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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.

The Federal Reserve kept short-term interest rates at 0% to 0.25%, and maintained large-scale asset purchase programs such as “Operation Twist” that were engineered to hold down long-term interest rates.

Dear Shareholder,

As President and CEO of Charles Schwab Investment Management, Inc. (CSIM), I’d like to thank you for trusting us to help you meet your investment objectives, and for reading this important report concerning the Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund. These funds are part of CSIM’s core investment solutions for investing in short-term money market securities, and are designed to provide investors with stability of capital, liquidity, and income.

For the 12 months ended December 31, 2012, interest rates on money market securities remained low. The Federal Reserve kept short-term interest rates at 0% to 0.25%, and maintained large-scale asset purchase programs such as “Operation Twist” that were engineered to hold down long-term interest rates. Overseas, concerns earlier this year regarding the euro zone’s sovereign debt crisis began to fade as European leaders passed legislation to try to resolve the situation, while the European Central Bank provided significant funds to banks at very low interest rates.

In other industry matters, money market fund reform was heavily debated in 2012, and discussions are expected to continue in 2013. Legislators and financial industry experts are exploring ways to continue providing safety and transparency for shareholders regarding these investment vehicles. As one of the largest retail providers of money market funds, we are committed to providing transparency that helps fund shareholders understand their investments.

For more information about the Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund, please continue reading this report. In addition, you can find answers to frequently asked questions and further details about these products by visiting www.schwabfunds.com, or by contacting us at 1-800-435-4000.

Sincerely,

2 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Fund Management



		Linda Klingman, Managing Director and Head of Taxable Money Market Strategies, leads the portfolio management team of Schwab’s prime and government taxable money funds. Ms. Klingman is also responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 1990, Ms. Klingman was a senior money market trader with AIM Management, Inc. for five years. She has managed money market funds since 1988.

		Mike Neitzke, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2001, Mr. Neitzke spent 10 years as a principal at Wells Capital Management, where he managed taxable money market funds, including SEC-registered and ERISA-qualified funds. Prior to that, he was a portfolio manager with Union Capital Advisors in Los Angeles. He has worked in the financial industry as a portfolio manager since 1986.

		Michael Lin, Portfolio Manager, is responsible for the day-to-day co-management of the funds. Mr. Lin has been a portfolio manager with CSIM since 2006, and also worked in CSIM’s Fund Administration group for nearly four years, where he focused on security pricing and valuation of Schwab Funds. Prior to joining CSIM, he was a senior trader of the taxable money market funds at American Century Investments for three years.

		Jonathan Roman, Portfolio Manager, is responsible for the day-to-day co-management of the funds. Mr. Roman has been a portfolio manager with CSIM since 2010, and has held a number of positions at the firm since beginning his tenure in 2005. In 2009, he joined the Portfolio Management group as a Trader, and prior to that he worked in the Portfolio Operations and Analytics group providing trading support to the taxable money market desk.

Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 3

Schwab Retirement Advantage Money Fund

The Schwab Retirement Advantage Money Fund (the fund) seeks the highest current income consistent with stability of capital and liquidity. To pursue its goal, the fund invests in high-quality, short-term money market investments issued by U.S. and foreign issuers. Examples of these securities include commercial paper, certificates of deposit, repurchase agreements, variable-rate debt securities, and obligations issued by the U.S. government or its agencies or instrumentalities.

Since December 2008, when the Federal Reserve first cut short-term interest rates to present-day levels, yields on money market securities have remained historically low—a trend that continued throughout the report period. As a result, and to help the fund maintain a positive net yield, the fund’s investment adviser and its affiliates voluntarily waived certain fees or expenses during the report period.* For more information about the fund’s yield and other important characteristics, please review the charts and footnotes that follow this discussion.

Market Highlights. Early in the report period, investors remained wary of conditions in Europe, given the protracted nature of the sovereign debt crisis. This was magnified by concerns over a Greek default and increasing prospects of the proliferation of the crisis to other areas of the region. In response, investors turned to securities issued by entities in countries such as Canada and Australia, causing yields on those securities to fall. At the end of February, however, the European Central Bank (ECB) announced its second Longer-Term Refinancing Operation (LTRO) to help control the crisis, injecting liquidity into the banking system and assuaging investors to some degree.

The supply of taxable money market securities that the fund typically buys continued to decline, pressuring yields lower. Short-term Treasuries were an exception, with yields on these securities rising due in part to the Fed’s “Operation Twist” program. Under this program, the Fed sold short-term Treasury securities to buy longer-maturity bonds in an effort to reduce long-term interest rates. The additional short-term Treasury supply also helped to keep rates elevated on repurchase agreements and short-term government securities for much of the year.

Positioning and Strategies. The fund’s investment adviser focused on stability of capital and ensured robust liquidity amid the fluid market backdrop, strategically managing the portfolio as conditions evolved. During the first quarter of 2012, as a result of ongoing credit concerns, the fund’s exposure to Europe was reduced and weighted average maturities (WAMs) in the low to mid-30s were maintained. But with improved liquidity and market sentiment following the ECB’s LTRO announcement, the fund’s exposure to European institutions was increased. For example, the fund resumed investment in select institutions in France during October, after having eliminated exposure earlier in the year. Over the report period, the fund’s WAM was extended from 32 days to 42 days. The investment adviser continues to closely monitor events across Europe and will adjust portfolio exposures as conditions warrant.

As of 12/31/12:

Portfolio Composition By Maturity¹


	% of investments

1-15 Days		40.4%
16-30 Days		15.6%
31-60 Days		18.6%
61-90 Days		10.5%
91-120 Days		4.0%
More than 120 Days		10.9%
Total		100.0%

Statistics


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

Portfolio Composition by Security Type


	% of investments

Commercial Paper
Asset Backed		15.6%
Financial Company		9.5%
Other		2.9%
Certificate Of Deposit		40.2%
Government Agency Debt		4.0%
Other Instrument		3.8%
Variable Rate Demand Note		1.5%
Other Note		1.9%
Repurchase Agreement
Government Agency		18.3%
Treasury		0.2%
Other		2.1%
Total		100.0%

An investment in a money fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in a money fund.

Management views and 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, see financial note 4.
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 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 Schwab Retirement Advantage Money Fund

Performance and Fund Facts as of 12/31/12

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, 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		-0.14%


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 each share class’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. For additional details, see financial note 4.
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 0.17% to the seven-day yield.

Schwab Retirement Advantage Money Fund 5

Schwab Investor Money Fund

The Schwab Investor Money Fund (the fund) seeks the highest current income consistent with stability of capital and liquidity. To pursue its goal, the fund invests in high-quality, short-term money market investments issued by U.S. and foreign issuers. Examples of these securities include commercial paper, certificates of deposit, repurchase agreements, variable-rate debt securities, and obligations issued by the U.S. government or its agencies or instrumentalities.

Positioning and Strategies. The fund’s investment adviser focused on stability of capital and ensured robust liquidity amid the fluid market backdrop, strategically managing the portfolio as conditions evolved. During the first quarter of 2012, as a result of ongoing credit concerns, the fund’s exposure to Europe was reduced and weighted average maturities (WAMs) in the low to mid-30s were maintained. But with improved liquidity and market sentiment following the ECB’s LTRO announcement, the fund’s exposure to European institutions was increased. For example, the fund resumed investment in select institutions in France during October, after having eliminated exposure earlier in the year. Over the report period, the fund’s WAM was extended from 33 days to 42 days. The investment adviser continues to closely monitor events across Europe and will adjust portfolio exposures as conditions warrant.

As of 12/31/12:

Portfolio Composition By Maturity¹


	% of investments

1-15 Days		39.1%
16-30 Days		16.5%
31-60 Days		18.8%
61-90 Days		13.3%
91-120 Days		1.7%
More than 120 Days		10.6%
Total		100.0%

Statistics


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

Portfolio Composition by Security Type


	% of investments

Commercial Paper
Asset Backed		14.3%
Financial Company		10.1%
Other		3.9%
Certificate Of Deposit		39.2%
Government Agency Debt		4.0%
Other Instrument		2.6%
Variable Rate Demand Note		0.7%
Other Note		3.3%
Repurchase Agreement
Government Agency		20.2%
Other		1.7%
Total		100.0%

Management views and 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, see financial note 4.
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 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.

6 Schwab Investor Money Fund

Performance and Fund Facts as of 12/31/12

Weighted Average Maturity Trend for previous 12 months

Money funds must maintain a dollar-weighted average maturity of no longer than 60 days, 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


		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 each share class’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. For additional details, see financial note 4.
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 0.31% to the seven-day yield.

Schwab Investor Money Fund 7

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, 2012 and held through December 31, 2012.

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 7/1/12		at 12/31/12		7/1/12–12/31/12

Schwab Retirement Advantage Money Fund^®
Actual Return		0.30%	$	1,000	$	1,000.10	$	1.51
Hypothetical 5% Return		0.30%	$	1,000	$	1,023.63	$	1.53


Schwab Investor Money Fund^®
Actual Return		0.31%	$	1,000	$	1,000.10	$	1.56
Hypothetical 5% Return		0.31%	$	1,000	$	1,023.58	$	1.58


¹		Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers 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 366 days of the fiscal year.

8 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Schwab Retirement Advantage Money Fund^®

Financial Statements

Financial Highlights


	1/1/12–			1/1/11–			1/1/10–			1/1/09–			1/1/08–
	12/31/12			12/31/11			12/31/10			12/31/09			12/31/08


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		0.00	¹		0.00	¹		0.03
Net realized and unrealized gains (losses)		0.00	¹		0.00	¹		0.00	^1,2		(0.00	)¹		—

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

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

Total return (%)		0.01			0.01			0.01			0.20			2.56

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.27	³		0.25	³		0.34	³		0.44	^3,4		0.48	⁴
Gross operating expenses		0.61			0.60			0.60			0.62			0.60
Net investment income (loss)		0.01			0.01			0.01			0.20			2.52
Net assets, end of period ($ x 1,000,000)		806			846			873			954			984

¹ Per-share amount was less than $0.01.

² Net realized and unrealized gains (losses) ratio includes payment from affiliate.

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 incurred.

See financial notes 9

Schwab Retirement Advantage Money Fund

Portfolio Holdings as of December 31, 2012

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 the fund’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				($)		($)

	69	.6%	Fixed-Rate Obligations		561,291,695		561,291,695
	11	.0%	Variable-Rate Obligations		88,506,930		88,506,930
	20	.9%	Repurchase Agreements		168,467,609		168,467,609


	101	.5%	Total Investments		818,266,234		818,266,234
	(1	.5)%	Other Assets and Liabilities, Net				(12,101,795	)


	100	.0%	Net Assets				806,164,439


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

Fixed-Rate Obligations 69.6% of net assets

Asset Backed Commercial Paper 15.8%
Alpine Securitization Corp	a,b,c	0.46%			02/04/13		1,000,000		999,566
	a,b,c	0.40%			02/26/13		2,000,000		1,998,756

Atlantis One Funding Corp	a,b,c	0.27%			01/09/13		4,000,000		3,999,760
	a,b,c	0.52%			01/11/13		4,000,000		3,999,422
	a,b,c	0.50%			02/05/13		4,000,000		3,998,055
	a,b,c	0.39%			04/01/13		4,000,000		3,996,100

CAFCO, LLC	a,b,c	0.60%			02/22/13		5,000,000		4,995,667
	a,b,c	1.00%			03/04/13		2,000,000		1,996,556
	a,b,c	0.37%			03/14/13		2,000,000		1,998,520

Cancara Asset Securitisation, LLC	a,b,c	0.23%			01/17/13		3,000,000		2,999,693
	a,b,c	0.25%			02/12/13		4,000,000		3,998,833

Chariot Funding, LLC	a,b,c	0.24%			01/03/13		1,000,000		999,987
	a,b,c	0.23%			02/01/13		6,000,000		5,998,812
	a,b,c	0.23%			02/07/13		4,000,000		3,999,054
	a,b,c	0.33%			03/11/13		1,500,000		1,499,051
	a,b,c	0.25%			05/01/13		4,000,000		3,996,667

Ciesco, LLC	a,b,c	1.01%			02/01/13		4,000,000		3,996,555
	a,b,c	1.00%			03/04/13		2,000,000		1,996,556
	a,b,c	0.37%			03/14/13		3,000,000		2,997,780

Crown Point Capital Company, LLC	a,b,c	0.35%			04/09/13		5,000,000		4,995,236

Gemini Securitization Corp, LLC	a,b,c	0.28%			01/22/13		6,000,000		5,999,020

Gotham Funding Corp	a,b,c	0.21%			01/07/13		2,000,000		1,999,930

Govco, LLC	a,b,c	0.37%			03/21/13		8,000,000		7,993,504

Jupiter Securitization Corp	a,b,c	0.25%			01/14/13		1,000,000		999,910

10 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
	a,b,c	0.21%			02/15/13		8,000,000		7,997,900
	a,b,c	0.27%			03/08/13		2,000,000		1,999,010
	a,b,c	0.32%			06/17/13		1,000,000		998,516
	a,b,c	0.32%			06/21/13		4,000,000		3,993,920

Manhattan Asset Funding Capital Co, LLC	a,b,c	0.23%			01/09/13		1,000,000		999,949
	a,b,c	0.25%			02/13/13		2,000,000		1,999,403

Market Street Funding Corp	a,b,c	0.21%			02/15/13		1,000,000		999,737
	a,b,c	0.22%			03/11/13		3,000,000		2,998,735
	a,b,c	0.22%			03/13/13		4,000,000		3,998,264

MetLife Short Term Funding, LLC	a,b,c	0.40%			02/05/13		1,000,000		999,611

Old Line Funding, LLC	a,b,c	0.23%			01/10/13		11,000,000		10,999,367

Sheffield Receivables Corp	a,b,c	0.25%			02/05/13		3,000,000		2,999,271
	a,b,c	0.25%			02/06/13		2,000,000		1,999,500
	a,b,c	0.25%			02/08/13		2,000,000		1,999,472

									127,435,645

Financial Company Commercial Paper 8.3%
BNZ International Funding Ltd	a	0.20%			01/07/13		2,000,000		1,999,933

Commonwealth Bank of Australia	c	0.22%			01/08/13		3,000,000		2,999,872
	c	0.30%			02/25/13		4,000,000		3,998,167

General Electric Capital Corp		0.37%			01/04/13		9,000,000		8,999,722
		0.32%			01/28/13		4,000,000		3,999,040
		0.32%			02/20/13		1,000,000		999,556
		0.23%			03/05/13		1,000,000		999,597
		0.23%			04/03/13		3,000,000		2,998,237
		0.27%			09/09/13		1,000,000		998,117

