000       2,000  
Royal Bank of Scotland PLC
1.25%, 07/08/09
    2,000       2,000  
1.25%, 07/09/09
    2,000       2,000  
0.72%, 09/03/09
    6,000       6,000  
0.69%, 10/07/09
    1,000       1,000  
Societe Generale
1.11%, 07/09/09
    5,000       5,000  
1.17%, 07/13/09
    5,000       5,000  
0.86%, 08/20/09
    3,000       3,000  
State Street Bank & Trust
0.47%, 08/10/09
    2,000       2,000  
 
 
 
10 See financial notes

Table of Contents

 
 Schwab Retirement Advantage Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
1.00%, 08/18/09
    1,000       1,000  
Sumitomo Mitsui Banking Corp.
0.79%, 08/05/09
    4,000       4,000  
0.55%, 08/18/09
    1,000       1,000  
0.45%, 09/09/09
    3,000       3,000  
Sumitomo Trust & Banking Co.
0.55%, 09/15/09
    3,000       3,000  
Svenska Handelsbanken AB
0.65%, 07/20/09
    4,000       4,000  
0.36%, 08/24/09
    4,000       4,000  
Toronto Dominion Bank
1.00%, 09/08/09
    6,000       6,000  
1.47%, 11/12/09
    3,000       3,000  
0.50%, 11/23/09
    3,000       3,000  
1.50%, 12/11/09
    3,000       3,000  
Union Bank, N.A.
0.31%, 08/31/09
    4,000       4,000  
Westpac Banking Corp.
0.84%, 10/15/09
    1,000       1,000  
0.50%, 12/14/09
    6,000       6,000  
0.51%, 01/04/10
    4,000       4,000  
                 
              295,001  
 
Commercial Paper & Other Corporate Obligations 29.8%
Alpine Securitization Corp.
0.25%, 07/07/09 (a)(b)(c)
    9,000       9,000  
Atlantis One Funding Corp.
0.85%, 10/23/09 (a)(b)(c)
    3,000       2,992  
0.83%, 10/27/09 (a)(b)(c)
    3,000       2,992  
Australia & New Zealand Banking Group
0.33%, 08/31/09
    5,000       4,997  
Bank of America Corp., (FDIC Insured)
0.60%, 07/13/09 (a)(e)
    5,000       4,999  
0.25%, 07/22/09 (a)(e)
    10,000       9,999  
Cancara Asset Securitization, L.L.C.
0.35%, 07/07/09 (a)(b)(c)
    2,000       2,000  
0.90%, 07/13/09 (a)(b)(c)
    9,000       8,997  
Chariot Funding, L.L.C.
0.28%, 07/10/09 (a)(b)(c)
    5,000       5,000  
Citigroup Funding, Inc.
0.40%, 07/29/09 (a)
    3,000       2,999  
Citigroup Funding, Inc., (FDIC Insured)
0.25%, 07/10/09 (a)(e)
    1,000       1,000  
0.31%, 07/17/09 (a)(e)
    2,000       2,000  
0.31%, 07/21/09 (a)(e)
    1,000       1,000  
0.24%, 08/06/09 (a)(e)
    14,000       13,997  
0.28%, 08/06/09 (a)(e)
    8,000       7,998  
0.29%, 08/11/09 (a)(e)
    10,000       9,997  
CRC Funding, L.L.C.
0.96%, 08/06/09 (a)(b)(c)
    1,000       999  
Dakota CP Notes of Citibank Credit Card Issuance Trust
1.00%, 07/10/09 (b)(c)
    9,000       8,998  
Danske Corp (Danish Government Guarantee)
1.20%, 07/14/09 (a)(c)
    1,000       1,000  
0.43%, 10/30/09 (a)(c)
    9,000       8,987  
Falcon Asset Securitization Corp.
0.32%, 07/01/09 (a)(b)(c)
    1,000       1,000  
0.28%, 07/08/09 (a)(b)(c)
    7,000       7,000  
Gemini Securitization Corp., L.L.C.
0.41%, 07/06/09 (a)(b)(c)
    5,000       5,000  
General Electric Capital Corp., (FDIC Insured)
0.50%, 08/21/09 (a)(e)
    7,000       6,995  
0.58%, 09/11/09 (a)(e)
    5,000       4,994  
0.40%, 10/30/09 (a)(e)
    11,000       10,985  
0.42%, 11/05/09 (a)(e)
    10,000       9,985  
JP Morgan Chase Funding Inc.
0.36%, 07/09/09 (a)
    9,000       8,999  
Jupiter Securitization Corp.
0.28%, 07/14/09 (a)(b)(c)
    9,053       9,052  
Kitty Hawk Funding Corp.
0.43%, 08/14/09 (a)(b)(c)
    7,013       7,009  
Nationwide Building Society
0.65%, 10/05/09
    4,000       3,993  
0.64%, 10/07/09
    1,000       998  
Old Line Funding, L.L.C.
0.34%, 08/20/09 (a)(b)(c)
    15,000       14,993  
Park Avenue Receivables Co., L.L.C.
0.28%, 07/07/09 (a)(b)(c)
    4,000       4,000  
Ranger Funding Co., L.L.C.
0.45%, 07/20/09 (a)(b)(c)
    6,000       5,999  
0.50%, 08/07/09 (a)(b)(c)
    3,000       2,998  
0.43%, 09/21/09 (a)(b)(c)
    1,000       999  
Sheffield Receivables Corp.
0.40%, 07/09/09 (a)(b)(c)
    3,000       3,000  
Solitaire Funding, L.L.C.
0.47%, 08/03/09 (a)(b)(c)
    2,000       1,999  
0.45%, 08/11/09 (a)(b)(c)
    8,000       7,996  
Starbird Funding Corp.
0.38%, 09/23/09 (a)(b)(c)
    2,000       1,998  
Straight A Funding, L.L.C.
0.37%, 08/11/09 (a)(b)(c)
    5,000       4,998  
0.37%, 09/16/09 (a)(b)(c)
    3,000       2,998  
0.37%, 09/23/09 (a)(b)(c)
    2,000       1,998  
Swedbank AB (Swedish Government Guarantee)
0.87%, 06/02/10 (a)(c)
    4,000       3,968  
Thames Asset Global Securitization No. 1, Inc.
0.45%, 07/09/09 (a)(b)(c)
    5,000       4,999  
Thunder Bay Funding, L.L.C.
0.40%, 07/06/09 (a)(b)(c)
    3,000       3,000  
0.47%, 07/15/09 (a)(b)(c)
    4,423       4,422  
0.50%, 09/11/09 (a)(b)(c)
    1,000       999  
Ticonderoga Funding, L.L.C.
0.30%, 07/16/09 (a)(b)(c)
    1,000       1,000  
0.43%, 09/16/09 (a)(b)(c)
    3,000       2,997  
Variable Funding Capital Corp.
0.35%, 07/09/09 (a)(b)(c)
    3,000       3,000  
0.45%, 07/14/09 (a)(b)(c)
    6,000       5,999  
0.98%, 10/21/09 (a)(b)(c)
    1,000       997  
Westpac Banking Corp.
0.46%, 12/04/09 (c)
    4,000       3,992  
Whistlejacket Capital, L.L.C.
n/a, n/a, (c)(d)(f)
    42       42  
Windmill Funding Corp.
0.65%, 07/02/09 (a)(b)(c)
    9,000       9,000  
Yorktown Capital, L.L.C.
0.55%, 08/18/09 (a)(b)(c)
    2,000       1,998  
0.50%, 09/08/09 (a)(b)(c)
    7,000       6,993  
0.53%, 10/05/09 (a)(b)(c)
    6,000       5,991  
                 
              299,334  
 
Fixed-Rate Coupon Notes 1.8%
Federal Home Loan Bank
0.49%, 04/13/10
    8,000       8,025  
 
 
 
See financial notes 11

Table of Contents

 
 Schwab Retirement Advantage Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
0.55%, 06/03/10
    10,000       9,999  
                 
              18,024  
 
Fixed-Rate Discount Notes 22.6%
Fannie Mae
0.50%, 07/01/09
    3,000       3,000  
0.18%, 08/03/09
    10,000       9,998  
0.17%, 08/05/09
    35,000       34,994  
0.24%, 09/01/09
    12,367       12,362  
0.25%, 09/22/09
    9,000       8,995  
0.76%, 12/01/09
    3,000       2,990  
Federal Home Loan Bank
0.17%, 08/03/09
    10,000       9,999  
0.20%, 08/04/09
    1,000       1,000  
0.19%, 08/12/09
    5,000       4,999  
0.20%, 08/19/09
    9,000       8,998  
0.33%, 09/02/09
    7,000       6,996  
0.60%, 09/09/09
    10,000       9,988  
1.22%, 12/04/09
    8,000       7,958  
0.45%, 01/06/10
    5,000       4,988  
Freddie Mac
0.18%, 08/10/09
    19,000       18,996  
0.19%, 08/17/09
    4,000       3,999  
0.61%, 09/01/09
    1,400       1,399  
0.60%, 09/02/09
    20,000       19,979  
0.61%, 09/15/09
    29,000       28,963  
0.60%, 09/21/09
    27,000       26,963  
                 
              227,564  
 
Time Deposit 1.0%
Citibank, N.A.
0.13%, 07/01/09
    10,000       10,000  
                 
Total Fixed-Rate Obligations
(Cost $860,923) 		    860,923  
         
                 
                 
 
 Variable-Rate Obligations  9.2% of net assets
City of Palm Springs, California
1.35%, 07/02/09 (a)
    8,000       8,000  
Commonwealth Bank of Australia
1.27%, 08/03/09
    5,000       5,000  
Deutsche Bank AG
1.05%, 07/30/09
    1,500       1,500  
Fannie Mae
1.03%, 07/13/09
    25,000       24,983  
Freddie Mac
1.04%, 07/14/09
    15,000       15,010  
0.58%, 09/24/09
    1,000       1,000  
Goldman Sachs Group Inc., (FDIC Insured)
1.32%, 09/16/09 (a)(c)(d)(e)
    5,000       5,000  
Hewlett Packard Co.
1.05%, 09/03/09
    5,000       5,006  
New York City IDA
1.35%, 07/02/09 (a)
    125       125  
Rabobank Nederland
1.20%, 07/24/09
    15,000       15,000  
Royal Bank of Canada
1.03%, 08/19/09
    10,000       10,000  
Societe Generale
0.50%, 09/11/09
    2,000       2,000  
                 
Total Variable-Rate Obligations
(Cost $92,624) 		    92,624  
         
                 
                 
    Face/Maturity
 		   
Issuer
 		  Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Other Investment  5.6% of net assets
 
Repurchase Agreements 5.6%
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $57,727
0.11%, issued 06/30/09,
               
due 07/01/09
    56,593       56,593  
                 
Total Other Investments
(Cost $56,593) 		    56,593  
         
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $1,010,140.
 
(a) Credit-enhanced security.
(b) Asset-backed security.
(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $193,399 or 19.2% of net assets.
(d) Illiquid security. At the period end, the value of these amounted to $5,042 or 0.5% of net assets.
(e) This debt is guaranteed under the FDIC Temporary Liquidity Guarantee Program, and the FDIC has stated that this debt is backed by the full faith and credit of the United States.
(f) Whistlejacket notes are in receivership, and the fund has elected and sold all of its Whistlejacket notes at auction (4/29/2009). The remaining investment represents an interest in a small residual fund held by the receiver that is being held to cover any remaining expenses and liabilities associated with receivership.
 
CP — Commercial paper
IDA — Industrial development agency/authority
 
 
 
12 See financial notes

Table of Contents

 
 Schwab Retirement Advantage Money Fund
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $1,010,140  
Receivables:
           
Interest
        616  
Fund shares sold
        454  
Prepaid expenses
  +     69  
     
     
Total assets
        1,011,279  
             
 
Liabilities
Payables:
           
Investments bought
        3,999  
Investment adviser and administrator fees
        18  
Transfer agent and shareholder services fees
        18  
Fund shares redeemed
        882  
Distributions to shareholders
        34  
Trustees’ fees
  +     1  
     
     
Total liabilities
        4,952  
             
 
Net Assets
Total assets
        1,011,279  
Total liabilities
  −     4,952  
     
     
Net assets
        $1,006,327  
Net Assets by Source
           
Capital received from investors
        1,006,794  
Net realized capital losses
        (467 )
 
Net Asset Value (NAV)
 
                     
        Shares
 		         
Net Assets   ¸   Outstanding   =   NAV  
 
$1,006,327
      1,006,829         $1.00  
 
 
 
 
See financial notes 13

Table of Contents

 
 Schwab Retirement Advantage Money Fund
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $4,394  
             
 
Net Realized Gains and Losses
Net realized losses on investments
        (467 )
             
 
Expenses
Investment adviser and administrator fees
        1,769  
Transfer agent and shareholder service fees
        1,114  
Temporary Guarantee Program expense
        177  
Portfolio accounting fees
        32  
Trustees’ fees
        19  
Custodian fees
        18  
Professional fees
        16  
Registration fees
        2  
Shareholder reports
        1  
Other expenses
  +     4  
     
     
Total expenses
        3,152  
Expense reduction by adviser and Schwab
  −     670  
     
     
Net expenses
        2,482  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        4,394  
Net expenses
  −     2,482  
     
     
Net investment income
        1,912  
Net realized losses
  +     (467 )
     
     
Increase in net assets from operations
        $1,445  
 
 
 
 
14 See financial notes

Table of Contents

 
 Schwab Retirement Advantage Money Fund
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $1,912   $22,104
Net realized gains (losses)
  +   (467)   56
     
     
Increase in net assets from operations
      1,445   22,160
             
 
Distributions to Shareholders
Distributions from net investment income
      1,945   22,104
             
 
Transactions in Fund Shares*
Shares sold
      302,291   831,709
Shares reinvested
      1,861   21,472
Shares redeemed
  +   (281,476)   (815,551)
     
     
Net transactions in fund shares
      22,676   37,630
             
 
Net Assets
Beginning of period
      984,151   946,465
Total increase
  +   22,176   37,686
     
     
End of period
      $1,006,327   $984,151
             
Net investment income not yet distributed
      $−   $33
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
See financial notes 15

Table of Contents

 
Schwab Investor Money Fund®
 
Financial Statements
 
Financial Highlights
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  1/1/04–
 		   
    6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 1     0.02       0.05       0.04       0.03       0.01      
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )1     (0.02 )     (0.05 )     (0.04 )     (0.03 )     (0.01 )    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.15 2     2.41       4.82       4.50       2.63       0.77      
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.61 3     0.60       0.62       0.67       0.67       0.66      
Gross operating expenses
    0.65 3     0.62       0.63       0.67       0.67       0.66      
Net investment income (loss)
    0.30 3     2.37       4.71       4.50       2.61       0.76      
Net assets, end of period ($ x 1,000,000)
    2,169       2,360       2,089       1,314       521       492      

* Unaudited
1 Per-share amount was less than $0.01.
2 Not annualized.
3 Annualized.
 
