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From the President

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

Money market investors experienced historically low yields during the year as the Federal Reserve (the Fed) targeted its federal funds rate between zero and 0.25%.

Dear Shareholder,

It is a pleasure to have this opportunity to write to you for the first time as President and Chief Executive Officer of Charles Schwab Investment Management, Inc., the investment adviser to the Schwab Funds. In the accompanying pages, please find the annual report for the Schwab Retirement Advantage Money Fund and Schwab Investor Money for the 12-month period that ended December 31, 2010.

During most of 2010, investors and markets weathered a tepid U.S. economy, regulatory changes to the money market fund industry, and Federal Reserve (the Fed) actions that were aimed at keeping short term interest rates low. Despite stubbornly high unemployment and few signs of a turnaround in the housing market in the United States, nearly all investment markets rewarded investors with positive returns. Boosted by high corporate profits in many sectors, U.S. equity markets generated positive returns for the reporting period, as measured by the S&P 500’s 15.1% return. A broad benchmark for fixed income, the Barclays Capital U.S. Aggregate Bond Index, returned 6.5%. International stocks, as measured by the MSCI EAFE Index, returned 8.2%. Equities in emerging countries rewarded investors with a 19.2% return, according to the MSCI Emerging Markets Index, as their economies rebounded and their currencies rose in many cases.

Money market investors experienced historically low yields during the year as the Federal Reserve targeted its federal funds rate between zero and 0.25%. The Fed continued its quantitative easing programs, buying Treasuries to keep borrowing rates low and stimulate economic growth. In mid-year, fears of a debt crisis in Greece and other European nations temporarily pressed short-term interest rates upward, but they settled lower again some months later. Toward the year’s end, intermediate and longer-term interest rates began to rise in anticipation of a stronger economy, the extension of the Bush tax cuts for 2011, and a rebound in consumer spending.

In February 2010, the Securities and Exchange Commission (SEC) adopted new amendments to Rule 2a-7 of the Investment Company Act of 1940, the rule that regulates money funds. The changes included new requirements for money funds to maintain minimum levels of liquidity and lowered the maximum permissible weighted average maturity of a money fund portfolio. The SEC also mandated increased disclosure to investors to help them make more informed decisions about the money funds they invest in. The new rules helped drive demand up and yields down for short-term instruments.

Recognizing the important role that money market funds play in investors’ portfolios, the funds’ investment adviser and its affiliates continued to waive certain fees or expenses during the year to maintain positive net yields for certain Schwab money funds.

Thank you for investing with the Schwab money market funds. We encourage you to review your investment portfolio regularly to make sure it meets your current financial plan. For answers to questions you may have or to consult our website for more information, please visit www.schwabfunds.com. We are also happy to hear from you at 1-800-435-4000.

Sincerely,

2 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

The Investment Environment

Economic Overview

The decision by the Federal Open Market Committee (the FOMC) in November 2010 to initiate a new program of security purchases, often referred to as quantitative easing, reminded investors that the U.S. economy was still in need of systemic reinforcement.

This latest announcement from the FOMC that it would purchase an additional $600 billion in longer-term U.S. Treasury securities followed earlier policy decisions that included: lowering the federal funds rate to near zero in December 2008 and keeping it there for an extended period of time; authorizing the large-scale purchase of longer-term securities in 2009 and early 2010; and modifying the Federal Reserve’s (the Fed) reinvestment policy in the summer of 2010 on mortgage-related securities, as they matured or were redeemed, in an effort to manage the Fed’s balance sheet.

Contributing to the FOMC’s decision to purchase an additional $600 billion in U.S. Treasuries was a U.S. unemployment rate that had remained above 9% since the fall of 2009 and an inflation rate that was still below optimal levels for what the Fed believed to be a sustainable recovery. Moreover, reports that many of the unemployed in the United States have been seeking employment for more than six months highlighted the fact that job creation had not kept pace with the rising number of people looking for jobs. Adding to the complexity of this economic picture was the decline in housing prices, accompanied by a rise in foreclosures.

Positive economic news was also part of the landscape. Corporations reported high profits for the period under review and increased their investment in equipment and software. Household spending was also up for the reporting period. Gross Domestic Product (GDP) growth—the output of goods and services produced by labor and property in the United States—was positive. The first, second, and third quarter GDP growth rates reached 3.7%, 1.7%, and 2.6%, respectively.

At the international level, news from Europe in the spring of 2010 described the challenges faced by several euro-zone countries as they tried to meet the demands of their sovereign debt. Central banks in Europe responded with financial supports of various types that typically came with the mandate that the countries receiving help also make deep budget cuts. Many of the cuts targeted the rising costs linked to maintaining long-standing benefits such as retirement pensions and subsidized education and health care, which had become unaffordable in an environment of declining revenue.

Money Markets

The Fed’s decision to keep the federal funds rate in the 0% to 0.25% range resulted in a low interest rate environment throughout the reporting period. Low interest rates combined with limited supply of short-term, high-quality taxable and tax-exempt securities suppressed short-term yields. The limited supply was driven, in part, by the new SEC regulations that required money market funds to maintain a weighted average maturity (WAM) of 60 days or less and that required them to meet new minimum liquidity standards. The need to meet these new regulations created higher demand for shorter-term securities, especially short-term U.S. Treasuries, which put downward pressure on yields.

Fixed Income

In the tax-free fixed income markets, many state and local governments saw 4−5% increases in tax revenues during the third quarter of 2010, which continued through year-end. However, tax revenues still remained well below the highs that occurred in 2008. Many fiscal 2011 budgets, passed in the summer of 2010, relied on the final year of federal stimulus funds for Medicaid and education, deep spending cuts, and the use of reserves to achieve balanced budgets. The slow recovery of municipal revenues, continued high unemployment in many states, news regarding high state and local government pension costs, and the spectre of future budgets without federal stimulus funds, all raised investor concerns in the last few months of the reporting period.

Also adding to the challenges in the bond markets was investor response to market volatility. The Euro-debt concerns that crystallized in May 2010 helped to push investors toward U.S. Treasuries. This put further downward pressure on U.S. Treasury rates, as demand outpaced supply. However, as the global stock market gained momentum toward the end of summer and continued to rise through the end of 2010, intermediate and longer-term U.S. Treasury rates rose to nearly match where they had been at the beginning of the reporting period. However, the shorter-term rates remained well below 1.00%.

In other categories, corporate bonds, including investment-grade and high-yield, offered investors returns that outpaced U.S. Treasuries, as did commercial mortgage-backed and agency mortgage-backed securities.

Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 3

The Investment Environment continued

As for broad bond market performance, the Barclays Capital U.S. Aggregate Bond Index returned 6.54%, the Barclays Capital U.S. TIPS Index returned 6.31%, the Barclays U.S. Treasury Index returned 5.87%, and the Barclays Capital General Muni Bond Index returned 2.38% for the 12 months under review.

Equities

The U.S. and international stock markets weathered a few ups and downs during the reporting period. In addition to the European debt crisis, the Deepwater Horizon oil spill on April 20, 2010, in the Gulf of Mexico, caused a short-lived decline in energy stocks. This was followed by a sudden, but temporary, 999-point drop in the Dow Jones Industrial Average within a 30-minute timeframe, on May 6, 2010. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges. Despite these events, both U.S. and international equity markets rebounded. In fact, the U.S. and international stock markets rewarded investors with positive returns for the 12 months under review, despite these disturbances and the slow-paced economic recovery.

For the reporting period, the S&P 500 Index returned 15.06%. In general, growth stocks outperformed value in small-, mid-, and large-cap categories, though not necessarily by wide margins. Small-cap growth stocks had the widest spread, with the Russell 2000 Growth Index returning 29.09% and the Russell 2000 Value Index returning 24.50%. By comparison, the Russell Midcap Growth Index returned 26.38%, compared to the Russell Midcap Value Index returning 24.75%, while the Russell 1000 Growth Index returned 16.71%, against the Russell 1000 Value Index return of 15.51%.

On the international side, the MSCI EAFE Index (Gross) returned 8.21%, while the MSCI EAFE Growth Index returned 12.60%, followed by the MSCI EAFE Value Index, which returned 3.81%. Here again, growth outpaced value, but the best performing index on the international level was the MSCI Emerging Markets Index, which returned 19.20%.

Sectors

All sectors in the U.S. equity markets had positive absolute returns. Consumer Discretionary and Industrials were the best performing sectors, followed by Materials, Energy, and Telecommunications, which also had solid returns. Sectors with low, but still positive returns included Health Care, Utilities, and Information Technology.

Top performing sectors at the international level were Industrials, Consumer Discretionary, and Materials. Utilities and Financials posted negative returns and were the poorest performers on an international level.

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

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

4 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Schwab Retirement Advantage Money Fund^®

Schwab Retirement Advantage Money Fund (the fund) seeks the highest current income consistent with stability of capital and liquidity.

During the 12-month reporting period that ended December 31, 2010, the fund provided safety and liquidity to shareholders, in the face of an investment environment characterized by low yields on short term, high quality investments. The fund’s investment adviser and its affiliates voluntarily waived certain fees or expenses to maintain a positive net yield for the fund.* Please read more about the yield and other important characteristics of the fund in the charts and footnotes following this discussion.

The fund’s low yield was a product of both a low interest rate environment and recent regulatory changes relating to money market funds. During 2010 the Federal Reserve continued to target its federal funds rate at a historically low range of 0-0.25%, which maintained low yields on securities in which the fund invests and, in turn, kept the yield of the fund low. In addition, in February 2010 the Securities and Exchange Commission (SEC) adopted amendments to Rule 2a-7 of the Investment Company Act of 1940 to bolster the ability of money funds to withstand economic stresses. The new regulations established minimum daily and weekly liquidity levels and shortened the maximum weighted average maturity (WAM) for money market funds from 90 days to 60 days. These changes increased demand for short-term securities across all money funds, helping to depress money market yields.

The investment adviser shortened the portfolio’s WAM during the first half of the year in anticipation of the new SEC regulations. Having a shortened WAM prior to the European credit crisis placed the fund in a position to purchase longer dated securities in the credit sector at attractive yields as the crisis started to wane. At the end of the reporting period, the fund’s WAM was 40 days. The fund also invested in repurchase agreements collateralized by equity securities based on the credit quality of the repurchase agreement counterparty.

As of 12/31/10:

Portfolio Composition by Maturity¹


		% of Investments

1-15 Days		48.5%
16-30 Days		11.0%
31-60 Days		13.0%
61-90 Days		14.7%
91-120 Days		2.7%
More than 120 Days		10.1%

Statistics


Weighted Average Maturity²		40 Days
Credit Quality of Holdings³ % of portfolio		99.99% Tier 1

Portfolio Composition by Security Type⁴


				% of Investments

U.S. Treasury				0.6%
Government Agency & Other Government Securities⁵				13.7%
Repurchase Agreement				20.7%
Commercial Paper (CP)
Asset Backed CP				16.5%
Bank/Financial CP				8.3%
Certificate of Deposit				35.1%
Bank Note				2.5%
Corporate Note				1.1%
Time Deposit				0.6%
Other				0.9%
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.


*		The investment adviser and its affiliates may recapture expenses or fees they voluntarily waived until the third anniversary of the end of the fiscal year in which such waiver occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 4 of the Financial Notes section.
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 60 days (effective June 30, 2010), 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 or, if unrated, is determined to be of comparable quality. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies. The fund itself has not been rated by an independent credit rating agency.
⁴		Portfolio Composition is calculated using the Par Value of Investments.
⁵		Includes debt issued by Straight A Funding LLC, which the U.S. Securities and Exchange Commission has stated is permissible for money market funds to treat as government securities for the purpose of compliance with the diversification requirements of Rule 2a-7(c)(4)(i).

6 Schwab Retirement Advantage Money Fund^®

Performance and Fund Facts as of 12/31/10

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.schwabfunds.com/prospectus.

Weighted Average Maturity Trend for previous 12 months

Money funds must maintain a dollar-weighted average maturity of no longer than 60 days (effective June 30, 2010), and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

7-Day Average Yield Trend for previous 12 months

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		0.01%


Seven-Day Yield—Without Contractual Expense Limitation³		-0.13%


Seven-Day Effective Yield²		0.01%

Portfolio holdings may have changed since the report date.


¹		Please see prospectus for further detail and eligibility requirements.
²		Yield reflects the effect of the fund’s agreement with the investment adviser and its affiliates to limit the fund’s total annual operating expenses to certain levels (contractual expense limitation). In addition, the investment adviser and its affiliates have voluntarily waived expenses in excess of the contractual expense limitation to maintain a positive net yield for the fund (voluntary expense waiver). Without the contractual expense limitation and the voluntary expense waiver, the fund’s yield would have been lower. Please see Note 4 in the Financial Notes section for additional details.
³		Yield does not reflect the effect of the contractual expense limitation but does reflect the effect of the voluntary expense waiver. The voluntary expense waiver added 0.13% to the seven-day yield.

Schwab Retirement Advantage Money Fund^® 7

Schwab Investor Money Fund^®

Schwab Investor Money Fund (the fund) seeks the highest current income consistent with stability of capital and liquidity.

During the 12-month reporting period that ended December 31, 2010, the fund provided safety and liquidity to shareholders in the face of an investment environment characterized by low yields on short term, high quality investments. The fund’s investment adviser and its affiliates voluntarily waived certain fees or expenses to maintain a positive net yield for the fund.* From time to time, the adviser also recaptured previously waived fees, which reduced the yield for the fund at such times. Please read more about the yield and other important characteristics of the fund in the charts and footnotes following this discussion.

The investment adviser shortened the portfolio’s WAM during the first half of the year in anticipation of the new SEC regulations. Having a shortened WAM prior to the European credit crisis placed the fund in a position to purchase longer dated securities in the credit sector at attractive yields as the crisis started to wane. At the end of the reporting period, the fund’s WAM was 42 days. The fund also invested in repurchase agreements collateralized by equity securities based on the credit quality of the repurchase agreement counterparty.