HSBC USA, Inc		0.25%			02/13/13		3,000,000		2,999,104

ING (U.S.) Funding, LLC	a	0.25%			01/16/13		3,000,000		2,999,694
	a	0.25%			02/25/13		3,000,000		2,998,854

JP Morgan Chase & Co		0.27%			01/04/13		2,000,000		1,999,955
		0.30%			04/02/13		1,000,000		999,242
		0.30%			05/07/13		4,000,000		3,995,800

Nationwide Building Society		0.29%			02/14/13		5,000,000		4,998,228

Nordea North America, Inc	a	0.34%			02/01/13		3,000,000		2,999,122
	a	0.36%			02/19/13		2,000,000		1,999,020
	a	0.35%			02/25/13		6,000,000		5,996,792

Skandinaviska Enskilda Banken AB		0.25%			01/22/13		2,000,000		1,999,708
		0.27%			03/01/13		1,000,000		999,557

Swedbank AB		0.35%			06/20/13		1,000,000		998,347

Westpac Banking Corp	c	0.40%			01/02/13		2,000,000		1,999,978
	c	0.40%			01/03/13		1,000,000		999,978

									66,975,620

Other Commercial Paper 3.0%
Coca-Cola Co	c	0.24%			03/04/13		7,000,000		6,997,106
	c	0.26%			05/01/13		8,000,000		7,993,067

See financial notes 11

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


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

Reckitt Benckiser Treasury Services PLC	a,c	0.60%			02/14/13		1,000,000		999,267
	a,c	0.64%			03/08/13		1,000,000		998,827
	a,c	0.49%			06/10/13		1,000,000		997,822

Toyota Motor Credit Corp	a	0.32%			03/04/13		1,000,000		999,449
	a	0.32%			03/20/13		5,000,000		4,996,533

									23,982,071

Certificate of Deposit 36.5%
Bank of Montreal		0.20%			01/02/13		6,000,000		6,000,000
		0.22%			02/05/13		6,000,000		6,000,000
		0.22%			02/08/13		1,000,000		1,000,000
		0.30%			03/01/13		2,000,000		2,000,000

Bank of Nova Scotia		0.20%			01/16/13		4,000,000		4,000,000
		0.21%			01/22/13		5,000,000		5,000,000
		0.21%			01/23/13		4,000,000		4,000,000
		0.22%			01/30/13		1,000,000		1,000,000
		0.22%			02/04/13		1,000,000		1,000,000

Bank of Tokyo Mitsubishi UFJ, Ltd		0.56%			01/02/13		6,000,000		6,000,000
		0.50%			02/01/13		1,000,000		1,000,000
		0.34%			06/28/13		3,000,000		3,000,000
		0.33%			07/09/13		3,000,000		3,000,000

Barclays Bank PLC		0.69%			01/28/13		2,000,000		2,000,000
		0.40%			05/09/13		3,000,000		3,000,000
		0.47%			05/17/13		4,000,000		4,000,000

BNP Paribas		0.38%			02/04/13		3,000,000		3,000,000
		0.34%			03/13/13		7,000,000		7,000,000
		0.27%			03/25/13		1,000,000		1,000,000
		0.59%			06/07/13		7,000,000		7,000,000

Branch Banking & Trust Co		0.25%			02/01/13		4,000,000		4,000,000

Chase Bank USA, NA		0.20%			01/25/13		6,000,000		6,000,000
		0.20%			02/22/13		8,000,000		8,000,000
		0.22%			03/06/13		1,000,000		1,000,000

Commonwealth Bank of Australia		0.22%			01/07/13		3,000,000		3,000,000
		0.24%			01/22/13		2,000,000		2,000,000
		0.22%			03/05/13		5,000,000		5,000,000

Credit Suisse AG		0.50%			01/29/13		6,000,000		6,000,000
		0.33%			04/23/13		6,000,000		6,000,000

Deutsche Bank AG		0.25%			01/30/13		4,000,000		4,000,000
		0.25%			02/15/13		6,000,000		6,000,000
		0.45%			05/15/13		2,000,000		2,000,000
		0.46%			07/09/13		5,000,000		5,000,000

DNB Bank ASA		0.51%			01/14/13		3,000,000		3,000,000
		0.24%			02/15/13		1,000,000		1,000,000
		0.25%			03/05/13		5,000,000		5,000,000

JPMorgan Chase Bank, NA		0.22%			03/12/13		3,000,000		3,000,000
		0.22%			03/14/13		5,000,000		5,000,000

Lloyds TSB Bank PLC		0.25%			03/26/13		3,000,000		3,000,000

Mitsubishi UFJ Trust & Banking Corp

12 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
		0.54%			01/07/13		7,000,000		7,000,000
		0.41%			04/02/13		2,000,000		2,000,000
		0.33%			07/10/13		4,000,000		4,000,000

Mizuho Corporate Bank Ltd		0.26%			01/28/13		2,000,000		2,000,000
		0.25%			02/15/13		2,000,000		2,000,000
		0.25%			02/28/13		1,000,000		1,000,000
		0.27%			03/20/13		2,000,000		2,000,000

National Australia Bank Ltd		0.22%			02/06/13		6,000,000		6,000,000
		0.34%			06/17/13		7,000,000		7,000,000

Nordea Bank Finland PLC		0.24%			02/14/13		3,000,000		3,000,000
		0.21%			04/12/13		3,000,000		3,000,000

Rabobank Nederland		0.48%			03/01/13		3,000,000		3,000,000
		0.30%			05/14/13		5,000,000		5,000,000
		0.30%			06/04/13		7,000,000		7,000,000

Skandinaviska Enskilda Banken AB		0.28%			03/06/13		1,000,000		1,000,000
		0.34%			06/20/13		1,000,000		1,000,000
		0.34%			07/10/13		1,000,000		1,000,000

Societe Generale		0.38%			02/04/13		7,000,000		7,000,000
		0.68%			07/01/13		4,000,000		4,000,000

State Street Bank & Trust Company, NA		0.19%			01/15/13		7,000,000		7,000,000

Sumitomo Mitsui Banking Corp		0.49%			01/18/13		1,000,000		999,998
		0.47%			01/28/13		6,000,000		6,000,000
		0.25%			03/26/13		8,000,000		8,000,000
		0.25%			04/01/13		2,000,000		2,000,000
		0.26%			04/05/13		1,000,000		1,000,000
		0.34%			05/06/13		3,000,000		3,000,000
		0.34%			05/08/13		3,000,000		3,000,000
		0.34%			05/13/13		1,000,000		1,000,000

Sumitomo Mitsui Trust Bank Ltd		0.29%			01/25/13		4,000,000		4,000,000
		0.26%			02/15/13		1,000,000		1,000,000
		0.27%			04/12/13		3,000,000		3,000,000

Svenska Handelsbanken AB		0.23%			01/23/13		2,000,000		2,000,000
		0.24%			02/14/13		8,000,000		8,000,000
		0.24%			03/01/13		2,000,000		2,000,000

Swedbank AB		0.35%			05/28/13		1,900,000		1,899,999

Toronto-Dominion Bank		0.17%			01/04/13		2,000,000		2,000,000
		0.18%			01/04/13		4,000,000		4,000,000
		0.30%			01/25/13		6,000,000		6,000,000
		0.29%			02/08/13		4,000,000		4,000,000
		0.22%			02/15/13		1,000,000		1,000,000
		0.20%			04/29/13		2,000,000		2,000,000

UBS AG		0.41%			01/11/13		2,000,000		2,000,000

Union Bank, NA		0.23%			03/01/13		3,000,000		3,000,000

									293,899,997

Government Agency Debt 2.2%
Fannie Mae		0.14%			01/30/13		15,000,000		14,998,369

See financial notes 13

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued


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

Federal Home Loan Bank		0.09%				01/02/13		3,000,000		2,999,993

										17,998,362

Other Instrument 3.8%
Australia & New Zealand Banking Group Ltd		0.20%				01/02/13		10,000,000		10,000,000
		0.19%				01/07/13		12,000,000		12,000,000

Bank of Nova Scotia		0.03%				01/02/13		9,000,000		9,000,000

										31,000,000

Total Fixed-Rate Obligations
(Cost $561,291,695)										561,291,695




Variable-Rate Obligations 11.0% of net assets

Financial Company Commercial Paper 1.4%
JP Morgan Chase & Co		0.36%		01/02/13		03/01/13		4,000,000		4,000,000

Westpac Banking Corp	c	0.30%		01/04/13		02/04/13		2,000,000		2,000,000
	c	0.40%		01/07/13		02/07/13		5,000,000		5,000,000

										11,000,000

Certificate of Deposit 4.3%
Canadian Imperial Bank of Commerce		0.38%		01/16/13		04/16/13		4,000,000		4,000,000
		0.30%		01/28/13		05/28/13		6,000,000		6,000,000

Sumitomo Mitsui Banking Corp		0.44%		01/02/13		02/04/13		3,000,000		3,000,000

Toronto-Dominion Bank		0.30%		01/22/13		04/22/13		16,000,000		16,000,000
		0.30%		01/28/13		05/28/13		1,000,000		1,000,000

Westpac Banking Corp		0.46%		01/11/13		07/11/13		2,000,000		2,000,000
		0.45%		01/18/13		07/18/13		3,000,000		3,000,000

										35,000,000

Government Agency Debt 1.9%
Freddie Mac		0.30%		01/10/13		11/08/13		15,000,000		15,000,000

Variable Rate Demand Note 1.5%
California
RAN 2012-2013 Series A1	a,c	0.14%				01/02/13		1,000,000		1,000,000

New York City IDA
IDRB (Allway Tools) Series 1997	a	0.61%				01/07/13		80,000		80,000

Palm Springs, CA
COP (Downtown Parking) Series 2002A	a	0.38%				01/07/13		7,390,000		7,390,000

Texas
TRAN Series 2012	a,c	0.14%				01/02/13		4,000,000		4,000,000

										12,470,000

Other Note 1.9%
JPMorgan Chase Bank, NA		0.33%		01/22/13		01/21/14		10,000,000		10,000,000

Royal Bank of Canada		0.40%		01/04/13		01/03/14		5,000,000		5,000,000

14 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued

Face

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity

Date

($)

Whistlejacket Capital, LLC

d,†

n/a

36,930

15,036,930

Total Variable-Rate Obligations

(Cost $88,506,930)

88,506,930

Maturity

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity

Date

($)

Repurchase Agreements 20.9% of net assets

Government Agency Repurchase Agreement 18.5%

Barclays Capital, Inc

Issued 12/12/12, repurchase date 01/14/13
(Collateralized by U.S. Government Agency Securities valued at $6,244,373, 2.59% - 6.16%, due 08/01/34 - 02/01/42)

0.18%

01/07/13

6,000,780

6,000,000

BNP Paribas Securities Corp

Issued 12/05/12, repurchase date 01/02/13
(Collateralized by U.S. Government Agency Securities valued at $6,120,432, 1.35%, due 02/15/17)

0.20%

01/02/13

6,000,933

6,000,000

Credit Suisse Securities (USA), LLC

Issued 12/31/12, repurchase date 01/02/13
(Collateralized by U.S. Government Agency Securities valued at $20,880,799, 2.70% - 6.50%, due 04/20/38 - 12/15/44)

0.22%

01/02/13

20,467,859

20,467,609

Issued 12/27/12, repurchase date 01/03/13
(Collateralized by U.S. Government Agency Securities valued at $11,222,290, 3.00%, due 12/01/42)

0.18%

01/03/13

11,000,385

11,000,000

Deutsche Bank Securities, Inc

Issued 12/31/12, repurchase date 01/02/13
(Collateralized by U.S. Government Agency Securities valued at $62,400,000, 0.46% - 5.50%, due 12/25/31 - 01/25/43)

0.25%

01/02/13

60,000,833

60,000,000

Issued 12/19/12, repurchase date 03/19/13
(Collateralized by U.S. Government Agency Securities valued at $5,213,426, 6.50%, due 11/25/42)

0.22%

01/07/13

5,000,581

5,000,000

Issued 11/26/12, repurchase date 02/25/13
(Collateralized by U.S. Government Agency Securities valued at $4,172,859, 2.00% - 6.50%, due 12/25/31 - 11/25/42)

0.23%

01/07/13

4,001,073

4,000,000

Issued 11/13/12, repurchase date 01/14/13
(Collateralized by U.S. Government Agency Securities valued at $1,043,189, 2.50%, due 08/01/27)

0.24%

01/07/13

1,000,367

1,000,000

Issued 11/08/12, repurchase date 01/08/13
(Collateralized by U.S. Government Agency Securities valued at $10,406,029, 2.50% - 7.00%, due 07/01/27 - 11/25/42)

0.25%

01/07/13

10,004,167

10,000,000

Goldman Sachs & Co

Issued 12/27/12, repurchase date 01/03/13
(Collateralized by U.S. Government Agency Securities valued at $5,250,000, 3.50% - 5.50%, due 06/20/33 - 12/15/42)

0.22%

01/03/13

5,000,214

5,000,000

Merrill Lynch, Pierce, Fenner & Smith, Inc

Issued 12/26/12, repurchase date 01/02/13
(Collateralized by U.S. Government Agency Securities valued at $21,630,001, 2.00%, due 02/15/42)

0.15%

01/02/13

21,000,613

21,000,000

149,467,609

See financial notes 15

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued

Maturity

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity

Date

($)

Treasury Repurchase Agreement 0.3%

Goldman Sachs & Co

Issued 12/27/12, repurchase date 01/03/13
(Collateralized by U.S. Treasury Securities valued at $2,040,092, 4.38%, due 11/15/39)

0.15%

01/03/13

2,000,058

2,000,000

Other Repurchase Agreement* 2.1%

BNP Paribas Securities Corp

Issued 12/06/12, repurchase date 01/07/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $4,202,795, 1.88% - 8.75%, due 11/15/13 - 12/15/42)

0.31%

01/07/13

4,001,102

4,000,000

Credit Suisse Securities (USA), LLC

Issued 12/07/12, repurchase date 03/22/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $2,300,070, 5.31% - 5.75%, due 03/25/36 - 07/15/36)

0.73%

03/22/13

2,004,258

2,000,000

Deutsche Bank Securities, Inc

Issued 11/26/12, repurchase date 03/11/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $3,302,979, 0.00% - 9.00%, due 08/23/18 - 03/14/51)

0.50%

01/07/13

3,001,750

3,000,000

Goldman Sachs & Co

Issued 12/13/12, repurchase date 04/02/13
(Collateralized by U.S. Government Agency Securities valued at $1,050,001, 2.08%, due 01/01/43)

0.46%

04/02/13

1,001,406

1,000,000

Merrill Lynch, Pierce, Fenner & Smith, Inc

Issued 12/14/12, repurchase date 04/01/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $8,050,001, 8.00% - 11.13%, due 11/15/14 - 07/02/56)

0.55%

01/07/13

7,002,567

7,000,000

17,000,000

Total Repurchase Agreements

(Cost $168,467,609)

168,467,609

End of Investments.

