N-CSR

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-5954

The Charles Schwab Family of Funds
(Exact name of registrant as specified in charter)

101 Montgomery Street, San Francisco, California 94104
(Address of principal executive offices) (Zip code)

Randall W. Merk
The Charles Schwab Family of Funds
101 Montgomery Street, San Francisco, California 94104
(Name and address of agent for service)

Registrant’s telephone number, including area code: (415) 627-7000

Date of fiscal year end: December 31

Date of reporting period: December 31, 2007

Item 1: Report(s) to Shareholders.

Schwab Municipal Money Fund^tm

Schwab AMT Tax-Free Money Fund^tm

Annual Report

December 31, 2007

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Funds	3
Performance and Fund Facts	5
Fund Expenses	6
Financial Statements
Schwab Municipal Money Fundtm	7
Schwab AMT Tax-Free Money Fundtm	48
Financial Notes	62
Report of Independent Registered Public Accounting Firm	67
Trustees and Officers	69
Glossary	73
EXHIBIT 99.CODEETH
EXHIBIT 99.CERT
EXHIBIT 99.906CERT

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Municipal Money Fund & Schwab AMT Tax-Free Money Fund 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

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

The Investment Environment and the Funds

Kevin Shaughnessy (left) CFA, managing director and senior portfolio manager, is responsible for the management of the funds.

John Shelton (right) CFA, portfolio manager, has day-to-day responsibility for management of the funds.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

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

The Investment Environment and the Fundscontinued

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Municipal Money Fund and Schwab AMT Tax-Free Money Fund generally maintained a weighted average maturity that was neutral to short relative to their peer groups. With an emphasis toward attractively priced weekly variable rate notes, the funds were able to add value throughout the year in spite of general market volatility. During the third quarter, as it became apparent that the Fed would have to ease monetary policy, the funds increased their exposure to one-year municipal notes, extending their weighted average maturity as short-term municipal yields declined.

Overall, the investment environment during the reporting period proved to be highly unusual for money funds as the markets reacted to subprime and credit turmoil. During the first half of the year, yields on municipal notes maturing 6-12 months were range bound, but dropped when the Fed lowered the Fed Funds Rate. In the latter half of the year, municipal fixed-rate notes fell approximately 80 basis points in response to a 100 basis point reduction in the Fed Funds Rate. In an environment characterized by falling yields, issuance of short-term municipal securities increased for the year. The term structure of tax-exempt money market yields maturing from 1 week to 13 months started out positive and then ended the year inverted. The Bond Market Association Municipal Index averaged 3.67%, while one-year notes averaged 3.51%.

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

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

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

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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.

									AMT Tax-Free
	Municipal Money Fund								Money Fund
			Value								Value
	Sweep		Advantage		Select		Institutional		Sweep		Advantage
	Shares		Sharestm		Shares®		Shares		Shares		Sharestm
Ticker Symbol	SWXXX		SWTXX		SWLXX		SWOXX		SWFXX		SWWXX
Seven-Day Yield1		2.85%		2.99%		3.09%		3.20%		2.80%		2.98%
Seven-Day Yield—No Waiver2		2.66%		2.79%		2.79%		2.79%		2.46%		2.59%
Seven-Day Effective Yield1		2.89%		3.04%		3.14%		3.26%		2.83%		3.02%
Seven-Day Taxable-Equivalent Effective Yield1,3		4.45%		4.68%		4.83%		5.02%		4.35%		4.65%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

	Municipal	AMT Tax-Free
	Money Fund	Money Fund
Weighted Average Maturity	30 days	29 days
Credit Quality of Holdings % of portfolio	100% Tier 1	100% Tier 1
Credit-Enhanced Securities % of portfolio	70%	60%
Minimum Initial Investment4
Sweep Investments®	*	*
Value Advantage Sharestm	$25,000	$25,000
($15,000 for IRA and custodial accounts)5
Select Shares	$1,000,000	n/a
Institutional Shares	$3,000,000	n/a

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
3	Taxable-equivalent effective yield assumes a 2007 maximum federal regular income tax rate of 35.00%. Investment income may be subject to the Alternative Minimum Tax.
4	Please see prospectus for further detail and eligibility requirements.
5	Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult your tax advisor about your situation.

^*  Subject to the eligibility terms and conditions of your Schwab account agreement.

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

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 -12/31/07
Schwab Municipal Money Fundtm
Sweep Shares
Actual Return		0.59%	$	1,000	$	1,015.40	$	3.00
Hypothetical 5% Return		0.59%	$	1,000	$	1,022.23	$	3.01
Value Advantage Sharestm
Actual Return		0.45%	$	1,000	$	1,016.10	$	2.29
Hypothetical 5% Return		0.45%	$	1,000	$	1,022.94	$	2.29
Select Shares®
Actual Return		0.35%	$	1,000	$	1,016.70	$	1.78
Hypothetical 5% Return		0.35%	$	1,000	$	1,023.44	$	1.79
Intistutional Shares
Actual Return		0.24%	$	1,000	$	1,017.20	$	1.22
Hypothetical 5% Return		0.24%	$	1,000	$	1,024.00	$	1.22
Schwab AMT Tax-Free Money Fundtm
Sweep Shares
Actual Return		0.63%	$	1,000	$	1,015.20	$	3.20
Hypothetical 5% Return		0.63%	$	1,000	$	1,022.03	$	3.21
Value Advantage Shares
Actual Return		0.45%	$	1,000	$	1,016.10	$	2.29
Hypothetical 5% Return		0.45%	$	1,000	$	1,022.94	$	2.29

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

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

Schwab Municipal Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Sweep Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per–Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			(0.00	)1
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.12			2.83			1.79			0.60			0.46
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.59			0.64			0.65			0.66			0.66
Gross operating expenses		0.68			0.81			0.82			0.81			0.81
Net investment income (loss)		3.07			2.79			1.77			0.60			0.46
Net assets, end of period ($ x 1,000,000)		8,491			7,230			7,467			7,563			7,494

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Value Advantage Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per–Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.01
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.27			3.03			2.00			0.81			0.68
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.45			0.45			0.45			0.45			0.45
Gross operating expenses		0.55			0.58			0.59			0.58			0.58
Net investment income (loss)		3.22			2.98			1.97			0.80			0.68
Net assets, end of period ($ x 1,000,000)		2,786			2,798			3,007			3,245			3,901

¹ Per-share amount was less than $0.01.

See financial notes 7

Financial Highlights continued

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			6/2/031-
Select Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			(0.00	)2
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)2
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.37			3.13			2.10			0.92			0.39	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.35			0.35			0.35			0.35			0.35	4
Gross operating expenses		0.55			0.58			0.59			0.58			0.58	4
Net investment income (loss)		3.31			3.10			2.11			0.93			0.68	4
Net asset, end of period ($ x 1,000,000)		1,428			1,244			966			727			474

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			6/2/031-
Institutional Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			(0.00	)2
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)2
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.48			3.25			2.21			1.03			0.45	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.24			0.24			0.24			0.24			0.24	4
Gross operating expenses		0.55			0.58			0.59			0.58			0.58	4
Net investment income (loss)		3.41			3.21			2.20			1.08			0.80	4
Net assets, end of period ($ x 1,000,000)		3,840			2,494			1,783			1,459			718

¹ Commencement of operations.

² Per-share amount was less than $0.01.

³ Not annualized.

⁴ Annualized.

8 See financial notes

Schwab Municipal Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	100	.8%	Municipal Securities		16,681,165		16,681,165
	100	.8%	Total Investments		16,681,165		16,681,165
	(0	.8)%	Other Assets and Liabilities				(136,753	)
	100	.0%	Net Assets				16,544,412

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 100.8% of net assets
Alabama 1.1%
Alabama
GO Series 2007A
3.51%, 01/03/08 (a)(b)(c)(d)		6,275		6,275
Alabama Housing Finance Auth
S/F Mortgage RB Series 2006H
3.66%, 01/03/08 (a)		5,830		5,830
Alabama Municipal Funding Corp
Municipal Funding Notes Master Series 2006A
3.44%, 01/03/08 (a)(b)		19,915		19,915
Alabama Public School & College Auth
Capital Improvement Bonds Series 2007
3.48%, 01/03/08 (a)(c)(d)		21,040		21,040
Alabama Special Care Facility Finance Auth
RB (Ascension Health Senior Credit Group) Series 2006D
3.50%, 01/03/08 (a)(c)(d)		8,000		8,000
Bessemer Medical Clinic Board
RB Series 1990A
3.59%, 01/03/08 (a)(b)(c)(d)		10,865		10,865
Birmingham Public Educational Building Auth
Student Housing RB Series 2005A
3.44%, 01/03/08 (a)(b)		6,415		6,415
Daphne Utilities Board
Water, Gas & Sewer Refunding RB Series 2000
3.45%, 01/03/08 (a)(b)(c)		6,605		6,605
Decatur IDB
Exempt Facilities Refunding RB (Nucor Steel Decatur) Series 2003A
3.59%, 01/02/08 (a)		17,000		17,000
Hoover Board of Education
Capital Outlay TAN Series 2001
3.49%, 01/03/08 (a)(b)(c)(d)		14,810		14,810
Indian Springs Village
RB (Joseph Bruno Montessori Academy) Series 1999
3.36%, 01/02/08 (a)(b)		1,050		1,050
Jefferson Cnty Public Building Auth
Lease Revenue Warrants Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		10,305		10,305
Lower Alabama Gas District
Gas Supply RB Series 2007A
3.50%, 01/03/08 (a)(c)		20,000		20,000
Mobile Board of Water & Sewer
RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		10,170		10,170
Montgomery Cnty Public Building Auth
Revenue Warrants Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		5,385		5,385
Montgomery Downtown Redevelopment Auth
Bonds (Southern Poverty Law Center) Series 2000
3.57%, 01/03/08 (a)		15,000		15,000
Montgomery IDB
Pollution Control & Solid Waste Disposal Refunding RB (General Electric Co) Series 2005
3.67%, 01/02/08 (a)		2,000		2,000
Scottsboro
School Warrants Series 1997
3.44%, 01/03/08 (a)(b)		2,960		2,960
Tuscaloosa Cnty
IDRB (Knight Specialties) Series 1998
3.55%, 01/02/08 (a)(b)		775		775
				184,400
Alaska 0.5%
Alaska Housing Finance Corp
Collateralized Bonds (Veteran Mortgage Program) 2006 First Series A2
3.51%, 01/03/08 (a)(c)(d)		5,500		5,500
3.51%, 01/03/08 (a)(c)(d)		9,655		9,655
General Mortgage RB Series 2002A
3.50%, 01/03/08 (a)(c)(d)		5,995		5,995
Mortgage RB Series 1999A2
3.54%, 01/03/08 (a)(c)(d)		4,840		4,840
State Capital Project Bonds Series 2006A
3.80%, 07/10/08 (b)(c)(d)		27,795		27,795

See financial notes 9

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Anchorage
GO Refunding Bonds Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		11,315		11,315
Valdez
Marine Terminal Refunding RB (BP Pipelines Inc) Series 2003A
3.75%, 01/02/08 (a)		4,000		4,000
Marine Terminal Refunding RB (Exxon Pipeline Co) Series 1993A
3.60%, 01/02/08 (a)		2,800		2,800
Marine Terminal Refunding RB (Exxon Pipeline Co) Series 1993B
3.60%, 01/02/08 (a)		4,500		4,500
				76,400
Arizona 1.6%
Arizona Health Facilities Auth
RB (Banner Health) Series 2007B
3.51%, 01/03/08 (a)(c)(d)		32,170		32,170
Arizona School Facilities Board
COP Series 2005A 2&3
3.55%, 01/03/08 (a)(b)(c)(d)		9,825		9,825
Arizona SD
TAN Series 2007
3.64%, 07/30/08		16,500		16,579
Chandler
GO Bonds Series 2007
3.48%, 01/03/08 (a)(c)(d)		10,510		10,510
Glendale IDA
CP Revenue Notes (Midwestern Univ Financing Program)
3.55%, 01/07/08 (b)		6,000		6,000
Maricopa Cnty IDA
M/F Mortgage Refunding RB (San Fernando Apts) Series 2004
3.52%, 01/03/08 (a)(b)		7,750		7,750
Maricopa Cnty USD #48
GO Refunding Bonds Series 2007
3.48%, 01/03/08 (a)(c)(d)		19,905		19,905
Phoenix Civic Improvement Corp
Jr Lien Wastewater System RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		10,365		10,365
Sr Lien Excise Tax Refunding RB Series 2007
3.49%, 01/03/08 (a)(c)(d)		9,857		9,858
Subordinated Excise Tax RB (Airport Improvements) Series 1995
3.53%, 01/02/08 (a)(b)		1,000		1,000
Subordinated Excise Tax RB (Civic Expansion) Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		4,675		4,675
Subordinated Excise Tax RB Series 2005A
3.53%, 01/03/08 (a)(b)(c)(d)		6,885		6,885
Phoenix IDA
Government Office Lease Refunding RB (Capitol Mall) Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		6,225		6,225
M/F Refunding RB (Paradise Lakes Apts) Series 2007A
3.46%, 01/03/08 (a)(b)		17,500		17,500
M/F Refunding RB (Paradise Lakes Apts) Series 2007B
3.52%, 01/03/08 (a)(b)		16,000		16,000
S/F Mortgage Draw-Down RB Series 2005A
3.54%, 01/03/08 (a)(c)(d)		1,760		1,760
Pima Cnty
GO Bonds Series 2007
3.51%, 01/03/08 (a)(b)(c)(d)		5,320		5,320
Salt River Pima-Maricopa Indian Community
Bonds Series 2005
3.48%, 01/03/08 (a)(b)		25,981		25,981
Salt River Project Agricultural Improvement & Power District
Electric System RB Series 2006A
3.50%, 01/03/08 (a)(c)(d)		34,560		34,560
Scottsdale IDA
Hospital RB (Scottsdale Healthcare) Series 2006G
3.50%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Scottsdale Municipal Property Corp
Excise Tax Refunding RB Series 2006
3.51%, 01/03/08 (a)(c)(d)		4,595		4,595
Tempe IDA
RB (ASUF Brickyard) Series 2004A
3.48%, 01/03/08 (a)(b)		1,885		1,885
Tucson
Refunding RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		7,195		7,195
				259,543
Arkansas 0.1%
Arkansas Development Finance Auth
IDRB (C&C Holding Co) Series 1998
3.58%, 01/03/08 (a)(b)		370		370
Independence Cnty
IDRB (Townsends) Series 1996
3.52%, 01/02/08 (a)(b)		9,000		9,000
Univ of Arkansas
Various Facilities RB (UAMS Campus) Series 2006
3.53%, 01/03/08 (a)(b)(c)(d)		14,565		14,565
				23,935

10 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
California 2.6%
Association of Bay Area Governments
M/F Housing RB (Crossing Apts) Series 2002A
3.45%, 01/03/08 (a)(b)		3,000		3,000
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB Series 2006A1
3.22%, 01/03/08 (a)(b)(c)		16,550		16,550
California
RAN
3.37%, 06/30/08 (g)		300,000		300,918
California Economic Development Financing Auth
Airport Facilities RB (Mercury Air Group) Series 1998
3.43%, 01/03/08 (a)(b)		10,000		10,000
California HFA
Home Mortgage RB Series 2001N
3.70%, 01/02/08 (a)(b)(c)		1,180		1,180
Home Mortgage RB Series 2003K
3.45%, 01/02/08 (a)(c)		32,685		32,685
Home Mortgage RB Series 2003M
3.70%, 01/02/08 (a)(c)		2,600		2,600
Home Mortgage RB Series 2005B
3.42%, 01/02/08 (a)(c)		15,000		15,000
Home Mortgage RB Series 2007H
3.66%, 01/02/08 (a)(c)		14,455		14,455
Golden State Tobacco Securitization Corp
Enhanced Tobacco Settlement Asset-Backed Bonds Series 2005A
3.53%, 01/03/08 (a)(b)(c)(d)		33,940		33,940
Los Angeles
M/F Housing RB (Fountain Park Phase II) Series 2000B
3.45%, 01/03/08 (a)(b)		1,000		1,000
				431,328
Colorado 3.8%
Arapahoe Cnty
Refunding IDRB (Denver Jetcenter) Series 1997
3.75%, 01/01/08 (a)(b)		3,500		3,500
Arvada
Water Enterprise RB Series 2001
3.65%, 01/02/08 (a)(b)(c)		3,525		3,525
Aurora
First Lien Water Improvement RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		29,870		29,870
Centerra Metropolitan District #1
RB Series 2004
3.45%, 01/03/08 (a)(b)		10,000		10,000
Colorado
General Fund TRAN Series 2007A
3.70%, 06/27/08		25,000		25,064
3.71%, 06/27/08		50,000		50,127
TRAN Series 2007B
2.90%, 08/05/08		60,000		60,017
Colorado Health Facilities Auth
Hospital Revenue RB (NCMC Inc) Series 2005
3.47%, 01/02/08 (a)(b)(c)		5,500		5,500
Colorado HFA
Economic Development RB (Pemracs) Series 2000A
3.60%, 01/03/08 (a)(b)		2,335		2,335
RB Series 2006A
3.50%, 01/03/08 (a)(c)(d)		21,030		21,030
S/F Mortgage Class II Bonds Series 2006C3
3.63%, 01/03/08 (a)(c)(d)		27,100		27,100
Colorado Springs Utilities System
Subordinate Lien Improvement & Refunding RB Series 2006A
3.42%, 01/03/08 (a)(c)		3,500		3,500
Utilities System Improvement & Refunding RB Series 2007B
3.37%, 01/03/08 (a)(c)		48,475		48,475
Colorado Student Loan Auth
Sr Lien RB Series 1999A2
3.55%, 01/02/08 (a)(b)(c)		3,400		3,400
Dawson Ridge Metropolitan District #1
Limited Tax Refunding Bonds Series 1992A
3.75%, 01/28/08 (a)(c)(d)		9,820		9,820
Denver City & Cnty
Airport System RB Series 1992G
3.50%, 01/02/08 (a)(b)		2,000		2,000
Airport System RB Series 2005A
3.58%, 01/03/08 (a)(b)(c)(d)		7,175		7,175
3.92%, 01/03/08 (a)(b)(c)(d)		30,210		30,210
Airport System RB Series 2007A
3.55%, 01/03/08 (a)(b)(c)(d)		10,250		10,250
3.57%, 01/03/08 (a)(b)(c)(d)		34,175		34,175
Airport System RB Series 2007D
3.51%, 01/03/08 (a)(b)(c)(d)		4,110		4,110
3.54%, 01/03/08 (a)(b)(c)(d)		9,045		9,045
3.62%, 01/03/08 (a)(b)(c)(d)		7,170		7,170
3.64%, 01/03/08 (a)(b)(c)(d)		6,320		6,320
Airport System Refunding RB Series 2001A
3.54%, 01/03/08 (a)(b)(c)(d)		8,355		8,355
RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		33,360		33,360
Denver Department of Aviation
Airport System RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		19,000		19,000
Park Creek Metropolitan District
Jr Subordinate RB Series 2005
3.50%, 01/03/08 (a)(c)(d)		3,205		3,205
Regional Transportation District
Sales Tax RB (FasTracks) Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		8,615		8,615

See financial notes 11

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Sales Tax Refunding RB (FasTracks) Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		16,790		16,790
3.49%, 01/03/08 (a)(b)(c)(d)		18,085		18,085
3.49%, 01/03/08 (a)(b)(c)(d)		27,905		27,905
3.49%, 01/03/08 (a)(b)(c)(d)		16,830		16,830
3.49%, 01/03/08 (a)(b)(c)(d)		29,700		29,700
Thompson SD R2-J
GO Bonds Series 2005
3.51%, 01/03/08 (a)(b)(c)(d)		4,167		4,167
Univ of Colorado Hospital Auth
RB Series 2006B
3.50%, 01/03/08 (a)(b)(c)(d)		16,500		16,500
Westminster Economic Development Auth
Tax Increment RB (Westminster Plaza) Series 1997A
3.60%, 01/03/08 (a)(b)		5,660		5,660
				621,890
Connecticut 0.3%
Connecticut Health & Educational Facilities Auth
RB (Yale Univ) Series Z-1
3.48%, 01/03/08 (a)(c)(d)		51,760		51,760
Connecticut HFA
Mortgage Finance Bonds Series G2
3.54%, 01/03/08 (a)(c)(d)		4,780		4,780
S/F Mortgage Draw Down RB Series 2004B
3.49%, 01/03/08 (a)(b)(c)(d)		40		40
				56,580
Delaware 0.3%
Delaware Economic Development Auth
RB (Delaware State Univ) Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		12,005		12,005
Delaware Housing Auth
Sr Mortgage RB Series 2007D1
3.60%, 01/02/08 (a)(c)		9,975		9,975
Delaware Solid Waste Auth
RB Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		1,235		1,235
Delaware State Transportation Auth
Transportation System Sr RB Series 2006
3.60%, 01/03/08 (a)(b)(c)(d)		3,170		3,170
New Castle Cnty
M/F Rental Housing RB (Fairfield English Village) Series 2005
3.52%, 01/03/08 (a)(b)		8,500		8,500
Sussex Cnty
IDRB (Perdue-Agrirecycle) Series 2000
3.49%, 01/02/08 (a)(b)		5,300		5,300
RB (Baywood) Series 1997A
3.63%, 01/02/08 (a)(b)		2,400		2,400
Wilmington
GO Bonds Series 2006B
3.43%, 01/03/08 (a)(b)(c)		7,520		7,520
				50,105
District of Columbia 2.2%
District of Columbia
GO Bonds Series 2007A
3.51%, 01/03/08 (a)(b)(c)(d)		15,435		15,435
3.54%, 01/03/08 (a)(b)(c)(d)		18,885		18,885
GO Bonds Series 2007C
3.48%, 01/03/08 (a)(b)(c)(d)		8,490		8,490
3.50%, 01/03/08 (a)(b)(c)(d)		21,235		21,235
GO Refunding Bonds Series 2005B
3.50%, 01/02/08 (a)(b)(c)(d)		16,230		16,230
RB (American Psychological Association) Series 2003
3.50%, 01/03/08 (a)(b)		2,560		2,560
RB (St Coletta Special Education Public Charter School) Series 2005
3.48%, 01/03/08 (a)(b)		4,105		4,105
District of Columbia Water & Sewer Auth
Public Utility Subordinated Lien RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		27,225		27,225
3.54%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
Metropolitan Washington Airports Auth
Airport System RB Series 2006B
3.58%, 01/03/08 (a)(b)(c)(d)		12,496		12,496
Airport System RB Series 2007B
3.55%, 01/02/08 (a)(b)(c)(d)		33,310		33,310
3.51%, 01/03/08 (a)(b)(c)(d)		11,950		11,950
3.58%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
Airport System Refunding RB Series 1999A & 2003A
3.63%, 01/03/08 (a)(b)(c)(d)		8,195		8,195
Airport System Refunding RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		7,700		7,700
Flexible Term PFC Revenue Notes Series C
3.00%, 02/12/08 (b)		30,000		30,000
2.97%, 02/19/08 (b)		15,000		15,000
Flexible Term PFC Revenue Notes Series D
3.50%, 03/14/08 (b)		30,000		30,000
RB Series 2005A
3.55%, 01/02/08 (a)(b)(c)(d)		6,575		6,575
RB Series 2006A
3.53%, 01/03/08 (a)(b)(c)(d)		9,000		9,000
RB Series 2007B
3.62%, 01/03/08 (a)(b)(c)(d)		13,965		13,965
Refunding RB Series 2002C
3.48%, 01/02/08 (a)(b)(c)		1,625		1,625
Refunding RB Series 2004D
3.62%, 01/03/08 (a)(b)(c)(d)		2,355		2,355

12 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
National Capital Revitalization Corp
RB (DC USA Parking Garage) Series 2006
3.59%, 01/03/08 (a)(b)(c)(d)		34,430		34,430
				360,766
Florida 10.3%
Alachua Cnty Health Facilities Auth
RB (Shands Hospital) Series 1992R
3.48%, 01/03/08 (a)(b)(c)(d)		60,330		60,330
Brevard Cnty HFA
M/F Housing Refunding RB (Shore View Apts) Series 1995
3.45%, 01/03/08 (a)(b)		1,900		1,900
Broward Cnty
Subordinate Port Facilities Refunding RB (Port Everglades) Series 1998
3.48%, 01/03/08 (a)(b)(c)		7,460		7,460
Broward Cnty HFA
M/F Housing RB (Sawgrass Pines Apts) Series 1993A
3.50%, 01/03/08 (a)(b)		11,000		11,000
Broward Cnty SD
School Board COP Series 2005B
3.48%, 01/03/08 (a)(b)(c)		6,780		6,780
Charlotte Cnty HFA
M/F Housing RB (Murdock Circle Apts) Series 2000
3.76%, 01/02/08 (a)(b)		3,200		3,200
Citizens Property Insurance Corp
High-Risk Account Sr Secured Refunding Bonds Series 2007A
3.68%, 03/01/08 (b)		6,000		6,013
Collier Cnty
IDRB (Ave Maria Utility Co) Series 2005
3.49%, 01/02/08 (a)(b)		10,000		10,000
Dade Cnty
Water & Sewer System RB Series 1994
3.46%, 01/02/08 (a)(b)(c)(f)		76,060		76,060
Dade Cnty IDA
IDRB (South Florida Stadium Corp) Series 1985C
3.30%, 01/02/08 (a)(b)		1,050		1,050
Escambia HFA
S/F Mortgage RB Series 2001A
3.52%, 01/03/08 (a)(b)(c)(d)		2,170		2,170
S/F Mortgage RB Series 2002A1
3.52%, 01/03/08 (a)(c)(d)		3,310		3,310
Florida Board of Education
Capital Outlay Bonds
3.60%, 01/03/08 (a)(b)(c)(d)		34,830		34,830
Capital Outlay Bonds Series 1999C
3.50%, 01/03/08 (a)(c)(d)		17,740		17,740
Capital Outlay Bonds Series 2003C
3.49%, 01/03/08 (a)(b)(c)(d)		5,600		5,600
Capital Outlay Bonds Series 2006B
3.48%, 01/03/08 (a)(b)(c)(d)		54,195		54,195
3.50%, 01/03/08 (a)(c)(d)		16,900		16,900
Capital Outlay Bonds Series 2006C
3.50%, 01/03/08 (a)(c)(d)		33,546		33,546
Capital Outlay Bonds Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		30,810		30,810
Capital Outlay Refunding Bonds Series 2005C
3.61%, 01/03/08 (a)(c)(d)		15,020		15,020
Florida Department of Environmental Protection
RB (Florida Forever) Series 2003A
3.51%, 01/03/08 (a)(b)(c)(d)		6,720		6,720
Refunding RB (Preservation 2000) Series 1997B
3.50%, 01/03/08 (a)(b)(c)(d)		14,961		14,960
Florida Department of Management Services
Facilities Pool RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
Florida Dept of Transportation
Turnpike RB
3.60%, 01/03/08 (a)(b)(c)(d)		3,680		3,680
Turnpike RB Series 2000A
3.50%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Turnpike RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
3.48%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
3.70%, 01/03/08 (a)(b)(c)(d)		4,395		4,395
Turnpike RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		41,800		41,800
Florida Development Finance Corp
IDRB (Schmitt Family Partnership) Series 1999A2
3.54%, 01/02/08 (a)(b)		1,500		1,500
IDRB (Sunshine State Christian Homes) Series 1999A3
3.49%, 01/02/08 (a)(b)		1,000		1,000
IDRB Enterprise Bond Program (Pioneer-Ram) Series 1998A3
3.54%, 01/02/08 (a)(b)		680		680
Florida HFA
Homeowner Mortgage RB Series 2000-4
3.52%, 01/01/08 (a)(b)(c)(d)		230		230
Homeowner Mortgage RB Series 2006-4
3.55%, 01/03/08 (a)(c)(d)		9,215		9,215
Homeowner Mortgage RB Series 2007-2
3.63%, 01/03/08 (a)(c)(d)		13,695		13,695
3.63%, 01/03/08 (a)(c)(d)		16,215		16,215
Housing RB (Caribbean Key Apts) Series 1996F
3.49%, 01/02/08 (a)(b)		300		300

See financial notes 13

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
M/F Housing RB (Cameron Cove Apts) Series 1985XX
3.49%, 01/02/08 (a)(b)		400		400
M/F Mortgage RB (Clarcona Groves Apts) Series 2005A
3.53%, 01/02/08 (a)(b)		4,250		4,250
M/F Mortgage RB (Lynn Lake Apts) Series 2005B1
3.51%, 01/03/08 (a)(b)		10,100		10,100
M/F Mortgage RB (Pinnacle Pointe Apts) Series 2003N
3.53%, 01/02/08 (a)(b)		2,335		2,335
M/F Mortgage RB (Wexford Apts) Series 2003P
3.53%, 01/02/08 (a)(b)		7,840		7,840
RB (Timberline Apts) Series 1999P
3.48%, 01/02/08 (a)(b)		5,935		5,935
Florida Higher Educational Facilities Financing Auth
RB (St Thomas Univ) Series 2003
3.74%, 01/02/08 (a)(b)		1,135		1,135
Florida Housing Finance Corp
Homeowner Mortgage RB Series 2006-4 & 2007-3
3.58%, 01/03/08 (a)(c)(d)		7,445		7,445
Florida Hurricane Catastrophe Fund Finance Corp
RB
3.60%, 01/03/08 (a)(b)(c)(d)		32,035		32,035
Florida Local Government Finance Commission
Pooled TECP Series 1994A
3.42%, 02/13/08 (b)		16,098		16,098
Gainesville
IDRB (Lifesouth Community Blood Centers) Series 1999
3.44%, 01/02/08 (a)(b)		4,715		4,715
Gainesville Utility System
RB Series 2005C
3.70%, 01/02/08 (a)(c)		2,500		2,500
Greater Orlando Aviation Auth
Airport Facilities Refunding RB Series 2007A
3.60%, 01/03/08 (a)(b)(c)(d)		33,590		33,590
Gulf Breeze
Local Government Loan Program RB Series 1985C
3.48%, 01/03/08 (a)(b)(c)		960		960
Local Government Loan Program RB Series 1985E
3.48%, 01/03/08 (a)(b)(c)		7,450		7,450
Hillsborough Cnty
COP (Master Lease Program) Series 2007
3.61%, 01/03/08 (a)(b)(c)(d)		5		5
RB Series 2007
3.64%, 01/02/08 (a)(b)(c)(d)		13,015		13,015
Solid Waste & Resource Recovery RB Series 2006A
3.51%, 01/03/08 (a)(b)(c)(d)		9,555		9,555
Hillsborough Cnty Aviation Auth
RB (Tampa International Airport) Series 2003A
3.54%, 01/03/08 (a)(b)(c)(d)		5,495		5,495
Hillsborough Cnty Educational Facilities Auth
RB (Univ of Tampa) Series 2000
3.53%, 01/03/08 (a)(b)		4,900		4,900
Hillsborough Cnty HFA
M/F Housing RB (Claymore Crossing Apts) Series 2005
3.50%, 01/02/08 (a)(b)		1,000		1,000
M/F Housing RB (Lake Kathy Apts) Series 2005
3.50%, 01/03/08 (a)(b)		5,000		5,000
Hillsborough Cnty IDA
Educational Facilities RB (Berkeley Preparatory School) Series 1999
3.44%, 01/02/08 (a)(b)		4,135		4,135
IDRB (Univ Community Hospital) Series 1994
3.61%, 01/03/08 (a)(b)(c)(d)		55,795		55,795
RB (Independent Day School) Series 2000
3.53%, 01/03/08 (a)(b)		700		700
Hillsborough Cnty Port District
Refunding RB (Tampa Port Auth) Series 2005A
3.53%, 01/03/08 (a)(b)(c)(d)		6,634		6,634
Hillsborough Cnty SD
Sales Tax Refunding RB Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		14,365		14,365
Jacksonville Aviation Auth
Refunding RB Series 2005
3.48%, 01/02/08 (a)(b)(c)		3,900		3,900
Jacksonville Economic Development Commission
Educational Facilities RB (Episcopal High School) Series 2002
3.48%, 01/02/08 (a)(b)		5,000		5,000
RB (Bolles School) Series 1999A
3.50%, 01/03/08 (a)(b)		1,200		1,200
Refunding RB (YMCA of Florida First Coast) Series 2003
3.48%, 01/03/08 (a)(b)		4,550		4,550
Special Facility Airport RB (Holland Sheltair Aviation Group) Series 2004A1
3.53%, 01/03/08 (a)(b)		3,825		3,825
Jacksonville Health Facilities Auth
Hospital RB Series 2003A
3.74%, 01/02/08 (a)(b)		1,600		1,600
RB (River Garden/The Coves) Series 1994
3.50%, 01/03/08 (a)(b)		2,870		2,870
Jacksonville HFA
M/F Housing Refunding RB (St Augustine Apts) Series 2006
3.42%, 01/02/08 (a)(b)		3,300		3,300
Lake Shore Hospital Auth
Health Facility RB (Lake Shore Hospital) Series 1991
3.44%, 01/03/08 (a)(b)		2,800		2,800

14 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Manatee Cnty HFA
M/F Housing RB (La Mirada Gardens) Series 2002A
3.49%, 01/03/08 (a)(b)		4,000		4,000
M/F Housing RB (Sabal Palm Harbor Apts) Series 2000A
3.76%, 01/02/08 (a)(b)		4,200		4,200
Miami
Special Obligation Bonds (Street & Sidewalk Improvement Program) Series 2007
3.64%, 01/02/08 (a)(b)(c)(d)		5,000		5,000
Miami-Dade Cnty
Aviation RB (Miami International Airport) Series 2002
3.70%, 01/03/08 (a)(b)(c)(d)		5,370		5,370
Aviation RB (Miami International Airport) Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		7,625		7,625
3.58%, 01/03/08 (a)(b)(c)(d)		22,070		22,070
Aviation TECP (Miami International Airport) Series A
3.50%, 02/05/08 (b)		7,000		7,000
3.10%, 02/14/08 (b)		13,500		13,500
Capital Asset Acquisition Special Obligation Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		13,155		13,155
GO Bonds Series 2005
3.75%, 03/20/08 (b)(c)(d)		17,030		17,030
Refunding RB Series 2007C
3.55%, 01/02/08 (a)(b)(c)(d)		6,400		6,400
3.53%, 01/03/08 (a)(b)(c)(d)		9,500		9,500
3.59%, 01/03/08 (a)(b)(c)(d)		12,000		12,000
Refunding RB Series 2007C&D
3.50%, 01/03/08 (a)(b)(c)(d)		37,175		37,175
Solid Waste System RB Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		5,410		5,410
3.50%, 01/03/08 (a)(b)(c)(d)		5,395		5,395
Miami-Dade Cnty Educational Facilities Auth
Refunding RB (Univ of Miami)
3.46%, 01/03/08 (a)(b)(c)(d)		7,615		7,615
Refunding RB (Univ of Miami) Series 2007B
3.49%, 01/03/08 (a)(b)(c)(d)		2,535		2,535
Miami-Dade Cnty IDA
IDRB (Airbus Service Co) Series 1998A
3.49%, 01/03/08 (a)(b)		80		80
IDRB (Tarmac America) Series 2004
3.53%, 01/03/08 (a)(b)		12,600		12,600
RB (Gulliver Schools) Series 2000
3.50%, 01/03/08 (a)(b)		3,600		3,600
Miami-Dade Cnty SD
TAN Series 2007
3.40%, 10/03/08		45,000		45,197
Ocala
Utility Systems RB Series 2005B
3.55%, 01/03/08 (a)(b)(c)(d)		1,490		1,490
Ocean Highway & Port Auth
RB Series 1990
3.69%, 01/02/08 (a)(b)		8,700		8,700
Okeechobee Cnty
Exempt Facility RB (Okeechobee Landfill) Series 1999
3.53%, 01/03/08 (a)(b)		15,000		15,000
Orange Cnty Health Facilities Auth
RB (Presbyterian Retirement Communities) Series 2006A
3.49%, 01/03/08 (a)(b)		32,195		32,195
RB (Presbyterian Retirement Communities) Series 2006B
3.49%, 01/03/08 (a)(b)		8,830		8,830
Orange Cnty Health Finance Auth
Refunding Program RB (Pooled Hospital Loan) Series 1985
2.95%, 01/14/08 (b)		19,100		19,100
Orange Cnty HFA
M/F Housing RB (Alta Westgate Apts) Series 2005C
3.46%, 01/02/08 (a)(b)		6,920		6,920
M/F Housing Refunding RB (Andover Place Apts) Series 1998F
3.47%, 01/03/08 (a)(b)		6,000		6,000
Orange Cnty IDA
IDRB (Central Florida YMCA) Series 2002A
3.50%, 01/03/08 (a)(b)		3,850		3,850
IDRB (Central Florida YMCA) Series 2005
3.48%, 01/03/08 (a)(b)		5,120		5,120
Orange Cnty School Board
COP Series 2006A
3.53%, 01/03/08 (a)(b)(c)(d)		9,937		9,937
Orange Cnty SD
COP Series 2000B
3.50%, 01/02/08 (a)(b)(c)		1,180		1,180
Orlando & Orange Cnty Expressway Auth
RB Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		28,730		28,730
3.49%, 01/03/08 (a)(b)(c)(d)(g)		50,000		50,000
3.49%, 01/03/08 (a)(b)(c)(d)		20,000		20,000
Orlando Utilities Commission
Water & Electric RB Series 2002B
3.47%, 01/02/08 (a)(c)		22,300		22,300
Osceola Cnty
Sales Surtax RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		5,160		5,160
Palm Beach Cnty
Airport RB (Galaxy Aviation) Series 2000A
3.50%, 01/02/08 (a)(b)		7,190		7,190
RB (Norton Gallery & School of Art) Series 1995
3.35%, 01/02/08 (a)(b)		2,500		2,500

See financial notes 15

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Palm Beach Cnty HFA
M/F Housing Refunding RB (Emerald Bay Club Apts) Series 2004
3.45%, 01/03/08 (a)(b)		7,000		7,000
M/F Housing Refunding RB (Spinnaker Landing Apts) Series 1998
3.52%, 01/03/08 (a)(b)		2,545		2,545
Palm Beach Cnty School Board
Refunding COP Series 2007C
3.61%, 01/03/08 (a)(b)(c)(d)		15,710		15,710
TAN Series 2007
3.44%, 09/24/08		50,000		50,201
Pinellas Cnty Health Facilities Auth
Hospital Facilities Refunding RB (Bayfront Hospital) Series 2004
3.74%, 01/02/08 (a)(b)		3,775		3,775
Pinellas Cnty HFA
M/F Housing RB (Greenwood Apts) Series 2002A
3.53%, 01/03/08 (a)(b)		6,460		6,460
Pinellas Cnty Industry Council
RB (Operation Par) Series 1999
3.55%, 01/03/08 (a)(b)		3,545		3,545
Sarasota Cnty
RB (Sarasota Family YMCA) Series 1999
3.48%, 01/03/08 (a)(b)		440		440
Seminole Cnty IDA
IDRB (Amrhein Family Limited Partnership) Series 2001
3.49%, 01/02/08 (a)(b)		3,795		3,795
South Florida Water Management District
COP Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		22,145		22,145
South Miami Health Facilities Auth
Hospital RB (Baptist Health South Florida Obligated Group) Series 2007
3.50%, 01/03/08 (a)(c)(d)		47,245		47,245
St Johns Cnty
Water & Sewer Refunding RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		10,995		10,995
Sumter Landing Community Development District
Recreational RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
Sunshine State Governmental Financing Commission
TECP Series 1998A
3.24%, 02/11/08 (b)(c)		58,309		58,309
Tallahassee
Energy System RB Series 2007
3.54%, 01/03/08 (a)(b)(c)(d)		24,750		24,750
Tallahassee Consolidated Utility Systems
Utility Systems RB Series 2007
3.50%, 01/03/08 (a)(c)(d)		6,800		6,800
Tampa
Occupational License Tax Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		20,485		20,485
Tampa Bay Water Auth
Utility System RB Series 2002
3.53%, 01/03/08 (a)(b)		5,400		5,400
Utility System Refunding & Improvement RB Series 2005
3.51%, 01/03/08 (a)(b)(c)(d)		18,645		18,645
Volusia Cnty
Tourist Development Tax RB Series 2004
3.48%, 01/03/08 (a)(b)(c)(d)		14,500		14,500
Volusia Cnty Health Facilities Auth
Hospital Facilities RB (Memorial Health Systems) Series 1996
3.51%, 01/03/08 (a)(b)(c)(d)		38,965		38,965
Winter Haven
Utility System Improvement & Refunding RB Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		8,145		8,145
				1,707,245
Georgia 3.8%
Atlanta
Airport General Refunding RB Series 2000A
3.67%, 01/03/08 (a)(b)(c)(d)		11,195		11,195
Airport General Refunding RB Series 2000C
3.54%, 01/03/08 (a)(b)(c)(d)		3,385		3,385
Airport Passenger Facility Charge & Subordinate Lien General RB Series 2004C
3.50%, 01/03/08 (a)(b)(c)(d)		5,140		5,140
Subordinate Lien Tax Allocation Bonds (Atlantic Station) Series 2006
3.45%, 01/03/08 (a)(b)		20,000		20,000
Water & Wastewater RB Series 2004
3.54%, 01/02/08 (a)(b)(c)(d)		9,000		9,000
Water & Wastewater Revenue CP Series 2006-1
2.90%, 09/10/08 (b)		4,000		4,000
Atlanta Urban Residential Finance Auth
M/F Housing RB (Alta Coventry Station Apts) Series 2007
3.54%, 01/03/08 (a)(b)		14,000		14,000
M/F Housing RB (Capitol Gateway Apts Phase I) Series 2005
3.55%, 01/03/08 (a)(b)		4,125		4,125
M/F Housing RB (Delmonte/Brownlee Court) Series 2001A
3.49%, 01/02/08 (a)(b)		4,510		4,510
M/F Housing RB (Lindbergh City Center Apts) Series 2004
3.52%, 01/03/08 (a)(b)		5,000		5,000
M/F Housing RB (M St Apts) Series 2003
3.48%, 01/03/08 (a)(b)		7,000		7,000

16 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
M/F Housing RB (Peaks at West Atlanta Apts) Series 2001
3.49%, 01/02/08 (a)(b)		4,700		4,700
M/F Sr Housing RB (Big Bethel Village) Series 2001
3.49%, 01/02/08 (a)(b)		4,355		4,355
Augusta
Refunding RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		6,790		6,790
Augusta Housing Auth
M/F Housing RB (G-Hope) Series 2001
3.49%, 01/02/08 (a)(b)		3,555		3,555
Burke Cnty Development Auth
Pollution Control RB (Oglethorpe Power Corp) Series 2006A
2.95%, 01/07/08 (b)(c)		3,000		3,000
3.05%, 01/07/08 (b)(c)		14,750		14,750
Pollution Control RB (Oglethorpe Power Corp) Series 2006B2
3.50%, 01/17/08 (b)(c)		9,000		9,000
3.35%, 02/05/08 (b)(c)		23,900		23,900
Cherokee Cnty School System
GO Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		25,110		25,110
Clarke Cnty Hospital Auth
Revenue Certificates (Athens Regional Medical Center) Series 2007
3.75%, 02/28/08 (b)(c)(d)		33,635		33,635
Clayton Cnty Housing Auth
M/F Housing RB (Hyde Park Club Apts) Series 1997
3.53%, 01/02/08 (a)(b)		11,495		11,495
Cobb Cnty Housing Auth
M/F Housing RB (Walton Green Apts) Series 1995
3.53%, 01/03/08 (a)(b)		13,500		13,500
M/F Housing RB (Woodchase Village Apts) Series 2003
3.62%, 01/03/08 (a)(b)		4,000		4,000
Columbus Development Auth
RB (Foundation Properties) Series 2002
3.47%, 01/03/08 (a)(b)		10,895		10,895
Columbus Housing Auth
M/F Housing RB (Eagles Trace Apts) Series 2002
3.49%, 01/02/08 (a)(b)		6,000		6,000
Dalton Development Auth
Revenue Certificates (Hamilton Health Care System) Series 2003B
3.48%, 01/03/08 (a)(b)		5,245		5,245
DeKalb Cnty
Water & Sewerage RB Series 2003A
3.59%, 01/03/08 (a)(c)(d)		13,240		13,240
Water & Sewerage RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		9,955		9,955
DeKalb Cnty Development Auth
RB (Arbor Montessori School) Series 1998
3.44%, 01/02/08 (a)(b)		1,100		1,100
DeKalb Cnty Housing Auth
M/F Housing RB (Brittany Apts) Series 2001
3.61%, 01/03/08 (a)(b)		7,200		7,200
M/F Housing RB (Mountain Crest Apts) Series 2002
3.49%, 01/02/08 (a)(b)		7,615		7,615
M/F Housing RB (Villas of Friendly Heights Apts) Series 2001
3.49%, 01/02/08 (a)(b)		3,305		3,305
M/F Housing RB (Wesley Club Apts) Series 2002
3.49%, 01/02/08 (a)(b)		5,760		5,760
Effingham Cnty IDA
RB (TEMCOR) Series 2001
3.49%, 01/02/08 (a)(b)		2,640		2,640
Fulton Cnty
Water & Sewerage RB Series 2004
3.49%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
3.51%, 01/03/08 (a)(b)(c)(d)		12,335		12,335
Fulton Cnty Development Auth
RB (Atlanta International School) Series 1997
3.44%, 01/02/08 (a)(b)		2,000		2,000
RB (Children’s Healthcare of Atlanta) Series 2005A
3.55%, 01/03/08 (a)(c)(d)		46,395		46,395
Gwinnett Cnty Development Auth
COP (Gwinnett Cnty Public Schools) Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		33,180		33,180
3.51%, 01/03/08 (a)(b)(c)(d)		25,835		25,835
Jefferson Cnty Development Auth
IDRB (Grove River Mills) Series 1997
3.55%, 01/03/08 (a)(b)		900		900
Laurens Cnty Development Auth
Solid Waste Disposal RB (Southeast Paper Manufacturing Co) Series 1993
3.49%, 01/03/08 (a)(b)		25,000		25,000
Solid Waste Disposal RB (Southeast Paper Manufacturing Co) Series 1997
3.49%, 01/03/08 (a)(b)		28,000		28,000
Lawrenceville Housing Auth
M/F Housing RB (Chatham Club Apts) Series 2002
3.49%, 01/03/08 (a)(b)		7,600		7,600
Lowndes Cnty Development Auth
M/F Housing RB (FMPH Valdosta) Series 1999
3.49%, 01/02/08 (a)(b)		4,390		4,390