 
 
16 See financial notes

Table of Contents

 
 Schwab Investor Money Fund
 

 
Portfolio Holdings as of June 30, 2009 (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  85 .5%   Fixed-Rate Obligations     1,854,642       1,854,642  
  10 .0%   Variable-Rate Obligations     215,472       215,472  
  5 .0%   Other Investment     108,920       108,920  
  100 .5%   Total Investments     2,179,034       2,179,034  
  (0 .5)%   Other Assets and Liabilities, Net             (10,277 )
  100 .0%   Net Assets             2,168,757  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Fixed-Rate Obligations  85.5% of net assets
 
Certificates of Deposit 32.1%
Abbey National Treasury Services PLC
0.32%, 08/27/09 (a)
    9,000       9,000  
Australia & New Zealand Banking Group Ltd.
0.80%, 10/30/09
    3,000       3,000  
0.50%, 12/03/09
    11,000       11,000  
0.50%, 12/15/09
    1,000       1,000  
0.48%, 12/16/09
    18,000       18,000  
Banco Bilbao Vizcaya Argentaria S.A.
0.60%, 07/20/09
    17,000       17,000  
0.55%, 07/27/09
    1,000       1,000  
Bank of America, N.A.
1.25%, 08/07/09
    1,000       1,000  
1.39%, 09/04/09
    16,000       16,000  
0.60%, 09/24/09
    15,000       15,000  
0.55%, 10/16/09
    10,000       10,000  
0.60%, 10/22/09
    13,000       13,000  
0.50%, 10/23/09
    16,000       16,000  
Bank of Nova Scotia
0.60%, 07/13/09
    5,000       5,000  
0.62%, 07/14/09
    11,000       11,000  
0.56%, 07/29/09
    13,000       13,000  
0.48%, 08/11/09
    4,000       4,000  
Bank of the West
0.32%, 09/14/09
    4,000       4,000  
Bank of Tokyo Mitsubishi UFJ Ltd.
0.99%, 07/07/09
    14,000       14,000  
0.88%, 12/02/09
    5,000       5,000  
Barclays Bank PLC
1.10%, 07/13/09
    3,000       3,000  
0.80%, 08/12/09
    1,000       1,000  
0.45%, 08/13/09
    4,000       4,000  
BNP Paribas
0.98%, 07/07/09
    1,000       1,000  
1.05%, 07/09/09
    1,000       1,000  
1.05%, 07/10/09
    6,000       6,000  
1.20%, 07/16/09
    4,000       4,000  
0.96%, 08/13/09
    3,000       3,000  
1.01%, 08/14/09
    26,000       26,000  
1.00%, 08/14/09
    24,000       24,000  
0.68%, 09/04/09
    3,000       3,000  
0.65%, 09/10/09
    11,000       11,000  
0.41%, 09/23/09
    2,000       2,000  
0.39%, 10/05/09
    8,000       8,000  
Branch Banking & Trust
0.42%, 11/04/09
    5,000       5,000  
Citibank, N.A.
0.75%, 08/12/09
    9,000       9,000  
0.50%, 09/02/09
    22,000       22,000  
0.55%, 09/18/09
    11,000       11,000  
Commonwealth Bank of Australia
0.51%, 07/31/09
    14,000       14,000  
0.41%, 08/21/09
    9,000       9,000  
0.48%, 12/17/09
    1,000       1,000  
Credit Agricole S.A.
0.90%, 09/01/09
    8,000       8,000  
0.60%, 09/08/09
    5,000       5,000  
0.52%, 09/18/09
    4,000       4,000  
0.50%, 10/08/09
    6,000       6,000  
0.53%, 10/09/09
    5,000       5,000  
0.54%, 10/15/09
    5,000       5,000  
Deutsche Bank AG
0.62%, 07/06/09
    4,000       4,000  
DnB NOR Bank ASA
0.40%, 09/01/09
    8,000       8,000  
0.32%, 09/17/09
    2,000       2,000  
HSBC Bank PLC
0.66%, 07/07/09
    2,000       2,000  
Intesa Sanpaolo
0.50%, 09/21/09
    4,000       4,000  
0.43%, 10/14/09
    9,000       9,000  
0.44%, 10/19/09
    8,000       8,000  
Lloyds TSB Bank PLC
0.59%, 09/14/09
    9,000       9,000  
Mitsubishi UFJ Trust & Banking Corp.
1.10%, 07/08/09
    6,000       6,000  
0.54%, 08/20/09
    2,000       2,000  
0.56%, 08/26/09
    7,000       7,000  
Mizuho Corporate Bank Ltd.
0.50%, 08/13/09
    15,000       15,000  
0.40%, 09/22/09
    6,000       6,000  
National Australia Bank Ltd.
0.60%, 07/01/09
    6,000       6,000  
1.00%, 10/22/09
    1,000       1,000  
0.51%, 12/22/09
    19,000       19,000  
0.50%, 01/04/10
    1,000       1,000  
0.52%, 01/07/10
    5,000       5,000  
 
 
 
See financial notes 17

Table of Contents

 
 Schwab Investor Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Nordea Bank Finland PLC
0.33%, 07/07/09
    3,000       3,000  
Rabobank Nederland
1.00%, 09/10/09
    11,000       11,000  
1.00%, 09/17/09
    22,000       22,000  
1.11%, 05/03/10
    4,000       4,000  
Royal Bank of Scotland PLC
1.25%, 07/09/09
    4,000       4,000  
0.72%, 09/03/09
    5,000       5,000  
0.82%, 09/08/09
    16,000       16,000  
0.69%, 10/07/09
    6,000       6,000  
Societe Generale
1.17%, 07/13/09
    11,000       11,000  
0.86%, 08/20/09
    1,000       1,000  
State Street Bank & Trust
1.00%, 08/18/09
    6,000       6,000  
Sumitomo Mitsui Banking Corp.
0.35%, 07/17/09
    3,000       3,001  
0.65%, 08/12/09
    3,000       3,000  
0.55%, 08/18/09
    8,000       8,000  
0.44%, 09/09/09
    6,000       6,000  
Sumitomo Trust & Banking Co.
1.12%, 07/15/09
    5,000       5,000  
0.55%, 09/15/09
    3,000       3,000  
Svenska Handelsbanken AB
0.60%, 07/20/09
    12,000       12,001  
0.35%, 08/24/09
    6,000       6,000  
Toronto Dominion Bank
1.00%, 08/14/09
    27,000       27,005  
1.47%, 11/12/09
    2,000       2,000  
1.50%, 12/11/09
    7,000       7,000  
Union Bank, N.A.
0.50%, 08/04/09
    6,000       6,000  
Westpac Banking Corp.
0.50%, 12/14/09
    12,000       12,000  
0.51%, 01/04/10
    6,000       6,000  
                 
              697,007  
 
Commercial Paper & Other Corporate Obligations 33.2%
Alpine Securitization Corp.
0.25%, 07/10/09 (a)(b)(c)
    10,000       9,999  
0.47%, 07/27/09 (a)(b)(c)
    5,000       4,998  
0.40%, 10/08/09 (a)(b)(c)
    4,000       3,996  
Amsterdam Funding Corp.
0.65%, 07/28/09 (a)(b)(c)
    7,000       6,997  
Atlantis One Funding Corp.
0.65%, 10/27/09 (a)(b)(c)
    6,000       5,987  
0.83%, 10/27/09 (a)(b)(c)
    5,000       4,986  
0.75%, 11/03/09 (a)(b)(c)
    27,000       26,930  
0.56%, 12/15/09 (a)(b)(c)
    5,000       4,987  
Bank of America Corp., (FDIC Insured)
0.25%, 07/22/09 (a)(e)
    5,000       4,999  
0.25%, 08/17/09 (a)(e)
    14,000       13,995  
Cancara Asset Securitization, L.L.C.
0.90%, 07/13/09 (a)(b)(c)
    19,000       18,994  
0.90%, 07/21/09 (a)(b)(c)
    1,000       999  
0.65%, 09/10/09 (a)(b)(c)
    4,000       3,995  
Chariot Funding, L.L.C.
0.28%, 07/13/09 (a)(b)(c)
    10,979       10,978  
0.28%, 07/20/09 (a)(b)(c)
    3,869       3,868  
0.29%, 07/23/09 (a)(b)(c)
    2,000       2,000  
0.28%, 07/27/09 (a)(b)(c)
    5,519       5,518  
Citigroup Funding, Inc., (FDIC Insured)
0.25%, 07/10/09 (a)(e)
    2,000       2,000  
0.31%, 07/21/09 (a)(e)
    15,000       14,997  
0.28%, 08/06/09 (a)(e)
    32,000       31,991  
0.29%, 08/11/09 (a)(e)
    27,000       26,991  
CRC Funding, L.L.C.
0.96%, 08/06/09 (a)(b)(c)
    22,000       21,979  
Dakota CP Notes of Citibank Credit Card Issuance Trust
1.00%, 07/10/09 (b)(c)
    21,000       20,995  
0.85%, 07/28/09 (b)(c)
    2,000       1,999  
Danske Corp. (Danish Government Guarantee)
0.43%, 10/30/09 (a)(c)
    13,000       12,981  
0.40%, 11/03/09 (a)(c)
    5,000       4,993  
Falcon Asset Securitization Corp.
0.32%, 07/01/09 (a)(b)(c)
    2,027       2,027  
0.28%, 07/23/09 (a)(b)(c)
    4,000       3,999  
Gemini Securitization Corp., L.L.C.
0.46%, 07/17/09 (a)(b)(c)
    1,000       1,000  
0.39%, 07/30/09 (a)(b)(c)
    20,000       19,994  
0.33%, 09/10/09 (a)(b)(c)
    2,000       1,999  
General Electric Capital Corp., (FDIC Insured)
0.65%, 08/25/09 (a)(e)
    12,000       11,988  
0.58%, 09/11/09 (a)(e)
    12,000       11,986  
0.35%, 09/22/09 (a)(e)
    9,000       8,993  
0.42%, 11/06/09 (a)(e)
    17,000       16,975  
0.40%, 11/09/09 (a)(e)
    11,000       10,984  
JP Morgan Chase Funding Inc.
0.36%, 07/09/09 (a)
    21,000       20,998  
Jupiter Securitization Corp.
0.28%, 07/14/09 (a)(b)(c)
    24,000       23,998  
0.29%, 07/27/09 (a)(b)(c)
    2,000       2,000  
Kitty Hawk Funding Corp.
0.27%, 07/24/09 (a)(b)(c)
    10,000       9,998  
Nationwide Building Society
0.65%, 10/05/09
    5,000       4,991  
0.64%, 10/07/09
    1,000       998  
Nestle Capital Corp.
0.28%, 07/08/09 (c)
    14,000       13,999  
Nokia Corp.
0.22%, 07/02/09 (c)
    9,000       9,000  
Nordea North America, Inc.
0.32%, 07/14/09 (a)
    4,000       4,000  
Old Line Funding, L.L.C.
0.42%, 08/13/09 (a)(b)(c)
    17,000       16,991  
0.35%, 09/03/09 (a)(b)(c)
    13,000       12,992  
0.34%, 09/10/09 (a)(b)(c)
    3,000       2,998  
Park Avenue Receivables
0.28%, 07/07/09 (a)(b)(c)
    4,000       4,000  
0.29%, 07/28/09 (a)(b)(c)
    9,000       8,998  
Ranger Funding Co., L.L.C.
0.45%, 07/20/09 (a)(b)(c)
    22,000       21,995  
0.50%, 08/07/09 (a)(b)(c)
    3,000       2,998  
0.52%, 08/26/09 (a)(b)(c)
    9,000       8,993  
Sheffield Receivables Corp.
0.40%, 07/09/09 (a)(b)(c)
    15,000       14,999  
Societe Generale North America, Inc.
1.01%, 08/10/09 (a)
    7,000       6,992  
Solitaire Funding, L.L.C.
0.47%, 08/03/09 (a)(b)(c)
    3,000       2,999  
0.45%, 08/11/09 (a)(b)(c)
    18,000       17,991  
0.55%, 09/14/09 (a)(b)(c)
    1,000       999  
 
 
 
18 See financial notes

Table of Contents

 
 Schwab Investor Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Straight A Funding, L.L.C.
0.36%, 08/27/09 (a)(b)(c)
    4,000       3,998  
0.37%, 09/01/09 (a)(b)(c)
    7,000       6,996  
0.37%, 09/16/09 (a)(b)(c)
    10,000       9,992  
Swedbank AB (Swedish Government Guarantee)
0.87%, 06/02/10 (a)(c)
    8,000       7,936  
Thames Asset Global Securitization No. 1, Inc.
0.36%, 08/17/09 (a)(b)(c)
    1,000       1,000  
Thunder Bay Funding, L.L.C.
0.40%, 07/06/09 (a)(b)(c)
    5,000       5,000  
0.48%, 07/14/09 (a)(b)(c)
    5,000       4,999  
0.47%, 07/15/09 (a)(b)(c)
    1,000       1,000  
0.34%, 09/11/09 (a)(b)(c)
    9,000       8,994  
Ticonderoga Funding, L.L.C.
0.30%, 07/16/09 (a)(b)(c)
    7,000       6,999  
0.43%, 09/16/09 (a)(b)(c)
    1,000       999  
Variable Funding Capital Corp.
0.35%, 07/09/09 (a)(b)(c)
    2,000       2,000  
0.45%, 07/14/09 (a)(b)(c)
    16,000       15,997  
0.28%, 08/05/09 (a)(b)(c)
    9,000       8,998  
0.98%, 10/20/09 (a)(b)(c)
    1,000       997  
Westpac Banking Corp.
0.85%, 10/26/09 (c)
    2,000       1,994  
0.46%, 12/04/09 (c)
    7,000       6,986  
Westpac Securities NZ Ltd.
0.38%, 09/28/09 (a)(c)
    1,000       999  
Whistlejacket Capital, L.L.C.
n/a, n/a, (c)(d)(f)
    141       141  
Windmill Funding Corp.
0.65%, 07/02/09 (a)(b)(c)
    15,000       15,000  
Yorktown Capital, L.L.C.
0.48%, 08/10/09 (a)(b)(c)
    1,000       999  
0.55%, 08/18/09 (a)(b)(c)
    17,000       16,988  
0.40%, 09/21/09 (a)(b)(c)
    4,000       3,996  
0.53%, 10/05/09 (a)(b)(c)
    10,000       9,986  
                 
              720,018  
 
Fixed-Rate Coupon Note 0.8%
Federal Home Loan Bank
0.49%, 04/13/10
    17,000       17,053  
 
Fixed-Rate Discount Notes 19.4%
Fannie Mae
0.50%, 07/01/09
    11,000       11,000  
0.50%, 07/02/09
    5,000       5,000  
0.18%, 08/24/09
    30,000       29,992  
0.24%, 09/01/09
    10,000       9,996  
0.25%, 09/22/09
    21,000       20,988  
0.76%, 12/01/09
    6,000       5,981  
Federal Home Loan Bank
0.18%, 07/10/09
    22,000       21,999  
0.60%, 08/14/09
    20,000       19,985  
0.20%, 08/19/09
    10,000       9,997  
0.20%, 08/21/09
    2,000       2,000  
0.23%, 09/22/09
    15,000       14,992  
1.22%, 12/04/09
    9,000       8,953  
0.45%, 01/06/10
    6,000       5,986  
0.51%, 01/12/10
    17,000       16,953  
0.50%, 02/01/10
    15,000       14,955  
Freddie Mac
0.17%, 07/20/09
    16,000       15,999  
0.17%, 08/03/09
    7,000       6,999  
0.18%, 08/10/09
    31,000       30,994  
0.19%, 08/17/09
    14,000       13,997  
0.60%, 09/02/09
    17,000       16,982  
0.61%, 09/15/09
    90,000       89,884  
0.60%, 09/21/09
    16,000       15,978  
0.60%, 09/23/09
    22,000       21,969  
0.70%, 09/23/09
    9,000       8,985  
                 
              420,564  
                 
Total Fixed-Rate Obligations
(Cost $1,854,642) 		    1,854,642  
         
                 
                 
 
 Variable-Rate Obligations  10.0% of net assets
California Pollution Control Financing Authority
0.65%, 07/01/09 (a)
    1,000       1,000  
Deutsche Bank AG
1.05%, 07/30/09
    5,000       5,001  
Eagle County Colorado Taxable Housing Facilities
1.60%, 07/02/09 (a)
    1,500       1,500  
Fannie Mae
1.03%, 07/13/09
    85,000       84,948  
Federal Home Loan Bank
0.01%, 09/22/09
    10,000       10,000  
Freddie Mac
0.01%, 09/18/09
    15,000       15,000  
0.58%, 09/24/09
    25,000       25,017  
Goldman Sachs Group Inc., (FDIC Insured)
1.32%, 09/16/09 (a)(c)(d)(e)
    8,000       8,000  
Hewlett Packard Co.
1.05%, 09/03/09
    5,000       5,006  
Procter & Gamble International
1.00%, 08/07/09
    9,000       9,000  
Rabobank Nederland
1.26%, 07/14/09
    7,000       7,000  
Royal Bank of Canada
1.03%, 08/19/09
    25,000       25,000  
Societe Generale
0.50%, 09/11/09
    15,000       15,000  
Westpac Banking Corp.
1.09%, 08/20/09
    4,000       4,000  
                 
Total Variable-Rate Obligations
(Cost $215,472) 		    215,472  
         
                 
                 
 
 
 
See financial notes 19

Table of Contents

 
 Schwab Investor Money Fund
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Other Investment  5.0% of net assets
 
Repurchase Agreements 5.0%
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $111,101.
0.11%, issued 06/30/09,
due 07/01/09
    108,921       108,920  
                 
Total Other Investment
(Cost $108,920) 		    108,920  
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $2,179,034.
 