At 12/31/12, the tax basis cost of the fund’s investments was $818,266,234.


a		Credit-enhanced or liquidity-enhanced.
b		Asset-backed security.
c		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $167,419,729 or 20.8% of net assets.
d		Illiquid security. At the period end, the value of these amounted to $3,036,930 or 0.4% of net assets.
†		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.
*		Usually collateralized via common stocks, ETFs, corporate bonds or non-agency collateralized mortgage obligations or less frequently by Government Agency securities and/ or U.S. Treasury Securities.


COP —		Certificate of participation
ETF —		Exchange traded fund
IDA —		Industrial development agency/authority
IDRB —		Industrial development revenue bond
RAN —		Revenue anticipation note
TRAN —		Tax and revenue anticipation note

16 See financial notes

Schwab Investor Money Fund^®

Financial Statements

Financial Highlights


	1/1/12–			1/1/11–			1/1/10–			1/1/09–			1/1/08–
	12/31/12			12/31/11			12/31/10			12/31/09			12/31/08


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		0.00	¹		0.00	¹		0.02
Net realized and unrealized gains (losses)		0.00	¹		0.00	¹		0.00	^1,2		(0.00	)¹		—

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

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

Total return (%)		0.01			0.01			0.01			0.16			2.41

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.27	³		0.25	³		0.34	³		0.51	^3,4		0.60
Gross operating expenses		0.63			0.62			0.62			0.64			0.62
Net investment income (loss)		0.01			0.01			0.01			0.17			2.37
Net assets, end of period ($ x 1,000,000)		1,205			1,333			1,495			1,832			2,360

¹ Per-share amount was less than $0.01.

² Net realized and unrealized gains (losses) ratio includes payment from affiliate.

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, 2012

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	.0%	Fixed-Rate Obligations		795,577,664		795,577,664
	11	.8%	Variable-Rate Obligations		141,528,071		141,528,071
	21	.8%	Repurchase Agreements		262,694,699		262,694,699


	99	.6%	Total Investments		1,199,800,434		1,199,800,434
	0	.4%	Other Assets and Liabilities, Net				5,093,846


	100	.0%	Net Assets				1,204,894,280


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

Fixed-Rate Obligations 66.0% of net assets

Asset Backed Commercial Paper 14.3%
Alpine Securitization Corp	a,b,c	0.46%			02/04/13		10,000,000		9,995,656

Atlantis One Funding Corp	a,b,c	0.53%			01/02/13		6,000,000		5,999,912
	a,b,c	0.25%			01/25/13		4,000,000		3,999,333
	a,b,c	0.50%			02/05/13		5,000,000		4,997,569
	a,b,c	0.39%			04/01/13		7,000,000		6,993,175
	a,b,c	0.31%			05/14/13		1,000,000		998,855

CAFCO, LLC	a,b,c	1.00%			03/04/13		4,000,000		3,993,111

Cancara Asset Securitisation, LLC	a,b,c	0.22%			01/02/13		7,000,000		6,999,957
	a,b,c	0.25%			01/18/13		2,000,000		1,999,764
	a,b,c	0.25%			02/11/13		2,000,000		1,999,431

Chariot Funding, LLC	a,b,c	0.25%			05/01/13		12,000,000		11,990,000

Ciesco, LLC	a,b,c	1.00%			03/04/13		8,000,000		7,986,222
	a,b,c	0.37%			03/14/13		2,000,000		1,998,520

CRC Funding, LLC	a,b,c	0.37%			03/06/13		4,000,000		3,997,369

Crown Point Capital Company, LLC	a,b,c	0.35%			02/13/13		3,000,000		2,998,746
	a,b,c	0.35%			04/09/13		2,000,000		1,998,094

Govco, LLC	a,b,c	0.37%			03/21/13		12,000,000		11,990,257

Jupiter Securitization Corp	a,b,c	0.21%			02/14/13		14,000,000		13,996,407
	a,b,c	0.32%			06/21/13		7,000,000		6,989,360

Manhattan Asset Funding Capital Co, LLC	a,b,c	0.23%			01/09/13		4,000,000		3,999,796

Market Street Funding Corp	a,b,c	0.21%			01/08/13		3,000,000		2,999,878
	a,b,c	0.21%			02/07/13		1,024,000		1,023,779
	a,b,c	0.22%			03/11/13		7,000,000		6,997,048

22 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued


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

MetLife Short Term Funding, LLC	a,b,c	0.40%			02/04/13		7,000,000		6,997,356
	a,b,c	0.40%			02/05/13		1,000,000		999,611
	a,b,c	0.40%			02/20/13		1,000,000		999,444

Nieuw Amsterdam Receivables Corp	a,b,c	0.19%			01/25/13		7,000,000		6,999,113

Old Line Funding, LLC	a,b,c	0.22%			02/08/13		16,000,000		15,996,284

Sheffield Receivables Corp	a,b,c	0.25%			02/05/13		3,000,000		2,999,271
	a,b,c	0.27%			02/06/13		1,000,000		999,730
	a,b,c	0.26%			02/08/13		6,000,000		5,998,353

Victory Receivables Corp	a,b,c	0.24%			01/08/13		3,000,000		2,999,860

									171,931,261

Financial Company Commercial Paper 8.5%
BNZ International Funding Ltd	a	0.22%			02/05/13		2,000,000		1,999,572

General Electric Capital Corp		0.32%			01/23/13		6,000,000		5,998,827
		0.32%			02/11/13		1,000,000		999,636
		0.30%			03/04/13		3,000,000		2,998,450
		0.23%			03/05/13		18,000,000		17,992,755
		0.23%			03/27/13		2,000,000		1,998,914

HSBC USA, Inc		0.25%			02/13/13		5,000,000		4,998,507

ING (U.S.) Funding, LLC	a	0.24%			01/11/13		2,000,000		1,999,867
	a	0.25%			01/16/13		4,000,000		3,999,592

JP Morgan Chase & Co
		0.27%			01/04/13		2,000,000		1,999,955
		0.30%			04/22/13		7,000,000		6,993,525

Lloyds TSB Bank PLC		0.25%			01/08/13		5,000,000		4,999,757
		0.26%			01/25/13		2,000,000		1,999,653
		0.26%			03/26/13		1,000,000		999,393

Nationwide Building Society		0.34%			01/03/13		2,000,000		1,999,962
		0.38%			01/17/13		3,200,000		3,199,460

Nordea North America, Inc	a	0.34%			02/01/13		4,000,000		3,998,829
	a	0.36%			02/19/13		5,000,000		4,997,550
	a	0.35%			02/25/13		8,000,000		7,995,722
	a	0.35%			02/27/13		1,000,000		999,446

Rabobank USA Financial Corp	a	0.48%			02/05/13		4,000,000		3,998,133
	a	0.41%			03/18/13		1,000,000		999,134

Skandinaviska Enskilda Banken AB		0.27%			03/01/13		3,000,000		2,998,672
		0.35%			06/05/13		4,000,000		3,993,972

State Street Corp		0.18%			01/11/13		5,000,000		4,999,750

Westpac Banking Corp	c	0.40%			01/02/13		3,000,000		2,999,967

									103,159,000

Other Commercial Paper 3.9%
Catholic Health Initiatives
Taxable CP Notes Series A		0.22%			01/18/13		2,000,000		2,000,000

Coca-Cola Co	c	0.24%			03/04/13		1,000,000		999,587
	c	0.24%			03/06/13		10,000,000		9,995,733

See financial notes 23

Schwab Investor Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
	c	0.24%			03/07/13		10,000,000		9,995,667

Reckitt Benckiser Treasury Services PLC	a,c	0.60%			02/14/13		2,000,000		1,998,533
	a,c	0.52%			07/02/13		2,500,000		2,493,428

Toyota Motor Credit Corp	a	0.25%			02/28/13		9,000,000		8,996,375
	a	0.32%			03/20/13		11,000,000		10,992,373

									47,471,696

Certificate of Deposit 34.7%
Bank of Montreal		0.20%			01/02/13		4,000,000		4,000,000
		0.22%			02/05/13		2,000,000		2,000,000
		0.22%			02/08/13		2,000,000		2,000,000
		0.30%			03/01/13		16,000,000		16,000,000

Bank of Nova Scotia		0.20%			01/16/13		8,000,000		8,000,000
		0.20%			01/17/13		9,000,000		9,000,000
		0.21%			01/22/13		5,000,000		5,000,000
		0.22%			02/26/13		1,000,000		1,000,000
		0.22%			03/26/13		1,000,000		1,000,000

Bank of the West		0.33%			03/27/13		1,000,000		1,000,000

Bank of Tokyo Mitsubishi UFJ, Ltd		0.56%			01/02/13		11,000,000		11,000,000
		0.34%			06/24/13		4,000,000		4,000,000
		0.33%			07/09/13		7,000,000		7,000,000

Barclays Bank PLC		0.25%			02/05/13		3,000,000		3,000,000
		0.69%			03/12/13		3,000,000		3,000,000
		0.67%			03/14/13		1,000,000		1,000,000
		0.40%			05/02/13		2,000,000		2,000,000
		0.40%			05/09/13		8,000,000		8,000,000
		0.45%			05/28/13		1,000,000		1,000,000

BNP Paribas		0.35%			02/01/13		2,000,000		2,000,000
		0.38%			02/04/13		2,000,000		2,000,000
		0.34%			03/13/13		4,000,000		4,000,000
		0.27%			03/25/13		3,000,000		3,000,000
		0.60%			06/04/13		6,000,000		6,000,000
		0.59%			06/07/13		3,000,000		3,000,000
		0.59%			06/10/13		2,000,000		2,000,000

Branch Banking & Trust Co		0.25%			02/01/13		6,000,000		6,000,000

Chase Bank USA, NA		0.20%			02/07/13		3,000,000		3,000,000
		0.20%			02/22/13		11,000,000		11,000,000
		0.22%			03/06/13		4,000,000		4,000,000
		0.25%			03/26/13		5,000,000		5,000,000

Commonwealth Bank of Australia		0.22%			01/07/13		11,000,000		11,000,000
		0.24%			01/22/13		14,000,000		14,000,000
		0.22%			03/05/13		4,000,000		4,000,000

Credit Suisse AG		0.50%			01/29/13		14,000,000		14,000,000

Deutsche Bank AG		0.25%			02/15/13		7,000,000		7,000,000
		0.26%			02/21/13		11,000,000		11,000,000
		0.45%			05/14/13		2,000,000		2,000,000
		0.45%			05/15/13		5,000,000		5,000,000
		0.46%			07/09/13		9,000,000		9,000,000

DNB Bank ASA		0.53%			01/03/13		5,000,000		5,000,000
		0.24%			02/07/13		3,000,000		2,999,985

24 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
		0.40%			02/19/13		1,000,000		1,000,000
		0.25%			03/05/13		2,000,000		2,000,000
		0.30%			05/13/13		3,000,000		3,000,000

HSBC Bank PLC		0.41%			01/10/13		2,000,000		2,000,000

JPMorgan Chase Bank, NA		0.22%			03/12/13		2,000,000		2,000,000

Lloyds TSB Bank PLC		0.26%			04/08/13		2,000,000		2,000,000

Mitsubishi UFJ Trust & Banking Corp		0.54%			01/07/13		2,000,000		2,000,000
		0.52%			02/01/13		2,000,000		2,000,000
		0.53%			02/07/13		2,000,000		2,000,000
		0.49%			03/05/13		3,000,000		3,000,000
		0.34%			06/19/13		11,000,000		11,000,000

Mizuho Corporate Bank Ltd		0.26%			01/28/13		1,000,000		1,000,000
		0.25%			02/15/13		4,000,000		4,000,000
		0.25%			03/04/13		3,000,000		3,000,000
		0.27%			03/20/13		3,000,000		3,000,000
		0.27%			03/26/13		1,000,000		1,000,000

National Australia Bank Ltd		0.22%			02/06/13		8,000,000		8,000,000
		0.38%			05/30/13		12,000,000		12,000,000

Nordea Bank Finland PLC		0.24%			02/14/13		4,000,000		4,000,000

Rabobank Nederland		0.31%			05/07/13		1,000,000		1,000,000
		0.30%			06/04/13		4,000,000		4,000,000

Skandinaviska Enskilda Banken AB		0.28%			03/06/13		4,000,000		4,000,000

Societe Generale		0.38%			02/01/13		11,000,000		11,000,000
		0.68%			07/01/13		6,000,000		6,000,000

State Street Bank & Trust Company, NA		0.19%			01/15/13		6,000,000		6,000,000

Sumitomo Mitsui Banking Corp		0.51%			01/07/13		8,000,000		8,000,000
		0.49%			01/18/13		4,000,000		3,999,990
		0.25%			03/26/13		4,000,000		4,000,000
		0.25%			03/27/13		15,000,000		15,000,000
		0.26%			04/05/13		1,000,000		1,000,000
		0.35%			04/17/13		1,000,000		1,000,000
		0.34%			05/08/13		3,000,000		3,000,000
		0.34%			05/20/13		1,000,000		1,000,000
		0.34%			05/21/13		1,000,000		1,000,000

Sumitomo Mitsui Trust Bank Ltd		0.29%			01/25/13		5,000,000		5,000,000

Svenska Handelsbanken AB		0.23%			01/23/13		8,000,000		8,000,000
		0.24%			02/14/13		2,000,000		2,000,000
		0.24%			03/01/13		5,000,000		5,000,000

Swedbank AB		0.34%			06/20/13		3,000,000		3,000,000

Toronto-Dominion Bank		0.18%			01/04/13		12,000,000		12,000,000
		0.19%			01/04/13		1,000,000		1,000,000
		0.30%			01/25/13		10,000,000		10,000,000
		0.40%			08/27/13		6,000,000		6,000,000

Union Bank, NA		0.23%			03/01/13		3,000,000		3,000,000

									417,999,975

See financial notes 25

Schwab Investor Money Fund

Portfolio Holdings continued


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

Government Agency Debt 1.9%
Fannie Mae		0.08%				01/14/13		2,000,000		1,999,946
		0.14%				01/30/13		8,000,000		7,999,130

Federal Home Loan Bank		0.09%				01/02/13		4,000,000		3,999,990
		0.12%				01/04/13		9,000,000		8,999,912

										22,998,978

Other Instrument 2.6%
Australia & New Zealand Banking Group Ltd		0.12%				01/07/13		10,000,000		10,000,000
		0.19%				01/07/13		10,000,000		10,000,000