As of 12/31/10:

Portfolio Composition by Maturity¹


		% of Investments

1-15 Days		40.6%
16-30 Days		17.3%
31-60 Days		18.7%
61-90 Days		9.3%
91-120 Days		2.9%
More than 120 Days		11.2%

Statistics


Weighted Average Maturity²		42 Days
Credit Quality of Holdings³ % of portfolio		99.99% Tier 1

Portfolio Composition by Security Type⁴


				% of Investments

U.S. Treasury				0.6%
Government Agency & Other Government Securities⁵				12.1%
Repurchase Agreement				14.8%
Commercial Paper (CP)
Asset Backed CP				19.7%
Bank/Financial CP				9.8%
Certificate of Deposit				34.6%
Bank Note				1.9%
Corporate Note				2.8%
Time Deposit				3.2%
Other				0.5%
Total				100.0%

Portfolio holdings may have changed since the report date.


*		The investment adviser and its affiliates may recapture expenses or fees they voluntarily waived until the third anniversary of the end of the fiscal year in which such waiver occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 4 of the Financial Notes section.
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 60 days (effective June 30, 2010), 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 or, if unrated, is determined to be of comparable quality. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies. The fund itself has not been rated by an independent credit rating agency.
⁴		Portfolio Composition is calculated using the Par Value of Investments.
⁵		Includes debt issued by Straight A Funding LLC, which the U.S. Securities and Exchange Commission has stated is permissible for money market funds to treat as government securities for the purpose of compliance with the diversification requirements of Rule 2a-7(c)(4)(i).

8 Schwab Investor Money Fund^®

Performance and Fund Facts as of 12/31/10

Weighted Average Maturity Trend for previous 12 months

7-Day Average Yield Trend for previous 12 months

Seven-Day Yields


		Schwab Investor
		Money Fund


Ticker Symbol		SWRXX
Minimum Initial Investment¹		$1 Retirement Plan Participants
		$2,500 Other Investors


Seven-Day Yield²		0.01%


Seven-Day Yield—Without Contractual Expense Limitation³		-0.03%


Seven-Day Effective Yield²		0.01%

Portfolio holdings may have changed since the report date.


¹		Please see prospectus for further detail and eligibility requirements.
²		Yield reflects the effect of the fund’s agreement with the investment adviser and its affiliates to limit the fund’s total annual operating expenses to certain levels (contractual expense limitation). In addition, the investment adviser and its affiliates have voluntarily waived expenses in excess of the contractual expense limitation to maintain a positive net yield for the fund (voluntary expense waiver). Without the contractual expense limitation and the voluntary expense waiver, the fund’s yield would have been lower. Please see Note 4 in the Financial Notes section for additional details.
³		Yield does not reflect the effect of the contractual expense limitation but does reflect the effect of the voluntary expense waiver. The voluntary expense waiver added 0.25% to the seven-day yield.

Schwab Investor Money Fund^® 9

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 July 1, 2010 and held through December 31, 2010.

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

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

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

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


					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio¹		Account Value		(Net of Expenses)		During Period²
	(Annualized)		at 7/1/10		at 12/31/10		7/1/10–12/31/10

Schwab Retirement Advantage Money Fund^®
Actual Return		0.37%	$	1,000	$	1,000.10	$	1.87
Hypothetical 5% Return		0.37%	$	1,000	$	1,023.34	$	1.89


Schwab Investor Money Fund^®
Actual Return		0.37%	$	1,000	$	1,000.10	$	1.87
Hypothetical 5% Return		0.37%	$	1,000	$	1,023.34	$	1.89


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

10 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Schwab Retirement Advantage Money Fund^®

Financial Statements

Financial Highlights


	1/1/10–			1/1/09–			1/1/08–			1/1/07–			1/1/06–
	12/31/10			12/31/09			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			1.00

Income (loss) from investment operations:
Net investment income (loss)		0.00	¹		0.00	¹		0.03			0.05			0.05
Net realized and unrealized gains (losses)		0.00	^1,2		(0.00	)¹		—			—			—

Total from investment operations		0.00	¹		0.00	¹		0.03			0.05			0.05
Less distributions:
Distributions from net investment income		(0.00	)¹		(0.00	)¹		(0.03	)		(0.05	)		(0.05	)

Net asset value at end of period		1.00			1.00			1.00			1.00			1.00

Total return (%)		0.01			0.20			2.56			4.96			4.67

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.34	³		0.44	^3,4		0.48	⁴		0.48			0.49
Gross operating expenses		0.60			0.62			0.60			0.62			0.64
Net investment income (loss)		0.01			0.20			2.52			4.85			4.59
Net assets, end of period ($ x 1,000,000)		873			954			984			946			802

¹ Per-share amount was less than $0.01.

² Net realized and unrealized gains (losses) ratio includes payment from affiliate of $471,270. (See financial note 4)

³ Reflects the effect of a voluntary expense waiver in excess of the contractual expense limitation. (See financial note 4)

⁴ The ratio of net operating expenses would have been 0.41% for 2009 and 0.47% for 2008, 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

Schwab Retirement Advantage Money Fund

Portfolio Holdings as of December 31, 2010

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

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarter 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 fund also files a complete schedule of portfolio holdings with the SEC monthly on Form N-MFP which is available 60 days after the end of the month to which the information pertains. A monthly schedule of portfolio holdings is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus along with a link to the fund’s Form N-MFP filings on the SEC’s website.

For fixed rate obligations, the rate shown is the coupon rate (the rate established when the obligation was issued) and if the coupon rate is not available, the effective yield at the time of purchase is shown. For variable-rate obligations, the rate shown is the interest rate as of the report date. If the security’s structure includes one of a number of maturity-shortening provisions set forth in Rule 2a-7, such as an interest rate reset, demand feature or put feature, the effective maturity date is disclosed. In addition, the second maturity date shown is either the date on which the principal amount must be paid or the date payment must be made pursuant to a demand feature. If the effective maturity and maturity date are the same, the date will appear in the maturity date column.


				Cost		Value
Holdings by Category				($)		($)

	56	.6%	Fixed-Rate Obligations		493,628,109		493,628,109
	9	.8%	Variable-Rate Obligations		85,914,897		85,914,897
	6	.2%	U.S. Government Securities		53,998,605		53,998,605
	8	.4%	U.S. Government Agency Securities		73,493,225		73,493,225
	21	.2%	Repurchase Agreements		185,102,344		185,102,344
	0	.0%	Other Investment		59,677		59,677


	102	.2%	Total Investments		892,196,857		892,196,857
	(2	.2)%	Other Assets and Liabilities, Net				(19,420,527	)


	100	.0%	Net Assets				872,776,330


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Fixed-Rate Obligations 56.6% of net assets

Bank Notes 2.5%
Bank of America, N.A.		0.30%			01/05/11		6,000,000		6,000,013
		0.30%			03/04/11		6,000,000		6,000,000
		0.32%			03/23/11		4,000,000		4,000,000
		0.32%			04/04/11		1,000,000		1,000,000

Chase Bank USA, N.A.		0.23%			02/07/11		5,000,000		5,000,000

									22,000,013

Certificates of Deposit 28.1%
Abbey National Treasury Services PLC	a	0.67%			03/29/11		2,000,000		2,000,000
	a	0.68%			05/02/11		3,000,000		3,000,050

Banco Santander S.A.		0.64%			03/03/11		9,000,000		9,000,000

Bank of Nova Scotia		0.23%			01/06/11		12,000,000		12,000,000
		0.28%			03/03/11		1,000,000		1,000,000
		0.29%			03/03/11		4,000,000		4,000,000

Bank of Tokyo Mitsubishi UFJ Ltd.		0.30%			01/05/11		1,000,000		1,000,000
		0.30%			03/31/11		9,000,000		9,000,000
		0.52%			07/27/11		1,000,000		1,000,000

Barclays Bank PLC		0.72%			05/04/11		6,000,000		6,000,000

BNP Paribas		0.30%			01/03/11		8,000,000		8,000,000
		0.71%			01/10/11		1,000,000		1,000,000
		0.61%			01/28/11		4,000,000		4,000,000
		0.56%			02/03/11		1,000,000		1,000,000

12 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)
BNP Paribas continued		0.44%			03/10/11		5,000,000		5,000,000
		0.50%			06/17/11		18,000,000		18,000,000
		0.45%			07/13/11		4,000,000		4,000,000
		0.46%			07/15/11		1,000,000		1,000,000

Credit Agricole Corporate & Investment Bank		0.30%			02/01/11		3,000,000		3,000,000

Credit Agricole S.A.		0.32%			02/01/11		3,000,000		3,000,000

Credit Suisse AG		0.23%			01/03/11		2,000,000		2,000,000

Deutsche Bank AG		0.26%			01/06/11		10,000,000		10,000,000
		0.37%			06/07/11		10,000,000		10,000,000

DnB NOR Bank ASA		0.40%			02/18/11		10,000,000		10,000,000

Intesa Sanpaolo		0.37%			01/04/11		6,000,000		6,000,020

Lloyds TSB Bank PLC		0.63%			02/07/11		4,000,000		4,000,000
		0.44%			05/03/11		7,000,000		7,000,000

Mitsubishi UFJ Trust & Banking Corp.		0.30%			01/05/11		7,000,000		7,000,000
		0.30%			03/14/11		1,000,000		1,000,000

Mizuho Corporate Bank Ltd.		0.27%			01/10/11		2,000,000		2,000,000
		0.27%			01/24/11		6,000,000		6,000,000

Nationwide Building Society		0.53%			03/02/11		3,000,000		3,000,025

Royal Bank of Scotland PLC		0.64%			07/19/11		2,000,000		2,000,000
		1.00%			08/24/11		10,000,000		10,000,000

Societe Generale		0.34%			03/08/11		4,000,000		4,000,000
		0.40%			04/08/11		4,000,000		4,000,000
		0.40%			04/18/11		2,000,000		2,000,000

Sumitomo Mitsui Banking Corp.		0.29%			02/07/11		2,000,000		2,000,000
		0.30%			04/08/11		10,000,000		10,000,000

Sumitomo Trust & Banking Co.		0.28%			01/11/11		4,000,000		4,000,000
		0.33%			01/11/11		4,000,000		4,000,006

Toronto Dominion Bank		0.24%			02/10/11		4,000,000		4,000,000
		0.28%			03/18/11		8,000,000		8,000,000

UBS AG		0.70%			01/31/11		5,000,000		5,000,000
		0.48%			02/09/11		7,000,000		7,000,000
		0.59%			05/31/11		5,000,000		5,000,000

UniCredit S.p.A.		0.95%			02/22/11		10,000,000		10,000,000

									245,000,101

Commercial Paper & Other Corporate Obligations 25.4%
Alpine Securitization Corp.	a,b,c	0.24%			01/11/11		5,000,000		4,999,667

Amsterdam Funding Corp.	a,b,c	0.32%			01/27/11		1,490,000		1,489,656
	a,b,c	0.27%			02/04/11		3,000,000		2,999,235
	a,b,c	0.30%			03/08/11		1,250,000		1,249,313

ANZ National (Int’l) Ltd.	a	0.25%			01/04/11		3,000,000		2,999,937

Argento Variable Funding Co., L.L.C.	a,b,c	0.32%			03/02/11		4,000,000		3,997,867

See financial notes 13

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Atlantis One Funding Corp.	a,b,c	0.30%			03/03/11		3,000,000		2,998,475
	a,b,c	0.29%			03/07/11		9,000,000		8,995,287
	a,b,c	0.37%			06/09/11		1,000,000		998,366

CAFCO, L.L.C.	a,b,c	0.67%			01/18/11		6,000,000		5,998,102
	a,b,c	0.59%			01/20/11		2,000,000		1,999,377
	a,b,c	0.34%			02/03/11		1,000,000		999,688

Cancara Asset Securitization, L.L.C.	a,b,c	0.30%			01/10/11		4,000,000		3,999,700
	a,b,c	0.30%			01/14/11		3,000,000		2,999,675
	a,b,c	0.30%			01/18/11		4,000,000		3,999,433
	a,b,c	0.30%			03/11/11		1,000,000		999,425

Chariot Funding, L.L.C.	a,b,c	0.23%			01/06/11		6,000,000		5,999,808

Ciesco, L.L.C.	a,b,c	0.58%			01/10/11		8,000,000		7,998,840

Citigroup Funding, Inc.	a	0.49%			02/07/11		1,000,000		999,496
	a	0.29%			03/03/11		1,000,000		999,509
	a	0.40%			03/08/11		7,000,000		6,994,867
	a	0.40%			03/16/11		3,000,000		2,997,533

Commonwealth Bank of Australia	c	0.28%			03/15/11		10,000,000		9,994,322

CRC Funding, L.L.C.	a,b,c	0.30%			01/10/11		2,000,000		1,999,850
	a,b,c	0.57%			02/01/11		2,000,000		1,999,018
	a,b,c	0.55%			02/03/11		1,000,000		999,496

Danske Corp.	a,c	0.29%			01/03/11		3,000,000		2,999,952

Falcon Asset Securitization Corp.	a,b,c	0.23%			01/03/11		12,000,000		11,999,847

Gemini Securitization Corp., L.L.C.	a,b,c	0.30%			03/16/11		11,000,000		10,993,217
	a,b,c	0.30%			03/21/11		1,000,000		999,342

General Electric Capital Corp.		0.39%			06/15/11		18,000,000		17,967,825
		0.39%			06/27/11		3,000,000		2,994,247

Grampian Funding, L.L.C.	a,b,c	0.58%			02/10/11		1,000,000		999,356
	a,b,c	0.50%			03/15/11		3,000,000		2,996,958
	a,b,c	0.51%			03/17/11		5,000,000		4,994,687

HSBC USA, Inc.		0.23%			01/11/11		4,000,000		3,999,744

Jupiter Securitization Corp.	a,b,c	0.23%			01/18/11		12,000,000		11,998,697

Lloyds TSB Bank PLC		0.50%			03/10/11		1,000,000		999,056

Nationwide Building Society		0.45%			05/04/11		1,000,000		998,463

Nordea North America, Inc.	a	0.30%			03/15/11		2,000,000		1,998,783

Santander Central Hispano Finance (Delaware), Inc.	a	0.67%			02/04/11		4,000,000		3,997,469

Sheffield Receivables Corp.	a,b,c	0.30%			01/06/11		2,000,000		1,999,917

Skandinaviska Enskilda Banken AB		0.36%			01/18/11		2,000,000		1,999,665

Societe Generale North America, Inc.	a	0.26%			01/03/11		4,000,000		3,999,943
	a	0.40%			04/06/11		7,000,000		6,992,611