(a) Credit-enhanced security.
(b) Asset-backed security.
(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $534,140 or 24.6% of net assets.
(d) Illiquid security. At the period end, the value of these amounted to $8,141 or 0.4% of net assets.
(e) This debt is guaranteed under the FDIC Temporary Liquidity Guarantee Program, and the FDIC has stated that it is backed by the full faith and credit of the United States.
(f) Whistlejacket notes are in receivership, and the fund has elected and sold all of its Whistlejacket notes at auction (4/29/2009). The remaining investment represents an interest in a small residual fund held by the receiver that is being held to cover any remaining expenses and liabilities associated with receivership.
 
 
 
20 See financial notes

Table of Contents

 
 Schwab Investor Money Fund
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $2,179,034  
Receivables:
           
Fund shares sold
        1,984  
Interest
        1,313  
Prepaid expenses
  +     201  
     
     
Total assets
        2,182,532  
             
 
Liabilities
Payables:
           
Investments bought
        5,993  
Investment adviser and administrator fees
        32  
Transfer agent and shareholder services fees
        44  
Fund shares redeemed
        7,605  
Distributions to shareholders
        18  
Trustees’ fees
        2  
Accrued expenses
  +     81  
     
     
Total liabilities
        13,775  
             
 
Net Assets
Total assets
        2,182,532  
Total liabilities
  −     13,775  
     
     
Net assets
        $2,168,757  
Net Assets by Source
           
Capital received from investors
        2,170,311  
Net realized capital losses
        (1,554 )
 
Net Asset Value (NAV)
 
                     
        Shares
 		         
Net Assets   ¸   Outstanding   =   NAV  
 
$2,168,757
      2,170,226         $1.00  
 
 
 
 
See financial notes 21

Table of Contents

 
 Schwab Investor Money Fund
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $10,594  
             
 
Net Realized Gains and Losses
Net realized losses on investments
        (1,554 )
             
 
Expenses
Investment adviser and administrator fees
        3,858  
Transfer agent and shareholder service fees
        2,898  
Temporary Guarantee Program expense
        479  
Shareholder reports
        100  
Portfolio accounting fees
        46  
Registration fees
        43  
Custodian fees
        43  
Professional fees
        20  
Trustees’ fees
        20  
Other expenses
  +     11  
     
     
Total expenses
        7,518  
Expense reduction by adviser and Schwab
  −     459  
     
     
Net expenses
        7,059  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        10,594  
Net expenses
  −     7,059  
     
     
Net investment income
        3,535  
Net realized losses
  +     (1,554 )
     
     
Increase in net assets from operations
        $1,981  
 
 
 
 
22 See financial notes

Table of Contents

 
 Schwab Investor Money Fund
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $3,535   $56,419
Net realized gains (losses)
  +   (1,554)   257
     
     
Increase in net assets from operations
      1,981   56,676
             
 
Distributions to Shareholders
Distributions from net investment income
      3,650   56,419
             
 
Transactions in Fund Shares*
Shares sold
      711,851   2,781,863
Shares reinvested
      3,444   53,113
Shares redeemed
  +   (904,966)   (2,563,979)
     
     
Net transactions in fund shares
      (189,671)   270,997
             
 
Net Assets
Beginning of period
      2,360,097   2,088,843
Total increase (decrease)
  +   (191,340)   271,254
     
     
End of period
      $2,168,757   $2,360,097
             
Net investment income not yet distributed
      $−   $115
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
See financial notes 23

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited
 
 
1. Business Structure of the Funds:
 
Each of the funds discussed in this report is a series of The Charles Schwab Family of Funds (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
 
     
 
The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Money Fund
  Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund
     
 
Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund each offers one share class. Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
 
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund also may keep certain assets in segregated accounts, as required by securities laws.
 
2. Significant Accounting Policies:
       (All dollar amounts are x 1,000)
 
The following is a summary of the significant accounting policies the funds used in the preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America.
 
(a) Security Valuation:
 
Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. In the event that security valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.
 
(b) Portfolio Investments:
 
Repurchase Agreements: The funds may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created.
 
The funds’ repurchase agreements will be fully collateralized by U.S. government securities or U.S. government agency securities. All collateral is held by the funds’ custodian (or, in the case of tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
 
Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, a fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.
 
(c) Security Transactions:
 
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
 
(d) Investment Income:
 
Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security
 
 
 
24 

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.
 
(e) Expenses:
 
Expenses that are specific to a fund 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.
 
(f) Distributions to Shareholders:
 
The funds declare distributions from net investment income every day they are open for business. These distributions, which are substantially equal to a fund’s net investment income for that day, are paid out to shareholders once a month. The funds may make distributions from any net realized capital gains once a year.
 
(g) Custody Credit:
 
Each fund has an arrangement with its custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
 
(h) Accounting Estimates:
 
The accounting policies described in this report conform with accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates.
 
(i) Federal Income Taxes:
 
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, they are not required to pay federal income tax.
 
(j) Indemnification:
 
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
 
(k) Accounting Pronouncements:
 
The funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.
 
In addition, effective June 30, 2009, the funds adopted FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased.
 
 
 
 25

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
Various inputs are used in determining the value of the funds’ investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:
 
  •  Level 1 — quoted prices in active markets for identical securities. — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of June 30, 2009:
 
Retirement Advantage Money Fund:
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Fixed-Rate Obligations
    —       $860,923       —       $860,923  
                                 
Variable-Rate Obligations
    —       92,624       —       92,624  
Other Investments
    —       56,593       —       56,593  
                                 
Total
    $—       $1,010,140       $—       $1,010,140  
                                 
 
 
 
26 

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
Schwab Investor Money Fund:
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Fixed-Rate Obligations
    —       $1,854,642       —       $1,854,642  
                                 
Variable-Rate Obligations
    —       215,472       —       215,472  
Other Investments
    —       108,920       —       108,920  
                                 
Total
    $—       $2,179,034       $—       $2,179,034  
                                 
 
*  The funds had no Other Financial Instruments.
 
3. Risk factors:
 
Investing in a fund may involve certain risks, as discussed in the fund’s prospectus, including, but not limited to, those described below:
 
Interest rates will rise and fall over time. As with any investment whose yield reflects current interest rates, a fund’s yield will change over time. During periods when interest rates are low, a fund’s yield (and total return) also will be low. An investment in a fund is not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the funds. A fund could lose money or underperform as a result of a default on the part of a portfolio investment. The additional risks of any foreign investments are due to reasons ranging from lack of issuer information to the risk of political uncertainties. Many of the U.S. government securities that the funds invest in are not backed by the full faith and credit of the United States. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. The manager’s maturity decisions also will affect a fund’s yield, and in unusual circumstances potentially affect its share price. To the extent that the manager anticipates interest rate trends imprecisely, a fund’s yield at times could lag those of other money market funds. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
 
Please refer to a fund’s prospectus for a complete description of the principal risks of investing in the fund.
 
4. U.S. Treasury Temporary Guarantee Program:
       (All dollar amounts are x 1,000)
 
On September 19, 2008, The U.S. Treasury Department announced the establishment of a Temporary Guarantee Program for the U.S. Money Market Mutual Funds (the “Program”). The initial term of the Program was set to expire on December 18, 2008. On November 24, 2008, the Treasury announced an extension of the Program for the period December 19, 2008 through April 30, 2009; and on March 31, 2009, the Treasury announced a further extension of the Program for the period from May 1, 2009 through September 18, 2009 (together, the ”Program Extensions”). According to the Treasury, the Program will not be extended beyond September 18, 2009. The Schwab Retirement Advantage Money Fund and the Schwab Investor Money Fund, with the approval of the Schwab Funds Board of Trustees, participated in the Program during the initial and extended Program periods covered by this report. The Retirement Advantage Money fund and the Investor fund paid $89 and $239, respectively, to participate in the initial term of the Program, which covered the period September 19, 2008 through December 18, 2008. In addition, the Retirement Advantage Money fund and the Investor Money fund paid $133 and $359, respectively, to participate in the first extension of the Program, which covers the period December 19, 2008 through April 30, 2009. The Retirement Advantage Money fund and the Investor Money fund paid $133 and $359, respectively, to participate in the second Program Extension, which covers the period May 1, 2009 through September 18, 2009. Subject to provisions contained in the guarantee agreement signed by the fund, the Program guarantees that the shareholders in the fund as of the close of business on September 19, 2008, will receive $1.00 for each fund share held. Shares not guaranteed under the program will be redeemed at net asset value per share. The guarantee applies only if a participating money market fund’s net asset value per share falls below
 
 
 
 27

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited (continued)
 
4. U.S. Treasury Temporary Guarantee Program (continued):
       (All dollar amounts are x 1,000)
 
$0.995 and the fund subsequently decides to liquidate. Any increase in shares in the account after the close of business on September 19, 2008, will not be guaranteed. If the amount of shares held fluctuates over the period, shareholders will be covered for either the number of shares held as of the close of business on September 19, 2008, or the current amount, whichever is less. The cost of participating in the Program and the Program Extensions is borne by each participating fund and will not be subject to any expense limitation or reimbursement agreement.
 
5. Affiliates and Affiliated Transactions:
       (All dollar amounts are x 1,000)
 
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the funds’ investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
 
For its advisory and administrative services to the funds, the investment adviser is entitled to receive an annual fee payable monthly based on the funds’ average daily net assets described as follows:
 
         
Average daily net assets
   
 
First $1 billion
    0.35%  
$1 billion to $10 billion
    0.32%  
$10 billion to $20 billion
    0.30%  
$20 billion to $40 billion
    0.27%  
Over $40 billion
    0.25%  
 
Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and during the reporting period was the trust’s transfer agent and shareholder services agent. Effective July 1, 2009, the trust has appointed Boston Financial Data Services Inc. (“BFDS”) as transfer agent of the funds. Prior to July 1, 2009, BFDS served as the funds’ sub-transfer agent.
 
For the transfer agent and shareholder services provided during the reporting period, Schwab received an annual fee payable monthly based on the funds’ average daily net assets as follows:
 
                 
   
Transfer Agent Fees
 
Shareholder Service Fees
Retirement Advantage Money Fund
    0.05%       0.17%  
Investor Money Fund
    0.05%       0.20%  
                 
 
Effective July 1, 2009, the trust adopted a Shareholder Servicing Plan (the “Plan”) on behalf of certain funds of the trust. Pursuant to the Plan, the fund pays Schwab to provide certain account maintenance, customer liaison and shareholder services to fund shareholders. The fund also pays for certain administration services it provides to fund shareholders invested in the Sweep Shares of the fund. Under the Plan, Schwab will be entitled to receive an annual fee payable monthly based on the funds’ average daily net assets described as follows:
 
         
 
Shareholder Service Fees
 
Retirement Advantage Money Fund
    0.22%  
Investor Money Fund
    0.25%  
 
Although these agreements specify certain fees for these services, CSIM and Schwab have made an additional agreement with the Retirement Advantage Money Fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses to 0.49% through April 29, 2011. This additional agreement ensures that any increase in the fund’s other expenses as a result of the appointment of BFDS as transfer agent and Schwab as a shareholder service provider will be offset by the expense limitation.
 
In addition, effective January 1, 2009 through December 31, 2009, CSIM and Schwab agreed to voluntarily waive an additional 0.035% of the Retirement Advantage Money Fund and Investor Money Fund expenses.
 
In addition to the contractual expense limitation noted above, Schwab and the investment adviser also may waive and/or reimburse expenses to the extent necessary to maintain each fund’s net yield at a certain level as determined by Schwab and the
 
 
 
28 

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited (continued)
 
5. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)
 
investment adviser. Schwab and the investment adviser may recapture from each fund any of these expenses or fees they have waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. These reimbursement payments by the fund to Schwab and/or the investment adviser are considered “non-routine expenses” and are not subject to any net operating expense limitations in effect at the time of such payment. This recapture could negatively affect the fund’s future yield. As of June 30, 2009, the balance of the recoupable expenses is as follows:
 
                 
Expiration
 
Retirement Advantage Money Fund
 
Investor Money Fund
 
12/31/2012
    $—       $53  
 
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 June 30, 2009, the fund had no direct security transactions with other Schwab Funds.
 
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
 
6. Board of Trustees:
 
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
 
7. Borrowing from Banks:
 
The funds may borrow money from banks and custodians. The funds covered in this report have custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds had no borrowing from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.
 
8. Federal Income Taxes:
 
Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2008, the funds had no capital loss carry forwards.
 
For tax purposes, realized capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2008, the funds had no deferred realized net capital losses, and there were no capital losses being utilized to offset capital gains.
 
As of December 31, 2008, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for State purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the fund’s financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended December 31, 2008, the funds did not incur any interest or penalties.
 
 
 
 29

Table of Contents

 
 Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund
 

 
Financial Notes, unaudited (continued)
 
9. Subsequent Events:
 
In accordance with the provision set forth in FAS 165 Subsequent Events, management has evaluated the possibility of subsequent events existing in the funds’ financial statements through June 30, 2009. Management has determined that there are no material events that would require disclosure in the funds’ financial statements through August 14, 2009.
 
 
 
30 

Table of Contents

 
Investment Advisory Agreement Approval
 
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the advisory agreement.
 
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between The Charles Schwab Family of Funds (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to existing funds in the Trust, including the Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund, and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the funds that the Board reviews during the course of each year, including information that relates to fund operations and fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of fund management and participate in question and answer sessions with representatives of CSIM.
 
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement at meetings held on April 27, 2009 and May 15, 2009, and approved the renewal of the Agreement for an additional one year term at the meeting held on May 15, 2009. The Board’s approval of the Agreement was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
 
1.  the nature, extent and quality of the services provided to the funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the funds;
 
2.  each fund’s investment performance and how it compared to that of certain other comparable mutual funds;
 
3.  each fund’s expenses and how those expenses compared to those of certain other comparable mutual funds;
 
4.  the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and
 
5.  the extent to which economies of scale would be realized as the funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of fund investors.
 
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The information considered by the Trustees included specific information concerning changes in the nature, extent and quality of services provided by CSIM since the Trustees had last considered approval of the Agreement. The Trustees also considered the fact that Schwab’s extensive branch network, Internet access, investment and research tools, telephone services, and array of account features benefit the funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds supported renewal of the Agreement.
 
Fund Performance. The Board considered fund performance in determining whether to renew the Agreement. Specifically, the Trustees considered each fund’s performance relative to a peer group of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, when applicable, and market trends. As part of this review, the Trustees considered the composition of the peer group, selection criteria and the reputation of the third party who prepared the peer group analysis. In evaluating the performance of each fund, the Trustees considered both risk and shareholder risk expectations for such fund and the appropriateness of the benchmark used to compare the performance of each fund. The Trustees further considered the level of fund performance in the context of its review of fund expenses and adviser profitability discussed below. Following such evaluation the
 
 
 
 31

Table of Contents

Board concluded, within the context of its full deliberations, that the performance of the funds supported renewal of the Agreement.
 
Fund Expenses. With respect to the funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each fund’s net operating expense ratio, in each case, in comparison to those of other comparable mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total fund expenses from exceeding a specified cap. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as wrap accounts and offshore funds, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the funds are reasonable and supported renewal of the Agreement.
 
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the funds, such as whether, by virtue of its management of the funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each fund by CSIM and its affiliates. The Board also considered information relating to changes to CSIM’s business operations and how these changes affected CSIM’s profitability under the Agreement. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement.
 