Bank of Nova Scotia		0.03%				01/02/13		11,000,000		11,000,000

										31,000,000

Other Note 0.1%
Credit Suisse AG		5.00%				05/15/13		1,000,000		1,016,754

Total Fixed-Rate Obligations
(Cost $795,577,664)										795,577,664




Variable-Rate Obligations 11.8% of net assets

Financial Company Commercial Paper 1.5%
JP Morgan Chase & Co		0.36%		01/02/13		03/01/13		8,000,000		8,000,000

Westpac Banking Corp	c	0.30%		01/04/13		02/04/13		2,000,000		2,000,000
	c	0.40%		01/07/13		02/07/13		8,000,000		8,000,000

										18,000,000

Certificate of Deposit 4.3%
Canadian Imperial Bank of Commerce		0.38%		01/16/13		04/16/13		8,000,000		8,000,000

Sumitomo Mitsui Banking Corp		0.44%		01/02/13		02/04/13		4,000,000		4,000,000

Toronto-Dominion Bank		0.30%		01/22/13		04/19/13		2,000,000		2,000,000
		0.30%		01/22/13		04/22/13		20,000,000		20,000,000
		0.30%		01/29/13		05/29/13		2,000,000		2,000,000

Westpac Banking Corp		0.46%		01/11/13		07/11/13		4,000,000		4,000,000
		0.45%		01/18/13		07/18/13		12,000,000		12,000,000

										52,000,000

Government Agency Debt 2.1%
Freddie Mac		0.30%		01/10/13		11/08/13		25,000,000		25,000,000

Variable Rate Demand Note 0.7%
California
RAN 2012-2013 Series A1	a,c	0.14%				01/02/13		2,000,000		2,000,000

Eagle Cnty, CO
Housing Facilities RB (BC Housing) Series 1997B	a	0.21%				01/07/13		1,500,000		1,500,000

Labcon North America
Taxable Bonds Series 2010	a	0.52%				01/07/13		2,065,000		2,065,000

26 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued


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

Texas
Veterans Housing Assistance Taxable Refunding Bonds Series 1994A2		0.26%				01/07/13		1,000,000		1,000,000
Veterans Land Taxable Refunding Bonds Series 2006A		0.26%				01/07/13		1,840,000		1,840,000

										8,405,000

Other Note 3.2%
JPMorgan Chase Bank, NA		0.33%		01/22/13		01/21/14		38,000,000		38,000,000

Whistlejacket Capital, LLC	d,†	n/a		n/a		n/a		123,071		123,071

										38,123,071

Total Variable-Rate Obligations
(Cost $141,528,071)										141,528,071



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

Repurchase Agreements 21.8% of net assets

Government Agency Repurchase Agreement 20.1%
BNP Paribas Securities Corp
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $25,750,000, 2.50% - 8.00%, due 06/15/24 - 09/15/42)		0.18%				01/02/13		25,000,250		25,000,000

Credit Suisse Securities (USA), LLC
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $30,292,797, 0.00%, due 06/19/13 - 12/12/13)		0.22%				01/02/13		29,695,062		29,694,699
Issued 12/27/12, repurchase date 01/03/13 (Collateralized by U.S. Government Agency Securities valued at $11,222,290, 3.00%, due 12/01/42)		0.18%				01/03/13		11,000,385		11,000,000
Issued 12/31/12, repurchase date 01/07/13 (Collateralized by U.S. Government Agency Securities valued at $18,364,701, 3.00%, due 12/01/42)		0.20%				01/07/13		18,000,700		18,000,000

Deutsche Bank Securities, Inc
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $52,000,000, 0.61% - 7.00%, due 10/25/28 - 03/25/42)		0.25%				01/02/13		50,000,694		50,000,000
Issued 12/19/12, repurchase date 03/19/13 (Collateralized by U.S. Government Agency Securities valued at $15,613,434, 3.00% - 4.00%, due 07/25/41 - 11/25/42)		0.22%				01/07/13		15,001,742		15,000,000
Issued 11/20/12, repurchase date 02/19/13 (Collateralized by U.S. Government Agency Securities valued at $8,324,753, 3.00% - 7.00%, due 12/25/31 - 11/25/42)		0.23%				01/07/13		8,002,453		8,000,000
Issued 11/26/12, repurchase date 02/25/13 (Collateralized by U.S. Government Agency Securities valued at $10,401,391, 2.00% - 6.50%, due 12/25/31 - 11/25/42)		0.23%				01/07/13		10,002,683		10,000,000
Issued 11/13/12, repurchase date 01/14/13 (Collateralized by U.S. Government Agency Securities valued at $1,042,266, 4.00% - 6.50%, due 08/25/31 - 11/25/42)		0.24%				01/07/13		1,000,367		1,000,000
Issued 11/08/12, repurchase date 01/08/13 (Collateralized by U.S. Government Agency Securities valued at $1,040,640, 1.21% - 7.00%, due 01/01/38 - 11/01/42)		0.25%				01/07/13		1,000,417		1,000,000

See financial notes 27

Schwab Investor Money Fund

Portfolio Holdings continued

Maturity

Effective

Maturity

Amount

Value

Issuer

Footnotes

Rate

Maturity

Date

($)

Merrill Lynch, Pierce, Fenner & Smith, Inc

Issued 12/26/12, repurchase date 01/02/13
(Collateralized by U.S. Government Agency Securities valued at $76,220,001, 2.00% - 3.00%, due 12/15/41 - 02/15/42)

0.15%

01/02/13

74,002,158

74,000,000

242,694,699

Other Repurchase Agreement* 1.7%

BNP Paribas Securities Corp

Issued 12/13/12, repurchase date 01/30/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $2,100,000, 5.30%, due 03/01/13)

0.31%

01/07/13

2,000,121

2,000,000

Credit Suisse Securities (USA), LLC

Issued 12/07/12, repurchase date 03/22/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $3,455,574, 0.48% - 6.12%, due 03/25/36 - 02/16/51)

0.73%

03/22/13

3,006,388

3,000,000

Deutsche Bank Securities, Inc

Issued 11/26/12, repurchase date 03/11/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at
$5,665,116, 0.00% - 10.55%, due 06/15/13 - 12/10/49)

0.50%

01/07/13

5,002,917

5,000,000

Merrill Lynch, Pierce, Fenner & Smith, Inc

Issued 12/14/12, repurchase date 04/01/13
(Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $11,500,000, 0.00% - 9.25%, due 12/01/15 - 03/22/38)

0.55%

01/07/13

10,003,667

10,000,000

20,000,000

Total Repurchase Agreements

(Cost $262,694,699)

262,694,699

End of Investments.

At 12/31/12, the tax basis cost of the fund’s investments was $1,199,800,434.


a		Credit-enhanced or liquidity-enhanced.
b		Asset-backed security.
c		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $212,414,176 or 17.6% of net assets.
d		Illiquid security. At the period end, the value of these amounted to $3,123,071 or 0.3% of net assets.
†		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.
*		Usually collateralized via common stocks, ETFs, corporate bonds or non-agency collateralized mortgage obligations or less frequently by Government Agency securities and/ or U.S. Treasury Securities.


CP —		Commercial paper
ETF —		Exchange traded fund
RAN —		Revenue anticipation note
RB —		Revenue bond

At December 31, 2012, all of the fund’s investment securities were classified as Level 2. The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended December 31, 2012. The breakdown of the fund’s investments into major categories is disclosed on the portfolio holdings. (See financial note 2(a) for additional information)

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

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 as of the end of the period, including the funds discussed in this report, which are highlighted:



The Charles Schwab Family of Funds (organized October 20, 1989)		Schwab Investor Money Fund
Schwab Money Market Fund		Schwab Municipal Money Fund
Schwab Government Money Fund		Schwab AMT Tax-Free Money Fund
Schwab U.S. Treasury Money Fund		Schwab California Municipal Money Fund
Schwab Treasury Obligations 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 Retirement Advantage Money Fund and Schwab Investor Money Fund each offer one share class. Shares are bought and sold at closing net asset value per share (“NAV”), which is the price for all outstanding shares of the funds. Each share has a par value of 1/1,000 of a cent, and the funds’ Board of Trustees (the “Board”) may authorize the issuance of as many shares as necessary.

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

2. Significant Accounting Policies:

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

(a) Security Valuation:

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

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 fair valued as determined in accordance with procedures adopted by the Board. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the procedures.

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

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):


	•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. 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 levels associated with valuing the funds’ investments as of December 31, 2012 are disclosed in the Portfolio Holdings.

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

(c) Security Transactions:

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

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (less than face value) or a premium (more than face value), it amortizes premiums and accretes discounts 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 Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(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 make distributions from net realized capital gains, if any, once a year.

(g) Custody Credit:

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

(h) Accounting Estimates:

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

(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 attributable to these arrangements to be remote.

(k) New Accounting Pronouncements:

In December 2011, Accounting Standards Update (“ASU”) No. 2011-11, “Disclosures about Offsetting Assets and Liabilities,” was issued and is effective for interim and annual periods beginning after January 1, 2013. The ASU enhances disclosure requirements with respect to an entity’s rights of offset and related arrangements associated with its financial and derivative instruments. Management is currently evaluating the impact the adoption of ASU 2011-11 may have on the funds’ financial statement disclosures.

3. Risk Factors:

Investment Risk. An investment in a fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation 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 Rate Risk. 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):

Counter-Party Risk. When a fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counter-party) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that, when a fund buys a security from a counter-party that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security.

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. Although maintained in conservatorship by the Federal Housing Finance Agency since September 2008, Fannie Mae (FNMA) and Freddie Mac (FHLMC) maintain only limited lines of credit with the U.S. Treasury. The Federal Home Loan Banks (FHLB) also only maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation (FFCB), are supported solely by the credit of the issuer. 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.

Foreign Investment Risk. The funds’ investments in securities of foreign issuers or securities with credit or liquidity enhancements provided by foreign entities may involve certain risks that are greater than those associated with investments in securities of U.S. issuers or securities with credit or liquidity enhancements provided by U.S. entities. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. In addition, sovereign risk, or the risk that a government may become unwilling or unable to meet its loan obligations or guarantees, could increase the credit risk of financial institutions connected to that particular country.

Management Risk. Any 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. 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.

Redemption Risk. 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.

Regulatory Risk. The Securities and Exchange Commission (SEC) and other regulators may adopt additional money market fund regulations in the future, which may impact the operation and performance of a fund.

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

3. Risk Factors (continued):

Money Market Risk. 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 these and other principal risks of investing in the funds.

4. Affiliates and Affiliated Transactions:

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

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


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 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.

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 fund shares owned by shareholders holding shares through such service providers. Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the 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

CSIM and its affiliates 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, 2014, which may only be amended or terminated with the approval of the Board.

In addition, effective January 1, 2012 through December 31, 2012, CSIM and its affiliates 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

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

year in which such waiver and/or reimbursement occurs, subject to certain limitations. The reimbursement payments by a fund to CSIM and its affiliates 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 yield. There were no prior year amounts recaptured. As of December 31, 2012, the balance of recoupable expenses is as follows:


	Expiration Date
	December 31, 2013		December 31, 2014		December 31, 2015		Total

Schwab Retirement Advantage Money Fund		$1,024,503		$1,817,734		$1,484,338		$4,326,575
Schwab Investor Money Fund		$3,969,429		$4,664,552		$3,983,641		$12,617,622

As of December 31, 2012, recoupable expenses expired as follows:


Schwab Retirement Advantage Money Fund			$428,510
Schwab Investor Money Fund			2,068,715

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/or officers. For the period ended December 31, 2012, 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 by the Board. The funds had no interfund borrowing or lending activity during the period.

5. Transfer Agent Services:

Boston Financial Data Services, Inc. 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 its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations. For information regarding the trustees please refer to Trustees and Officers table at the end of this report.

7. Borrowing from Banks:

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

There were no borrowings from the lines of credit by the funds during the period. However, the funds may have utilized their overdraft facility and incurred interest expense, which is disclosed in 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, 2012, the components of distributable earnings on a tax-basis were as follows:


	Schwab		Schwab
	Retirement Advantage		Investor
	Money Fund		Money Fund

Undistributed ordinary income		$24,082		$—

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

8. Federal Income Taxes (continued):

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2012, the following funds had capital loss carryforwards available to offset future net capital gains before the expiration dates:


	Schwab		Schwab
	Retirement Advantage		Investor
Expiration Date	Money Fund		Money Fund

December 31, 2017		$—		$82,027

For tax purposes, realized net capital losses and late-year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended December 31, 2012, the funds had no capital losses deferred and had capital losses utilized as follows:


	Schwab		Schwab
	Retirement Advantage		Investor
	Money Fund		Money Fund

Capital losses utilized		$—		$2,614

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


	Schwab		Schwab
	Retirement Advantage		Investor
	Money Fund		Money Fund

Current period distributions
Ordinary income		$80,652		$124,545

Prior period distributions
Ordinary income		$87,958		$138,893

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as 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.

Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2012, the funds made the following reclassifications:


	Schwab			Schwab
	Retirement Advantage			Investor
	Money Fund			Money Fund

Capital shares		$7,608			$—
Undistributed net investment income		(6,423	)		—
Net realized capital gains and losses		(1,185	)		—

As of December 31, 2012, 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, 2012, the funds did not incur any interest or penalties.

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, 2012, 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

February 15, 2013

Trustees and Officers

The tables below give information about the trustees and officers of 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 94 funds.

The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the funds’ Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees


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

Mariann Byerwalter 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman of JDN Corporate Advisory LLC.	77	Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009)


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).	77	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).	77	Director, TOUSA (1998 – present) Director, Mission West Properties (1998 – present) Director, Globalstar, Inc. (2009 – present) Director, Aviat Networks (2001 – present) Director, Ditech Networks Corporation (1997 – Jan. 2012) Director, Aphton Corp. (1991 – 2007) Director, Solectron Corporation (1998 – 2007) Director, Genitope Corporation (2000 – 2009)


David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds since 2011.)	Private Investor.	77	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present) Director, Tercica Inc. (2004 – 2008)


Kiran M. Patel 1948 Trustee (Trustee of 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).	77	Director, KLA-Tencor Corporation (2008 – present) Director, BEA Systems, Inc. (2007 – 2008) Director, Eaton Corp. (2003 – 2006)

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

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


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).	77	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 1993.)	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.	77	None


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. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	94	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 – Oct. 2011), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer (Dec. 2010 – present) and Chief Investment Officer (Dec. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); 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 Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007).


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


Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of The Charles Schwab Family of Funds since 2011.)		Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds and Laudus Funds (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 – Jan. 2008); Managing Director, Head of Market-Based Strategies, State Street Research (August 2003 – Jan. 2005).


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


Catherine MacGregor 1964 Vice President (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 (March 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).