Solitaire Funding, L.L.C.	a,b,c	0.31%			01/07/11		6,000,000		5,999,690
	a,b,c	0.30%			01/18/11		2,000,000		1,999,717
	a,b,c	0.30%			01/27/11		3,000,000		2,999,350

14 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Starbird Funding Corp.	a,b,c	0.26%				01/31/11		1,000,000		999,783

Thames Asset Global Securitization No. 1, Inc.	a,b,c	0.28%				03/10/11		6,000,000		5,996,827

Thunder Bay Funding, L.L.C.	a,b,c	0.25%				01/19/11		6,000,000		5,999,250

Ticonderoga Funding, L.L.C.	a,b,c	0.30%				01/25/11		2,000,000		1,999,600

Windmill Funding Corp.	a,b,c	0.27%				02/07/11		7,000,000		6,998,057

										221,627,995

Time Deposit 0.6%
Citibank, N.A.		0.25%				01/03/11		5,000,000		5,000,000

Total Fixed-Rate Obligations
(Cost $493,628,109)										493,628,109




Variable-Rate Obligations 9.8% of net assets


Banco Bilbao Vizcaya Argentaria S.A.		0.56%				01/07/11		5,000,000		5,000,000

Barclays Bank PLC		0.76%		01/18/11		10/17/11		7,000,000		7,000,000

Dexia Credit Local		0.56%				01/07/11		5,000,000		5,000,000

JPMorgan Chase Bank, N.A.		0.26%		01/21/11		01/21/12		10,000,000		10,000,000

National Australia Bank Ltd.		0.28%				01/31/11		5,000,000		5,000,000

New York City IDA
Revenue Bonds (Allway Tools) Series 1997	a	0.51%				01/07/11		105,000		105,000

Palm Springs, CA
Certificates of Participation Series 2002A	a	0.45%				01/07/11		7,810,000		7,810,000

Rabobank Nederland		0.34%		01/07/11		10/07/11		16,000,000		16,000,000
		0.35%		01/05/11		12/05/11		5,000,000		5,000,000

Westpac Banking Corp.		0.30%		01/15/11		03/15/11		5,000,000		4,999,897
		0.31%		01/04/11		06/01/11		20,000,000		20,000,000

Total Variable-Rate Obligations
(Cost $85,914,897)										85,914,897




U.S. Government Securities 6.2% of net assets

U.S. Treasury Bill 0.6%
U.S. Treasury Bill		0.20%				01/13/11		5,000,000		4,999,667

Other Government Related 5.6%
Straight A Funding, L.L.C.	a,b,c,f	0.23%				01/04/11		42,000,000		41,999,195
	a,b,c,f	0.22%				01/07/11		7,000,000		6,999,743

										48,998,938

Total U.S. Government Securities
(Cost $53,998,605)										53,998,605

See financial notes 15

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

U.S. Government Agency Securities 8.4% of net assets

Fixed-Rate Discount Notes 6.7%
Fannie Mae		0.17%				02/01/11		25,000,000		24,996,576
		0.16%				02/22/11		1,000,000		999,769

Federal Home Loan Bank		0.15%				01/07/11		1,000,000		999,975
		0.16%				01/07/11		3,500,000		3,499,907
		0.14%				01/14/11		2,000,000		1,999,895
		0.15%				01/19/11		4,000,000		3,999,700
		0.17%				01/26/11		22,000,000		21,997,403

										58,493,225

Variable-Rate Obligation 1.7%
Freddie Mac		0.14%		01/10/11		11/10/11		15,000,000		15,000,000

Total U.S. Government Agency Securities
(Cost $73,493,225)										73,493,225



							Face/
							Maturity
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Repurchase Agreements 21.2% of net assets


Barclays Capital, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $35,700,000, issued 12/23/10, due 01/03/11.		0.14%				01/03/11		34,001,454		34,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $10,500,000, issued 12/22/10, due 01/03/11.		0.20%				01/03/11		10,000,667		10,000,000

Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $66,408,236, issued 12/31/10, due 01/03/11.		0.15%				01/03/11		65,103,158		65,102,344

Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $1,040,000, issued 12/21/10, due 01/03/11.		0.21%				01/03/11		1,000,076		1,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $27,040,000, issued 12/10/10, due 01/06/11.		0.20%				01/06/11		26,003,900		26,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $4,160,000, issued 12/14/10, due 01/06/11.		0.20%				01/06/11		4,000,511		4,000,000

16 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued

Face/

Maturity

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity*

Date*

($)

Goldman Sachs & Co.

Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $21,000,000, issued 12/31/10, due 01/03/11.

0.17%

01/03/11

20,000,283

20,000,000

Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $7,350,000, issued 12/23/10, due 01/03/11.

0.18%

01/03/11

7,000,385

7,000,000

Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $1,050,000, issued 12/31/10, due 01/07/11.

0.19%

01/07/11

1,000,037

1,000,000

Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $2,100,001, issued 11/04/10, due 02/17/11.

0.60%

02/17/11

2,003,500

2,000,000

Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $5,250,017, issued 11/09/10, due 02/22/11.

0.60%

02/22/11

5,008,750

5,000,000

Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $3,150,018, issued 11/16/10, due 03/01/11.

0.57%

03/01/11

3,004,988

3,000,000

Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $7,350,045, issued 11/29/10, due 03/14/11.

0.60%

03/14/11

7,012,250

7,000,000

Total Repurchase Agreements

(Cost $185,102,344)

185,102,344

Face

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity*

Date*

($)

Other Investment 0.0% of net assets

Whistlejacket Capital, L.L.C.

c,d,e

n/a

59,677

59,677

Total Other Investments

(Cost $59,677)

59,677

End of Investments.

At 12/31/10, the tax basis cost of the fund’s investments was $892,196,857.


*		If the security’s structure includes one of a number of maturity-shortening provisions set forth in Rule 2a-7, such as interest rate reset, demand feature or put feature, the effective maturity date is disclosed. The second maturity date is either the date on which the principal amount must be paid or the date payment must be made pursuant to a demand feature. If the effective maturity and maturity date are the same, the date will appear in the maturity column.
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 $209,747,462 or 24.0% of net assets.
d		Illiquid security. At the period end, the value of these amounted to $17,059,677 or 2.0% of net assets.
e		Whistlejacket notes are in receivership, and the fund elected to sell all of its Whistlejacket notes at auction (4/29/2009). The remaining investment represents an interest in a small residual fund that is being held to cover any remaining expenses and liabilities associated with receivership.
f		The U.S. Securities and Exchange Commission has stated that it is permissible for money market funds to treat Straight A Funding LLC securities as government securities for the purpose of compliance with the diversification requirements of Rule 2a-7(c)(4)(i).


IDA —		Industrial development agency/authority

See financial notes 17

Schwab Investor Money Fund^®

Financial Statements

Financial Highlights


	1/1/10–			1/1/09–			1/1/08–			1/1/07–			1/1/06–
	12/31/10			12/31/09			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			1.00

Income (loss) from investment operations:
Net investment income (loss)		0.00	¹		0.00	¹		0.02			0.05			0.04
Net realized and unrealized gains (losses)		0.00	^1,2		(0.00	)¹		—			—			—

Total from investment operations		0.00	¹		0.00	¹		0.02			0.05			0.04
Less distributions:
Distributions from net investment income		(0.00	)¹		(0.00	)¹		(0.02	)		(0.05	)		(0.04	)

Net asset value at end of period		1.00			1.00			1.00			1.00			1.00

Total return (%)		0.01			0.16			2.41			4.82			4.50

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.34	³		0.51	^3,4		0.60			0.62			0.67
Gross operating expenses		0.62			0.64			0.62			0.63			0.67
Net investment income (loss)		0.01			0.17			2.37			4.71			4.50
Net assets, end of period ($ x 1,000,000)		1,495			1,832			2,360			2,089			1,314

¹ Per-share amount was less than $0.01.

² Net realized and unrealized gains (losses) ratio includes payment from affiliate of $1,351,086. (See financial note 4)

³ Reflects the effect of a voluntary expense waiver in excess of the contractual expense limitation. (See financial note 4)

⁴ The ratio of net operating expenses would have been 0.48% if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been incurred.

See financial notes 21

Schwab Investor Money Fund

Portfolio Holdings as of December 31, 2010

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


				Cost		Value
Holdings by Category				($)		($)

	63	.3%	Fixed-Rate Obligations		946,668,710		946,668,710
	10	.3%	Variable-Rate Obligations		153,924,114		153,924,114
	4	.3%	U.S. Government Securities		64,430,408		64,430,408
	8	.6%	U.S. Government Agency Securities		128,806,443		128,806,443
	15	.0%	Repurchase Agreements		224,010,661		224,010,661
	0	.0%	Other Investment		198,914		198,914


	101	.5%	Total Investments		1,518,039,250		1,518,039,250
	(1	.5)%	Other Assets and Liabilities, Net				(23,083,085	)


	100	.0%	Net Assets				1,494,956,165


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Fixed-Rate Obligations 63.3% of net assets

Bank Notes 1.9%
Bank of America, N.A.		0.30%			01/05/11		4,000,000		4,000,009
		0.57%			01/26/11		10,000,000		10,000,000
		0.55%			02/01/11		7,000,000		7,000,000
		0.29%			02/17/11		4,000,000		4,000,000
		0.32%			03/23/11		4,000,000		4,000,000

									29,000,009

Certificates of Deposit 29.0%
Abbey National Treasury Services PLC	a	0.67%			03/29/11		7,000,000		7,000,000

Banco Santander S.A.		0.64%			03/03/11		13,000,000		13,000,000

Bank of Nova Scotia		0.25%			02/08/11		21,000,000		21,000,000
		0.29%			03/03/11		8,000,000		8,000,000

Bank of Tokyo Mitsubishi UFJ Ltd.		0.30%			03/31/11		7,000,000		7,000,000
		0.47%			07/07/11		7,000,000		7,000,000
		0.50%			07/22/11		6,000,000		6,000,000

Barclays Bank PLC		0.72%			05/04/11		2,000,000		2,000,000
		0.60%			06/22/11		11,000,000		11,000,000
		0.58%			06/24/11		3,000,000		3,000,000

BNP Paribas		0.30%			01/03/11		12,000,000		12,000,000
		0.67%			01/19/11		6,000,000		6,000,000
		0.61%			01/28/11		4,000,000		4,000,000
		0.56%			02/03/11		22,000,000		22,000,000
		0.45%			07/05/11		8,000,000		8,000,000

22 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)
		0.45%			07/18/11		10,000,000		10,000,000

Credit Agricole Corporate & Investment Bank		0.25%			01/03/11		5,000,000		5,000,000

Credit Agricole S.A.		0.32%			02/01/11		10,000,000		10,000,000

Credit Suisse AG		0.23%			01/03/11		22,000,000		22,000,000
		0.25%			01/24/11		6,000,000		6,000,000

Deutsche Bank AG		0.24%			01/03/11		10,000,000		10,000,000
		0.29%			04/01/11		22,000,000		22,000,000
		0.50%			06/21/11		8,000,000		8,000,000

DnB NOR Bank ASA		0.40%			02/18/11		19,000,000		19,000,000

Landesbank Hessen-Thuringen Girozentrale		0.36%			02/17/11		2,000,000		2,000,013

Lloyds TSB Bank PLC		0.63%			02/07/11		9,000,000		9,000,000
		0.44%			05/03/11		14,000,000		14,000,000

Mitsubishi UFJ Trust & Banking Corp.		0.30%			02/16/11		6,000,000		6,000,000
		0.30%			03/08/11		7,000,000		7,000,000

Mizuho Corporate Bank Ltd.		0.27%			01/10/11		8,000,000		8,000,000
		0.27%			01/24/11		6,000,000		6,000,000
		0.28%			01/28/11		1,000,000		1,000,000

Nationwide Building Society		0.53%			03/02/11		4,000,000		4,000,033

Nordea Bank Finland PLC		0.27%			03/04/11		1,000,000		1,000,000

Royal Bank of Scotland PLC		0.99%			04/20/11		6,000,000		6,000,000
		1.00%			08/24/11		20,000,000		20,000,000

Societe Generale		0.34%			03/08/11		8,000,000		8,000,000
		0.42%			04/01/11		2,000,000		2,000,000
		0.40%			04/08/11		5,000,000		5,000,000
		0.40%			04/18/11		9,000,000		9,000,000

Sumitomo Mitsui Banking Corp.		0.30%			01/04/11		8,000,000		8,000,000
		0.27%			01/18/11		3,000,000		3,000,000
		0.27%			01/24/11		1,000,000		1,000,000
		0.27%			02/15/11		1,000,000		1,000,000
		0.30%			03/02/11		5,000,000		5,000,000

Sumitomo Trust & Banking Co.		0.33%			01/07/11		4,000,000		4,000,003
		0.32%			02/25/11		2,000,000		2,000,000
		0.40%			05/17/11		9,000,000		9,000,000

Toronto Dominion Bank		0.24%			02/10/11		2,000,000		2,000,000

UBS AG		0.48%			02/09/11		7,000,000		7,000,000
		0.59%			05/31/11		12,000,000		12,000,000

UniCredit Bank AG		0.49%			02/10/11		4,000,000		4,000,000

UniCredit S.p.A.		0.48%			02/18/11		1,000,000		1,000,000
		0.95%			02/22/11		15,000,000		15,000,000
		0.48%			02/23/11		2,000,000		2,000,000

									433,000,049

Commercial Paper & Other Corporate Obligations 28.8%
Alpine Securitization Corp.	a,b,c	0.24%			01/11/11		4,000,000		3,999,733

See financial notes 23

Schwab Investor Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)
	a,b,c	0.25%			01/21/11		3,000,000		2,999,583

Amsterdam Funding Corp.	a,b,c	0.27%			02/04/11		13,000,000		12,996,685

Argento Variable Funding Co., L.L.C.	a,b,c	0.32%			03/02/11		5,000,000		4,997,333

Atlantis One Funding Corp.	a,b,c	0.26%			02/03/11		10,000,000		9,997,617
	a,b,c	0.29%			02/10/11		9,000,000		8,997,100
	a,b,c	0.29%			03/07/11		1,000,000		999,476
	a,b,c	0.37%			06/09/11		9,000,000		8,985,293
	a,b,c	0.37%			06/14/11		2,000,000		1,996,629