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of fund expenses, the Trustees considered that CSIM and Schwab have previously committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered CSIM’s agreement to contractual investment advisory fee schedules that include lower fees at higher graduated asset levels. The Board also considered certain commitments by CSIM and Schwab that are designed to pass along potential economies of scale to fund shareholders. Specifically, the Board considered CSIM and Schwab’s previously negotiated commitments, which may be changed only with Board approval, relating to: (i) reductions of contractual advisory fees or addition of breakpoints for certain funds within the fund complex, (ii) implementation, by means of expense limitation agreement, of additional reductions in net overall expenses for certain funds, and (iii) future net total operating expense reductions for taxable money funds as a group and non-taxable money funds as a group when aggregate assets of such group of funds exceed certain levels. In particular, the Board considered the actual expense reductions that resulted from CSIM and Schwab’s commitments set forth above. Based on this evaluation, and in consideration of the previously negotiated commitments made by CSIM and Schwab as discussed above, the Board concluded, within the context of its full deliberations, that the funds obtain reasonable benefit from economies of scale.
 
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously approved the continuation of the Agreement and concluded that the compensation under the Agreement is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
 
 
 
32 

Table of Contents

 
Trustees and Officers
 
The tables below give information about the trustees and officers for The Charles Schwab Family of Funds which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of June 30, 2009 the Fund Complex included 82 funds.
 
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
 
                 
Independent Trustees
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
                 
Mariann Byerwalter
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman of JDN Corporate Advisory LLC.     82     Board 1–Director, Redwood Trust, Inc.
 
John F. Cogan
1947
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University     68     Board 1–Director, Gilead Sciences, Inc.
Board 2–Director, Monaco Coach Corporation
Board 3–Director, Venture Lending and Leasing, Inc.
 
William A. Hasler
1941
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).     82     Board 1–Director, Mission West Properties
Board 2–Director, TOUSA
Board 3–Director, Harris-Stratex Networks
Board 4–Director, Genitope Corp.
Board 5– Director, Ditech Networks
Board 6–Director, Rubicon Limited
 
Gerald B. Smith
1950
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).     68     Board 1–Board of Cooper Industries
Board 2–Chairman of the Audit Committee of Oneok Partners LP
 
Donald R. Stephens
1938
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Managing Partner, D. R. Stephens & Company (investments).     68     None
 
Joseph H. Wender
1944
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007;     68     Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
 
 
 
 
 33

Table of Contents

                 
Independent Trustees continued
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
Michael W. Wilsey
1943
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).     68     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. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989.) 		  Founded Charles Schwab & Co., Inc. in 1971 and became Chairman in 1978. Since 1986, Chairman and Director, The Charles Schwab Corporation. Since 1989, Director, Charles Schwab Investment Management, Inc., and appointed as Chairman in 1991. Since 1996, Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. Since 1999, Director and Chief Executive Officer, Schwab Holdings, Inc. Since 2003, Chairman, Charles Schwab Bank, N. A.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, and the Charles Schwab & Co., Inc.     68     None
 
Walter W. Bettinger II2
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.     68     None
 
 
 
 
 
34 

Table of Contents

     
Officers of the Trust
 
Name, Year of Birth, and Position(s)
 		   
with the trust; (Terms of office, and
 		   
length of Time Served3)   Principal Occupations During the Past Five Years
 
     
Randall W. Merk
1954
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds since 2007.) 		  Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC.
 
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
 
Jeffrey Mortimer
1963
Senior Vice President and Chief Investment Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
 
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of The Charles Schwab Family of Funds since 1998.) 		  Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
 
Catherine MacGregor
1964
Vice President
(Officer of The Charles Schwab Family of Funds since 2005.) 		  Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., and Laudus Trust and Laudus Institutional Trust. Since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust.
 
Michael Haydel
1972
Vice President
(Officer of The Charles Schwab Family of Funds since 2006.) 		  Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust.
 
 
 
1  Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
 
2  Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
 
3  The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.
 
 
 
 35

Table of Contents

 
Glossary
 
agency discount notes Notes issued by federal agencies—known as Government Sponsored Enterprises, or GSEs—at a discount to their value at maturity. An agency discount note is a short-term investment alternative offering a high degree of credit quality.
 
asset-backed commercial paper A short-term investment that is typically issued by a bank or other financial institution. The notes represent an interest in financial assets such as trade receivables, credit card receivables, auto receivables, etc. and are generally used for the short-term financing needs of companies.
 
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.
 
commercial paper Promissory notes issued by banks, corporations and other entities to finance short-term credit needs. These securities generally are structured on a discounted basis but sometimes may be interest-bearing notes. Commercial paper, which may be unsecured, is subject to credit risk.
 
corporate note An unsecured debt security issued by a corporation that is subject to the credit risk of the issuer.
 
credit-enhanced securities Securities that are backed by the credit of an entity other than the issuer (such as a financial institution). Credit enhancements, which can equal up to 100% of the security’s value, are designed to help lower the risk of default on a security and may also make the security more liquid.
 
credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly regulate the credit quality of the securities a money market fund can buy.
 
credit ratings Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Standard & Poor’s, Fitch, Inc. and Moody’s Investor Service, to rate their creditworthiness and/or the creditworthiness of their debt issues. For example, an issuer may obtain a long-term rating within the investment grade rating category, which is, from high to low, AAA, AA, A and BBB for Standard & Poor’s and Fitch, and Aaa, Aa, A and Baa for Moody’s.
 
credit risk The risk that a debt issuer may be unable to pay interest or repay principal to its debt holders.
 
dollar-weighted average maturity (DWAM) See weighted average maturity.
 
effective yield A measurement of a fund’s yield that assumes that all interest income is reinvested in additional shares of the fund.
 
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 for the year.
 
face value The value of a bond, note, mortgage or other security as given on the certificate or instrument. Face value is also referred to as par value or nominal value.
 
illiquid securities Securities are generally considered illiquid if they cannot be disposed of promptly (typically within seven days) and in the ordinary course of business at approximately the amount at which a fund has valued the instruments.
 
interest Payments to holders of debt securities as compensation for loaning a security’s principal to the issuer.
 
liquidity-enhanced security The security’s structure includes a liquidity arrangement that requires an entity other than the issuer (such as a large financial institution) to provide funds to pay a tender under most circumstances. Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities for repayment within a specified time period (usually one day or one week) at any time prior to their final maturity.
 
maturity The date a debt security is scheduled to be “retired” and its principal amount repaid to the bond holder. The Maturity of an investment will generally reflect the security’s final maturity date unless the security’s structure includes a maturity-shortening provision such as an interest rate reset, demand feature or put feature which reflects the security’s Effective Maturity Date. For those securities with a maturity-shortening provision, including variable-rate demand securities, the Maturity is determined by using the Effective Maturity Date.
 
municipal securities Debt securities issued by a state, its counties, municipalities, authorities and other subdivisions, or the territories and possessions of the United States and the District of Columbia, including their subdivisions, agencies and instrumentalities and corporations. These securities may be issued to obtain money for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works.
 
net asset value per share (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. Money funds seek to maintain a steady NAV of $1.00.
 
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
 
restricted securities Securities that are subject to contractual restrictions on resale. These securities are often purchased in private placement transactions.
 
section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.
 
section 4(2)/144A securities Securities exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may be sold only to qualified institutional buyers under Securities Act Rule 144A.
 
Structured Investment Vehicle (SIV) SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only

 

 
 
 
36 

Table of Contents

purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.
 
taxable-equivalent yield The yield an investor would need to get from a taxable investment in order to match the yield paid by a given tax-exempt investment, once the effect of all applicable taxes is taken into account. For example, if your tax rate were 25%, a tax-exempt investment paying 4.5% would have a taxable-equivalent yield for you of 6.0% (4.5% ¸ [1 – 0.25%] = 6.0%).
 
Temporary Liquidity Guarantee Program (TLGP) The Federal Deposit Insurance Corporation (FDIC) created the Temporary Liquidity Guarantee Program (TLGP) to strengthen investor confidence and encourage liquidity in the banking system. The TLGP-backed obligations, such as commercial paper or commercial notes, are issued by private issuers and are guaranteed as to principal and interest by the FDIC. These securities are considered U.S. government securities under the rules that govern money market funds and the FDIC has stated that they are backed by the full faith and credit of the United States.
 
Tier 1, Tier 2 Tier 1 is the highest category of credit quality, Tier 2 the second highest. A security’s tier can be established either by an independent rating organization or by a determination of the investment adviser. Money market fund shares and U.S. government securities are automatically considered Tier 1 securities. The Schwab Money Funds only purchase securities which are considered to be Tier 1.  
 
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 maturity For money market mutual funds as per rule 2a-7, the sooner of the maturity (see definition of maturity) of all the debt securities in its portfolio or the date the interest rate on those securities is reset or those securities that can be redeemed through demand, calculated as a weighted average. As a rule, the longer the fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.
 
yield The income paid out by an investment, expressed as a percentage of the investments market value.
 
 
 
 
 37

Table of Contents

 
Notes

Table of Contents

 
Notes

Table of Contents

 
Notes

Table of Contents

 
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.
 
An investor should consider a funds investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1.800.435.4000 for a prospectus and brochure. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
 
Proxy Voting Policies, Procedures and Results
 
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com/marketmasters, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.
 
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov.
 
The Schwab Funds Family®
 
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedge Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab Institutional Select® S&P 500 Fund
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
 
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
 
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab Long-Term Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
 
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
 
 
  * SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.
  1 Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Table of Contents

(CHARLES SCHWAB LOGO)
 
 
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
 
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
 
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2008 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR13605-13

Table of Contents

 
Schwab Advisor Cash Reserves ®
 
Semiannual Report
June 30, 2009
 
 
 
(CHARLES SCHWAB LOGO)
 

 

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

Table of Contents

 
From the President
 

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

 
Dear Shareholder,
 
In the past six months, investors have had to endure the continuing effects of a recessionary economy. Volatile equity prices and low yields on government-backed securities have been among the numerous market challenges. In addition, corporate bankruptcies, regulatory changes, and securitized-asset troubles have reshaped fixed income and equity markets causing us to reassess and reexamine where these markets stood before the crisis and where they might take us in the future.
 
Despite this economic backdrop, Schwab’s money funds provided shareholders with safety and liquidity and maintained a stable $1 Net Asset Value during the period. The funds also maintained a positive net yield. However, a low interest rate environment both for taxable and tax-free investments, as well as continued demand for government-backed securities has translated into relatively low yields. For more detail on yields for each fund, please see the fund managers’ discussion and analysis found in the following pages of this report.
 
Information specific to Schwab’s money funds, such as a question and answer document, recent holdings for select money funds, and information on Schwab’s participation in the Treasury’s Temporary Guarantee Program for Money Market Funds can be found on schwab.com under the Money Market Funds page and on schwabinstitutional.com
 
If you have any questions about Schwab’s money funds or other Schwab Funds, we are always available at 1-800-435-4000, while additional resources may be found on schwab.com
 
Thank you for investing with us.
 
Sincerely,
 
-s-Randall W. Merk
 
 
 
Schwab Advisor Cash Reserves 1

Table of Contents

 
The Investment Environment
 
 
Investment conditions in the U.S. financial marketplace remained difficult to gauge as a climate of economic recession persisted, but showed signs of improving during the latter half of the reporting period. Broad-market equity indexes, such as the S&P 500 Index® and Russell 1000 Index® displayed meaningful gains since their March lows. The Chicago Board Options Exchange Volatility Index (VIX) – a measure of U.S. stock market price fluctuations – declined from March through the end of the period, settling around 30 after touching the high 50s in January. On the fixed income side, demand for government-backed debt remained strong relative to corporate and other non-government debt. Treasury yields, though still relatively low, inched higher toward the end of the period. From a policy perspective, economic stability and stimulus measures enacted in the U.S. and around the world acted to slow the pace of economic degradation and have encouraged investors to reengage markets in some cases.
 
Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence reflected the recessionary environment, but some indicators improved during the period. GDP – the output of goods and services produced by labor and property located in the United States – decreased at an annual rate of 5.7% in the first quarter of 2009 compared with a decline of 6.3% in the fourth quarter of 2008, according to the Bureau of Economic Analysis. The unemployment rate continued to rise, increasing to 9.4% in May, driven by job losses in the manufacturing sector. However, the Consumer Confidence Index improved in both April and May. As of May 26, 2009 the Index stood at 54.9, compared to 26.9 in March.
 
In this environment, yields on most taxable and municipal money funds were extremely low during the reporting period when compared to historical averages. Money funds that invested exclusively in U.S. Treasury securities or other government-backed assets had the lowest yields. Strong demand for so-called “safe assets”, such as U.S. Treasuries and highly rated short-term commercial paper, in conjunction with a 0% to 0.25% target on the Federal Funds Rate acted to dampen yield on money fund eligible assets. At the close of the period, 3-month Treasuries yielded 0.16% and 2-year Treasuries yielded 1.12%.
 
Despite the depression in yields, the Fed signaled that lending and liquidity conditions were beginning to improve by making modifications to emergency lending programs. In late June, the Fed announced that the Schedule 1 Term Security Lending Facility – a program that lent Treasury securities – would be suspended on July 1, 2009. In addition, reductions were made in the amount of credit auctioned under the Term Auction Facility, which was designed to provide cash to commercial lenders, and the Term Security Lending Facility, which makes funds available to primary bond dealers.
 
Earlier in the period, the Fed extended the Money Market Funds Guarantee Program until September 18, 2009. However, no fund has had to draw on the insurance provided by the program. In a separate move, the U.S. Securities and Exchange Commission (SEC) proposed new rules for money market funds aimed at preventing a repeat of the scenario that caused the collapse of the Reserve Primary Fund. The proposal modifies current restrictions on money funds and requires that funds increase liquidity and lower the ceiling on Weighted Average Maturity (WAM), among other changes. As of the reporting date, the SEC was seeking public comment on the proposal.
 

 
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.

 
 
 
2 Schwab Advisor Cash Reserves

Table of Contents

 
Fund Management
 
     
     
(PHOTO)   Linda Klingman, a managing director and portfolio manager of the investment adviser, has overall responsibility for the management of the fund. She joined the firm in 1990 and has managed money market funds since 1988.
     
(PHOTO)   Mike Neitzke, a managing director and portfolio manager of the investment adviser, has day-to-day responsibility for the management of the fund. He joined the firm in March 2001 and has worked in the financial industry as a portfolio manager since 1986.
     
(PHOTO)   Michael Lin, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of the fund. He joined the firm in 2000 and was named to his current position in 2004.
 
 
 
Schwab Advisor Cash Reserves 3

Table of Contents

 
 
Schwab Advisor Cash Reserves®
 
 
The Schwab Advisor Cash Reserves provided safety and liquidity to shareholders throughout the reporting period, while emphasizing credit quality over yield. The fund’s low yield is a product of both a low interest rate environment and the fund managers’ conservative investment strategy. The Federal Funds Rate, which stood at a target range of 0% to 0.25% during the period, in conjunction with high market demand acted to suppress yields on government agency and other securities that the fund invests in to provide safety and liquidity. In addition, yields on the majority of securities in which the fund invests are pegged to the London Interbank Offered Rate (LIBOR)—a key benchmark for short term interest rates—which declined during the period.
 
The fund’s Weighted Average Maturity (WAM)—an indication of the portfolio’s sensitivity to interest rate changes—ranged between 48 and 63 days (from 12/31/08-6/30/09). Due to the low interest rate environment, the WAM was extended toward the long end of this range in the last several months of the period in an effort to bolster yield. In addition, Charles Schwab & Co. and the fund’s investment adviser voluntarily waived and/or reimbursed certain fees or expenses to maintain a positive net yield*. For more information about the fund’s yield, please see the charts and relevant footnotes on the next page.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity1
 
     
    % of Investments
1-15 Days
  25.4%
16-30 Days
  6.8%
31-60 Days
  30.3%
61-90 Days
  22.0%
91-120 Days
  5.2%
More than 120 Days
  10.3%
 
 
 Statistics
 
     
Weighted Average Maturity2
  58 days
Credit Quality of Holdings3
% of portfolio
  99.9% Tier 1
 
 Portfolio Composition by Security Type4
 
         
        % of Investments
U.S. Treasury
      1.1%
Government Agency
      29.9%
Repurchase Agreements
      2.7%
Commercial Paper (CP)
       
Asset Backed CP
      13.4%
Bank/Financial CP
      5.1%
Corporate CP
      0.9%
TLGP CP5
      5.1%
Certificates of Deposit
      35.1%
Bank Notes (BN)
       
TLGP BN5
      1.4%
Other BN
      2.1%
Corporate Notes (CN)
       
TLGP CN5
      0.5%
Other CN
      1.4%
Time Deposits
      1.3%
Total
      100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
*Schwab and the investment adviser may recapture expenses or fees they waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 5 of the Financial Notes Section.
 