See financial notes 17

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Macon-Bibb Cnty Hospital Auth
Revenue Anticipation Certificates (Medical Center of Central Georgia) Series 1998
3.44%, 01/02/08 (a)(b)		4,000		4,000
Marietta Housing Auth
M/F Housing RB (Walton Village Apts) Series 2005
3.52%, 01/03/08 (a)(b)		14,300		14,300
Metro Atlanta Rapid Transit Auth
Sales Tax Refunding RB Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		5,995		5,995
Miller Cnty Development Auth
IDRB (Birdsong Corp) Series 2000
3.49%, 01/02/08 (a)(b)		2,200		2,200
Pooler Development Auth
M/F Housing RB (Alta Towne Lake Apts) Series 2005
3.53%, 01/03/08 (a)(b)		19,500		19,500
Private Colleges & Universities Auth
CP Notes (Emory Univ)
3.40%, 03/06/08		22,000		22,000
Savannah Economic Development Auth
Exempt Facility RB (Georgia Kaolin Terminal) Series 1997
3.53%, 01/03/08 (a)(b)		6,000		6,000
Exempt Facility RB (Home Depot) Series 1995B
3.49%, 01/02/08 (a)(b)		10,000		10,000
Savannah Housing Auth
M/F Housing RB (Live Oak Plantation Apts) Series 2001A1
3.49%, 01/02/08 (a)(b)		2,500		2,500
Summerville Development Auth
Exempt Facility RB (Image Industries) Series 1997
3.51%, 01/03/08 (a)(b)		11,000		11,000
Walton Cnty Development Auth
RB (Tucker Door & Trim Corp) Series 2000
3.59%, 01/02/08 (a)(b)		2,300		2,300
Webster Cnty IDA
IDRB (Tolleson Lumber Co) Series 1999
3.55%, 01/03/08 (a)(b)		4,000		4,000
Winder-Barrow Industrial Building Auth
IDRB (Progress Container Corp) Series 2000
3.49%, 01/02/08 (a)(b)		1,985		1,985
Worth Cnty
Refunding IDRB (Seabrook Peanut Co) Series 1996B
3.49%, 01/02/08 (a)(b)		1,300		1,300
				620,815
Hawaii 0.3%
Hawaii
GO Bonds Series 2002CZ
3.48%, 01/03/08 (a)(b)(c)(d)		5,900		5,900
Special Purpose Refunding RB (Hawaiian Electric Co) Series 2000
3.62%, 01/03/08 (a)(b)(c)(d)		9,095		9,095
Honolulu Board of Water Supply
Water System RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Honolulu City & Cnty
GO Bonds Series 2003A
3.50%, 01/03/08 (a)(b)(c)(d)		14,995		14,995
Wastewater System RB (First Bond Resolution) Sr Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		9,365		9,365
				46,355
Idaho 0.2%
Idaho
TAN Series 2007
3.73%, 06/30/08		35,000		35,128
Idaho State Univ Foundation
RB (LE & Thelma E Stephens Performing Arts Center) Series 2001
3.42%, 01/03/08 (a)(b)		1,965		1,965
				37,093
Illinois 7.3%
Berwyn
GO Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		18,075		18,075
Carol Stream
M/F Housing Refunding RB (St Charles Square) Series 1997
3.56%, 01/02/08 (a)(b)		4,415		4,415
Chicago
CP (Chicago O’Hare International Airport) Series 2005
2.80%, 02/11/08 (b)		47,836		47,836
General Airport Third Lien RB (Chicago O’Hare International Airport) Series 2003B2
3.54%, 01/03/08 (a)(b)(c)(d)		8,595		8,595
General Airport Third Lien RB (Chicago O’Hare International Airport) Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		20,465		20,465
3.50%, 01/03/08 (a)(b)(c)(d)		26,225		26,225
3.67%, 01/03/08 (a)(b)(c)(d)		5,192		5,192
General Airport Third Lien Refunding RB (Chicago O’Hare International Airport) Series 2003A2
3.58%, 01/03/08 (a)(b)(c)(d)		7,895		7,895
General Airport Third Lien Refunding RB (Chicago O’Hare International Airport) Series 2003B2
3.54%, 01/03/08 (a)(b)(c)(d)		10,800		10,800

18 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
General Airport Third Lien Refunding RB (Chicago O’Hare International Airport) Series 2005B
3.50%, 01/03/08 (a)(b)(c)(d)		9,655		9,655
3.51%, 01/03/08 (a)(b)(c)(d)		11,370		11,370
GO Bonds Series 2007 C, D, J
3.50%, 01/03/08 (a)(b)(c)(d)		5,855		5,855
GO Bonds Series 2007G
3.50%, 01/03/08 (a)(b)(c)(d)		13,795		13,795
GO Project & Refunding Bonds Series 2005B
3.59%, 01/03/08 (a)(b)(c)(d)		6,815		6,815
GO Project & Refunding Bonds Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		37,350		37,350
3.54%, 01/03/08 (a)(b)(c)(d)		24,900		24,900
GO Project & Refunding Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		14,515		14,515
3.54%, 01/03/08 (a)(b)(c)(d)		33,000		33,000
M/F Housing RB (Central Station Sr Housing) Series 2004
3.52%, 01/03/08 (a)(b)		9,500		9,500
S/F Mortgage RB Series 2007-2A
3.55%, 01/03/08 (a)(c)(d)		17,980		17,980
Sales Tax Refunding RB Series 2005
3.59%, 01/03/08 (a)(b)(c)(d)		9,665		9,665
Second Lien Passenger Facility Charge RB Series 2001A
3.55%, 01/02/08 (a)(b)(c)(d)		11,070		11,070
3.54%, 01/03/08 (a)(b)(c)(d)		6,315		6,315
Second Lien Refunding RB Series 2006B
3.54%, 01/03/08 (a)(b)(c)(d)		11,665		11,665
Second Lien Wastewater Transmission Refunding RB Series 2001
3.48%, 01/03/08 (a)(b)(c)(d)		21,590		21,590
Second Lien Wastewater Transmission Refunding RB Series 2006A&B
3.48%, 01/03/08 (a)(b)(c)(d)		11,405		11,405
Second Lien Water Refunding RB Series 2004
3.40%, 01/03/08 (a)(b)(c)(f)		50,000		50,000
Special Facilities RB (O’Hare Tech Center II) Series 2002
3.52%, 01/03/08 (a)(b)		15,500		15,500
Sr Lien Water RB Series 2000
3.50%, 01/03/08 (a)(c)(d)		11,970		11,970
Chicago Board of Education
Unlimited Tax GO Bonds (Dedicated Revenues) Series 2006B
3.50%, 01/03/08 (a)(b)(c)(d)		16,975		16,975
Unlimited Tax GO Bonds Series 1998B1
3.59%, 01/03/08 (a)(b)(c)(d)		4,980		4,980
Unlimited Tax GO Refunding Bonds (Dedicated Revenues) Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		10,303		10,303
Dupage Cnty
RB (Morton Arboretum) Series 2003
3.48%, 01/03/08 (a)(b)		24,050		24,050
East Dundee, Kane & Cook Counties
IDRB (Otto Engineering) Series 1998
3.58%, 01/03/08 (a)(b)		1,420		1,420
Hampshire
IDRB (Poli-Film America) Series 1998A
3.55%, 01/03/08 (a)(b)		2,200		2,200
Illinois
Civic Center Bonds Series 1991
3.50%, 01/03/08 (a)(b)(c)(d)		2,940		2,940
GO Bonds Series 2000
3.50%, 01/03/08 (a)(b)(c)(d)		19,575		19,575
3.50%, 01/03/08 (a)(b)(c)(d)		3,370		3,370
3.56%, 01/03/08 (a)(b)(c)(d)		8,995		8,995
GO Bonds Series 2002
3.49%, 01/03/08 (a)(b)(c)(d)		12,375		12,375
3.56%, 01/03/08 (a)(b)(c)(d)		13,425		13,425
GO Bonds Series 2003
3.48%, 01/03/08 (a)(b)(c)(d)		22,500		22,500
GO Bonds Series 2006
3.50%, 01/03/08 (a)(c)(d)		2,385		2,385
3.50%, 01/03/08 (a)(c)(d)		1,745		1,745
GO Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		6,345		6,345
Illinois Education Facility Auth
RB (Northwestern Univ) Series 2003
3.50%, 01/03/08 (a)(c)(d)		14,020		14,020
Illinois Finance Auth
Economic Development RB (Korex Corp) Series 1990
3.51%, 01/03/08 (a)(b)		4,000		4,000
Gas Supply Refunding RB (People’s Gas) Series 2003E
3.54%, 01/03/08 (a)(b)(c)(d)		14,995		14,995
IDRB (Arc-Tronics) Series 1999
3.59%, 01/02/08 (a)(b)		1,380		1,380
IDRB (Camcraft Inc) Series 1993
3.63%, 01/02/08 (a)(b)		1,400		1,400
IDRB (Radiological Society of North America) Series 1997
3.47%, 01/03/08 (a)(b)		2,630		2,630
RB (Aurora Central Catholic High School) Series 1994
3.68%, 01/02/08 (a)(b)		1,000		1,000
RB (Bradley Univ) Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		5,950		5,950
RB (Catholic Charities Housing Development Corp) Series 1993A
3.58%, 01/02/08 (a)(b)		9,160		9,160

See financial notes 19

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB (Catholic Charities Housing Development Corp) Series 1993B
3.58%, 01/02/08 (a)(b)		910		910
RB (Chicago Academy of Sciences) Series 1997
3.49%, 01/02/08 (a)(b)		295		295
RB (Francis W. Parker School) Series 1999
3.45%, 01/02/08 (a)(b)		2,355		2,355
RB (Lake Forest Academy) Series 1994
3.43%, 01/02/08 (a)(b)		4,000		4,000
RB (Perspectives Charter School) Series 2003
3.45%, 01/03/08 (a)(b)		5,400		5,400
RB (Resurrection Health Care) Series 2005C
3.45%, 01/03/08 (a)(b)		16,000		16,000
RB (Richard H Driehaus Museum) Series 2005
3.43%, 01/02/08 (a)(b)		3,800		3,800
RB (St Ignatius College Prep) Series 2002
3.46%, 01/02/08 (a)(b)		2,800		2,800
RB (Univ of Chicago) Series 2007
3.50%, 01/03/08 (a)(c)(d)		49,475		49,475
RB Series 2007A1
3.38%, 01/03/08 (a)(c)		11,000		11,000
RB Series 2007A3
3.38%, 01/03/08 (a)(c)		11,500		11,500
RB Series 2007B1
3.50%, 01/02/08 (a)(c)		9,400		9,400
Water Facilities Refunding RB (Illinois-American Water Co) Series 2002
3.65%, 01/03/08 (a)(b)(c)		5,000		5,000
Illinois Health Facilities Auth
RB (Ingalls Health System) Series 1994
3.48%, 01/03/08 (a)(b)(c)(d)		28,120		28,120
Illinois Housing Development Auth
Homeowner Mortgage RB Series 2007H2
3.48%, 10/01/08		22,415		22,415
M/F Mortgage Refunding RB (Hyde Park Tower Apts) Series 2000A
3.59%, 01/02/08 (a)(b)		4,500		4,500
Illinois Municipal Electric Agency
Power Supply System RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		10,800		10,800
3.54%, 01/03/08 (a)(b)(c)(d)		9,205		9,205
Illinois Sports Facilities Auth
Bonds RB Series 2001
3.60%, 01/03/08 (a)(b)(c)(d)		9,030		9,030
Illinois Toll Highway Auth
Sr Priority RB Series 2005A
3.54%, 01/03/08 (a)(b)(c)(d)		6,885		6,885
Sr Priority RB Series 2006A1
3.59%, 01/03/08 (a)(b)(c)(d)		10,385		10,385
Sr Priority RB Series 2006A2
3.48%, 01/03/08 (a)(b)(c)(d)		10,390		10,390
3.49%, 01/03/08 (a)(b)(c)(d)		14,995		14,995
Sr Priority RB Series 2007A1
3.45%, 01/03/08 (a)(b)(c)		25,000		25,000
Lombard
Refunding IDRB (B&H Partnership) Series 1995
3.81%, 01/03/08 (a)(b)		1,850		1,850
Metropolitan Pier & Exposition Auth
Bonds (McCormick Place Expansion) Series 1998B
3.51%, 01/03/08 (a)(b)(c)(d)		30,870		30,870
Bonds (McCormick Place Expansion) Series 2002A
3.50%, 01/03/08 (a)(b)(c)(d)		2,870		2,870
Refunding Bonds (McCormick Place Expansion) Series 1999AC
3.56%, 01/03/08 (a)(b)(c)(d)		9,790		9,790
Refunding Bonds (McCormick Place Expansion) Series 2002B
3.50%, 01/02/08 (a)(b)(c)(d)		18,490		18,490
Metropolitan Water Reclamation District of Greater Chicago
GO Refunding Bonds Unlimited Tax Series 2007B & Limited Tax Series 2007C
3.48%, 01/03/08 (a)(c)(d)		44,285		44,285
Unlimited Tax GO Refunding Bonds Series 2006
3.51%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Montgomery Special Service Area #10
Special Tax Bonds (Blackberry Crossing West) Series 2004
3.45%, 01/02/08 (a)(b)		5,788		5,788
Northern Illinois Municipal Power Agency
RB Series 2007A
3.59%, 01/03/08 (a)(b)(c)(d)		9,790		9,790
Palatine
Special Facility RB (Little City for Community Development) Series 1998
3.43%, 01/02/08 (a)(b)		5,000		5,000
Regional Transportation Auth
GO Bonds Series 2005A
3.49%, 01/03/08 (a)(b)(c)(d)		29,005		29,005
GO Refunding Bonds Series 1999
3.51%, 01/03/08 (a)(b)(c)(d)		9,730		9,730
3.51%, 01/03/08 (a)(b)(c)(d)		12,055		12,055
Rockford
IDRB (Ring Can Corp) Series 1998
3.49%, 01/02/08 (a)(b)		440		440
IDRB (Rockford Industrial Welding Supply) Series 1996
3.65%, 01/03/08 (a)(b)		2,000		2,000
Schaumburg
GO Bonds Series 2004B
3.55%, 01/03/08 (a)(b)(c)(d)		18,675		18,675

20 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Southwestern Illinois Development Auth
Refunding IDRB (Holten Meat) Series 2004
3.64%, 01/03/08 (a)(b)		6,860		6,860
Univ of Illinois
Auxiliary Facilities RB Series 1999A
3.50%, 01/02/08 (a)(b)(c)(d)		3,500		3,500
Will-Kankakee Regional Development Auth
IDRB (Toltec Steel Services) Series 2002
3.53%, 01/03/08 (a)(b)		5,850		5,850
Woodridge
M/F Housing Refunding RB (Hinsdale Lake Terrace Apts) Series 1990
3.47%, 01/04/08 (a)(b)(c)		20,760		20,760
Yorkville
IDRB (FE Wheaton & Co) Series 1996
3.70%, 01/03/08 (a)(b)		950		950
				1,213,749
Indiana 1.6%
Brownburg 1999 School Bldg Corp
First Mortgage Refunding Bonds Series 2005B
3.59%, 01/03/08 (a)(b)(c)(d)		11,540		11,540
Elkhart Cnty
Economic Development RB (West Plains Apts) Series 1998A
3.68%, 01/02/08 (a)(b)		1,695		1,695
Indiana Bond Bank
Special Program Refunding Bonds (Hendricks Regional Health) Series 2007A
3.59%, 01/03/08 (a)(b)(c)(d)		9,850		9,850
Indiana Finance Auth
Environmental RB (PSI Energy) Series 2005B
3.53%, 01/02/08 (a)(b)		10,500		10,500
Highway RB
3.60%, 01/03/08 (a)(b)(c)(d)		57,565		57,565
Highway Refunding RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
3.50%, 01/03/08 (a)(b)(c)(d)		9,035		9,035
IDRB (Big Sky Park) Series 1999
3.53%, 01/03/08 (a)(b)		3,800		3,800
State Revolving Fund Program Series 2006B
3.60%, 01/03/08 (a)(c)(d)		5,630		5,630
Indiana Health Facility Financing Auth
Hospital RB (Community Hospital Network) Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
Hospital RB (Sisters of St Francis Health Services) Series 1999A
3.48%, 01/03/08 (a)(b)(c)(d)		7,605		7,605
Insured RB Series 1985A
3.53%, 01/02/08 (a)(b)(c)		2,280		2,280
Indiana HFA
S/F Mortgage RB Series 2002B
3.55%, 01/01/08 (a)(c)(d)		1,840		1,840
S/F Mortgage RB Series 2004B2 & 2005C2
3.54%, 01/03/08 (a)(c)(d)		5,080		5,080
Indiana Housing & Community Dev Agency
S/F Mortgage RB Series 2006D1
3.53%, 01/03/08 (a)(c)(d)		14,000		14,000
Indiana Municipal Power Agency
Power Supply System RB Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Indianapolis
M/F Housing RB (Nora Pines Apts) Series 2001
3.52%, 01/03/08 (a)(b)		9,275		9,275
Thermal Energy System RB Series 2001A
3.51%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
Indianapolis Local Public Improvement Bond Bank
Bonds (Indianapolis Airport Auth) Series 2005B
3.52%, 01/03/08 (a)(b)(c)(d)		3,125		3,125
Bonds (Waterworks) Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		4,245		4,245
RB (Indianapolis Airport Auth) Series 2004I
3.54%, 01/03/08 (a)(b)(c)(d)		11,295		11,295
IPS Multi-School Building Corp
First Mortgage Refunding Bonds Series 2007
3.59%, 01/03/08 (a)(b)(c)(d)		13,235		13,235
Jay School Building Corp
First Mortgage Refunding Bonds Series 2006
3.50%, 01/02/08 (a)(b)(c)(d)		4,555		4,555
St Joseph Cnty
Economic Development RB (Corby Apts) Series 1997B
3.56%, 01/02/08 (a)(b)		3,325		3,325
Economic Development RB (Pin Oaks Apts) Series 1997A
3.56%, 01/02/08 (a)(b)		1,000		1,000
Economic Development RB (Western Manor Apts) Series 1997C
3.56%, 01/02/08 (a)(b)		2,130		2,130
RB (Univ of Notre Dame du Lac) Series 2007
3.35%, 01/03/08 (a)(c)		16,000		16,000
Vigo Cnty
Economic Development RB (Sisters of Providence) Series 2001
3.53%, 01/03/08 (a)(b)		3,500		3,500
Wayne Township School Building Corp
First Mortgage Refunding Bonds Series 2006
3.51%, 01/03/08 (a)(b)(c)(d)		5,145		5,145

See financial notes 21

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Westfield Washington Multi-School Building Corp
First Mortgage Bonds Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		5,205		5,205
				259,350
Iowa 0.6%
Des Moines Metropolitan Wastewater Reclamation Auth
Sewer RB Series 2004B
3.48%, 01/03/08 (a)(b)(c)(d)		6,465		6,465
Iowa Finance Auth
M/F Housing RB (Country Club Village) Series 2006
3.59%, 01/03/08 (a)(b)		11,370		11,370
Iowa Higher Education Loan Auth
Private College Facility RB (Graceland Univ) Series 2003
3.53%, 01/03/08 (a)(b)		2,000		2,000
Iowa School Corp
Cash Anticipation Program Warrant Certificates Series 2007-2008A
3.73%, 06/27/08 (b)		20,000		20,072
Iowa Student Loan Liquidity Corp
RB Series 1988B
3.53%, 01/02/08 (a)(b)(c)		43,500		43,500
Tobacco Settlement Auth
Asset-Backed Bonds Series C
3.51%, 01/03/08 (a)(b)(c)(d)		11,820		11,820
				95,227
Kansas 0.1%
Kansas Development Finance Auth
M/F Housing RB (Saddlewood Apts) Series 2004M
3.56%, 01/03/08 (a)(b)		7,600		7,600
Sedgwick & Shawnee Counties
S/F Mortgage RB Series 2007A2
3.55%, 01/02/08 (a)(c)(d)		10,520		10,520
				18,120
Kentucky 2.0%
Boyle Cnty
Hospital RB (Ephraim McDowell Health) Series 2006
3.42%, 01/03/08 (a)(b)		8,500		8,500
Campbell, Kenton & Boone Counties Sanitation District #1
RB Series 2007
3.50%, 01/02/08 (a)(b)(c)(d)		10,490		10,490
Elizabethtown
IDRB (ALTEC) Series 1997
3.50%, 01/02/08 (a)(b)		3,000		3,000
Jefferson Cnty
M/F Housing Refunding RB (Camden Brookside Apts) Series 2002
3.45%, 01/03/08 (a)(b)		8,900		8,900
Kentucky Asset/Liability Commission
General Fund Project Notes Series 2007B
3.55%, 01/03/08 (a)(b)(c)(d)		14,955		14,955
General Fund TRAN Series 2007A
3.70%, 06/26/08		25,000		25,092
3.71%, 06/26/08		75,000		75,277
Project Notes (2005 General Fund) Second Series A1 & A2
3.55%, 02/07/08 (c)		12,500		12,500
3.35%, 02/11/08 (c)		35,000		35,000
3.10%, 04/03/08 (c)		40,000		40,000
Kentucky Higher Education Student Loan Corp
Insured RB Series 1991E
3.48%, 01/02/08 (a)(b)(c)		12,600		12,600
Insured RB Series 1996A
3.48%, 01/02/08 (a)(b)(c)		23,850		23,850
Kentucky Housing Corp
RB Series 2002A
3.55%, 01/02/08 (a)(c)(d)		2,350		2,350
Kentucky Municipal Power Auth
Power Agency System RB (Prairie State) Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		22,795		22,795
Kentucky State Property & Buildings Commission
Refunding RB Project No.84
3.51%, 01/03/08 (a)(b)(c)(d)		24,840		24,840
Louisville & Jefferson Cnty Metro Sewer District
Sewage & Drainage System RB Series 1999A
3.56%, 01/03/08 (a)(b)(c)(d)		5,600		5,600
Louisville & Jefferson Cnty Metropolitan Government
Health System RB (Norton Healthcare) Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		820		820
Richmond
IDRB (Mikron) Series 1995
3.53%, 01/02/08 (a)(b)		2,500		2,500
				329,069
Louisiana 1.9%
East Baton Rouge
Pollution Control Refunding RB
3.65%, 01/02/08 (a)		1,100		1,100
Ernest N. Morial-New Orleans Exhibit Hall Auth
Sr Subordinate Special Tax Bonds Series 2003A
3.53%, 01/03/08 (a)(b)(c)(d)		4,995		4,995
Louisiana
Gas & Fuels Tax RB Series 2005A
3.51%, 01/03/08 (a)(b)(c)(d)		3,420		3,420
3.55%, 01/03/08 (a)(b)(c)(d)		11,975		11,975
Gas & Fuels Tax RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		20,845		20,845
3.50%, 01/03/08 (a)(b)(c)(d)		20,785		20,785
3.55%, 01/03/08 (a)(b)(c)(d)		56,824		56,824
GO Refunding Bonds Series 2005A
3.51%, 01/03/08 (a)(b)(c)(d)		6,275		6,275

22 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Louisiana Citizens Property Insurance Corp
Assessment RB Series 2006B
3.75%, 01/02/08 (a)(b)(c)(d)		16,660		16,660
Louisiana Local Government Environmental Facilities & Community Development Auth
RB (Univ of Louisiana-Monroe) Series 2004C
3.45%, 01/03/08 (a)(b)		10,000		10,000
Louisiana Public Facilities Auth
Refunding RB (Tulane Univ) Series 2007A2
3.54%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
Louisiana State Univ Agricultural & Mechanical College
Auxiliary RB Series 2006
3.65%, 01/03/08 (a)(b)(c)(d)		9,210		9,210
New Orleans
GO Refunding Bonds Series 2005
3.70%, 01/03/08 (a)(b)(c)(d)		7,940		7,940
New Orleans Aviation Board
Refunding Bonds Series 1993B
3.50%, 01/02/08 (a)(b)(c)		3,855		3,855
New Orleans IDB
M/F Housing RB (3700 Orleans) Series 2000
3.52%, 01/03/08 (a)(b)		29,000		29,000
St James Parish
Pollution Control Refunding RB (Texaco) Series 1988A
3.54%, 02/12/08		59,030		59,030
Pollution Control Refunding RB (Texaco) Series 1988B
3.54%, 02/12/08		39,030		39,030
				310,939
Maine 0.2%
Maine Finance Auth
RB (Jackson Laboratory) Series 2002
3.49%, 01/03/08 (a)(b)		5,320		5,320
Solid Waste Disposal RB (Casella Waste Systems) Series 2005
3.53%, 01/03/08 (a)(b)		12,500		12,500
Maine Health & Educational Facilities Auth
RB Series 2006F
3.48%, 01/03/08 (a)(b)(c)(d)		15,105		15,105
Maine Housing Auth
General Housing Draw Down Bonds Series 2005A
3.61%, 01/03/08 (a)(c)(d)		2,920		2,920
General Housing Draw Down Bonds Series 2005B
3.54%, 01/03/08 (a)(c)(d)		350		350
3.54%, 01/03/08 (a)(c)(d)		100		100
Mortgage Purchase Bonds Series 2002F2
3.58%, 01/03/08 (a)(c)(d)		2,815		2,815
				39,110
Maryland 0.8%
Baltimore
RB (Wastewater)
3.60%, 01/03/08 (a)(b)(c)(d)		2,115		2,115
Howard Cnty
GO Bonds
3.60%, 01/03/08 (a)(c)(d)		5,130		5,130
Maryland Community Development Administration
RB Series 2007D
3.55%, 01/02/08 (a)(c)(d)		14,895		14,895
S/F Program Bonds Third Series 1999
3.52%, 01/03/08 (a)(c)(d)		28,705		28,705
Maryland Economic Development Corp
IDRB (Dixon Valve & Coupling Co) Series 1998
3.55%, 01/02/08 (a)(b)		490		490
RB (Constellation Energy) Series 2007
3.53%, 01/03/08 (a)(b)		13,000		13,000
Maryland Energy Financing Administration
Limited Obligation Local District Cooling Facilities RB (Comfort Link) Series 2001
3.49%, 01/02/08 (a)(b)		10,000		10,000
Maryland Health & Higher Educational Facilities Auth
FHA Insured Mortgage RB (Western Maryland Health System) Series 2006A
3.80%, 03/27/08 (b)(c)(d)		14,760		14,760
Project & Refunding RB (Mercy Center) Series 1996
3.48%, 01/03/08 (a)(b)(c)(d)		18,185		18,185
RB (Johns Hopkins Univ) Series 2002A
3.50%, 01/03/08 (a)(c)(d)		15,105		15,105
Montgomery Cnty
Consolidated Public Improvement BAN Series 2006B
3.70%, 01/02/08 (a)(c)		2,000		2,000
				124,385
Massachusetts 3.3%
Franklin
BAN
3.55%, 03/27/08		10,050		10,060
Massachusetts
GO Bonds Consolidated Loan Series 1998C
3.47%, 01/03/08 (a)(b)(c)(d)		3,485		3,485
GO Bonds Consolidated Loan Series 2000C
3.66%, 01/03/08 (a)(c)(d)		1,200		1,200
GO Bonds Consolidated Loan Series 2001D
3.47%, 01/03/08 (a)(b)(c)(d)		2,785		2,785
GO Bonds Consolidated Loan Series 2004A
3.47%, 01/03/08 (a)(b)(c)(d)		3,950		3,950

See financial notes 23

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
GO Bonds Consolidated Loan Series 2006A
3.73%, 01/02/08 (a)(c)		600		600
GO Bonds Consolidated Loan Series 2006E
3.49%, 01/03/08 (a)(b)(c)(d)		2,500		2,500
GO Bonds Consolidated Loan Series 2007C
3.49%, 01/03/08 (a)(b)(c)(d)		20,000		20,000
GO Refunding Bonds Series 2003D
3.48%, 01/03/08 (a)(c)(d)		10,985		10,985
GO Refunding Bonds Series 2006C
3.78%, 03/06/08 (b)(c)(d)		8,485		8,485
Special Obligation Dedicated Tax Refunding RB Series 2005
3.47%, 01/03/08 (a)(b)(c)(d)		29,700		29,700
3.54%, 01/03/08 (a)(b)(c)(d)		2,325		2,325
TECP Series E
3.32%, 03/07/08 (c)		18,700		18,700
TECP Series G
3.32%, 03/07/08 (c)		17,500		17,500
Massachusetts Bay Transportation Auth
Assessment Bonds Series 2006A
3.47%, 01/03/08 (a)(c)(d)		14,980		14,980
Sr Sales Tax Bonds Series 2004C
3.49%, 01/03/08 (a)(c)(d)		5,480		5,480
Sr Sales Tax Bonds Series 2006A
3.48%, 01/03/08 (a)(c)(d)		4,200		4,200
Sr Sales Tax Bonds Series 2006B
3.50%, 01/02/08 (a)(c)(d)		4,970		4,970
Massachusetts Development Finance Agency
M/F Housing RB (Archstone Reading Apts) Series 2004A
3.49%, 01/02/08 (a)(b)		12,560		12,560
M/F Housing RB (Midway Studios) Series 2003A
3.50%, 01/03/08 (a)(b)		10,000		10,000
M/F Housing Refunding RB (Kensington at Chelmsford) Series 2002
3.52%, 01/03/08 (a)(b)		16,050		16,050
RB (Boston Children’s Museum) Series 2006
3.45%, 01/02/08 (a)(b)		500		500
RB (College of Holy Cross) Series 2002
3.49%, 01/03/08 (a)(b)(c)(d)		1,600		1,600
RB (FIBA Technologies) Series 2003
3.49%, 01/02/08 (a)(b)		1,590		1,590
RB (Gordon College) Series 2002
3.47%, 01/03/08 (a)(b)		2,015		2,015
RB (YMCA of Greater Boston) Series 2004A
3.43%, 01/03/08 (a)(b)		1,500		1,500
Massachusetts Health & Educational Facilities Auth
RB (Baystate Medical Center) Series D
3.66%, 01/03/08 (a)(b)(c)(d)		18,249		18,249
RB (Massachusetts Institute of Technology) Series K
3.50%, 01/03/08 (a)(c)(d)		6,710		6,710
RB (Winchester Hospital) Series D
3.49%, 01/03/08 (a)(b)(c)(d)		3,170		3,170
RB (Worchester City Campus Corp - Univ of Massachusetts) Series 2007F
3.54%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Massachusetts HFA
Housing Bonds Series 2003S
3.60%, 01/02/08 (a)(c)(d)		7,285		7,285
Housing Bonds Series 2005E
3.55%, 01/03/08 (a)(c)(d)		4,095		4,095
Housing Bonds Series 2006B
3.55%, 01/03/08 (a)(c)(d)		11,315		11,315
RB Series 2005H
3.60%, 01/02/08 (a)(c)(d)		5,930		5,930
Rental Housing Bonds Series 2005A
3.54%, 01/03/08 (a)(b)(c)(d)		20,030		20,030
Rental Housing Mortgage RB Series 2002F
3.52%, 01/03/08 (a)(b)(c)(d)		12,635		12,635
3.57%, 01/03/08 (a)(b)(c)(d)		5,315		5,315
S/F Housing RB Series 122
3.49%, 01/03/08 (a)(c)(d)		10,110		10,110
S/F Housing RB Series 126
3.49%, 01/03/08 (a)(c)(d)		6,770		6,770
3.50%, 01/03/08 (a)(c)(d)		3,395		3,395
Massachusetts Port Auth
RB Series 2005 A&C
3.49%, 01/03/08 (a)(b)(c)(d)		6,845		6,845
RB Series 2005A
3.45%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Massachusetts School Building Auth
CP Series A
3.35%, 02/06/08 (b)		35,000		35,000
Dedicated Sales Tax Bonds Series 2005A
3.53%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Dedicated Sales Tax Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		9,990		9,990
3.48%, 01/03/08 (a)(b)(c)(d)		20,850		20,850
3.48%, 01/03/08 (a)(b)(c)(d)		9,000		9,000
3.52%, 01/03/08 (a)(b)(c)(d)		50,000		50,000
Massachusetts Turnpike Auth
Subordinate RB (Metropolitan Highway System) Series 1999A
3.49%, 01/03/08 (a)(b)(c)(d)		2,335		2,335
Massachusetts Water Pollution Abatement Trust
Pool Program Bonds Series 10
3.48%, 01/03/08 (a)(c)(d)		3,815		3,815
Pool Program Bonds Series 12
3.54%, 01/03/08 (a)(c)(d)		500		500
Massachusetts Water Resources Auth
General RB
3.57%, 01/03/08 (a)(b)(c)(d)		49,905		49,905
General RB Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		4,000		4,000

24 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
General Refunding RB Series 2005B
3.46%, 01/03/08 (a)(b)(c)(d)		9,415		9,415
				539,384
Michigan 3.0%
Detroit
Refunding RB Second Lien Series 2006C
3.50%, 01/03/08 (a)(b)(c)(d)		16,965		16,965
Second Lien Refunding RB Series 2006C
3.50%, 01/03/08 (a)(b)(c)(d)		4,900		4,900
Sewage Disposal System RB Series 1999A
3.55%, 01/03/08 (a)(b)(c)(d)		30,400		30,400
Sewage Disposal System Second Lien RB Series 2001B
3.50%, 01/03/08 (a)(b)(c)(d)		4,260		4,260
Detroit SD
School Building & Site Improvement Bonds Series 2001A
3.48%, 01/03/08 (a)(b)(c)(d)		83,150		83,150
3.50%, 01/03/08 (a)(b)(c)(d)		4,620		4,620
School Building & Site Improvement Refunding Bonds Series 1998B
3.55%, 01/03/08 (a)(b)(c)(d)		10,260		10,260
School Building & Site Improvement Refunding Bonds Series 2005A
3.48%, 01/03/08 (a)(b)(c)(d)		10,855		10,855
3.50%, 01/03/08 (a)(b)(c)(d)		12,785		12,785
3.50%, 01/03/08 (a)(b)(c)(d)		8,500		8,500
Detroit Sewage Disposal System
Sr Lien Refunding RB Series 2003A
3.50%, 01/02/08 (a)(b)(c)(d)		15,050		15,050
Michigan
Grant Anticipation Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		10,100		10,100
3.56%, 01/03/08 (a)(b)(c)(d)		17,670		17,670
Grant Anticipation Notes Series 2007
3.50%, 01/02/08 (a)(b)(c)(d)		8,700		8,700
Michigan Higher Education Facilities Auth
Limited Obligation Refunding RB (Hope College) Series 2004
3.43%, 01/03/08 (a)(b)		3,585		3,585
Michigan Housing Development Auth
S/F Mortgage RB Series 2007D
3.05%, 09/03/08		52,800		52,800
S/F Mortgage RB Series 2007E
3.54%, 01/02/08 (c)		40,000		40,000
S/F Mortgage RB Series 2007F
3.54%, 01/02/08 (a)(c)		30,000		30,000
Michigan Job Development Auth
Limited Obligation RB (Frankenmuth Bavarian Inn Motor Lodge) Series 1985
3.70%, 01/02/08 (a)(b)		7,100		7,100
Michigan Municipal Bond Auth
Revenue Notes Series 2007B2
3.68%, 08/20/08 (b)		35,000		35,175
Michigan State Building Auth
Refunding RB (Facilities Program) Series 2005I
3.45%, 01/03/08 (a)(b)(c)(d)		4,600		4,600
Refunding RB Series 2006IA
3.50%, 01/03/08 (a)(b)(c)(d)		9,400		9,400
Michigan State Hospital Financing Auth
Hospital Refunding RB (Henry Ford Health System) Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		1,670		1,670
RB (McLaren Health Care) Series 2005B
3.50%, 01/03/08 (a)(b)(c)(d)		11,500		11,500
Michigan Strategic Fund
Limited Obligation RB (American Cancer Society) Series 2000
3.48%, 01/03/08 (a)(b)		3,455		3,455
Limited Obligation RB (United Machining) Series 1998
3.58%, 01/03/08 (a)(b)		4,000		4,000
Limited Obligation Refunding RB (Detroit Edison Co) Series 1999C
3.57%, 01/03/08 (a)(b)(c)(d)		9,245		9,245
Oakland Cnty
Limited Obligation RB (Husky Envelope Products) Series 1999
3.58%, 01/03/08 (a)(b)		1,320		1,320
Wayne Cnty Airport Auth
Airport Jr Lien RB Series 2001
3.49%, 01/03/08 (a)(b)(c)		600		600
Airport RB Series 2005
3.51%, 01/03/08 (a)(b)(c)(d)		4,485		4,485
3.52%, 01/03/08 (a)(b)(c)(d)		3,640		3,640
3.54%, 01/03/08 (a)(b)(c)(d)		2,750		2,750
3.62%, 01/03/08 (a)(b)(c)(d)		13,020		13,020
3.66%, 01/03/08 (a)(b)(c)(d)		5,190		5,190
Airport RB Series 2007
3.62%, 01/03/08 (a)(b)(c)(d)		9,500		9,500
				491,250
Minnesota 0.9%
Eden Prairie
M/F Housing RB (Eden Prairie Leased Housing Associates I) Series 2003A
3.52%, 01/04/08 (a)(b)		17,500		17,500
Hennepin Cnty
First Lien Sales Tax RB (Ballpark Project) Series 2007A
3.50%, 01/03/08 (a)(c)(d)		7,415		7,415

See financial notes 25

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Hennepin Cnty Housing & Redevelopment Auth
M/F Housing Refunding RB (Stone Arch Apts) Series 2002
3.59%, 01/03/08 (a)(b)		2,800		2,800
Mendota Heights
Refunding IDRB (Dakota Business Plaza) Series 2000
3.62%, 01/03/08 (a)(b)		2,300		2,300
Minneapolis-St Paul Metropolitan Airports Commission
RB Series 2000B
3.54%, 01/03/08 (a)(b)(c)(d)		5,225		5,225
Subordinate Refunding RB Series 2005B
3.62%, 01/03/08 (a)(b)(c)(d)		5,940		5,940
Minnesota
Tax & Aid Anticipation Borrowing Program COP Series 2007
3.64%, 08/28/08		13,000		13,071
Minnesota Agricultural & Economic Development Board
RB (Evangelical Lutheran Good Samaritan Society) Series 1996
3.47%, 01/03/08 (a)(b)		7,200		7,200
Minnesota HFA
Residential Housing Finance Bonds Series 2003B
3.48%, 01/03/08 (a)(c)		6,000		6,000
Residential Housing Finance Bonds Series 2005M
3.48%, 01/03/08 (a)(c)		14,960		14,960
Minnesota Higher Education Facilities Auth
RB (Hamline Univ of Minnesota) Series Six-E1
3.44%, 01/03/08 (a)(b)		2,370		2,370
RB (Hamline Univ of Minnesota) Series Six-E2
3.44%, 01/03/08 (a)(b)		3,860		3,860
Minnesota Housing Finance Auth
Limited Obligation Bonds Draw-down Series 2007-2
3.53%, 01/03/08 (a)(b)(c)(d)		6,300		6,300
Minnesota Public Facilities Auth
Clean Water RB Series 2007A
3.51%, 01/03/08 (a)(c)(d)		21,265		21,265
St Louis Park
M/F Housing RB (At The Park) Series 2002A
3.57%, 01/04/08 (a)(b)		3,300		3,300
St Paul Housing & Redevelopment Auth
District Heating RB Series 1999D
3.47%, 01/04/08 (a)(b)		2,760		2,760
Western Minnesota Municipal Power Agency
Power Supply RB Series 2006A
3.80%, 07/10/08 (b)(c)(d)		27,820		27,820
				150,086
Mississippi 0.7%
Jackson Cnty
Port Facility Refunding RB (Chevron USA) Series 1993
3.74%, 01/02/08 (a)		1,400		1,400
Mississippi Business Finance Corp
IDRB (Electric Mills Wood Preserving) Series 1999
3.57%, 01/03/08 (a)(b)		5,000		5,000
RB (Chevron USA) Series 2007A
3.40%, 01/02/08 (a)		42,000		42,000
RB (Chevron USA) Series 2007B
3.45%, 01/02/08 (a)		13,000		13,000
RB (Chevron USA) Series 2007C
3.45%, 01/02/08 (a)		6,500		6,500
RB (Chevron USA) Series 2007E
3.44%, 01/02/08 (a)		20,000		20,000
RB (Gulfport Promenade) Series 2007
3.50%, 01/03/08 (a)(b)		7,000		7,000
Mississippi Development Bank
Special Obligation Bonds (Madison Cnty Highway Construction) Series 2006
3.51%, 01/03/08 (a)(b)(c)(d)		18,410		18,410
Mississippi Valley State Univ
Educational Building Corporation RB Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		9,405		9,405
				122,715
Missouri 1.9%
Jackson Cnty
Special Obligation Bonds (Harry S. Truman Sports Complex) Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		8,100		8,100
3.59%, 01/03/08 (a)(b)(c)(d)		12,485		12,485
Kirkwood SD Educational Facilities Auth
Leasehold RB Series 2005B
3.80%, 03/14/08 (b)(c)(d)		7,925		7,925
Metropolitan St. Louis Sewer District
Wastewater System RB Series 2006C
3.50%, 01/03/08 (a)(b)(c)(d)		17,575		17,575
Missouri Board of Public Buildings
Special Obligation Bonds Series 2006A
3.50%, 01/03/08 (a)(c)(d)		11,580		11,580
Missouri Environmental Improvement & Energy Resources Auth
Water Facilities Refunding RB (Missouri-American Water Co) Series 2006
3.53%, 01/03/08 (a)(b)(c)(d)		15,330		15,330
Missouri Health & Educational Facilities Auth
Educational Facilities RB (Washington Univ) Series 2007A
3.50%, 01/03/08 (a)(c)(d)		4,570		4,570
Health Facilities RB (SSM Health Care) Series 2005B
3.55%, 01/03/08 (a)(c)(d)		39,400		39,400
Health Facilities RB (SSM Health Care) Series 2005C1
3.50%, 01/02/08 (a)(b)(c)		5,915		5,915

26 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Missouri Higher Education Loan Auth
Student Loan RB Sr Series 2005A
3.53%, 01/03/08 (a)(b)(c)		9,000		9,000
Missouri Highway & Transportation Commission
First Lien State Road Bonds Series 2006B
3.51%, 01/03/08 (a)(c)(d)		19,120		19,120
Sr Lien Refunding State Road Bonds Series 2006
3.48%, 01/03/08 (a)(c)(d)		5,000		5,000
Missouri Housing Development Commission
S/F Mortgage RB Series 2004A1
3.54%, 01/03/08 (a)(c)(d)		3,640		3,640
Missouri Joint Municipal Electric Utility Commission
Power Project RB (Prairie State) Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		12,215		12,215
Springfield
Public Utility RB Series 2006
3.54%, 01/03/08 (a)(b)(c)(d)		6,790		6,790
3.55%, 01/03/08 (a)(b)(c)(d)		9,985		9,985
3.75%, 02/28/08 (a)(b)(c)(d)		30,555		30,555
St Charles Cnty IDA
M/F Housing Refunding RB (Time Centre Apts Phase I) Series 2004A
3.48%, 01/03/08 (a)(b)		15,600		15,600
M/F Housing Refunding RB (Time Centre Apts Phase II) Series 2004B
3.52%, 01/03/08 (a)(b)		4,500		4,500
St Louis
Airport RB
3.60%, 01/03/08 (a)(b)(c)(d)		5,600		5,600
St Louis IDA
IDRB (Kessler Container) Series 1997A
3.53%, 01/03/08 (a)(b)		1,500		1,500
M/F Housing RB (Whispering Lakes Apts) Series 1995
3.52%, 01/03/08 (a)(b)		7,435		7,435
M/F Housing Refunding RB (Merchandise Mart Apts) Series 2005A
3.52%, 01/03/08 (a)(b)		10,475		10,475
Univ of Missouri
Capital Projects Notes Series FY 2007-2008A
3.70%, 06/30/08		50,000		50,191
Washington IDA
IDRB (Pauwels Transformers) Series 1995
3.59%, 01/03/08 (a)(b)		2,200		2,200
				316,686
Montana 0.0%
Forsyth
Pollution Control Refunding RB (NW Corp Colstrip) Series 2006
3.57%, 01/03/08 (a)(b)(c)(d)		3,715		3,715
Montana State Health Facility Auth
Hospital RB (Deaconess-Billings Clinic Health System) Series 1994
3.54%, 01/02/08 (a)(b)(c)(d)		3,500		3,500
				7,215
Nebraska 1.0%
Central Plains Energy Project
Gas Project RB (Project #1)
3.84%, 01/03/08 (a)(c)(d)		5,800		5,800
Lincoln
Electric System RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		36,030		36,030
Nebraska Public Power District
General RB Series 2006A
3.60%, 03/13/08 (b)(c)(d)		12,515		12,515
3.78%, 03/13/08 (b)(c)(d)		12,405		12,405
Omaha Public Power District
Electric System Subordinated RB Series 2006B
3.55%, 01/03/08 (a)(b)(c)(d)		5,073		5,073
Separate Electric System RB Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		34,390		34,390
Public Power General Agency
RB (Whelan Energy Center Unit 2) Series 2007A
3.78%, 07/10/08 (b)(c)(d)		47,600		47,600
Stanton Cnty
IDRB (Nucor Corp) Series 1996
3.59%, 01/02/08 (a)		19,300		19,300
				173,113
Nevada 3.1%
Clark Cnty
Airport Passenger Facility Charge RB Series 2007A2
3.80%, 03/27/08 (b)(c)(d)		35,315		35,315
Airport Passenger Facility Charge Refunding RB Series 2005A2
3.53%, 01/02/08 (a)(b)(c)		38,000		38,000
GO (Limited Tax) Bank Bonds Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		7,015		7,015
3.60%, 01/03/08 (a)(b)(c)(d)		8,970		8,970
3.75%, 03/13/08 (b)(c)(d)		26,355		26,355
GO Bank Refunding Bonds Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		9,945		9,945
IDRB (Southwest Gas Corp) Series 2003A
3.55%, 01/02/08 (a)(b)		44,000		44,000
Clark Cnty SD
GO (Limited Tax) Building Bonds 2007C
3.55%, 01/02/08 (a)(c)(d)		12,000		12,000
GO (Limited Tax) Building Bonds Series 2001F
3.49%, 01/03/08 (a)(b)(c)(d)(g)		21,715		21,715