CAFCO, L.L.C.	a,b,c	0.67%			01/18/11		12,000,000		11,996,203
	a,b,c	0.57%			02/01/11		4,000,000		3,998,037

Cancara Asset Securitization, L.L.C.	a,b,c	0.30%			01/14/11		20,000,000		19,997,833
	a,b,c	0.30%			03/11/11		1,000,000		999,425

Chariot Funding, L.L.C.	a,b,c	0.23%			01/03/11		18,000,000		17,999,770
	a,b,c	0.23%			01/06/11		1,000,000		999,968

Ciesco, L.L.C.	a,b,c	0.70%			01/11/11		8,000,000		7,998,445
	a,b,c	0.64%			01/13/11		1,000,000		999,787
	a,b,c	0.35%			02/14/11		3,500,000		3,498,503

Citigroup Funding, Inc.	a	0.59%			02/01/11		6,000,000		5,996,952
	a	0.30%			03/09/11		2,000,000		1,998,883
	a	0.40%			03/16/11		14,000,000		13,988,489

Commonwealth Bank of Australia	c	0.27%			03/09/11		10,000,000		9,994,975
	c	0.29%			03/15/11		8,000,000		7,995,377

CRC Funding, L.L.C.	a,b,c	0.67%			01/18/11		1,000,000		999,684
	a,b,c	0.55%			02/03/11		10,000,000		9,994,958

Danske Corp.	a,c	0.29%			01/14/11		6,000,000		5,999,372

Falcon Asset Securitization Corp.	a,b,c	0.23%			01/03/11		3,000,000		2,999,962
	a,b,c	0.23%			01/07/11		6,000,000		5,999,770
	a,b,c	0.23%			01/12/11		3,000,000		2,999,789
	a,b,c	0.23%			01/13/11		9,000,000		8,999,310

Gemini Securitization Corp., L.L.C.	a,b,c	0.25%			01/06/11		12,000,000		11,999,583
	a,b,c	0.26%			01/10/11		2,000,000		1,999,870
	a,b,c	0.29%			02/14/11		2,400,000		2,399,149

General Electric Capital Corp.		0.39%			06/15/11		16,000,000		15,971,400
		0.39%			06/23/11		12,000,000		11,977,510
		0.39%			06/27/11		8,000,000		7,984,660

Grampian Funding, L.L.C.	a,b,c	0.30%			02/15/11		6,000,000		5,997,750
	a,b,c	0.50%			03/15/11		1,000,000		998,986
	a,b,c	0.51%			03/17/11		3,000,000		2,996,813
	a,b,c	0.47%			05/17/11		5,000,000		4,991,122

HSBC USA, Inc.		0.23%			01/11/11		7,000,000		6,999,553

Intesa Funding, L.L.C.	a	0.33%			03/16/11		11,000,000		10,992,538

Jupiter Securitization Corp.	a,b,c	0.23%			01/03/11		10,000,000		9,999,872
	a,b,c	0.23%			01/18/11		11,000,000		10,998,805

Manhattan Asset Funding Capital Co., L.L.C.	a,b,c	0.28%			01/18/11		4,000,000		3,999,471

24 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Market Street Funding Corp.	a,b,c	0.25%				01/05/11		1,000,000		999,972
	a,b,c	0.29%				03/10/11		6,000,000		5,996,713

Nationwide Building Society		0.48%				03/18/11		1,000,000		998,987
		0.45%				05/04/11		2,000,000		1,996,925

Nieuw Amsterdam Receivables Corp.	a,b,c	0.30%				01/27/11		6,000,000		5,998,700

Nordea North America, Inc.	a	0.29%				03/15/11		3,000,000		2,998,236

Old Line Funding, L.L.C.	a,b,c	0.25%				01/18/11		3,000,000		2,999,646

Santander Central Hispano Finance (Delaware), Inc.	a	0.67%				02/04/11		12,000,000		11,992,407
	a	0.65%				05/16/11		1,000,000		997,563

Sheffield Receivables Corp.	a,b,c	0.28%				02/17/11		12,000,000		11,995,613

Skandinaviska Enskilda Banken AB		0.36%				01/18/11		5,000,000		4,999,162

Societe Generale North America, Inc.	a	0.26%				01/03/11		5,000,000		4,999,929
	a	0.31%				01/27/11		3,000,000		2,999,328

Solitaire Funding, L.L.C.	a,b,c	0.30%				01/12/11		6,000,000		5,999,450
	a,b,c	0.30%				01/14/11		1,000,000		999,892
	a,b,c	0.30%				01/18/11		1,000,000		999,858
	a,b,c	0.30%				01/21/11		12,000,000		11,998,000

Thames Asset Global Securitization No. 1, Inc.	a,b,c	0.27%				02/28/11		4,000,000		3,998,260
	a,b,c	0.28%				03/10/11		11,000,000		10,994,182

Thunder Bay Funding, L.L.C.	a,b,c	0.25%				01/19/11		9,976,000		9,974,753

Ticonderoga Funding, L.L.C.	a,b,c	0.30%				01/25/11		3,000,000		2,999,400

Variable Funding Capital Corp.	a,b,c	0.25%				01/06/11		10,000,000		9,999,653

										430,668,652

Promissory Note 0.3%
The Goldman Sachs Group, Inc.	c,d	1.02%				08/02/11		5,000,000		5,000,000

Time Deposits 3.3%
Citibank, N.A.		0.25%				01/03/11		6,000,000		6,000,000

Royal Bank of Canada		0.14%				01/03/11		43,000,000		43,000,000

										49,000,000

Total Fixed-Rate Obligations
(Cost $946,668,710)										946,668,710




Variable-Rate Obligations 10.3% of net assets


Banco Bilbao Vizcaya Argentaria S.A.		0.56%				01/07/11		9,000,000		9,000,000

Barclays Bank PLC		0.76%		01/18/11		10/17/11		6,000,000		6,000,000

BNP Paribas		0.46%		01/18/11		06/15/11		13,000,000		13,000,000

Dexia Credit Local		0.56%				01/07/11		9,000,000		9,000,000

Eagle County, CO
Housing Facilities Revenue Bonds (BC Housing) Series 1997B	a	0.27%				01/07/11		1,500,000		1,500,000

See financial notes 25

Schwab Investor Money Fund

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

JPMorgan Chase Bank, N.A.		0.26%		01/21/11		01/21/12		38,000,000		38,000,000

Labcon, N.A.
Bonds Series 2010	a	0.36%				01/07/11		2,455,000		2,455,000

National Australia Bank Ltd.		0.28%				01/31/11		8,000,000		8,000,000

Rabobank Nederland		0.26%		01/10/11		02/09/11		1,000,000		1,000,000
		0.34%		01/07/11		10/07/11		10,000,000		10,000,000

Societe Generale		0.48%		01/20/11		06/20/11		3,000,000		3,000,000

Texas
General Obligation Refunding Bonds (Veterans Land) Series 2006A	a	0.34%				01/07/11		1,970,000		1,970,000
General Obligation Bonds (Veterans Housing Assistance) Series 1994A2	a	0.34%				01/07/11		1,000,000		1,000,000

Toronto Dominion Bank		0.33%		01/28/11		10/28/11		3,000,000		3,000,000

Westpac Banking Corp.		0.30%		01/15/11		03/15/11		20,000,000		19,999,588
		0.31%		01/04/11		06/01/11		10,000,000		10,000,000
	c	0.35%		01/18/11		09/16/11		14,000,000		14,000,000

Westpac Securities NZ Ltd.	a,c	0.35%		01/04/11		02/03/11		3,000,000		2,999,526

Total Variable-Rate Obligations
(Cost $153,924,114)										153,924,114




U.S. Government Securities 4.3% of net assets

U.S. Treasury Bill 0.6%
U.S. Treasury Bill		0.20%				01/13/11		9,000,000		8,999,400

Other Government Related 3.7%
Straight A Funding, L.L.C.	a,b,c,f	0.23%				01/04/11		38,000,000		37,999,272
	a,b,c,f	0.22%				01/07/11		15,000,000		14,999,450
	a,b,c,f	0.24%				02/14/11		2,433,000		2,432,286

										55,431,008

Total U.S. Government Securities
(Cost $64,430,408)										64,430,408




U.S. Government Agency Securities 8.6% of net assets

Fixed-Rate Discount Notes 6.3%
Fannie Mae		0.12%				01/19/11		8,000,000		7,999,520
		0.17%				02/01/11		10,815,000		10,813,519
		0.18%				02/01/11		10,000,000		9,998,590

Federal Home Loan Bank		0.14%				01/12/11		12,000,000		11,999,487
		0.12%				01/19/11		8,000,000		7,999,520
		0.15%				01/19/11		13,000,000		12,999,025
		0.17%				01/19/11		2,000,000		1,999,830
		0.15%				01/20/11		6,000,000		5,999,525
		0.12%				01/21/11		6,000,000		5,999,600
		0.16%				01/21/11		1,000,000		999,914
		0.13%				02/04/11		17,000,000		16,997,913

										93,806,443

26 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Variable-Rate Obligations 2.3%
Federal Farm Credit Bank		0.27%		01/28/11		02/28/11		10,000,000		10,000,000

Freddie Mac		0.14%		01/10/11		11/10/11		25,000,000		25,000,000

										35,000,000

Total U.S. Government Agency Securities
(Cost $128,806,443)										128,806,443



							Face/
							Maturity
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Repurchase Agreements 15.0% of net assets


Barclays Capital, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $25,200,000, issued 12/23/10, due 01/03/11.		0.14%				01/03/11		24,001,027		24,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $7,350,000, issued 12/23/10, due 01/03/11.		0.18%				01/03/11		7,000,385		7,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $3,150,000, issued 12/22/10, due 01/03/11.		0.18%				01/03/11		3,000,180		3,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $21,000,001, issued 12/22/10, due 01/03/11.		0.20%				01/03/11		20,001,333		20,000,000

Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $98,953,273, issued 12/31/10, due 01/03/11.		0.15%				01/03/11		97,011,874		97,010,661

Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $6,240,001, issued 12/21/10, due 01/03/11.		0.21%				01/03/11		6,000,455		6,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $12,480,001, issued 12/14/10, due 01/06/11.		0.20%				01/06/11		12,001,533		12,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $10,400,001, issued 12/10/10, due 01/06/11.		0.20%				01/06/11		10,001,500		10,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $5,200,000, issued 12/13/10, due 01/07/11.		0.20%				01/07/11		5,000,694		5,000,000

Goldman Sachs & Co.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $10,500,000, issued 12/23/10, due 01/03/11.		0.18%				01/03/11		10,000,550		10,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $5,250,000, issued 12/31/10, due 01/07/11.		0.19%				01/07/11		5,000,185		5,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $4,200,009, issued 11/04/10, due 02/17/11.	d	0.60%				02/17/11		4,007,000		4,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $6,300,052, issued 11/08/10, due 02/18/11.	d	0.60%				02/18/11		6,010,200		6,000,000

See financial notes 27

Schwab Investor Money Fund

Portfolio Holdings continued

Face/

Maturity

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity*

Date*

($)

Merrill Lynch, Pierce, Fenner & Smith, Inc.

Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $15,450,000, issued 12/20/10, due 01/19/11.

0.24%

01/07/11

15,001,800

15,000,000

Total Repurchase Agreements

(Cost $224,010,661)

224,010,661

Face

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity*

Date*

($)

Other Investment 0.0% of net assets

Whistlejacket Capital, L.L.C.

c,d,e

n/a

198,914

198,914

Total Other Investments

(Cost $198,914)

198,914

End of Investments.

At 12/31/10, the tax basis cost of the fund’s investments was $1,518,039,250.


*		If the security’s structure includes one of a number of maturity-shortening provisions set forth in Rule 2a-7, such as interest rate reset, demand feature or put feature, the effective maturity date is disclosed. The second maturity date is either the date on which the principal amount must be paid or the date payment must be made pursuant to a demand feature. If the effective maturity and maturity date are the same, the date will appear in the maturity column.
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 $400,405,578 or 26.8% of net assets.
d		Illiquid security. At the period end, the value of these amounted to $15,198,914 or 1.0% of net assets.
e		Whistlejacket notes are in receivership, and the fund elected to sell all of its Whistlejacket notes at auction (4/29/2009). The remaining investment represents an interest in a small residual fund that is being held to cover any remaining expenses and liabilities associated with receivership.
f		The U.S. Securities and Exchange Commission has stated that it is permissible for money market funds to treat Straight A Funding LLC securities as government securities for the purpose of compliance with the diversification requirements of Rule 2a-7(c)(4)(i).

28 See financial notes

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes

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 Advisor Cash Reserves Schwab Cash Reserves Schwab Retirement Advantage Money Fund Schwab Investor Money Fund		Schwab Municipal Money Fund Schwab AMT Tax-Free Money Fund Schwab California Municipal Money Fund Schwab California AMT Tax-Free Money Fund Schwab New York AMT Tax-Free Money Fund Schwab New Jersey AMT Tax-Free Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Massachusetts 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 may also keep certain assets in segregated accounts, as required by securities laws.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the funds are valued at amortized cost (which approximates market value) as 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.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.

The three levels of the fair value hierarchy are as follows:


	•	Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. 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 certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. 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

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):


		adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Securities held by money funds operating under Rule 2a-7 of the 1940 Act are valued at amortized cost which approximates current market value and are considered to be valued using Level 2 inputs.


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

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. At December 31, 2010, all of the funds’ investment securities were classified as Level 2. The breakdown of the funds’ investments into major categories is disclosed on the portfolio holdings.

In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.

The funds have adopted the new guidance for the period ended December 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended December 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.

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

Repurchase Agreements: In a repurchase agreement, funds buy a security from another party (usually a financial institution) with the agreement that it be sold back in the future. Repurchase agreements subject the funds to counterparty risk, meaning that the funds could lose money if the other party fails to perform under the terms of the agreement. The funds mitigate this risk by ensuring that the funds’ repurchase agreements are collateralized by cash, U.S. government securities, fixed income securities, equity securities or other types of securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement. Investments in repurchase agreements are also based on a review of the credit quality of the repurchase agreement counterparty.