¹		Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds^® retirement policy requires that independent trustees 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. In addition to their employment with Schwab, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation, the parent company of Schwab and the investment adviser.
³		The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.

Glossary

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

asset-backed commercial paper A short-term investment that is typically issued by a bank or other financial institution. The notes represent an interest in financial assets such as trade receivables, credit card receivables, auto receivables, etc. and are generally used for the short-term financing needs of companies.

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

commercial paper Promissory notes issued by banks, corporations and other entities to finance short-term credit needs. These securities generally are structured on a discounted basis but sometimes may be interest-bearing notes. Commercial paper, which may be unsecured, is subject to credit risk.

corporate note An unsecured debt security issued by a corporation that is subject to the credit risk of the issuer.

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly regulate the credit quality of the securities a money market fund can buy.

credit ratings Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Standard & Poor’s, Fitch, Inc., and Moody’s Investor Service, to rate their creditworthiness and/or the creditworthiness of their debt issues. For example, an issuer may obtain a long-term rating within the investment grade rating category, which is, from high to low, AAA, AA, A and BBB for Standard & Poor’s and Fitch, and Aaa, Aa, A and Baa for Moody’s.

credit risk The risk that a debt issuer may be unable to pay interest or repay principal to its debt holders.

dollar-weighted average maturity 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.

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

net asset value per share (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding. Money funds seek to maintain a steady NAV of $1.00.

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

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

section 3(c)(7) securities Section 3(c)(7) 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.

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.

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 the number below.

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

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

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

Proxy Voting Policies, Procedures and Results

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

The Schwab Funds Family^®

Stock Funds

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab^® International Core Equity Fund

Schwab Fundamental US Large Company* Index Fund

Schwab Fundamental US Small Company* Index Fund

Schwab Fundamental International* Large Company Index Fund

Schwab Fundamental International* Small Company Index Fund

Schwab Fundamental Emerging Markets* Large Company Index Fund

Schwab Global Real Estate Fund^tm

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Balanced Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2015 Fund

Schwab Target 2020 Fund

Schwab Target 2025 Fund

Schwab Target 2030 Fund

Schwab Target 2035 Fund

Schwab Target 2040 Fund

Schwab Target 2045 Fund

Schwab Target 2050 Fund

Schwab Target 2055 Fund

Schwab^® Monthly Income Fund – Moderate Payout

Schwab^® Monthly Income Fund – Enhanced Payout

Schwab^® Monthly Income Fund – Maximum Payout

Bond Funds

Schwab Short-Term Bond Market Fund^tm

Schwab Intermediate-Term Bond Fund^tm

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab^® Treasury Inflation Protected Securities Fund

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

Schwab offers an array of money market funds.¹ Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments^®.


*		SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE COMPANY, FUNDAMENTAL US SMALL COMPANY, 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 fund covered in this report.

Dear Shareholder,

As President and CEO of Charles Schwab Investment Management, Inc. (CSIM), I’d like to thank you for trusting us to help you meet your investment objectives, and for reading this important report concerning Schwab Advisor Cash Reserves. This fund is part of CSIM’s core investment solutions for investing in short-term money market securities, and is designed to provide investors with stability of capital, liquidity, and income.

For more information about Schwab Advisor Cash Reserves, please continue reading this report. In addition, you can find answers to frequently asked questions and further details about this product by visiting www.schwabfunds.com, or by contacting us at 1-800-435-4000.

Sincerely,

2 Schwab Advisor Cash Reserves

Fund Management



		Linda Klingman, Managing Director and Head of Taxable Money Market Strategies, leads the portfolio management team of Schwab’s prime and government taxable money funds. Ms. Klingman is also responsible for the day-to-day co-management of the fund. Prior to joining CSIM in 1990, Ms. Klingman was a senior money market trader with AIM Management, Inc. for five years. She has managed money market funds since 1988.

		Mike Neitzke, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining CSIM in 2001, Mr. Neitzke spent 10 years as a principal at Wells Capital Management, where he managed taxable money market funds, including SEC-registered and ERISA-qualified funds. Prior to that, he was a portfolio manager with Union Capital Advisors in Los Angeles. He has worked in the financial industry as a portfolio manager since 1986.

		Michael Lin, Portfolio Manager, is responsible for the day-to-day co-management of the fund. Mr. Lin has been a portfolio manager with CSIM since 2006, and also worked in CSIM’s Fund Administration group for nearly four years, where he focused on security pricing and valuation of Schwab Funds. Prior to joining CSIM, he was a senior trader of the taxable money market funds at American Century Investments for three years.

		Jonathan Roman, Portfolio Manager, is responsible for the day-to-day co-management of the fund. Mr. Roman has been a portfolio manager with CSIM since 2010, and has held a number of positions at the firm since beginning his tenure in 2005. In 2009, he joined the Portfolio Management group as a Trader, and prior to that he worked in the Portfolio Operations and Analytics group providing trading support to the taxable money market desk.

Schwab Advisor Cash Reserves 3

Schwab Advisor Cash Reserves

Schwab Advisor Cash Reserves (the fund) seeks the highest current income consistent with stability of capital and liquidity. To pursue its goal, the fund invests in high-quality, short-term money market investments issued by U.S. and foreign issuers. Examples of these securities include commercial paper, certificates of deposit, repurchase agreements, variable-rate debt securities, and obligations issued by the U.S. government or its agencies, or instrumentalities.

Positioning and Strategies. The fund’s investment adviser focused on stability of capital and ensured robust liquidity amid the fluid market backdrop, strategically managing the portfolio as conditions evolved. During the first quarter of 2012, as a result of ongoing credit concerns, the fund’s exposure to Europe was reduced and weighted average maturities (WAMs) in the low to mid-30s were maintained. But with improved liquidity and market sentiment following the ECB’s LTRO announcement, the fund’s exposure to European institutions was increased. For example, the fund resumed investment in select institutions in France during October, after having eliminated exposure earlier in the year. Over the report period, the fund’s WAM was extended from 31 days to 47 days. The investment adviser continues to closely monitor events across Europe and will adjust portfolio exposures as conditions warrant.

As of 12/31/12:

Portfolio Composition By Maturity¹


	% of investments

1-15 Days		38.4%
16-30 Days		11.6%
31-60 Days		16.8%
61-90 Days		16.8%
91-120 Days		5.5%
More than 120 Days		10.9%
Total		100.0%

Statistics


Weighted Average Maturity²		47 Days
Credit Quality Of Holdings³% of portfolio		99.99% Tier 1

Portfolio Composition by Security Type


	% of investments

Commercial Paper
Asset Backed		12.8%
Financial Company		9.6%
Other		2.4%
Certificate Of Deposit		42.0%
Government Agency Debt		3.8%
Other Instrument		6.6%
Variable Rate Demand Note		1.1%
Other Note		2.5%
Repurchase Agreement
Government Agency		14.0%
Treasury		2.6%
Other		2.6%
Total		100.0%

Management views and 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, see financial note 4.
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 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 Schwab Advisor Cash Reserves

Performance and Fund Facts as of 12/31/12

Weighted Average Maturity Trend for previous 12 months

Money funds must maintain a dollar-weighted average maturity of no longer than 60 days, 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


	Schwab Advisor Cash Reserves
	Sweep	Premier Sweep
	Shares	Shares

Ticker Symbol	SWQXX	SWZXX
Minimum Initial Investment	**	**


Seven-Day Yield¹	0.01%	0.01%


Seven-Day Yield–Without Contractual Expense Limitation²	-0.08%	-0.15%


Seven-Day Effective Yield¹	0.01%	0.01%

Portfolio holdings may have changed since the report date.


*		The 7-day average yield for the Sweep Shares and Premier Sweep Shares was 0.01% throughout the entire period.
**		Subject to the eligibility terms and conditions of your Schwab account agreement.
¹		Yield reflects the effect of the fund’s agreement with the investment adviser and its affiliates to limit each share class’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 certain share classes of the fund (voluntary expense waiver). Without the contractual expense limitation and the voluntary expense waiver, the fund’s yield would have been lower. For additional details, see financial note 4.
²		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 0.33% and 0.26% to the seven-day yields of the Sweep Shares and Premier Sweep Shares, respectively.

Schwab Advisor Cash Reserves 5

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 7/1/12		at 12/31/12		7/1/12–12/31/12

Schwab Advisor Cash Reserves^®
Sweep Shares
Actual Return		0.31%	$	1,000	$	1,000.10	$	1.56
Hypothetical 5% Return		0.31%	$	1,000	$	1,023.58	$	1.58
Premier Sweep Shares
Actual Return		0.31%	$	1,000	$	1,000.10	$	1.56
Hypothetical 5% Return		0.31%	$	1,000	$	1,023.58	$	1.58


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 share class 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 366 days of the fiscal year.

6 Schwab Advisor Cash Reserves

Schwab Advisor Cash Reserves^®

Financial Statements

Financial Highlights


	1/1/12–			1/1/11–			1/1/10–			1/1/09–			1/1/08–
Sweep Shares	12/31/12			12/31/11			12/31/10			12/31/09			12/31/08


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		0.00	¹		0.00	¹		0.02
Net realized and unrealized gains (losses)		0.00	¹		(0.00	)¹		0.00	^1,2		(0.00	)¹		—

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

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

Total return (%)		0.01			0.01			0.01			0.13			2.36

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.28	^3,4		0.26	³		0.34	³		0.53	^3,5		0.65	⁶
Gross operating expenses		0.72	⁴		0.73			0.73			0.76			0.75
Net investment income (loss)		0.01			0.01			0.01			0.14			2.34
Net assets, end of period ($ x 1,000,000)		6,207			6,035			5,617			5,786			7,286


	1/1/12–			1/1/11–			1/1/10–			1/1/09–			1/1/08–
Premier Sweep Shares	12/31/12			12/31/11			12/31/10			12/31/09			12/31/08


Per-Share Data ($)

Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00

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

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

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

Total Return (%)		0.01			0.01			0.01			0.16			2.43

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.28	^3,4		0.26	³		0.34	³		0.50	^3,5		0.58	⁶
Gross operating expenses		0.72	⁴		0.73			0.73			0.76			0.75
Net investment income (loss)		0.01			0.01			0.01			0.17			2.42
Net assets, end of period ($ x 1,000,000)		17,575			14,727			15,342			14,132			16,245

¹ Per-share amount was less than $0.01.

² Net realized and unrealized gains (losses) ratio includes payment from affiliate.

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

⁴ The ratio of gross operating expenses would have been 0.73%, if the State filing fee reimbursement had not been included. There was no impact on the ratio of net operating expenses. (See financial note 4)

⁵ The ratio of net operating expenses would have been 0.51% for Sweep Shares and 0.47% for Premier Sweep Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been incurred.

⁶ The ratio of net operating expenses would have been 0.64% for Sweep Shares and 0.57% for Premier Sweep Shares, respectively, if certain non-routine expenses (participation fees for the Treasury’s Temporary Guarantee Program for Money Market Funds) had not been incurred.

See financial notes 7

Schwab Advisor Cash Reserves

Portfolio Holdings as of December 31, 2012

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

Cost

Value

Holdings by Category

($)

.7%

Fixed-Rate Obligations

16,809,045,641

.2%

Variable-Rate Obligations

2,415,961,962

.1%

Repurchase Agreements

4,550,122,481

100

.0%

Total Investments

23,775,130,084

.0%

Other Assets and Liabilities, Net

6,116,806

100

.0%

Net Assets

23,781,246,890


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

Fixed-Rate Obligations 70.7% of net assets

Asset Backed Commercial Paper 12.8%
Alpine Securitization Corp	a,b,c	0.46%			02/04/13		8,000,000		7,996,524

Atlantis One Funding Corp	a,b,c	0.53%			01/02/13		103,000,000		102,998,484
	a,b,c	0.52%			01/24/13		56,000,000		55,981,396
	a,b,c	0.25%			01/25/13		11,000,000		10,998,167
	a,b,c	0.50%			02/05/13		5,000,000		4,997,569
	a,b,c	0.41%			04/01/13		120,000,000		119,877,000
	a,b,c	0.31%			05/14/13		7,000,000		6,991,983

CAFCO, LLC	a,b,c	0.60%			02/22/13		28,000,000		27,975,733
	a,b,c	0.38%			03/08/13		73,000,000		72,949,143

Cancara Asset Securitisation, LLC	a,b,c	0.22%			01/02/13		14,000,000		13,999,914
	a,b,c	0.23%			01/16/13		3,000,000		2,999,713
	a,b,c	0.23%			01/17/13		5,000,000		4,999,489
	a,b,c	0.25%			01/17/13		47,000,000		46,994,778
	a,b,c	0.25%			02/05/13		38,000,000		37,990,764
	a,b,c	0.25%			02/11/13		1,000,000		999,715

Chariot Funding, LLC	a,b,c	0.24%			01/03/13		55,000,000		54,999,267
	a,b,c	0.24%			01/04/13		42,000,000		41,999,160
	a,b,c	0.25%			01/11/13		22,000,000		21,998,472
	a,b,c	0.24%			01/15/13		3,000,000		2,999,720
	a,b,c	0.22%			02/14/13		36,450,000		36,440,199
	a,b,c	0.22%			02/15/13		10,000,000		9,997,250
	a,b,c	0.22%			02/19/13		4,000,000		3,998,802
	a,b,c	0.33%			02/25/13		8,096,000		8,091,918
	a,b,c	0.23%			03/05/13		47,000,000		46,981,082
	a,b,c	0.33%			03/07/13		9,000,000		8,994,638
	a,b,c	0.32%			03/11/13		39,000,000		38,976,080
	a,b,c	0.25%			03/19/13		35,000,000		34,981,285
	a,b,c	0.25%			03/20/13		50,000,000		49,972,917
	a,b,c	0.25%			03/22/13		15,400,000		15,391,444
	a,b,c	0.25%			04/05/13		5,000,000		4,996,736

8 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
	a,b,c	0.25%			05/01/13		54,000,000		53,955,000
	a,b,c	0.30%			06/14/13		13,000,000		12,982,233
	a,b,c	0.32%			06/17/13		1,000,000		998,516

Ciesco, LLC	a,b,c	0.37%			02/26/13		25,000,000		24,985,611
	a,b,c	0.37%			03/01/13		90,000,000		89,945,425
	a,b,c	1.00%			03/04/13		83,000,000		82,857,056
	a,b,c	0.37%			03/12/13		15,000,000		14,989,208
	a,b,c	0.37%			03/14/13		25,000,000		24,981,500

CRC Funding, LLC	a,b,c	1.00%			02/01/13		2,000,000		1,998,278
	a,b,c	1.01%			02/01/13		113,000,000		112,902,694
	a,b,c	0.36%			03/22/13		35,000,000		34,972,000