See financial notes 27

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
GO (Limited Tax) Building Bonds Series 2005C
3.51%, 01/03/08 (a)(b)(c)(d)		5,920		5,920
GO (Limited Tax) Refunding Bonds Series 2007A
3.50%, 01/02/08 (a)(b)(c)(d)		15,405		15,405
3.59%, 01/03/08 (a)(b)(c)(d)		5,400		5,400
Las Vegas
Various Purpose GO Bonds Series 2006B
3.48%, 01/03/08 (a)(b)(c)(d)		8,285		8,285
Las Vegas Convention & Visitors Auth
Refunding RB Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		4,120		4,120
Las Vegas Valley Water District
GO (Limited Tax) Water CP Series 2004 A&B
3.35%, 02/05/08 (c)		10,300		10,300
3.52%, 02/07/08 (c)		8,900		8,900
3.35%, 02/11/08 (c)		20,000		20,000
2.70%, 03/06/08 (c)		14,100		14,100
GO (Limited Tax) Water Improvement Bonds Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		28,085		28,085
GO Water Improvement & Refunding Bonds Series 2003A
3.49%, 01/03/08 (a)(b)(c)(d)		21,395		21,395
Nevada
GO Water Refunding Bonds Series 2006D
3.59%, 01/03/08 (a)(b)(c)(d)		8,840		8,840
Nevada Department of Business & Industry
RB (LVE Energy Partners) Series 2007
3.60%, 01/03/08 (a)(b)		13,100		13,100
Nevada Housing Division
M/F Housing RB (Apache Pines Apts) Series 1999A
3.55%, 01/03/08 (a)(b)		7,415		7,415
M/F Housing RB (Banbridge Apts) Series 2000A
3.55%, 01/03/08 (a)(b)		3,960		3,960
M/F Housing RB (Silver Pines Apts) Series 2002A
3.48%, 01/03/08 (a)(b)		5,500		5,500
M/F Housing RB (St Rose Sr Apts) Series 2002A
3.55%, 01/03/08 (a)(b)(f)		14,770		14,770
M/F Housing Refunding RB (Oakmont) Series 2002
3.55%, 01/03/08 (a)(b)		4,350		4,350
Nevada System of Higher Education
Univ RB Series 2005B
3.50%, 01/03/08 (a)(b)(c)(d)		10,490		10,490
3.59%, 01/03/08 (a)(b)(c)(d)		10,650		10,650
North Las Vegas
GO Building Bonds Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		30,660		30,660
Truckee Meadows Water Auth
Water Refunding RB Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		9,300		9,300
Water Refunding RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		5,895		5,895
Water Revenue CP Series 2006B
3.53%, 01/08/08 (b)		5,300		5,300
Washoe Cnty
GO Refunding Bonds (Convention Center) Series 2001A
3.49%, 01/03/08 (a)(b)(c)(d)(g)		31,000		31,000
				506,455
New Hampshire 0.3%
New Hampshire Business Finance Auth
Solid Waste Disposal RB (Lonza Biologics) Series 2003
3.51%, 01/03/08 (a)(b)		30,000		30,000
New Hampshire Health & Educational Facilities Auth
RB (Easter Seals New Hampshire) Series 2004A
3.49%, 01/03/08 (a)(b)		6,060		6,060
RB (Frisbie Memorial Hospital) Series 2005
3.47%, 01/03/08 (a)(b)		3,800		3,800
RB (Riverwoods) Series 2003
3.44%, 01/03/08 (a)(b)		3,085		3,085
New Hampshire HFA
S/F Mortgage Acquisition RB Series 1997C
3.52%, 01/03/08 (a)(b)(c)(d)		935		935
S/F Mortgage Acquisition RB Series 1998B
3.52%, 01/01/08 (a)(b)(c)(d)		9,730		9,730
				53,610
New Jersey 0.8%
New Jersey Economic Development Auth
Exempt Facility RB (Chambers Co-Generation)
2.93%, 03/10/08 (b)		12,100		12,100
Exempt Facility RB (Keystone)
3.22%, 02/11/08 (b)		5,000		5,000
3.26%, 03/05/08 (b)		7,000		7,000
RB (Hamilton Industrial Development) Series 1998
3.53%, 01/02/08 (a)(b)		4,755		4,755
RB (Stone Brothers Secaucus) Series 2001
3.47%, 01/04/08 (a)(b)		1,495		1,495
Refunding RB (Gloucester Marine Terminal) Series 2006B
3.52%, 01/03/08 (a)(b)(c)(d)		2,800		2,800
Thermal Energy Facilities RB (Marina Energy) Series A
3.43%, 01/03/08 (a)(b)		1,400		1,400
New Jersey Tobacco Settlement Financing Corp
Settlement Asset-Backed Bonds Series 2003
3.50%, 01/02/08 (a)(c)(d)		29,805		29,805

28 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
New Jersey Transportation Trust Fund Auth
Transportation System Bonds Series 2006A
3.47%, 01/03/08 (a)(b)(c)(d)		1,610		1,610
3.47%, 01/03/08 (a)(b)(c)(d)		9,940		9,940
Transportation System Bonds Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		46,810		46,810
Newark Housing Auth
Refunding Bonds Series 2007
3.45%, 01/03/08 (a)(b)(c)(d)		2,020		2,020
				124,735
New Mexico 0.7%
Farmington
Hospital RB (San Juan Regional Medical Center) Series 2004B
3.45%, 01/03/08 (a)(b)		5,000		5,000
Pollution Control Refunding RB (Arizona Public Service Co-Four Corners) Series 1994B
3.50%, 01/02/08 (a)(b)		2,600		2,600
New Mexico
TRAN Series 2007-2008
3.72%, 06/30/08		60,000		60,223
New Mexico Mortgage Finance Auth
S/F Mortgage Program Bonds Draw Down Issue 2007
3.51%, 01/03/08 (a)(b)(c)(d)		35,528		35,528
Santa Fe
Tax Subordinate Lien Wastewater System RB Series 1997B
3.49%, 01/02/08 (a)(b)		15,900		15,900
				119,251
New York 4.8%
Glen Cove Housing Auth
Sr Living Facility RB (The Mayfair at Glen Cove) Series 1996
3.49%, 01/03/08 (a)(b)(c)(d)		5,535		5,535
Long Island Power Auth
Electric System RB Series 1998A
3.49%, 01/03/08 (a)(b)(c)(d)		2,110		2,110
Metropolitan Transportation Auth
Dedicated Tax Fund Bonds Series 2006B
3.49%, 01/03/08 (a)(b)(c)(d)		16,140		16,140
RB Series 2005B
3.75%, 03/20/08 (b)(c)(d)		7,845		7,845
RB Series 2005G1
3.56%, 01/02/08 (a)(b)		1,750		1,750
Transportation Revenue BAN Series CP1 A, B, C
2.83%, 02/06/08 (b)		23,000		23,000
New Rochelle IDA
RB (West End Phase I Facility) Series 2006
3.58%, 01/03/08 (a)(b)		9,000		9,000
New York City
GO Bonds Fiscal 1994 Series H4
3.45%, 01/02/08 (a)(b)		1,960		1,960
GO Bonds Fiscal 1998 Series D
3.50%, 01/02/08 (a)(b)(c)(d)		10		10
GO Bonds Fiscal 2001 Series B
3.48%, 01/03/08 (a)(b)(c)(d)		1,380		1,380
GO Bonds Fiscal 2004 Series F
3.51%, 01/03/08 (a)(b)(c)(d)		170,000		170,000
GO Bonds Fiscal 2005 Series O
3.48%, 01/03/08 (a)(c)(d)		18,350		18,350
GO Bonds Fiscal 2006 Series J1
3.49%, 01/03/08 (a)(b)(c)(d)		7,970		7,970
GO Bonds Fiscal 2007 Series C1
3.46%, 01/03/08 (a)(c)(d)(f)		7,000		7,000
GO Bonds Fiscal 2005 Series M & Fiscal 2006 Series I1
3.48%, 01/03/08 (a)(c)(d)		2,029		2,029
New York City Housing Development Corp
M/F Rental Housing RB (Sierra) Series 2003A
3.50%, 01/02/08 (a)(b)		18,585		18,585
M/F Rental Housing RB (The Nicole) Series 2005A
3.50%, 01/02/08 (a)(b)		10,200		10,200
New York City IDA
Refunding IDRB (Allway Tools) Series 1997
3.60%, 01/03/08 (a)(b)		1,215		1,215
Special Facility RB (Terminal One Group Association) Series 2005
3.59%, 01/03/08 (a)(b)(c)(d)		7,235		7,235
New York City Municipal Water Finance Auth
CP Series 6
3.53%, 01/17/08 (c)		50,000		50,000
3.54%, 01/17/08 (c)		60,000		60,000
Water & Sewer System RB Fiscal 2000 Series C
3.54%, 01/02/08 (a)(c)		1,600		1,600
Water & Sewer System RB Fiscal 2006 Series A
3.48%, 01/03/08 (a)(c)(d)		10,020		10,020
Water & Sewer System RB Fiscal 2008 Series AA
3.54%, 01/03/08 (a)(c)(d)		31,350		31,350
Water & Sewer System RB Fiscal 2008 Series BB1
3.45%, 01/02/08 (a)(c)		2,200		2,200
Water & Sewer System RB Fiscal 2008 Series BB3
3.53%, 01/02/08 (a)(c)		6,900		6,900
Water & Sewer System Second General Resolution RB Fiscal 2007 Series CC1
3.60%, 01/02/08 (a)(c)		6,500		6,500
Water & Sewer System Second General Resolution RB Fiscal 2007 Series CC2
3.60%, 01/02/08 (a)(c)		1,000		1,000
New York City Transitional Finance Auth
Building Aid RB Fiscal 2007 Series S1
3.54%, 01/03/08 (a)(b)(c)(d)		10,810		10,810

See financial notes 29

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Recovery Bonds Fiscal 2003 Series 3B
3.64%, 01/02/08 (a)(c)		4,000		4,000
New York State Environmental Facilities Corp
Clean Water & Drinking Water Revolving Funds RB Series 2007B
3.47%, 01/03/08 (a)(c)(d)		4,620		4,620
New York State HFA
Housing RB (Avalon Bowery Place I) Series 2006A
3.45%, 01/02/08 (a)(b)(f)		93,800		93,800
Housing RB (Chelsea Arms) Series 1998A
3.50%, 01/02/08 (a)(b)		5,000		5,000
Housing RB (Clinton Green North) Series 2005A
3.43%, 01/02/08 (a)(b)		2,000		2,000
Housing RB (Normandie Court II) Series 1999A
3.50%, 01/02/08 (a)(b)(f)		7,330		7,330
Housing RB (Tribeca Landing) Series 1997A
3.48%, 01/02/08 (a)(b)		18,400		18,400
Housing RB (Worth St) Series 2001A
3.50%, 01/02/08 (a)(b)		2,600		2,600
Housing RB (101 West End Ave) Series 1999A
3.46%, 01/02/08 (a)(b)		3,600		3,600
Housing RB (150 E 44th St) Series 2000A
3.46%, 01/02/08 (a)(b)		2,800		2,800
Housing RB (345 E 94th St) Series 1998A
3.45%, 01/02/08 (a)(b)		165		165
Housing RB (E 84th St) Series 1995A
3.42%, 01/02/08 (a)(b)		22,500		22,500
New York State Mortgage Agency
Homeowner Mortgage RB Series 79
3.50%, 01/03/08 (a)(c)(d)		14,995		14,995
Homeowner RB Series 150
3.02%, 01/03/08 (a)(c)		16,670		16,670
New York State Power Auth
CP Series 1
3.05%, 01/18/08 (c)		30,000		30,000
New York State Urban Development Corp
State Personal Income Tax RB Series 2005B
3.49%, 01/03/08 (a)(c)(d)		8,000		8,000
Port Auth of New York & New Jersey
Consolidated Bonds 135th Series
3.47%, 01/03/08 (a)(c)(d)		100		100
Consolidated Bonds 138th Series
3.48%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Consolidated Bonds 139th Series
3.54%, 01/03/08 (a)(b)(c)(d)		9,910		9,910
Consolidated Bonds 143rd Series
3.56%, 01/03/08 (a)(c)(d)		365		365
Consolidated Bonds 144th Series
3.49%, 01/03/08 (a)(c)(d)		5,000		5,000
Consolidated Bonds 146th Series
3.55%, 01/02/08 (a)(b)(c)(d)		10,410		10,410
3.78%, 03/06/08 (b)(c)(d)		22,040		22,069
Consolidated Bonds 148th Series
3.47%, 01/03/08 (a)(b)(c)(d)		4,350		4,350
Special Project Bonds (JFK International Air Terminal) Series 6
3.52%, 01/03/08 (a)(b)(c)(d)		4,895		4,895
TECP Series A
3.03%, 01/08/08 (c)		7,900		7,900
				797,173
North Carolina 1.5%
Durham Housing Auth
M/F Housing RB (Pendleton Townhomes) Series 2001
3.49%, 01/02/08 (a)(b)		5,230		5,230
Forsyth Cnty
RB (Plymouth Printing Co) Series 1998
3.55%, 01/02/08 (a)(b)		300		300
Guilford Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Metalcraft of Mayville SE Manufacturing) Series 1997
3.53%, 01/03/08 (a)(b)		700		700
Hertford Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Nucor Corp) Series 2000A
3.69%, 01/02/08 (a)		26,500		26,500
Johnston Cnty Industrial Facilities & Pollution Control Financing Auth
IDRB (Flanders Corp) Series 1998
3.53%, 01/02/08 (a)(b)		4,500		4,500
Mecklenburg Cnty
M/F Housing RB (Sycamore Green Apts) Series 2001
3.53%, 01/03/08 (a)(b)		8,240		8,240
North Carolina Capital Facilities Finance Agency
RB (Duke Univ) Series 2006A
3.50%, 01/03/08 (a)(c)(d)		8,400		8,400
Solid Waste Disposal RB (Duke Energy Carolinas) Series 2006A
3.53%, 01/03/08 (a)(b)		16,000		16,000
North Carolina Medical Care Commission
Health Care Facilities RB (Novant Health) Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)		11,420		11,420
3.49%, 01/03/08 (a)(b)(c)(d)		17,235		17,235

30 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB (Duke Univ Health System) Series 2006AB
3.55%, 01/03/08 (a)(c)(d)		20,000		20,000
RB (Mission Health Combined Group) Series 2007
3.50%, 01/03/08 (a)(c)(d)		17,490		17,490
North Carolina State Education Assistance Auth
Student Loan RB Series 2005A1
3.57%, 01/03/08 (a)(b)(c)		76,100		76,100
Student Loan RB Series 2005A3
3.53%, 01/03/08 (a)(b)(c)		8,995		8,995
Raleigh
Combined Enterprise System RB Series 2006A
3.50%, 01/03/08 (a)(c)(d)		6,400		6,400
Sampson Cnty Industrial Facilities & Pollution Control Finance Auth
IDRB (Crumpler Plastic Pipe) Series 1999
3.55%, 01/03/08 (a)(b)		1,200		1,200
Univ of North Carolina at Chapel Hill
General Revenue & Refunding RB Series 2005A
3.50%, 01/03/08 (a)(c)(d)		4,981		4,981
Wake Cnty Housing Auth
M/F Housing RB (Walnut Ridge Apts) Series 2000
3.49%, 01/02/08 (a)(b)		9,615		9,615
Wilmington Housing Auth
M/F Housing RB (Garden Lakes Estates) Series 1999
3.49%, 01/02/08 (a)(b)		6,540		6,540
				249,846
North Dakota 0.4%
North Dakota HFA
Home Mortgage Finance Program Series 2004B
3.54%, 01/02/08 (a)(c)		7,615		7,615
3.54%, 01/02/08 (a)(c)		12,990		12,990
Home Mortgage Finance Program Series 2005A
3.54%, 01/02/08 (a)(c)		22,100		22,100
Home Mortgage Finance Program Series 2005C
3.54%, 01/02/08 (a)(c)		12,000		12,000
Richland Cnty
Solid Waste Disposal RB (Minn-Dak Farmers Coop) Series 1996A
3.64%, 01/03/08 (a)(b)		3,440		3,440
Solid Waste Disposal RB (Minn-Dak Farmers Coop) Series 1996B
3.64%, 01/03/08 (a)(b)		315		315
				58,460
Ohio 1.5%
Akron, Bath & Copley Joint Township Hospital District
RB (Summa Health System) Series 2004B
3.43%, 01/03/08 (a)(b)		7,325		7,325
Cincinnati SD
Class room Facilities Construction & Improvement Refunding Bonds Series 2006
3.46%, 01/03/08 (a)(b)(c)(d)(g)		46,690		46,690
Cleveland
Airport System RB Series 2000C
3.78%, 03/13/08 (b)(c)(d)		31,845		31,845
Water RB Series 2007O
3.49%, 01/03/08 (a)(b)(c)(d)		14,850		14,850
Columbus SD
School Facilities Construction & Improvement Refunding Bonds Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		6,665		6,665
Cuyahoga Cnty
Economic Development RB (Hathaway Brown School) Series 1999
3.45%, 01/03/08 (a)(b)		11,345		11,345
Franklin Cnty
Hospital RB (The Children’s Hospital) Series 2003
3.46%, 01/03/08 (a)(b)(c)		5,000		5,000
Hamilton Cnty
Sales Tax Refunding Bonds Subordinate Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		23,415		23,415
3.50%, 01/03/08 (a)(b)(c)(d)		32,530		32,530
Northeast Ohio Regional Sewer District
Wastewater Improvement RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		5,585		5,585
Ohio
Common Schools GO Bonds
3.57%, 01/03/08 (a)(c)(d)		2,420		2,420
RB (Pooled Financing) Series 2004
3.44%, 01/03/08 (a)(b)		4,380		4,380
Ohio HFA
M/F Refunding RB (10 Wilmington Place) Series 1991B
3.47%, 01/04/08 (a)(b)(c)		8,945		8,945
Residential Mortgage RB Series 2001C
3.52%, 01/03/08 (a)(c)(d)		3,640		3,640
Ohio Higher Educational Facility Commission
Facility RB (Univ of Dayton) Series 2006
3.46%, 01/03/08 (a)(b)(c)(d)		8,025		8,025
RB (Pooled Financing) Series 2003B
3.44%, 01/03/08 (a)(b)		1,380		1,380

See financial notes 31

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB (The Cleveland Institute of Music) Series 2005
3.44%, 01/03/08 (a)(b)		5,000		5,000
Princeton City SD Board of Education, Ohio
Refunding Bonds Series 2006
3.64%, 01/02/08 (a)(b)(c)(d)		19,830		19,830
Rickenbacker Port Auth
Capital Funding RB (OASBO Expanded Asset Pooled Financing) Series 2002A
3.50%, 01/03/08 (a)(b)(c)(d)		5,700		5,700
				244,570
Oklahoma 0.5%
Muldrow Public Works Auth
IDRB (OK Foods) Series 1995
3.55%, 01/02/08 (a)(b)		3,500		3,500
Oklahoma Development Finance Auth
RB (Shawnee Funding) Series 1996
3.49%, 01/02/08 (a)(b)		3,100		3,100
Oklahoma Student Loan Auth
Bonds & Notes Series 1998A
3.55%, 01/02/08 (a)(b)(c)		18,100		18,100
Bonds & Notes Series 2000A4
3.55%, 01/02/08 (a)(b)(c)		20,945		20,945
Student Loan Bonds & Notes Series 1996A
3.45%, 01/02/08 (a)(b)(c)(f)		29,580		29,580
Payne Cnty Economic Development Auth
Student Housing RB (OSUF Phase III Student Housing) Series 2005
3.50%, 01/03/08 (a)(b)(c)		8,500		8,500
				83,725
Oregon 1.1%
Medford Hospital Facilities Auth
RB (Rogue Valley Manor) Series 2007
3.75%, 01/02/08 (a)(b)		22,250		22,250
Oregon
TAN Series 2007A
3.63%, 06/30/08		120,000		120,500
Oregon Economic Development Commission
RB (Pendleton Flour Mills) Series 1997-182
3.53%, 01/02/08 (a)(b)		2,420		2,420
Oregon Housing & Community Services Dept
S/F Mortgage RB Series 2004L
3.53%, 01/02/08 (a)(c)		5,000		5,000
S/F Mortgage RB Series 2005F
3.53%, 01/02/08 (a)(c)		13,685		13,685
Portland
First Lien Sewer System Refunding RB Series 2005A
3.48%, 01/03/08 (a)(b)(c)(d)		11,470		11,470
M/F Housing RB (Village of Lovejoy Fountain) Series 1997
3.51%, 01/02/08 (a)(b)		8,500		8,500
Second Lien Sewer System RB Series 2006B
3.50%, 01/03/08 (a)(b)(c)(d)		3,525		3,525
				187,350
Pennsylvania 5.8%
Abington SD
GO Bonds Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		6,430		6,430
Allegheny Cnty Airport Auth
Refunding RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		5,555		5,555
Allegheny Cnty Hospital Development Auth
RB (UPMC Senior Communities) Series 2003
3.42%, 01/03/08 (a)(b)		630		630
RB (UPMC) Series 2005B
3.56%, 01/15/08 (e)		12,534		12,534
RB (UPMC) Series 2007A2
3.60%, 01/03/08 (a)(c)(d)		68,995		68,995
RB (UPMC) Series 2007B1
3.50%, 01/03/08 (a)(b)(c)(d)		30,000		30,000
RB (UPMC) Series 2007B2
3.50%, 01/03/08 (a)(c)(d)		35,995		35,995
RB (UPMC) Series 2007C
3.50%, 01/03/08 (a)(b)(c)(d)		30,990		30,990
RB (UPMC) Series 2007D
3.60%, 01/03/08 (a)(c)(d)		13,340		13,340
Refunding RB (Pittsburgh International Airport) Series 2001B
3.49%, 01/03/08 (a)(b)(c)(d)		5,125		5,125
Beaver Cnty IDA
Pollution Control Refunding RB (FirstEnergy Nuclear Generation Corp) Series 2006A
3.74%, 01/02/08 (a)(b)		700		700
Bermudian Springs SD
GO Bonds Series 2005
3.44%, 01/03/08 (a)(b)(c)		1,800		1,800
Central Bucks SD
GO Bonds Series 2000A
3.48%, 01/03/08 (a)(b)(c)		3,530		3,530
Dauphin Cnty General Auth
RB (Education & Health Loan) Series 1997
3.47%, 01/03/08 (a)(b)(c)		1,575		1,575
RB (Hyatt Regency Pittsburgh International Airport Hotel) Series 1988
3.48%, 01/03/08 (a)(b)(c)(d)		27,392		27,392
Delaware Cnty IDA
RB (YMCA of Philadelphia) Series 1999
3.55%, 01/02/08 (a)(b)		75		75
Delaware River Joint Toll Bridge Commission
Bridge System RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		5,865		5,865

32 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Delaware Valley Regional Finance Auth
Local Government RB Series 1998A
3.50%, 01/03/08 (a)(b)(c)(d)		13,210		13,210
3.50%, 01/03/08 (a)(b)(c)(d)		500		500
RB Series 1998A
3.54%, 01/03/08 (a)(b)(c)(d)		11,070		11,070
Erie SD
GO Bonds Series 2001A
3.49%, 01/03/08 (a)(b)(c)(d)		26,695		26,695
Harrisburg Auth
Water Refunding RB Series 2002B
3.47%, 01/03/08 (a)(b)(c)		3,000		3,000
Water Refunding RB Series 2003A
3.57%, 01/03/08 (a)(b)(c)		13,600		13,600
Lancaster
GO Bonds Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		7,705		7,705
Luzerne Cnty IDA
RB (Methodist Homes) Series 2003
3.46%, 01/02/08 (a)(b)		185		185
Moon IDA
First Mortgage RB (Providence Point) Series 2007
3.50%, 01/03/08 (a)(b)		5,000		5,000
Northampton Cnty
Cnty Agreement RB Series 2001
3.49%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
RB (Binney & Smith) Series 1997B
3.50%, 01/02/08 (a)(b)		710		710
Norwin SD
GO Bonds Series 2001A
3.49%, 01/03/08 (a)(b)(c)(d)		1,800		1,800
Pennsylvania
GO Bonds First Series 2003
3.57%, 01/03/08 (a)(b)(c)(d)		3,645		3,645
GO Bonds Second Series 2002
3.57%, 01/03/08 (a)(b)(c)(d)		5,995		5,995
GO Bonds Second Series 2007A
3.50%, 01/03/08 (a)(c)(d)		15,265		15,265
GO Bonds Third Refunding Series 2004
3.50%, 01/03/08 (a)(b)(c)(d)		4,360		4,360
Pennsylvania Convention Center Auth
RB Series 1989A
3.55%, 01/03/08 (a)(b)(c)(d)		7,180		7,180
Pennsylvania Economic Development Finance Auth
RB (Amtrak) Series 2001B
3.55%, 01/03/08 (a)(b)		2,000		2,000
RB (PPL Energy Supply) Series 2007
3.20%, 01/02/08 (b)		22,000		22,000
Pennsylvania HFA
S/F Mortgage RB Series 2004-82B
3.46%, 01/02/08 (a)(c)		8,000		8,000
S/F Mortgage RB Series 2004-83B
3.45%, 01/02/08 (a)(c)		2,000		2,000
S/F Mortgage RB Series 2007-100A
3.55%, 01/03/08 (a)(c)(d)		500		500
Pennsylvania Higher Education Assistance Agency
Student Loan RB Series 1988B
3.45%, 01/02/08 (a)(b)(c)		4,000		4,000
Student Loan RB Series 1997A
3.46%, 01/02/08 (a)(b)(c)		28,900		28,900
Student Loan RB Series 2000A
3.46%, 01/02/08 (a)(b)(c)		46,200		46,200
Student Loan RB Series 2001A
3.46%, 01/02/08 (a)(b)(c)		18,450		18,450
Student Loan RB Series 2003A1
3.46%, 01/02/08 (a)(b)(c)		7,000		7,000
Student Loan RB Series 2003A2
3.46%, 01/02/08 (a)(b)(c)		38,000		38,000
Student Loan RB Series 2007A
3.50%, 01/02/08 (a)(b)(c)		75,000		75,000
Pennsylvania Higher Educational Facilities Auth
RB (Univ of Pennsylvania) Series 2005C
3.50%, 01/03/08 (a)(c)(d)		4,870		4,870
Pennsylvania Public School Building Auth
Lease RB (Philadelphia SD) Series 2003
3.50%, 01/03/08 (a)(b)(c)(d)		2,658		2,658
Lease RB (Philadelphia SD) Series 2006B
3.49%, 01/03/08 (a)(b)(c)(d)		28,265		28,265
3.50%, 01/03/08 (a)(b)(c)(d)		8,010		8,010
RB (Marple Newton SD) Series 2001
3.48%, 01/03/08 (a)(b)(c)(d)		4,965		4,965
RB (Parkland SD) Series 1999D
3.48%, 01/03/08 (a)(b)(c)		285		285
Pennsylvania State Univ
Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		26,000		26,000
Pennsylvania Turnpike Commission
RB Series 2002A3
3.40%, 01/02/08 (a)(c)		7,000		7,000
RB Series 2004A
3.50%, 01/03/08 (a)(b)(c)(d)		8,595		8,595
Philadelphia
Airport RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		2,800		2,800
Airport Refunding RB Series 2005C
3.55%, 01/02/08 (a)(b)(c)		25,000		25,000
GO Refunding Bonds Series 2007B
3.53%, 01/03/08 (a)(b)(c)		10,000		10,000
RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		34,760		34,760
TRAN Series 2007-2008A
3.67%, 06/30/08		37,000		37,147
Water & Wastewater RB Series 2005A
3.50%, 01/02/08 (a)(b)(c)(d)		10,000		10,000
Philadelphia Gas Works
RB 7th Series (1998 General Ordinance)
3.48%, 01/03/08 (a)(b)(c)(d)		5,590		5,590

See financial notes 33

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB Third Series 2001
3.66%, 01/03/08 (a)(b)(c)(d)		4,295		4,295
Philadelphia Hospital & Higher Educational Facilities Auth
RB (Children’s Hospital of Philadelphia) Series 2007A
3.50%, 01/03/08 (a)(c)(d)		14,195		14,195
Philadelphia IDA
RB (Fox Chase Cancer Center Obligated Group) Series 2007B
3.50%, 03/13/08 (b)(c)(d)		5,000		5,000
RB Series 1998A
3.52%, 01/04/08 (a)(b)(c)(d)		12,710		12,710
Philadelphia SD
GO Refunding Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		7,500		7,500
3.48%, 01/03/08 (a)(b)(c)(d)		10,495		10,495
TRAN Series 2007-2008A
3.72%, 06/27/08 (b)		40,000		40,147
Temple Univ
Univ Funding Obligations Series 2007
3.63%, 04/24/08		20,000		20,038
				962,821
Puerto Rico 0.1%
Puerto Rico
Refunding Bonds Series 2007A4
3.27%, 01/02/08 (a)(b)(c)		3,500		3,500
Puerto Rico Auth
Power Refunding RB Series UU
3.49%, 01/02/08 (a)(b)(c)(d)		14,150		14,150
				17,650
Rhode Island 0.3%
Rhode Island Economic Development Corp
Airport RB Series 2005A
3.62%, 01/03/08 (a)(b)(c)(d)		2,255		2,255
3.66%, 01/03/08 (a)(b)(c)(d)		3,925		3,925
Airport Refunding RB Series 2005C
3.58%, 01/03/08 (a)(b)(c)(d)		4,770		4,770
Rhode Island Housing & Mortgage Finance Corp
Homeownership Opportunity Bonds Series 52B & 53B
3.62%, 01/03/08 (a)(c)(d)		6,295		6,295
Rhode Island IDA
IDRB (Greystone of Lincoln) Series 2000
3.48%, 01/03/08 (a)(b)		900		900
Rhode Island Student Loan Auth
RB Series 1996-1
3.53%, 01/02/08 (a)(b)(c)		11,000		11,000
RB Series 1996-2
3.53%, 01/02/08 (a)(b)(c)		5,000		5,000
RB Series 1996-3
3.53%, 01/02/08 (a)(b)(c)		23,000		23,000
				57,145
South Carolina 1.0%
Beaufort-Jasper Higher Education Commission
RB (Univ of South Carolina-Beaufort Student Housing) Series 2005
3.44%, 01/03/08 (a)(b)		16,460		16,460
Berkeley Cnty SD
School Building Bonds Series 2002
3.80%, 01/02/08 (a)(b)(c)(d)		7,575		7,575
Florence Cnty Public Facilities Corp
Refunding COP (Law Enforcement & Civic Centers) Series 2003
3.46%, 01/03/08 (a)(b)(c)		20,125		20,125
Greenville IDA
IDRB (Stevens Aviation Technical Services) Series 1997
3.60%, 01/03/08 (a)(b)		3,500		3,500
Horry Cnty USD
GO Bonds Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		6,635		6,635
South Carolina
GO Bonds (Univ of South Carolina) Series 2006B
3.75%, 01/24/08 (c)(d)		4,125		4,125
South Carolina Association of Governmental Organizations
Installment Purchase RB (Pickens Cnty SD) Series 2006
3.81%, 06/19/08 (b)(c)(d)		12,165		12,165
South Carolina Housing & Development Auth
M/F Rental Housing RB (Ashley Apts) Series 1999
3.49%, 01/02/08 (a)(b)		3,785		3,785
M/F Rental Housing RB (Piedmont Manor Apts) Series 2000B1
3.49%, 01/02/08 (a)(b)		5,645		5,645
M/F Rental Housing RB (Spartanburg Terrace Apts) Series 2000C1
3.49%, 01/02/08 (a)(b)		1,960		1,960
M/F Rental Housing Refunding RB (Fairway Apts) Series 2001A
3.49%, 01/02/08 (a)(b)		7,735		7,735
South Carolina Jobs Economic Development Auth
RB (Ashley Hall) Series 2007
3.48%, 01/03/08 (a)(b)		19,000		19,000
RB (Holcim) Series 2003
3.58%, 01/03/08 (a)(b)		6,250		6,250
RB (Innovative Fibers) Series 2007
3.55%, 01/03/08 (a)(b)		7,600		7,600
South Carolina Public Service Auth
Revenue Obligations Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		5,970		5,970

34 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Revenue Obligations Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		10,310		10,310
3.50%, 01/03/08 (a)(b)(c)(d)		4,785		4,785
TECP
3.35%, 02/06/08 (c)		17,015		17,015
South Carolina Transportation Infrastructure Bank
RB Series 2003A
3.50%, 01/03/08 (a)(b)(c)(d)		5,875		5,875
Spartanburg Cnty IDA
Refunding IDRB (Bemis Co) Series 1991
3.50%, 01/03/08 (a)(b)		4,750		4,750
				171,265
South Dakota 0.2%
South Dakota Health & Educational Facilities Auth
RB (McKenna Hospital) Series 1994
3.47%, 01/04/08 (a)(b)(c)		23,625		23,625
South Dakota Housing Development Auth
Homeownership Mortgage Bonds Series 2004G
3.53%, 01/02/08 (a)(c)		11,000		11,000
M/F Housing RB (Harmony Heights) Series 2001
3.57%, 01/03/08 (a)(b)		6,500		6,500
				41,125
Tennessee 2.1%
Carter Cnty IDB
M/F Housing Refunding RB (Willow Run Apts) Series 1990
3.57%, 01/04/08 (a)(b)		6,675		6,675
Chattanooga Health, Education & Housing Facility Board
RB (Baylor School) Series 1996
3.44%, 01/02/08 (a)(b)		1,215		1,215
Clarksville Public Building Auth
Pooled Financing RB Series 2001
3.74%, 01/02/08 (a)(b)		10,090		10,090
Pooled Financing RB Series 2003
3.74%, 01/02/08 (a)(b)		3,290		3,290
Franklin Cnty IDB
IDRB (Hi-Tech) Series 1997
3.49%, 01/02/08 (a)(b)		2,400		2,400
Grundy Cnty IDB
Limited Obligation RB (Toyo Seat USA Corp) Series 2001
3.58%, 01/03/08 (a)(b)		2,385		2,385
Hendersonville IDB
Refunding IDRB (Betty Machine Co) Series 2001
3.49%, 01/02/08 (a)(b)		2,945		2,945
Jackson Health, Educational & Housing Facility Board
M/F Housing RB (Patrician Terrace Apts) Series 2005
3.52%, 01/03/08 (a)(b)		2,400		2,400
Jackson IDB
Solid Waste Facility Bonds (Ameristeel Corp) Series 1997
3.53%, 01/03/08 (a)(b)		3,800		3,800
Johnson City Health & Educational Facilities Board
Hospital RB (Mountain States Health Alliance) Series 2007A
2.85%, 01/02/08 (a)(b)		34,355		34,355
McMinn Cnty IDA
Solid Waste Disposal Facilities RB (Bowater) Series 1999
3.50%, 01/03/08 (a)(b)		13,500		13,500
Memphis
General Improvement Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		17,000		17,000
Metropolitan Government of Nashville & Davidson Cnty Health & Educational Facilities Board
M/F Housing RB (Burning Tree Apts) Series 2005
3.52%, 01/03/08 (a)(b)		8,580		8,580
M/F Housing RB (Chippington Tower Apts I & II) Series 2005
3.57%, 01/03/08 (a)(b)		13,500		13,500
M/F Housing Refunding RB (Brentwood Oaks Apts) Series 1991
3.48%, 01/03/08 (a)(b)		11,320		11,320
Metropolitan Government of Nashville & Davidson Cnty IDB
M/F Housing RB (Arbor Crest) Series 1985B
3.47%, 01/03/08 (a)(b)		12,750		12,750
M/F Housing RB (Arbor Knoll) Series 1985A
3.47%, 01/03/08 (a)(b)		13,400		13,400
RB (Nashville Symphony Hall) Series 2004
3.48%, 01/03/08 (a)(b)		17,075		17,075
RB (YMCA) Series 2007
3.48%, 01/03/08 (a)(b)		7,500		7,500
Metropolitan Nashville Airport Auth
Passenger Facility Charge Refunding Bonds Series 2003
3.49%, 01/02/08 (a)(b)		4,020		4,020
Montgomery Cnty Public Building Auth
Pooled Financing RB (Tennessee Cnty Loan Pool) Series 2002
3.74%, 01/02/08 (a)(b)		2,890		2,890
Sevier Cnty Public Building Auth
Public Improvement Bonds Series 1995C1
3.47%, 01/03/08 (a)(b)(c)		2,355		2,355
Public Improvement Bonds Series 1996E4
3.47%, 01/03/08 (a)(b)(c)		1,755		1,755
Public Improvement Bonds Series 1996E5
3.47%, 01/03/08 (a)(b)(c)		1,040		1,040
Public Improvement Bonds Series 1996II-C
3.47%, 01/03/08 (a)(b)(c)		645		645
Shelby Cnty Health, Education & Housing Facility Board
RB (Rhodes College) Series 2000
3.45%, 01/03/08 (a)(b)		9,295		9,295

See financial notes 35

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB (St Benedict at Auburndale High School) Series 2003
3.46%, 01/03/08 (a)(b)		4,800		4,800
RB (The Hutchison School) Series 2005
3.45%, 01/03/08 (a)(b)		9,860		9,860
Tennergy Corp
Gas RB Series 2006A
3.52%, 01/03/08 (a)(b)(c)(d)(g)		103,880		103,880
Tennessee Energy Acquisition Corp
Gas Project RB Series 2006A
3.50%, 01/03/08 (a)(c)(d)		11,250		11,250
Jr Gas Project RB Series 2006B
3.53%, 01/03/08 (a)(b)(c)(d)		4,966		4,966
Tennessee Housing Development Agency
Homeownership Program Bonds Series 2001-1C
3.52%, 01/03/08 (a)(c)(d)		4,550		4,550
				345,486
Texas 14.8%
Amarillo Health Facility Corp
Refunding RB (Evangelical Lutheran Good Samaritan Society) Series 1997
3.47%, 01/03/08 (a)(b)		3,155		3,155
Austin
Electric Utility System Refunding RB Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		17,930		17,930
Public Improvement Bonds Series 2000
3.50%, 01/03/08 (a)(c)(d)		5,570		5,570
Water & Wastewater Refunding RB Series 2001 A&B
3.50%, 01/02/08 (a)(b)(c)(d)		6,425		6,425
3.50%, 01/03/08 (a)(b)(c)(d)		4,600		4,600
Water & Wastewater Refunding RB Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		3,010		3,010
Austin ISD
Unlimited Tax Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		7,265		7,265
Bexar Cnty Housing Finance Corp
M/F Housing RB (Villages at Lost Creek Apts) Series 2006A1
3.50%, 01/03/08 (a)(b)(c)(d)		9,160		9,160
Brazos Cnty Health Facilities Development Corp
RB (Franciscan Services Corp Obligated Group) Series 1997A&B
3.51%, 01/03/08 (a)(b)(c)(d)		45,000		45,000
Brazos River Auth
Pollution Control Refunding RB (TXU Energy Co) Series 2001A
3.60%, 01/02/08 (a)(b)		10,000		10,000
Brazos River Harbor Navigation District
RB (Dow Chemical) Series 2002B
3.48%, 01/03/08 (a)(b)(c)(d)		12,440		12,440
Brownsville Utility System
Revenue Improvement & Refunding Bonds Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		6,930		6,930
Collin Cnty HFA
M/F Housing RB (Huntington Apts) Series 1996
3.54%, 01/03/08 (a)(b)		6,150		6,150
Comal ISD
Unlimited Tax School Building Bonds Series 2007
3.59%, 01/03/08 (a)(b)(c)(d)		6,735		6,735
Cypress-Fairbanks ISD
Schoolhouse & Refunding Bonds Series 2006
3.51%, 01/03/08 (a)(b)(c)(d)		38,890		38,890
Dallas
GO Bonds Series 2005
3.50%, 01/03/08 (a)(c)(d)(g)		31,905		31,905
GO Refunding & Improvement Bonds Series 2007A
3.50%, 01/03/08 (a)(c)(d)		9,680		9,680
Waterworks & Sewer System CP Series B
3.50%, 03/07/08 (c)		32,607		32,607
3.35%, 03/10/08 (c)		7,000		7,000
Waterworks & Sewer System Refunding & Improvement RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		6,485		6,485
Dallas Area Rapid Transit
Sr Lien Sales Tax RB Series 2001
3.50%, 01/03/08 (a)(b)(c)(d)		15,510		15,510
Sr Lien Sales Tax Refunding RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		4,940		4,940
3.50%, 01/03/08 (a)(b)(c)(d)		44,225		44,225
3.50%, 01/03/08 (a)(b)(c)(d)		18,430		18,430
Dallas Fort Worth International Airport
Joint Improvement & Refunding RB Series 2001A
3.54%, 01/03/08 (a)(b)(c)(d)		7,495		7,495
Joint Improvement RB Series 2003A
3.53%, 01/03/08 (a)(b)(c)(d)		5,780		5,780
3.54%, 01/03/08 (a)(b)(c)(d)		14,990		14,990
3.54%, 01/03/08 (a)(b)(c)(d)		2,500		2,500
Dallas ISD
Unlimited Tax School Building Bonds Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)(g)		29,140		29,140
3.50%, 01/03/08 (a)(b)(c)(d)		5,100		5,100
Denton Utility System
RB Series 2000A
3.50%, 01/03/08 (a)(b)(c)(d)		5,230		5,230

36 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Duncanville ISD
Unlimited Tax Refunding Bonds Series 2005
3.59%, 01/03/08 (a)(b)(c)(d)		4,355		4,355
Ector Cnty ISD
Unlimited Tax Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		8,000		8,000
El Paso
GO Bonds
3.60%, 01/03/08 (a)(b)(c)(d)		5,640		5,640
GO Bonds Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		7,490		7,490
Water & Sewer Refunding RB Series 1998
3.50%, 01/03/08 (a)(b)(c)(d)		7,210		7,210
El Paso Cnty Hospital District
Combination Tax & Revenue Certificates of Obligation Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		20,005		20,005
El Paso ISD
Unlimited Tax School Building Bonds Series 2007
3.59%, 01/03/08 (a)(b)(c)(d)		9,660		9,660
Galveston Cnty
GO Refunding Bonds Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		6,240		6,240
Garland ISD
Unlimited Tax School Building Bonds Series 2004B
3.75%, 06/16/08 (b)(c)		6,800		6,783
Goose Creek Consolidated ISD
Unlimited Tax Schoolhouse & Refunding Bonds Series 2006
3.51%, 01/03/08 (a)(b)(c)(d)		19,880		19,880
Grand Prairie IDA
IDRB (NTA Leasing Co) Series 1994
3.56%, 01/02/08 (a)(b)		1,025		1,025
Grapevine IDA
Airport Improvement RB (Simuflite Training International) Series 1983A
3.65%, 04/01/08 (b)		19,000		19,000
Greater East Texas Higher Education Auth
RB Series 1992B
3.85%, 07/01/08 (b)		14,000		14,000
RB Series 1995B
3.85%, 07/01/08 (b)		10,000		10,000
Greater Texas Student Loan Corp
RB Series 1998A
3.50%, 01/03/08 (a)(b)		10,250		10,250
Gulf Coast IDA
IDRB (Gruma Corp) Series 1994
3.51%, 01/02/08 (a)(b)		6,440		6,440
Gulf Coast Waste Disposal Auth
Pollution Control Refunding RB (Amoco Oil Co) Series 1992
3.60%, 01/02/08 (a)		58,525		58,525
Harris Cnty
Jr Lien Special RB (Rodeo) Series 2001C
3.45%, 01/03/08 (a)(b)(c)		1,675		1,675
Permanent Improvement Refunding Bonds Series 2004A
3.59%, 01/03/08 (a)(c)(d)		20,905		20,905
Permanent Improvement Refunding Bonds Series 2006A & Unlimited Tax Road & Refunding Bonds Series 2006B
3.50%, 01/03/08 (a)(c)(d)		16,860		16,860
Toll Road Sr Lien Refunding RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		3,845		3,845
Unlimited Tax Road & Refunding Bonds Series 2006B
3.50%, 01/03/08 (a)(c)(d)		14,050		14,050
Harris Cnty HFA
M/F Housing RB (Dominion Square Apts) Series 2000
3.58%, 01/03/08 (a)(b)		2,825		2,825
M/F Housing RB (Village At Cornerstone Apts) Series 2004
3.52%, 01/03/08 (a)(b)		8,360		8,360
Harris Cnty Housing Finance Corp
M/F Housing RB (Lafayette Village Apts) Series 2006
3.52%, 01/03/08 (a)(b)		7,100		7,100
Houston
Airport System Subordinate Lien Refunding RB Series 2007B
3.55%, 01/03/08 (a)(b)(c)(d)		23,000		23,000
Public Improvement Refunding Bonds Series 1998A
3.56%, 01/03/08 (a)(c)(d)		21,650		21,650
Water & Sewer System Jr Lien Refunding RB Series 2002A
3.50%, 01/03/08 (a)(b)(c)(d)		6,530		6,530
Houston Combined Utility System
First Lien Refunding RB Series 2004A
3.48%, 01/03/08 (a)(b)(c)(d)		14,530		14,530
3.59%, 01/03/08 (a)(b)(c)(d)		5,280		5,280
First Lien Refunding RB Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		5,170		5,170
Houston Higher Education Finance Corp
Higher Education RB (Rice Univ) Series 2006B
3.40%, 01/02/08 (a)(c)		4,700		4,700
Higher Education RB (Rice Univ) Series 2007A
3.49%, 01/03/08 (a)(c)(d)		3,430		3,430
3.50%, 01/03/08 (a)(c)(d)		9,240		9,240
Houston ISD
Limited Tax Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		16,285		16,285