Portfolio holdings may have changed since the report date.
 
1  As shown in the Portfolio Holdings section of the shareholder report.
 
2  Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
3  Based on ratings from Moody’s Investors Service, Standard & Poor’s Corp. and/or Fitch Ratings. The fund may use different ratings provided by other ratings agencies for purposes of determining compliance with the fund’s investment policies.
 
4  Portfolio Composition is calculated using the Par Value of Investments.
 
5  This is debt of banks, thrifts and/or certain holding companies guaranteed under the FDIC Temporary Liquidity Guarantee Program (TLGP), and the FDIC has stated that the debt is backed by the full faith and credit of the United States Government.
 
 
 
4 Schwab Advisor Cash Reserves®

Table of Contents

 
Performance and Fund Facts as of 6/30/09
 
The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.
 
 
 Weighted Average Maturity Trend for previous 12 months
 
Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
 
(LINE GRAPH)
 
 7-Day Average Yield Trend for previous 12 months
 
(LINE GRAPH)
 
 
 
 Seven-Day Yields
 
The seven-day yield is the income generated by the fund’s portfolio holdings minus the fund’s operating expenses. The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.
 
         
    Schwab Advisor
    Cash Reserves
    Sweep Shares   Premier Sweep Shares
 
Ticker Symbol
  SWQXX   SWZXX
Minimum Initial Investment1
  *   *
Seven-Day Yield2
  0.02%   0.02%
Seven-Day Yield—No Waiver3
  -0.09%   -0.16%
Seven-Day Effective Yield2
  0.02%   0.02%
 
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.
 
Portfolio holdings may have changed since the report date.
 
*  Subject to eligibility terms and conditions of your Schwab account agreement.
 
1  Please see prospectus for further detail and eligibility requirements.
 
2  Fund expenses have been partially absorbed by CSIM and Schwab.
 
3  Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
 
 
 
Schwab Advisor Cash Reserves® 5

Table of Contents

 
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 January 1, 2009 and held through June 30, 2009.
 
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period”.
 
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
 
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
 
                                 
            Ending
 		   
        Beginning
 		  Account Value
 		  Expenses Paid
    Expense Ratio1
 		  Account Value
 		  (Net of Expenses)
 		  During Period2
    (Annualized)   at 1/1/09   at 6/30/09   1/1/09-6/30/09
 
 
Schwab Advisor Cash Reserves Fund®                                
Sweep Shares                                
Actual Return
    0.65%     $ 1,000     $ 1,001.20     $ 3.23  
Hypothetical 5% Return
    0.65%     $ 1,000     $ 1,021.57     $ 3.26  
Premier Sweep Shares                                
Actual Return
    0.59%     $ 1,000     $ 1,001.50     $ 2.93  
Hypothetical 5% Return
    0.59%     $ 1,000     $ 1,021.87     $ 2.96  

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

 
 
 
6 Schwab Advisor Cash Reserves

Table of Contents

 
Schwab Advisor Cash Reservestm
 
Financial Statements
 
Financial Highlights
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  8/19/041–
 		   
 Sweep Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 2     0.02       0.05       0.04       0.03       0.00 2    
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )2     (0.02 )     (0.05 )     (0.04 )     (0.03 )     (0.00 )2    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total return (%)
    0.12 3     2.36       4.78       4.47       2.63       0.45 3    
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.65 4,5     0.65 6     0.66       0.68       0.69       0.69 5    
Gross operating expenses
    0.77 5     0.75       0.75       0.84       0.85       0.85 5    
Net investment income (loss)
    0.26 5     2.34       4.67       4.48       2.65       1.30 5    
Net assets, end of period ($ x 1,000,000)
    6,424       7,286       6,416       5,222       1,898       1,271      
 
                                                     
    1/1/09–
 		  1/1/08–
 		  1/1/07–
 		  1/1/06–
 		  1/1/05–
 		  8/19/041–
 		   
 Premier Sweep Shares   6/30/09*   12/31/08   12/31/07   12/31/06   12/31/05   12/31/04    
 
                                                     
Per-Share Data ($)
                                                   
Net asset value at beginning of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Income (loss) from investment operations:
                                                   
Net investment income (loss)
    0.00 2     0.02       0.05       0.04       0.03       0.00 2    
   
Less distributions:
                                                   
Distributions from net investment income
    (0.00 )2     (0.02 )     (0.05 )     (0.04 )     (0.03 )     (0.00 )2    
   
Net asset value at end of period
    1.00       1.00       1.00       1.00       1.00       1.00      
   
Total Return (%)
    0.15 3     2.43       4.86       4.57       2.73       0.48 3    
                                                     
Ratios/Supplemental Data (%)
                                                   
Ratios to average net assets:
                                                   
Net operating expenses
    0.59 4,5     0.58 6     0.59       0.59       0.59       0.59 5    
Gross operating expenses
    0.77 5     0.75       0.75       0.84       0.85       0.85 5    
Net investment income (loss)
    0.32 5     2.42       4.74       4.56       2.75       1.41 5    
Net assets, end of period ($ x 1,000,000)
    14,791       16,245       15,023       10,784       3,728       2,344      

* Unaudited.

1 Commencement of operations.
2 Per-share amount was less than $0.01.
3 Not annualized.
4 The ratio of net operating expenses would have been 0.61% for the Sweep Shares and 0.55% for the Premier Sweep Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been included.
5 Annualized.
6 The ratio of net operating expenses would have been 0.64% for the Sweep Shares and 0.57% for the Premier Sweep Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been included.
 
 
 
See financial notes 7

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Portfolio Holdings as of June 30, 2009 (Unaudited)
 
 
This section shows all the securities in the fund’s portfolio and their value as of the report date.
 
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwab.com/schwabfunds.
 
For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.
 
                         
        Cost
 		  Value
Holdings by Category   ($ x 1,000)   ($ x 1,000)
 
  85 .5%   Fixed-Rate Obligations     18,130,431       18,130,431  
  11 .7%   Variable-Rate Obligations     2,477,614       2,477,614  
  2 .7%   Other Investments     572,706       572,706  
  1 .1%   U.S. Government Security     244,688       244,688  
  101 .0%   Total Investments     21,425,439       21,425,439  
  (1 .0)%   Other Assets and Liabilities, Net             (210,684 )
  100 .0%   Net Assets             21,214,755  
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Fixed-Rate Obligations  85.5% of net assets
 
Bank Notes 1.4%
Bank of America, N.A., (FDIC Insured)
0.75%, 08/24/09 (a)(e)
    199,000       199,000  
Wells Fargo Bank, N.A.
0.20%, 07/06/09
    100,000       100,000  
                 
              299,000  
 
Certificates of Deposit 33.1%
Abbey National Treasury Services PLC
0.31%, 08/31/09 (a)
    85,000       85,000  
Australia & New Zealand Banking Group Ltd.
0.60%, 07/10/09
    9,000       9,000  
0.40%, 08/12/09
    77,000       77,000  
0.85%, 10/22/09
    40,000       40,000  
0.50%, 12/03/09
    113,000       113,000  
0.50%, 12/15/09
    24,000       24,000  
0.47%, 12/18/09
    28,000       28,000  
Banco Bilbao Vizcaya Argentaria S.A.
0.60%, 07/20/09
    162,000       162,000  
0.55%, 07/27/09
    25,000       25,000  
Bank of America, N.A.
0.60%, 09/24/09
    46,000       46,000  
0.61%, 10/21/09
    196,000       196,000  
0.60%, 10/22/09
    59,000       59,000  
Bank of Nova Scotia
0.60%, 07/07/09
    140,000       140,000  
0.60%, 07/13/09
    100,000       100,000  
0.62%, 07/14/09
    83,000       83,000  
Bank of the West
0.32%, 09/14/09
    34,000       34,000  
Bank of Tokyo Mitsubishi UFJ Ltd.
0.88%, 12/02/09
    95,000       95,000  
0.78%, 12/07/09
    13,000       13,000  
Barclays Bank PLC
1.10%, 07/13/09
    59,000       59,000  
1.05%, 12/10/09
    42,000       42,000  
BNP Paribas
1.02%, 07/06/09
    14,000       14,000  
0.98%, 07/07/09
    38,000       38,000  
1.05%, 07/09/09
    9,000       9,000  
1.05%, 07/10/09
    5,000       5,000  
1.20%, 07/16/09
    9,000       9,000  
0.96%, 08/13/09
    127,000       127,000  
1.00%, 08/14/09
    348,000       348,000  
1.01%, 08/14/09
    165,000       165,001  
0.68%, 09/02/09
    65,000       65,000  
0.65%, 09/10/09
    71,000       71,000  
0.39%, 10/05/09
    14,000       14,000  
Branch Banking & Trust
0.45%, 10/26/09
    50,000       50,000  
0.42%, 11/04/09
    2,000       2,000  
Citibank, N.A.
0.50%, 09/02/09
    15,000       15,000  
0.55%, 09/18/09
    94,000       94,000  
0.60%, 09/23/09
    218,000       218,000  
0.60%, 09/24/09
    80,000       80,000  
0.58%, 09/28/09
    6,000       6,000  
0.55%, 10/09/09
    23,000       23,000  
Commonwealth Bank of Australia
0.41%, 08/21/09
    27,000       27,000  
0.55%, 11/30/09
    38,000       38,001  
0.48%, 12/17/09
    22,000       22,000  
Credit Agricole S.A.
0.85%, 08/20/09
    90,000       90,000  
0.90%, 09/01/09
    108,000       108,000  
0.50%, 10/08/09
    6,000       6,000  
0.53%, 10/09/09
    5,000       5,000  
0.54%, 10/15/09
    113,000       113,000  
Deutsche Bank AG
0.62%, 07/06/09
    100,000       100,000  
0.62%, 07/08/09
    5,000       5,000  
0.62%, 07/09/09
    38,000       38,000  
DnB NOR Bank ASA
0.40%, 09/01/09
    25,000       25,000  
0.32%, 09/17/09
    80,000       80,000  
HSBC Bank PLC
0.66%, 07/07/09
    98,000       98,000  
Intesa Sanpaolo
0.50%, 09/21/09
    34,000       34,000  
0.43%, 10/08/09
    75,000       75,000  
0.43%, 10/14/09
    36,000       36,001  
0.44%, 10/19/09
    69,000       69,000  
Lloyds TSB Bank PLC
0.59%, 09/14/09
    70,000       70,000  
0.58%, 09/16/09
    205,000       205,000  
 
 
 
8 See financial notes

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
Mitsubishi UFJ Trust & Banking Corp.
0.54%, 08/20/09
    68,000       68,000  
0.56%, 08/26/09
    46,000       46,000  
0.47%, 08/28/09
    100,000       100,000  
Mizuho Corporate Bank Ltd.
0.50%, 08/13/09
    210,000       210,000  
National Australia Bank Ltd.
0.45%, 08/12/09
    30,000       30,000  
1.00%, 10/22/09
    14,000       14,000  
0.51%, 12/22/09
    107,000       107,000  
0.49%, 12/29/09
    78,000       78,000  
0.50%, 01/04/10
    90,000       90,002  
Nordea Bank Finland PLC
0.33%, 07/07/09
    30,000       30,000  
Rabobank Nederland
1.00%, 09/03/09
    177,000       177,000  
1.00%, 09/09/09
    9,000       9,000  
1.00%, 09/10/09
    213,000       213,000  
Royal Bank of Canada
0.30%, 09/17/09
    155,000       155,000  
Royal Bank of Scotland PLC
0.74%, 09/03/09
    200,000       200,000  
0.82%, 09/08/09
    2,000       2,000  
0.69%, 10/07/09
    52,000       52,001  
0.68%, 10/09/09
    50,000       50,000  
Societe Generale
1.11%, 07/09/09
    112,000       112,000  
1.17%, 07/13/09
    120,000       120,000  
State Street Bank & Trust
1.00%, 08/18/09
    69,000       69,000  
Sumitomo Mitsui Banking Corp.
0.79%, 08/05/09
    13,000       13,001  
0.70%, 08/10/09
    40,000       40,000  
0.50%, 08/17/09
    12,000       12,002  
0.55%, 08/18/09
    158,000       158,002  
Sumitomo Trust & Banking Co.
1.12%, 07/07/09
    35,000       35,000  
1.12%, 07/15/09
    13,000       13,000  
0.55%, 09/15/09
    37,000       37,000  
Svenska Handelsbanken AB
0.60%, 07/20/09
    69,000       69,002  
0.35%, 08/24/09
    45,000       45,001  
Toronto Dominion Bank
0.90%, 07/06/09
    31,000       31,000  
1.00%, 08/14/09
    150,000       150,027  
1.00%, 09/08/09
    3,000       3,000  
1.00%, 09/16/09
    13,000       13,000  
1.00%, 09/17/09
    53,000       53,000  
1.00%, 09/21/09
    36,000       36,000  
1.50%, 12/11/09
    90,000       90,000  
Union Bank, N.A.
0.50%, 07/16/09
    35,000       35,000  
0.50%, 08/05/09
    55,000       55,000  
Westpac Banking Corp.
0.50%, 12/14/09
    170,000       170,000  
                 
              7,017,041  
 
Commercial Paper & Other Corporate Obligations 24.6%
Alpine Securitization Corp.
0.28%, 07/16/09 (a)(b)(c)
    75,000       74,991  
0.35%, 09/02/09 (a)(b)(c)
    100,000       99,939  
0.40%, 10/08/09 (a)(b)(c)
    16,000       15,982  
Amsterdam Funding Corp.
0.85%, 07/15/09 (a)(b)(c)
    30,000       29,990  
ANZ National (Int’l) Ltd.
0.48%, 09/11/09 (a)
    40,000       39,962  
Atlantis One Funding Corp.
0.85%, 10/23/09 (a)(b)(c)
    30,000       29,919  
0.83%, 10/27/09 (a)(b)(c)
    37,000       36,899  
0.75%, 11/03/09 (a)(b)(c)
    16,000       15,958  
Bank of America Corp., (FDIC Insured)
0.60%, 07/13/09 (a)(e)
    71,000       70,986  
0.25%, 07/30/09 (a)(e)
    29,000       28,994  
0.24%, 08/18/09 (a)(e)
    115,000       114,963  
Cancara Asset Securitization, L.L.C.
0.65%, 09/10/09 (a)(b)(c)
    40,000       39,949  
CBA (Delaware) Finance, Inc.
0.32%, 08/28/09 (a)
    187,000       186,904  
Chariot Funding, L.L.C.
0.10%, 07/01/09 (a)(b)(c)
    25,000       25,000  
0.32%, 07/06/09 (a)(b)(c)
    20,000       19,999  
0.40%, 07/13/09 (a)(b)(c)
    50,000       49,993  
0.28%, 07/14/09 (a)(b)(c)
    79,000       78,992  
0.28%, 07/20/09 (a)(b)(c)
    15,000       14,998  
Ciesco, L.L.C.
0.95%, 08/06/09 (a)(b)(c)
    229,000       228,783  
Citigroup Funding, Inc.
0.40%, 07/29/09 (a)
    84,000       83,974  
Citigroup Funding, Inc., (FDIC Insured)
0.24%, 08/06/09 (a)(e)
    34,000       33,992  
0.30%, 08/10/09 (a)(e)
    71,000       70,976  
0.29%, 08/11/09 (a)(e)
    233,000       232,923  
Dakota CP Notes of Citibank Credit Card Issuance Trust
1.03%, 07/02/09 (b)(c)
    90,000       89,997  
1.05%, 07/02/09 (b)(c)
    98,239       98,236  
0.85%, 07/28/09 (b)(c)
    77,000       76,951  
Danske Corp. (Danish Government Guarantee)
1.21%, 07/06/09 (a)(c)
    5,000       4,999  
1.20%, 07/14/09 (a)(c)
    11,000       10,995  
0.43%, 10/30/09 (a)(c)
    130,000       129,812  
0.43%, 11/04/09 (a)(c)
    60,000       59,910  
Falcon Asset Securitization Corp.
0.32%, 07/01/09 (a)(b)(c)
    30,000       30,000  
0.25%, 07/07/09 (a)(b)(c)
    15,000       14,999  
Gemini Securitization Corp., L.L.C.
0.40%, 07/09/09 (a)(b)(c)
    10,000       9,999  
0.46%, 07/17/09 (a)(b)(c)
    35,000       34,993  
0.33%, 09/01/09 (a)(b)(c)
    22,000       21,988  
General Electric Capital Corp., (FDIC Insured)
0.47%, 08/21/09 (a)(e)
    239,000       238,841  
0.65%, 08/25/09 (a)(e)
    12,000       11,988  
0.58%, 09/11/09 (a)(e)
    75,000       74,913  
0.42%, 11/05/09 (a)(e)
    45,000       44,933  
0.42%, 11/06/09 (a)(e)
    43,000       42,936  
0.40%, 11/09/09 (a)(e)
    116,000       115,831  
JP Morgan Chase Funding, Inc.
0.36%, 07/07/09 (a)
    98,000       97,994  
0.36%, 07/09/09 (a)
    100,000       99,992  
0.32%, 09/15/09 (a)
    22,000       21,985  
Jupiter Securitization Corp.
0.28%, 07/14/09 (a)(b)(c)
    50,000       49,995  
0.30%, 07/17/09 (a)(b)(c)
    19,000       18,998  
Kitty Hawk Funding Corp.
0.27%, 07/22/09 (a)(b)(c)
    14,902       14,900  
0.27%, 07/24/09 (a)(b)(c)
    15,335       15,332  
 