Crown Point Capital Company, LLC	a,b,c	0.35%			04/09/13		30,000,000		29,971,417

Gemini Securitization Corp, LLC	a,b,c	0.32%			01/08/13		50,000,000		49,996,889
	a,b,c	0.28%			01/23/13		2,000,000		1,999,658
	a,b,c	0.28%			02/12/13		6,000,000		5,998,040
	a,b,c	0.28%			03/11/13		25,000,000		24,986,583

Gotham Funding Corp	a,b,c	0.21%			01/07/13		6,000,000		5,999,790
	a,b,c	0.20%			01/08/13		27,000,000		26,998,950
	a,b,c	0.20%			01/16/13		19,000,000		18,998,417

Govco, LLC	a,b,c	0.37%			02/21/13		50,000,000		49,973,792
	a,b,c	0.37%			03/05/13		100,000,000		99,935,250
	a,b,c	0.38%			03/08/13		39,000,000		38,972,830
	a,b,c	0.37%			03/11/13		40,000,000		39,971,633
	a,b,c	0.37%			03/25/13		71,000,000		70,939,433

Jupiter Securitization Corp	a,b,c	0.25%			01/14/13		15,000,000		14,998,646
	a,b,c	0.21%			02/14/13		19,000,000		18,995,123
	a,b,c	0.21%			02/15/13		50,000,000		49,986,875
	a,b,c	0.25%			03/19/13		80,000,000		79,957,222
	a,b,c	0.25%			03/20/13		30,000,000		29,983,750
	a,b,c	0.25%			04/01/13		21,000,000		20,986,875
	a,b,c	0.32%			05/13/13		14,000,000		13,983,573
	a,b,c	0.32%			06/17/13		29,000,000		28,956,951
	a,b,c	0.32%			06/18/13		40,000,000		39,940,267
	a,b,c	0.32%			06/21/13		75,900,000		75,784,632

Manhattan Asset Funding Capital Co, LLC
	a,b,c	0.26%			01/08/13		42,000,000		41,997,877
	a,b,c	0.23%			01/09/13		5,000,000		4,999,744
	a,b,c	0.24%			01/09/13		16,000,000		15,999,147
	a,b,c	0.23%			01/17/13		2,000,000		1,999,796
	a,b,c	0.25%			02/13/13		16,000,000		15,995,222
	a,b,c	0.25%			02/22/13		7,000,000		6,997,472

Market Street Funding Corp	a,b,c	0.20%			01/04/13		25,000,000		24,999,583
	a,b,c	0.21%			01/15/13		45,000,000		44,996,325
	a,b,c	0.21%			02/06/13		27,000,000		26,994,330
	a,b,c	0.21%			02/07/13		19,000,000		18,995,899
	a,b,c	0.21%			02/15/13		8,000,000		7,997,900
	a,b,c	0.22%			02/26/13		6,000,000		5,997,947
	a,b,c	0.22%			03/11/13		65,000,000		64,972,592
	a,b,c	0.22%			03/12/13		6,000,000		5,997,433
	a,b,c	0.22%			03/14/13		19,000,000		18,991,640
	a,b,c	0.22%			03/15/13		15,000,000		14,993,308

MetLife Short Term Funding, LLC	a,b,c	0.20%			01/23/13		68,000,000		67,991,689
	a,b,c	0.40%			02/04/13		80,000,000		79,969,778
	a,b,c	0.40%			02/11/13		10,000,000		9,995,444

See financial notes 9

Schwab Advisor Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
	a,b,c	0.32%			03/25/13		1,000,000		999,262
	a,b,c	0.21%			03/27/13		15,074,000		15,066,526

Nieuw Amsterdam Receivables Corp	a,b,c	0.30%			01/03/13		2,000,000		1,999,967
	a,b,c	0.27%			01/16/13		71,000,000		70,992,012
	a,b,c	0.19%			01/25/13		92,000,000		91,988,347

Sheffield Receivables Corp	a,b,c	0.25%			02/05/13		8,000,000		7,998,056
	a,b,c	0.25%			02/08/13		23,000,000		22,993,931

Thunder Bay Funding, LLC	a,b,c	0.25%			01/18/13		61,000,000		60,992,799
	a,b,c	0.33%			04/08/13		20,000,000		19,982,217

Victory Receivables Corp	a,b,c	0.23%			01/23/13		25,363,000		25,359,435
	a,b,c	0.23%			01/25/13		29,000,000		28,995,553
	a,b,c	0.23%			02/01/13		29,000,000		28,994,256

									3,050,698,946

Financial Company Commercial Paper 8.7%
BNP Paribas Finance, Inc	a	0.36%			02/01/13		12,000,000		11,996,280

BNZ International Funding Ltd	a	0.22%			02/05/13		18,000,000		17,996,150
	a	0.22%			02/13/13		31,000,000		30,991,854
	a	0.23%			02/21/13		2,000,000		1,999,348

Commonwealth Bank of Australia	c	0.31%			02/01/13		13,000,000		12,996,474
	c	0.32%			02/01/13		58,000,000		57,984,018

General Electric Capital Corp		0.32%			02/11/13		1,000,000		999,636
		0.32%			02/20/13		5,000,000		4,997,778
		0.30%			03/04/13		48,000,000		47,975,200
		0.23%			03/05/13		113,000,000		112,954,518
		0.23%			03/27/13		90,000,000		89,951,125
		0.23%			04/03/13		146,000,000		145,914,184
		0.21%			04/26/13		56,000,000		55,962,433
		0.21%			04/29/13		11,000,000		10,992,428
		0.20%			05/02/13		3,000,000		2,997,983
		0.25%			06/11/13		119,000,000		118,866,951
		0.27%			09/09/13		1,000,000		998,118

HSBC Bank PLC	c	0.30%			04/01/13		43,000,000		42,967,750

HSBC USA, Inc		0.27%			01/24/13		97,000,000		96,983,267
		0.25%			02/13/13		1,000,000		999,701

ING (U.S.) Funding, LLC	a	0.24%			01/11/13		7,000,000		6,999,533
	a	0.25%			01/16/13		11,000,000		10,998,877
	a	0.28%			02/01/13		131,000,000		130,968,414
	a	0.28%			02/05/13		26,000,000		25,992,922

JP Morgan Chase & Co		0.27%			01/04/13		29,000,000		28,999,348
		0.25%			01/11/13		10,000,000		9,999,306
		0.30%			03/26/13		40,000,000		39,972,000
		0.30%			04/02/13		47,000,000		46,964,358
		0.30%			05/07/13		21,000,000		20,977,950
		0.29%			06/03/13		22,000,000		21,972,885

Lloyds TSB Bank PLC
		0.25%			01/04/13		42,000,000		41,999,132
		0.26%			01/25/13		19,000,000		18,996,707
		0.26%			03/26/13		44,000,000		43,973,307
		0.30%			04/02/13		3,000,000		2,997,725

10 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued


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

National Australia Funding (Delaware), Inc	a	0.25%			05/01/13		11,600,000		11,590,333

Nationwide Building Society		0.34%			01/03/13		16,000,000		15,999,698
		0.45%			01/10/13		73,000,000		72,991,788
		0.38%			01/17/13		10,000,000		9,998,311

Nordea North America, Inc	a	0.34%			02/01/13		49,000,000		48,985,654
	a	0.35%			02/08/13		2,000,000		1,999,261
	a	0.36%			02/19/13		4,000,000		3,998,040
	a	0.35%			02/22/13		25,000,000		24,987,361
	a	0.37%			02/22/13		23,000,000		22,987,874
	a	0.35%			02/25/13		127,000,000		126,932,091
	a	0.35%			02/27/13		67,000,000		66,962,871

Rabobank USA Financial Corp	a	0.48%			02/05/13		1,000,000		999,533

RBS Holdings USA, Inc	a,c	0.32%			03/26/13		76,000,000		75,943,253

Skandinaviska Enskilda Banken AB		0.24%			04/04/13		35,000,000		34,978,300
		0.35%			06/05/13		4,000,000		3,993,972
		0.34%			07/09/13		3,000,000		2,994,645

State Street Corp		0.23%			01/09/13		98,000,000		97,994,991

Swedbank AB		0.35%			06/20/13		5,000,000		4,991,736

Westpac Banking Corp	c	0.40%			01/02/13		103,000,000		102,998,856
	c	0.40%			01/03/13		23,000,000		22,999,489

									2,074,665,717

Other Commercial Paper 2.5%
Catholic Health Initiatives
Taxable CP Notes Series A		0.22%			01/18/13		5,000,000		5,000,000
		0.24%			02/13/13		37,549,000		37,538,236

Coca-Cola Co	c	0.23%			02/19/13		15,000,000		14,995,304
	c	0.24%			03/11/13		157,000,000		156,927,780
	c	0.24%			03/12/13		48,496,000		48,473,369

Reckitt Benckiser Treasury Services PLC	a,c	0.64%			03/07/13		81,000,000		80,906,400

Toyota Motor Credit Corp	a	0.25%			02/28/13		38,000,000		37,984,694
	a	0.27%			03/13/13		80,000,000		79,957,400
	a	0.32%			03/18/13		119,000,000		118,919,609

									580,702,792

Certificate of Deposit 36.8%
Bank of Montreal		0.20%			01/02/13		50,000,000		50,000,000
		0.22%			02/05/13		120,000,000		120,000,000
		0.31%			02/07/13		5,000,000		5,000,051
		0.22%			02/08/13		121,000,000		121,000,000
		0.30%			03/01/13		94,000,000		94,000,000

Bank of Nova Scotia		0.22%			02/06/13		186,000,000		185,999,070
		0.22%			02/26/13		21,000,000		21,000,000
		0.22%			03/26/13		41,000,000		41,000,000

Bank of the West		0.33%			03/19/13		41,000,000		41,000,000

Bank of Tokyo Mitsubishi UFJ, Ltd		0.56%			01/02/13		176,000,000		176,000,000
		0.50%			02/01/13		20,000,000		20,000,000
		0.25%			04/11/13		23,000,000		23,000,000

See financial notes 11

Schwab Advisor Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
		0.25%			04/12/13		22,000,000		22,000,000
		0.34%			06/24/13		61,000,000		61,000,000
		0.34%			06/26/13		9,000,000		9,000,000
		0.34%			06/28/13		12,000,000		12,000,000
		0.33%			07/09/13		147,000,000		147,000,000

Barclays Bank PLC		0.65%			01/14/13		37,000,000		37,000,000
		0.25%			02/05/13		85,000,000		85,000,000
		0.74%			02/20/13		3,000,000		3,000,000
		0.69%			03/12/13		40,000,000		40,000,000
		0.67%			03/14/13		45,000,000		45,000,000
		0.55%			03/19/13		18,000,000		18,000,000
		0.40%			05/02/13		3,000,000		3,000,000
		0.40%			05/09/13		142,000,000		142,000,000
		0.45%			05/16/13		2,000,000		2,000,000
		0.47%			05/17/13		5,000,000		5,000,000

BNP Paribas
		0.38%			02/04/13		86,000,000		86,000,000
		0.34%			03/13/13		147,000,000		147,000,000
		0.27%			03/25/13		3,000,000		3,000,000
		0.28%			03/25/13		137,000,000		137,000,000
		0.60%			06/03/13		42,000,000		42,000,000
		0.59%			06/07/13		46,000,000		46,000,000
		0.59%			06/10/13		120,000,000		120,000,000

Branch Banking & Trust Co		0.25%			02/01/13		100,000,000		100,000,000

Chase Bank USA, NA		0.20%			02/07/13		76,000,000		76,000,000
		0.20%			02/22/13		239,000,000		239,000,000
		0.22%			03/06/13		11,000,000		11,000,000
		0.25%			03/26/13		78,000,000		78,000,000

Commonwealth Bank of Australia		0.24%			01/22/13		228,000,000		228,000,000
		0.33%			02/08/13		4,000,000		4,000,000
		0.33%			02/12/13		122,000,000		122,000,000
		0.22%			03/05/13		87,000,000		87,000,000

Credit Suisse AG		0.50%			01/29/13		197,000,000		197,000,000
		0.39%			02/26/13		11,000,000		11,000,000
		0.32%			04/04/13		80,000,000		80,000,000
		0.33%			05/06/13		101,000,000		101,000,000

Deutsche Bank AG		0.25%			02/14/13		158,000,000		158,000,000
		0.25%			02/15/13		27,000,000		27,000,000
		0.26%			02/21/13		2,000,000		2,000,000
		0.45%			05/15/13		100,000,000		100,000,000
		0.45%			05/24/13		138,000,000		138,000,000
		0.46%			07/09/13		182,000,000		182,000,000

DNB Bank ASA		0.53%			01/03/13		93,000,000		93,000,000
		0.24%			02/07/13		98,000,000		97,999,497
		0.24%			02/15/13		8,000,000		8,000,000
		0.40%			02/19/13		5,000,000		5,000,000
		0.25%			03/05/13		4,000,000		4,000,000
		0.30%			05/13/13		41,000,000		41,000,000

HSBC Bank PLC		0.41%			01/10/13		78,000,000		78,000,000

JPMorgan Chase Bank, NA		0.22%			03/12/13		170,000,000		170,000,000
		0.22%			03/14/13		181,000,000		181,000,000

Lloyds TSB Bank PLC		0.25%			01/25/13		54,000,000		54,000,000
		0.25%			03/26/13		59,000,000		59,000,000

12 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
		0.26%			04/08/13		19,000,000		19,000,000
		0.26%			04/10/13		65,000,000		65,000,000

Mitsubishi UFJ Trust & Banking Corp
		0.54%			01/07/13		105,000,000		105,000,000
		0.52%			02/01/13		45,000,000		45,000,000
		0.53%			02/07/13		18,000,000		18,000,000
		0.48%			03/06/13		29,000,000		29,000,000
		0.40%			04/02/13		7,000,000		7,000,000
		0.35%			05/08/13		42,000,000		42,000,000
		0.34%			06/19/13		73,000,000		73,000,000
		0.33%			07/02/13		39,000,000		39,000,000
		0.33%			07/09/13		6,000,000		6,000,000
		0.33%			07/10/13		70,000,000		70,000,000

Mizuho Corporate Bank Ltd		0.25%			02/27/13		51,000,000		51,000,000
		0.25%			02/28/13		12,000,000		12,000,000
		0.25%			03/04/13		16,000,000		16,000,000
		0.27%			03/20/13		54,000,000		54,000,000
		0.27%			03/21/13		24,000,000		24,000,000
		0.26%			03/25/13		10,000,000		10,000,000
		0.27%			03/26/13		59,000,000		59,000,000