See financial notes 37

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Limited Tax School Building Bonds Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		11,575		11,575
Limited Tax Schoolhouse & Refunding Bonds Series 2003
3.50%, 01/03/08 (a)(b)(c)(d)		5,260		5,260
Jewett Economic Development Corp
IDRB (Nucor Corp) Series 2003
3.59%, 01/02/08 (a)		6,200		6,200
Katy ISD
Unlimited Tax Refunding Bonds Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		13,095		13,095
Unlimited Tax School Building Bonds Series 2000A
3.50%, 01/03/08 (a)(b)(c)(d)		9,095		9,095
Keller ISD
Unlimited Tax School Building & Refunding Bonds Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		4,780		4,780
Lamar Consolidated ISD
Unlimited Tax Schoolhouse Bonds Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		4,950		4,950
3.50%, 01/03/08 (a)(b)(c)(d)		11,490		11,490
Lavaca-Navidad River Auth
Water Supply System Contract RB (Formosa Plastics Corp) Series 1990
3.57%, 01/02/08 (a)(b)(e)		13,600		13,600
Leander ISD
Unlimited Tax School Building & Refunding Bonds Series 2003
3.49%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Lewisville ISD
Unlimited Tax Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		9,550		9,550
Unlimited Tax School Building & Refunding Bonds Series 2007
3.70%, 01/03/08 (a)(b)(c)(d)		715		715
Lower Colorado River Auth
Refunding RB Series 1999A
3.51%, 01/03/08 (a)(b)(c)(d)		10,770		10,770
Lower Neches River Auth
Refunding RB (Exxon Mobil) Series 2001A
3.60%, 01/02/08 (a)		5,000		5,000
Refunding RB (Exxon Mobil) Series 2001B
3.65%, 01/02/08 (a)		2,000		2,000
Manor ISD
Unlimited Tax School Building Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		4,920		4,920
Mansfield IDA
IDRB (Southern Champion Tray) Series 1999
3.49%, 01/02/08 (a)(b)		800		800
Matagorda Cnty Navigation Dist #1
Pollution Control Refunding RB (AEP Texas Central Co) Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		23,995		23,995
Refunding RB (Houston Lighting & Power Co) Series 2001
3.55%, 01/02/08 (a)(b)(c)(d)		6,950		6,950
Midlothian ISD
Unlimited Tax School Building & Refunding Bonds Series 2004
3.51%, 01/03/08 (a)(b)(c)(d)		8,840		8,840
Montgomery Cnty
Unlimited Tax Road Bonds Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		4,240		4,240
North East ISD
Unlimited Tax Refunding Bonds Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		5,730		5,730
3.70%, 01/03/08 (a)(b)(c)(d)		1,975		1,975
Unlimited Tax Refunding Bonds Series 2007
3.51%, 01/03/08 (a)(b)(c)(d)		13,450		13,450
3.77%, 03/06/08 (b)(c)(d)		12,285		12,285
Unlimited Tax School Building Bonds Series 2004
3.48%, 01/03/08 (a)(b)(c)(d)		5,830		5,830
Unlimited Tax School Building Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		5,540		5,540
3.50%, 01/03/08 (a)(b)(c)(d)		11,670		11,670
North Texas Higher Education Auth
Student Loan RB Series 1998
3.45%, 01/02/08 (a)(b)		9,000		9,000
Student Loan RB Series 2005A
3.48%, 01/02/08 (a)(b)(c)		15,000		15,000
Student Loan RB Series 2007A
3.48%, 01/02/08 (a)(b)		25,650		25,650
North Texas Municipal Water District
RB Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		7,315		7,315
Northwest ISD
Unlimited Tax Refunding Bonds Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		29,065		29,065
Unlimited Tax School Building Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		3,600		3,600
Panhandle Plains Higher Education Auth
Student Loan RB Series 1992A
3.53%, 01/02/08 (a)(b)(c)		7,300		7,300
3.53%, 01/02/08 (a)(b)(c)		11,800		11,800
Student Loan RB Series 1993A
3.53%, 01/02/08 (a)(b)(c)		30,200		30,200
Pearland ISD
Unlimited Tax Schoolhouse RB Series 2007
3.59%, 01/03/08 (a)(b)(c)(d)		6,665		6,665
Port Arthur ISD
Unlimited Tax School Building Bonds Series 2005
3.49%, 01/03/08 (a)(b)(c)(d)		23,395		23,395

38 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Riesel Industrial Development Corp
Solid Waste RB (Sandy Creek Energy Associates) Series 2007
3.54%, 01/02/08 (a)(b)		11,250		11,250
San Antonio
Airport System Revenue Improvement Bonds Series 2002
3.54%, 01/03/08 (a)(b)(c)(d)		9,240		9,240
Electric & Gas Systems RB New Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Electric & Gas Systems Refunding RB New Series 2007
3.49%, 01/03/08 (a)(c)(d)		26,860		26,860
Electric & Gas Systems Refunding RB Series 2007
3.54%, 01/03/08 (a)(c)(d)		29,700		29,700
Revenue Improvement Bonds Series 2007
3.52%, 01/03/08 (a)(b)(c)(d)		7,565		7,565
Water System Refunding RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		12,400		12,400
San Antonio Empowerment Zone Development Corp
Contract RB (Drury Southwest Hotel) Series 2005
3.53%, 01/03/08 (a)(b)		10,450		10,450
San Antonio IDA
IDRB (Gruma Corp) Series 1994
3.51%, 01/02/08 (a)(b)		4,095		4,095
San Antonio ISD
Unlimited Tax Refunding Bonds Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		5,815		5,815
Southeast Texas Housing Finance Corp
M/F Housing RB (Piedmont Apts) Series 2006
3.52%, 01/03/08 (a)(b)		14,000		14,000
Spring ISD
Unlimited Tax Schoolhouse Bonds Series 2005
3.51%, 01/03/08 (a)(b)(c)(d)		26,690		26,690
Tarrant Cnty Cultural Education Facilities Finance Corp
Health Resources System Refunding RB Series 2007A
3.50%, 01/03/08 (a)(c)(d)		8,625		8,625
Texas
GO Bonds (Veterans’ Housing Assistance Program-Fund II) Series 2002A2
3.55%, 01/02/08 (a)(c)		6,000		6,000
GO Refunding Bonds (College Student Loan) Series 2003
3.93%, 07/01/08 (c)		20,000		20,000
3.93%, 07/01/08 (c)		10,630		10,630
TRAN Series 2007
4.50%, 08/28/08		200,000		201,038
Texas A&M Univ
Permanent Univ Fund Bonds Series 1998
3.48%, 01/03/08 (a)(c)(d)		25,725		25,725
Texas Dept of Housing & Community Affairs
M/F Housing RB (Atascocita Pines Apts) Series 2005
3.52%, 01/03/08 (a)(b)		11,900		11,900
M/F Housing RB (Bristol Apts) Series 2004
3.52%, 01/03/08 (a)(b)		8,400		8,400
M/F Housing RB (Creek Point Apts) Series 2000
3.53%, 01/02/08 (a)(b)		6,470		6,470
M/F Housing RB (Montgomery Pines Apts) Series 2004
3.52%, 01/03/08 (a)(b)		12,300		12,300
M/F Housing RB (Pinnacle Apts) Series 2004
3.52%, 01/03/08 (a)(b)		6,900		6,900
M/F Housing RB (Tower Ridge Apts) Series 2005
3.57%, 01/03/08 (a)(b)		15,000		15,000
Residential Mortgage RB Series 1998A
3.52%, 01/03/08 (a)(c)(d)		14,950		14,950
Residential Mortgage Refunding RB Series 2003A
3.54%, 01/03/08 (a)(c)(d)		10,000		10,000
S/F Mortgage RB Series 2002 A&B
3.58%, 01/03/08 (a)(b)(c)(d)		4,070		4,070
S/F Mortgage RB Series 2004D
3.57%, 01/03/08 (a)(b)(c)		23,400		23,400
Texas Municipal Gas Acquisition & Supply Corp II
Gas Supply RB Series 2007A
3.54%, 01/03/08 (a)(c)(d)		28,330		28,330
Gas Supply RB Series 2007AB
3.82%, 01/03/08 (a)(c)(d)		69,985		69,985
Gas Supply RB Series 2007B
3.57%, 01/03/08 (a)(c)(d)		71,000		71,000
3.84%, 01/03/08 (a)(c)(d)		34,445		34,445
Texas Public Finance Auth
Unemployment Compensation Obligation Assessment RB Series 2003C4
3.35%, 02/06/08		12,600		12,600
Texas State Affordable Housing Corp
S/F Mortgage RB (Professional Educators Home Loan Program) Series 2006A
3.59%, 01/02/08 (a)(b)(c)(d)		17,224		17,224
Texas State Univ
Revenue Financing System RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		19,355		19,355
Texas Transportation Commission
GO Mobility Fund Bonds
3.60%, 01/03/08 (a)(b)(c)(d)		12,335		12,335
GO Mobility Fund Bonds Series 2005A
3.50%, 01/03/08 (a)(c)(d)		5,935		5,935
3.50%, 01/03/08 (a)(c)(d)		4,700		4,700

See financial notes 39

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
3.51%, 01/03/08 (a)(c)(d)		12,405		12,405
GO Mobility Fund Bonds Series 2006
3.48%, 01/03/08 (a)(c)(d)		7,595		7,595
3.49%, 01/03/08 (a)(c)(d)		12,034		12,034
3.50%, 01/03/08 (a)(c)(d)		3,000		3,000
3.50%, 01/03/08 (a)(c)(d)		11,665		11,665
3.51%, 01/03/08 (a)(c)(d)		6,775		6,775
GO Mobility Fund Bonds Series 2006A
3.50%, 01/03/08 (a)(c)(d)		2,900		2,900
GO Mobility Fund Bonds Series 2007
3.49%, 01/03/08 (a)(c)(d)		30,500		30,500
3.49%, 01/03/08 (a)(c)(d)		43,750		43,750
3.50%, 01/03/08 (a)(c)(d)		12,330		12,330
State Highway Fund First Tier RB Series 2006A
3.50%, 01/03/08 (a)(c)(d)		25,965		25,965
State Highway Fund Revenue CP Notes Series A
3.52%, 01/07/08 (b)		35,000		35,000
3.08%, 02/04/08 (b)		30,000		30,000
Trinity River Auth
Solid Waste Disposal RB (Community Waste Disposal) Series 1999
3.53%, 01/02/08 (a)(b)		2,730		2,730
Univ of Texas
Permanent Univ Fund Notes Series A
3.35%, 02/05/08		20,000		20,000
3.35%, 02/06/08		15,000		15,000
3.43%, 03/06/08		7,000		7,000
3.35%, 04/10/08		13,878		13,878
3.35%, 04/15/08		15,000		15,000
Permanent Univ Fund Refunding Bonds Series 2006B
3.49%, 01/03/08 (a)(c)(d)		16,795		16,795
3.50%, 01/03/08 (a)(c)(d)		14,380		14,380
Refunding Bonds Series 2006B
3.46%, 01/03/08 (a)(c)(d)		5,480		5,480
Refunding Bonds Series 2007B
3.37%, 01/03/08 (a)		23,000		23,000
Revenue Financing System RB Series 2006B
3.50%, 01/03/08 (a)(c)(d)		5,920		5,920
Revenue Financing System RB Series 2006F
3.50%, 01/03/08 (a)(c)(d)		17,965		17,965
Waco Health Facilities Development Corp
Mortgage RB (Hillcrest Health System) Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		10,870		10,870
Wichita Falls
Water & Sewer System Priority Lien Refunding RB Series 2007
3.54%, 01/03/08 (a)(b)(c)(d)		5,690		5,690
				2,447,519
Utah 0.9%
Riverton
Hospital RB (IHC Health Services) Series 2007A
3.48%, 01/03/08 (a)(c)(d)		14,015		14,015
Salt Lake City
Hospital RB (IHC Health Services) Series 2001
3.56%, 01/03/08 (a)(b)(c)(d)		22,950		22,950
Univ of Utah
Hospital Refunding RB Series 2006A
3.78%, 03/13/08 (b)(c)(d)(g)		49,630		49,630
Student Loan RB Series 1993A
3.48%, 01/02/08 (a)(b)		5,000		5,000
Student Loan RB Series 2005W
3.48%, 01/02/08 (a)(b)(c)		25,280		25,280
Utah Building Ownership Auth
Lease Refunding RB Series 1998C
3.51%, 01/03/08 (a)(b)(c)(d)		9,695		9,695
Utah Transit Auth
Subordinated Sales Tax Refunding RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		3,070		3,070
3.51%, 01/03/08 (a)(b)(c)(d)		8,615		8,615
3.51%, 01/03/08 (a)(b)(c)(d)		7,430		7,430
				145,685
Vermont 0.1%
Vermont Economic Development Auth
IDRB (Agri-Mark) Series 1999A
3.54%, 01/03/08 (a)(b)		17,000		17,000
IDRB (Agri-Mark) Series 1999B
3.54%, 01/03/08 (a)(b)		1,000		1,000
				18,000
Virginia 1.1%
Arlington Cnty IDA
M/F Housing RB (Gates of Ballston Apts) Series 2005
3.48%, 01/02/08 (a)(b)		14,500		14,500
Chesterfield Cnty
GO Bonds
3.57%, 01/03/08 (a)(c)(d)		2,330		2,330
King George Cnty
Solid Waste Disposal Facility RB (Garnet) Series 1996
3.53%, 01/03/08 (a)(b)		3,700		3,700
Newport News IDA
RB (CNU Warwick Student Apts) Series 2004
3.48%, 01/03/08 (a)(b)		4,000		4,000
Portsmouth Redevelopment & Housing Auth
M/F Housing RB (Churchland North Apts) Series 1999
3.49%, 01/02/08 (a)(b)		6,070		6,070

40 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Smyth Cnty IDA
Hospital RB (Mountain States Health Alliance) Series 2007C
2.85%, 01/03/08 (a)(b)		36,575		36,575
Upper Occoquan Sewerage Auth
RB Series 2007B
3.50%, 01/03/08 (a)(c)(d)		3,810		3,810
Virginia Beach Development Auth
M/F Residential Rental Housing RB (Silver Hill at Thalia) Series 1999
3.49%, 01/02/08 (a)(b)		3,900		3,900
Virginia College Building Auth
Educational Facilities RB Series 2006A
3.54%, 01/03/08 (a)(c)(d)		6,015		6,015
Educational Facilities RB Series 2007A
3.50%, 01/03/08 (a)(c)(d)		19,690		19,690
Virginia Housing Development Auth
Mortgage Bonds Series 2001H1
3.55%, 01/03/08 (a)(b)(c)(d)		16,720		16,720
Mortgage Bonds Series 2006D1
3.55%, 01/02/08 (a)(c)(d)		7,365		7,365
Mortgage Bonds Series 2006D2
3.55%, 01/02/08 (a)(c)(d)		7,400		7,400
Virginia Port Auth
RB (2002 Resolution) Series 2005A
3.54%, 01/03/08 (a)(b)(c)(d)		2,630		2,630
Winchester IDA
Hospital RB (Valley Health System) Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		34,735		34,735
Hospital RB (Winchester Medical Center) Series 1991
3.49%, 01/03/08 (a)(b)(c)(d)		14,590		14,590
				184,030
Washington 4.8%
Cascade Water Alliance
Water System RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		8,660		8,660
Central Puget Sound Regional Transit Auth
Sales Tax RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		12,806		12,806
Clark Cnty SD #37
Unlimited Tax GO Bonds Series 2001C
3.60%, 01/03/08 (a)(b)(c)(d)		15,245		15,245
Douglas Cnty Development Corp
RB (Executive Flight) Series 1998
3.53%, 01/03/08 (a)(b)		5,700		5,700
Eatonville SD
Unlimited Tax GO Bonds Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)		8,745		8,745
Energy Northwest
Refunding Electric RB (Columbia Generating Station & Project No.3) Series 2001A
3.55%, 01/03/08 (a)(b)(c)(d)		25,500		25,500
Refunding Electric RB (Columbia Generating Station) Series 2006A
3.50%, 01/03/08 (a)(c)(d)		20,540		20,540
3.50%, 01/03/08 (a)(c)(d)		8,135		8,135
Refunding Electric RB (Project No.1) Series 2002A
3.51%, 01/03/08 (a)(b)(c)(d)(g)		32,460		32,460
Refunding Electric RB (Project No.3) Series 2003A
3.51%, 01/03/08 (a)(b)(c)(d)		5,195		5,195
Wind Project RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		10,385		10,385
King Cnty
Sewer RB 2007
3.49%, 01/03/08 (a)(b)(c)(d)		31,250		31,250
Sewer Refunding RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		7,645		7,645
King Cnty Rural Library District
Unlimited Tax GO Bonds Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		11,455		11,455
Olympia
Solid Waste RB (LeMay Enterprises) Series 1999
3.53%, 01/02/08 (a)(b)		3,290		3,290
Pierce Cnty
IDRB (McFarland Cascade) Series 1996
3.64%, 01/03/08 (a)(b)		3,945		3,945
Pierce Cnty Economic Development Corp
RB (Flex-A-Lite Consolidated) Series 1996
3.53%, 01/02/08 (a)(b)		1,800		1,800
Solid Waste RB (LeMay Enterprises) Series 1999
3.53%, 01/02/08 (a)(b)		575		575
Port of Centralia IDA
Solid Waste RB (LeMay Enterprises) Series 1999
3.53%, 01/02/08 (a)(b)		360		360
Port of Seattle
Passenger Facility Charge RB Series 1998A
3.48%, 01/03/08 (a)(b)(c)(d)		13,500		13,500
RB Series 2001B
3.54%, 01/03/08 (a)(b)(c)(d)		4,430		4,430
RB Series 2003A
3.50%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Special Facility RB (Terminal 18) Series 1999B
3.55%, 01/02/08 (a)(b)(c)(d)		49,795		49,795
Subordinate Lien RB Series 2005
3.48%, 01/02/08 (a)(b)		8,500		8,500
Port of Tacoma
RB Series 2005
3.54%, 01/03/08 (a)(b)(c)(d)		6,230		6,230
Seattle
Drainage & Wastewater Refunding RB Series 2002
3.59%, 01/03/08 (a)(b)(c)(d)		6,875		6,875

See financial notes 41

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Limited Tax GO Improvement & Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(c)(d)		5,925		5,925
Solid Waste Refunding RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		4,385		4,385
Seattle Housing Auth
RB Series 1996
3.53%, 01/02/08 (a)(b)		3,185		3,185
Snohomish Cnty Public Utility District #1
Electric System Refunding RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		7,375		7,375
Tacoma Housing Auth
RB (Crown Assisted Living) Series 1998
3.48%, 01/02/08 (a)(b)		2,840		2,840
Univ of Washington
RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		28,630		28,630
Washington
GO Bonds Series 2000B
3.50%, 01/03/08 (a)(c)(d)		11,955		11,955
GO Bonds Series 2003A
3.51%, 01/03/08 (a)(b)(c)(d)		5,170		5,170
GO Bonds Series 2003C
3.50%, 01/03/08 (a)(b)(c)(d)		4,590		4,590
3.50%, 01/03/08 (a)(b)(c)(d)		7,335		7,335
GO Bonds Series 2008B
3.48%, 01/03/08 (a)(b)(c)(d)		31,105		31,105
Motor Vehicle Fuel Tax GO Bonds Series 2007D
3.50%, 01/03/08 (a)(b)(c)(d)		15,945		15,945
Motor Vehicle Fuel Tax GO Bonds Series 2008B
3.50%, 01/03/08 (a)(b)(c)(d)		6,000		6,000
Various Purpose GO Bonds Series 2002B
3.55%, 01/03/08 (a)(b)(c)(d)		29,540		29,540
Various Purpose GO Bonds Series 2005D
3.50%, 01/03/08 (a)(b)(c)(d)		6,595		6,595
3.54%, 01/03/08 (a)(b)(c)(d)		3,455		3,455
3.59%, 01/03/08 (a)(b)(c)(d)		5,930		5,930
Various Purpose GO Bonds Series 2006D
3.50%, 01/03/08 (a)(b)(c)(d)		11,270		11,270
3.80%, 07/10/08 (b)(c)(d)		8,585		8,585
Various Purpose GO Bonds Series 2008A
3.50%, 01/03/08 (a)(c)(d)		6,000		6,000
3.50%, 01/03/08 (a)(c)(d)		6,900		6,900
Various Purpose GO Refunding Bonds Series R2005A
3.51%, 01/03/08 (a)(b)(c)(d)		2,870		2,870
Various Purpose GO Refunding Bonds Series R2005A & R2006A
3.50%, 01/03/08 (a)(b)(c)(d)		7,625		7,625
Washington Economic Development Finance Auth
Lease RB (Washington Biomedical Research Properties II) Series 2005E
3.64%, 01/02/08 (a)(b)(c)(d)		14,620		14,620
RB (Hunter Douglas) Series 1997A
3.49%, 01/02/08 (a)(b)		3,500		3,500
Solid Waste Disposal RB (Cedar Grove Composting) Series 2004B
3.53%, 01/02/08 (a)(b)		4,950		4,950
Solid Waste Disposal RB (Heirborne Investments) Series 2006K
3.53%, 01/02/08 (a)(b)		5,840		5,840
Solid Waste Disposal RB (Lemay Enterprises) Series 2005B
3.53%, 01/02/08 (a)(b)		5,510		5,510
Solid Waste Disposal RB (Specialty Chemical Products) Series 2007
3.53%, 01/03/08 (a)(b)		9,600		9,600
Solid Waste Disposal RB (Waste Management) Series 2000C
3.52%, 01/02/08 (a)(b)		5,500		5,500
Solid Waste Disposal RB (Waste Management) Series 2000H
3.58%, 01/02/08 (a)(b)		6,825		6,825
Solid Waste Disposal RB (Waste Management) Series 2000I
3.53%, 01/02/08 (a)(b)		7,235		7,235
Solid Waste Disposal RB (Waste Management) Series 2005D
3.53%, 01/03/08 (a)(b)		18,000		18,000
Washington Health Care Facilities Auth
RB (Yakima Valley Farm Workers Clinic) Series 1997
3.48%, 01/02/08 (a)(b)		2,500		2,500
Washington Housing Finance Commission
M/F Housing RB (Anchor Village Apts) Series 1997
3.52%, 01/03/08 (a)(b)		10,750		10,750
M/F Housing RB (Brittany Park Phase II) Series 1998A
3.52%, 01/03/08 (a)(b)		3,480		3,480
M/F Housing RB (Brittany Park) Series 1996A
3.52%, 01/03/08 (a)(b)		8,930		8,930
M/F Housing RB (Fairwinds Redmond) Series 2005A
3.52%, 01/03/08 (a)(b)		7,500		7,500
M/F Housing RB (Forest Creek Apts) Series 2006
3.52%, 01/03/08 (a)(b)		13,815		13,815
M/F Housing RB (Highlander Apts) Series 2004A
3.52%, 01/03/08 (a)(b)		7,000		7,000
M/F Housing RB (Lakewood Meadows Apts) Series 2000A
3.59%, 01/03/08 (a)(b)		3,140		3,140

42 See financial notes

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
M/F Housing RB (Merrill Gardens at Queen Anne) Series 2004A
3.52%, 01/03/08 (a)(b)		11,000		11,000
M/F Housing RB (Merrill Gardens) Series 1997A
3.52%, 01/03/08 (a)(b)		6,125		6,125
M/F Housing RB (Rainier Court Apts) Series 2003A
3.52%, 01/03/08 (a)(b)		12,750		12,750
M/F Housing RB (Silver Creek Apts) Series 2004
3.52%, 01/03/08 (a)(b)		4,100		4,100
M/F Housing RB (The Seasons Apts) Series 2006
3.59%, 01/03/08 (a)(b)		20,000		20,000
M/F Housing RB (Vintage at Burien) Series 2004A
3.52%, 01/03/08 (a)(b)		6,570		6,570
M/F Housing RB (Woodrose Apts) Series 1999A
3.52%, 01/03/08 (a)(b)		6,750		6,750
M/F Mortgage RB (Canyon Lakes) Series 1993
3.52%, 01/03/08 (a)(b)		4,035		4,035
M/F Mortgage RB (Lake Washington Apts) Series 1996
3.53%, 01/02/08 (a)(b)		7,735		7,735
M/F Mortgage RB (Meridian Court Apts) Series 1996
3.53%, 01/02/08 (a)(b)		6,700		6,700
M/F RB (Cedar Ridge Retirement) Series 2005A
3.52%, 01/03/08 (a)(b)		5,030		5,030
Non-Profit RB (Seattle Art Museum) Series 2005
3.70%, 01/02/08 (a)(b)		4,150		4,150
Non-Profit Refunding RB (Horizon House) Series 2005
3.47%, 01/03/08 (a)(b)		11,455		11,455
Washington State Univ
Student Fee RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		16,800		16,800
Yakima Cnty Public Corp
IDRB (Cowiche Growers) Series 1998
3.53%, 01/03/08 (a)(b)		1,900		1,900
				791,026
West Virginia 0.5%
Braxton Cnty
Solid Waste Disposal Refunding RB (Weyerhaeuser Co) Series 1998
3.58%, 01/03/08 (a)(b)(c)(d)		16,275		16,275
Marion Cnty
Solid Waste Disposal Facility RB (Grant Town Cogeneration) Series 1990B
3.50%, 01/02/08 (a)(b)		15,685		15,685
Solid Waste Disposal Facility RB (Grant Town Cogeneration) Series 1990C
3.50%, 01/02/08 (a)(b)		13,600		13,600
Solid Waste Disposal Facility RB (Grant Town Cogeneration) Series 1990D
3.50%, 01/02/08 (a)(b)		2,600		2,600
West Virginia Hospital Finance Auth
Refunding RB (Charleston Area Medical Center) Series 1995A
3.48%, 01/03/08 (a)(b)(c)(d)		17,535		17,535
West Virginia Housing Development Fund
Housing Finance Bonds Series 2001D
3.51%, 01/03/08 (a)(c)(d)		6,350		6,350
West Virginia Water Development Auth
RB (Loan Program IV) Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		7,486		7,486
				79,531
Wisconsin 1.2%
Colburn IDA
IDRB (Heartland Farms) Series 1994
3.62%, 01/03/08 (a)(b)		4,400		4,400
Kenosha
IDRB (Asyst Technologies) Series 1997
3.58%, 01/03/08 (a)(b)		5,000		5,000
Southeast Wisconsin Professional Baseball Park District
Sales Tax Refunding Bonds Series 1998
3.50%, 01/02/08 (a)(b)(c)(d)		5,000		5,000
Wisconsin
GO Bonds Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		19,985		19,985
GO CP Notes
3.40%, 02/05/08 (c)		11,000		11,000
Operating Notes of 2007
3.74%, 06/16/08		22,000		22,074
Wisconsin Health & Educational Facilities Auth
RB (Aurora Health Care) Series 1997
3.51%, 01/03/08 (a)(b)(c)(d)		48,335		48,335
RB (Aurora Medical Group) Series 1996
3.48%, 01/03/08 (a)(b)(c)(d)		52,000		52,000
Wisconsin Housing & Economic Development Auth
Business Development RB (Ultratec) Series 1995-7
3.62%, 01/03/08 (a)(b)		1,710		1,710
Homeownership RB Series 2002C
3.45%, 01/02/08 (a)(c)		2,160		2,160
Homeownership RB Series 2003A
3.58%, 01/03/08 (a)(c)(d)		915		915
Homeownership RB Series 2003B
3.55%, 01/02/08 (a)(c)		11,050		11,050

See financial notes 43

Schwab Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Homeownership RB Series 2004D
3.54%, 01/03/08 (a)(c)(d)		2,200		2,200
Homeownership RB Series 2005C
3.55%, 01/02/08 (a)(c)		11,000		11,000
Wisconsin Rapids
IDRB (Thiele Kaolin) Series 1998
3.49%, 01/02/08 (a)(b)		4,500		4,500
				201,329
Wyoming 0.8%
Campbell Cnty
IDRB (Two Elk Partners) Series 2007
3.65%, 11/28/08 (g)		91,000		91,000
Lincoln Cnty
Pollution Control RB (Exxon) Series 1987A
3.72%, 01/02/08 (a)		4,750		4,750
Pollution Control RB (Exxon) Series 1987C
3.72%, 01/02/08 (a)		5,575		5,575
Sublette Cnty
Pollution Control RB (Exxon) Series 1987A
2.85%, 01/03/08 (a)		6,200		6,200
Uinta Cnty
Pollution Control Refunding RB (Chevron USA) Series 1992
3.50%, 01/02/08 (a)		2,000		2,000
Pollution Control Refunding RB (Chevron USA) Series 1993
3.50%, 01/02/08 (a)		2,000		2,000
Wyoming Community Development Auth
S/F Mortgage RB Draw Down Series 2007
3.54%, 01/03/08 (a)(c)(d)		15,000		15,000
				126,525
Total Municipal Securities (Cost $16,681,165)				16,681,165
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $16,681,165.

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $9,614,477 or 58.1% of net assets.
(e)	Illiquid security. At the period end, the value of these amounted to $26,134 or 0.2% of net assets.
(f)	Delayed-delivery security.
(g)	All or a portion of this security is held as collateral for delayed delivery security.

BAN — Bond anticipation note

COP — Certificate of participation

GO — General obligation

HFA — Housing finance agency

IDA — Industrial development authority

IDB — Industrial development board

IDRB — Industrial development revenue bond

ISD — Independent school district

M/F — Multi-family

RAN — Revenue anticipation note

RB — Revenue bond

S/F — Single-family

SD — School district

TAN — Tax anticipation note

TECP — Tax-exempt commercial paper

TRAN — Tax and revenue anticipation note

USD — Unified school district

44 See financial notes

Schwab Municipal Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		16,681,165
Cash		339
Receivables:
Investments sold		67,981
Interest		128,591
Fund shares sold		75,387
Prepaid expenses	+	37
Total assets		16,953,500
Liabilities
Payables:
Investments bought		354,598
Investment adviser and administrator fees		311
Transfer agent and shareholder services fees		311
Fund shares redeemed		48,085
Distributions to shareholders		5,503
Accrued expenses	+	280
Total liabilities		409,088
Net Assets
Total assets		16,953,500
Total liabilities	−	409,088
Net assets		$16,544,412
Net Assets by Source
Capital received from investors		16,545,808
Net realized capital losses		(1,396	)

Net Asset Value (NAV) by Share Class 

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Sweep Shares	$8,491,131		8,493,944			$1.00
Value Advantage Shares	$2,785,732		2,785,828			$1.00
Select Shares	$1,427,850		1,427,751			$1.00
Institutional Shares	$3,839,699		3,839,412			$1.00

See financial notes 45

Schwab Municipal Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$531,716
Net Realized Gains and Losses
Net realized gains on investments		1,956
Expenses
Investment adviser and administrator fees		45,862
Transfer agent and shareholder service fees:
Sweep Shares		25,965
Value Advantage Shares		5,952
Select Shares		2,954
Institutional Shares		6,719
Registration fees		1,383
Portfolio accounting fees		438
Shareholder reports		383
Custodian fees		295
Professional fees		79
Trustees’ fees		66
Interest expense		12
Other expenses	+	110
Total expenses		90,218
Expense reduction by adviser and Schwab	−	22,236
Custody credits	−	82
Net expenses		67,900
Increase (Decrease) in Net Assets from Operations
Total investment income		531,716
Net expenses	−	67,900
Net investment income		463,816
Net realized gains	+	1,956
Increase in net assets from operations		$465,772

46 See financial notes

Schwab Municipal Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$463,816	$391,028
Net realized gains	+	1,956	669
Increase in net assets from operations		465,772	391,697
Distributions to Shareholders
Distributions from net investment income
Sweep Shares		228,064	199,231
Value Advantage Shares		86,989	87,857
Select Shares		44,509	35,801
Institutional Shares	+	104,254	68,139
Total distributions from net investment income		463,816	391,028
Transactions in Fund Shares*
Shares Sold
Sweep Shares		42,441,488	37,679,223
Value Advantage Shares		3,637,661	3,893,260
Select Shares		2,573,162	2,403,651
Institutional Shares	+	6,257,609	4,384,527
Total shares sold		54,909,920	48,360,661
Shares Reinvested
Sweep Shares		224,163	195,123
Value Advantage Shares		75,977	77,499
Select Shares		38,334	31,151
Institutional Shares	+	89,845	58,551
Total shares reinvested		428,319	362,324
Shares Redeemed
Sweep Shares		(41,406,081)	(38,110,980)
Value Advantage Shares		(3,726,353)	(4,179,902)
Select Shares		(2,427,616)	(2,156,933)
Institutional Shares	+	(5,001,979)	(3,732,716)
Total shares redeemed		(52,562,029)	(48,180,531)
Net transactions in fund shares		2,776,210	542,454
Net Assets
Beginning of period		13,766,246	13,223,123
Total increase	+	2,778,166	543,123
End of period		$16,544,412	$13,766,246

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

See financial notes 47

Schwab AMT Tax-Free Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Sweep Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per–Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.07			2.83			1.81			0.60			0.46
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.63			0.65			0.65			0.66			0.64
Gross operating expenses		0.75			0.86			0.85			0.85			0.85
Net investment income (loss)		3.02			2.77			1.78			0.59			0.47
Net assets, end of period ($ x 1,000,000)		1,680			1,045			1,973			1,905			1,804

	1/1/07-			11/6/062-
Value Advantage Shares	12/31/07			12/31/06
Per–Share Data ($)
Net asset value at beginning of period		1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.00	1
Less distributions:
Distributions from net investment income		(0.03	)		(0.00	)1
Net asset value at end of period		1.00			1.00
Total return (%)		3.26			0.49	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.45			0.44	4,5
Gross operating expenses		0.63			0.68	4
Net investment income (loss)		3.19			3.22	4
Net assets, end of period ($ x 1,000,000)		1,224			85

¹ Per-share amount was less than $0.01.

² Commencement of operations.

³ Not annualized.

⁴ Annualized.

⁵ The ratio of net operating expenses would have been 0.45%, if custody credits had not been included.

48 See financial notes

Schwab AMT Tax-Free Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.6%	Municipal Securities		2,862,372		2,862,372
	98	.6%	Total Investments		2,862,372		2,862,372
	1	.4%	Other Assets and Liabilities				41,400
	100	.0%	Net Assets				2,903,772

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 98.6% of net assets
Alabama 2.6%
Alabama Municipal Funding Corp
Municipal Funding Notes Master Series 2006A
3.44%, 01/03/08 (a)(b)		4,955		4,955
Alabama Public School & College Auth
Capital Improvement Bonds Series 2007
3.48%, 01/03/08 (a)(c)(d)		10,970		10,970
3.50%, 01/03/08 (a)(c)(d)		7,900		7,900
3.50%, 01/03/08 (a)(b)(c)(d)		5,965		5,965
Birmingham Downtown Redevelopment Auth
RB (UAB Educational Foundation) Series 2002
3.44%, 01/02/08 (a)(b)		18,175		18,175
Hoover
GO Sewer Warrants Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Mobile Board of Water & Sewer
RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		10,170		10,170
University of Alabama at Birmingham
Hospital RB Series 2006A
3.49%, 01/03/08 (a)(b)(c)(d)		12,050		12,050
				74,185
Alaska 0.5%
Valdez
Marine Terminal Refunding RB (BP Pipelines) Series 2003C
3.75%, 01/02/08 (a)		1,960		1,960
Marine Terminal Refunding RB (Exxon Pipeline Co) Series 1993B
3.60%, 01/02/08 (a)		4,300		4,300
Marine Terminal Refunding RB (Exxon Pipeline Co) Series 1993C
3.60%, 01/02/08 (a)		8,000		8,000
				14,260
Arizona 3.1%
Arizona Health Facilities Auth
RB (Banner Health) Series 2007B
3.51%, 01/03/08 (a)(c)(d)		17,775		17,775
Arizona School Facilities Board
COP Series 2005A 2&3
3.55%, 01/03/08 (a)(b)(c)(d)		980		980
Phoenix Civic Improvement Corp
GO Bonds
3.60%, 01/03/08 (a)(c)(d)		8,640		8,640
Jr Lien Wastewater System RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		7,190		7,190
Salt River Project Agricultural Improvement & Power District
Electric System RB Series 2002B
3.48%, 01/03/08 (a)(c)(d)		7,440		7,440
Salt Verde Financial Corp
Sr Gas RB Series 2007
3.52%, 01/03/08 (a)(c)(d)		13,585		13,585
Scottsdale IDA
Hospital RB (Scottsdale Healthcare) Series 2006G
3.50%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Scottsdale Municipal Property Corp
Excise Tax Refunding RB Series 2006
3.49%, 01/03/08 (a)(c)(d)		9,558		9,558
Yuma Municipal Property Corp
Sr Lien Utility System RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		18,100		18,100
				90,268
California 1.7%
California
RAN Series 2007-08
3.37%, 06/30/08		50,000		50,153

See financial notes 49

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Colorado 3.7%
Aurora
First Lien Water Improvement RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Colorado
TRAN Series 2007B
2.90%, 08/05/08		40,000		40,011
Colorado Educational & Cultural Facilities Auth
RB (University of Denver) Series 2007
3.66%, 01/03/08 (a)(b)(c)(d)		28,165		28,165
Colorado Health Facilities Auth
Hospital Refunding RB (NCMC) Series 2005
3.47%, 01/02/08 (a)(b)(c)		6,000		6,000
Douglas Cnty SD
GO Improvement Bonds Series 2006B
3.50%, 01/03/08 (a)(c)(d)		9,840		9,840
Regional Transportation District
COP (Transit Vehicles) Series 2002A
3.50%, 01/03/08 (a)(b)(c)(d)		3,950		3,950
Southglenn Metropolitan District
Special RB Series 2007
3.47%, 01/03/08 (a)(b)		10,000		10,000
				107,966
Connecticut 1.0%
Connecticut State Health & Educational Facilities
RB (Quinnipiac Univ) Series H
3.48%, 01/03/08 (a)(b)(c)(d)		9,730		9,730
RB (Yale Univ) Series Z-1
3.48%, 01/03/08 (a)(c)(d)		19,985		19,985
				29,715
District of Columbia 2.2%
District of Columbia
GO Bonds Series 2005A
3.50%, 01/02/08 (a)(b)(c)(d)		18,895		18,895
GO Bonds Series 2007A
3.51%, 01/03/08 (a)(b)(c)(d)		14,985		14,985
GO Bonds Series 2007C
3.50%, 01/03/08 (a)(b)(c)(d)		5,000		5,000
3.51%, 01/03/08 (a)(b)(c)(d)		4,695		4,695
RB (St Coletta Special Education Public Charter School) Series 2005
3.48%, 01/03/08 (a)(b)		8,170		8,170
National Capital Revitalization Corp
RB (DC USA Parking Garage) Series 2006
3.59%, 01/03/08 (a)(b)(c)(d)		12,000		12,000
				63,745
Florida 11.1%
Broward Cnty HFA
M/F Housing Refunding RB (Island Club Apts) Series 2001A
3.44%, 01/03/08 (a)(b)		3,000		3,000
Broward Cnty SD
School Board COP Series 2005B
3.48%, 01/03/08 (a)(b)(c)		6,000		6,000
Cape Coral
CP Notes
3.70%, 01/10/08 (b)		6,500		6,500
Clay Cnty Utility Auth
Utilities System Refunding RB Series 2007
3.67%, 01/03/08 (a)(b)(c)(d)		23,280		23,280
Florida Board of Education
Capital Outlay Bonds Series 1998E
3.50%, 01/03/08 (a)(c)(d)		11,170		11,170
Capital Outlay Bonds Series 2003C
3.49%, 01/03/08 (a)(b)(c)(d)		9,100		9,100
Capital Outlay Bonds Series 2006C
3.50%, 01/02/08 (a)(c)(d)		6,785		6,785
Capital Outlay Bonds Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Capital Outlay Bonds
3.60%, 01/03/08 (a)(b)(c)(d)		10,695		10,695
Florida Department of Environmental Protection
RB (Florida Forever) Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		10,185		10,185
Refunding RB (Preservation 2000) Series 1997B
3.50%, 01/03/08 (a)(b)(c)(d)		7,869		7,870
Florida Department of Management Services
Florida Facilities Pool RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		11,745		11,745
Florida Department of Transportation
Turnpike RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		11,515		11,515
Turnpike RB Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		17,555		17,555
Florida Hurricane Catastrophe Fund Finance Corp
RB
3.60%, 01/03/208 (a)(b)(c)(d)		28,605		28,605
Gainesville Utility System
RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		4,545		4,545
Miami-Dade Cnty SD
COP Series 2007A
3.65%, 01/03/08 (a)(b)(c)(d)		11,000		11,000
Ocala
Utility Systems RB Series 2005B
3.55%, 01/03/08 (a)(b)(c)(d)		3,965		3,965

50 See financial notes

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Orange Cnty Health Facilities Auth
RB (Presbyterian Retirement Communities) Series 2006B
3.49%, 01/03/08 (a)(b)		25,000		25,000
Orange Cnty Health Finance Auth
Refunding Program RB (Pooled Hospital Loan) Series 1985
3.35%, 01/14/08 (b)		18,300		18,300
Orange Cnty HFA
M/F Housing Refunding RB (Andover Place Apts) Series 1998F
3.47%, 01/03/08 (a)(b)		1,770		1,770
Refunding RB (Highland Pointe Apts) Series 1998J
3.46%, 01/03/08 (a)(b)		7,455		7,455
Orange Cnty IDA
Educational Facilities RB (UCF Hospitality School Student Housing Foundation) Series 2004
3.44%, 01/03/08 (a)(b)		8,360		8,360
IDRB (Catholic Charities of Central Florida & Diocese of Orlando) Series 2007
3.74%, 01/03/08 (a)(b)		5,000		5,000
Palm Beach Cnty Health Facilities Auth
Refunding Program RB (Pooled Hospital Loan) Series 1985
2.98%, 02/12/08 (b)		7,300		7,300
Palm Beach Cnty SD
Sales Tax Revenue CP
3.68%, 02/07/08 (b)		3,500		3,500
Sarasota Cnty
Utility System Refunding RB Series 2005A
3.54%, 01/03/08 (a)(b)(c)(d)		4,485		4,485
Sumter Landing Community Development District
Recreational RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
Tallahassee
Energy System RB Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
Tampa
Educational Facilities RB (Pepin Academy of Tampa) Series 2002
3.45%, 01/03/08 (a)(b)		3,485		3,485
Water & Sewer RB Series 2007
3.50%, 01/03/08 (a)(c)(d)		5,965		5,965
Tampa Bay Water Auth
Utility System Refunding & Improvement RB Series 2001A
3.50%, 01/03/08 (a)(b)(c)(d)		5,200		5,200
Utility System Refunding & Improvement RB Series 2005
3.51%, 01/03/08 (a)(b)(c)(d)		4,995		4,995
University of South Florida Research Foundation
RB (Interdisciplinary Research Building) Series 2004A
3.45%, 01/02/08 (a)(b)		13,700		13,700
Winter Haven
Utility System Improvement & Refunding RB Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		990		990
				320,920
Georgia 1.9%
Atlanta
Water & Wastewater RB Series 2001B
3.40%, 01/03/08 (a)(b)(c)		1,485		1,485
Burke Cnty Development Auth
Pollution Control RB (Oglethorpe Power) Series 2006B2
3.40%, 02/05/08 (b)(c)		8,000		8,000
DeKalb Cnty Public Safety & Judicial Facilities Auth
RB (Public Safety & Judicial Facility) Series 2004
3.50%, 01/03/08 (a)(c)(d)		4,470		4,470
Fulton Cnty Development Auth
RB (Piedmont Healthcare) Series 2007
3.44%, 01/02/08 (a)(b)		9,000		9,000
Georgia
GO Bonds Series 2007E
3.51%, 01/03/08 (a)(c)(d)		6,765		6,765
Metro Atlanta Rapid Transit Auth
Sales Tax Revenue CP Notes Series 2007D
3.10%, 02/05/08 (c)		14,500		14,500
2.85%, 02/12/08 (c)		5,000		5,000
Metropolitan Atlanta Rapid Transit Auth
Sales Tax Refunding RB (Third Indenture) Series 2007A
3.51%, 01/03/08 (a)(b)(c)(d)		6,100		6,100
				55,320
Hawaii 1.6%
Honolulu
GO Bonds Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		11,080		11,080
Wastewater RB Sr Series 2005A
3.54%, 01/03/08 (a)(b)(c)(d)		5,845		5,845
Honolulu City & Cnty
Wastewater System RB (First Bond Resolution) Sr Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		16,520		16,520
Univ of Hawaii
RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		14,145		14,145
				47,590
Illinois 9.3%
Bolingbrook
Jr Lien Tax Increment RB Series 2005
3.48%, 01/02/08 (a)(b)		8,880		8,880