 
 
See financial notes 9

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
0.48%, 09/23/09 (a)(b)(c)
    42,001       41,954  
Nationwide Building Society
0.64%, 10/07/09
    60,000       59,896  
Nestle Capital Corp.
0.28%, 07/08/09 (c)
    125,000       124,993  
0.28%, 07/15/09 (c)
    20,000       19,998  
0.22%, 08/13/09 (c)
    25,000       24,994  
Nordea North America, Inc.
0.33%, 07/06/09 (a)
    50,000       49,998  
0.30%, 07/08/09 (a)
    100,000       99,994  
Old Line Funding, L.L.C.
0.05%, 07/01/09 (a)(b)(c)
    14,000       14,000  
0.40%, 07/07/09 (a)(b)(c)
    100,000       99,993  
0.50%, 09/10/09 (a)(b)(c)
    29,733       29,704  
0.34%, 09/15/09 (a)(b)(c)
    19,000       18,986  
0.35%, 09/15/09 (a)(b)(c)
    86,842       86,778  
Park Avenue Receivables Co., L.L.C.
0.28%, 07/07/09 (a)(b)(c)
    42,000       41,998  
Ranger Funding Co., L.L.C.
0.33%, 08/20/09 (a)(b)(c)
    47,197       47,175  
0.39%, 09/08/09 (a)(b)(c)
    9,769       9,762  
0.43%, 09/21/09 (a)(b)(c)
    88,000       87,914  
0.48%, 09/23/09 (a)(b)(c)
    30,947       30,912  
Reckitt Benckiser Treasury Services
0.42%, 07/28/09 (a)(c)
    10,000       9,997  
0.42%, 08/10/09 (a)(c)
    12,000       11,994  
Sheffield Receivables Corp.
0.30%, 07/09/09 (a)(b)(c)
    14,000       13,999  
0.34%, 09/02/09 (a)(b)(c)
    75,000       74,955  
Solitaire Funding, L.L.C.
0.61%, 07/09/09 (a)(b)(c)
    50,000       49,993  
0.61%, 07/10/09 (a)(b)(c)
    25,000       24,996  
0.80%, 08/07/09 (a)(b)(c)
    55,000       54,955  
0.78%, 08/11/09 (a)(b)(c)
    112,000       111,901  
Starbird Funding Corp.
0.35%, 09/17/09 (a)(b)(c)
    2,000       1,999  
Straight A Funding, L.L.C.
0.39%, 08/18/09 (a)(b)(c)
    100,000       99,948  
0.37%, 09/02/09 (a)(b)(c)
    9,000       8,994  
Swedbank AB (Swedish Government Guarantee)
0.87%, 06/01/10 (a)(c)
    75,000       74,400  
Thames Asset Global Securitization No. 1, Inc.
0.36%, 08/17/09 (a)(b)(c)
    44,000       43,979  
Thunder Bay Funding, L.L.C.
0.50%, 07/06/09 (a)(b)(c)
    50,000       49,997  
0.47%, 07/15/09 (a)(b)(c)
    15,000       14,997  
0.50%, 08/17/09 (a)(b)(c)
    40,757       40,730  
0.35%, 09/10/09 (a)(b)(c)
    47,734       47,701  
0.34%, 09/11/09 (a)(b)(c)
    43,000       42,971  
Ticonderoga Funding, L.L.C.
0.43%, 09/16/09 (a)(b)(c)
    10,000       9,991  
UBS Finance (Delaware), Inc.
0.31%, 07/28/09 (a)
    15,000       14,997  
Variable Funding Capital Corp.
0.35%, 07/09/09 (a)(b)(c)
    15,000       14,999  
0.26%, 07/31/09 (a)(b)(c)
    64,948       64,934  
0.28%, 08/05/09 (a)(b)(c)
    40,000       39,989  
0.98%, 10/15/09 (a)(b)(c)
    27,000       26,923  
0.98%, 10/20/09 (a)(b)(c)
    94,000       93,719  
Westpac Banking Corp.
0.40%, 08/10/09 (c)
    30,000       29,987  
0.46%, 12/04/09 (c)
    14,000       13,972  
Westpac Securities NZ Ltd.
0.38%, 09/28/09 (a)(c)
    7,000       6,993  
Whistlejacket Capital, L.L.C.
n/a, n/a, (c)(d)(f)
    2,739       2,739  
Windmill Funding Corp.
0.85%, 07/13/09 (a)(b)(c)
    27,000       26,992  
0.39%, 08/20/09 (a)(b)(c)
    85,000       84,954  
0.41%, 10/01/09 (a)(b)(c)
    35,000       34,963  
Yorktown Capital, L.L.C.
0.39%, 09/08/09 (a)(b)(c)
    10,000       9,993  
0.53%, 10/05/09 (a)(b)(c)
    24,000       23,966  
                 
              5,224,249  
 
Fixed-Rate Coupon Notes 1.4%
Federal Home Loan Bank
0.55%, 06/01/10
    155,000       154,919  
0.56%, 06/04/10
    90,000       89,985  
Freddie Mac
1.25%, 11/30/09
    40,000       40,472  
                 
              285,376  
 
Fixed-Rate Discount Notes 23.7%
Fannie Mae
0.50%, 07/01/09
    113,000       113,000  
0.50%, 07/02/09
    89,000       88,999  
0.17%, 07/21/09
    181,100       181,083  
0.18%, 08/03/09
    431,000       430,929  
0.18%, 08/24/09
    182,000       181,951  
0.25%, 09/22/09
    10,000       9,994  
0.76%, 12/01/09
    62,000       61,802  
Federal Home Loan Bank
0.18%, 07/01/09
    300,000       300,000  
0.18%, 07/08/09
    50,000       49,998  
0.23%, 07/08/09
    110,480       110,475  
0.18%, 07/10/09
    30,000       29,999  
0.23%, 07/10/09
    100,000       99,994  
0.22%, 07/14/09
    225,000       224,982  
0.18%, 07/15/09
    233,000       232,984  
0.17%, 08/03/09
    180,000       179,972  
0.20%, 08/04/09
    120,000       119,977  
0.20%, 08/11/09
    48,000       47,989  
0.19%, 08/12/09
    357,900       357,822  
0.60%, 08/14/09
    40,000       39,971  
0.60%, 08/21/09
    170,000       169,855  
0.62%, 09/01/09
    50,000       49,947  
0.60%, 09/09/09
    265,160       264,851  
0.50%, 02/01/10
    195,000       194,418  
Freddie Mac
0.17%, 08/03/09
    66,000       65,990  
0.18%, 08/10/09
    229,900       229,854  
0.19%, 08/17/09
    227,000       226,944  
0.60%, 08/17/09
    132,000       131,897  
0.60%, 09/01/09
    185,000       184,809  
0.62%, 09/01/09
    290,000       289,690  
0.60%, 09/02/09
    170,000       169,821  
0.61%, 09/15/09
    180,000       179,768  
                 
              5,019,765  
 
 
 
10 See financial notes

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Portfolio Holdings (Unaudited) continued
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
Time Deposit 1.3%
Bank of Ireland
0.30%, 07/01/09
    100,000       100,000  
Citibank, N.A.
0.13%, 07/01/09
    185,000       185,000  
                 
              285,000  
                 
Total Fixed-Rate Obligations
(Cost $18,130,431) 		    18,130,431  
         
                 
                 
 
 Variable-Rate Obligations  11.7% of net assets
Bank of America, N.A.
1.24%, 07/30/09
    200,000       200,000  
1.21%, 08/06/09
    150,000       150,000  
Bank of America, N.A., (FDIC Insured)
0.97%, 08/05/09 (a)(e)
    111,000       111,000  
Breckenridge Terrace, L.L.C.
1.60%, 07/02/09 (a)
    1,000       1,000  
Commonwealth Bank of Australia
1.27%, 08/03/09
    50,000       50,000  
Deutsche Bank AG
0.84%, 07/21/09
    100,000       100,000  
Eagle County, Co.
1.60%, 07/02/09 (a)
    2,000       2,000  
Fannie Mae
1.03%, 07/13/09
    470,000       469,813  
0.97%, 08/05/09
    120,000       119,952  
Federal Home Loan Bank
0.79%, 07/06/09
    200,000       200,000  
0.01%, 09/22/09
    100,000       100,000  
Freddie Mac
0.58%, 09/24/09
    214,000       213,941  
Goldman Sachs Group Inc., (FDIC Insured)
1.32%, 09/16/09 (a)(c)(d)(e)
    75,000       75,000  
0.76%, 09/17/09 (a)(e)
    25,000       25,000  
Hewlett Packard Co.
1.05%, 09/03/09
    20,000       20,023  
Rabobank Nederland
1.26%, 07/14/09
    33,000       33,000  
1.20%, 07/24/09
    285,000       285,000  
0.70%, 09/29/09
    70,000       70,000  
Societe Generale
0.50%, 09/11/09
    120,000       120,000  
Svenska Handelsbanken AB
1.40%, 07/06/09 (c)
    50,000       50,000  
Tenderfoot Seasonal Housing, L.L.C.
1.60%, 07/02/09 (a)
    2,885       2,885  
Westpac Banking Corp.
1.09%, 08/20/09
    79,000       79,000  
                 
Total Variable-Rate Obligations
(Cost $2,477,614) 		    2,477,614  
         
                 
                 
    Face/Maturity
 		   
Issuer
 		  Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 Other Investments  2.7% of net assets
 
Repurchase Agreements 2.7%
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $61,204.
0.02%, issued 06/30/2009,
               
due 07/01/09
    60,000       60,000  
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $104,763
0.11%, issued 06/30/2009,
               
due 07/01/09
    102,706       102,706  
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $71,403
0.16%, issued 06/25/2009,
               
due 07/02/09
    70,002       70,000  
Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $40,800
0.01%, issued 06/30/09,
               
due 07/01/09
    40,000       40,000  
Goldman Sachs & Co.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $315,000
0.05%, issued 06/30/09,
               
due 07/01/09
    300,000       300,000  
                 
Total Other Investments
(Cost $572,706) 		    572,706  
         
                 
                 
 
                 
Issuer
 		  Face Amount
 		  Value
    Rate, Maturity Date   ($ x 1,000)   ($ x 1,000)
 
 
 U.S. Government Security  1.1% of net assets
 
U.S. Treasury Bills 1.1%
U.S. Treasury Bills
0.30%, 12/03/09
    245,000       244,688  
                 
Total U.S. Government Security
(Cost $244,688) 		    244,688  
         
                 
                 
 
End of Investments.                
 
(All dollar amounts are x 1,000)
 
At 06/30/09, the tax basis cost of the fund’s investments was $21,425,439.
 
 
 
See financial notes 11

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Portfolio Holdings (Unaudited) continued
 
 
(a) Credit-enhanced security.
(b) Asset-backed security.
(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $3,511,277 or 16.6% of net assets.
(d) Illiquid security. At the period end, the value of these amounted to $77,739 or 0.4% of net assets.
(e) This debt is guaranteed under the FDIC Temporary Liquidity Guarantee Program, and the FDIC has stated that this debt is backed by the full faith and credit of the United States.
(f) Whistlejacket notes are in receivership, and the fund has elected and sold all of its Whistlejacket notes at auction (4/29/2009). The remaining investment represents an interest in a small residual fund held by the receiver that is being held to cover any remaining expenses and liabilities associated with receivership.
 
 
 
12 See financial notes

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Statement of
Assets and Liabilities
As of June 30, 2009; unaudited. All numbers are x 1,000 except NAV.
 
             
             
 
Assets
Investments, at cost and value (Note 2a)
        $21,425,439  
Receivables:
           
Interest
        13,827  
Prepaid expenses
  +     1,748  
     
     
Total assets
        21,441,014  
             
 
Liabilities
Payables:
           
Investments bought
        223,976  
Investment adviser and administrator fees
        363  
Transfer agent and shareholder services fees
        414  
Distributions to shareholders
        175  
Payable to custodian
        13  
Trustees’ fees
        2  
Accrued expenses
  +     1,316  
     
     
Total liabilities
        226,259  
             
 
Net Assets
Total assets
        21,441,014  
Total liabilities
  −     226,259  
     
     
Net assets
        $21,214,755  
Net Assets by Source
           
Capital received from investors
        21,243,563  
Net realized capital losses
        (28,808 )
 
Net Asset Value (NAV) by Shares Class 
 
                         
            Shares
 		         
Share Class   Net Assets   ¸   Outstanding   =   NAV  
 
Sweep Shares
  $6,424,072       6,432,544         $1.00  
Premier Sweep Shares
  $14,790,683       14,809,609         $1.00  
 
 
 
 
See financial notes 13

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Statement of
Operations
For January 1, 2009 through June 30, 2009; unaudited. All numbers are x 1,000.
 
             
             
 
Investment Income
Interest
        $103,782  
             
 
Net Realized Gains and Losses
Net realized losses on investments
        (28,808 )
             
 
Expenses
Investment adviser and administrator fees
        35,084  
Transfer agent and shareholder service fees:
           
Sweep Shares
        13,969  
Premier Sweep Shares
        31,910  
Temporary Guarantee Program expense
        4,152  
Registration fees
        1,931  
Shareholder reports
        414  
Custodian fees
        344  
Portfolio accounting fees
        237  
Professional fees
        72  
Trustees’ fees
        46  
Other expenses
  +     99  
     
     
Total expenses
        88,258  
Expense reduction by adviser and Schwab
  −     18,565  
     
     
Net expenses
        69,693  
             
 
Increase (Decrease) in Net Assets from Operations
Total investment income
        103,782  
Net expenses
  −     69,693  
     
     
Net investment income
        34,089  
Net realized losses
  +     (28,808 )
     
     
Increase in net assets from operations
        $5,281  
 
 
 
 
14 See financial notes

Table of Contents

 
 Schwab Advisor Cash Reserves
 

Statements of
Changes in Net Assets
For current and prior report periods. All numbers are x 1,000.
Figures for the current period are unaudited.
 
             
             
 
Operations
             
        1/1/09-6/30/09   1/1/08-12/31/08
Net investment income
      $34,089   $536,267
Net realized gains (losses)
  +   (28,808)   1,399
     
     
Increase in net assets from operations
      5,281   537,666
             
 
Distributions to Shareholders
Distributions from net investment income
           
Sweep Shares
      8,909   158,219
Premier Sweep Shares
  +   25,180   378,048
     
     
Total distributions from net investment income
      34,089   536,267
             
 
Transactions in Fund Shares*
Shares Sold
           
Sweep Shares
      10,579,149   30,481,173
Premier Sweep Shares
  +   31,397,286   90,682,111
     
     
Total shares sold
      41,976,435   121,163,284
             
             
Shares Reinvested
Sweep Shares
      8,758   154,952
Premier Sweep Shares
  +   24,709   368,025
     
     
Total shares reinvested
      33,467   522,977
             
             
Shares Redeemed
Sweep Shares
      (11,440,711)   (29,767,182)
Premier Sweep Shares
  +   (32,856,366)   (89,828,735)
     
     
Total shares redeemed
      (44,297,077)   (119,595,917)
     
     
             
Net transactions in fund shares
      (2,287,175)   2,090,344
             
 
Net Assets
Beginning of period
      23,530,738   21,438,995
Total increase (decrease)
  +   (2,315,983)   2,091,743
     
     
End of period
      $21,214,755   $23,530,738
 
 
*  Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.
 