National Australia Bank Ltd		0.41%			01/08/13		1,000,000		1,000,000
		0.22%			02/06/13		119,000,000		119,000,000
		0.36%			07/11/13		62,000,000		62,000,000
		0.35%			08/01/13		71,000,000		71,000,000

Nordea Bank Finland PLC		0.24%			02/14/13		97,000,000		97,000,000
		0.21%			04/12/13		74,000,000		74,000,000

Rabobank Nederland		0.51%			01/23/13		20,000,000		20,000,000
		0.48%			03/01/13		20,000,000		20,000,000
		0.37%			04/08/13		79,000,000		79,000,000
		0.34%			04/10/13		22,000,000		22,000,000
		0.36%			04/17/13		15,000,000		15,000,000
		0.31%			05/07/13		6,000,000		6,000,000
		0.30%			05/14/13		233,000,000		233,000,000
		0.30%			06/04/13		42,000,000		42,000,000

Skandinaviska Enskilda Banken AB		0.25%			02/07/13		14,000,000		14,000,000
		0.28%			03/06/13		74,000,000		74,000,000
		0.37%			06/03/13		42,000,000		42,000,000
		0.38%			06/14/13		1,000,000		1,000,000
		0.34%			06/20/13		41,000,000		41,000,000

Societe Generale		0.38%			02/04/13		199,000,000		199,000,000
		0.68%			07/01/13		110,000,000		110,000,000

Sumitomo Mitsui Banking Corp		0.51%			01/07/13		47,000,000		47,000,000
		0.50%			01/10/13		29,000,000		29,000,000
		0.47%			01/28/13		24,000,000		24,000,000
		0.47%			02/01/13		64,000,000		64,000,000
		0.46%			02/06/13		32,000,000		32,000,000
		0.25%			03/13/13		139,000,000		139,000,000
		0.25%			03/26/13		12,000,000		12,000,000
		0.25%			03/27/13		101,000,000		101,000,000
		0.25%			04/01/13		14,000,000		14,000,000
		0.26%			04/01/13		42,000,000		42,000,000
		0.26%			04/05/13		33,000,000		33,000,000
		0.35%			04/15/13		81,000,000		81,000,000
		0.35%			04/22/13		30,000,000		30,000,000
		0.34%			04/29/13		9,000,000		9,000,000
		0.35%			05/01/13		32,000,000		32,000,000

See financial notes 13

Schwab Advisor Cash Reserves

Portfolio Holdings continued


						Face
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
		0.34%			05/06/13		8,000,000		8,000,000
		0.34%			05/08/13		2,000,000		2,000,000
		0.34%			05/13/13		9,000,000		9,000,000
		0.34%			05/15/13		33,000,000		33,000,000
		0.34%			05/20/13		2,000,000		2,000,000
		0.34%			06/05/13		5,000,000		5,000,000
		0.32%			06/19/13		10,000,000		10,000,000

Sumitomo Mitsui Trust Bank Ltd		0.32%			01/02/13		1,000,000		1,000,000
		0.26%			01/24/13		5,000,000		5,000,000
		0.26%			02/15/13		18,000,000		18,000,000
		0.27%			04/12/13		16,000,000		16,000,000

Svenska Handelsbanken AB		0.24%			01/17/13		8,000,000		8,000,000
		0.23%			01/23/13		136,000,000		136,000,000
		0.24%			02/14/13		50,000,000		50,000,000
		0.24%			02/21/13		52,000,000		52,000,000
		0.23%			03/27/13		100,000,000		100,000,000

Swedbank AB		0.34%			06/03/13		80,000,000		80,000,000
		0.33%			07/10/13		8,000,000		8,000,000

Toronto-Dominion Bank		0.19%			01/02/13		8,000,000		8,000,000
		0.17%			01/04/13		213,000,000		213,000,000
		0.30%			01/25/13		66,000,000		66,000,000
		0.29%			02/08/13		137,000,000		137,000,000
		0.22%			02/15/13		20,000,000		20,000,000
		0.22%			03/11/13		26,000,000		26,000,000
		0.24%			03/19/13		43,000,000		43,000,000
		0.20%			04/29/13		63,000,000		63,000,000

UBS AG		0.42%			01/10/13		5,000,000		5,000,000

									8,740,998,618

Government Agency Debt 3.3%
Fannie Mae		0.09%			01/02/13		10,000,000		9,999,976
		0.08%			01/14/13		133,000,000		132,996,398
		0.10%			01/17/13		20,000,000		19,999,111
		0.14%			01/30/13		14,000,000		13,998,478

Federal Home Loan Bank		0.09%			01/02/13		44,000,000		43,999,896
		0.08%			01/04/13		35,000,000		34,999,781
		0.12%			01/04/13		238,000,000		237,997,626
		0.11%			01/09/13		26,000,000		25,999,364
		0.13%			01/09/13		86,000,000		85,997,497
		0.09%			01/11/13		21,000,000		20,999,475
		0.12%			01/11/13		6,000,000		5,999,800
		0.08%			01/18/13		25,000,000		24,999,115
		0.10%			01/18/13		8,000,000		7,999,641
		0.11%			01/25/13		40,000,000		39,997,200
		0.06%			02/01/13		5,000,000		4,999,742
		0.08%			02/01/13		9,000,000		8,999,380
		0.06%			02/06/13		10,000,000		9,999,400
		0.08%			02/06/13		10,000,000		9,999,250
		0.09%			02/06/13		9,000,000		8,999,190

Freddie Mac		0.11%			01/07/13		41,000,000		40,999,248

									789,979,568

Other Instrument 6.6%
Australia & New Zealand Banking Group Ltd		0.08%			01/02/13		300,000,000		300,000,000
		0.20%			01/02/13		26,000,000		26,000,000

14 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued


							Face
			Effective		Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity		Date		($)		($)
		0.12%				01/07/13		140,000,000		140,000,000
		0.19%				01/07/13		325,000,000		325,000,000

Bank of Nova Scotia		0.03%				01/02/13		250,000,000		250,000,000
		0.14%				01/02/13		231,000,000		231,000,000

Citibank, NA		0.20%				01/04/13		50,000,000		50,000,000

Royal Bank of Canada		0.05%				01/02/13		125,000,000		125,000,000
		0.13%				01/02/13		125,000,000		125,000,000

										1,572,000,000

Total Fixed-Rate Obligations
(Cost $16,809,045,641)										16,809,045,641




Variable-Rate Obligations 10.2% of net assets

Financial Company Commercial Paper 0.9%
JP Morgan Chase & Co		0.36%		01/22/13		02/21/13		38,000,000		38,000,000
		0.36%		01/02/13		03/01/13		105,000,000		105,000,000

Westpac Banking Corp	c	0.30%		01/04/13		02/04/13		25,000,000		25,000,000
	c	0.40%		01/07/13		02/07/13		43,000,000		43,000,000

										211,000,000

Certificate of Deposit 5.3%
Bank of Nova Scotia		0.29%		01/22/13		05/21/13		98,000,000		97,998,111
		0.46%		01/02/13		07/26/13		114,000,000		114,000,000

Canadian Imperial Bank of Commerce		0.38%		01/16/13		04/16/13		211,000,000		211,000,000
		0.30%		01/28/13		05/28/13		85,000,000		85,000,000

Sumitomo Mitsui Banking Corp		0.44%		01/02/13		02/04/13		68,000,000		68,000,000

Toronto-Dominion Bank		0.30%		01/22/13		04/19/13		24,000,000		24,000,000
		0.30%		01/22/13		04/22/13		292,000,000		292,000,000
		0.30%		01/28/13		05/28/13		74,000,000		74,000,000
		0.30%		01/29/13		05/29/13		96,000,000		96,000,000

Westpac Banking Corp		0.46%		01/11/13		07/11/13		61,000,000		61,000,000
		0.45%		01/18/13		07/18/13		110,000,000		110,000,000
		0.43%		01/23/13		08/23/13		15,000,000		15,000,000

										1,247,998,111

Government Agency Debt 0.4%
Freddie Mac		0.30%		01/10/13		11/08/13		100,000,000		100,000,000

Variable Rate Demand Note 1.1%
Breckenridge Terrace, LLC
Housing Facilities Revenue Notes Series 1999B	a	0.21%				01/07/13		1,000,000		1,000,000

California
RAN 2012-2013 Series A1	a,c	0.14%				01/02/13		35,000,000		35,000,000

Cleveland
Airport System Taxable RB Series 2008F	a	0.19%				01/07/13		29,000,000		29,000,000

Eagle Cnty, CO
Housing Facilities RB (The Tarnes at BC) Series 1999B	a	0.21%				01/07/13		2,000,000		2,000,000

See financial notes 15

Schwab Advisor Cash Reserves

Portfolio Holdings continued


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

GFRE Holdings, LLC
Taxable Notes Series 2009A	a	0.21%				01/07/13		2,810,000		2,810,000

Indiana Health & Educational Facility Financing Auth
Taxable RB (Union Hospital) Series 2006B	a	0.19%				01/07/13		12,330,000		12,330,000

Tenderfoot Seasonal Housing, LLC
Taxable Housing Facilities Revenue Notes Series 2000B	a	0.21%				01/07/13		2,885,000		2,885,000

Texas
TRAN Series 2012	a,c	0.14%				01/02/13		150,000,000		150,000,000
Veterans Taxable Refunding Bonds Series 2010B	a	0.22%				01/07/13		12,635,000		12,635,000
Veterans Housing Assistance Taxable Refunding Bonds Series 1994A2		0.26%				01/07/13		6,900,000		6,900,000
Veterans Land Taxable Refunding Bonds Series 2006A		0.26%				01/07/13		1,030,000		1,030,000

										255,590,000

Other Note 2.5%
JPMorgan Chase Bank, NA		0.39%		01/18/13		01/17/14		90,000,000		90,000,000
		0.33%		01/22/13		01/21/14		47,000,000		47,000,000

Royal Bank of Canada		0.40%		01/04/13		01/03/14		137,000,000		137,000,000

Wells Fargo Bank, NA		0.38%		03/22/13		01/23/14		225,000,000		225,000,000

Westpac Banking Corp	c	0.53%		01/28/13		01/28/14		100,000,000		100,000,000

Whistlejacket Capital, LLC	d,†	n/a		n/a		n/a		2,373,851		2,373,851

										601,373,851

Total Variable-Rate Obligations
(Cost $2,415,961,962)										2,415,961,962



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

Repurchase Agreements 19.1% of net assets

Government Agency Repurchase Agreement 14.0%
Barclays Capital, Inc
Issued 12/12/12, repurchase date 01/14/13 (Collateralized by U.S. Government Agency Securities valued at $136,265,147, 0.00% - 7.02%, due 05/01/17 - 10/01/44)		0.18%				01/07/13		131,017,030		131,000,000

BNP Paribas Securities Corp
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $494,400,001, 3.00% - 4.00%, due 01/01/41 - 09/15/42)		0.18%				01/02/13		480,004,800		480,000,000
Issued 12/05/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $66,301,955, 0.00% - 5.38%, due 04/11/13 - 01/15/48)		0.20%				01/02/13		65,010,111		65,000,000

Credit Suisse Securities (USA), LLC
Issued 12/26/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $76,503,412, 2.50%, due 07/01/27)		0.16%				01/02/13		75,002,333		75,000,000
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $425,468,739, 0.25% - 2.30%, due 01/26/15 - 12/12/22)		0.22%				01/02/13		417,127,579		417,122,481

16 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued


						Maturity
			Effective	Maturity		Amount		Value
Issuer	Footnotes	Rate	Maturity	Date		($)		($)
Issued 12/28/12, repurchase date 01/04/13 (Collateralized by U.S. Government Agency Securities valued at $153,000,739, 3.00% - 6.00%, due 09/01/25 - 11/01/42)		0.18%			01/04/13		150,005,250		150,000,000
Issued 12/31/12, repurchase date 01/07/13 (Collateralized by U.S. Government Agency Securities valued at $153,001,280, 4.00% - 5.50%, due 09/01/25 - 08/01/41)		0.20%			01/07/13		150,005,833		150,000,000

Deutsche Bank Securities, Inc
Issued 12/03/12, repurchase date 03/04/13 (Collateralized by U.S. Government Agency Securities valued at $111,536,217, 4.50% - 7.00%, due 04/01/42 - 12/25/42)		0.21%			01/07/13		107,021,846		107,000,000
Issued 12/19/12, repurchase date 03/19/13 (Collateralized by U.S. Government Agency Securities valued at $130,523,483, 2.00%, due 10/16/42 )		0.21%			01/07/13		125,013,854		125,000,000
Issued 12/19/12, repurchase date 03/19/13 (Collateralized by U.S. Government Agency Securities valued at $36,420,853, 7.00%, due 07/25/42)		0.22%			01/07/13		35,004,064		35,000,000
Issued 11/20/12, repurchase date 02/19/13 (Collateralized by U.S. Government Agency Securities valued at $254,979,778, 3.00% - 7.00%, due 08/25/31 - 11/25/52)		0.23%			01/07/13		245,075,133		245,000,000
Issued 11/26/12, repurchase date 02/25/13 (Collateralized by U.S. Government Agency Securities valued at $104,049,383, 0.76% - 7.00%, due 12/25/31 - 11/25/42)		0.23%			01/07/13		100,026,833		100,000,000
Issued 11/15/12, repurchase date 01/11/13 (Collateralized by U.S. Government Agency Securities valued at $104,095,383, 2.00% - 6.50%, due 10/25/40 - 11/25/52)		0.24%			01/07/13		100,035,333		100,000,000
Issued 11/08/12, repurchase date 01/08/13 (Collateralized by U.S. Government Agency Securities valued at $122,801,963, 3.00% - 6.50%, due 10/01/25 - 11/25/42)		0.25%			01/07/13		118,049,167		118,000,000
Issued 11/09/12, repurchase date 01/09/13 (Collateralized by U.S. Government Agency Securities valued at $15,669,859, 2.00% - 6.50%, due 08/25/31 - 10/20/41)		0.25%			01/07/13		15,006,146		15,000,000

Goldman Sachs & Co
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $15,750,000, 2.94% - 5.45%, due 04/01/18 - 11/01/41)		0.25%			01/02/13		15,000,208		15,000,000
Issued 12/28/12, repurchase date 01/04/13 (Collateralized by U.S. Government Agency Securities valued at $210,000,001 2.27% - 7.00%, due 07/01/17 - 12/01/42)		0.22%			01/04/13		200,008,556		200,000,000

JP Morgan Securities, LLC
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $205,931,720, 1.00% - 4.25%, due 11/15/14 - 01/01/42)		0.26%			01/02/13		200,002,889		200,000,000