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:

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):

case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.

(e) Expenses:

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

(f) Distributions to Shareholders:

The funds declare distributions from net investment income, if any, every day they are open for business. These distributions, which are substantially equal to the funds’ net investment income for that day, are paid out to shareholders once a month. The funds declare distributions from net realized capital gains, if any, once a year.

(g) Custody Credit:

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

(h) Accounting Estimates:

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

(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 the funds to be remote.

3. Risk factors:

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

An investment in a fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of a shareholder’s investment at $1 per share, it is possible to lose money by investing in the funds.

Interest rates 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. In addition, to the extent a fund makes any reimbursement payments to the investment adviser and/or its affiliates, the fund’s yield would be lower.

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

3. Risk factors (continued):

also cause the price of that investment to decline. The credit quality of a fund’s portfolio holdings can change rapidly in certain market environments and any default on the part of a single portfolio investment could cause the fund’s share price or yield to fall. The additional risks of 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 government, which means they are neither issued nor guaranteed by the U.S. Treasury. 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. Also, any government guarantees on securities a fund owns do not extend to the shares of the fund itself.

An actively managed mutual fund is subject to the risk that its investment adviser will make poor security selections. A fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect a fund’s yield, and in unusual circumstances potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, a fund’s yield at times could lag those of other money market funds.

Liquidity risk exists when particular investments are difficult to purchase or sell. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. A fund’s investments in illiquid securities may reduce the returns of the fund because it may be unable to sell the illiquid securities at an advantageous time or price. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.

A fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in a fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the funds, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.

The funds are not designed to offer capital appreciation. 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 funds’ prospectus for a more complete description of the principal risks of investing in the funds.

4. Affiliates and Affiliated Transactions:

Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as 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, CSIM 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%
More than $1 billion but not exceeding $10 billion			0.32%
More than $10 billion but not exceeding $20 billion			0.30%
More than $20 billion but not exceeding $40 billion			0.27%
Over $40 billion			0.25%

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

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to the amount set forth in the table below. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds), and the funds will pay no more than the amounts listed in the table below of the average annual daily net asset value of the funds shares owned by shareholders holding shares through such service providers. Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.


	Shareholder Service Fees

Schwab Retirement Advantage Money Fund		0.22%
Schwab Investor Money Fund		0.25%

Contractual Expense Limitations

Although these agreements specify certain fees for these services, CSIM and Schwab have made an additional agreement (“expense limitation”) with the Schwab Retirement Advantage Money Fund to limit the total annual fund operating expenses, excluding interest, taxes, and certain non-routine expenses, to 0.49% through April 29, 2012, which may only be amended or terminated with the approval of the fund’s Board of Trustees.

In addition, effective January 1, 2010 through December 31, 2010, CSIM and Schwab agreed to waive an additional amount of the Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund expenses equal to 0.035% of the funds’ average daily net assets.

Voluntary Expense Waiver/Reimbursement

In addition to the contractual expense limitation agreement noted above, Schwab and the investment adviser also may voluntarily waive and/or reimburse expenses to the extent necessary to maintain a positive net yield for each fund. 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 funds’ future net yield. As of December 31, 2010, the balance of the recoupable expenses is as follows:


	Schwab		Schwab
	Retirement Advantage		Investor
Expiration Date	Money Fund		Money Fund

December 31, 2012		$428,510		$2,068,715
December 31, 2013		1,024,503		3,969,429

Total		$1,453,013		$6,038,144

The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2010, the funds 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.

On September 14, 2010, the Charles Schwab Corporation made a payment of $471,270 to Schwab Retirement Advantage Fund and $1,351,086 to Schwab Investor Money Fund to cover the net remaining losses recognized as a result of its investment in a single structured investment vehicle that defaulted in 2008. This payment represented 0.1% of the funds’ net assets on that date and is presented as a “Payment from affiliate” on the Statement of Operations.

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

5. Transfer Agent Services:

Boston Financial Data Services, Inc. (“BFDS”) provides transfer agent services for each fund.

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 have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.

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

8. Federal Income Taxes:

As of December 31, 2010, the components of distributable earnings on tax basis were as follows:


	Schwab		Schwab
	Retirement Advantage		Investor
	Money Fund		Money Fund

Undistributed ordinary income		$29,239		$—

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2010, the following funds had capital loss carryforwards available to offset future net capital gains before the expiration date:


	Schwab		Schwab
	Retirement Advantage		Investor
Expiration Date	Money Fund		Money Fund

December 31, 2017		$—		$85,033

For tax purposes, realized net capital losses, incurred after October 31, may be deferred and treated as occurring on the first day of the following year. For the period ended December 31, 2010, the funds had no capital losses deferred and capital losses utilized were as follows:


	Schwab		Schwab
	Retirement Advantage		Investor
	Money Fund		Money Fund

Capital losses utilized		$463,376		$1,423,625

The tax-basis components of distributions during the current and prior periods were:


	Schwab		Schwab
	Retirement Advantage		Investor
	Money Fund		Money Fund

Current period distributions
Ordinary income		$88,624		$163,480
Prior period distributions
Ordinary income		$2,012,395		$3,755,028

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

8. Federal Income Taxes (continued):

primarily to differing treatment for items such as short-term capital gains. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments have no impact on net assets or the results of operations. As of December 31, 2010, the funds made the following reclassifications:


	Schwab			Schwab
	Retirement Advantage			Investor
	Money Fund			Money Fund

Capital shares		$5,369			$—
Undistributed net investment income		29,239			—
Net realized capital gains (losses)		(34,608	)		—

As of December 31, 2010, 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, 2010, the funds did not incur any interest or penalties.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (“the Act”) was signed by The President. The Act is the first major piece of legislation affecting Regulated Investment Companies (“RICs”) since 1986 and it modernizes several of the federal income and excise tax provisions related to RICs.

Certain of the enacted provisions include:

Post-enactment capital losses may now be carried forward indefinitely, but must retain the character of the original loss. Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as short-term capital, irrespective of the character of the original loss.

The Act contains simplification provisions, which are aimed at preventing disqualification of a RIC for “inadvertent” failures of the asset diversification and/or qualifying income tests. Additionally, the Act exempts RICs from the preferential dividend rule, and repeals the 60-day designation requirement for certain types of pay-through income and gains.

Finally, the Act contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions.

Except for the simplification provisions related to RIC qualification, the Act is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

9. Subsequent Events:

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

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:

Schwab Retirement Advantage Money Fund

Schwab Investor Money Fund

In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund (two of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Funds”) at December 31, 2010, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

February 16, 2011

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, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 86 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.	73	Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009) Director, Excelsior Funds (2006 – 2007)


John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present).	73	Director, Gilead Sciences, Inc. (2005 – present) Director, Monaco Coach Corporation (2005 – 2009)


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 (July 1998 – present).	73	Director, Ditech Networks Corporation (1997 – present) Director, TOUSA (1998 – present) Director, Mission West Properties (1998 – present) Director, Globalstar, Inc. (2009 – present) Director, Harris-Stratex Networks (2001 – present) Director, Aphton Corp. (1991 – 2007) Director, Solectron Corporation (1998 – 2007) Director, Genitope Corporation (2000 – 2009) Director, Excelsior Funds (2006 – 2007)


David L. Mahoney 1954 Trustee (Trustee of Schwab The Charles Schwab Family of Funds since 2011.)	Private Investor.	73	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present) Director, Tercica Inc. (2004 – 2008)

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

Kiran M. Patel 1948 Trustee (Trustee of Schwab The Charles Schwab Family of Funds since 2011.)	Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 – present); Senior Vice President and General Manager of Consumer Group, Intuit, Inc. (June 2007 – Dec. 2008); Senior Vice President and Chief Financial Officer, Intuit, Inc. (Sept. 2005 – Jan. 2008).	73	Director, KLA-Tencor Corporation (2008 – present) Director, BEA Systems, Inc. (2007 – 2008) Director, Eaton Corp. (2003 – 2006)


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) (1990 – present).	73	Lead Independent Director, Board of Cooper Industries (2002 – present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present) Director, Oneok, Inc (2009 – present)


Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005).	73	Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)

Interested Trustees


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

Charles R. Schwab²1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.	73	None

Interested 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 Served )	During the Past Five Years	the Trustee	Other Directorships

Walter W. Bettinger II²1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	86	None

Officers of the Trust


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

Marie Chandoha 1961 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2010.)		Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007).


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 (Nov. 2004 – present); Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007).


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. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007).

Officers of the Trust (continued)


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

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. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present).


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. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present).


¹		Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds^® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the Schwab Funds retirement policy also requires any independent trustee of the Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first.
²		Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation.
³		The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.

Glossary

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.

Barclays Capital General Municipal Bond Index An index that covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.

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. 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 (the “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, as permitted by Rule 2a-7.

MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.

MSCI EAFE Growth Index An index that is a subset of the MSCI EAFE Index that generally represents 50% of the free float-adjusted market capitalization of the MSCI EAFE Index and consists of those securities classified by MSCI as most representing the growth style.

MSCI EAFE Value Index An index that is a subset of the MSCI EAFE Index that generally represents 50% of the free float-adjusted market capitalization of the MSCI EAFE Index and consists of those securities classified by MSCI as most representing the value style.

MSCI Emerging Markets Index A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

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.

Russell 1000 Growth Index An index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 1000 Value Index An index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

Russell 2000 Growth Index An index that measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 2000 Value Index An index that measures the performance of small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

Russell Midcap Growth Index An index that measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values.

Russell Midcap Value Index An index that measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values.

S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.

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%).

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; however, they may hold Tier 2 securities as a result of a downgrade of a portfolio security.

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 life (WAM) For money market mutual funds as per rule 2a-7, the maturity date or Effective Maturity Date (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. Effective June 30, 2010, money funds are required to maintain a weighted average maturity of no more than 60 days.

weighted average maturity (WAL) For money market mutual funds as per rule 2a-7, the weighted average life calculation takes into account either the final maturity date for each security held in the portfolio or, when relevant, the date of the next demand feature (when the fund is scheduled to receive payment of principal and interest after a demand). Effective June 30, 2010, money funds are required to maintain a weighted average life of no more than 120 days. Weighted average life for all Schwab money market funds is available in each fund’s monthly schedule of portfolio holdings at www.schwabfunds.com/prospectus and also available in each fund’s Form N-MFP on the SEC’s website at www.sec.gov 60 days after the end of the month to which the information pertains.

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

PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT

A Commitment to Your Privacy

Your Privacy Is Not for Sale

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

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

How We Collect Information About You

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


•	APPLICATION AND REGISTRATION INFORMATION.

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


•	TRANSACTION AND EXPERIENCE INFORMATION.

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


•	WEBSITE USAGE.

When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please click the Privacy link on our website.

How We Share and Use Your Information

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


•	to help us process transactions for your account;

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

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

State Laws

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

Safeguarding Your Information — Security Is a Partnership

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

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

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

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

Contact Us

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

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

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

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^®

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large* Company Index Fund

Schwab Fundamental US Small-Mid* Company Index Fund

Schwab Fundamental International* Large Company Index Fund

Schwab Fundamental International* Small-Mid Company Index Fund

Schwab Fundamental Emerging Markets* Index Fund

Schwab Global Real Estate Fund^tm

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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


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

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

From the President

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

Money market investors experienced historically low yields during the year as the Federal Reserve (the Fed) targeted its federal funds rate between zero and 0.25%.

Dear Shareholder,

It is a pleasure to have this opportunity to write to you for the first time as President and Chief Executive Officer of Charles Schwab Investment Management, Inc., the investment adviser to the Schwab Funds. In the accompanying pages, please find the annual report for the Schwab Cash Reserves for the 12-month period that ended December 31, 2010.

Sincerely,

2 Schwab Cash Reserves

The Investment Environment

Economic Overview

Money Markets

Fixed Income

Schwab Cash Reserves 3

The Investment Environment continued

Equities

Sectors

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

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

4 Schwab Cash Reserves

Schwab Cash Reserves™

Schwab Cash Reserves (the fund) seeks the highest current income consistent with stability of capital and liquidity.

During the 12-month reporting period that ended December 31, 2010, the fund provided safety and liquidity to shareholders in the face of an investment environment characterized by low yields on short term, high quality investments. The fund’s investment adviser and its affiliates voluntarily waived certain fees or expenses to maintain a positive net yield for the fund.* Please read more about the yield and other important characteristics of the fund in the charts and footnotes following this discussion.

The investment adviser shortened the portfolio’s WAM during the first half of the year in anticipation of the new SEC regulations. Having a shortened WAM prior to the European credit crisis placed the fund in a position to purchase longer dated securities in the credit sector at attractive yields as the crisis started to wane. At the end of the reporting period, the fund’s WAM was 41 days. The fund also invested in repurchase agreements collateralized by equity securities based on the credit quality of the repurchase agreement counterparty.

As of 12/31/10:

Portfolio Composition by Maturity¹


		% of Investments

1-15 Days		43.4%
16-30 Days		14.8%
31-60 Days		18.4%
61-90 Days		10.6%
91-120 Days		2.4%
More than 120 Days		10.4%

Statistics


Weighted Average Maturity²		41 Days
Credit Quality of Holdings³ % of portfolio		99.99% Tier 1

Portfolio Composition by Security Type⁴


				% of Investments

U.S. Treasury				0.5%
Government Agency & Other Government Securities⁵				9.1%
Repurchase Agreement				14.1%
Commercial Paper (CP)
Asset Backed CP				14.1%
Bank/Financial CP				11.1%
Certificate of Deposit				36.7%
Bank Note				4.5%
Corporate Note				3.2%
Time Deposit				6.6%
Other				0.1%
Total				100.0%

Portfolio holdings may have changed since the report date.


*		The investment adviser and its affiliates may recapture expenses or fees they voluntarily waived until the third anniversary of the end of the fiscal year in which such waiver occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, please see Note 4 of the Financial Notes section.
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 60 days (effective June 30, 2010), 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 or, if unrated, is determined to be of comparable quality. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the fund’s investment policies. The fund itself has not been rated by an independent credit rating agency.
⁴		Portfolio Composition is calculated using the Par Value of Investments.
⁵		Includes debt issued by Straight A Funding LLC, which the U.S. Securities and Exchange Commission has stated is permissible for money market funds to treat as government securities for the purpose of compliance with the diversification requirements of Rule 2a-7(c)(4)(i).