 
 
See financial notes 15

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Financial Notes, unaudited
 
 
1. Business Structure of the Fund:
 
Schwab Advisor Cash Reserves is a series of The Charles Schwab Family of Funds (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the fund discussed in this report, which is highlighted:
 
     
 
The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Money Fund
  Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund
     
 
Schwab Advisor Cash Reserves offers two share classes: Sweep Shares and Premier Sweep Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums.
 
Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
 
The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, the fund also may keep certain assets in segregated accounts, as required by securities laws.
 
2. Significant Accounting Policies:
       (All dollar amounts are x 1,000)
 
The following is a summary of the significant accounting policies the fund 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:
 
Securities in the fund are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. In the event that security valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.
 
(b) Portfolio Investments:
 
Repurchase Agreements: The fund may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created.
 
The fund’s repurchase agreements will be fully collateralized by U.S. government securities or U.S. government agency securities. All collateral is held by the fund’s custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
 
Delayed-Delivery: The fund may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The fund sets aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.
 
(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.
 
 
 
16 

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
(d) Investment Income:
 
Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.
 
(e) Expenses:
 
Expenses that are specific to a fund or 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 average daily net assets.
 
(f) Distributions to Shareholders:
 
The fund declares distributions from net investment income every day it is open for business. These distributions are paid out to shareholders once a month. The fund may make distributions from any net realized capital gains once a year.
 
(g) Custody Credit:
 
The fund has an arrangement with its custodian bank, State Street Corp., under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the 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.
 
(i) Federal Income Taxes:
 
The fund intends to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the fund distributes substantially all of its net investment income and realized net capital gains (if any) to its respective shareholders each year. As long as the fund meets the tax requirements, it is not required to pay federal income tax.
 
(j) Indemnification:
 
Under the fund’s organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business the fund enters into contracts with its vendors and others that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. However, based on experience, the fund expects the risk of loss to be remote.
 
(k) Accounting Pronouncements:
 
The fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), Fair Value Measurements, effective January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.
 
In addition, effective June 30, 2009, the fund adopted FASB Staff position (“FSP”) No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are
 
 
 
 17

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Financial Notes, unaudited (continued)
 
2. Significant Accounting Policies (continued):
       (All dollar amounts are x 1,000)
 
Not Orderly” (“FSP No. 157-4”). FSP No. 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased.
 
Various inputs are used in determining the value of the fund’s investments. SFAS No. 157 establishes a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. These inputs are summarized in the three broad levels listed below:
 
  •  Level 1 — quoted prices in active markets for identical securities. — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price.
 
  •  Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
 
  •  Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of June 30, 2009:
 
                                 
    Quoted Prices
 		           
    in Active
 		  Significant
 		       
    Markets for
 		  Other
 		  Significant
 		   
    Identical
 		  Observable
 		  Unobservable
 		   
    Assets
 		  Inputs
 		  Inputs
 		   
Description
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total*
 
Fixed-Rate Obligations
    —       18,130,431       —       18,130,431  
                                 
Variable-Rate Obligations
    —       2,477,614       —       2,477,614  
                                 
Other Investments
    —       572,706       —       572,706  
                                 
U.S. Government Securities
    —       244,688       —       244,688  
                                 
Total
    $—       $21,425,439       $—       $21,425,439  
                                 
 
*  The fund had no Other Financial Instruments.
 
 
 
18 

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Financial Notes, unaudited (continued)
 
3. Risk factors:
 
Investing in the fund may involve certain risks, as discussed in the fund’s prospectus, including, but not limited to, those described below:
 
Interest rates will rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low, the fund’s yield (and total return) also will be low. An investment in the fund is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. The fund could lose money or underperform as a result of a default on the part of a portfolio investment. The additional risks of any foreign investments are due to reasons ranging from lack of issuer information to the risk of political uncertainties. Many of the U.S. government securities that the fund invests in are not backed by the full faith and credit of the United States. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. The manager’s maturity decisions also will affect the fund’s yield, and in unusual circumstances potentially affect its share price. To the extent that the manager anticipates interest rate trends imprecisely, the fund’s yield at times could lag those of other money market funds. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
 
Please refer to the fund’s prospectus for a complete description of the principal risks of investing in the fund.
 
4. U.S. Temporary Guarantee Program:
       (All dollar amounts are x 1,000)
 
On September 19, 2008, the U.S. Treasury Department announced the establishment of a Temporary Guaranty Program for the U.S. Money Market Mutual Funds (the “Program”). The initial term of the Program was set to expire on December 18, 2008. On November 24, 2008, the Treasury announced an extension of the Program for the period from December 19, 2008 through April 30, 2009; and on March 31, 2009, the Treasury announced a further extension of the Program for the period from May 1, 2009 through September 18, 2009 (together, the “Program Extensions”). According to the Treasury, the Program will not be extended beyond September 18, 2009. The Schwab Advisor Cash Reserves fund, with the approval of the Schwab Funds Board of Trustees, participated in the Program during the initial and extended Program periods covered by this report. The fund paid $2,074 to participate in the initial term of the Program, which covered the period September 19, 2008 through December 18, 2008. In addition, the fund paid $3,111 to participate in the extension of the first Program, which covered the period December 18, 2008 through April 30, 2009. The fund paid $3,111 to participate in the second Program Extension, which covers the period May 1, 2009 through September 18, 2009. Subject to provisions contained in the guarantee agreement signed by the fund, the Program guarantees that the shareholders in the fund as of the close of business on September 19, 2008, will receive $1.00 for each fund share held. Shares not guaranteed under the Program will be redeemed at net asset value per share. The guarantee applies only if a participating money market funds net asset value per share falls below $0.995 and the fund subsequently decides to liquidate. Any increase in shares in the account after the close of business on September 19, 2008, will not be guaranteed. If the amount of shares held fluctuates over the periods, shareholders will be covered for either the number of shares held as of the close of business on September 19, 2008, or the current amount, whichever is less. The cost of participating in the Program and the Program Extensions is borne by each participating fund and will not be subject to any expense limitation or reimbursement agreement.
 
5. Affiliates and Affiliated Transactions:
       (All dollar amounts are x 1,000)
 
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
 
 
 
 19

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Financial Notes, unaudited (continued)
 
5. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)
 
For its advisory and administrative services to the fund, the investment adviser is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:
 
         
Average daily net assets
   
 
First $1 billion
    0.35%  
$1 billion to $10 billion
    0.32%  
$10 billion to $20 billion
    0.30%  
$20 billion to $40 billion
    0.27%  
Over $40 billion
    0.25%  
 
Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and during the reporting period was the trust’s transfer agent and shareholder services agent. Effective July 1, 2009, the trust has appointed Boston Financial Data Services Inc. (“BFDS”) as transfer agent of the fund. Prior to July 1, 2009, BFDS served as the fund’s sub-transfer agent.
 
For the transfer agent and shareholder services provided during the reporting period, Schwab received an annual fee payable monthly based on the fund’s average daily net assets as follows:
 
                 
 
Transfer Agent Fees
 
Shareholder Service Fees
 
Sweep Shares
    0.20%       0.20%  
Premier Sweep Shares
    0.20%       0.20%  
 
Effective July 1, 2009, the trust adopted a Shareholder Servicing Plan (the “Plan”) on behalf of certain funds of the trust. Pursuant to the Plan, the fund pays Schwab to provide certain account maintenance, customer liaison and shareholder services to fund shareholders. The fund also pays for certain administration services it provides to fund shareholders invested in the Sweep Shares of the fund. Under the Plan, Schwab will be entitled to receive an annual fee payable monthly based on the funds’ average daily net assets as follows:
 
         
 
Shareholder Service Fees
 
Sweep Shares
    0.40%  
Premier Sweep Shares
    0.40%  
 
Although these agreements specify certain fees for these services, CSIM and Schwab have made an additional agreement with the fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses for so long as CSIM serves as the investment adviser to the fund as follows:
 
         
Sweep Shares
    0.66%  
Premier Sweep Shares
    0.59%  
 
The agreement may only be amended or terminated with the approval of the Fund’s Board of Trustees. This agreement ensures that any increase in the fund’s other expenses as a result of the appointment of BFDS as transfer agent and Schwab as a shareholder service provider will be offset by the expense limitation.
 
In addition, effective January 1, 2009 through December 31, 2009, CSIM and Schwab agreed to voluntarily waive an additional 0.035% of the fund’s expenses.
 
In addition to the contractual expense limitation noted above, Schwab and the investment adviser also may waive and/or reimburse expenses to the extent necessary to maintain the fund’s net yield at a certain level as determined by Schwab and the investment adviser. Schwab and the investment adviser may recapture from the fund any of these expenses or fees they have waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. These reimbursement payments by the fund to Schwab and/or the investment adviser are considered “non-routine expenses” and are not subject to any net operating expense limitations in effect at the time of such
 
 
 
20 

Table of Contents

 
 Schwab Advisor Cash Reserves
 

 
Financial Notes, unaudited (continued)
 
5. Affiliates and Affiliated Transactions (continued):
       (All dollar amounts are x 1,000)
 
payment. This recapture could negatively affect the fund’s future yield. As of June 30, 2009, the balance of recoupable expenses is as follows:
 
             
Expiration
 
Schwab Advisor Cash Reserved Fund
 
  12/31/2012       $561  
 
The fund may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended June 30, 2009 the fund’s aggregate security transactions with other Schwab Funds were $100,000.
 
Pursuant to an exemptive order issued by the SEC, the fund may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The fund had no interfund borrowing or lending activity during the period.
 
6. Board of Trustees:
 
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but the trust did pay non-interested persons (independent trustees), as noted in the fund’s Statement of Operations.
 
7. Borrowings from Banks:
 
The fund may borrow money from banks and custodians. The fund has custodian overdraft facilities, a committed line of credit of $150 million with State Street Corp., an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The fund pays interest on the amounts it borrows at rates that are negotiated periodically. The fund had no borrowing from the lines of credit during the period.
 
8. 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 December 31, 2008, the fund had no capital loss carry forwards.
 
For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2008, the fund had no deferred realized net capital losses and there were no capital losses being utilized to offset capital gains.
 
As of December 31, 2008, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the fund, and has determined that no provision for income tax is required in the fund’s financial statements. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended December 31, 2008, the fund did not incur any interest or penalties.
 
9. Subsequent Events:
 
In accordance with the provision set forth in FAS 165 Subsequent Events, management has evaluated the possibility of subsequent events existing in the fund’s financial statements through June 30, 2009. Management has determined that there are no material events that would require additional disclosure in the fund’s financial statement through August 14, 2009.
 
 
 
 21

Table of Contents

 
Investment Advisory Agreement Approval
 
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the advisory agreement.
 
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between The Charles Schwab Family of Funds (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to existing funds in the Trust, including the Schwab Advisor Cash Reserves, and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the funds that the Board reviews during the course of each year, including information that relates to fund operations and fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of fund management and participate in question and answer sessions with representatives of CSIM.
 
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement at meetings held on April 27, 2009 and May 15, 2009, and approved the renewal of the Agreement for an additional one year term at the meeting held on May 15, 2009. The Board’s approval of the Agreement was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
 
1.  the nature, extent and quality of the services provided to the funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the funds;
 
2.  each fund’s investment performance and how it compared to that of certain other comparable mutual funds;
 
3.  each fund’s expenses and how those expenses compared to those of certain other comparable mutual funds;
 
4.  the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and
 
5.  the extent to which economies of scale would be realized as the funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of fund investors.
 
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The information considered by the Trustees included specific information concerning changes in the nature, extent and quality of services provided by CSIM since the Trustees had last considered approval of the Agreement. The Trustees also considered the fact that Schwab’s extensive branch network, Internet access, investment and research tools, telephone services, and array of account features benefit the funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the funds and the resources of CSIM and its affiliates dedicated to the funds supported renewal of the Agreement.
 
Fund Performance. The Board considered fund performance in determining whether to renew the Agreement. Specifically, the Trustees considered each fund’s performance relative to a peer group of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, when applicable, and market trends. As part of this review, the Trustees considered the composition of the peer group, selection criteria and the reputation of the third party who prepared the peer group analysis. In evaluating the performance of each fund, the Trustees considered both risk and shareholder risk expectations for such fund and the appropriateness of the benchmark used to compare the performance of each fund. The Trustees further considered the level of fund performance in the context of its review of fund expenses and adviser
 
 
 
22 

Table of Contents

profitability discussed below. Following such evaluation the Board concluded, within the
 
context of its full deliberations, that the performance of the funds supported renewal of the Agreement.
 
Fund Expenses. With respect to the funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each fund’s net operating expense ratio, in each case, in comparison to those of other comparable mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total fund expenses from exceeding a specified cap. The Trustees also considered fees charged by CSIM to other mutual funds and to other types of accounts, such as wrap accounts and offshore funds, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the funds are reasonable and supported renewal of the Agreement.
 
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the funds, such as whether, by virtue of its management of the funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each fund by CSIM and its affiliates. The Board also considered information relating to changes to CSIM’s business operations and how these changes affected CSIM’s profitability under the Agreement. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement.
 
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of fund expenses, the Trustees considered that CSIM and Schwab have previously committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered CSIM’s agreement to contractual investment advisory fee schedules that include lower fees at higher graduated asset levels. The Board also considered certain commitments by CSIM and Schwab that are designed to pass along potential economies of scale to fund shareholders. Specifically, the Board considered CSIM and Schwab’s previously negotiated commitments, which may be changed only with Board approval, relating to: (i) reductions of contractual advisory fees or addition of breakpoints for certain funds within the fund complex, (ii) implementation, by means of expense limitation agreement, of additional reductions in net overall expenses for certain funds, and (iii) future net total operating expense reductions for taxable money funds as a group and non-taxable money funds as a group when aggregate assets of such group of funds exceed certain levels. In particular, the Board considered the actual expense reductions that resulted from CSIM and Schwab’s commitments set forth above. Based on this evaluation, and in consideration of the previously negotiated commitments made by CSIM and Schwab as discussed above, the Board concluded, within the context of its full deliberations, that the funds obtain reasonable benefit from economies of scale.
 
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously approved the continuation of the Agreement and concluded that the compensation under the Agreement is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
 
 
 
 23

Table of Contents

 
Trustees and Officers
 
The tables below give information about the trustees and officers for The Charles Schwab Family of Funds which includes the fund covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust. As of June 30, 2009 the Fund Complex included 82 funds.
 
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
 
                 
Independent Trustees
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
                 
Mariann Byerwalter
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman of JDN Corporate Advisory LLC.     82     Board 1–Director, Redwood Trust, Inc.
 
John F. Cogan
1947
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University     68     Board 1–Director, Gilead Sciences, Inc.
Board 2–Director, Monaco Coach Corporation
Board 3–Director, Venture Lending and Leasing, Inc.
 