Merrill Lynch, Pierce, Fenner & Smith, Inc
Issued 12/26/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $103,000,001, 2.50% - 3.00%, due 10/20/38 - 12/15/41)		0.15%			01/02/13		100,002,917		100,000,000
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Government Agency Securities valued at $515,000,001, 0.56% - 7.00%, due 12/25/19 - 10/25/51)		0.18%			01/02/13		500,005,000		500,000,000

									3,328,122,481

Treasury Repurchase Agreement 2.6%
Barclays Capital, Inc
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by U.S. Treasury Securities valued at $86,700,003, 1.75%, due 04/15/13)		0.20%			01/02/13		85,000,944		85,000,000
Issued 12/19/12, repurchase date 01/03/13 (Collateralized by U.S. Treasury Securities valued at $204,000,079, 0.13% - 10.63%, due 02/15/13 - 02/15/41)		0.12%			01/03/13		200,010,000		200,000,000

See financial notes 17

Schwab Advisor Cash Reserves

Portfolio Holdings continued


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

Goldman Sachs & Co
Issued 12/26/12, repurchase date 01/02/13 (Collateralized by U.S. Treasury Securities valued at $51,000,068, 1.88% , due 10/31/17)		0.15%			01/02/13		50,001,458		50,000,000
Issued 12/27/12, repurchase date 01/03/13 (Collateralized by U.S. Treasury Securities valued at $285,600,135, 6.88% - 8.13% , due 08/15/19 - 08/15/25)		0.15%			01/03/13		280,008,167		280,000,000

									615,000,000

*Other Repurchase Agreement 2.5%**
BNP Paribas Securities Corp
Issued 12/31/12, repurchase date 01/30/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $26,250,000, 5.13% - 7.75%, due 04/30/14 - 08/15/15)		0.31%			01/07/13		25,001,507		25,000,000
Issued 12/21/12, repurchase date 01/28/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $12,625,836, 0.58% - 6.80%, due 12/02/13 - 01/15/40)		0.31%			01/07/13		12,001,757		12,000,000

Credit Suisse Securities (USA), LLC
Issued 12/07/12, repurchase date 03/22/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $218,763,328, 0.00% - 53.92%, due 08/16/13 - 02/15/51)	d	0.73%			03/22/13		192,408,800		192,000,000

Deutsche Bank Securities, Inc
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $26,250,001)		0.22%			01/02/13		25,000,306		25,000,000
Issued 12/31/12, repurchase date 01/02/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $26,250,001)		0.27%			01/02/13		25,000,375		25,000,000
Issued 11/26/12, repurchase date 03/11/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $91,302,950, 0.00% - 13.50%, due 06/15/13 - 06/15/68)		0.50%			01/07/13		80,046,667		80,000,000

Goldman Sachs & Co
Issued 12/31/12, repurchase date 04/02/13 (Collateralized by U.S. Government Agency securities valued at $66,150,001, 2.28% - 5.50%, due 04/01/40 - 04/01/42)	d	0.46%			04/02/13		63,088,550		63,000,000

Merrill Lynch, Pierce, Fenner & Smith, Inc
Issued 12/14/12, repurchase date 04/01/13 (Collateralized by common stocks, ETFs, corporate bonds, or non-agency collateralized mortgage obligations valued at $209,438,345, 0.00% - 12.50%, due 01/14/13 - 12/31/99)		0.55%			01/07/13		185,067,833		185,000,000

									607,000,000

Total Repurchase Agreements
(Cost $4,550,122,481)									4,550,122,481



End of Investments.

18 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued

At 12/31/12, the tax basis cost of the fund’s investments was $23,775,130,084.


a		Credit-enhanced or liquidity-enhanced.
b		Asset-backed security.
c		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $4,020,891,639 or 16.9% of net assets.
d		Illiquid security. At the period end, the value of these amounted to $257,373,851 or 1.1% of net assets.
†		Whistlejacket notes are in receivership, and the fund elected to sell all of its Whistlejacket notes at auction (April 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.
*		Usually collateralized via common stocks, ETFs, corporate bonds or non-agency collateralized mortgage obligations or less frequently by Government Agency securities and/ or U.S. Treasury Securities.


CP —		Commercial paper
ETF —		Exchange traded fund
RAN —		Revenue anticipation note
RB —		Revenue bond
TRAN —		Tax and revenue anticipation note

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

See financial notes 19

Schwab Advisor Cash Reserves

Statement of

Changes in Net Assets

For the current and prior report periods



Operations


1/1/12-12/31/12				1/1/11-12/31/11
Net investment income		$1,999,440			$2,054,071
Net realized gains (losses)	+	40,354			(616	)

Increase in net assets from operations		2,039,794			2,053,455

Distributions to Shareholders

Distributions from net investment income
Sweep Shares		(557,105	)		(573,256	)
Premier Sweep Shares	+	(1,442,335	)		(1,480,815	)

Total distributions from net investment income		(1,999,440	)		(2,054,071	)

Transactions in Fund Shares*

Shares Sold
Sweep Shares		18,289,092,848			21,703,474,701
Premier Sweep Shares	+	63,287,085,336			69,113,644,043

Total shares sold		81,576,178,184			90,817,118,744


Shares Reinvested
Sweep Shares		485,869			493,334
Premier Sweep Shares	+	1,368,483			1,384,993

Total shares reinvested		1,854,352			1,878,327


Shares Redeemed
Sweep Shares		(18,117,934,458	)		(21,286,232,784	)
Premier Sweep Shares	+	(60,440,623,562	)		(69,729,967,805	)

Total shares redeemed		(78,558,558,020	)		(91,016,200,589	)

Net transactions in fund shares		3,019,474,516			(197,203,518	)

Net Assets

Beginning of period		20,761,732,020			20,958,936,154
Total increase or decrease	+	3,019,514,870			(197,204,134	)

End of period		$23,781,246,890			$20,761,732,020


*		Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars.

22 See financial notes

Schwab Advisor Cash Reserves

Financial Notes

1. Business Structure of the Fund:

Schwab Advisor Cash Reserves is a series of The Charles Schwab Family of Funds (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust as of the end of the period, including the fund discussed in this report, which is highlighted:



The Charles Schwab Family of Funds (organized October 20, 1989)		Schwab Investor Money Fund
Schwab Money Market Fund		Schwab Municipal Money Fund
Schwab Government Money Fund		Schwab AMT Tax-Free Money Fund
Schwab U.S. Treasury Money Fund		Schwab California Municipal Money Fund
Schwab Treasury Obligations 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 Advisor Cash Reserves offers two share classes: Sweep Shares and Premier Sweep Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums.

Shares are bought and sold at closing net asset value per share (“NAV”), which is the price for all outstanding shares of the fund. Each share has a par value of 1/1,000 of a cent, and the Board of Trustees (the “Board”) may authorize the issuance of as many shares as necessary.

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

2. Significant Accounting Policies:

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

(a) Security Valuation:

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

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 fair valued as determined in accordance with procedures adopted by the Board. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the procedures.

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 measurements) 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.

Schwab Advisor Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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


	•	Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities.

	•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. 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 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 levels associated with valuing the fund’s investments as of December 31, 2012 are disclosed in the Portfolio Holdings.

(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 a fund to counterparty risk, meaning that the fund could lose money if the other party fails to perform under the terms of the agreement. The fund mitigates this risk by ensuring that a fund’s 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 fund’s custodian (or, with multi-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 Transactions: The fund may buy securities at a predetermined price or yield, with payment and delivery taking place after the customary settlement period for that type of security. The fund will assume the rights and risks of ownership at the time of purchase, including the risk of price and yield fluctuations. Typically, no interest will accrue to a fund until the security is delivered. The fund will earmark or segregate appropriate liquid assets to cover its delayed-delivery purchase obligations.

(c) Security Transactions:

(d) Investment Income:

Schwab Advisor Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(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:

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

(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 a fund’s net investment income for that day, are paid out to shareholders once a month. The fund makes distributions from net realized capital gains, if any, once a year.

(g) Custody Credit:

The fund has an arrangement with its custodian bank, State Street Bank and Trust Company (“State Street”), under which the fund may receive 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 attributable to these arrangements to be remote.

(k) New Accounting Pronouncements:

3. Risk Factors:

Investment Risk. An investment in the fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation 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.

Schwab Advisor Cash Reserves

Financial Notes (continued)

3. Risk Factors (continued):

Interest Rate Risk. 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.

Credit Risk. 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 of a portfolio investment fails to make timely principal or interest payments or if a guarantor, liquidity provider or counterparty of a portfolio investment fails to otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. Negative perceptions of the ability of an issuer, guarantor, liquidity provider or counterparty to make payments or otherwise honor its obligations, as applicable, 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 downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.

Many of the U.S. government securities that the fund invests in are not backed by the full faith and credit of the United States government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency since September 2008, Fannie Mae (FNMA) and Freddie Mac (FHLMC) maintain only limited lines of credit with the U.S. Treasury. The Federal Home Loan Banks (FHLB) also only maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation (FFCB), are supported solely by the credit of the issuer. 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.

Foreign Investment Risk. The fund’s investments in securities of foreign issuers or securities with credit or liquidity enhancements provided by foreign entities may involve certain risks that are greater than those associated with investments in securities of U.S. issuers or securities with credit or liquidity enhancements provided by U.S. entities. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. In addition, sovereign risk, or the risk that a government may become unwilling or unable to meet its loan obligations or guarantees, could increase the credit risk of financial institutions connected to that particular country.

Management Risk. 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. 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.

Redemption Risk. 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 fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.

Schwab Advisor Cash Reserves

Financial Notes (continued)

3. Risk Factors (continued):

Money Market Risk. 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.

Please refer to the fund’s prospectus for a more complete description of these and other principal risks of investing in the fund.

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 CSIM and the trust.

For its advisory and administrative services to the fund, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of the fund’s average daily net assets 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 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 service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund. Schwab serves as the fund’s 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 fund to Schwab in its capacity as the fund’s paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees. 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 invested in the fund.

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 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 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 such service providers. 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 or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payment received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.

Contractual Expense Limitation

CSIM and its affiliates have made an additional agreement (“expense limitation”) with the fund, 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, to limit the total annual fund operating expenses, excluding interest, taxes and certain non-routine expenses as follows:


Sweep Shares			0.66%
Premier Sweep Shares			0.59%

In addition, effective January 1, 2012 through December 31, 2012, CSIM and its affiliates agreed to waive an additional amount of the fund’s expenses equal to 0.035% of the fund’s average daily net assets.

Schwab Advisor Cash Reserves

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Voluntary Expense Waiver/Reimbursement

In addition to the contractual expense limitation agreements noted above, CSIM and its affiliates also may waive and/or reimburse expenses to the extent necessary to maintain a positive net yield for each share class of the fund. CSIM and its affiliates 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. The reimbursement payments by the fund to CSIM and its affiliates 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. There were no prior year amounts recaptured. As of December 31, 2012, the balance of recoupable expenses is as follows:


	Expiration Date
	December 31, 2013		December 31, 2014		December 31, 2015		Total

Schwab Advisor Cash Reserves
Sweep Shares		$15,882,287		$21,168,260		$19,328,373		$56,378,920
Premier Sweep Shares		$30,275,610		$44,182,521		$39,977,192		$114,435,323

As of December 31, 2012, the fund had recoupable expenses expire in the amount of $7,890,129 and $13,137,784 for Sweep Shares and Premier Sweep Shares, respectively.

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/or officers. For the period ended December 31, 2012, 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 by the Board. The fund had no interfund borrowing or lending activity during the period.

During the period, the Schwab Advisor Cash Reserves received a payment of $796,236, related to state filing fees resulting from revised fee calculation methodologies being applied on sales of the fund’s shares in prior periods. This payment is presented in the fund’s Statement of Operations as “State filing fee reimbursement”.

All or a portion of the state filing fees were previously borne by CSIM through a waiver of CSIM’s management fee. As this expense was previously waived, the payments received during the period had the effect of decreasing the total “Expense reduction by CSIM and its affiliates” in the fund’s Statement of Operations. The current net operating expense ratio was not impacted by this payment.

5. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or its affiliates. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in the fund’s Statement of Operations. For information regarding the trustees please refer to Trustees and Officers table at the end of this report.

6. Borrowing from Banks:

The fund has access to custodian overdraft facilities, a committed line of credit of $150 million with State Street, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman & Co. The fund pays interest on the amount it borrows at rates that are negotiated periodically. The fund also pays an annual fee to State Street for the committed line of credit.

Schwab Advisor Cash Reserves

Financial Notes (continued)

6. Borrowing from Banks (continued):

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

7. Federal Income Taxes:

As of December 31, 2012, 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, 2012, the fund had capital loss carryforwards of $1,362,975 available to offset future net capital gains before the expiration date of December 31, 2017.

For tax purposes, realized net capital losses and late-year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended December 31, 2012, the fund had no capital losses deferred and had $40,354 capital losses utilized.

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


Current period distributions
Ordinary income			$1,999,440

Prior period distributions
Ordinary income			$2,054,071

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, 2012, 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, 2012, the fund did not incur any interest or penalties.

8. Subsequent Events:

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:

Schwab Advisor 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 Advisor Cash Reserves (one of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Fund”) at December 31, 2012, 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

February 15, 2013

Trustees and Officers

Independent Trustees


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

Mariann Byerwalter 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman of JDN Corporate Advisory LLC.	77	Director, Redwood Trust, Inc. (1998 – present) Director, PMI Group Inc. (2001 – 2009)


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).	77	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).	77	Director, TOUSA (1998 – present) Director, Mission West Properties (1998 – present) Director, Globalstar, Inc. (2009 – present) Director, Aviat Networks (2001 – present) Director, Ditech Networks Corporation (1997 – Jan. 2012) Director, Aphton Corp. (1991 – 2007) Director, Solectron Corporation (1998 – 2007) Director, Genitope Corporation (2000 – 2009)


David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds since 2011.)	Private Investor.	77	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present) Director, Tercica Inc. (2004 – 2008)


Kiran M. Patel 1948 Trustee (Trustee of 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).	77	Director, KLA-Tencor Corporation (2008 – present) Director, BEA Systems, Inc. (2007 – 2008) Director, Eaton Corp. (2003 – 2006)

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

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


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).	77	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 1993.)	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.	77	None


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. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	94	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 – Oct. 2011), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer (Dec. 2010 – present) and Chief Investment Officer (Dec. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); 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 Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007).


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


Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of The Charles Schwab Family of Funds since 2011.)		Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds and Laudus Funds (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 – Jan. 2008); Managing Director, Head of Market-Based Strategies, State Street Research (August 2003 – Jan. 2005).


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


Catherine MacGregor 1964 Vice President (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 (March 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).


¹		Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds^® retirement policy requires that independent trustees 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. In addition to their employment with Schwab, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation, the parent company of Schwab and the investment adviser.
³		The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.