See financial notes 51

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Chicago
GO Project & Refunding Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		3,964		3,964
3.50%, 01/04/08 (a)(b)(c)(d)		18,260		18,260
3.54%, 01/03/08 (a)(b)(c)(d)		8,800		8,800
Limited Tax Bonds (Lakefront Millenium Parking Facilities) Series 1998
3.48%, 01/03/08 (a)(b)(c)(d)		22,720		22,720
Second Lien Water Refunding RB Series 2004
3.40%, 01/03/08 (a)(b)(c)		4,200		4,200
Chicago Board of Education
Unlimited Tax GO Bonds (Dedicated Revenues) Series 2006B
3.50%, 01/03/08 (a)(b)(c)(d)		11,580		11,580
Chicago Public Building Commission
Refunding RB Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)		12,175		12,175
Cook Cnty
RB (Catholic Theological Union) Series 2005
3.43%, 01/02/08 (a)(b)		4,000		4,000
Illinois
GO Bonds Series 2006A
3.50%, 01/03/08 (a)(c)(d)		12,055		12,055
GO Refunding Bonds Series 2007B
3.51%, 01/03/08 (a)(c)(d)		9,995		9,995
Illinois Finance Auth
RB (Erikson Institute) Series 2007
3.48%, 01/03/08 (a)(b)		6,000		6,000
RB (Northwestern University) Series 2006
3.50%, 01/03/08 (a)(c)(d)		10,745		10,745
RB (Resurrection Health Care) Series 2005C
3.45%, 01/03/08 (a)(b)		6,745		6,745
RB (University of Chicago) Series 2007
3.48%, 01/03/08 (a)(c)(d)		10,010		10,010
RB Series 2007B2
3.75%, 01/02/08 (a)(c)		11,300		11,300
Illinois Toll Highway Auth
Sr Priority RB Series 2005A
3.80%, 03/13/08 (b)(c)(d)		10,600		10,600
3.48%, 03/13/08 (a)(b)(c)(d)		15,000		15,000
Metropolitan Pier & Exposition Auth
Bonds (McCormick Place Expansion) Series 1998B
3.51%, 01/03/08 (a)(b)(c)(d)		1,675		1,675
Bonds (McCormick Place Expansion) Series 2002A
3.50%, 01/03/08 (a)(b)(c)(d)		10,330		10,330
Metropolitan Water Reclamation District of Greater Chicago
Unlimited Tax GO Capital Improvement Bonds Series 2006
3.50%, 01/03/08 (a)(c)(d)		11,630		11,630
Springfield
RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		5,410		5,410
Sr Lien Electric RB Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)		4,950		4,950
St. Clair Cnty
Industrial Building Refunding RB (Winchester Apts) Series 1994
3.44%, 01/03/08 (a)(b)		15,550		15,550
Valley View Community Unit SD
GO Bonds Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		8,600		8,600
Western Springs
Special Assessment Bonds (Timber Trails) Series 2006
3.44%, 01/02/08 (a)(b)		24,266		24,266
				269,440
Indiana 3.6%
Greater Clark Cnty School Building Corp
First Mortgage Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		2,675		2,675
Indiana Bond Bank
Special Program Bonds Series 2006B1
3.56%, 01/03/08 (a)(b)(c)(d)		5,985		5,985
Indiana Finance Auth
Highway RB
3.60%, 01/03/08 (a)(b)(c)(d)		7,140		7,140
Highway Refunding RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		30,875		30,875
3.50%, 01/03/08 (a)(b)(c)(d)		9,035		9,035
Indiana Health & Educational Facility Financing Auth
RB (Ascension Health Senior Credit Group) Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		30,980		30,980
Indiana Transportation Finance Auth
RB Series 1998A
3.50%, 01/03/08 (a)(c)(d)		2,800		2,800
Indianapolis Local Public Improvement Bond Bank
Bonds (Waterworks) Series 2007L
3.50%, 01/03/08 (a)(b)(c)(d)		9,765		9,765
New Albany-Floyd Cnty School Building Corp
First Mortgage Bonds Series 2007
3.50%, 01/02/08 (a)(b)(c)(d)		5,100		5,100
				104,355
Iowa 1.4%
Iowa
TRAN Series 2007
3.25%, 06/30/08		40,000		40,146
Kansas 0.3%
Harvey Cnty USD
GO Refunding Improvement Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		9,110		9,110

52 See financial notes

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Kentucky 4.7%
Boyle Cnty
Hospital RB (Ephraim McDowell Health) Series 2006
3.42%, 01/03/08 (a)(b)		1,000		1,000
Kentucky Asset/Liability Commission
General Fund Project Notes Second Series 2005 A1 & A2
3.35%, 02/11/08 (c)		40,000		40,000
General Fund Project Notes Series 2007B
3.55%, 01/03/08 (a)(b)(c)(d)		5,000		5,000
General Fund TRAN Series 2007A
3.70%, 06/26/08		28,500		28,606
Kentucky Public Energy Auth
Gas Supply RB Sr Series 2007A1
3.50%, 01/03/08 (a)(c)		25,000		25,000
Gas Supply RB Sr Series 2007A2
3.33%, 01/03/08 (a)(c)		25,000		25,000
Louisville & Jefferson Cnty Metro Sewer District
Sewer & Drainage System RB Series 2007A
3.64%, 01/02/08 (a)(b)(c)(d)		5,000		5,000
Louisville & Jefferson Cnty Metropolitan Government
Health System RB (Norton Healthcare) Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		6,345		6,345
				135,951
Louisiana 1.1%
Louisiana
Gasoline & Fuels Tax RB Series 2005A
3.51%, 01/03/08 (a)(b)(c)(d)		6,965		6,965
Louisiana Local Government Environmental Facilities & Community Development Auth
RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		9,130		9,130
Louisiana Public Facilities Auth
Refunding RB (Tulane University of Louisiana) Series 2007A1
3.49%, 01/03/08 (a)(b)(c)(d)		15,345		15,345
				31,440
Maine 0.3%
Maine
GO BAN
3.70%, 06/10/08		9,500		9,522
Maryland 0.7%
Maryland
GO Capital Improvement Bonds
3.60%, 01/03/08 (a)(c)(d)		6,685		6,685
Maryland Health & Higher Educational Facilities Auth
FHA Insured Mortgage RB (Western Maryland Health System) Series 2006A
3.80%, 03/27/08 (b)(c)(d)		14,760		14,760
				21,445
Massachusetts 0.8%
Massachusetts Bay Transportation Auth
Sr Sales Tax Bonds Series 2006B
3.50%, 01/02/08 (a)(c)(d)		12,320		12,320
Massachusetts Development Finance Agency
RB (Harvard University) Series 2006B1
3.60%, 01/02/08 (a)		1,000		1,000
Massachusetts Health & Educational Facilities Auth
RB (Capital Assets Program) Series 1985D
3.67%, 01/02/08 (a)(b)(c)		2,000		2,000
Massachusetts School Building Auth
Dedicated Sales Tax Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		2,170		2,170
Massachusetts Turnpike Auth
Subordinate RB (Metropolitan Highway System) Series 1999A
3.49%, 01/03/08 (a)(b)(c)(d)		3,978		3,978
Massachusetts Water Pollution Abatement Trust
Pool Program Bonds
3.57%, 01/03/08 (a)(c)(d)		2,480		2,480
				23,948
Michigan 2.2%
Detroit
Sr Lien RB Series 2006A
3.54%, 01/02/08 (a)(b)(c)(d)		4,965		4,965
Water Supply System Sr Lien RB Series 2005B
3.55%, 01/03/08 (a)(b)(c)		1,000		1,000
Detroit Sewage Disposal System
Refunding Sr Lien RB Series 2006D
3.50%, 01/03/08 (a)(b)(c)(d)		15,380		15,380
Michigan State Building Auth
CP Notes Series 5
3.48%, 02/21/08 (b)		15,000		15,000
Refunding RB Series IA
3.50%, 01/03/08 (a)(b)(c)(d)		16,260		16,260
Michigan State Hospital Financing Auth
RB (McLaren Health Care) Series 2005B
3.50%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Univ of Michigan Health System
RB Series 2005A
3.73%, 01/02/08 (a)		5,200		5,200
				64,805

See financial notes 53

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Minnesota 0.6%
Minneapolis-St Paul Metropolitan Airports Commission
Subordinate Refunding RB Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		8,118		8,118
Minnesota
GO Refunding Bonds
3.69%, 08/01/08		7,860		7,918
				16,036
Mississippi 1.2%
Mississippi Business Finance Corp
RB (Chevron USA) Series 2007C
3.45%, 01/02/08 (a)		5,000		5,000
RB (Chevron USA) Series 2007D
3.45%, 01/02/08 (a)		30,000		30,000
				35,000
Missouri 2.0%
Hazelwood SD
GO Refunding & Improvement Bonds Series 2007A
3.50%, 01/02/08 (a)(b)(c)(d)		4,365		4,365
Missouri Health & Educational Facilities Auth
Educational Facilities RB (Saint Louis University) Series 2006A
3.68%, 01/02/08 (a)(b)(c)		835		835
Missouri Highway & Transportation Commission
First Lien State Road Bonds Series 2006B
3.50%, 01/03/08 (a)(c)(d)		6,870		6,870
Second Lien State Road Bonds Series 2007
3.51%, 01/03/08 (a)(c)(d)		15,385		15,385
Missouri Joint Municipal Electric Utility Commission
Power Project RB (Prairie State) Series 2007A
3.50%, 01/02/08 (a)(b)(c)(d)		13,915		13,915
3.49%, 01/03/08 (a)(b)(c)(d)		10,335		10,335
Missouri Public Utilities Commission
Interim Construction Notes Series 2007
3.79%, 09/01/08		6,625		6,666
				58,371
Montana 1.3%
Forsyth
Pollution Control Refunding RB (NW Corp Colstrip) Series 2006
3.57%, 01/03/08 (a)(b)(c)(d)		20,790		20,790
Montana State Health Facility Auth
Hospital RB (Deaconess-Billings Clinic Health System) Series 1994
3.54%, 01/02/08 (a)(b)(c)(d)		17,375		17,375
				38,165
Nebraska 1.4%
Central Plains Energy Project
Gas Project RB (Project #1)
3.84%, 01/03/08 (a)(c)(d)		10,000		10,000
Nebraska Public Power District
General RB Series 2006A
3.49%, 01/03/08 (a)(b)(c)(d)		17,495		17,495
Public Power General Agency
RB (Whelan Energy Center Unit 2) Series 2007A
3.78%, 07/10/08 (b)(c)(d)		4,985		4,985
Univ of Nebraska Board of Regents
RB (Univ of Nebraska at Omaha Student Facilities) Series 2007
3.48%, 01/03/08 (a)(c)(d)		7,665		7,665
				40,145
Nevada 2.8%
Clark Cnty
Airport Passenger Facility Charge RB Series 2007A2
3.49%, 01/03/08 (a)(b)(c)(d)		6,180		6,180
3.80%, 03/27/08 (b)(c)(d)		15,955		15,955
GO (Limited Tax) Bank Bonds Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)		5,695		5,695
3.60%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Clark Cnty SD
GO (Limited Tax) Building Bonds Series 2001F
3.50%, 01/02/08 (a)(b)(c)(d)		9,860		9,860
GO (Limited Tax) Refunding Bonds Series 2007A
3.59%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
GO (Limited Tax) School Bonds Series 2007B
3.50%, 01/03/08 (a)(c)(d)		3,780		3,780
Henderson
Health Facility RB (Catholic Healthcare West) Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Las Vegas Valley Water District
GO (Limited Tax) Water CP Series 2004 A&B
3.35%, 02/11/08 (c)		10,000		10,000
Nevada
GO Capital Improvement & Cultural Affairs Bonds Series 2007B
3.50%, 01/03/08 (a)(c)(d)		3,700		3,700
Truckee Meadows Water Auth
Water Refunding RB Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		9,305		9,305
				80,475
New Jersey 0.4%
Burlington Cnty
BAN Series 2007F
2.83%, 12/26/08		5,100		5,133

54 See financial notes

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fair Lawn
BAN Series 2007A
2.92%, 12/18/08		4,350		4,373
Rutgers State Univ
GO Refunding Bonds Series 2002A
3.47%, 01/02/08 (a)(c)		1,850		1,850
				11,356
New York 1.6%
New York City
GO Bonds Fiscal 2002 Series A6
3.60%, 01/02/08 (a)(b)(c)		3,600		3,600
GO Bonds Fiscal 2006 Series A
3.48%, 01/03/08 (a)(c)(d)		4,080		4,080
GO Bonds Fiscal 2006 Series I7
3.49%, 01/02/08 (a)(b)		3,000		3,000
GO Bonds Fiscal 2006 Series I8
3.70%, 01/02/08 (a)(b)		1,835		1,835
New York City Municipal Water Finance Auth
CP Notes Series 1
3.55%, 01/17/08 (c)		17,540		17,540
CP Series 6
3.54%, 01/17/08 (c)		15,000		15,000
Water & Sewer System RB Series 2000C
3.54%, 01/02/08 (a)(c)		900		900
				45,955
North Carolina 1.4%
North Carolina
GO Refunding Bonds Series 2004
2.90%, 03/01/08		4,740		4,756
GO Refunding Bonds Series 2007B
3.50%, 01/03/08 (a)(c)(d)		9,550		9,550
North Carolina Capital Facilities Finance Agency
RB (Duke Univ) Series 2006A
3.50%, 01/03/08 (a)(c)(d)		9,248		9,247
North Carolina Infrastructure Finance Corp
COP Series 2007A
3.50%, 01/02/08 (a)(b)(c)(d)		9,965		9,965
North Carolina Medical Care Commission
Health Care Facilities RB (Novant Health) Series 2006
3.49%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Univ of North Carolina at Chapel Hill
GO RB Series 2007
3.50%, 01/03/08 (a)(c)(d)		3,090		3,090
				40,608
Ohio 0.4%
Hamilton Cnty
Sales Tax Refunding Bonds Subordinate Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		8,012		8,012
Ohio Higher Educational Facility Commission
Facility RB (Univ of Dayton) Series 2006
3.46%, 01/03/08 (a)(b)(c)(d)		2,745		2,745
				10,757
Oklahoma 0.2%
Oklahoma Capital Improvement Auth
State Facilities RB (Higher Education) Series 2005F
3.50%, 01/02/08 (a)(b)(c)(d)		5,095		5,095
Oregon 0.1%
Medford Hospital Facilities Auth
RB (Rogue Valley Manor) Series 2007
3.75%, 01/02/08 (a)(b)		2,125		2,125
Oregon
GO Bonds (Verterans’ Welfare) Series 85
3.70%, 01/02/08 (a)(c)		1,100		1,100
				3,225
Pennsylvania 2.7%
Allegheny Cnty Hospital Development Auth
RB (UPMC) Series 2007A2
3.60%, 01/03/08 (a)(c)(d)		2,000		2,000
RB (UPMC) Series 2007B1
3.50%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
RB (UPMC) Series 2007D
3.60%, 01/03/08 (a)(c)(d)		10,000		10,000
Allegheny Cnty Port Auth
Grant Anticipation Notes Series 2007
3.68%, 06/30/08 (b)		5,000		5,013
Delaware Valley Regional Finance Auth
RB Series 1998A
3.54%, 01/03/08 (a)(b)(c)(d)		8,000		8,000
Montgomery Cnty IDA
Pollution Control Refunding RB (Peco Energy) Series 1994A
3.53%, 03/12/08 (b)		17,000		17,000
Montgomery Cnty Redevelopment Auth
M/F Housing RB (Brookside Manor Apts) Series 2001A
3.34%, 01/03/08 (a)(b)		1,500		1,500
Pennsylvania Public School Building Auth
Lease RB (Philadelphia SD) Series 2006B
3.50%, 01/03/08 (a)(b)(c)(d)		5,000		5,000
Philadelphia
TRAN Series 2007-2008A
3.67%, 06/30/08		15,000		15,060
				78,573

See financial notes 55

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Rhode Island 0.1%
Rhode Island Economic Development Corp
Airport Refunding RB Series 2005C
3.80%, 03/13/08 (b)(c)(d)		4,315		4,315
South Carolina 0.9%
South Carolina
GO Research Univ Infrastructure Bonds Series 2005A
3.51%, 01/03/08 (a)(c)(d)		16,265		16,265
South Carolina Association of Governmental Organizations
Educational Facilities Corp Installment Purchase RB (Pickens Cnty SD) Series 2006
3.81%, 06/19/08 (b)(c)(d)		3,990		3,990
South Carolina Transportation Infrastructure Bank
Refunding RB Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		6,355		6,355
				26,610
Tennessee 1.8%
Knoxville
Wastewater System Revenue Improvement Bonds Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		5,490		5,490
Memphis
General Improvement Bonds Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
Montgomery Cnty Public Building Auth
Pooled Financing RB (Tennessee Cnty Loan Pool) Series 2002
3.74%, 01/02/08 (a)(b)		2,000		2,000
Shelby Cnty Health, Educational & Housing Facilities Board
RB (Trezevant Manor) Series A
3.48%, 01/03/08 (a)(b)		7,225		7,225
Tennessee Energy Acquisition Corp
Jr Gas Project RB Series 2006B
3.53%, 01/03/08 (a)(b)(c)(d)		22,387		22,387
				52,102
Texas 19.8%
Alvin ISD
Unlimited Tax Schoolhouse RB Series 2005
3.59%, 01/03/08 (a)(b)(c)(d)		6,140		6,140
Brazos Cnty Health Facilities Development Corp
RB (Franciscan Services Corp Obligated Group) Series 1997A&B
3.51%, 01/03/08 (a)(b)(c)(d)		8,000		8,000
Brownsville ISD
Unlimited Tax School Building Bonds Series 2006
3.50%, 01/02/08 (a)(b)(c)(d)		3,815		3,815
Cypress-Fairbanks ISD
Unlimited Tax Refunding Bonds Series 2007
3.54%, 01/03/08 (a)(b)(c)(d)		14,850		14,850
Dallas
GO Bonds Series 2005
3.50%, 01/03/08 (a)(c)(d)		4,980		4,980
Waterworks & Sewer System Refunding & Improvement RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		4,990		4,990
Dallas Area Rapid Transit
Sr Lien Sales Tax Refunding RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		4,300		4,300
3.50%, 01/03/08 (a)(b)(c)(d)		9,530		9,530
Dallas ISD
Unlimited Tax School Building Bonds Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		6,440		6,440
Dallas Water & Sewer Utilities
Refunding RB Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		36,845		36,845
Ector Cnty ISD
Unlimited Tax Refunding Bonds Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
El Paso
GO Bonds
3.60%, 01/03/08 (a)(b)(c)(d)		3,460		3,460
Harris Cnty
Permanent Improvement Refunding Bonds Series 2006A & Unlimited Tax Road & Refunding Bonds Series 2006B
3.50%, 01/03/08 (a)(c)(d)		24,965		24,965
Toll Road Sr Lien Refunding RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		9,600		9,600
Unlimited Tax & Subordinate Lien Refunding RB Series 2007C
3.48%, 01/03/08 (a)(b)(c)(d)		12,975		12,975
Houston
Airport System Subordinate Lien Refunding RB Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		8,425		8,425
Combined Utility System First Lien Refunding RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		4,950		4,950
Public Improvement Refunding Bonds Series 2007A
3.51%, 01/03/08 (a)(b)(c)(d)		1,200		1,200
Houston Combined Utility System
First Lien Refunding RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		4,300		4,300
3.50%, 01/03/08 (a)(b)(c)(d)		5,434		5,434
First Lien Refunding RB Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		5,937		5,937

56 See financial notes

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Houston Higher Education Finance Corp
Higher Education RB (Rice University) Series 2007AB
3.50%, 01/03/08 (a)(c)(d)		7,013		7,014
Katy ISD
Unlimited Tax Refunding Bonds Series 2007B & Limited Tax Refunding Bonds Series 2007C
3.50%, 01/03/08 (a)(b)(c)(d)		7,265		7,265
Lower Colorado River Auth
CP Series A
3.20%, 02/06/08 (c)		1,000		1,000
3.65%, 02/06/08 (c)		9,100		9,100
Lower Neches River Auth
Refunding RB (Exxon Mobil) Series 2001A
3.60%, 01/02/08 (a)		1,500		1,500
Matagorda Cnty Navigation Dist #1
Pollution Control Refunding RB (AEP Texas Central Co) Series 2005A
3.50%, 01/03/08 (a)(b)(c)(d)		12,000		12,000
Midland College District
GO Bonds Series 2005
3.80%, 03/13/08 (b)(c)(d)		5,480		5,480
North Texas Municipal Water District
RB Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		7,320		7,320
3.59%, 01/03/08 (a)(b)(c)(d)		4,910		4,910
Northwest ISD
Unlimited Tax School Building Bonds Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		5,480		5,480
Round Rock ISD
Unlimited Tax School Building Bonds Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		10,755		10,755
San Antonio
Combination Tax & Revenue Certificates of Obligation Series 2006
3.75%, 01/17/08 (c)(d)		8,910		8,910
General Improvement & Refunding Bonds Series 2006 & Combination Tax & Revenue Certificates of Obligation Series 2006
3.60%, 01/03/08 (a)(c)(d)		3,165		3,165
Tax & Revenue Certificates of Obligation Series 2007
3.50%, 01/02/08 (a)(c)(d)		3,000		3,000
Water System Refunding RB Series 2005
3.70%, 01/03/08 (a)(b)(c)(d)		7,570		7,570
San Antonio Electric & Gas System
Electric & Gas Systems Refunding RB New Series 2007
3.48%, 01/03/08 (a)(c)(d)		10,245		10,245
3.50%, 01/03/08 (a)(c)(d)		28,360		28,360
San Antonio ISD
Unlimited Tax Refunding Bonds Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		4,500		4,500
Socorro ISD
Unlimited Tax School Building Bonds Series 2006A
3.50%, 01/03/08 (a)(b)(c)(d)		3,400		3,400
Texas
TRAN Series 2007
3.70%, 08/28/08		25,000		25,253
4.50%, 08/28/08		12,500		12,438
Texas A&M Univ
Permanent Univ Fund Bonds Series 1998
3.48%, 01/03/08 (a)(c)(d)		5,980		5,980
Texas Transportation Commission
GO Mobility Fund Bonds Series 2005A
3.50%, 01/03/08 (a)(c)(d)		8,990		8,990
GO Mobility Fund Bonds Series 2006
3.48%, 01/03/08 (a)(c)(d)		7,595		7,595
GO Mobility Fund Bonds Series 2007
3.49%, 01/03/08 (a)(c)(d)		17,000		17,000
3.49%, 01/03/08 (a)(c)(d)		29,195		29,195
3.50%, 01/03/08 (a)(c)(d)		2,100		2,100
3.50%, 01/03/08 (a)(c)(d)		4,995		4,995
State Highway Fund First Tier RB Series 2006A
3.50%, 01/03/08 (a)(c)(d)		6,090		6,090
State Highway Fund First Tier RB Series 2007
3.50%, 01/03/08 (a)(c)(d)		4,000		4,000
Texas Municipal Gas Acquisition & Supply Corp II
Gas Supply RB Series 2007AB
3.82%, 01/03/08 (a)(c)(d)		30,000		30,000
Gas Supply RB Series 2007B
3.57%, 01/03/08 (a)(c)(d)		24,000		24,000
3.84%, 01/03/08 (a)(c)(d)		10,000		10,000
Texas Water Development Board
State Revolving Fund Subordinate Lien RB Series 2007A
3.73%, 01/02/08 (a)(c)		6,800		6,800
Univ of Texas
Permanent Univ Fund Notes Series A
3.35%, 04/15/08		10,000		10,000
Permanent Univ Fund Refunding Bonds Series 2006B
3.49%, 01/03/08 (a)(c)(d)		16,800		16,800
Refunding Bonds Series 2007B
3.42%, 01/03/08 (a)		26,330		26,330
				573,676
Utah 0.9%
Intermountain Power Agency
Power Supply RB Series 1985F
3.51%, 03/15/08 (b)(c)		15,000		15,000
Utah Transit Auth
Subordinated Sales Tax Refunding RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		12,150		12,150
				27,150

See financial notes 57

Schwab AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Virginia 0.6%
Chesterfield Cnty
GO Bonds
3.57%, 01/03/08 (a)(c)(d)		3,040		3,040
Virginia College Building Auth
Educational Facilities RB (Public Higher Education Financing Program) Series 2006A
3.51%, 01/03/08 (a)(c)(d)		4,125		4,125
Winchester IDA
Hospital RB (Valley Health System) Series 2007
3.49%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
				17,165
Washington 3.2%
Cascade Water Alliance
Water System RB Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		8,660		8,660
Central Puget Sound Regional Transit Auth
Sales Tax Bonds Series 2007A
3.50%, 01/02/08 (a)(b)(c)(d)		4,840		4,840
3.50%, 01/03/08 (a)(c)(d)		5,850		5,850
King Cnty
Sewer Refunding RB Second Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		3,340		3,340
3.51%, 01/03/08 (a)(b)(c)(d)		9,095		9,095
Seattle
Water System Refunding RB Series 2006
3.46%, 01/03/08 (a)(b)(c)(d)		2,510		2,510
Univ of Washington
RB Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		9,985		9,985
Washington
Various Purpose GO Bonds Series 2008A
3.50%, 01/02/08 (a)(c)(d)		28,085		28,085
Washington Health Care Facilities Auth
RB (Providence Health & Services) Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		19,855		19,855
				92,220
West Virginia 0.3%
West Virginia Hospital Finance Auth
Refunding RB (Charleston Area Medical Center) Series 1995A
3.48%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Wisconsin 1.1%
Wisconsin
RB Series 2005A
3.49%, 01/03/08 (a)(b)(c)(d)		7,564		7,564
Transportation RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		8,065		8,065
Transportation Revenue CP Series 2006A
2.95%, 06/11/08 (c)		7,500		7,500
Wisconsin Health & Educational Facilities Auth
RB (Aurora Health Care) Series 1997
3.61%, 01/03/08 (a)(b)(c)(d)		7,960		7,960
				31,089
Total Municipal Securities (Cost $2,862,372)				2,862,372
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $2,862,372.

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $2,004,528 or 69.0% of net assets.

BAN — Bond anticipation note

COP — Certificate of participation

GO — General obligation

HFA — Housing finance agency

IDA — Industrial development authority

IDRB — Industrial development revenue bond

ISD — Independent school district

M/F – Multi-family

RAN — Revenue anticipation note

RB — Revenue bond

S/F – Single-family

SD — School district

TRAN — Tax and revenue anticipation note

USD — Unified school district

58 See financial notes

Schwab AMT Tax-Free Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		2,862,372
Cash		1,755
Receivables:
Investments sold		1,124
Interest		23,288
Fund shares sold		23,466
Prepaid expenses	+	5
Total assets		2,912,010
Liabilities
Payables:
Investments bought		5
Investment adviser and administrator fees		48
Transfer agent and shareholder services fees		67
Fund shares redeemed		7,426
Distributions to shareholders		592
Accrued expenses	+	100
Total liabilities		8,238
Net Assets
Total assets		2,912,010
Total liabilities	−	8,238
Net assets		$2,903,772
Net Assets by Source
Capital received from investors		2,903,830
Net investment income not yet distributed		12
Net realized capital losses		(70	)

Net Asset Value (NAV) by Share Class 

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Sweep Shares	$1,680,043		1,680,081			$1.00
Value Advantage Shares	$1,223,729		1,223,661			$1.00

See financial notes 59

Schwab AMT Tax-Free Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$70,882
Net Realized Gains and Losses
Net realized gains on investments		193
Expenses
Investment adviser and administrator fees		6,520
Transfer agent and shareholder service fees:
Sweep Shares		4,466
Value Advantage Shares		1,469
Registration fees		1,130
Portfolio accounting fees		86
Custodian fees		52
Professional fees		35
Shareholder reports		35
Trustees’ fees		31
Interest expense		4
Other expenses	+	12
Total expenses		13,840
Expense reduction by adviser and Schwab	−	2,757
Custody credits	−	34
Net expenses		11,049
Increase (Decrease) in Net Assets from Operations
Total investment income		70,882
Net expenses	−	11,049
Net investment income		59,833
Net realized gains	+	193
Increase in net assets from operations		$60,026

60 See financial notes

Schwab AMT Tax-Free Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$59,833	$31,616
Net realized gains	+	193	48
Increase in net assets from operations		60,026	31,664
Distributions to Shareholders
Distributions from net investment income
Sweep Shares		38,503	31,422
Value Advantage Shares	+	21,330	194
Total distributions from net investment income		59,833	31,616
Transactions in Fund Shares*
Shares Sold
Sweep Shares		7,552,321	5,393,721
Value Advantage Shares	+	2,238,778	101,632
Total shares sold		9,791,099	5,495,353
Shares Reinvested
Sweep Shares		37,885	30,578
Value Advantage Shares	+	18,789	167
Total shares reinvested		56,674	30,745
Shares Redeemed
Sweep Shares		(6,955,741)	(6,351,764)
Value Advantage Shares	+	(1,118,384)	(17,321)
Total shares redeemed		(8,074,125)	(6,369,085)
Net transactions in fund shares		1,773,648	(842,987)
Net Assets
Beginning of period		1,129,931	1,972,870
Total increase or decrease	+	1,773,841	(842,939)
End of period		$2,903,772	$1,129,931
Net investment income not yet distributed		$12	$12

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

See financial notes 61

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

Financial Notes

1. Business Structure of the Funds:

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

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Money Fund
Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab Municipal Money Fund offers four share classes: Sweep Shares, Value Advantage Shares, Select Shares and Institutional Shares. Schwab AMT Tax-Free Money Fund offers two share classes: Sweep Shares and Value Advantage Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums.

Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

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

(e) Expenses:

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

62 

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

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

Each fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the funds’ financial statements.

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

63

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

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

	Transfer Agent Fees		Shareholder Service Fees
Sweep Shares		0.15%		0.20%
Value Advantage Shares		0.05%		0.17%
Select Shares*		0.05%		0.17%
Institutional Shares*		0.05%		0.17%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses through April 29, 2009 for Select Shares and Institutional Shares, and for so long as CSIM is the investment adviser to the applicable funds for Sweep Shares and Value Advantage Shares as follows:

				AMT
	Municipal			Tax-Free
	Money Fund			Money Fund
Sweep Shares		0.63%	**		0.63%	**
Value Advantage Shares		0.45%			0.45%
Select Shares*		0.35%			n/a
Institutional Shares*		0.24%			n/a

*    Select Shares and Institutional Shares are only offered by Municipal Money Fund.

**   Prior to April 30, 2007 the expense limit for Sweep Shares was 0.64%.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, each fund’s total security transactions with other Schwab Funds were as follow:

Municipal Money Fund	$4,384,973
AMT Tax-Free Money Fund	$1,490,660

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject

64 

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

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions (continued):

to the oversight and periodic review of the Board of Trustees of the Schwab Funds. There was no interfund borrowing or lending activity for the funds during the period.

Trustees

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

4. Borrowings from Banks:

The funds may borrow money from banks and custodians. The funds may obtain temporary bank loans through the trust to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. There was no borrowing from the lines of credit for the funds during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.

5.  Federal Income Taxes:

(All dollars amounts are x 1,000)

As of December 31, 2007, the components of distributable earnings on a tax basis were as follows:

			AMT
	Municipal		Tax-Free
	Money Fund		Money Fund
Undistributed tax-exempt income		$—		$12
Undistributed long-term capital gains		—		—

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

			AMT
	Municipal		Tax-Free
Expire	Money Fund		Money Fund
2012		743		—
2013		652		70
Total		$1,395		$70

For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2007, the funds had no deferred realized net capital losses and the capital losses utilized to offset capital gains were as follows:

			AMT
	Municipal		Tax-Free
	Money Fund		Money Fund
Capital losses utilized		$1,956		$193

65

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

Financial Notes (continued)

5. Federal Income Taxes (continued):
(All dollars amounts are x 1,000)

			AMT
	Municipal		Tax-Free
	Money Fund		Money Fund
Current period distributions
Tax-exempt income		$463,816		$59,833
Prior period distributions
Tax-exempt income		$391,028		$31,616

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, no such reclassifications were required.

66 

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:
Schwab Municipal Money Fund
Schwab AMT Tax-Free 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 Municipal Money Fund and Schwab AMT Tax-Free Money Fund (two of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Funds”) at December 31, 2007, 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 periods presented, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

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Other Federal Tax Information: (unaudited)

The funds designate the following percentage of the distributions paid from net investment income as tax-exempt interest dividends for the fiscal year ended December 31, 2007.

	Percentage
Municipal Money Fund		100
AMT Tax-Free Money Fund		100

68 

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

69

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President– Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President–Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

70 

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

71

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

72 

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

73

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

74 

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR26568-05

Schwab Municipal Money Funds

Annual Report

December 31, 2007

Schwab New York AMT

Tax-Free Money Fund^tm

(formerly Schwab New York

Municipal Money Fund^tm)

Schwab New Jersey AMT

Tax-Free Money Fund^tm

(formerly Schwab New Jersey

Municipal Money Fund^tm)

Schwab Pennsylvania

Municipal Money Fund^tm

Schwab Massachusetts AMT

Tax-Free Money Fund^tm

(formerly Schwab Massachusetts

Municipal Money Fund^tm)

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Funds	3
Performance and Fund Facts	8
Fund Expenses	9
Financial Statements
Schwab New York AMT Tax-Free Money Fundtm	10
Schwab New Jersey AMT Tax-Free Money Fundtm	20
Schwab Pennsylvania Municipal Money Fundtm	27
Schwab Massachusetts AMT Tax-Free Money Fundtm	34
Financial Notes	41
Report of Independent Registered Public Accounting Firm	46
Trustees and Officers	48
Glossary	52

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Municipal Money Funds 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

2 Schwab Municipal Money Funds

The Investment Environment and the Funds

Kevin Shaughnessy (left) CFA, managing director and senior portfolio manager, is responsible for the management of the funds.

John Shelton (right) CFA, portfolio manager, has day-to-day responsibility for management of the funds.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

Schwab Municipal Money Funds 3

The Investment Environment and the Fundscontinued

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Municipal Money Funds generally maintained a weighted average maturity that was neutral to short relative to their peer groups. With an emphasis toward attractively priced weekly variable rate notes, the funds were able to add value throughout the year in spite of general market volatility. During the third quarter, as it became apparent that the Fed would have to ease monetary policy, the funds increased their exposure to one-year municipal notes, extending their weighted average maturity as short-term municipal yields declined.

Overall, the investment environment during the reporting period proved to be highly unusual for money funds as the markets reacted to subprime and credit turmoil. During the first half of the year, yields on municipal notes maturing 6-12 months were range bound, but dropped when the Fed lowered the Fed Funds Rate. In the latter half of the year, municipal fixed-rate notes fell approximately 80 basis points in response to a 100 basis point reduction in the Fed Funds Rate. In an environment characterized by falling yields, issuance of short-term municipal securities increased for the year. The term structure of tax-exempt money market yields maturing from 1 week to 13 months started out positive and then ended the year inverted. The Bond Market Association Municipal Index averaged 3.67%, while one-year notes averaged 3.51%.

Although New York anticipates its budget will remain in balance through the end of fiscal 2008 (4/1/07-3/31/08), it has lowered its revenue forecast for the year by about $610 million due to the national economic slowdown and the impact of the subprime market on the financial services sector. Projections for personal income tax and corporate franchise tax receipts have been lowered by $500 million and $230 million, respectively, although other smaller revenue items are expected to be slightly higher. However, the budget remains in balance because Medicaid-related spending is projected to be $556 million lower, due to reduced case loads, some other spending is expected to be nominally lower as well, and the use of $33 million in reserves. The State still projects ending the fiscal year with a level of reserves similar to the previous year, $2.8 billion or 5.1% of spending.

4 Schwab Municipal Money Funds

The Investment Environment and the Fundscontinued

In 2007, employment grew 0.9%, providing the State with its fourth year of economic expansion. For 2008, employment growth is forecasted to slow to 0.7%, and growth in wages and salaries, which set a record pace of 7.1% in 2007, is expected to slow to 4%, with a related fall off in revenue collections. The State has lowered its expectations for the level of bonuses in the financial sector, due to the substantial write-downs reported in recent months by many financial services firms. Further, the already weak manufacturing sector in upstate and western New York is feeling the effects of the slow down in the national economy.

Due to the accumulation of a 5% reserve as well as its mid-year budget revisions, the State has given itself some flexibility to respond to the current economic slow down without having to make draconian cuts. However, Governor Spitzer’s fiscal 2009 budget, to be released in January, must hold the line on spending to avoid draining the reserves early in an economic slow down.

New York City updated its $59.3 billion financial plan for fiscal 2008 (7/1/07- 6/30/08) in mid-October with year-to-date receipts and spending, at which time Mayor Bloomberg requested 2.5% across the board cuts from City agencies to provide $500 million in spending reductions for the rest of the year, with larger amounts to be realized in subsequent years. The City is expecting employment to stagnate, if not decline, in the third quarter due to major write-offs by Wall Street firms. Similarly, bonus payments paid in the third quarter are expected to be the lowest in several years, with an attendant ripple effect on sales tax revenues and real estate transaction-related revenues. However, this is not expected to fully erase the impact of the new highs reached in the commercial and apartment markets in October, which were not anticipated in the current year budget. The City is well positioned to enter a slow down, with over $2 billion set aside in the fiscal 2008 budget to offset spending in fiscal 2009.

Due to the continued dominance of the New York City metropolitan area in the State’s economy as well as the State’s revenue raising ability, New York remains a strong investment-grade credit. As of the report date, the State’s general obligation credit ratings were Aa3 from Moody’s Investors Service, AA from Standard & Poor’s, and AA from Fitch Ratings.

New Jersey’s revenue collections through November 2007, the first five months of the fiscal year, were slightly above budget estimates. Revenues for the full fiscal year ending 6/30/08 are projected to increase 3% over the prior fiscal year to $31.9 billion, reflecting expectations for slower tax growth as the economy cools. Strong tax revenue growth in the prior fiscal year was attributable to economic growth, an increase in the sales tax rate and an expansion of the sales tax base. Half of the revenue attributable to the increase in the sales tax rate is dedicated for property tax rebates and the other half for general government spending. Property tax rebates in the current budget are more than double last year’s level and, together with higher spending for education, account for most of the 8% increase in state appropriations. The budget is balanced by drawing down state reserves.

The State expects to end fiscal 2008 (ended 6/30/08) with reserves of $603 million, compared to $2.2 billion at the start of the year. Governor Corzine plans to propose major cutbacks and changes in his budget for the upcoming fiscal year. The plan includes the proposed sale of the state’s toll roads to a newly created, independent public benefit corporation. Proceeds of the sale would be used to reduce the State’s high debt load and fund improvements to transportation infrastructure. Other major issues expected to be addressed include pensions, post-retirement medical benefit costs, and the formula used for distributing state aid among schools.

Schwab Municipal Money Funds 5

The Investment Environment and the Fundscontinued

The State’s economy continues to expand, albeit at a slower pace than the nation. Job growth as of October 2007 was up 0.6% from year ago levels with growth in the service sector offsetting a continued decline in manufacturing. The unemployment rate remains low at 4.1% as of October and is below that of the national average. Personal income and state GDP on a per capita basis rank among the highest in the nation.

New Jersey remains a solid investment grade credit due to its large and diverse economy, high wealth levels and revenue-raising ability. As of the report date, the State’s general obligation credit ratings were Aa3 from Moody’s Investors Service, AA from Standard & Poor’s, and AA- from Fitch Ratings.

Pennsylvania’s economic picture was strong in the first half of fiscal 2008, but challenges could develop in the second half of fiscal 2008 mirroring national trends.

Pennsylvania’s general fund budget for fiscal 2008 (7/1/07-6/30/08) totals $27.2 billion and includes moderate revenue growth of 1% offset by a spending increase of 3% and the use of virtually all the $531 million fiscal 2007 surplus to balance the budget. The 2008 budget limits spending increases to less than 1% in all areas with the exception of education, public welfare, and corrections. The state projects ending fiscal 2008 with a minimal $190 million in reserves, or 0.04% of spending. While tax revenue collections through the first half of fiscal 2008 were 1.5% ahead of budget, Pennsylvania’s economic outlook for the remainder of fiscal 2008 is more cautious due to uncertainties surrounding the national economy, as Pennsylvania’s economic performance has historically closely mirrored that of the nation. Challenges related to weakness in the housing market along with rising energy costs may likely result in more moderated economic growth for Pennsylvania over the next year.

Job growth was slightly below national levels over the past year, but remains healthy as service industry jobs continue to replace the shrinking manufacturing sector. Employment as of November 2007 was up 0.6% year-over-year, with continued losses in the manufacturing sector more than offset by growth in the service sector. As of November 2007, unemployment was 4.2% down from 4.7% for calendar 2006. Personal income rose 1.3% in the first quarter of fiscal 2008 and has been similar to the national level for the past two years. As of the report date, the State’s general obligation credit ratings were Aa2 from Moody’s Investors Service, AA from Standard & Poor’s, and AA from Fitch Ratings.

Massachusetts’ budget for fiscal 2008 (7/1/07-6/30/08) totals $26.8 billion, a 4.3% increase over the fiscal 2007 budget. The budget includes a 7.1% increase in spending for health and human services, with spending on K-12 education and aid to local governments budgeted to increase 6.5% and 5.8%, respectively. The increase in healthcare spending includes funding for coverage of additional uninsured residents under the newly instituted universal healthcare legislation. Based on revised estimates as of 10/30/07, tax revenues are conservatively projected to rise 1.4%, a decline from growth rates that have averaged 7.1% since fiscal 2003. Although personal income and sales tax collections are estimated to rise 4.8% and 2.4%, respectively, corporate income taxes are estimated to fall 5.7%. As a result, the Commonwealth projects ending fiscal 2008 with $1.25 billion in general fund balances, or 4.9% of budgeted expenditures, similar to the $1.24 billion balance at 6/30/07. With $2.3 billion in the budget stabilization fund, the Commonwealth’s combined balances are expected to total $3.5 billion, or 12.1%. For the first six months of fiscal 2008 (ended 6/31/07), tax collections totaled $9.1 billion, a 4.2% increase over the same period a year ago. Personal income taxes totaled $5.2 billion, a 7.5% increase over the prior year period, while sales taxes totaled $2.0 billion, a 1.7% increase.

Massachusetts’ economy remains strong with growth in personal income above the national average; however, employment growth continues to lag the nation as jobs remain below

6 Schwab Municipal Money Funds

The Investment Environment and the Fundscontinued

pre-recession peaks. Through the twelve months ending November 2007, Massachusetts gained over 29,000 jobs, a 0.9% increase from the prior year period, compared to 1.1% growth in U.S. jobs for the same period. In November 2007, the unemployment rate declined to 3.9% from 4.8% in November 2006. For the twelve months ending September 2007, personal income grew 6.8%, up from 5.4% for prior year period, and above the national growth rate of 6.4%. Massachusetts’ per capita personal income continues to be higher than that of the nation and currently ranks 3rd behind New Jersey and Connecticut. As of the report date, the Commonwealth’s general obligation credit ratings were Aa2 from Moody’s Investors Service, AA from Standard & Poor’s, and AA from Fitch Ratings.

As previously communicated to shareholders, effective February 5, 2008, the Schwab Massachusetts Municipal Money Fund, the Schwab New Jersey Municipal Money Fund and the Schwab New York Municipal Money Fund modified their investment strategies. The funds will now seek to provide income exempt from the federal Alternative Minimum Tax (AMT) as well as federal and applicable state income taxes. Accordingly, their names have been changed to more accurately reflect their new investment strategies.

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

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

Schwab Municipal Money Funds 7

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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.

	Municipal Money Funds
	New York				New Jersey				Massachusetts
	AMT Tax-Free				AMT Tax-Free				AMT Tax-Free
	Money Fund				Money Fund		Pennsylvania		Money Fund
			Value
	Sweep		Advantage
	Shares		Sharestm
Ticker Symbol	SWNXX		SWYXX		SWJXX		SWEXX		SWDXX
Seven-Day Yield1		2.70%		2.90%		2.69%		2.78%		2.74%
Seven-Day Yield—No Waiver2		2.61%		2.74%		2.39%		2.41%		2.42%
Seven-Day Effective Yield1		2.74%		2.94%		2.72%		2.82%		2.77%
Seven-Day Taxable-Equivalent Effective Yield1,3		4.71%		5.05%		4.60%		4.48%		4.50%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

	Municipal Money Funds
	New York	New Jersey		Massachusetts
	AMT Tax-Free	AMT Tax-Free		AMT Tax-Free
	Money Fund	Money Fund	Pennsylvania	Money Fund
Weighted Average Maturity	21 days	33 days	26 days	30 days
Credit Quality of Holdings % of portfolio	100% Tier 1	100% Tier 1	100% Tier 1	100% Tier 1
Credit-Enhanced Securities % of portfolio	56%	69%	80%	64%
Minimum Initial Investment4
Sweep Invesments®	*	*	*	*
Value Advantage Sharestm	$25,000	n/a	n/a	n/a
($15,000 for IRA and custodial accounts)5

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
3	Taxable-equivalent effective yields assume the following 2007 maximum tax rates: New York: 41.82% (federal regular income, New York state and New York city taxes); New Jersey 40.83%, Pennsylvania 37.00%, and Massachusetts 38.45% (federal regular income and state personal income taxes). Investment income may be subject to the Alternative Minimum Tax.
4	Please see prospectus for further detail and eligibility requirements.
5	Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult your tax advisor about your situation.

^*  Subject to the eligibility terms and conditions of your Schwab account agreement.