William A. Hasler
1941
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).     82     Board 1–Director, Mission West Properties
Board 2–Director, TOUSA
Board 3–Director, Harris-Stratex Networks
Board 4–Director, Genitope Corp.
Board 5– Director, Ditech Networks
Board 6–Director, Rubicon Limited
 
Gerald B. Smith
1950
Trustee
(Trustee of The Charles Schwab Family of Funds since 2000.) 		  Chairman, Chief Executive Officer and founder of Smith Graham & Co. (investment advisors).     68     Board 1–Board of Cooper Industries
Board 2–Chairman of the Audit Committee of Oneok Partners LP
 
Donald R. Stephens
1938
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Managing Partner, D. R. Stephens & Company (investments).     68     None
 
Joseph H. Wender
1944
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  Senior Managing Director, Chairman of the Finance Committee, GSC Group, until December 2007;     68     Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals
 
 
 
 
24 

Table of Contents

                 
Independent Trustees continued
 
Name, Year of Birth,
 		      Number of
 		   
and Position(s) with
 		      Portfolios in
 		   
the trust; (Terms of
 		      Fund Complex
 		   
office, and length of
 		  Principal Occupations
 		  Overseen by
 		   
Time Served1)   During the Past Five Years   the Trustee   Other Directorships
 
Michael W. Wilsey
1943
Trustee
(Trustee of The Charles Schwab Family of Funds since 1989.) 		  Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).     68     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. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of The Charles Schwab Family of Funds since 1989.) 		  Founded Charles Schwab & Co., Inc. in 1971 and became Chairman in 1978. Since 1986, Chairman and Director, The Charles Schwab Corporation. Since 1989, Director, Charles Schwab Investment Management, Inc., and appointed as Chairman in 1991. Since 1996, Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I and Schwab International Holdings, Inc. Since 1999, Director and Chief Executive Officer, Schwab Holdings, Inc. Since 2003, Chairman, Charles Schwab Bank, N. A.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, and the Charles Schwab & Co., Inc.     68     None
 
Walter W. Bettinger II2
1960
Trustee
(Trustee of The Charles Schwab Family of Funds since 2008.) 		  As of October 2008, Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company; Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.     68     None
 
 
 
 
 
 25

Table of Contents

     
Officers of the Trust
 
Name, Year of Birth, and Position(s)
 		   
with the trust; (Terms of office, and
 		   
length of Time Served3)   Principal Occupations During the Past Five Years
 
     
Randall W. Merk
1954
President and Chief Executive Officer
(Officer of The Charles Schwab Family of Funds since 2007.) 		  Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC.
 
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Institutional Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
 
Jeffrey Mortimer
1963
Senior Vice President and Chief Investment Officer
(Officer of The Charles Schwab Family of Funds since 2004.) 		  Senior Vice President and Chief Investment Officer, Charles Schwab Investment Management, Inc.; President, CEO and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust. Prior to March 31, 2008, Vice President and Chief Investment Officer, Laudus Trust and Laudus Institutional Trust.
 
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of The Charles Schwab Family of Funds since 1998.) 		  Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust. Until 2006, Chief Legal Officer, Laudus Trust and Laudus Institutional Trust.
 
Catherine MacGregor
1964
Vice President
(Officer of The Charles Schwab Family of Funds since 2005.) 		  Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., and Laudus Trust and Laudus Institutional Trust. Since 2006, Chief Counsel, Laudus Trust and Laudus Institutional Trust.
 
Michael Haydel
1972
Vice President
(Officer of The Charles Schwab Family of Funds since 2006.) 		  Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Institutional Trust.
 
 
 
1  Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
 
2  Messrs. Schwab and Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
 
3  The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.
 
 
 
26 

Table of Contents

 
Glossary
 
agency discount notes Notes issued by federal agencies—known as Government Sponsored Enterprises, or GSEs—at a discount to their value at maturity. An agency discount note is a short-term investment alternative offering a high degree of credit quality.
 
asset-backed commercial paper A short-term investment that is typically issued by a bank or other financial institution. The notes represent an interest in financial assets such as trade receivables, credit card receivables, auto receivables, etc. and are generally used for the short-term financing needs of companies.
 
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.
 
commercial paper Promissory notes issued by banks, corporations and other entities to finance short-term credit needs. These securities generally are structured on a discounted basis but sometimes may be interest-bearing notes. Commercial paper, which may be unsecured, is subject to credit risk.
 
corporate note An unsecured debt security issued by a corporation that is subject to the credit risk of the issuer.
 
credit-enhanced securities Securities that are backed by the credit of an entity other than the issuer (such as a financial institution). Credit enhancements, which can equal up to 100% of the security’s value, are designed to help lower the risk of default on a security and may also make the security more liquid.
 
credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly regulate the credit quality of the securities a money market fund can buy.
 
credit ratings Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Standard & Poor’s, Fitch, Inc. and Moody’s Investor Service, to rate their creditworthiness and/or the creditworthiness of their debt issues. For example, an issuer may obtain a long-term rating within the investment grade rating category, which is, from high to low, AAA, AA, A and BBB for Standard & Poor’s and Fitch, and Aaa, Aa, A and Baa for Moody’s.
 
credit risk The risk that a debt issuer may be unable to pay interest or repay principal to its debt holders.
 
dollar-weighted average maturity (DWAM) See weighted average maturity.
 
effective yield A measurement of a fund’s yield that assumes that all interest income is reinvested in additional shares of the fund.
 
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 for the year.
 
face value The value of a bond, note, mortgage or other security as given on the certificate or instrument. Face value is also referred to as par value or nominal value.
 
illiquid securities Securities are generally considered illiquid if they cannot be disposed of promptly (typically within seven days) and in the ordinary course of business at approximately the amount at which a fund has valued the instruments.
 
interest Payments to holders of debt securities as compensation for loaning a security’s principal to the issuer.
 
liquidity-enhanced security The security’s structure includes a liquidity arrangement that requires an entity other than the issuer (such as a large financial institution) to provide funds to pay a tender under most circumstances. Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities for repayment within a specified time period (usually one day or one week) at any time prior to their final maturity.
 
maturity The date a debt security is scheduled to be “retired” and its principal amount repaid to the bond holder. The Maturity of an investment will generally reflect the security’s final maturity date unless the security’s structure includes a maturity-shortening provision such as an interest rate reset, demand feature or put feature which reflects the security’s Effective Maturity Date. For those securities with a maturity-shortening provision, including variable-rate demand securities, the Maturity is determined by using the Effective Maturity Date.
 
municipal securities Debt securities issued by a state, its counties, municipalities, authorities and other subdivisions, or the territories and possessions of the United States and the District of Columbia, including their subdivisions, agencies and instrumentalities and corporations. These securities may be issued to obtain money for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works.
 
net asset value per share (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. Money funds seek to maintain a steady NAV of $1.00.
 
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
 
restricted securities Securities that are subject to contractual restrictions on resale. These securities are often purchased in private placement transactions.
 
section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.
 
section 4(2)/144A securities Securities exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may be sold only to qualified institutional buyers under Securities Act Rule 144A.
 
Structured Investment Vehicle (SIV) SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only

 

 
 
 
 27

Table of Contents

purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.
 
taxable-equivalent yield The yield an investor would need to get from a taxable investment in order to match the yield paid by a given tax-exempt investment, once the effect of all applicable taxes is taken into account. For example, if your tax rate were 25%, a tax-exempt investment paying 4.5% would have a taxable-equivalent yield for you of 6.0% (4.5% ¸ [1 – 0.25%] = 6.0%).
 
Temporary Liquidity Guarantee Program (TLGP) The Federal Deposit Insurance Corporation (FDIC) created the Temporary Liquidity Guarantee Program (TLGP) to strengthen investor confidence and encourage liquidity in the banking system. The TLGP-backed obligations, such as commercial paper or commercial notes, are issued by private issuers and are guaranteed as to principal and interest by the FDIC. These securities are considered U.S. government securities under the rules that govern money market funds and the FDIC has stated that they are backed by the full faith and credit of the United States.
 
Tier 1, Tier 2 Tier 1 is the highest category of credit quality, Tier 2 the second highest. A security’s tier can be established either by an independent rating organization or by a determination of the investment adviser. Money market fund shares and U.S. government securities are automatically considered Tier 1 securities. The Schwab Money Funds only purchase securities which are considered to be Tier 1.  
 
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 maturity For money market mutual funds as per rule 2a-7, the sooner of the maturity (see definition of maturity) of all the debt securities in its portfolio or the date the interest rate on those securities is reset or those securities that can be redeemed through demand, calculated as a weighted average. As a rule, the longer the fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.
 
yield The income paid out by an investment, expressed as a percentage of the investments market value.
 
 
 
 
28 

Table of Contents

 
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.
 
An investor should consider a funds investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1.800.435.4000 for a prospectus and brochure. Please read the prospectus carefully before you invest. This report must be preceeded or accompanied by a current prospectus.
 
Proxy Voting Policies, Procedures and Results
 
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwab.com/marketmasters, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1.800.435.4000.
 
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwab.com/schwabfunds or the SEC’s website at http://www.sec.gov .
 
The Schwab Funds Family®
 
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedge Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab Institutional Select® S&P 500 Fund
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
 
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
 
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab Long-Term Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
 
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
 
 
  * SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC.
  1 Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money.

Table of Contents

(CHARLES SCHWAB LOGO)
 
 
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
 
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
 
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2008 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR32959-04

Table of Contents

 
Schwab Cash Reservestm
 
Semiannual Report
June 30, 2009
 
 
 
(CHARLES SCHWAB LOGO)
 

 

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

Table of Contents

 
From the President
 

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

 
Dear Shareholder,
 
In the past six months, investors have had to endure the continuing effects of a recessionary economy. Volatile equity prices and low yields on government-backed securities have been among the numerous market challenges. In addition, corporate bankruptcies, regulatory changes, and securitized-asset troubles have reshaped fixed income and equity markets causing us to reassess and reexamine where these markets stood before the crisis and where they might take us in the future.
 
Despite this economic backdrop, Schwab’s money funds provided shareholders with safety and liquidity and maintained a stable $1 Net Asset Value during the period. The funds also maintained a positive net yield. However, a low interest rate environment both for taxable and tax-free investments, as well as continued demand for government-backed securities has translated into relatively low yields. For more detail on yields for each fund, please see the fund managers’ discussion and analysis found in the following pages of this report.
 
Information specific to Schwab’s money funds, such as a question and answer document, recent holdings for select money funds, and information on Schwab’s participation in the Treasury’s Temporary Guarantee Program for Money Market Funds can be found on schwab.com under the Money Market Funds page and on schwabinstitutional.com
 
If you have any questions about Schwab’s money funds or other Schwab Funds, we are always available at 1-800-435-4000, while additional resources may be found on schwab.com
 
Thank you for investing with us.
 
Sincerely,
 
-s-Randall W. Merk
 
 
 
Schwab Cash Reserves 1

Table of Contents

 
The Investment Environment
 
 
Investment conditions in the U.S. financial marketplace remained difficult to gauge as a climate of economic recession persisted, but showed signs of improving during the latter half of the reporting period. Broad-market equity indexes, such as the S&P 500 Index® and Russell 1000 Index® displayed meaningful gains since their March lows. The Chicago Board Options Exchange Volatility Index (VIX) – a measure of U.S. stock market price fluctuations – declined from March through the end of the period, settling around 30 after touching the high 50s in January. On the fixed income side, demand for government-backed debt remained strong relative to corporate and other non-government debt. Treasury yields, though still relatively low, inched higher toward the end of the period. From a policy perspective, economic stability and stimulus measures enacted in the U.S. and around the world acted to slow the pace of economic degradation and have encouraged investors to reengage markets in some cases.
 
Major economic indicators, such as Gross Domestic Product (GDP), unemployment, and consumer confidence reflected the recessionary environment, but some indicators improved during the period. GDP – the output of goods and services produced by labor and property located in the United States – decreased at an annual rate of 5.7% in the first quarter of 2009 compared with a decline of 6.3% in the fourth quarter of 2008, according to the Bureau of Economic Analysis. The unemployment rate continued to rise, increasing to 9.4% in May, driven by job losses in the manufacturing sector. However, the Consumer Confidence Index improved in both April and May. As of May 26, 2009 the Index stood at 54.9, compared to 26.9 in March.
 
In this environment, yields on most taxable and municipal money funds were extremely low during the reporting period when compared to historical averages. Money funds that invested exclusively in U.S. Treasury securities or other government-backed assets had the lowest yields. Strong demand for so-called “safe assets”, such as U.S. Treasuries and highly rated short-term commercial paper, in conjunction with a 0% to 0.25% target on the Federal Funds Rate acted to dampen yield on money fund eligible assets. At the close of the period, 3-month Treasuries yielded 0.16% and 2-year Treasuries yielded 1.12%.
 
Despite the depression in yields, the Fed signaled that lending and liquidity conditions were beginning to improve by making modifications to emergency lending programs. In late June, the Fed announced that the Schedule 1 Term Security Lending Facility – a program that lent Treasury securities – would be suspended on July 1, 2009. In addition, reductions were made in the amount of credit auctioned under the Term Auction Facility, which was designed to provide cash to commercial lenders, and the Term Security Lending Facility, which makes funds available to primary bond dealers.
 
Earlier in the period, the Fed extended the Money Market Funds Guarantee Program until September 18, 2009. However, no fund has had to draw on the insurance provided by the program. In a separate move, the U.S. Securities and Exchange Commission (SEC) proposed new rules for money market funds aimed at preventing a repeat of the scenario that caused the collapse of the Reserve Primary Fund. The proposal modifies current restrictions on money funds and requires that funds increase liquidity and lower the ceiling on Weighted Average Maturity (WAM), among other changes. As of the reporting date, the SEC was seeking public comment on the proposal.
 

 
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.

 
 
 
2 Schwab Cash Reserves

Table of Contents

 
Fund Management
 
     
     
(PHOTO)   Linda Klingman, a managing director and portfolio manager of the investment adviser, has overall responsibility for the management of the fund. She joined the firm in 1990 and has managed money market funds since 1988.
     
(PHOTO)   Mike Neitzke, a managing director and portfolio manager of the investment adviser, has day-to-day responsibility for the management of the fund. He joined the firm in March 2001 and has worked in the financial industry as a portfolio manager since 1986.
     
(PHOTO)   Michael Lin, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of the fund. He joined the firm in 2000 and was named to his current position in 2004.
 
 
 
Schwab Cash Reserves 3

Table of Contents

 
 
Schwab Cash Reservestm
 
 
The Schwab Cash Reserves provided safety and liquidity to shareholders throughout the reporting period, while emphasizing credit quality over yield. The fund’s low yield is a product of both a low interest rate environment and the fund managers’ conservative investment strategy. The Federal Funds Rate, which stood at a target range of 0% to 0.25% during the period, in conjunction with high market demand acted to suppress yields on government agency and other securities that the fund invests in to provide safety and liquidity. In addition, yields on the majority of securities in which the fund invests are pegged to the London Interbank Offered Rate (LIBOR)—a key benchmark for short term interest rates—which declined during the period.
 
The fund’s Weighted Average Maturity (WAM)—an indication of the portfolio’s sensitivity to interest rate changes—ranged between 46 and 64 days (from 12/31/08-6/30/09). Due to the low interest rate environment, the WAM was extended toward the long end of this range in the last several months of the period in an effort to bolster yield. In addition, Charles Schwab & Co. and the fund’s investment adviser voluntarily waived and/or reimbursed certain fees or expenses to maintain a positive net yield*. For more information about the fund’s yield, please see the charts and relevant footnotes on the next page.
 
 
As of 6/30/09:
 
 Portfolio Composition by Maturity1
 
     
    % of Investments
1-15 Days
  26.0%
16-30 Days
  9.7%
31-60 Days
  20.7%
61-90 Days
  24.3%
91-120 Days
  7.3%
More than 120 Days
  12.0%
 
 
 Statistics
 
     
Weighted Average Maturity2
  63 days
Credit Quality of Holdings3
% of portfolio
  99.9% Tier 1
 
 Portfolio Composition by Security Type4
 
         
        % of Investments
U.S. Treasury
      1.1%
Government Agency
      26.6%
Repurchase Agreements
      4.4%
Commercial Paper (CP)
       
Asset Backed CP
      16.2%
Bank/Financial CP
      4.9%
Corporate CP
      0.6%
TLGP CP5
      5.6%
Certificates of Deposit
      36.3%
Bank Notes (BN)
       
TLGP BN5
      0.8%
Other BN
      0.8%
Corporate Notes (CN)
       
TLGP CN5
      0.4%
Other CN
      1.8%
Time Deposits
      0.5%
Total
      100.0%
 
An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose
 
*Schwab and the investment adviser may recapture expenses or fees they waived and/or reimbursed until the third anniversary of the end of the fiscal year in which such waiver and/or reimbursement occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 5 of the Financial Notes Section.
 
Portfolio holdings may have changed since the report date.
 
1  As shown in the Portfolio Holdings section of the shareholder report.
 <