6 Schwab Cash Reserves^tm

Performance and Fund Facts as of 12/31/10

Weighted Average Maturity Trend for previous 12 months

7-Day Average Yield Trend for previous 12 months

Seven-Day Yields


		Schwab Cash Reserves
		Sweep Shares

Ticker Symbol		SWSXX
Minimum Initial Investment¹		*


Seven-Day Yield²		0.05%


Seven-Day Yield—Without Contractual Expense Limitation³		-0.02%


Seven-Day Effective Yield²		0.05%

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		Yield reflects the effect of the fund’s agreement with the investment adviser and its affiliates to limit the fund’s total annual operating expenses to certain levels (contractual expense limitation). In addition, the investment adviser and its affiliates have voluntarily waived expenses in excess of the contractual expense limitation to maintain a positive net yield for the fund (voluntary expense waiver). Without the contractual expense limitation and the voluntary expense waiver, the fund’s yield would have been lower. Please see Note 4 in the Financial Notes section for additional details.
³		Yield does not reflect the effect of the contractual expense limitation but does reflect the effect of the voluntary expense waiver. The voluntary expense waiver added 0.34% to the seven-day yield.

Schwab Cash Reserves^tm 7

Fund Expenses (Unaudited)

Examples for a $1,000 Investment


					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio¹		Account Value		(Net of Expenses)		During Period²
	(Annualized)		at 7/1/10		at 12/31/10		7/1/10–12/31/10

Schwab Cash Reserves^tm
Actual Return		0.33%	$	1,000	$	1,000.30	$	1.66
Hypothetical 5% Return		0.33%	$	1,000	$	1,023.54	$	1.68


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

8 Schwab Cash Reserves

Schwab Cash Reserves™

Financial Statements

Financial Highlights


	1/1/10–			1/1/09–			1/1/08–			1/1/07–			1/1/06–
	12/31/10			12/31/09			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			1.00

Income (loss) from investment operations:
Net investment income (loss)		0.00	¹		0.00	¹		0.02			0.05			0.04
Net realized and unrealized gains (losses)		0.00	^1,2		(0.00	)¹		—			—			—

Total from investment operations		0.00	¹		0.00	¹		0.02			0.05			0.04
Less distributions:
Distributions from net investment income		(0.00	)¹		(0.00	)¹		(0.02	)		(0.05	)		(0.04	)

Net asset value at end of period		1.00			1.00			1.00			1.00			1.00

Total return (%)		0.07			0.16			2.36			4.77			4.50

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.28	³		0.47	^3,4		0.66	⁵		0.68			0.69
Gross operating expenses		0.71			0.74			0.73			0.74			0.82
Net investment income (loss)		0.07			0.16			2.33			4.66			4.59
Net assets, end of period ($ x 1,000,000)		32,419			31,720			29,253			26,162			16,738

¹ Per-share amount was less than $0.01.

² Net realized and unrealized gains (losses) ratio includes payment from affiliate of $24,987,098. (See financial note 4)

³ Reflects the effect of a voluntary expense waiver in excess of the contractual expense limitation. (See financial note 4)

⁴ 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 incurred.

⁵ The ratio of net operating expenses would have been 0.65% if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been incurred.

See financial notes 9

Schwab Cash Reserves

Portfolio Holdings as of December 31, 2010

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


				Cost		Value
Holdings by Category				($)		($)

	66	.7%	Fixed-Rate Obligations		21,620,976,288		21,620,976,288
	9	.8%	Variable-Rate Obligations		3,180,850,565		3,180,850,565
	1	.1%	U.S. Government Securities		365,956,896		365,956,896
	8	.6%	U.S. Government Agency Securities		2,767,552,986		2,767,552,986
	14	.1%	Repurchase Agreements		4,582,671,864		4,582,671,864
	0	.0%	Other Investment		3,957,867		3,957,867


	100	.3%	Total Investments		32,521,966,466		32,521,966,466
	(0	.3)%	Other Assets and Liabilities, Net				(102,576,867	)


	100	.0%	Net Assets				32,419,389,599


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Fixed-Rate Obligations 66.7% of net assets

Bank Notes 4.5%
Bank of America, N.A.		0.30%			01/05/11		205,000,000		205,000,455
		0.57%			01/26/11		275,000,000		275,000,000
		0.55%			02/01/11		253,000,000		253,000,000
		0.46%			02/04/11		190,000,000		190,000,000
		0.30%			02/25/11		200,000,000		200,000,000
		0.30%			03/01/11		100,000,000		100,000,000
		0.32%			03/23/11		35,000,000		35,000,000

Chase Bank USA, N.A.		0.23%			02/07/11		201,000,000		201,000,000

									1,459,000,455

Certificates of Deposit 30.2%
Abbey National Treasury Services PLC	a	0.67%			03/29/11		158,000,000		158,000,000
	a	0.68%			05/02/11		4,000,000		4,000,067

Banco Santander S.A.		0.65%			02/04/11		83,000,000		83,000,000
		0.64%			03/03/11		116,000,000		116,000,000
		0.54%			05/03/11		98,000,000		98,000,000

Bank of Nova Scotia		0.23%			01/06/11		98,000,000		98,000,000
		0.25%			02/08/11		267,000,000		267,000,000
		0.29%			03/03/11		185,000,000		185,000,000
		0.28%			03/18/11		16,000,000		16,000,000
		0.28%			03/21/11		51,000,000		51,000,000

Bank of Tokyo Mitsubishi UFJ Ltd.		0.15%			01/07/11		183,000,000		183,000,000
		0.30%			03/31/11		120,000,000		120,000,000
		0.50%			07/22/11		40,000,000		40,000,000

10 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)
		0.52%			07/27/11		337,000,000		337,000,000

Barclays Bank PLC		0.72%			05/04/11		200,000,000		200,000,000
		0.69%			05/27/11		96,000,000		96,000,000
		0.58%			06/24/11		5,000,000		5,000,000
		0.58%			07/05/11		84,000,000		84,000,000
		0.58%			07/27/11		37,000,000		37,000,000

BNP Paribas		0.30%			01/03/11		188,000,000		188,000,000
		0.71%			01/10/11		18,000,000		18,000,000
		0.30%			02/03/11		82,000,000		82,000,000
		0.56%			02/03/11		17,000,000		17,000,000
		0.44%			03/10/11		145,000,000		145,000,000
		0.68%			05/09/11		362,000,000		362,000,000
		0.52%			05/31/11		27,000,000		27,000,000
		0.50%			06/17/11		103,000,000		103,000,000
		0.45%			07/05/11		45,000,000		45,000,000
		0.48%			07/05/11		29,000,000		29,000,000
		0.45%			07/13/11		328,000,000		328,000,000
		0.45%			07/18/11		3,000,000		3,000,000
		0.48%			08/08/11		11,000,000		11,000,000

Credit Agricole Corporate & Investment Bank		0.25%			01/03/11		120,000,000		120,000,000
		0.32%			03/22/11		125,000,000		125,000,000

Credit Agricole S.A.		0.32%			02/01/11		31,000,000		31,000,000

Credit Suisse AG		0.23%			01/03/11		504,000,000		504,000,000
		0.25%			01/10/11		86,000,000		86,000,000
		0.25%			01/24/11		278,000,000		278,000,000

Deutsche Bank AG		0.24%			01/03/11		209,000,000		209,000,000
		0.29%			03/10/11		150,000,000		150,000,000
		0.29%			04/01/11		11,000,000		11,000,000
		0.50%			06/21/11		94,000,000		94,000,000

DnB NOR Bank ASA		0.40%			02/18/11		381,000,000		381,000,000

Intesa Sanpaolo		0.34%			01/21/11		7,000,000		7,000,000
		0.30%			02/02/11		421,000,000		421,000,000

Landesbank Hessen-Thuringen Girozentrale		0.36%			02/17/11		70,000,000		70,000,457

Lloyds TSB Bank PLC		0.47%			03/07/11		131,000,000		131,000,000
		0.47%			03/23/11		10,000,000		10,000,000
		0.45%			04/12/11		45,000,000		45,000,000
		0.44%			05/03/11		102,000,000		102,000,000

Mitsubishi UFJ Trust & Banking Corp.		0.30%			01/05/11		1,000,000		1,000,000
		0.30%			01/10/11		53,000,000		53,000,000
		0.32%			01/10/11		61,000,000		61,000,000
		0.32%			01/27/11		4,000,000		4,000,000
		0.30%			02/16/11		61,000,000		61,000,000
		0.30%			03/14/11		6,000,000		6,000,000
		0.32%			03/18/11		45,000,000		45,000,000

Mizuho Corporate Bank Ltd.		0.27%			01/07/11		75,000,000		75,000,000
		0.27%			01/10/11		116,000,000		116,000,000
		0.28%			01/19/11		64,000,000		64,000,000
		0.27%			01/24/11		65,000,000		65,000,000

National Australia Bank Ltd.		0.27%			02/22/11		303,000,000		303,000,000

Nationwide Building Society		0.53%			03/02/11		4,000,000		4,000,033

See financial notes 11

Schwab Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Royal Bank of Scotland PLC		0.84%			05/20/11		158,000,000		158,000,000
		0.64%			07/19/11		75,000,000		75,000,000
		0.64%			07/27/11		2,000,000		2,000,000
		1.00%			08/24/11		125,000,000		125,000,000

Societe Generale		0.34%			03/08/11		7,000,000		7,000,000
		0.42%			04/01/11		200,000,000		200,000,000
		0.40%			04/08/11		47,000,000		47,000,000

Sumitomo Mitsui Banking Corp.		0.27%			01/12/11		20,000,000		20,000,000
		0.27%			01/18/11		76,000,000		76,000,000
		0.27%			01/24/11		134,000,000		134,000,000
		0.30%			01/31/11		34,000,000		34,000,000
		0.27%			02/15/11		12,000,000		12,000,000
		0.30%			03/02/11		30,000,000		30,000,000
		0.30%			04/08/11		147,000,000		147,000,000

Sumitomo Trust & Banking Co.		0.33%			01/11/11		106,000,000		106,000,147
		0.32%			02/25/11		58,000,000		58,000,000
		0.32%			03/23/11		40,000,000		40,000,000
		0.40%			05/17/11		58,000,000		58,000,000
		0.55%			05/24/11		58,000,000		58,001,147

Toronto Dominion Bank		0.23%			01/24/11		254,000,000		254,000,000
		0.28%			03/18/11		134,000,000		134,000,000

UBS AG		0.35%			04/18/11		83,000,000		83,000,000
		0.59%			05/31/11		135,000,000		135,000,000
		0.60%			06/13/11		196,000,000		196,000,000

UniCredit Bank AG		0.50%			02/04/11		95,000,000		95,000,000

UniCredit S.p.A.		0.47%			01/26/11		15,000,000		15,000,000
		0.48%			02/18/11		61,000,000		61,000,000
		0.95%			02/22/11		135,000,000		135,000,000
		0.48%			02/23/11		28,000,000		28,000,000

Union Bank, N.A.		0.25%			01/20/11		88,000,000		88,000,000

									9,780,001,851

Commercial Paper & Other Corporate Obligations 25.0%
Alpine Securitization Corp.	a,b,c	0.24%			01/11/11		104,000,000		103,993,067
	a,b,c	0.25%			01/21/11		113,000,000		112,984,306

Amsterdam Funding Corp.	a,b,c	0.27%			02/01/11		27,500,000		27,493,606
	a,b,c	0.27%			02/04/11		15,000,000		14,996,175

ANZ National (Int’l) Ltd.	a	0.25%			01/04/11		25,000,000		24,999,479

Argento Variable Funding Co., L.L.C.	a,b,c	0.52%			02/22/11		120,000,000		119,909,867
	a,b,c	0.32%			03/02/11		33,000,000		32,982,400

Atlantis One Funding Corp.	a,b,c	0.23%			01/03/11		117,000,000		116,998,505
	a,b,c	0.26%			01/21/11		150,000,000		149,978,333
	a,b,c	0.26%			02/03/11		129,000,000		128,969,255
	a,b,c	0.30%			03/03/11		32,000,000		31,983,733
	a,b,c	0.29%			03/11/11		54,000,000		53,969,985
	a,b,c	0.29%			03/14/11		119,000,000		118,930,980
	a,b,c	0.37%			06/09/11		50,000,000		49,918,292

Bank of America Corp.		0.28%			01/11/11		311,000,000		310,975,811
		0.28%			02/03/11		9,000,000		8,997,690

12 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Barton Capital, L.L.C.	a,b,c	0.24%			01/03/11		7,000,000		6,999,907

CAFCO, L.L.C.	a,b,c	0.67%			01/13/11		100,000,000		99,977,667
	a,b,c	0.67%			01/14/11		100,000,000		99,975,806
	a,b,c	0.67%			01/18/11		22,000,000		21,993,039
	a,b,c	0.56%			02/01/11		20,000,000		19,990,356
	a,b,c	0.57%			02/01/11		16,000,000		15,992,147
	a,b,c	0.34%			02/03/11		43,000,000		42,986,598
	a,b,c	0.39%			02/17/11		16,000,000		15,991,853
	a,b,c	0.28%			03/02/11		11,289,000		11,283,732

Cancara Asset Securitization, L.L.C.	a,b,c	0.30%			01/10/11		2,000,000		1,999,850
	a,b,c	0.27%			01/12/11		14,000,000		13,998,845
	a,b,c	0.30%			01/14/11		14,000,000		13,998,483
	a,b,c	0.30%			01/24/11		2,000,000		1,999,617
	a,b,c	0.30%			01/25/11		75,000,000		74,985,000
	a,b,c	0.60%			02/04/11		54,000,000		53,969,400
	a,b,c	0.30%			02/24/11		13,000,000		12,994,150
	a,b,c	0.32%			03/08/11		7,000,000		6,995,893
	a,b,c	0.30%			03/10/11		21,500,000		21,487,817
	a,b,c	0.30%			03/11/11		35,000,000		34,979,875
	a,b,c	0.30%			03/14/11		80,000,000		79,952,000