8 Schwab Municipal Money Funds

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio 1		Account Value		(Net of Expenses)		During Period 2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab New York AMT Tax-Free Money Fundtm
Sweep Shares
Actual Return		0.66%	$	1,000	$	1,014.90	$	3.35
Hypothetical 5% Return		0.66%	$	1,000	$	1,021.88	$	3.36
Value Advantage Sharestm
Actual Return		0.46%	$	1,000	$	1,015.90	$	2.34
Hypothetical 5% Return		0.46%	$	1,000	$	1,022.89	$	2.35
Schwab New Jersey AMT Tax-Free Money Fundtm
Actual Return		0.66%	$	1,000	$	1,014.90	$	3.35
Hypothetical 5% Return		0.66%	$	1,000	$	1,021.88	$	3.36
Schwab Pennsylvania Municipal Money Fundtm
Actual Return		0.65%	$	1,000	$	1,015.10	$	3.30
Hypothetical 5% Return		0.65%	$	1,000	$	1,021.93	$	3.31
Schwab Massachusetts AMT Tax-Free Money Fundtm
Actual Return		0.65%	$	1,000	$	1,015.00	$	3.30
Hypothetical 5% Return		0.65%	$	1,000	$	1,021.93	$	3.31

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

Schwab Municipal Money Funds 9

Schwab New York AMT Tax-Free Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Sweep Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.03			2.82			1.78			0.56			0.41
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.65			0.65			0.66			0.69			0.69
Gross operating expenses		0.70			0.84			0.84			0.84			0.84
Net investment income (loss)		2.98			2.80			1.75			0.55			0.41
Net assets, end of period ($ x 1,000,000)		1,561			1,217			1,031			1,073			1,038

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Value Advantage Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.01
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.24			3.03			2.00			0.80			0.66
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.45			0.45			0.45			0.45			0.45
Gross operating expenses		0.57			0.60			0.61			0.61			0.61
Net investment income (loss)		3.18			2.98			2.00			0.79			0.65
Net assets, end of period ($ x 1,000,000)		1,477			1,103			834			654			690

¹ Per-share amount was less than $0.01.

10 See financial notes

Schwab New York AMT Tax-Free Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	97	.5%	Municipal Securities		2,960,672		2,960,672
	97	.5%	Total Investments		2,960,672		2,960,672
	2	.5%	Other Assets and Liabilities				77,120
	100	.0%	Net Assets				3,037,792

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 97.5% of net assets
New York 93.0%
Albany IDA
Refunding IDRB (United Cerebral Palsy Assoc) Series 1997B
3.41%, 01/03/08 (a)(b)		8,385		8,385
Broome Cnty
BAN Series 2007
3.64%, 04/18/08		21,300		21,322
Broome Cnty IDA
Civic Facility RB (Methodist Homes For the Aging) Series 2003
3.41%, 01/02/08 (a)(b)		4,245		4,245
Chautauqua Cnty
Civic Facility RB (Jamestown Center City Development Corp) Series 2000A
3.49%, 01/03/08 (a)(b)		11,210		11,210
Erie Cnty IDA
RB (Orchard Park CCRC) Series 2006B
3.39%, 01/03/08 (a)(b)		7,000		7,000
School Facility RB Series 2007A
3.53%, 01/03/08 (a)(b)(c)(d)		6,100		6,100
Herkimer Cnty
Civic Facility RB (Templeton Foundation) Series 2000
3.48%, 01/03/08 (a)(b)		1,450		1,450
Hudson Yards Infrastructure Corp
Sr RB Series 2007A
3.53%, 01/03/08 (a)(b)(c)(d)		14,415		14,415
Jay Street Dev Corp
Courts Facility Lease RB Fiscal 2004 Series A2
3.25%, 01/02/08 (a)(b)		4,765		4,765
Long Island Power Auth
Electric System General RB Series 1998A
3.49%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
Electric System General RB Series 2001A
3.53%, 01/03/08 (a)(b)(c)(d)		4,365		4,365
Electric System General RB Series 2006A
3.54%, 01/03/08 (a)(b)(c)(d)		4,135		4,135
3.59%, 01/02/08 (a)(b)(c)(d)		9,400		9,400
Electric System General RB Series 2006D
3.47%, 01/03/08 (a)(b)(c)(d)		6,500		6,500
Electric System General RB Series 2006E
3.47%, 01/03/08 (a)(b)(c)(d)		12,050		12,050
3.52%, 01/03/08 (a)(b)(c)(d)		4,435		4,435
Electric System Subordinated RB Series 2001-1B
3.73%, 01/02/08 (a)(b)		9,500		9,500
Longwood Central SD
TAN
3.62%, 06/27/08		25,000		25,074
Metropolitan Transportation Auth
Dedicated Tax Fund Bonds Series 1999A
3.47%, 01/03/08 (a)(c)(d)		25,405		25,405
Dedicated Tax Fund Bonds Series 2002A
3.49%, 01/03/08 (a)(b)(c)(d)		10,980		10,980
Dedicated Tax Fund Bonds Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		2,750		2,750
Dedicated Tax Fund Refunding Bonds Series 2005A
3.41%, 01/03/08 (a)(b)(c)		7,030		7,030
RB Series 2005B
3.44%, 01/03/08 (a)(b)(c)(d)		11,350		11,350
3.48%, 01/03/08 (a)(b)(c)(d)		3,495		3,495
3.53%, 01/03/08 (a)(b)(c)(d)		10,570		10,570
3.75%, 03/20/08 (b)(c)(d)		8,175		8,175
RB Series 2005E1
3.37%, 01/03/08 (a)(b)		15,000		15,000
RB Series 2005G1
3.56%, 01/02/08 (a)(b)		5,950		5,950
RB Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		2,998		2,998
RB Series 2006B
3.47%, 01/03/08 (a)(b)(c)(d)		30,165		30,165
RB Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		25,000		25,000
3.53%, 01/03/08 (a)(b)(c)(d)		10,610		10,610
Refunding RB Series 2002A
3.48%, 01/03/08 (a)(b)(c)(d)		28,995		28,995
Refunding RB Series 2002G2
3.35%, 01/03/08 (a)(b)(c)		11,675		11,675

See financial notes 11

Schwab New York AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Transportation Revenue BAN Series CP1 A, B, C
2.80%, 02/11/08 (b)		2,000		2,000
2.83%, 02/06/08 (b)		25,000		25,000
2.90%, 02/08/08 (b)		3,000		3,000
3.05%, 06/11/08 (b)		25,000		25,000
3.42%, 02/06/08 (b)		42,500		42,500
Nassau Cnty
GO Bonds Series 2007B
3.27%, 01/02/08 (a)(b)		10,000		10,000
Nassau Cnty Industrial Development Agency
RB (Amsterdam at Harborside) Series 2007C
3.27%, 01/02/08 (a)(b)		12,550		12,550
New York City
GO Bonds Fiscal 1994 Series A7
3.45%, 01/02/08 (a)(b)		7,200		7,200
GO Bonds Fiscal 1994 Series H4
3.45%, 01/02/08 (a)(b)		3,000		3,000
GO Bonds Fiscal 1995 Series B4
3.57%, 01/02/08 (a)(b)(c)		1,400		1,400
GO Bonds Fiscal 2000 Series A
3.47%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
GO Bonds Fiscal 2001 Series A
3.54%, 01/03/08 (a)(b)(c)(d)		10,185		10,185
GO Bonds Fiscal 2001 Series B
3.48%, 01/03/08 (a)(b)(c)(d)		2,960		2,960
GO Bonds Fiscal 2002 Series A
3.55%, 01/03/08 (a)(b)(c)(d)		21,240		21,240
GO Bonds Fiscal 2002 Series A6
3.60%, 01/02/08 (a)(b)(c)		11,670		11,670
GO Bonds Fiscal 2002 Series G
2.93%, 08/01/08 (b)		10,000		10,132
GO Bonds Fiscal 2003 Series C2
3.40%, 01/02/08 (a)(b)		5,030		5,030
GO Bonds Fiscal 2003 Series C3
3.35%, 01/02/08 (a)(b)		25,700		25,700
GO Bonds Fiscal 2004 Series F
3.51%, 01/03/08 (a)(b)(c)(d)		75,000		75,000
GO Bonds Fiscal 2004 Series H-5
3.40%, 01/02/08 (a)(b)		1,400		1,400
GO Bonds Fiscal 2004 Series H-6
3.42%, 01/02/08 (a)(b)		12,720		12,720
GO Bonds Fiscal 2004 Series H1
3.60%, 01/02/08 (a)(b)		20,000		20,000
GO Bonds Fiscal 2004 Series H3
3.35%, 01/02/08 (a)(b)		41,100		41,100
GO Bonds Fiscal 2004 Series H7
3.45%, 01/02/08 (a)(b)		9,340		9,340
GO Bonds Fiscal 2004 Series J
3.47%, 01/03/08 (a)(b)(c)(d)		9,160		9,160
GO Bonds Fiscal 2005 Series E
3.48%, 01/03/08 (a)(b)(c)(d)		20,890		20,890
GO Bonds Fiscal 2005 Series J
3.49%, 01/03/08 (a)(c)(d)		5,065		5,065
GO Bonds Fiscal 2005 Series N
3.48%, 01/03/08 (a)(b)(c)(d)		20,095		20,095
GO Bonds Fiscal 2005 Series O
3.48%, 01/03/08 (a)(c)(d)		2,745		2,745
GO Bonds Fiscal 2006 Series E2
3.60%, 01/02/08 (a)(b)		14,475		14,475
GO Bonds Fiscal 2006 Series G
3.47%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
3.53%, 01/03/08 (a)(b)(c)(d)		11,310		11,310
GO Bonds Fiscal 2006 Series I1
3.46%, 01/03/08 (a)(c)(d)		6,395		6,395
3.47%, 01/03/08 (a)(b)(c)(d)		6,165		6,165
3.54%, 01/03/08 (a)(b)(c)(d)		27,920		27,920
GO Bonds Fiscal 2006 Series I3
3.65%, 01/02/08 (a)(b)		13,900		13,900
GO Bonds Fiscal 2006 Series I4
3.34%, 01/02/08 (a)(b)		8,500		8,500
GO Bonds Fiscal 2006 Series I5
3.53%, 01/02/08 (a)(b)		30,180		30,180
GO Bonds Fiscal 2006 Series I6
3.53%, 01/02/08 (a)(b)		27,145		27,145
GO Bonds Fiscal 2006 Series I8
3.70%, 01/02/08 (a)(b)		14,000		14,000
GO Bonds Fiscal 2007 Series A
3.46%, 01/03/08 (a)(c)(d)		8,000		8,000
GO Bonds Fiscal 2007 Series C1
3.49%, 01/03/08 (a)(b)(c)(d)		5,295		5,295
GO Bonds Fiscal 2007 Series D
3.47%, 01/03/08 (a)(c)(d)		6,820		6,820
3.49%, 01/03/08 (a)(c)(d)		4,400		4,400
GO Bonds Fiscal 2008 Series A1
3.47%, 01/03/08 (a)(c)(d)		37,950		37,950
GO Bonds Fiscal 2008 Series C
3.46%, 01/03/08 (a)(c)(d)		7,445		7,445
GO Bonds Fiscal 2008 Series C1
3.50%, 01/03/08 (a)(b)(c)(d)		7,345		7,345
GO Bonds Fiscal 2008 Series D1
3.48%, 01/03/08 (a)(c)(d)		6,260		6,260
GO Bonds Fiscal 2008 Series D3
3.29%, 01/03/08 (a)(c)		3,000		3,000
GO Bonds Fiscal 2008 Series D4
3.38%, 01/03/08 (a)(c)		4,000		4,000
GO Fiscal 2005 Series M & Fiscal 2006 Series I1
3.48%, 01/03/08 (a)(c)(d)		8,395		8,396
New York City Health & Hospitals Corp
Health System Bonds Series 1999A
3.47%, 01/03/08 (a)(b)(c)(d)		17,620		17,620
New York City HFA
Housing RB (Normandie Court I) Series 1991A
3.35%, 01/02/08 (a)(b)		52,250		52,250
New York City IDA
Civic Facility RB (Wartburg Lutheran Home for the Aging & Wartburg Nursing Home) Series 2006A
3.41%, 01/03/08 (a)(b)		8,090		8,090
Liberty Bonds (7 World Trade Center) Series A
3.49%, 01/03/08 (a)(b)(c)(d)		3,835		3,835
New York City Municipal Water Finance Auth
CP Notes Series 1
3.55%, 01/17/08 (c)		48,000		48,000
CP Notes Series 7
3.38%, 02/15/08		28,300		28,300
Water & Sewer Second General Resolution RB Fiscal 2007 Series CC2
3.60%, 01/02/08 (a)(c)		25,150		25,150

12 See financial notes

Schwab New York AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Water & Sewer System RB Fiscal 2001 Series D
3.66%, 01/03/08 (a)(c)(d)		4,995		4,995
Water & Sewer System RB Fiscal 2001 Series F1
3.65%, 01/02/08 (a)(c)		4,000		4,000
Water & Sewer System RB Fiscal 2002 & 2003 Series A
3.53%, 01/03/08 (a)(c)(d)		15,000		15,000
Water & Sewer System RB Fiscal 2002 Series G
3.47%, 01/03/08 (a)(b)(c)(d)		18,545		18,545
Water & Sewer System RB Fiscal 2005 Series B
3.47%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Water & Sewer System RB Fiscal 2005 Series C
3.66%, 01/03/08 (a)(b)(c)(d)		5,200		5,200
Water & Sewer System RB Fiscal 2005 Series D
3.47%, 01/03/08 (a)(c)(d)		1,445		1,445
3.48%, 01/03/08 (a)(c)(d)		22,880		22,880
3.49%, 01/03/08 (a)(c)(d)		4,800		4,800
3.50%, 01/02/08 (a)(c)(d)		4,270		4,270
Water & Sewer System RB Fiscal 2006 Series A
3.45%, 01/03/08 (a)(b)(c)(d)		25,400		25,400
3.48%, 01/03/08 (a)(c)(d)		41,000		41,000
3.48%, 01/03/08 (a)(c)(d)		7,000		7,000
3.49%, 01/03/08 (a)(c)(d)		4,500		4,500
3.54%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Water & Sewer System RB Fiscal 2006 Series D
3.47%, 01/03/08 (a)(c)(d)		12,025		12,025
3.54%, 01/03/08 (a)(c)(d)		6,280		6,280
Water & Sewer System RB Fiscal 2007 Series A
3.47%, 01/03/08 (a)(c)(d)		31,845		31,845
Water & Sewer System RB Fiscal 2008 Series 2007A
3.47%, 01/03/08 (a)(c)(d)		23,187		23,187
Water & Sewer System RB Fiscal 2008 Series AA
3.54%, 01/03/08 (a)(c)(d)		20,995		20,995
Water & Sewer System RB Fiscal 2008 Series BB1
3.45%, 01/02/08 (a)(c)		64,700		64,700
Water & Sewer System RB Fiscal 2008 Series BB3
3.53%, 01/02/08 (a)(c)		6,000		6,000
Water & Sewer System RB Fiscal 2000 Series C
3.54%, 01/02/08 (a)(c)		6,900		6,900
New York City Transitional Finance Auth
Building Aid RB Fiscal 2007 Series S1
3.54%, 01/03/08 (a)(b)(c)(d)		10,800		10,800
Building Aid RB Fiscal 2007 Series S2
3.47%, 01/03/08 (a)(b)(c)(d)		27,985		27,985
Future Tax Secured Bonds Fiscal 1999 Series A
3.49%, 01/03/08 (a)(c)(d)		4,970		4,970
Future Tax Secured Bonds Fiscal 2000 Series C
3.53%, 01/03/08 (a)(c)(d)		14,545		14,545
Future Tax Secured Bonds Fiscal 2001 Series B
3.60%, 01/02/08 (a)(c)		18,200		18,200
Future Tax Secured Bonds Fiscal 2004 Series B & C & Fiscal 2003 Series E
3.47%, 01/03/08 (a)(c)(d)		9,405		9,405
Future Tax Secured Bonds Fiscal 2000 Series A
3.54%, 01/03/08 (a)(b)(c)(d)		13,845		13,845
Future Tax Secured Refunding Bonds Fiscal 2005 Series A
3.47%, 01/03/08 (a)(c)(d)		24,945		24,945
Future Tax Secured Subordinate Bonds Fiscal 2007 Series B
3.48%, 01/03/08 (a)(c)(d)		6,400		6,400
Future Tax Secured Subordinate Bonds Fiscal 2007 Series C1
3.47%, 01/03/08 (a)(c)(d)		3,765		3,765
Recovery Bonds Fiscal 2003 Series 2A
3.60%, 01/02/08 (a)(c)		4,490		4,490
Recovery Bonds Fiscal 2003 Series 3H
3.67%, 01/02/08 (a)(c)		34,915		34,915
Subordinate Future Tax Secured Bonds Fiscal 2007 Series B
3.47%, 01/03/08 (a)(c)(d)		5,590		5,590
New York Convention Center Development Corp
RB Series 2005
3.47%, 01/03/08 (a)(b)(c)(d)		7,200		7,200
New York Liberty Development Corp
RB (Goldman Sachs Headquarters) Series 2005
3.48%, 01/03/08 (a)(c)(d)		41,000		41,000
3.48%, 01/03/08 (a)(c)(d)		16,125		16,125
3.49%, 01/03/08 (a)(c)(d)		9,300		9,300
New York State Dormitory Auth
Court Facilities Lease RB (New York City) Series 2005A
3.44%, 01/03/08 (a)(b)(c)(d)		17,590		17,590
Insured RB (Mt Sinai School of Medicine) Series 1994A
3.47%, 01/03/08 (a)(b)(c)(d)		2,900		2,900
Personal Income Tax RB Series 2005F & 2006A
3.47%, 01/03/08 (a)(c)(d)		9,260		9,260
Personal Income Tax RB Series 2006C
3.48%, 01/03/08 (a)(c)(d)		18,132		18,132
3.48%, 01/03/08 (a)(c)(d)		14,000		14,000
3.49%, 01/03/08 (a)(c)(d)		22,945		22,945
Personal Income Tax RB Series 2006D
3.47%, 01/03/08 (a)(c)(d)		6,130		6,130
3.49%, 01/03/08 (a)(c)(d)		5,500		5,500
3.53%, 01/03/08 (a)(c)(d)		7,900		7,900
Personal Income Tax RB Series 2007A
3.47%, 01/03/08 (a)(c)(d)		14,995		14,995

See financial notes 13

Schwab New York AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
3.50%, 01/03/08 (a)(c)(d)		5,230		5,230
Personal Income Tax Refunding RB Series 2005B
3.44%, 01/03/08 (a)(b)(c)(d)		13,580		13,580
RB (1989 Resolution) Series 2000
3.55%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
RB (Columbia University) Series 2006A
3.49%, 01/02/08 (a)(c)(d)		5,970		5,970
RB (Memorial Sloan-Kettering Cancer Center) Series 2006-2
3.48%, 01/03/08 (a)(c)(d)		27,160		27,160
RB (New York Foundling Charitable Corp) Series 1997
3.35%, 01/02/08 (a)(b)		9,175		9,175
RB (State University Educational Facilities) Series 2000B
3.47%, 01/03/08 (a)(b)(c)(d)		47,030		47,030
New York State Energy Research & Development Auth
Facilities RB (Consolidated Edison) Series 2005A-3
3.35%, 01/02/08 (a)(b)		3,000		3,000
Gas Facilities RB (Brooklyn Union Gas) Series 1996
3.48%, 01/03/08 (a)(b)(c)(d)		15,695		15,695
New York State Environmental Facilities Corp
State Clean Water & Drinking Water Revolving Funds RB Series 2002B
3.47%, 01/03/08 (a)(c)(d)		11,285		11,285
3.54%, 01/03/08 (a)(c)(d)		24,750		24,750
State Clean Water & Drinking Water Revolving Funds RB Series 2006C
3.49%, 01/03/08 (a)(c)(d)		10,370		10,370
State Clean Water & Drinking Water Revolving Funds RB Series 2007A
3.48%, 01/03/08 (a)(c)(d)		7,500		7,500
State Clean Water & Drinking Water Revolving Funds Subordinated RB Series 2007B
3.47%, 01/03/08 (a)(c)(d)		67,940		67,940
3.49%, 01/03/08 (a)(c)(d)		9,865		9,865
New York State HFA
Service Contract Refunding RB Series 2003I
3.35%, 01/02/08 (a)(b)		5,000		5,000
New York State Local Assistance Corp
Refunding RB Series 1993C
3.55%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
Subordinate Lien Refunding Bonds Series 2003A6V
3.35%, 01/02/08 (a)(b)(c)		1,500		1,500
Subordinate Lien Refunding RB Series 2003A5V
3.35%, 01/02/08 (a)(b)(c)		2,500		2,500
New York State Power Auth
CP Series 1
3.05%, 01/18/08 (c)		15,583		15,583
3.11%, 02/05/08		15,931		15,931
3.45%, 01/16/08		28,407		28,407
CP Series 2
3.30%, 01/14/08 (c)		8,000		8,000
RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
New York State Thruway Auth
General RB Series F
3.54%, 01/03/08 (a)(b)(c)(d)		15,455		15,455
General RB Series G
3.47%, 01/03/08 (a)(b)(c)(d)		4,990		4,990
3.49%, 01/03/08 (a)(b)(c)(d)		8,415		8,415
General RB Series H
3.46%, 01/03/08 (a)(b)(c)(d)		8,865		8,865
Personal Income Tax RB Series 2006A
3.49%, 01/03/08 (a)(c)(d)		5,045		5,045
Personal Income Tax RB Series 2007A
3.46%, 01/03/08 (a)(c)(d)		10,100		10,100
3.47%, 01/03/08 (a)(c)(d)		9,400		9,400
Second General Highway & Bridge Trust Fund Bonds Series 2005B
3.46%, 01/03/08 (a)(b)(c)(d)		3,500		3,500
Second General Highway & Bridge Trust Fund Bonds Series 2007A
3.54%, 01/03/08 (a)(b)(c)(d)		11,480		11,480
Second General Highway & Bridge Trust Fund Bonds Series 2007B
3.46%, 01/03/08 (a)(c)(d)		3,155		3,155
New York State Tobacco Settlement Financing Corp
Asset-Backed RB (State Contingency Contract) Series 2003A1C
3.48%, 01/03/08 (a)(b)(c)(d)		15,900		15,900
Niagara Falls Bridge Commission
Toll Bridge System RB Series 1993A
3.38%, 01/02/08 (a)(b)(c)		3,600		3,600
North Babylon Union Free SD
TAN
3.62%, 06/26/08		2,000		2,008
Ontario Cnty IDA
Civic Facility RB (CHF-Finger Lakes) Series 2006A
3.43%, 01/03/08 (a)(b)		6,000		6,000
Otsego Cnty Industrial Development Agency
RB (Mary Imogene Bassett Hospital) Series 2007A
3.43%, 01/03/08 (a)(b)		4,375		4,375
Plainview-Old Bethpage Central SD
TAN 2007-2008 Taxes
3.71%, 06/30/08		7,000		7,018
Port Auth of New York & New Jersey
Consolidated Bonds 135th Series
3.47%, 01/03/08 (a)(c)(d)		6,000		6,000
Consolidated Bonds 140th Series
3.76%,03/28/08 (b)(c)(d)		7,485		7,485
Consolidated Bonds 144th Series
3.46%, 01/03/08 (a)(c)(d)		2,400		2,400
3.49%, 01/03/08 (a)(c)(d)		4,000		4,000

14 See financial notes

Schwab New York AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Consolidated Bonds 148th Series
3.47%, 01/03/08 (a)(b)(c)(d)		31,000		31,000
Consolidated Bonds 149th Series
3.46%, 01/03/08 (a)(b)(c)(d)		7,900		7,900
CP Series B
2.91%, 02/04/08 (c)		5,285		5,285
3.05%, 01/15/08 (c)		16,100		16,100
Sachem Central SD
TAN 2007-2008
3.62%, 06/26/08		43,000		43,178
Sales Tax Asset Receivable Corp
RB Fiscal 2005 Series A
3.47%, 01/03/08 (a)(b)(c)(d)		6,400		6,400
3.47%, 01/03/08 (a)(b)(c)(d)		6,540		6,540
3.49%, 01/03/08 (a)(b)(c)(d)		5,580		5,580
3.54%, 01/03/08 (a)(b)(c)(d)		34,095		34,095
Saratoga Cnty Industrial Development Agency
RB (Saratoga Hospital Obligated Group) Series 2007A
3.41%, 01/03/08 (a)(b)		3,945		3,945
South Huntington Union Free SD
TAN for 2007-2008 Taxes
3.47%, 06/30/08		15,000		15,038
St Lawrence Cnty IDA
Civic Facility Refunding RB (Claxton-Hepburn Medical Center) Series 2006
3.41%, 01/03/08 (a)(b)		3,860		3,860
Suffolk Cnty Water Auth
Water System RB Series 1992C
3.54%, 01/02/08 (a)(b)(c)(d)		6,660		6,660
Triborough Bridge & Tunnel Auth
General RB Series 2001A
3.46%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
General RB Series 2006A
3.48%, 01/03/08 (a)(c)(d)		5,099		5,099
General RB Series 2007A
3.47%, 01/03/08 (a)(c)(d)		8,990		8,990
General Refunding RB Series 2002B
3.47%, 01/03/08 (a)(c)(d)		14,000		14,000
3.49%, 01/03/08 (a)(c)(d)		9,995		9,995
3.50%, 01/02/08 (a)(b)(c)(d)		8,910		8,910
General Refunding RB Series 2005B2
3.42%, 01/03/08 (a)(c)		1,000		1,000
Subordinate Refunding RB Series 2000AB
3.40%, 01/02/08 (a)(b)(c)		2,810		2,810
TSASC
Tobacco Settlement Asset-Backed Bonds Series 2006-1
3.50%, 01/03/08 (a)(b)(c)(d)		5,600		5,600
Westchester Industrial Development Agency
Mortgage RB (Kendal on Hudson) Series 2007
3.39%, 01/03/08 (a)(b)		17,850		17,850
William Floyd Union Free SD
TAN 2007-2008
3.70%, 06/30/08		50,500		50,632
				2,823,345
Puerto Rico 4.5%
Puerto Rico
Public Improvement Bonds Series 2001A
3.47%, 01/03/08 (a)(b)(c)(d)		1,235		1,235
Public Improvement Refunding Bonds Series 2002A
3.55%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
Public Improvement Refunding Bonds Series 2007A2
3.40%, 01/03/08 (a)(b)(c)		2,000		2,000
Public Improvement Refunding Bonds Series 2007A3
3.27%, 01/02/08 (a)(b)(c)		5,800		5,800
Public Improvement Refunding Bonds Series 2007A4
3.27%, 01/02/08 (a)(b)(c)		5,825		5,825
TRAN Series 2008
3.40%, 07/30/08 (b)		15,000		15,072
Puerto Rico Electric Power Auth
RB Series HH
3.52%, 01/03/08 (a)(b)(c)(d)		6,000		6,000
Refunding RB Series UU
3.47%, 01/03/08 (a)(b)(c)(d)		7,060		7,060
3.52%, 01/03/08 (a)(b)(c)(d)		7,200		7,200
Puerto Rico Highway & Transportation Auth
Highway Refunding RB Series CC
3.44%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Transportation RB Series 1998A
3.30%, 01/02/08 (a)(b)(c)		18,790		18,790
Transportation RB Series L
3.44%, 01/03/08 (a)(b)(c)(d)		20,000		20,000
Transportation Refunding RB Series N
3.55%, 01/03/08 (a)(b)(c)(d)		6,500		6,500
Puerto Rico Infrastructure Financing Auth
Special Tax Refunding RB Series 2005C
3.48%, 01/02/08 (a)(b)(c)(d)		5,625		5,625
Puerto Rico Public Buildings Auth
Government Facilities Refunding RB Series M3
3.55%, 01/03/08 (a)(b)(c)		25,000		25,000
Refunding RB Series L
3.47%, 01/03/08 (a)(b)(c)(d)		500		500
Puerto Rico Sales Tax Financing Corp
Sales Tax RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		1,720		1,720
3.50%, 01/03/08 (a)(b)(c)(d)		6,000		6,000
				137,327
Total Municipal Securities (Cost $2,960,672)				2,960,672
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $2,960,672.

See financial notes 15

Schwab New York AMT Tax-Free Money Fund

Portfolio Holdings continued

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $1,798,847 or 59.2% of net assets.

BAN — Bond anticipation note

GO — General obligation

HFA — Housing finance agency

IDA — Industrial development authority

IDRB — Industrial development revenue bond

RB — Revenue bond

SD — School district

TAN — Tax antipication note

TRAN — Tax and revenue anticipation note

16 See financial notes

Schwab New York AMT Tax-Free Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$2,960,672
Cash		247
Receivables:
Investments sold		51,535
Interest		17,926
Fund shares sold		12,644
Prepaid expenses	+	5
Total assets		3,043,029
Liabilities
Payables:
Investment adviser and administrator fees		81
Transfer agent and shareholder services fees		64
Fund shares redeemed		4,357
Distributions to shareholders		517
Accrued expenses	+	218
Total liabilities		5,237
Net Assets
Total assets		3,043,029
Total liabilities	−	5,237
Net assets		$3,037,792
Net Assets by Source
Capital received from investors		3,037,792

Net Asset Value (NAV) by Share Class 

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Sweep Shares	$1,560,727		1,560,546			$1.00
Value Advantage Shares	$1,477,065		1,476,788			$1.00

See financial notes 17

Schwab New York AMT Tax-Free Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$93,566
Net Realized Gains and Losses
Net realized gains on investments		413
Expenses
Investment adviser and administrator fees		8,545
Transfer agent and shareholder service fees:
Sweep Shares		4,682
Value Advantage Shares		2,722
Registration fees		234
Tax expenses		146
Portfolio accounting fees		105
Custodian fees		65
Shareholder reports		42
Professional fees		36
Trustees’ fees		34
Interest expense		4
Other expenses	+	18
Total expenses		16,633
Expense reduction by adviser and Schwab	−	2,214
Custody credits	−	26
Net expenses		14,393
Increase (Decrease) in Net Assets from Operations
Total investment income		93,566
Net expenses	−	14,393
Net investment income		79,173
Net realized gains	+	413
Increase in net assets from operations		$79,586

18 See financial notes

Schwab New York AMT Tax-Free Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$79,173	$59,005
Net realized gains	+	413	720
Increase in net assets from operations		79,586	59,725
Distributions to Shareholders
Distributions from net investment income
Sweep Shares		39,892	31,040
Value Advantage Shares	+	39,413	28,047
Total distributions from net investment income		79,305	59,087
Transactions in Fund Shares *
Shares Sold
Sweep Shares		7,261,363	5,795,838
Value Advantage Shares	+	1,960,583	1,507,421
Total shares sold		9,221,946	7,303,259
Shares Reinvested
Sweep Shares		39,234	30,536
Value Advantage Shares	+	36,265	25,992
Total shares reinvested		75,499	56,528
Shares Redeemed
Sweep Shares		(6,957,069)	(5,640,231)
Value Advantage Shares	+	(1,622,927)	(1,264,944)
Total shares redeemed		(8,579,996)	(6,905,175)
Net transactions in fund shares		717,449	454,612
Net Assets
Beginning of period		2,320,062	1,864,812
Total increase	+	717,730	455,250
End of period		$3,037,792	$2,320,062

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

See financial notes 19

Schwab New Jersey AMT Tax-Free Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.02			2.82			1.80			0.57			0.43
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.66	2		0.65			0.65			0.65			0.65
Gross operating expenses		0.76			0.88			0.86			0.86			0.86
Net investment income (loss)		2.96			2.78			1.78			0.57			0.43
Net assets, end of period ($ x 1,000,000)		726			513			472			448			463

¹ Per-share amount was less than $0.01.

² The ratio of net operating expenses would have been 0.65%, if tax expense had not been included.

20 See financial notes

Schwab New Jersey AMT Tax-Free Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.9%	Municipal Securities		717,277		717,277
	98	.9%	Total Investments		717,277		717,277
	1	.1%	Other Assets and Liabilities				8,313
	100	.0%	Net Assets				725,590

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 98.9% of net assets
New Jersey 88.4%
Burlington Cnty
BAN Series 2007F
2.83%, 12/26/08		10,000		10,064
Camden Cnty Municipal Utilities Auth
Sewer Refunding RB Series 2006B
3.32%, 07/15/08 (b)		1,225		1,233
Essex Cnty Improvement Auth
GO Guaranteed Lease RB (Cnty Correctional Facility) Series 2000
3.66%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Project Consolidation RB Series 2007
3.50%, 01/02/08 (a)(b)(c)(d)		12,255		12,255
Fair Lawn
BAN Series 2007A
2.92%, 12/18/08		10,000		10,054
Gloucester Cnty
Pollution Control Refunding RB (Exxon Mobil) Series 2003
3.34%, 01/02/08 (a)		4,900		4,900
Hopatcong
BAN
3.68%, 08/08/08		12,714		12,756
New Jersey
GO Bonds Series 2007
3.48%, 01/03/08 (a)(c)(d)		6,980		6,980
Refunding GO Bonds Series J
3.39%, 07/15/08		2,000		2,017
TRAN Fiscal Series 2008A
3.60%, 06/24/08		10,000		10,042
New Jersey Economic Development Auth
Economic Development Bonds (Ranney School) Series 2007
3.42%, 01/03/08 (a)(b)		12,410		12,410
First Mortgage Refunding RB (Winchester Gardens at Homestead) Series 2004B
3.33%, 01/03/08 (a)(b)		1,105		1,105
Motor Vehicle Surcharge RB Series 2004A
3.45%, 01/03/08 (a)(b)(c)(d)		2,580		2,580
RB (Baptist Home Society of New Jersey) Series 2003
3.53%, 01/03/08 (a)(b)		3,450		3,450
RB (Blair Academy) Series 2007
3.38%, 01/03/08 (a)(b)		22,795		22,795
RB (Princeton Day School) Series 2005
3.44%, 01/02/08 (a)(b)		5,000		5,000
RB (Research & Manufacturing Corp of America) Series 2006
3.53%, 01/03/08 (a)(b)		85		85
RB (The Hun School of Princeton) Series 2004
3.37%, 01/03/08 (a)(b)		10,135		10,135
Refunding RB (Crane’s Mill) Series 2005B
3.44%, 01/03/08 (a)(b)		11,560		11,560
School Facilities Construction Bonds Series 2006R1
3.53%, 01/02/08 (a)(b)		22,630		22,630
School Facilities Construction Bonds Series 2006R2
3.55%, 01/02/08 (a)(b)		10,280		10,280
School Facilities Construction Bonds Series 2006R3
3.58%, 01/02/08 (a)(b)		3,000		3,000
School Facilities Construction Bonds Series 2007U
3.48%, 01/03/08 (a)(b)(c)(d)		5,320		5,320
School Facilities Construction Refunding Bonds Series 2005K
3.47%, 01/03/08 (a)(b)(c)(d)		7,200		7,200
School Facilities Construction Refunding Bonds Series 2005N
3.47%, 01/03/08 (a)(b)(c)(d)		3,030		3,030
School Facilities Construction Refunding Bonds Series 2005N1
3.47%, 01/03/08 (a)(b)(c)(d)		10,180		10,180
New Jersey Educational Facilities Auth
RB (Princeton Univ) Series 2001B
3.50%, 01/02/08 (a)		7,200		7,200
RB (Princeton Univ) Series 2002B
3.65%, 01/02/08 (a)		9,595		9,595
RB (Princeton Univ) Series 2007F
3.48%, 01/03/08 (a)(c)(d)		6,435		6,435

See financial notes 21

Schwab New Jersey AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Refunding RB (Montclair State Univ) Series 2006J
3.48%, 01/03/08 (a)(b)(c)(d)		5,580		5,580
3.55%, 01/03/08 (a)(b)(c)(d)		4,030		4,030
New Jersey Environmental Infrastructure Trust
Bonds Series 2007A
3.46%, 01/03/08 (a)(c)(d)		12,120		12,120
Refunding Bonds Series 2007A&B
3.46%, 01/03/08 (a)(c)(d)		3,825		3,825
New Jersey Health Care Facilities Financing Auth
RB (Hospital Capital Asset Financing Program) Series 1985A
3.31%, 01/03/08 (a)(b)		1,125		1,125
RB (JFK Health Systems Obligated Group) Series 1993
3.53%, 01/03/08 (a)(b)(c)(d)		11,715		11,715
RB (Meridian Health System Obligated Group) Series 2003A
3.31%, 01/03/08 (a)(b)		1,200		1,200
RB (Virtua Health) Series 2004
3.38%, 01/03/08 (a)(b)		3,500		3,500
RB Composite Program Series 2004A3
3.38%, 01/03/08 (a)(b)		1,000		1,000
New Jersey Sports & Exposition Auth
State Contract Bonds Series 1992C
3.33%, 01/03/08 (a)(b)(c)		900		900
New Jersey Tobacco Settlement Financing Corp
Tobacco Settlement Asset-Backed Bonds Series 2002
3.46%, 01/03/08 (a)(c)(d)		15,745		15,745
Tobacco Settlement Asset-Backed Bonds Series 2007-1A
3.49%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
New Jersey Transit Corp
COP Series 2003A
3.47%, 01/03/08 (a)(b)(c)(d)		14,765		14,765
Subordinated COP Series 2005A
3.56%, 01/03/08 (a)(b)(c)(d)		3,900		3,900
New Jersey Transportation Trust Fund Auth
Transportation System Bonds Series 2004B
3.47%, 01/03/08 (a)(b)(c)(d)		4,990		4,990
Transportation System Bonds Series 2005B
3.50%, 01/02/08 (a)(b)(c)(d)		14,980		14,980
Transportation System Bonds Series 2005D
3.46%, 01/03/08 (a)(b)(c)(d)		31,665		31,665
Transportation System Bonds Series 2006A
3.50%, 01/02/08 (a)(b)(c)(d)		6,635		6,635
3.47%, 01/03/08 (a)(b)(c)(d)		6,300		6,300
3.47%, 01/03/08 (a)(b)(c)(d)		23,100		23,100
3.47%, 01/03/08 (a)(b)(c)(d)		7,500		7,500
Transportation System Bonds Series 2006C
3.48%, 01/03/08 (a)(b)(c)(d)		6,820		6,820
3.49%, 01/03/08 (a)(b)(c)(d)		2,600		2,600
3.50%, 01/03/08 (a)(b)(c)(d)		9,410		9,410
Transportation System Bonds Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		8,000		8,000
New Jersey Turnpike Auth
RB Series 2000A
3.47%, 01/03/08 (a)(b)(c)(d)		11,200		11,200
3.48%, 01/03/08 (a)(b)(c)(d)		10,985		10,985
RB Series 2004C2
3.45%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
3.48%, 01/03/08 (a)(b)(c)(d)		9,945		9,945
Newark Housing Auth
Refunding Bonds Series 2007
3.45%, 01/03/08 (a)(b)(c)(d)		19,000		19,000
North Bergen
BAN
3.66%, 05/15/08		7,000		7,015
Port Auth of New York & New Jersey
Consolidated Bonds 85th Series
3.66%, 01/03/08 (a)(c)(d)		6,795		6,795
Consolidated Bonds 135th Series
3.47%, 01/03/08 (a)(c)(d)		13,900		13,900
Consolidated Bonds 140th Series
3.53%, 01/03/08 (a)(b)(c)(d)		2,940		2,940
3.76%, 03/28/08 (b)(c)(d)		19,680		19,680
Consolidated Bonds 144th Series
3.46%, 01/03/08 (a)(c)(d)		2,000		2,000
3.49%, 01/03/08 (a)(c)(d)		6,000		6,000
Consolidated Bonds 148th Series
3.47%, 01/03/08 (a)(b)(c)(d)		12,000		12,000
CP Series B
3.05%, 01/15/08 (c)		9,205		9,205
2.91%, 02/04/08 (c)		17,275		17,275
2.87%, 02/06/08 (c)		9,930		9,930
3.44%, 02/07/08 (c)		5,700		5,700
2.80%, 02/11/08 (c)		12,330		12,330
3.39%, 03/06/08 (c)		7,400		7,400
Rutgers State Univ
GO Refunding Bonds Series 2002A
3.47%, 01/02/08 (a)(c)		8,100		8,100
Union Cnty Pollution Control Financing Auth
Refunding RB (Exxon Mobil) Series 1994
3.34%, 01/02/08 (a)		1,395		1,395
Univ of Medicine & Dentistry
Bonds Series 2002B
3.42%, 01/03/08 (a)(b)(c)		11,825		11,825
Verona
BAN
3.10%, 06/05/08		5,962		5,978
				641,294
Puerto Rico 10.5%
Puerto Rico
Public Improvement Refunding Bonds Series 2002A
3.55%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
Public Improvement Refunding Bonds Series 2007A5
3.35%, 01/03/08 (a)(b)(c)		11,100		11,100

22 See financial notes

Schwab New Jersey AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Public Improvement Refunding Bonds Series 2007A4
3.27%, 01/02/08 (a)(b)(c)		4,600		4,600
TRAN Series 2008
3.40%, 07/30/08 (b)		10,000		10,048
Puerto Rico Electric Power Auth
Refunding RB Series UU
3.47%, 01/03/08 (a)(b)(c)(d)		14,800		14,800
Puerto Rico Highway & Transportation Auth
Transportation RB Series 2000B
3.48%, 01/02/08 (a)(b)(c)(d)		4,920		4,920
Transportation RB Series 1998A
3.30%, 01/02/08 (a)(b)(c)		1,220		1,220
Transportation RB Series L
3.44%, 01/03/08 (a)(b)(c)(d)		5,300		5,300
Transportation Refunding RB Series N
3.55%, 01/03/08 (a)(b)(c)(d)		12,000		12,000
Puerto Rico Infrastructure Financing Auth
Special Tax Refunding RB Series 2005C
3.48%, 01/02/08 (a)(b)(c)(d)		2,995		2,995
Puerto Rico Public Buildings Auth
Refunding RB Series L
3.47%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Puerto Rico Sales Tax Financing Corp
Sales Tax RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
3.50%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
				75,983
Total Municipal Securities (Cost $717,277)				717,277
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $717,277.

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $416,120 or 57.3% of net assets.

BAN — Bond anticipation note

COP — Certificate of participation

GO — General obligation

RB — Revenue bond

TRAN — Tax and revenue anticipation note

See financial notes 23

Schwab New Jersey AMT Tax-Free Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$717,277
Cash		618
Receivables:
Investments sold		3,035
Interest		4,787
Prepaid expenses	+	1
Total assets		725,718
Liabilities
Payables:
Investment adviser and administrator fees		23
Transfer agent and shareholder services fees		21
Accrued expenses	+	84
Total liabilities		128
Net Assets
Total assets		725,718
Total liabilities	−	128
Net assets		$725,590
Net Assets by Source
Capital received from investors		725,590

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$725,590		725,119			$1.00

24 See financial notes

Schwab New Jersey AMT Tax-Free Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$22,374
Net Realized Gains and Losses
Net realized gains on investments		132
Expenses
Investment adviser and administrator fees		2,163
Transfer agent and shareholder service fees		2,163
Registration fees		192
Portfolio accounting fees		53
Tax expenses		50
Trustees’ fees		29
Professional fees		25
Custodian fees		17
Shareholder reports		12
Interest expense		7
Other expenses	+	5
Total expenses		4,716
Expense reduction by adviser and Schwab	−	644
Custody credits	−	21
Net expenses		4,051
Increase (Decrease) in Net Assets from Operations
Total investment income		22,374
Net expenses	−	4,051
Net investment income		18,323
Net realized gains	+	132
Increase in net assets from operations		$18,455

See financial notes 25

Schwab New Jersey AMT Tax-Free Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$18,323	$13,567
Net realized gains	+	132	106
Increase in net assets from operations		18,455	13,673
Distributions to Shareholders
Distributions from net investment income		18,370	13,578
Transactions in Fund Shares*
Shares sold		2,325,659	1,861,378
Shares reinvested		18,178	13,386
Shares redeemed	+	(2,131,277)	(1,834,283)
Net transactions in fund shares		212,560	40,481
Net Assets
Beginning of period		512,945	472,369
Total increase	+	212,645	40,576
End of period		$725,590	$512,945

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

26 See financial notes

Schwab Pennsylvania Municipal Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.06			2.85			1.82			0.62			0.49
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.65			0.65			0.65			0.65			0.65
Gross operating expenses		0.77			0.89			0.88			0.86			0.87
Net investment income (loss)		3.00			2.81			1.82			0.62			0.48
Net assets, end of period ($ x 1,000,000)		525			412			378			346			328

¹ Per-share amount was less than $0.01.

See financial notes 27

Schwab Pennsylvania Municipal Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.1%	Municipal Securities		520,445		520,445
	99	.1%	Total Investments		520,445		520,445
	0	.9%	Other Assets and Liabilities				4,904
	100	.0%	Net Assets				525,349

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 99.1% of net assets
Pennsylvania 93.7%
Abington SD
GO Bonds Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Allegheny Cnty Hospital Development Auth
RB (UPMC) Series 2005B
3.56%, 01/15/08 (e)		6,750		6,750
RB (UPMC) Series 2007A2
3.60%, 01/03/08 (a)(c)(d)		4,000		4,000
RB (UPMC) Series 2007B2
3.50%, 01/03/08 (a)(c)(d)		9,000		9,000
Allegheny Cnty Port Auth
Grant Anticipation Notes Series 2007
3.68%, 06/30/08 (b)		5,200		5,214
Beaver Cnty IDA
Pollution Control Refunding RB (FirstEnergy Nuclear Generation Corp) Series 2006A
3.74%, 01/02/08 (a)(b)		300		300
Chester Cnty School Auth
School Lease RB Series 2005
3.51%, 01/03/08 (a)(b)(c)(d)		1,740		1,740
Dauphin Cnty General Auth
RB (Education & Health Loan) Series 1997
3.47%, 01/03/08 (a)(b)(c)		4,000		4,000
RB (Hyatt Regency Pittsburg International Airport Hotel) Series 1988
3.48%, 01/03/08 (a)(b)(c)(d)		19,828		19,828
Delaware Cnty IDA
Hospital RB (Crozer-Chester Medical Center) Series 2002
3.44%, 01/03/08 (a)(b)		4,595		4,595
RB (YMCA of Philadelphia) Series 1999
3.55%, 01/02/08 (a)(b)		1,335		1,335
Delaware River Joint Toll Bridge Commission
Bridge RB Series 2007A
3.49%, 01/03/08 (a)(b)(c)(d)		3,795		3,795
Delaware Valley Regional Finance Auth
Local Government RB Series 1986
3.45%, 01/02/08 (a)(b)		5,000		5,000
Local Government RB Series 1998A
3.50%, 01/03/08 (a)(b)(c)(d)		5,355		5,355
3.54%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
East Stroudsburg SD
GO Notes Series 2007
3.50%, 01/03/08 (a)(b)(c)(d)		3,840		3,840
Erie SD
GO Bonds Series 2001A
3.49%, 01/03/08 (a)(b)(c)(d)		5,950		5,950
Hanover Public SD
GO Bonds Series 2005
3.44%, 01/03/08 (a)(b)(c)		4,700		4,700
Harrisburg Auth
Water Refunding RB Series 2002B
3.47%, 01/03/08 (a)(b)(c)		2,000		2,000
Water Refunding RB Series 2003A
3.57%, 01/03/08 (a)(b)(c)		3,500		3,500
Lackawanna Cnty
GO Bonds Series 2007B
3.50%, 01/03/08 (a)(b)(c)(d)		2,120		2,120
Lehigh Cnty General Purpose Auth
Hospital RB (St Luke’s Hospital) Series 1992
3.72%, 02/14/08 (b)(c)(d)		8,910		8,910
Luzerne Cnty IDA
RB (Methodist Homes) Series 2003
3.46%, 01/02/08 (a)(b)		4,215		4,215
Manheim SD
GO Bonds Series 2004
3.45%, 01/03/08 (a)(b)(c)		2,000		2,000
Montgomery Cnty IDA
Environmental Facilities RB (Ionza) Series 2000
3.51%, 01/03/08 (a)(b)		7,000		7,000
Pollution Control Refunding RB (Exelon Generation) Series 2002A
3.37%, 03/12/08 (b)		10,340		10,340
Pollution Control Refunding RB (Peco Energy) Series 1994A
3.52%, 01/10/08 (b)		16,000		16,000
3.53%, 03/12/08 (b)		14,000		14,000
Pollution Control Refunding RB (Peco Energy) Series 1999A
3.40%, 01/02/08 (a)(b)		26,200		26,200

28 See financial notes

Schwab Pennsylvania Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Montgomery Cnty Redevelopment Auth
M/F Housing RB (Brookside Manor Apts) Series 2001A
3.34%, 01/03/08 (a)(b)		1,500		1,500
M/F Housing RB (Kingswood Apts) Series 2001A
3.34%, 01/03/08 (a)(b)		5,375		5,375
Moon IDA
First Mortgage RB (Providence Point) Series 2007
3.50%, 01/03/08 (a)(b)		10,000		10,000
Northampton Cnty
RB (Binney & Smith) Series 1997A
3.55%, 01/02/08 (a)(b)		3,250		3,250
Norwin SD
GO Bonds Series 2001A
3.49%, 01/03/08 (a)(b)(c)(d)		19,410		19,410
Pennsylvania
GO Bonds First Series 2007A
3.48%, 01/03/08 (a)(c)(d)		9,250		9,250
GO Bonds First Series 2003
3.57%, 01/03/08 (a)(b)(c)(d)		3,870		3,870
GO Bonds Second Refunding Series 2002
2.93%, 10/01/08 (b)		7,955		8,075
GO Bonds Second Series 2002
3.57%, 01/03/08 (a)(b)(c)(d)		5,195		5,195
GO Bonds Second Series 2007A
3.50%, 01/03/08 (a)(c)(d)		4,000		4,000
GO Bonds Second Series 2006
3.50%, 01/03/08 (a)(c)(d)		2,510		2,510
GO Bonds Third Refunding Series 2004
3.50%, 01/03/08 (a)(b)(c)(d)		20,000		20,000
Pennsylvania Economic Development Finance Auth
Exempt Facilities RB (Amtrak) Series 2001B
3.55%, 01/03/08 (a)(b)		12,000		12,000
Exempt Facilities RB (Shippingport) Series 2005A
3.34%, 01/02/08 (a)(b)		9,000		9,000
Pennsylvania Energy Development Auth
RB (B&W Ebensburg) Series 1986
3.52%, 01/02/08 (a)(b)		2,560		2,560
Pennsylvania HFA
Residental Development Refunding RB Series 2002A
3.60%, 01/02/08 (a)(c)(d)		6,000		6,000
S/F Mortgage RB Draw Down Series 2003
3.54%, 01/03/08 (a)(b)(c)(d)		7,035		7,035
S/F Mortgage RB Series 2001-72A
3.54%, 01/03/08 (a)(b)(c)(d)		2,495		2,495
S/F Mortgage RB Series 2002-74B
3.55%, 01/03/08 (a)(c)(d)		7,495		7,495
S/F Mortgage RB Series 2003-97A
3.54%, 01/03/08 (a)(c)(d)		1,610		1,610
S/F Mortgage RB Series 2004-82B
3.46%, 01/02/08 (a)(c)		9,215		9,215
S/F Mortgage RB Series 2004-83B
3.45%, 01/02/08 (a)(c)		2,000		2,000
S/F Mortgage RB Series 2004-83C
3.45%, 01/02/08 (a)(c)		2,400		2,400
S/F Mortgage RB Series 2004-84C
3.50%, 01/02/08 (a)(c)		13,490		13,490
S/F Mortgage RB Series 2004-86C
3.50%, 01/02/08 (a)(c)		100		100
S/F Mortgage RB Series 2005-88B
3.46%, 01/02/08 (a)(c)		1,750		1,750
S/F Mortgage RB Series 2006-96A
3.54%, 01/03/08 (a)(c)(d)		9,340		9,340
S/F Mortgage RB Series 2007-100A
3.55%, 01/03/08 (a)(c)(d)		1,000		1,000
Pennsylvania Higher Education Assistance Agency
Student Loan RB Series 2001A
3.46%, 01/02/08 (a)(b)(c)		8,050		8,050
Student Loan RB Series 2003A1
3.46%, 01/02/08 (a)(b)(c)		4,000		4,000
Pennsylvania Higher Educational Facilities Auth
RB (Foundation for IUP Student Housing) Series 2007A
3.57%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
RB (Temple Univ) First Series 2006
3.50%, 01/03/08 (a)(b)(c)(d)		4,159		4,160
3.57%, 01/03/08 (a)(b)(c)(d)		5,960		5,960
Pennsylvania Public School Building Auth
RB (Parkland SD) Series 1999D
3.48%, 01/03/08 (a)(b)(c)		15,115		15,115
School Lease RB (Philadelphia SD) Series 2003
3.50%, 01/03/08 (a)(b)(c)(d)		4,665		4,665
3.50%, 01/03/08 (a)(b)(c)(d)		1,936		1,936
3.66%, 01/03/08 (a)(b)(c)(d)		7,600		7,600
School Lease RB (Richland SD) Series 2004
3.48%, 01/03/08 (a)(b)(c)(d)		10,130		10,130
Pennsylvania State Turnpike Commission
RB Series 2006A
3.51%, 01/03/08 (a)(b)(c)(d)		3,800		3,800
Pennsylvania State Univ
Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Philadelphia
Airport RB Series 2005A
3.55%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Airport Refunding RB Series 2005C
3.55%, 01/02/08 (a)(b)(c)		700		700
TRAN Series 2007-2008A
3.67%, 06/30/08		5,350		5,371
Water & Wastewater RB Series 1997B
3.46%, 01/02/08 (a)(b)(c)		2,300		2,300

See financial notes 29

Schwab Pennsylvania Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Water & Wastewater Refunding RB Series 2007A
3.66%, 01/03/08 (a)(b)(c)(d)		4,995		4,995
Philadelphia Gas Works
RB Seventh Series (1998 General Ordinance)
3.48%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
RB Third Series 2001
3.66%, 01/03/08 (a)(b)(c)(d)		1,700		1,700
Philadelphia Hospital & Higher Educational Facilities Auth
Hospital RB (Children’s Hospital of Philadelphia) Series 2007A
3.60%, 01/03/08 (a)(c)(d)		4,625		4,625
Philadelphia IDA
RB (Fox Chase Cancer Center Obligated Group) Series 2007B
3.50%, 03/13/08 (b)(c)(d)		10,000		10,000
RB Series 1998A
3.52%, 01/04/08 (a)(b)(c)(d)		5,000		5,000
Philadelphia SD
TRAN Series 2007-2008A
3.72%, 06/27/08 (b)		5,000		5,018
Philadelphia Water & Sewer System
RB Series 2001A
3.55%, 01/03/08 (a)(b)(c)(d)		5,250		5,250
Temple Univ
Univ Funding Obligations Series 2007
3.63%, 04/24/08		5,000		5,010
				491,997
Puerto Rico 5.4%
Puerto Rico
TRAN Series 2008
3.40%, 07/30/08 (b)		10,000		10,048
Puerto Rico Electric Power Auth
Refunding RB Series UU
3.47%, 01/03/08 (a)(b)(c)(d)		13,200		13,200
Power RB Series NN
3.51%, 01/03/08 (a)(b)(c)(d)		5,200		5,200
				28,448
Total Municipal Securities (Cost $520,445)				520,445
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $520,445.

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $266,969 or 50.8% of net assets.
(e)	Illiquid security. At the period end, the value of these amounted to $6,750 or 1.3% of net assets.

GO — General obligation

HFA — Housing finance agency

IDA — Industrial development authority

M/F — Multi-family

RB — Revenue bond

S/F — Single-family

SD — School district

TRAN — Tax and revenue anticipation note

30 See financial notes

Schwab Pennsylvania Municipal Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$520,445
Cash		198
Receivables:
Investments sold		392
Interest	+	4,380
Total assets		525,415
Liabilities
Payables:
Investment adviser and administrator fees		19
Transfer agent and shareholder services fees		16
Accrued expenses	+	31
Total liabilities		66
Net Assets
Total assets		525,415
Total liabilities	−	66
Net assets		$525,349
Net Assets by Source
Capital received from investors		525,348
Net investment income not yet distributed		1

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$525,349		525,233			$1.00

See financial notes 31

Schwab Pennsylvania Municipal Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$15,628
Net Realized Gains and Losses
Net realized gains on investments		136
Expenses
Investment adviser and administrator fees		1,497
Transfer agent and shareholder service fees		1,497
Registration fees		184
Porfolio accounting fees		48
Trustees’ fees		28
Professional fees		22
Custodian fees		17
Shareholder reports		9
Tax expenses		7
Other expenses	+	4
Total expenses		3,313
Expense reduction by adviser and Schwab	−	529
Custody credits	−	9
Net expenses		2,775
Increase (Decrease) in Net Assets from Operations
Total investment income		15,628
Net expenses	−	2,775
Net investment income		12,853
Net realized gains	+	136
Increase in net assets from operations		$12,989

32 See financial notes

Schwab Pennsylvania Municipal Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$12,853	$11,040
Net realized gains	+	136	26
Increase in net assets from operations		12,989	11,066
Distributions to Shareholders
Distributions from net investment income		12,860	11,040
Transactions in Fund Shares*
Shares sold		2,063,299	1,703,566
Shares reinvested		12,657	10,861
Shares redeemed	+	(1,962,742)	(1,680,508)
Net transactions in fund shares		113,214	33,919
Net Assets
Beginning of period		412,006	378,061
Total increase	+	113,343	33,945
End of period		$525,349	$412,006
Net investment income not yet distributed		$1	$2

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

See financial notes 33

Schwab Massachusetts AMT Tax-Free Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			5/16/031-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.00	2
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)2
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.04			2.81			1.78			0.64			0.30	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.65			0.65			0.63			0.60			0.51	4,5
Gross operating expenses		0.78			0.90			0.87			0.86			0.86	4
Net investment income (loss)		2.99			2.77			1.76			0.63			0.48	4
Net assets, end of period ($ x 1,000,000)		543			399			351			386			363

¹ Commencement of operations.

² Per-share amount was less than $0.01.

³ Not annualized.

⁴ Annualized.

⁵ In addition to the guaranteed expense limit in place, the investment adviser voluntarily reduced the funds annualized operating expense ratio by an additional 0.09%.

34 See financial notes

Schwab Massachusetts AMT Tax-Free Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.8%	Municipal Securities		536,858		536,858
	98	.8%	Total Investments		536,858		536,858
	1	.2%	Other Assets and Liabilities				6,329
	100	.0%	Net Assets				543,187

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 98.8% of net assets
Massachusetts 88.0%
Amesbury
BAN
3.65%, 08/08/08		7,300		7,325
Franklin
BAN
3.55%, 03/27/08		3,000		3,003
Haverhill
BAN
3.60%, 03/28/08		3,865		3,871
Marlborough
BAN
3.28%, 06/26/08		5,478		5,490
Massachusetts
Dedicated Tax Refunding RB Series 2005
3.50%, 01/03/08 (a)(b)(c)(d)		8,300		8,300
GO Bonds Series 2004A
3.48%, 01/03/08 (a)(b)(c)(d)		1,300		1,300
GO Bonds Consolidated Loan Series 2000C
3.66%, 01/03/08 (a)(c)(d)		1,000		1,000
GO Bonds Consolidated Loan Series 2005C
3.49%, 01/03/08 (a)(b)(c)(d)		5,750		5,750
GO Bonds Consolidated Loan Series 2006B
3.73%, 01/02/08 (a)(c)		3,700		3,700
GO Bonds Consolidated Loan Series 2006D
3.48%, 01/03/08 (a)(c)(d)		8,630		8,630
GO Bonds Consolidated Loan Series 2007A
3.50%, 01/02/08 (a)(c)(d)		7,000		7,000
3.59%, 01/02/08 (a)(b)(c)(d)		9,160		9,160
GO Refunding Bonds Series 2001B
3.40%, 01/03/08 (a)(c)		7,000		7,000
GO Refunding Bonds Series 2004A
3.49%, 01/02/08 (a)(b)(c)(d)		5,765		5,765
GO Refunding Bonds Series 2006C
3.78%, 03/06/08 (b)(c)(d)		1,465		1,465
Special Obligation Dedicated Tax Refunding RB Series 2005
3.45%, 01/03/08 (a)(b)(c)(d)		9,975		9,975
TECP Series E
3.32%, 03/07/08 (c)		1,300		1,300
Massachusetts Bay Transportation Auth
Assessment Bonds Series 2005A
3.47%, 01/03/08 (b)(c)(d)		9,995		9,995
Assessment Bonds Series 2006A
3.47%, 01/03/08 (a)(c)(d)		13,000		13,000
3.50%, 01/03/08 (a)(c)(d)		3,200		3,200
Sr Sales Tax Bonds Series 2004C
3.48%, 01/03/08 (a)(c)(d)		4,215		4,215
3.49%, 01/03/08 (a)(c)(d)		5,685		5,685
Sr Sales Tax Bonds Series 2005A
3.47%, 01/03/08 (a)(c)(d)		1,300		1,300
Sr Sales Tax Bonds Series 2006A
3.48%, 01/03/08 (a)(c)(d)		2,395		2,395
Sr Sales Tax Bonds Series 2006B
3.50%, 01/02/08 (a)(c)(d)		10,630		10,630
Sr Sales Tax Bonds Series 2006C
3.49%, 01/03/08 (a)(c)(b)(d)		11,345		11,345
Sr Sales Tax Bonds Series 2007A1
3.48%, 01/03/08 (a)(c)(d)		5,025		5,025
Massachusetts Development Finance Agency
Higher Education RB (Smith College) Series 2005
3.49%, 01/03/08 (a)(c)(d)		4,890		4,890
RB (Berkshire School) Series 2001
3.46%, 01/03/08 (a)(b)		4,500		4,500
RB (Boston Children’s Museum) Series 2006
3.45%, 01/02/08 (a)(b)		9,500		9,500
RB (Boston Univ) Series T1
3.47%, 01/03/08 (a)(b)(c)(d)		2,605		2,605
RB (Fessenden School) Series 2001
3.49%, 01/03/08 (a)(b)		2,925		2,925
RB (Tabor Academy) Series 2007B
3.47%, 01/02/08 (a)(b)		5,910		5,910
RB (Wentworth Institute of Technology) Series 2000
3.51%, 01/03/08 (a)(b)(c)		1,000		1,000
RB (Worcester Academy) Series 2000
3.47%, 01/03/08 (a)(b)		7,500		7,500

See financial notes 35

Schwab Massachusetts AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB (YMCA of Greater Worcester) Series 2006
3.49%, 01/02/08 (a)(b)		11,545		11,545
Massachusetts Health & Educational Facilities Auth
RB (Baystate Medical Center) Series D
3.66%, 01/03/08 (a)(b)(c)(d)		11,793		11,793
RB (Boston Home) Series 2002B
3.47%, 01/03/08 (a)(b)		2,500		2,500
RB (Capital Assets Program) Series 1985D
3.67%, 01/02/08 (a)(b)(c)		1,960		1,960
RB (MIT) Series I1
3.75%, 02/07/08 (c)(d)		12,170		12,170
RB (MIT) Series K
3.50%, 01/03/08 (a)(c)(d)		8,800		8,800
RB (Sherrill House) Series A1
3.44%, 01/03/08 (a)(b)		5,000		5,000
RB (Winchester Hospital) Series D
3.49%, 01/03/08 (a)(b)(c)(d)		18,019		18,020
RB (Worcester City Campus Corp – Univ of MA) Series 2007 E&F
3.77%, 06/19/08 (b)(c)(d)		3,000		3,000
RB (Worcester City Campus Corp – Univ of MA) Series 2007 F
3.54%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Revenue Notes (Harvard Univ) Series EE
3.32%, 03/12/08		21,500		21,500
Massachusetts Industrial Finance Agency
RB (New England College of Optometry) Series 1997
3.47%, 01/03/08 (a)(b)		5,950		5,950
Massachusetts Port Auth
RB Series 2005A
3.45%, 01/03/08 (a)(b)(c)(d)		2,385		2,385
Massachusetts School Building Auth
CP Series A
3.13%, 01/25/08 (b)		18,000		18,000
3.37%, 02/06/08 (b)		3,250		3,250
Dedicated Sales Tax Bonds Series 2005A
3.53%, 01/03/08 (a)(b)(c)(d)		20,640		20,640
Dedicated Sales Tax Bonds Series 2007A
3.48%, 01/03/08 (a)(b)(c)(d)		2,830		2,830
3.48%, 01/03/08 (a)(b)(c)(d)		9,000		9,000
3.52%, 01/03/08 (a)(b)(c)(d)		17,400		17,400
Massachusetts State College Building Auth
Project & Refunding RB Series 2003B
3.48%, 01/03/08 (a)(b)(c)(d)		6,680		6,680
RB Series 2006A
3.59%, 01/02/08 (a)(b)(c)(d)		5,700		5,700
Massachusetts Turnpike Auth
Subordinate RB (Metropolitan Highway System) Series 1999A
3.49%, 01/03/08 (a)(b)(c)(d)		16,110		16,110
Massachusetts Water Pollution Abatement Trust
Pool Program Bonds
3.57%, 01/03/08 (a)(c)(d)		4,255		4,255
Pool Program Bonds Series 12
3.54%, 01/03/08 (a)(c)(d)		7,425		7,425
Pool Program Bonds Series 13
3.49%, 01/02/08 (a)(c)(d)		13,500		13,500
Massachusetts Water Resources Auth
General RB
3.57%, 01/03/08 (a)(b)(c)(d)		3,590		3,590
General RB Series 2007B
3.47%, 01/03/08 (a)(b)(c)(d)		11,000		11,000
Refunding RB Series 2007B
3.48%, 01/03/08 (a)(b)(c)(d)		7,205		7,205
Quincy
BAN Series A
3.68%, 08/01/08		2,393		2,397
BAN Series B
3.68%, 02/01/08		4,328		4,329
Shawsheen Valley Regional Vocational Technical SD
BAN
3.70%, 08/08/08		4,250		4,257
Shrewsbury
BAN Series B
3.29%, 11/21/08		6,100		6,124
Silver Lake Regional SD
BAN
3.34%, 05/15/08		7,900		7,912
Springfield
GO Bonds Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		4,090		4,090
Winchester
BAN
3.65%, 07/01/08		1,042		1,044
				478,015
Puerto Rico 10.8%
Puerto Rico
Public Improvement Bonds Series 2001A
3.47%, 01/03/08 (a)(b)(c)(d)		2,800		2,800
Public Improvement Refunding Bonds Series 2007A4
3.27%, 01/02/08 (a)(b)(c)		11,000		11,000
TRAN Series 2008
3.40%, 07/30/08 (b)		10,000		10,048
Puerto Rico Highway & Transportation Auth
Highway Refunding RB Series CC
3.44%, 01/03/08 (a)(b)(c)(d)		5,000		5,000
Highway RB Series Y
3.47%, 01/03/08 (a)(b)(c)(d)		6,000		6,000
Highway Refunding RB Series CC
3.44%, 01/03/08 (a)(b)(c)(d)		8,895		8,895
Transportation Refunding RB Series 2005L
3.44%, 01/03/08 (a)(b)(c)(d)		9,000		9,000
Puerto Rico Infrastructure Financing Auth
Special Obligation Bonds Series 2000A
3.46%, 01/03/08 (a)(c)(d)		100		100

36 See financial notes

Schwab Massachusetts AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Puerto Rico Sales Tax Financing Corp
Sales Tax RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		3,000		3,000g
3.51%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
				58,843
Total Municipal Securities (Cost $536,858)				536,858
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $536,858.

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $357,018 or 65.7% of net assets.

BAN — Bond anticipation note

GO — General obligation

RB — Revenue bond

TECP — Tax-exempt commercial paper

TRAN — Tax and revenue anticipation note

See financial notes 37

Schwab Massachusetts AMT Tax-Free Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		536,858
Cash		425
Receivables:
Investments sold		220
Interest		5,753
Prepaid expenses	+	1
Total assets		543,257
Liabilities
Payables:
Investment adviser and administrator fees		17
Transfer agent and shareholder services fees		16
Accrued expenses	+	37
Total liabilities		70
Net Assets
Total assets		543,257
Total liabilities	−	70
Net assets		$543,187
Net Assets by Source
Capital received from investors		543,186
Net investment income not yet distributed		1

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$543,187		543,125			$1.00

38 See financial notes

Schwab Massachusetts AMT Tax-Free Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$16,002
Net Realized Gains and Losses
Net realized gains on investments		24
Expenses
Investment adviser and administrator fees		1,540
Transfer agent and shareholder service fees		1,540
Registration fees		205
Portfolio accounting fees		48
Trustees’ fees		28
Professional fees		22
Custodian fees		17
Tax expenses		14
Shareholder reports		7
Other expenses	+	3
Total expenses		3,424
Expense reduction by adviser and Schwab	−	551
Custody credits	−	11
Net expenses		2,862
Increase (Decrease) in Net Assets from Operations
Total investment income		16,002
Net expenses	−	2,862
Net investment income		13,140
Net realized gains	+	24
Increase in net assets from operations		$13,164

See financial notes 39

Schwab Massachusetts AMT Tax-Free Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$13,140	$10,299
Net realized gains	+	24	157
Increase in net assets from operations		13,164	10,456
Distributions to Shareholders
Distributions from net investment income		13,150	10,313
Transactions in Fund Shares*
Shares sold		1,721,243	1,274,614
Shares reinvested		13,028	10,168
Shares redeemed	+	(1,590,375)	(1,237,036)
Net transactions in fund shares		143,896	47,746
Net Assets
Beginning of period		399,277	351,388
Total increase	+	143,910	47,889
End of period		$543,187	$399,277
Net investment income not yet distributed		$1	$−

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

40 See financial notes

Schwab Municipal Money Funds

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 list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund*
Schwab New Jersey AMT Tax-Free Money Fund*
Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund*
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

*  In November 2007, the Board of Trustees approved name changes for the Schwab New York Municipal Fund, Schwab New Jersey Municipal Fund and Schwab Massachusetts Municipal Fund to Schwab New York AMT Tax-Free Money Fund, Schwab New Jersey AMT Tax-Free Money Fund and Schwab Massachusetts AMT Tax-Free Money Fund, respectively. Also, effective February 5, 2008 each fund’s strategy is to invest at least 80% of its net assets in municipal money market securities whose interest is exempt from federal and state personal income tax, including the federal alternative minimum tax.

Schwab New York AMT Tax-Free Money Fund offers two share classes: Sweep Shares and Value Advantage Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums. Schwab New Jersey AMT Tax-Free Money, Schwab Pennsylvania Municipal Money, and Schwab Massachusetts AMT Tax-Free Money Fund each offer one share class.

Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

•  Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then

41

Schwab Municipal Money Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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

(e) Expenses:

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

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

Each fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to off set its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the funds’ financial statements.

42 

Schwab Municipal Money Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

	Transfer Agent Fees		Shareholder Service Fees
Sweep Shares		0.15%		0.20%
Value Advantage Shares*		0.05%		0.17%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses as follows so long as CSIM serves as the investment adviser of the funds:

	New York		New Jersey		Pennsylvania		Massachusetts
	AMT Tax-Free		AMT Tax-Free		Municipal		AMT Tax-Free
	Money Fund		Money Fund		Money Fund		Money Fund
Sweep Shares		0.65%		0.65%		0.65%		0.65%
Value Advantage Shares*		0.45%		n/a		n/a		n/a

*  Value Advantage Shares are only offered by New York AMT Tax-Free Money Fund.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, each fund’s total security transactions with other Schwab Funds were as follows:

New York AMT Tax-Free Money Fund	$2,013,056
New Jersey AMT Tax-Free Money Fund	806,454
Pennsylvania Municipal Money Fund	1,094,605
Massachusetts AMT Tax-Free Money Fund	762,229

43

Schwab Municipal Money Funds

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000) (continued):

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

Trustees

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

4. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds may obtain temporary bank loans through the trust to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. There was no borrowing from the lines of credit for the funds during the period. However, the funds utilized their overdraft facility and incurred interest-expense, which is disclosed in the Statement of Operations.

5.  Federal Income Taxes:

(All dollar amounts are x 1,000)

As of December 31, 2007, the components of distributable earnings on a tax basis were as follows:

	New York		New Jersey		Pennsylvania		Massachusetts
	AMT Tax-Free		AMT Tax-Free		Municipal		AMT Tax-Free
	Money Fund		Money Fund		Money Fund		Money Fund
Undistributed tax-exempt income	$	—	$	—	$	1	$	1
Undistributed Long-term capital gains	$	—	$	—	$	—	$	—

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the funds had no capital loss carry forwards.

For tax purposes, realized capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following year. As of December 31, 2007, the funds had no deferred realized net capital losses and the capital losses utilized to offset capital gains were as follows:

	New York		New Jersey		Pennsylvania		Massachusetts
	AMT Tax-Free		AMT Tax-Free		Municipal		AMT Tax-Free
	Money Fund		Money Fund		Money Fund		Money Fund
Capital losses utilized		$—		$—		$31		$—

44 

Schwab Municipal Money Funds

Financial Notes (continued)

5. Federal Income Taxes (continued):

The funds may also utilize earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. The tax-basis components of distributions during the current period and prior fiscal year were:

	New York		New Jersey		Pennsylvania		Massachusetts
	AMT Tax-Free		AMT Tax-Free		Municipal		AMT Tax-Free
	Money Fund		Money Fund		Money Fund		Money Fund
Current period distributions
Tax-exempt income		$79,284		$18,359		$12,860		$13,150
Ordinary income		21		11		—		—
Long-term capital gains		—		—		—		—
Prior period distributions
Tax-exempt income		$59,072		$13,572		$11,040		$10,310
Ordinary income		—		6		—		—
Long-term capital gains		15		—		—		3

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 and losses; capital losses related to wash sales, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by each fund for financial reporting purposes. Each fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, the funds made the following reclassifications:

	New York			New Jersey			Pennsylvania			Massachusetts
	AMT Tax-Free			AMT Tax-Free			Municipal			AMT Tax-Free
	Money Fund			Money Fund			Money Fund			Money Fund
Capital shares		$281			$85			$99			$13
Undistributed net investment income		$132			$47			$6			$11
Net realized capital gains and losses		$(413	)		$(132	)		$(105	)		$(24	)

45

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:
Schwab New York AMT Tax-Free Money Fund (formerly Schwab New York Municipal Money Fund)
Schwab New Jersey AMT Tax-Free Money Fund (formerly Schwab New Jersey Municipal Money Fund)
Schwab Pennsylvania Municipal Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund (formerly Schwab Massachusetts Municipal 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 New York AMT Tax-Free Money Fund (formerly Schwab New York Municipal Money Fund), Schwab New Jersey AMT Tax-Free Money Fund (formerly Schwab New Jersey Municipal Money Fund), Schwab Pennsylvania Municipal Money Fund and Schwab Massachusetts AMT Tax-Free Money Fund (formerly Schwab Massachusetts Municipal Money Fund) (four of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Funds”) at December 31, 2007, 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 periods presented, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

46 

Other Federal Tax Information: (unaudited)

The funds designate the following percentage of the distributions paid from net investment income as tax-exempt interest dividends for the period ended December 31, 2007.

	Percentage
New York Municipal Money Fund		100
New Jersey Municipal Money Fund		100
Pennsylvania Municipal Money Fund		100
Massachusetts Municipal Money Fund		100

For the period ended December 31, 2007, the funds hereby designate the following as a capital gain dividend:

New York Municipal Money Fund	$32
New Jersey Municipal Money Fund	30
Pennsylvania Municipal Money Fund	44
Massachusetts Municipal Money Fund	6

47

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

48 

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President– Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President–Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

49

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

50 

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

51

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

52 

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

53

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR13859-11

Schwab Cash Reserves

Annual Report

December 31, 2007

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Fund	3
Performance and Fund Facts	5
Fund Expenses	6
Financial Statements	7
Financial Notes	17
Report of Independent Registered Public Accounting Firm	21
Trustees and Officers	22
Glossary	26

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Cash Reserves 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

2 Schwab Cash Reserves

The Investment Environment and the Fund

Linda Klingman (middle), managing director and portfolio manager, has overall responsibility for the management of the fund.

Mike Neitzke (right), managing director and portfolio manager, has day-to-day responsibility for management of the fund.

Michael Lin (left), portfolio manager, has day-to-day responsibility for management of the fund.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

Schwab Cash Reserves 3

The Investment Environment and the Fundcontinued

The reduced liquidity hit SIVs particularly hard. For nearly twenty years, SIVs have been a typical holding in the portfolios of many financial institutions, pension funds, mutual funds, municipalities and money market funds. However, not all SIVs were created equal—a handful of SIVs carried higher risk and had significant subprime investments. When those SIVs were recently unable to meet repayment of their debt obligations in the normal course of business, all SIVs came under scrutiny and the impact was felt throughout the marketplace.

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Cash Reserves maintained a weighted average maturity (WAM) that was longer than the peer group throughout the reporting period. In August, ramifications from trouble in the housing and credit markets were made clear as the market experienced unprecedented volatility and uncertainty throughout the third and fourth quarters. In response, we sought to reduce the weighted average maturity and increase the overnight cash position of the fund as a buffer against market volatility. Despite reduction of the WAM, the fund remained long relative to the peer group. Maintaining a longer WAM throughout the year benefited the fund as we were able to lock in higher yielding securities before the Fed lowered rates.

Given the unprecedented volatility in the subprime mortgage market, we focused on reviewing and evaluating our SIV exposure in the second half of the year. As of December 31, 2007, SIV exposure in the Schwab Cash Reserves was approximately 4.1% of the fund’s net assets (see Financial Note 6).

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

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

4 Schwab Cash Reserves

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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 Cash Reserves	Ticker Symbol: SWSXX
Seven-Day Yield1		4.43%
Seven-Day Yield—No Waiver2		4.30%
Seven-Day Effective Yield1		4.53%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

Schwab Cash Reserves	Ticker Symbol: SWSXX
Weighted Average Maturity	49 days
Credit Quality of Holdings % of portfolio	100% Tier 1

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.

Schwab Cash Reserves 5

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab Cash Reserves
Actual Return		0.67%	$	1,000	$	1,023.71	$	3.42
Hypothetical 5% Return		0.67%	$	1,000	$	1,021.83	$	3.41

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

6 Schwab Cash Reserves

Schwab Cash Reserves^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			8/12/04-1
	12/31/07			12/31/06			12/31/05			12/31/04
Per-Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.04			0.03			0.00	2
Less distributions:
Distributions from net investment income		(0.05	)		(0.04	)		(0.03	)		(0.00	)2
Net asset value at end of period		1.00			1.00			1.00			1.00
Total return (%)		4.77			4.50			2.65			0.46	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.68			0.69			0.69			0.69	4
Gross operating expenses		0.74			0.82			0.92			1.05	4
Net investment income (loss)		4.66			4.59			2.90			1.24	4
Net assets, end of period ($ x 1,000,000)		26,162			16,738			822			140

¹ Commencement of operations.

² Per-share amount was less than $0.01.

³ Not annualized.

⁴ Annualized.

See financial notes 7

Schwab Cash Reserves

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	77	.2%	Fixed-Rate Obligations		20,199,865		20,199,865
	13	.4%	Variable-Rate Obligations		3,496,927		3,496,927
	8	.9%	Other Investments		2,329,449		2,329,449
	99	.5%	Total Investments		26,026,241		26,026,241
	0	.5%	Other Assets and Liabilities				135,824
	100	.0%	Net Assets				26,162,065

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fixed-Rate Obligations 77.2% of net assets
Bank Notes 0.9%
Bank of America, N.A.
5.09%, 01/18/08		187,000		187,000
4.75%, 04/11/08		44,000		44,000
				231,000
Certificates of Deposit 32.9%
ABN AMRO Bank N.V.
5.34%, 02/04/08		24,000		24,000
5.36%, 03/04/08		72,000		72,000
Alliance & Leicester PLC
5.36%, 02/21/08		9,000		9,000
5.34%, 03/04/08		86,000		86,000
5.32%, 04/18/08		10,000		10,000
Allied Irish Bank PLC
4.73%, 04/28/08		36,000		36,000
American Express Bank FSB
5.05%, 03/10/08		72,000		72,000
American Express Centurion Bank
5.15%, 02/28/08		40,000		40,000
5.25%, 03/07/08		34,000		34,000
Banco Bilbao Vizcaya Argentaria S.A.
5.25%, 01/02/08		100,000		100,000
5.23%, 01/10/08		119,000		119,000
5.15%, 02/29/08		49,000		49,000
5.37%, 03/11/08		35,000		35,000
Bank of Ireland
5.20%, 04/11/08		25,000		25,000
Bank of Montreal
5.35%, 01/22/08		6,000		6,000
5.38%, 04/14/08		15,000		15,000
Bank of Scotland
5.15%, 02/26/08		123,000		123,000
Bank of Tokyo Mitsubishi UFJ, Ltd.
5.15%, 01/17/08		45,000		45,000
5.15%, 01/18/08		2,000		2,000
5.12%, 02/19/08		38,000		38,000
Barclays Bank PLC
5.32%, 02/22/08		3,000		3,000
5.25%, 03/05/08		232,000		232,000
5.47%, 03/13/08		120,000		120,000
4.87%, 04/09/08		10,000		10,008
5.16%, 04/09/08		153,000		153,000
5.21%, 04/14/08		8,000		8,000
5.10%, 04/17/08		59,000		58,998
4.73%, 04/24/08		13,000		13,000
Bayerische Hypo-und Vereinsbank AG
5.20%, 02/28/08		127,000		127,002
BNP Paribas
4.64%, 05/30/08		420,000		420,000
4.80%, 06/25/08		50,000		50,000
4.75%, 06/26/08		230,000		230,000
Calyon
5.31%, 01/31/08		75,000		75,000
5.38%, 04/11/08		61,000		61,000
Canadian Imperial Bank of Commerce
5.28%, 02/07/08		15,000		15,000
5.09%, 03/17/08		30,000		30,000
4.76%, 05/09/08		57,000		57,000
Citibank, N.A.
4.88%, 02/14/08		50,000		50,000
4.90%, 02/15/08		194,000		194,000
Commerzbank AG
4.81%, 02/05/08		94,000		94,000
Credit Agricole S.A.
4.85%, 02/01/08		160,000		160,000
4.91%, 04/01/08		200,000		200,000
4.83%, 04/02/08		8,000		8,000
5.36%, 04/09/08		66,000		66,000
5.37%, 04/09/08		28,000		28,000
4.76%, 05/05/08		20,000		19,999
4.80%, 06/30/08		29,000		29,000
Credit Suisse
5.56%, 03/10/08		264,000		264,000
DePfa Bank PLC
5.46%, 02/12/08		38,000		38,000
5.37%, 02/20/08		46,000		46,000
Dexia Credit Local
4.88%, 01/04/08		211,000		211,000
DnB NOR Bank ASA
5.64%, 01/10/08		75,000		75,000
5.03%, 01/24/08		11,000		11,000
4.85%, 01/30/08		50,000		50,000
5.15%, 02/28/08		27,000		27,000
Fortis Bank
5.34%, 03/04/08		17,000		17,000

8 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
HBOS Treasury Services PLC
5.31%, 02/22/08 (a)		19,000		19,000
5.33%, 02/29/08 (a)		43,000		43,000
5.48%, 03/11/08 (a)		57,000		57,000
HSBC Bank PLC
4.76%, 05/09/08		23,000		23,001
HSBC Bank USA
5.36%, 02/20/08		38,000		38,000
ING Bank N.V.
4.84%, 02/01/08		99,000		99,000
4.81%, 02/06/08		6,000		6,000
4.79%, 03/03/08		190,000		190,000
Intesa Sanpaolo
5.17%, 01/16/08		19,000		19,000
5.12%, 01/31/08		221,000		221,000
5.01%, 03/14/08		14,000		14,000
KBC Bank N.V.
5.13%, 01/30/08		19,000		19,000
5.12%, 02/27/08		80,000		80,000
Lloyds TSB Bank PLC
4.80%, 01/29/08		255,000		255,000
Mitsubishi UFJ Trust & Banking Corp.
4.91%, 02/12/08		54,000		54,000
5.32%, 02/14/08		4,000		4,000
5.38%, 03/05/08		50,000		50,000
Mizuho Corporate Bank Ltd.
5.40%, 01/02/08		18,000		18,000
4.88%, 01/04/08		20,000		20,000
5.17%, 01/30/08		69,000		69,000
Nationwide Building Society
5.15%, 02/29/08		80,000		80,001
5.30%, 05/14/08		16,000		16,000
Natixis S.A.
4.81%, 02/06/08		57,000		57,000
4.77%, 03/06/08		37,000		37,000
Norinchukin Bank Ltd.
5.03%, 01/25/08		33,000		33,000
5.36%, 01/28/08		80,000		80,000
4.82%, 02/06/08		5,000		5,000
Royal Bank of Scotland PLC
5.16%, 01/18/08		5,000		5,000
4.80%, 03/07/08		53,000		53,000
4.83%, 06/18/08		75,000		75,000
Skandinaviska Enskilda Banken AB
5.37%, 03/17/08		11,000		11,000
5.20%, 04/10/08		23,000		23,000
4.80%, 04/24/08		16,000		16,000
4.91%, 05/28/08		70,000		70,000
Societe Generale
5.23%, 01/09/08		40,000		40,000
4.84%, 02/01/08		78,000		78,000
5.20%, 02/08/08		116,000		116,000
5.14%, 02/20/08		7,000		7,000
5.33%, 02/25/08		23,000		23,000
5.12%, 02/29/08		40,000		40,000
5.13%, 03/13/08		83,000		83,001
4.80%, 06/10/08		5,000		5,000
4.81%, 06/24/08		125,000		125,000
Sumitomo Mitsui Banking Corp.
4.85%, 01/04/08		200,000		200,000
4.85%, 01/07/08		50,000		50,000
4.85%, 01/08/08		100,000		100,000
5.14%, 01/30/08		21,000		21,000
Sumitomo Trust & Banking Co.
5.44%, 01/16/08		10,000		10,000
5.37%, 01/22/08		21,000		21,000
5.12%, 02/21/08		73,000		73,000
4.96%, 04/15/08		57,000		57,000
Svenska Handelsbanken AB
5.05%, 01/24/08		25,000		25,000
Swedbank AB
4.88%, 02/11/08		6,000		6,000
Toronto Dominion Bank
5.37%, 02/21/08		34,000		34,000
5.02%, 03/12/08		42,000		42,000
4.92%, 05/07/08		285,000		285,000
4.86%, 06/20/08		18,000		18,000
UBS AG
4.99%, 02/04/08		250,000		250,043
4.98%, 03/18/08		70,000		70,000
4.99%, 03/27/08		50,000		50,000
5.40%, 04/14/08		23,000		23,000
5.35%, 04/15/08		35,000		35,000
4.76%, 05/07/08		13,000		13,000
4.70%, 05/09/08		116,000		116,000
5.28%, 05/13/08		40,000		40,000
4.90%, 06/02/08		10,000		10,000
Unicredito Italiano S.p.A.
5.36%, 01/11/08		42,000		42,000
5.37%, 03/18/08		15,000		15,000
5.38%, 03/20/08		48,000		48,000
4.93%, 06/04/08		85,000		85,000
4.80%, 06/27/08		46,000		46,000
Union Bank of California
5.35%, 01/16/08		67,000		67,000
4.77%, 03/05/08		7,000		7,000
4.85%, 03/26/08		62,000		62,000
Wachovia Bank, N.A.
5.40%, 03/27/08		70,000		70,000
Westpac Banking Corp.
5.12%, 02/15/08		35,000		35,000
5.37%, 04/10/08		7,000		7,000
Wilmington Trust Co.
4.90%, 06/19/08		25,000		25,000
				8,625,053
Commercial Paper & Other Corporate Obligations 43.0%
Alpine Securitzation Corp.
4.80%, 01/14/08 (a)(b)(c)		75,000		74,772
4.93%, 02/07/08 (a)(b)(c)		87,000		86,565
5.37%, 03/17/08 (a)(b)(c)		15,000		14,832
Amstel Funding Corp.
5.88%, 01/08/08 (b)(c)		13,000		12,985
6.34%, 01/17/08 (b)(c)		2,000		1,994
5.34%, 01/18/08 (b)(c)		50,000		49,877
4.96%, 01/22/08 (b)(c)		12,000		11,966
5.01%, 01/22/08 (b)(c)		77,000		76,778
5.12%, 02/19/08 (b)(c)		39,000		38,732
5.37%, 03/13/08 (b)(c)		100,000		98,940
5.73%, 03/14/08 (b)(c)		31,000		30,645
5.38%, 03/27/08 (b)(c)		10,000		9,873
5.16%, 04/15/08 (b)(c)		50,000		49,261
Amsterdam Funding Corp.
4.94%, 01/04/08 (a)(b)(c)		7,000		6,997
5.15%, 01/17/08 (a)(b)(c)		34,000		33,923