Chariot Funding, L.L.C.	a,b,c	0.23%			01/03/11		50,000,000		49,999,361
	a,b,c	0.23%			01/06/11		42,000,000		41,998,658
	a,b,c	0.23%			01/11/11		35,224,000		35,221,750
	a,b,c	0.23%			01/12/11		45,000,000		44,996,838
	a,b,c	0.23%			01/13/11		60,000,000		59,995,400

Ciesco, L.L.C.	a,b,c	0.32%			02/04/11		99,000,000		98,970,080
	a,b,c	0.35%			02/14/11		18,000,000		17,992,300
	a,b,c	0.39%			04/04/11		50,000,000		49,949,625

Citigroup Funding, Inc.	a	0.64%			01/14/11		67,000,000		66,984,516
	a	0.29%			02/22/11		30,000,000		29,987,433
	a	0.29%			02/24/11		50,000,000		49,978,250
	a	0.40%			03/08/11		66,000,000		65,951,600
	a	0.30%			03/09/11		152,000,000		151,915,133

Commonwealth Bank of Australia	c	0.27%			03/14/11		275,000,000		274,851,500
	c	0.29%			03/15/11		141,000,000		140,918,514

CRC Funding, L.L.C.	a,b,c	0.30%			01/10/11		8,000,000		7,999,400
	a,b,c	0.67%			01/14/11		100,000,000		99,975,806
	a,b,c	0.67%			01/18/11		69,000,000		68,978,169
	a,b,c	0.56%			02/02/11		100,000,000		99,950,222
	a,b,c	0.55%			02/03/11		30,000,000		29,984,875
	a,b,c	0.29%			03/14/11		5,000,000		4,997,100

Danske Corp.	a,c	0.29%			01/03/11		10,000,000		9,999,839
	a,c	0.29%			01/07/11		116,000,000		115,994,393
	a,c	0.28%			02/08/11		4,000,000		3,998,818

Falcon Asset Securitization Corp.	a,b,c	0.23%			01/03/11		24,000,000		23,999,693
	a,b,c	0.23%			01/06/11		60,000,000		59,998,083
	a,b,c	0.23%			01/07/11		25,000,000		24,999,042
	a,b,c	0.23%			01/12/11		50,000,000		49,996,486

Gemini Securitization Corp., L.L.C.	a,b,c	0.25%			01/06/11		73,000,000		72,997,465
	a,b,c	0.26%			01/10/11		106,000,000		105,993,110
	a,b,c	0.30%			03/16/11		106,000,000		105,934,633

General Electric Capital Corp.		0.22%			02/07/11		222,000,000		221,949,803
		0.22%			02/08/11		270,000,000		269,937,300

See financial notes 13

Schwab Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)
		0.39%			06/15/11		207,000,000		206,629,987
		0.39%			06/27/11		90,000,000		89,827,425

Grampian Funding, L.L.C.	a,b,c	0.31%			01/24/11		9,000,000		8,998,218
	a,b,c	0.51%			03/17/11		161,000,000		160,828,937
	a,b,c	0.48%			04/12/11		155,000,000		154,791,267

Intesa Funding, L.L.C.	a	0.35%			03/02/11		52,000,000		51,969,667

JP Morgan Chase & Co.		0.23%			02/09/11		130,000,000		129,967,608

Jupiter Securitization Corp.	a,b,c	0.23%			01/18/11		50,000,000		49,994,569

Lloyds TSB Bank PLC		0.50%			03/10/11		174,000,000		173,835,667

Manhattan Asset Funding Capital Co., L.L.C.	a,b,c	0.28%			01/03/11		11,000,000		10,999,829
	a,b,c	0.28%			01/18/11		15,000,000		14,998,017
	a,b,c	0.28%			01/24/11		2,000,000		1,999,642

Market Street Funding Corp.	a,b,c	0.29%			03/14/11		24,317,000		24,302,896
	a,b,c	0.29%			03/18/11		50,043,000		50,012,363

Nationwide Building Society		0.80%			01/04/11		40,000,000		39,997,333
		0.80%			01/12/11		22,000,000		21,994,622
		0.49%			03/11/11		61,000,000		60,942,711
		0.45%			05/04/11		32,000,000		31,950,800

Nieuw Amsterdam Receivables Corp.	a,b,c	0.30%			01/11/11		23,000,000		22,998,083
	a,b,c	0.30%			01/27/11		62,000,000		61,986,567
	a,b,c	0.31%			03/01/11		15,000,000		14,992,379

Nordea North America, Inc.	a	0.29%			03/15/11		40,000,000		39,976,478

Old Line Funding, L.L.C.	a,b,c	0.24%			01/06/11		43,000,000		42,998,567
	a,b,c	0.25%			01/18/11		12,000,000		11,998,583
	a,b,c	0.24%			01/21/11		56,600,000		56,592,453

Santander Central Hispano Finance (Delaware), Inc.	a	0.67%			02/04/11		149,000,000		148,905,716
	a	0.53%			03/15/11		132,000,000		131,858,137
	a	0.65%			05/16/11		61,000,000		60,851,312

Sheffield Receivables Corp.	a,b,c	0.30%			01/06/11		18,000,000		17,999,250
	a,b,c	0.27%			02/11/11		15,000,000		14,995,388
	a,b,c	0.28%			02/16/11		40,000,000		39,985,689
	a,b,c	0.28%			02/17/11		38,000,000		37,986,109
	a,b,c	0.28%			02/22/11		75,000,000		74,969,667

Skandinaviska Enskilda Banken AB		0.34%			01/04/11		58,000,000		57,998,357
		0.36%			01/18/11		61,000,000		60,989,774

Societe Generale North America, Inc.	a	0.26%			01/03/11		176,000,000		175,997,507
	a	0.30%			01/04/11		59,000,000		58,998,525
	a	0.31%			01/27/11		77,000,000		76,982,761
	a	0.35%			03/16/11		105,000,000		104,924,458
	a	0.40%			04/06/11		42,000,000		41,955,667

Solitaire Funding, L.L.C.	a,b,c	0.30%			01/14/11		228,000,000		227,975,300
	a,b,c	0.30%			01/18/11		3,000,000		2,999,575
	a,b,c	0.30%			01/27/11		25,000,000		24,994,583
	a,b,c	0.28%			01/28/11		120,000,000		119,974,800
	a,b,c	0.28%			02/03/11		40,000,000		39,989,733
	a,b,c	0.31%			02/28/11		5,100,000		5,097,453

Starbird Funding Corp.	a,b,c	0.15%			01/03/11		50,000,000		49,999,583

14 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)
	a,b,c	0.26%				01/31/11		99,000,000		98,978,550

Sumitomo Mitsui Banking Corp.	c	0.30%				02/02/11		4,000,000		3,998,933

Thames Asset Global Securitization No. 1, Inc.	a,b,c	0.25%				01/18/11		107,014,000		107,001,366
	a,b,c	0.27%				02/28/11		96,000,000		95,958,240

Thunder Bay Funding, L.L.C.	a,b,c	0.25%				01/19/11		40,000,000		39,995,000

Variable Funding Capital Corp.	a,b,c	0.25%				01/06/11		24,000,000		23,999,167

										8,099,973,982

Promissory Note 0.4%
The Goldman Sachs Group, Inc.	c,d	1.02%				08/02/11		125,000,000		125,000,000

Time Deposits 6.6%
Australia & New Zealand Bank Group Ltd.		0.14%				01/03/11		180,000,000		180,000,000

Citibank, N.A.		0.17%				01/03/11		100,000,000		100,000,000
		0.25%				01/03/11		160,000,000		160,000,000
		0.23%				01/05/11		216,000,000		216,000,000

Commerzbank AG		0.18%				01/07/11		356,000,000		356,000,000

Royal Bank of Canada		0.14%				01/03/11		1,145,000,000		1,145,000,000

										2,157,000,000

Total Fixed-Rate Obligations
(Cost $21,620,976,288)										21,620,976,288




Variable-Rate Obligations 9.8% of net assets


Banco Bilbao Vizcaya Argentaria S.A.		0.51%				01/07/11		90,000,000		90,000,000
		0.56%				01/07/11		165,000,000		165,000,000

Bank of America, N.A.		0.59%		01/24/11		01/20/12		174,000,000		174,000,000

Barclays Bank PLC		0.46%		01/12/11		02/14/11		17,000,000		17,000,000
		0.76%		01/18/11		10/17/11		23,000,000		23,000,000

BNP Paribas		0.46%		01/18/11		06/15/11		167,000,000		167,000,000

Citigroup, Inc.		0.37%		02/18/11		05/18/11		109,550,000		109,425,956

Deutsche Bank AG		0.47%				01/10/11		100,000,000		99,999,869
		0.35%				01/24/11		335,000,000		335,000,000

Dexia Credit Local		0.56%				01/07/11		166,000,000		166,000,000

JPMorgan Chase Bank, N.A.		0.26%		01/21/11		01/21/12		250,000,000		250,000,000

National Australia Bank Ltd.		0.28%				01/31/11		155,000,000		155,000,000

Rabobank Nederland		0.26%		01/10/11		02/09/11		48,000,000		48,000,000
		0.35%		01/13/11		09/13/11		116,000,000		116,000,000
		0.34%		01/07/11		10/07/11		71,000,000		71,000,000
		0.35%		01/05/11		12/05/11		150,000,000		150,000,000

Societe Generale		0.48%		01/20/11		06/20/11		86,000,000		86,000,000

Svenska Handelsbanken AB	c	0.39%		01/04/11		04/02/11		240,000,000		240,000,000

See financial notes 15

Schwab Cash Reserves

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Tenderfoot Seasonal Housing, CO
Housing Facilities Revenue Notes Series 2000B	a	0.27%				01/07/11		3,000,000		3,000,000

Texas
General Obligation Refunding Bonds (Veterans Land) Series 2006A	a	0.34%				01/07/11		24,620,000		24,620,000
General Obligation Bonds (Veterans Housing Assistance) Series 1994A2	a	0.34%				01/07/11		32,000,000		32,000,000

Toronto Dominion Bank		0.33%		01/28/11		10/28/11		90,000,000		90,000,000

UBS AG		0.66%		01/18/11		10/17/11		6,000,000		6,000,000

Wells Fargo & Co.		0.39%				01/12/11		29,818,000		29,817,927

Westpac Banking Corp.		0.30%		01/15/11		03/15/11		50,000,000		49,998,971
		0.31%		01/04/11		06/01/11		306,000,000		306,000,000
	c	0.36%		01/28/11		01/27/12		100,000,000		100,000,000

Westpac Securities NZ Ltd.	a,c	0.35%		01/04/11		02/03/11		77,000,000		76,987,842

Total Variable-Rate Obligations
(Cost $3,180,850,565)										3,180,850,565




U.S. Government Securities 1.1% of net assets

U.S. Treasury Bill 0.5%
U.S. Treasury Bill		0.20%				01/13/11		166,000,000		165,988,933

Other Government Related 0.6%
Straight A Funding, L.L.C.	a,b,c,f	0.23%				01/04/11		55,000,000		54,998,946
	a,b,c,f	0.22%				01/07/11		45,000,000		44,998,350
	a,b,c,f	0.24%				02/14/11		100,000,000		99,970,667

										199,967,963

Total U.S. Government Securities
(Cost $365,956,896)										365,956,896




U.S. Government Agency Securities 8.6% of net assets

Fixed-Rate Discount Notes 7.3%
Fannie Mae		0.13%				01/10/11		130,000,000		129,995,694
		0.17%				01/18/11		30,000,000		29,997,592
		0.16%				01/20/11		40,000,000		39,996,622
		0.17%				02/01/11		65,000,000		64,991,099
		0.18%				02/01/11		50,000,000		49,992,951

Federal Home Loan Bank		0.15%				01/05/11		249,000,000		248,995,905
		0.13%				01/05/11		148,000,000		147,997,862
		0.15%				01/07/11		243,000,000		242,993,925
		0.14%				01/12/11		34,000,000		33,998,545
		0.15%				01/12/11		79,500,000		79,496,478
		0.14%				01/14/11		150,716,000		150,708,380
		0.15%				01/14/11		81,400,000		81,395,738
		0.12%				01/19/11		13,000,000		12,999,220
		0.15%				01/19/11		177,000,000		176,986,725
		0.15%				01/20/11		120,000,000		119,990,500
		0.12%				01/21/11		10,000,000		9,999,333
		0.16%				01/21/11		3,000,000		2,999,742
		0.17%				01/26/11		113,000,000		112,986,660
		0.18%				01/26/11		50,000,000		49,993,923

16 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)
Federal Home Loan Bank continued		0.18%				01/28/11		100,000,000		99,986,875
		0.13%				02/04/11		3,000,000		2,999,632
		0.15%				02/11/11		6,000,000		5,999,009
		0.14%				02/16/11		5,000,000		4,999,105
		0.16%				02/16/11		1,400,000		1,399,723

Freddie Mac		0.16%				01/05/11		10,000,000		9,999,828
		0.13%				01/10/11		3,000,000		2,999,901
		0.14%				01/10/11		27,700,000		27,699,030
		0.15%				01/14/11		50,000,000		49,997,292
		0.14%				01/18/11		350,000,000		349,976,861
		0.15%				01/19/11		25,000,000		24,998,125

										2,367,572,275

Variable-Rate Obligations 1.3%
Federal Farm Credit Bank		0.27%		01/28/11		02/28/11		105,000,000		105,000,000

Federal Home Loan Bank		0.17%		01/25/11		07/25/11		75,000,000		74,980,711

Freddie Mac		0.14%		01/10/11		11/10/11		220,000,000		220,000,000

										399,980,711

Total U.S. Government Agency Securities
(Cost $2,767,552,986)										2,767,552,986



							Face/
							Maturity
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*		Date*		($)		($)

Repurchase Agreements 14.1% of net assets


Barclays Capital, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $431,550,001, issued 12/23/10, due 01/03/11.		0.14%				01/03/11		411,017,582		411,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $137,550,001, issued 12/23/10, due 01/03/11.		0.18%				01/03/11		131,007,205		131,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $245,700,000, issued 12/22/10, due 01/03/11.		0.18%				01/03/11		234,014,040		234,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $299,250,000, issued 12/22/10, due 01/03/11.		0.20%				01/03/11		285,019,000		285,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $73,500,000, issued 12/21/10, due 01/03/11.		0.20%				01/03/11		70,005,056		70,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $133,900,830, issued 12/31/10, due 01/03/11.		0.25%				01/03/11		130,002,708		130,000,000

Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $70,047,835, issued 12/31/10, due 01/03/11.		0.15%				01/03/11		68,672,722		68,671,864

See financial notes 17

Schwab Cash Reserves

Portfolio Holdings continued


						Face/
						Maturity
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity*	Date*		($)		($)

Deutche Bank Securities, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $130,000,000, issued 12/21/10, due 01/03/11.		0.21%			01/03/11		125,009,479		125,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $36,750,021, issued 12/31/10, due 01/03/11.		0.35%			01/03/11		35,001,021		35,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $156,000,000, issued 12/14/10, due 01/06/11.		0.20%			01/06/11		150,019,167		150,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $62,400,000, issued 12/10/10, due 01/06/11.		0.20%			01/06/11		60,009,000		60,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $138,320,000, issued 12/13/10, due 01/07/11.		0.20%			01/07/11		133,018,472		133,000,000

Goldman Sachs & Co.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $47,250,001, issued 12/31/10, due 01/03/11.		0.17%			01/03/11		45,000,638		45,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $320,250,000, issued 12/23/10, due 01/03/11.		0.18%			01/03/11		305,016,775		305,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $351,750,001, issued 12/31/10, due 01/07/11.		0.19%			01/07/11		335,012,376		335,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $169,050,001, issued 11/04/10, due 02/17/11.	d	0.60%			02/17/11		161,281,750		161,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $68,250,004, issued 11/08/10, due 02/18/11.	d	0.60%			02/18/11		65,110,500		65,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $93,450,021, issued 11/09/10, due 02/22/11.	d	0.60%			02/22/11		89,155,750		89,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $99,750,019, issued 11/16/10, due 03/01/11.	d	0.57%			03/01/11		95,157,937		95,000,000
Tri-Party Repurchase Agreement Collateralized by Equity Securities with a value of $15,750,030, issued 12/06/10, due 03/21/11.	d	0.58%			03/21/11		15,025,375		15,000,000

JPMorgan Securities, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $206,000,001, issued 12/31/10, due 01/03/11.		0.30%			01/03/11		200,005,000		200,000,000

Merrill Lynch, Pierce, Fenner & Smith, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $659,200,001, issued 12/31/10, due 01/03/11.		0.22%			01/03/11		640,011,733		640,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $515,000,000, issued 12/17/10, due 01/18/11.		0.24%			01/07/11		500,070,000		500,000,000
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $309,000,000, issued 12/20/10, due 01/19/11.		0.24%			01/07/11		300,036,000		300,000,000

Total Repurchase Agreements
(Cost $4,582,671,864)									4,582,671,864

18 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued

Face

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity*

Date*

($)

Other Investment 0.0% of net assets

Whistlejacket Capital, L.L.C.

c,d,e

n/a

3,957,868

3,957,867

Total Other Investments

(Cost $3,957,867)

3,957,867

End of Investments.

At 12/31/10, the tax basis cost of the fund’s investments was $32,521,966,466.


*		If the security’s structure includes one of a number of maturity-shortening provisions set forth in Rule 2a-7, such as interest rate reset, demand feature or put feature, the effective maturity date is disclosed. The second maturity date is either the date on which the principal amount must be paid or the date payment must be made pursuant to a demand feature. If the effective maturity and maturity date are the same, the date will appear in the maturity column.
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 $5,877,656,127 or 18.1% of net assets.
d		Illiquid security. At the period end, the value of these amounted to $553,957,867 or 1.7% of net assets.
e		Whistlejacket notes are in receivership, and the fund elected to sell all of its Whistlejacket notes at auction (4/29/2009). The remaining investment represents an interest in a small residual fund that is being held to cover any remaining expenses and liabilities associated with receivership.
f		The U.S. Securities and Exchange Commission has stated that it is permissible for money market funds to treat Straight A Funding LLC securities as government securities for the purpose of compliance with the diversification requirements of Rule 2a-7(c)(4)(i).

See financial notes 19

Schwab Cash Reserves

Financial Notes

1. Business Structure of the Fund:

Schwab 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 Municipal Money Fund
Schwab Money Market Fund		Schwab AMT Tax-Free Money Fund
Schwab Government Money Fund		Schwab California Municipal Money Fund
Schwab U.S. Treasury Money Fund		Schwab California AMT Tax-Free Money Fund
Schwab Value Advantage Money Fund		Schwab New York AMT Tax-Free Money Fund
Schwab Advisor Cash Reserves		Schwab New Jersey AMT Tax-Free Money Fund
Schwab Cash Reserves		Schwab Pennsylvania Municipal Money Fund
Schwab Retirement Advantage Money Fund		Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Investor Money Fund

Schwab Cash Reserves 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.

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

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the fund are valued at amortized cost (which approximates market value) as 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.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.

The three levels of the fair value hierarchy are as follows:


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

	•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)— Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. 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 nontransferability, which are generally based on available market information. Securities held by money funds operating under Rule 2a-7 of the 1940 Act are valued at amortized cost which approximates current market value and are considered to be valued using Level 2 inputs.

Schwab Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):


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

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. At December 31, 2010, all of the fund’s investment securities were classified as Level 2. The breakdown of the fund’s investments into major categories is disclosed on the portfolio holdings.

The fund has adopted the new guidance for the period ended December 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended December 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the fund’s financial statements.

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

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. Repurchase agreements subject the fund to counterparty risk, meaning that a fund could lose money if the other party fails to perform under the terms of the agreements. The fund mitigates this risk by ensuring that the fund’s repurchase agreements are collateralized by cash, U.S. government securities, fixed income securities, equity or other types of securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement. Investments in repurchase agreements are also based on a review of the credit of the repurchase agreement counterparty.

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, a fund could end up paying more for the security than its market value at the time of settlement. The fund has set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (less than face value) or a premium (more than face value), it amortizes 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.

Schwab Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(e) Expenses:

(f) Distributions to Shareholders:

The fund declares distributions from net investment income, if any, every day it is open for business. These distributions, which are substantially equal to the fund’s net investment income for that day, are paid out to shareholders once a month. The fund declares distributions from net realized capital gains, if any, once a year.

(g) Custody Credits:

The fund has an arrangement with its custodian bank, State Street Bank and Trust Company, 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:

(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 a fund meets the tax requirements, it is not required to pay federal income tax.

(j) Indemnification:

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

3. Risk factors:

An investment in the fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of a shareholder’s investment at $1 per share, it is possible to lose money by investing in the fund.

Interest rates 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. In addition, to the extent the fund makes any reimbursement payments to the investment adviser and/or its affiliates, the fund’s yield would be lower.

The fund is subject to the risk that a decline in the credit quality of a portfolio investment could cause the fund to lose money or underperform. The fund could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations. The negative perceptions of an issuer’s ability to make such payments could also cause the price of that investment to decline. The credit quality of a fund’s portfolio holdings can change rapidly in certain market environments and any default on the part of a single portfolio investment could cause the fund’s share price or yield to fall. The additional risks of foreign investments are due to reasons ranging from a 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 government, which means they are neither issued nor guaranteed by the U.S. Treasury. 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

Schwab Cash Reserves

Financial Notes (continued)

3. Risk factors (continued):

obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.

Any actively managed mutual fund is subject to the risk that its investment adviser will make poor security selections. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and in unusual circumstances potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag those of other money market funds.

Liquidity risk exists when particular investments are difficult to purchase or sell. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. The fund’s investments in illiquid securities may reduce the returns of the fund because it may be unable to sell the illiquid securities at an advantageous time or price. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.

The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the funds, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.

The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.

4. Affiliates and Affiliated Transactions:

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

Administration Agreement (“Advisory Agreement”) between it and the trust.

For its advisory and administrative services to the fund, CSIM 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%
More than $1 billion but not exceeding $10 billion			0.32%
More than $10 billion but not exceeding $20 billion			0.30%
More than $20 billion but not exceeding $40 billion			0.27%
Over $40 billion			0.25%

The Board of Trustees has adopted a Shareholder Servicing and Sweep Administration Plan (the “Plan”) on behalf of the fund. The Plan enables the fund to bear expenses relating to the provision by Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund. The Plan also enables the fund to pay Schwab for certain sweep administration services, such as processing of automatic purchases and redemptions it provides to fund shareholders.

Pursuant to the Plan, the fund’s shares are subject to an annual shareholder servicing fee of up to 0.25%. The shareholder servicing fee paid to Schwab is made pursuant to its written agreement with the fund and the fund will pay no more than 0.25% of the average annual daily net asset value of the fund shares owned by shareholders holding shares through Schwab. Pursuant to the Plan, the fund’s shares are subject to an annual sweep administration fee of up to 0.15%. The sweep administration fee paid to Schwab is based on the average daily net asset value of the fund shares owned by shareholders holding shares through Schwab. Payments under the Plan are made as described above regardless of Schwab’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payment received, the unexpended portion of the fees may be retained as profit by Schwab.

Schwab Cash Reserves

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Contractual Expense Limitation

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements (“expense limitation”) with the fund to limit the total annual fund operating expenses, excluding interest, taxes, and certain non-routine expenses to 0.66% for so long as CSIM serves as the investment adviser to the fund, which may only be amended or terminated with the approval of the fund’s Board of Trustees.

In addition, effective January 1, 2010 through December 31, 2010, CSIM and Schwab agreed to waive an additional amount of the fund’s expenses equal to 0.035% of the fund’s average daily net assets.

Voluntary Expense Waiver/Reimbursement

In addition to the contractual expense limitation agreement noted above, Schwab and the investment adviser also may waive and/or reimburse expenses to the extent necessary to maintain a positive net yield for the fund. 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 payment. This recapture could negatively affect the fund’s future yield. As of December 31, 2010, the balance of recoupable expenses is as follows:


Expiration Date	Schwab Cash Reserves

December 31, 2012		$55,069,426
December 31, 2013		109,025,081

Total		$164,094,507

The fund may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2010, the fund had no direct security transactions with other Schwab Funds.

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.

On September 14, 2010, the Charles Schwab Corporation made a payment of $24,987,098 to Schwab Cash Reserves to cover the net remaining losses recognized as a result of its investment in a single structured investment vehicle that defaulted in 2008. This payment represented 0.1% of the fund’s net assets on that date and is presented as a “Payment from affiliate” on the Statement of Operations.

5. Transfer Agent Services:

Boston Financial data Services, Inc. (“BFDS”) provides transfer agent services for the fund.

6. Board of Trustees:

7. Borrowing from Banks:

The fund may borrow money from banks and custodians. The fund has custodian overdraft facilities, a committed line of credit of $150,000,000 with State Street Bank and Trust Company, an uncommitted line of credit of $100,000,000 with Bank of

Schwab Cash Reserves

Financial Notes (continued)

7. Borrowing from Banks (continued):

America, N.A. and an uncommitted line of credit of $50,000,000 with Brown Brothers Harriman. The fund pays interest on the amounts it borrows at rates that are negotiated periodically. The fund also pays an annual fee to State Street Bank and Trust Company for the committed line of credit.

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

8. Federal Income Taxes:

As of December 31, 2010, the fund had no distributable earnings on a tax basis.

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2010, the fund had capital loss carryforwards of $1,679,440 available to offset net capital gains before the expiration date of December 31, 2017.

For tax purposes, realized net capital losses, incurred after October 31, may be deferred and treated as occurring on the first day of the following year. For the period ended December 31, 2010, the fund had capital losses utilized of $26,312,491 and no capital losses deferred.

The tax-basis components of distributions during the current and prior period were:


	Current Period Distributions		Prior Period Distributions

Ordinary income		$22,051,852		$49,018,864

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes; there were no such differences in the current year. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

As of December 31, 2010, 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, 2010, the fund did not incur any interest or penalties.

Certain of the enacted provisions include:

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:

Schwab Cash Reserves

In our opinion, the accompanying statement of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Cash Reserves (one of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

February 16, 2011

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, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 86 funds.

Independent Trustees


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

Mariann Byerwalter 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman of JDN Corporate Advisory LLC.	73	Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009) Director, Excelsior Funds (2006 – 2007)


John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present).	73	Director, Gilead Sciences, Inc. (2005 – present) Director, Monaco Coach Corporation (2005 – 2009)


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 (July 1998 – present).	73	Director, Ditech Networks Corporation (1997 – present) Director, TOUSA (1998 – present) Director, Mission West Properties (1998 – present) Director, Globalstar, Inc. (2009 – present) Director, Harris-Stratex Networks (2001 – present) Director, Aphton Corp. (1991 – 2007) Director, Solectron Corporation (1998 – 2007) Director, Genitope Corporation (2000 – 2009) Director, Excelsior Funds (2006 – 2007)


David L. Mahoney 1954 Trustee (Trustee of Schwab The Charles Schwab Family of Funds since 2011.)	Private Investor.	73	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present) Director, Tercica Inc. (2004 – 2008)

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

Kiran M. Patel 1948 Trustee (Trustee of Schwab The Charles Schwab Family of Funds since 2011.)	Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 – present); Senior Vice President and General Manager of Consumer Group, Intuit, Inc. (June 2007 – Dec. 2008); Senior Vice President and Chief Financial Officer, Intuit, Inc. (Sept. 2005 – Jan. 2008).	73	Director, KLA-Tencor Corporation (2008 – present) Director, BEA Systems, Inc. (2007 – 2008) Director, Eaton Corp. (2003 – 2006)


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) (1990 – present).	73	Lead Independent Director, Board of Cooper Industries (2002 – present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present) Director, Oneok, Inc (2009 – present)


Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005).	73	Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present)

Interested Trustees


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

Charles R. Schwab²1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc.	73	None

Interested 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 Served )	During the Past Five Years	the Trustee	Other Directorships

Walter W. Bettinger II²1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	86	None

Officers of the Trust


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

Marie Chandoha 1961 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2010.)		Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007).


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 (Nov. 2004 – present); Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007).


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. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007).

Officers of the Trust (continued)


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

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. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present).


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. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present).


¹		Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds^® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the Schwab Funds retirement policy also requires any independent trustee of the Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first.
²		Mr. Schwab and Mr. Bettinger are Interested Trustees because they 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.