See financial notes 9

Schwab Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
5.01%, 02/15/08 (a)(b)(c)		14,000		13,913
Anglo Irish Bank Corp. PLC
5.07%, 01/24/08 (c)		29,000		28,907
5.50%, 03/06/08 (c)		35,000		34,662
ANZ National (Int’l) Ltd.
5.36%, 01/14/08 (a)		100,000		99,812
5.35%, 01/18/08 (a)		24,000		23,941
Aquinas Funding, L.L.C.
5.35%, 01/09/08 (a)(b)(c)		9,000		8,990
6.04%, 01/30/08 (a)(b)(c)		7,000		6,966
5.07%, 02/21/08 (a)(b)(c)		40,000		39,717
5.34%, 02/28/08 (a)(b)(c)		31,000		30,737
5.66%, 03/18/08 (a)(b)(c)		6,000		5,929
5.43%, 03/20/08 (a)(b)(c)		7,000		6,918
Atlantic Asset Securitization, L.L.C.
5.53%, 01/08/08 (a)(b)(c)		31,000		30,967
4.85%, 01/14/08 (a)(b)(c)		75,000		74,870
4.85%, 01/15/08 (a)(b)(c)		45,390		45,305
4.85%, 01/16/08 (a)(b)(c)		33,000		32,934
5.21%, 01/17/08 (a)(b)(c)		65,157		65,008
5.06%, 02/14/08 (a)(b)(c)		7,000		6,957
4.95%, 02/15/08 (a)(b)(c)		10,000		9,939
5.48%, 02/28/08 (a)(b)(c)		13,000		12,887
5.72%, 02/29/08 (a)(b)(c)		73,000		72,324
Atlantis One Funding Corp.
4.85%, 01/02/08 (b)(c)		100,000		99,987
4.82%, 01/08/08 (b)(c)		21,000		20,981
5.13%, 01/22/08 (b)(c)		65,000		64,808
5.05%, 01/24/08 (b)(c)		100,000		99,682
5.32%, 02/15/08 (b)(c)		26,000		25,834
5.34%, 02/25/08 (b)(c)		16,000		15,875
5.15%, 02/26/08 (b)(c)		108,000		107,147
5.43%, 03/18/08 (b)(c)		4,000		3,954
5.11%, 04/21/08 (b)(c)		54,000		53,164
4.95%, 06/05/08 (b)(c)		10,000		9,791
Bank of America Corp.
5.09%, 02/13/08		309,000		307,153
4.70%, 05/05/08		150,000		147,606
Bank of Ireland
5.35%, 01/14/08 (c)		127,000		126,761
5.42%, 01/16/08 (c)		9,000		8,980
4.79%, 01/28/08 (c)		14,000		13,950
5.20%, 02/12/08 (c)		5,000		4,970
Barclays US Funding Corp.
4.84%, 02/29/08 (a)		11,000		10,914
4.85%, 03/25/08 (a)		9,000		8,900
Barton Capital, L.L.C.
4.94%, 01/02/08 (a)(b)(c)		96,000		95,987
6.24%, 01/09/08 (a)(b)(c)		7,000		6,990
5.07%, 02/05/08 (a)(b)(c)		56,000		55,727
Cancara Asset Securitization, L.L.C.
5.53%, 01/02/08 (a)(b)(c)		10,000		9,998
5.36%, 01/08/08 (a)(b)(c)		91,000		90,908
5.29%, 01/11/08 (a)(b)(c)		140,000		139,797
5.22%, 01/22/08 (a)(b)(c)		7,000		6,979
5.05%, 01/28/08 (a)(b)(c)		25,000		24,907
5.00%, 01/29/08 (a)(b)(c)		29,000		28,889
4.85%, 02/15/08 (a)(b)(c)		15,000		14,910
5.04%, 03/19/08 (a)(b)(c)		12,000		11,871
Chariot Funding, L.L.C.
5.48%, 01/04/08 (a)(b)(c)		50,000		49,977
5.94%, 01/10/08 (a)(b)(c)		45,980		45,912
5.45%, 01/25/08 (a)(b)(c)		95,000		94,658
5.45%, 01/28/08 (a)(b)(c)		92,000		91,627
Citigroup Funding, Inc.
4.88%, 01/03/08 (a)		127,000		126,966
4.85%, 01/07/08 (a)		23,000		22,982
4.80%, 01/16/08 (a)		100,000		99,802
5.18%, 01/18/08 (a)		19,000		18,954
4.85%, 02/06/08 (a)		100,000		99,521
4.80%, 02/15/08 (a)		50,000		49,704
5.40%, 02/20/08 (a)		47,000		46,657
5.35%, 02/25/08 (a)		75,000		74,404
5.05%, 03/14/08 (a)		84,000		83,150
5.51%, 03/24/08 (a)		30,000		29,630
4.94%, 06/06/08 (a)		97,000		94,961
Clipper Receivables Co., L.L.C.
4.99%, 01/09/08 (a)(b)(c)		70,000		69,923
5.06%, 01/14/08 (a)(b)(c)		45,000		44,918
5.06%, 01/15/08 (a)(b)(c)		45,000		44,912
6.30%, 01/23/08 (a)(b)(c)		150,000		149,427
4.93%, 02/05/08 (a)(b)(c)		62,000		61,706
5.36%, 02/25/08 (a)(b)(c)		10,000		9,919
Concord Minuteman Capital Co., Series A
5.34%, 01/10/08 (a)(b)(c)		37,000		36,952
Danske Corp.
5.30%, 02/22/08 (a)(c)		20,000		19,853
DnB NOR Bank ASA
5.02%, 03/12/08		39,000		38,619
5.05%, 04/15/08		49,000		48,296
Fairway Finance Co., L.L.C.
4.94%, 02/05/08 (a)(b)(c)		21,000		20,900
5.06%, 02/14/08 (a)(b)(c)		14,000		13,914
5.51%, 02/14/08 (a)(b)(c)		70,000		69,534
5.34%, 02/21/08 (a)(b)(c)		100,000		99,253
5.34%, 02/22/08 (a)(b)(c)		37,000		36,718
Falcon Asset Securitization Corp.
5.41%, 01/31/08 (a)(b)(c)		30,000		29,866
4.94%, 02/11/08 (a)(b)(c)		199,272		198,165
5.32%, 02/27/08 (a)(b)(c)		12,000		11,900
5.06%, 04/17/08 (a)(b)(c)		90,000		88,671
Galaxy Funding, Inc.
5.25%, 01/11/08 (b)(c)		18,000		17,974
Gemini Securitization Corp., L.L.C.
5.28%, 01/08/08 (a)(b)(c)		75,000		74,924
4.86%, 01/31/08 (a)(b)(c)		31,000		30,876
5.14%, 02/20/08 (a)(b)(c)		69,000		68,514
5.48%, 02/29/08 (a)(b)(c)		5,000		4,956
5.27%, 03/19/08 (a)(b)(c)		21,000		20,763
General Electric Capital Corp.
5.32%, 02/19/08		173,000		171,794
5.38%, 03/04/08		35,000		34,683
5.33%, 03/20/08		75,000		74,156
Grampian Funding, L.L.C.
4.84%, 03/06/08 (a)(b)(c)		5,000		4,957
5.21%, 03/28/08 (a)(b)(c)		79,000		78,031
5.21%, 03/31/08 (a)(b)(c)		6,000		5,924
5.26%, 04/07/08 (a)(b)(c)		11,000		10,848
5.02%, 04/18/08 (a)(b)(c)		6,000		5,912
4.79%, 04/25/08 (a)(b)(c)		63,000		62,058
Intesa Funding, L.L.C.
5.23%, 01/15/08 (a)		140,000		139,719
5.07%, 01/16/08 (a)		55,000		54,885
Irish Life & Permanent PLC
5.35%, 01/16/08 (c)		12,000		11,974

10 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
J.P. Morgan Chase & Co.
5.01%, 03/14/08		38,000		37,622
5.02%, 04/18/08 (c)		300,000		295,599
Jupiter Securitization Corp.
5.33%, 01/25/08 (a)(b)(c)		100,000		99,648
K2 (USA), L.L.C.
5.34%, 01/24/08 (b)(c)(d)		4,000		3,987
5.40%, 06/13/08 (b)(c)(d)		7,000		7,000
5.42%, 07/15/08 (b)(c)(d)		54,000		54,000
KBC Financial Products International, Ltd.
5.39%, 02/21/08 (a)(c)		28,000		27,792
5.20%, 04/02/08 (a)(c)		11,000		10,857
Kitty Hawk Funding Corp.
5.41%, 01/28/08 (a)(b)(c)		50,000		49,799
Mont Blanc Capital Corp.
5.25%, 01/09/08 (a)(b)(c)		155,000		154,822
5.04%, 01/16/08 (a)(b)(c)		17,000		16,965
Morgan Stanley
5.20%, 04/14/08		327,000		322,220
5.21%, 04/22/08		50,000		49,211
4.91%, 04/29/08		8,000		7,873
Nationwide Building Society U.S.
5.35%, 01/16/08		20,000		19,957
5.10%, 01/24/08		30,000		29,904
5.28%, 03/03/08		82,000		81,265
Nieuw Amsterdam Receivables Corp.
5.18%, 03/27/08 (a)(b)(c)		18,000		17,783
5.21%, 04/04/08 (a)(b)(c)		81,000		79,928
Old Line Funding, L.L.C.
4.83%, 01/11/08 (a)(b)(c)		24,000		23,968
4.94%, 01/11/08 (a)(b)(c)		77,389		77,284
5.98%, 01/11/08 (a)(b)(c)		28,869		28,821
4.94%, 02/07/08 (a)(b)(c)		37,000		36,814
4.95%, 02/07/08 (a)(b)(c)		61,054		60,747
5.09%, 02/08/08 (a)(b)(c)		14,000		13,926
4.98%, 02/11/08 (a)(b)(c)		11,000		10,938
4.96%, 02/12/08 (a)(b)(c)		34,531		34,334
5.01%, 02/13/08 (a)(b)(c)		7,000		6,959
5.29%, 02/20/08 (a)(b)(c)		35,000		34,746
5.09%, 02/22/08 (a)(b)(c)		25,305		25,122
5.14%, 02/22/08 (a)(b)(c)		15,000		14,890
5.41%, 02/27/08 (a)(b)(c)		6,000		5,949
5.45%, 02/27/08 (a)(b)(c)		17,000		16,855
Park Avenue Receivables Co., L.L.C.
4.94%, 02/08/08 (a)(b)(c)		72,000		71,629
5.12%, 02/22/08 (a)(b)(c)		127,000		126,074
Picaros Funding, L.L.C.
5.39%, 03/19/08 (a)(b)(c)		27,000		26,693
5.23%, 04/08/08 (a)(b)(c)		40,000		39,445
Ranger Funding Co., L.L.C.
5.32%, 01/03/08 (a)(b)(c)		104,258		104,227
5.14%, 01/07/08 (a)(b)(c)		69,000		68,941
5.32%, 01/16/08 (a)(b)(c)		71,540		71,383
5.33%, 01/18/08 (a)(b)(c)		74,000		73,816
5.40%, 01/24/08 (a)(b)(c)		5,000		4,983
5.43%, 01/31/08 (a)(b)(c)		15,000		14,933
5.12%, 02/25/08 (a)(b)(c)		50,000		49,614
5.12%, 03/18/08 (a)(b)(c)		128,000		126,623
5.05%, 03/19/08 (a)(b)(c)		44,000		43,526
Royal Bank of Scotland PLC
4.99%, 01/28/08		5,000		4,982
San Paolo IMI U.S. Financial Co.
4.85%, 03/24/08 (a)		106,000		104,839
Scaldis Capital Ltd.
5.31%, 01/07/08 (a)(b)(c)		30,000		29,974
5.27%, 01/15/08 (a)(b)(c)		45,000		44,909
5.22%, 01/22/08 (a)(b)(c)		50,000		49,850
5.13%, 01/25/08 (a)(b)(c)		14,000		13,953
4.93%, 02/08/08 (a)(b)(c)		10,000		9,949
5.10%, 02/22/08 (a)(b)(c)		11,000		10,920
5.44%, 03/14/08 (a)(b)(c)		53,322		52,749
5.21%, 04/01/08 (a)(b)(c)		146,000		144,127
4.81%, 04/25/08 (a)(b)(c)		5,000		4,925
5.14%, 04/25/08 (a)(b)(c)		11,094		10,915
Sedna Finance, Inc.
5.41%, 06/13/08 (b)(c)		4,000		4,000
Sheffield Receivables Corp.
5.77%, 01/11/08 (a)(b)(c)		34,000		33,946
5.07%, 01/15/08 (a)(b)(c)		8,000		7,984
5.05%, 01/22/08 (a)(b)(c)		20,000		19,942
5.01%, 02/07/08 (a)(b)(c)		33,000		32,832
Sigma Finance, Inc.
5.35%, 01/03/08 (b)(c)		105,000		104,970
5.40%, 03/12/08 (b)(c)(d)		5,000		4,949
5.38%, 04/09/08 (b)(c)(d)		6,000		5,915
Skandinaviska Enskilda Banken AB
4.78%, 02/01/08		10,000		9,959
5.04%, 03/19/08		2,000		1,979
4.81%, 03/28/08		17,000		16,806
Solitaire Funding, L.L.C.
5.29%, 01/11/08 (a)(b)(c)		26,000		25,962
5.13%, 01/25/08 (a)(b)(c)		36,000		35,879
4.86%, 01/30/08 (a)(b)(c)		39,000		38,849
5.09%, 02/19/08 (a)(b)(c)		20,000		19,863
5.50%, 03/04/08 (a)(b)(c)		104,000		103,014
5.14%, 04/10/08 (a)(b)(c)		95,000		93,667
Stadshypotek Delaware, Inc.
4.80%, 03/05/08 (a)(c)		94,000		93,210
Swedbank AB
5.34%, 01/09/08		8,000		7,991
5.35%, 01/09/08		36,000		35,958
5.49%, 01/22/08		70,000		69,780
5.49%, 03/11/08		10,000		9,896
Swedbank Mortgage AB
4.94%, 03/25/08		3,000		2,966
5.22%, 04/10/08		6,000		5,915
4.87%, 06/18/08		90,000		87,993
Thames Asset Global Securitization No.1, Inc.
5.29%, 01/07/08 (a)(b)(c)		122,000		121,894
4.99%, 01/09/08 (a)(b)(c)		5,000		4,995
5.74%, 01/11/08 (a)(b)(c)		12,000		11,981
5.20%, 01/22/08 (a)(b)(c)		37,000		36,889
5.27%, 02/15/08 (a)(b)(c)		11,000		10,929
5.33%, 04/04/08 (a)(b)(c)		8,000		7,890
Thunder Bay Funding, L.L.C.
5.97%, 01/08/08 (a)(b)(c)		37,000		36,957
4.92%, 01/15/08 (a)(b)(c)		60,000		59,886
5.04%, 01/15/08 (a)(b)(c)		9,187		9,169
4.92%, 01/25/08 (a)(b)(c)		37,651		37,529
4.98%, 02/12/08 (a)(b)(c)		18,734		18,626
Ticonderoga Funding, L.L.C.
4.90%, 01/11/08 (a)(b)(c)		10,000		9,987
5.27%, 02/08/08 (a)(b)(c)		51,260		50,978
Tulip Funding Corp.
4.87%, 02/06/08 (a)(b)(c)		6,000		5,971
5.27%, 02/21/08 (a)(b)(c)		23,000		22,831

See financial notes 11

Schwab Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
UBS Finance (Delaware), Inc.
5.55%, 03/06/08 (a)		50,000		49,513
5.39%, 03/17/08 (a)		3,000		2,967
5.38%, 03/18/08 (a)		5,000		4,944
5.09%, 04/16/08 (a)		205,000		202,009
UniCredit Bank (Ireland) PLC
5.42%, 01/15/08 (a)		48,000		47,901
Variable Funding Capital Corp.
4.94%, 01/09/08 (a)(b)(c)		45,000		44,951
4.89%, 01/10/08 (a)(b)(c)		136,000		135,835
5.06%, 02/05/08 (a)(b)(c)		23,000		22,888
5.48%, 02/20/08 (a)(b)(c)		56,000		55,584
Whistlejacket Capital, L.L.C.
5.34%, 01/24/08 (b)(c)(d)		19,226		19,162
5.34%, 01/25/08 (b)(c)(d)		15,000		14,948
5.37%, 01/25/08 (b)(c)(d)		34,749		34,628
5.42%, 06/16/08 (b)(c)(d)		13,000		13,000
Windmill Funding Corp.
5.14%, 01/17/08 (a)(b)(c)		9,000		8,980
Yorktown Capital, L.L.C.
4.98%, 01/17/08 (a)(b)(c)		100,000		99,780
5.05%, 01/25/08 (a)(b)(c)		29,000		28,903
5.07%, 02/20/08 (a)(b)(c)		50,000		49,653
5.64%, 02/22/08 (a)(b)(c)		17,000		16,863
5.05%, 03/19/08 (a)(b)(c)		26,000		25,720
5.14%, 03/19/08 (a)(b)(c)		122,076		120,740
				11,243,812
Promissory Note 0.4%
Merrill Lynch & Co., Inc.
5.37%, 02/22/08 (c)(d)		100,000		100,000
Total Fixed-Rate Obligations (Cost $20,199,865)				20,199,865
Variable-Rate Obligations 13.4% of net assets
ABN AMRO Bank N.V.
5.27%, 01/11/08		143,000		143,000
Allied Irish Banks PLC
4.95%, 01/22/08 (c)		50,000		50,000
Banco Espanol de Credito S.A.
5.20%, 01/18/08 (c)		25,000		25,000
Barclays Bank PLC
4.99%, 01/16/08		106,000		105,997
Beta Finance, Inc.
4.86%, 01/25/08 (b)(c)		72,000		72,001
BNP Paribas
5.17%, 01/03/08		70,000		69,993
Canadian Imperial Bank of Commerce
4.88%, 01/29/08		30,000		30,000
4.92%, 01/29/08		50,000		50,000
4.90%, 02/15/08		10,000		10,000
CC (USA), Inc.
4.86%, 01/25/08 (b)(c)		65,000		65,001
Credit Suisse
5.15%, 01/23/08		13,000		13,000
Danske Bank A/S
4.92%, 01/22/08		100,000		100,000
Danske Corp.
4.95%, 02/13/08 (a)(c)		90,000		90,000
4.96%, 02/15/08 (a)(c)		50,000		50,000
4.99%, 02/18/08 (a)(c)		140,000		140,000
Deutsche Bank AG
5.33%, 01/07/08		100,000		100,000
5.29%, 01/14/08		100,000		100,003
4.96%, 01/23/08		150,000		150,000
4.96%, 01/28/08		35,000		35,001
Dexia Credit Local
4.82%, 01/25/08		17,000		17,000
Dorada Finance, Inc.
5.00%, 01/15/08 (b)(c)		90,000		89,997
Five Finance, Inc.
5.18%, 01/09/08 (b)(c)		21,000		20,996
Florida Hurricane Catastrophe Fund
4.86%, 01/15/08		75,000		75,000
Fortis Bank
4.80%, 01/28/08		50,000		49,978
Intesa Bank Ireland PLC
4.88%, 01/25/08 (c)		70,000		70,000
K2 (USA), L.L.C.
5.00%, 01/15/08 (b)(c)(d)		3,000		3,000
4.86%, 02/07/08 (b)(c)(d)		20,000		19,998
4.91%, 03/20/08 (b)(c)(d)		50,000		50,002
Lexington Parker Capital Co., L.L.C.
5.19%, 01/07/08 (a)(b)(c)		50,000		49,999
Liberty Lighthouse U.S. Capital Co., L.L.C.
5.19%, 01/02/08 (b)(c)(d)		2,000		2,000
5.21%, 01/10/08 (b)(c)(d)		6,000		5,999
4.83%, 02/15/08 (b)(c)(d)		16,000		15,999
4.95%, 03/17/08 (b)(c)(d)		35,000		34,999
Links Finance, L.L.C.
5.02%, 01/15/08 (b)(c)(d)		3,000		3,000
4.84%, 01/25/08 (b)(c)(d)		7,000		7,000
Merrill Lynch & Co., Inc.
5.14%, 01/18/08		50,000		50,000
Mitsubishi UFJ Trust & Banking Corp.
4.97%, 01/30/08		20,000		20,000
Morgan Stanley
5.33%, 01/18/08		30,000		29,998
Physician Solutions, L.L.C.
4.95%, 01/03/08 (a)		1,585		1,585
Roman Catholic Bishop of San Jose (CA)
4.85%, 01/03/08 (a)		5,400		5,400
Royal Bank of Canada
5.18%, 01/04/08		50,000		49,996
Royal Bank of Scotland PLC
5.28%, 01/08/08		142,000		142,000
5.29%, 01/11/08		100,000		100,000
Sedna Finance, Inc.
5.21%, 01/10/08 (b)(c)		2,000		2,000
5.00%, 01/15/08 (b)(c)		20,000		20,000
4.94%, 02/21/08 (b)(c)		3,000		3,000
Sigma Finance, Inc.
5.00%, 01/15/08 (b)(c)(d)		50,000		49,999
5.07%, 01/25/08 (b)(c)(d)		100,000		100,006
5.07%, 01/25/08 (b)(c)(d)		45,000		45,000
Societe Generale
5.06%, 01/17/08		83,000		83,000
Sumitomo Trust & Banking Co.
5.25%, 01/07/08		4,000		4,000
5.10%, 01/14/08		100,000		100,000
4.93%, 01/22/08		3,000		3,000
Tenderfoot Seasonal Housing, L.L.C.
4.91%, 01/03/08 (a)		3,000		3,000

12 See financial notes

Schwab Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
The Goldman Sachs Group, Inc.
5.26%, 01/11/08 (d)		160,000		160,000
5.08%, 01/17/08 (c)(d)		23,000		23,000
5.08%, 01/16/08 (c)(d)		60,000		60,000
4.93%, 01/29/08 (d)		29,000		29,000
Wachovia Bank, N.A.
4.98%, 01/25/08		31,000		31,000
Westpac Banking Corp.
4.88%, 02/05/08		282,000		282,000
Whistlejacket Capital, L.L.C.
5.19%, 01/02/08 (b)(c)(d)		10,000		9,999
4.86%, 01/22/08 (b)(c)(d)		16,000		15,999
4.83%, 01/25/08 (b)(c)(d)		14,000		13,999
4.85%, 02/06/08 (b)(c)(d)		92,000		91,989
4.86%, 02/07/08 (b)(c)(d)		50,000		49,994
4.86%, 02/19/08 (b)(c)(d)		4,000		4,000
Total Variable-Rate Obligations (Cost $3,496,927)				3,496,927
Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 8.9% of net assets
Repurchase Agreements 8.9%
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement, dated 12/31/07, due 01/02/08 at 4.77%, fully collateralized by U.S. Government Securities with a value of $525,302.		515,136		515,000
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement, dated 12/31/07, due 01/02/08 at 4.50%, fully collateralized by U.S. Government Securities with a value of $14,742.		14,453		14,449
Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.75%, fully collateralized by U.S. Government Securities with a value of $1,836,000.		1,800,475		1,800,000
Total Other Investments (Cost $2,329,449)				2,329,449
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $26,026,241.

(a)	Credit-enhanced security.
(b)	Asset-backed security.
(c)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $9,280,530 or 35.5% of net assets.
(d)	Illiquid security. At the period end, the value of these amounted to $1,052,571 or 4.0% of net assets.

See financial notes 13

Schwab Cash Reserves

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$26,026,241
Receivables:
Interest		137,844
Prepaid expenses	+	49
Total assets		26,164,134
Liabilities
Payables:
Investment adviser and administrator fees		563
Transfer agent and shareholder services fees		869
Accrued expenses	+	637
Total liabilities		2,069
Net Assets
Total assets		26,164,134
Total liabilities	−	2,069
Net assets		$26,162,065
Net Assets by Source
Capital received from investors		26,162,112
Net realized capital losses		(47	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$26,162,065		26,162,112		$1.00

14 See financial notes

Schwab Cash Reserves

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$1,090,843
Net Realized Gains and Losses
Net realized losses on investments		(47	)
Expenses
Investment adviser and administrator fees		63,287
Transfer agent and shareholder service fees		81,814
Registration fees		3,509
Custodian fees		956
Shareholder reports		540
Portfolio accounting fees		506
Trustees’ fees		90
Professional fees		58
Interest expense		1
Other expenses	+	128
Total expenses		150,889
Expense reduction by adviser and Schwab	−	12,825
Custody credits	−	3
Net expenses		138,061
Increase (Decrease) in Net Assets from Operations
Total investment income		1,090,843
Net expenses	−	138,061
Net investment income		952,782
Net realized losses	+	(47	)
Increase in net assets from operations		$952,735

See financial notes 15

Schwab Cash Reserves

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$952,782	$479,373
Net realized losses	+	(47)	−
Increase in net assets from operations		952,735	479,373
Distributions to Shareholders
Distributions from net investment income		952,782	479,373
Transactions in Fund Shares*
Shares sold		104,547,606	61,375,778
Shares reinvested		940,059	472,341
Shares redeemed	+	(96,063,921)	(45,931,679)
Net transactions in fund shares		9,423,744	15,916,440
Net Assets
Beginning of period		16,738,368	821,928
Total increase	+	9,423,697	15,916,440
End of period		$26,162,065	$16,738,368

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

16 See financial notes

Schwab Cash Reserves

Financial Notes

1. Business Structure of the Fund:

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

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Money Fund Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab Cash Reserves offers one share class. Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the fund are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

Repurchase Agreements: The fund may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created. Any repurchase agreements with due dates later than seven days from issue dates may be subject to seven day put features for liquidity purposes.

The fund’s repurchase agreements will be fully collateralized by U.S. government securities. All collateral is held by the fund’s custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Delayed-Delivery: The fund may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The fund has set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

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

17

Schwab Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(e) Expenses:

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

(f) Distributions to Shareholders:

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

(g) Custody Credits:

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

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the fund’s financial statements.

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

18 

Schwab Cash Reserves

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

Transfer Agent Fees		Shareholder Service Fees
	0.20%		0.20%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses to 0.68% for so long as CSIM serves as the investment adviser to the fund.

The fund may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, the fund’s total security transactions with other Schwab Funds were $126,000.

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

Trustees

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

4. Borrowing from Banks:

The fund may borrow money from banks and custodians. The fund may obtain temporary bank loans through the trust to which the fund belongs, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and an uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The fund pays interest on the amounts it borrows at rates that are negotiated periodically. There was no borrowing from the lines of credit for the fund during the period. However, the fund utilized its overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.

19

Schwab Cash Reserves

Financial Notes (continued)

5.  Federal Income Taxes:

(All dollar amounts are x 1,000)

As of December 31, 2007, the fund had no undistributed earnings on a tax basis.

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the fund had capital loss carry forwards of $47 available to offset net capital gains before the expiration date of December 31, 2015.

For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2007, the fund had no deferred realized net capital losses and there were no capital losses being utilized to offset capital gains.

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

	Current period distributions		Prior period distributions
Ordinary income		$952,782		$479,373
Long-term capital gains		—		—
Return of capital		—		—

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

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, no such reclassifications were required.

6.   Subsequent Event:

Subsequent to year-end, on February 11, 2008, Whistlejacket Capital LLC (Whistlejacket), a structured investment vehicle (“SIV”), experienced an “enforcement event” that has led to the appointment of a Receiver to manage Whistlejacket’s operations. On February 12, 2008, two nationally recognized statistical rating organizations downgraded the ratings of the medium term notes (Notes) issued by Whistlejacket, including the Notes held by the fund. As a result of the downgrade, the Notes are no longer money fund eligible pursuant to Rule 2a-7 of the 1940 Act. As required under Rule 2a-7, the Board of Trustees of the fund met on February 12, 2008 and, based on the recommendation of the fund’s investment adviser, determined that it was not in the best interest of the fund to dispose of the Notes at that time.

20 

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:
Schwab Cash Reserves

In our opinion, the accompanying statement of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Cash Reserves (one of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the ‘‘Fund”) at December 31, 2007, 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 periods presented, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

21

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the fund covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

22 

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

23

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

24 

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

25

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

26 

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

27

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR31381-03

Schwab California Municipal Money Fund^tm

Schwab California AMT Tax-Free Money Fund^tm

Annual Report

December 31, 2007

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Funds	3
Performance and Fund Facts	6
Fund Expenses	7
Financial Statements
Schwab California Municipal Money Fundtm	8
Schwab California AMT Tax-Free Money Fundtm	29
Financial Notes	36
Report of Independent Registered Public Accounting Firm	41
Investment Advisory Agreement Approval	43
Trustees and Officers	45
Glossary	49

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

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

The Investment Environment and the Funds

Kevin Shaughnessy (left) CFA, managing director and senior portfolio manager, is responsible for the management of the funds.

John Shelton (right) CFA, portfolio manager, has day-to-day responsibility for management of the funds.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

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

The Investment Environment and the Fundscontinued

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund maintained a weighted average maturity that was neutral to short relative to their peer groups. With an emphasis toward attractively priced weekly variable rate notes, the funds were able to add value throughout the year in spite of general market volatility. During the third quarter, as it became apparent that the Fed would have to ease monetary policy, the funds increased their exposure to one-year municipal notes, extending their weighted average maturity as short-term municipal yields declined.

Overall, the investment environment during the reporting period proved to be highly unusual for money funds as the markets reacted to subprime and credit turmoil. During the first half of the year, yields on municipal notes maturing 6-12 months were range bound, but dropped when the Fed lowered the Fed Funds Rate. In the latter half of the year, municipal fixed-rate notes fell approximately 80 basis points in response to a 100 basis point reduction in the Fed Funds Rate. In an environment characterized by falling yields, issuance of short-term municipal securities increased for the year. The term structure of tax-exempt money market yields maturing from 1 week to 13 months started out positive and then ended the year inverted. The Bond Market Association Municipal Index averaged 3.67%, while one-year notes averaged 3.51%.

California’s budget for fiscal 2008 (7/1/07-6/30/08) was approved on August 24, 2007. Though essentially balanced on paper, the budget relied on about $1.7 billion in one-time revenues, including $980 million from the sale of EdFund, California’s federal student loan guaranty agency. Though the original plan anticipated moderate revenue growth, the State Department of Finance is now projecting that revenues will fall short of that projection by about $4.9 billion, including a delay of the sale of EdFund into fiscal 2009. Revenues received through December 2007 were about $1.1 billion behind projections, with sales and use taxes 4.5% below projections and corporation taxes off by 11.4%. The updated forecast reduces fiscal 2008 personal income tax growth to 1.4%, while sales taxes are expected to increase by just 0.9%. The revenue shortfall, combined with about $2 billion of unbudgeted appropriations, would result in a year-end general fund deficit of about $3.3 billion, if left unaddressed.

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

The Investment Environment and the Fundscontinued

On January 10, 2008, Governor Arnold Schwarzenegger declared a fiscal emergency under authority granted by Proposition 58, approved by State voters in March 2004. The declaration calls the State Legislature into special session and requires them to act on the projected deficit within 45 days, or they may not work on other business or adjourn. The Governor also introduced his spending plan for fiscal 2009 (beginning 7/1/08). The budget projects a cumulative general fund deficit of $14.5 billion through June 30, 2009, including carry over of the $3.3 billion deficit from the current year. The proposed budget closes much of the gap through 10% across the board reductions to general fund appropriations, excluding debt service, pensions, and other court-mandated spending. The plan would suspend the level of education spending required under Proposition 98 and cut general fund appropriations to K-12 education by $4.4 billion. MediCal, social services, and higher education would each absorb reductions of over $1 billion. The Governor also plans to sell the remaining $3.3 billion of deficit bonds that were authorized in 2004. If enacted as proposed, California would end fiscal 2009 with a $2.8 billion general fund reserve, or 2.7% of budgeted appropriations. However, this austere budget plan is likely to face stiff resistance in the State Legislature.

California’s economy has slowed due to the sharp downturn in housing, softness in consumer spending, and slowing national economic growth. Though the State added 195,000 payroll jobs from January to November 2007, up 1.3% over the same period in 2006, job gains in each of the last three months have been less than 1%. This compares with a 1.9% year-over-year increase for all of 2006. The construction sector lost 12,000 payroll jobs through November, or 1.3%, and the pace of job loss has since accelerated. These job losses have been somewhat offset by increases in education and health services, government, and professional and business activities. The State’s unemployment rate increased to 5.6% in November 2007, up from 4.7% in November 2006. The Department of Finance is projecting 0.7% growth in payroll jobs for 2008, and 4.8% growth in personal income.

California’s ratings remain among the lowest of all the states, reflecting its history of persistent budget deficts. As of the report date, the State’s ratings were A1 from Moody’s Investors Service, A+ from Standard & Poor’s, and A+ from Fitch Ratings. However, Fitch placed the State’s rating on its watch list for potential downgrade in January 2008, following release of the Governor’s large deficit forecast.

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

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

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

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

The seven-day yields are calculated using standard SEC formulas. The effective yield includes the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate.

	California Municipal Money Fund				California AMT Tax-Free Money Fund
	Sweep Shares		Value Advantage Sharestm			Value Advantage Sharestm
Ticker Symbol	SWCXX		SWKXX			SNKXX
Seven-Day Yield1		2.76%		2.93%			2.79%
Seven-Day Yield—No Waiver2		2.67%		2.80%			2.67%
Seven-Day Effective Yield1		2.80%		2.97%			2.83%
Seven-Day Taxable-Equivalent Effective Yield1,3		4.80%		5.09%			4.85%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

		California AMT Tax-Free
	California Municipal Money Fund	Money Fund
Weighted Average Maturity	33 days	33 days
Credit Quality of Holdings % of portfolio	100% Tier 1	100% Tier 1
Credit-Enhanced Securities % of portfolio	73%	60%
Minimum Initial Investment4
Sweep Investmentstm	*	n/a
Value Advantage Sharestm	$25,000	$25,000
($15,000 for IRA and custodial accounts)5

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
3	Taxable-equivalent effective yield assumes a 2007 maximum combined federal regular income and California state personal income tax rate of 41.70%. Investment income may be subject to the Alternative Minimum Tax.
4	Please see prospectus for further detail and eligibility requirements.
5	Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult your tax advisor about your situation.

^*  Subject to the eligibility terms and conditions of your Schwab account agreement.

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

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab California Municipal Money Fundtm
Sweep Shares
Actual Return		0.62%	$	1,000	$	1,015.00		3.15
Hypothetical 5% Return		0.62%	$	1,000	$	1,022.08		3.16
Value Advantage Sharestm
Actual Return		0.45%	$	1,000	$	1,015.90		2.29
Hypothetical 5% Return		0.45%	$	1,000	$	1,022.94		2.29
Schwab California AMT Tax-Free Money Fundtm
Actual Return		0.45%	$	1,000	$	1,003.60		0.57
Hypothetical 5% Return		0.45%	$	1,000	$	1,005.87		0.57

1

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

2

Expenses for each share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 184 days of the period, and divided by 365 days of the fiscal year. For the Schwab California AMT Tax-Free Money Fund, expenses are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 46 days of the period (11/16/07, commencement of operations, through 12/31/07), and divided by 365 days of the fiscal year.

Schwab California Municipal Money Fund & Schwab California AMT Tax-Free Money Fund 7

Schwab California Municipal Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Sweep Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.02			2.79			1.76			0.59			0.46
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.63			0.64			0.65			0.65			0.65
Gross operating expenses		0.69			0.82			0.82			0.82			0.82
Net investment income (loss)		2.98			2.77			1.74			0.58			0.45
Net assets, end of period ($ x 1,000,000)		5,745			4,539			4,134			4,147			4,169

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Value Advantage Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.03			0.02			0.01			0.01
Less distributions:
Distributions from net investment income		(0.03	)		(0.03	)		(0.02	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		3.21			2.99			1.96			0.79			0.66
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.45			0.45			0.45			0.45			0.45
Gross operating expenses		0.56			0.58			0.59			0.59			0.59
Net investment income (loss)		3.16			2.95			1.96			0.78			0.65
Net assets, end of period ($ x 1,000,000)		5,267			4,201			3,240			2,825			3,061

¹ Per-share amount was less than $0.01.

8 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	99	.6%	Municipal Securities		10,972,058		10,972,058
	99	.6%	Total Investments		10,972,058		10,972,058
	0	.4%	Other Assets and Liabilities				40,105
	100	.0%	Net Assets				11,012,163

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 99.6% of net assets
California 94.8%
Alameda Cnty IDA
RB (Aitchison Family Partnership) Series 1993A
3.44%, 01/02/08 (a)(b)		2,440		2,440
RB (JMS Family Partnership) Series 1995A
3.44%, 01/02/08 (a)(b)		1,000		1,000
Anaheim Housing Auth
M/F Housing RB (Casa Granada Apts) Series 1997A
3.41%, 01/03/08 (a)(b)		3,395		3,395
M/F Housing RB (Port Trinidad Apts) Series 1997C
3.41%, 01/03/08 (a)(b)		1,940		1,940
M/F Housing Refunding RB (Sage Park) Series 1998A
3.45%, 01/03/08 (a)(b)		5,500		5,500
Anaheim Redevelopment Agency
Tax Allocation Refunding Bonds Series A
3.47%, 01/03/08 (a)(b)(c)(d)		8,715		8,715
Association of Bay Area Governments
COP (Harker School Foundation) Series 1998
3.35%, 01/02/08 (a)(b)		3,895		3,895
COP (The Harker School) Series 2007
3.35%, 01/02/08 (a)(b)		9,890		9,890
M/F Housing RB (Artech Building) Series 1999A
3.46%, 01/03/08 (a)(b)		3,200		3,200
M/F Housing RB (Crossing Apts) Series 2002A
3.45%, 01/03/08 (a)(b)		61,450		61,450
M/F Housing RB (Miramar Apts) Series 2000A
3.45%, 01/03/08 (a)(b)		15,000		15,000
M/F Housing RB (Mountain View Apts) Series 1997A
3.47%, 01/03/08 (a)(b)		5,785		5,785
RB (Air Force Village West Inc) Series 2005
3.42%, 01/03/08 (a)(b)		10,695		10,695
RB (Francis Parker School) Series 2005
3.35%, 01/03/08 (a)(b)		5,000		5,000
RB (Public Policy Institute of California) Series 2001A
3.35%, 01/03/08 (a)(b)		10,000		10,000
Bakersfield
Wastewater RB Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		3,235		3,235
Bakersfield SD
GO Bonds (Election of 2006) Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		2,390		2,390
Bay Area Toll Auth
RB Series 2006F
3.44%, 01/03/08 (a)(c)(d)		3,800		3,800
San Francisco Bay Area Toll Bridge RB Series 2001C
3.15%, 01/03/08 (a)(b)(c)		13,300		13,300
San Francisco Bay Area Toll Bridge RB Series 2001D
3.47%, 01/03/08 (a)(b)(c)(d)		10,125		10,125
San Francisco Bay Area Toll Bridge RB Series 2006B1
3.22%, 01/03/08 (a)(b)(c)		6,000		6,000
San Francisco Bay Area Toll Bridge RB Series 2006C
3.22%, 01/03/08 (a)(b)(c)		77,535		77,535
San Francisco Bay Area Toll Bridge RB Series 2006F
3.48%, 01/03/08 (a)(c)(d)		48,970		48,970
San Francisco Bay Area Toll Bridge RB Series 2006F & 2007F
3.44%, 01/03/08 (a)(c)(d)		15,810		15,810
San Francisco Bay Area Toll Bridge RB Series 2007F
3.45%, 01/03/08 (a)(c)(d)		5,200		5,200
Cabrillo Community College District
GO Bonds (Election of 2004) Series A
3.44%, 01/03/08 (a)(b)(c)(d)		8,575		8,575
GO Bonds (Election of 2004) Series B
3.44%, 01/03/08 (a)(b)(c)(d)		18,065		18,065
California
Economic Recovery Bonds Series 2004A
3.52%, 01/02/08 (a)(c)(d)(f)		100,500		100,500
3.45%, 01/03/08 (a)(b)(c)(d)		31,420		31,420

See financial notes 9

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
3.45%, 01/03/08 (a)(c)(d)(f)		39,995		39,995
3.48%, 01/03/08 (a)(b)(c)(d)		8,495		8,495
3.64%, 01/03/08 (a)(b)(c)(d)		8,873		8,873
Economic Recovery Bonds Series 2004C11
3.25%, 01/02/08 (a)(b)		13,620		13,620
GO Bonds
3.44%, 01/03/08 (a)(b)(c)(d)		92,765		92,765
3.45%, 01/03/08 (a)(b)(c)(d)		23,825		23,825
3.45%, 01/03/08 (a)(b)(c)(d)		28,480		28,480
3.45%, 01/03/08 (a)(b)(c)(d)		30,795		30,795
3.48%, 01/03/08 (a)(b)(c)(d)		15,580		15,580
3.48%, 01/03/08 (a)(b)(c)(d)		4,410		4,410
3.52%, 01/03/08 (a)(b)(c)(d)		16,385		16,385
3.52%, 01/03/08 (a)(b)(c)(d)		8,285		8,285
3.52%, 01/03/08 (a)(b)(c)(d)		6,720		6,720
3.53%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
3.53%, 01/03/08 (a)(b)(c)(d)		10,740		10,740
3.53%, 01/03/08 (a)(b)(c)(d)		17,775		17,775
3.64%, 01/03/08 (a)(b)(c)(d)		7,870		7,870
GO Bonds Series 1999
3.47%, 01/03/08 (a)(b)(c)(d)		10,835		10,835
GO Bonds Series 2004A3
3.55%, 01/02/08 (a)(b)		500		500
GO Bonds Series 2004A5
3.52%, 01/02/08 (a)(b)		1,200		1,200
GO Bonds Series 2007
3.42%, 01/03/08 (a)(b)(c)(d)		15,440		15,440
3.47%, 01/03/08 (a)(b)(c)(d)		12,017		12,017
GO CP Notes
3.34%, 02/01/08 (c)		40,100		40,100
3.10%, 02/06/08 (c)		4,000		4,000
2.59%, 03/05/08 (c)		23,400		23,400
3.10%, 03/19/08 (c)		48,000		48,000
GO Refunding Bonds
3.44%, 01/03/08 (a)(b)(c)(d)		22,135		22,135
3.44%, 01/03/08 (a)(b)(c)(d)		9,530		9,530
3.44%, 01/03/08 (a)(b)(c)(d)		51,835		51,835
3.47%, 01/03/08 (a)(b)(c)(d)		16,830		16,830
3.52%, 01/03/08 (a)(b)(c)(d)		16,250		16,250
GO Refunding Bonds Series 2007
3.45%, 01/03/08 (a)(b)(c)(d)(f)		74,280		74,280
3.46%, 01/03/08 (a)(b)(c)(d)		74,940		74,940
3.47%, 01/03/08 (a)(b)(c)(d)		11,625		11,625
3.47%, 01/03/08 (a)(b)(c)(d)		74,250		74,250
3.52%, 01/03/08 (a)(b)(c)(d)		25,000		25,000
RAN
3.37%, 06/30/08		300,000		300,918
Various Purpose GO Bonds
3.48%, 01/02/08 (a)(b)(c)(d)		6,010		6,010
3.44%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
3.44%, 01/03/08 (a)(b)(c)(d)		18,715		18,715
3.44%, 01/03/08 (a)(b)(c)(d)		4,175		4,175
3.44%, 01/03/08 (a)(b)(c)(d)		31,365		31,365
3.45%, 01/03/08 (a)(b)(c)(d)		30,830		30,830
3.47%, 01/03/08 (a)(b)(c)(d)		4,528		4,528
3.48%, 01/03/08 (a)(b)(c)(d)		11,760		11,760
3.48%, 01/03/08 (a)(b)(c)(d)		16,000		16,000
3.48%, 01/03/08 (a)(b)(c)(d)		6,365		6,365
3.52%, 01/03/08 (a)(b)(c)(d)		18,440		18,440
3.60%, 09/18/08 (b)(c)(d)		37,435		37,435
California Dept of Water Resources
BAN Series 2007A
3.50%, 03/27/08 (b)(c)(d)		63,000		63,000
Power Supply RB Series 2002B1
3.53%, 01/02/08 (a)(b)		2,000		2,000
Power Supply RB Series 2002C1
3.32%, 01/03/08 (a)(b)		2,600		2,600
Power Supply RB Series 2002C11
3.28%, 01/03/08 (a)(b)		3,100		3,100
Power Supply RB Series 2002C3
3.32%, 01/03/08 (a)(b)(c)		12,080		12,080
Power Supply RB Series 2002C8
3.25%, 01/03/08 (a)(b)		3,000		3,000
Power Supply RB Series 2002C9
3.30%, 01/03/08 (a)(b)		8,000		8,000
Power Supply RB Series 2005F4
3.53%, 01/02/08 (a)(b)		2,025		2,025
Power Supply RB Series 2005G3
3.28%, 01/03/08 (a)(b)(c)		7,105		7,105
Power Supply RB Series 2005G6
3.32%, 01/03/08 (a)(b)(c)		2,000		2,000
Water Refunding RB (Big Bear Lake) Series 1996
3.52%, 01/03/08 (a)(b)(c)(d)		8,445		8,445
California Economic Development Financing Auth
IDRB (Calco) Series 1997
3.43%, 01/02/08 (a)(b)		300		300
California Educational Facilities Auth
RB (Chapman University) Series 2000
3.35%, 01/02/08 (a)(b)		3,700		3,700
RB (University of Judaism) Series 1998A
3.51%, 01/03/08 (a)(b)		4,800		4,800
Refunding RB (Pepperdine University) Series 2005A
3.44%, 01/03/08 (a)(b)(c)(d)		25,835		25,835
California Health Facilities Financing Auth
Insured RB (Southern California Presbyterian Homes) Series 1998
3.38%, 01/02/08 (a)(b)(c)		41,175		41,175
RB (Adventist Health System/West) Series 1998B
3.53%, 01/02/08 (a)(b)(c)		1,025		1,025
RB (Catholic Healthcare West) Series 2004K
3.30%, 01/02/08 (a)(b)		7,900		7,900
RB (Kaiser Permanente) Series 1998A
3.44%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
RB (Kaiser Permanente) Series 2006C
3.41%, 01/02/08 (a)		73,200		73,200
RB (Kaiser Permanente) Series 2006E
3.30%, 02/11/08		2,500		2,500
3.25%, 03/12/08		40,000		40,000
RB (Sutter Health) Series 2007A
3.52%, 01/02/08 (a)(c)(d)		29,990		29,990
3.48%, 01/03/08 (a)(c)(d)		15,000		15,000

10 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Refunding RB (Cedars-Sinai Medical Center) Series 2005
3.48%, 01/03/08 (a)(b)(c)(d)		2,425		2,425
California HFA
Home Mortgage RB Series 2001J
3.65%, 01/02/08 (a)(b)(c)		10,960		10,960
Home Mortgage RB Series 2001R
3.70%, 01/02/08 (a)(b)(c)		11,485		11,485
3.70%, 01/02/08 (a)(b)(c)		2,255		2,255
Home Mortgage RB Series 2002J
3.67%, 01/02/08 (a)(b)(c)		5,680		5,680
Home Mortgage RB Series 2003K
3.45%, 01/02/08 (a)(c)		22,000		22,000
3.45%, 01/02/08 (a)(c)		6,600		6,600
Home Mortgage RB Series 2003M
3.42%, 01/02/08 (a)(c)(e)		28,390		28,390
3.70%, 01/02/08 (a)(c)		28,570		28,570
Home Mortgage RB Series 2005A
3.42%, 01/02/08 (a)(c)		31,000		31,000
Home Mortgage RB Series 2005B
3.42%, 01/02/08 (a)(c)(e)		14,605		14,605
3.42%, 01/02/08 (a)(c)(e)		4,660		4,660
3.42%, 01/02/08 (a)(c)		2,000		2,000
Home Mortgage RB Series 2006I
3.52%, 01/03/08 (a)(c)(d)		4,620		4,620
Home Mortgage RB Series 2006K
3.52%, 01/03/08 (a)(c)(d)		6,215		6,215
3.52%, 01/03/08 (a)(c)(d)		4,000		4,000
Home Mortgage RB Series 2007H
3.66%, 01/02/08 (a)(c)		10,330		10,330
Home Mortgage RB Series 2007K
3.70%, 01/02/08 (a)(c)		5,000		5,000
3.70%, 01/02/08 (a)(c)		5,000		5,000
Home Mortgage RB Series J
3.59%, 01/02/08 (a)(c)(d)		12,675		12,675
M/F Housing RB III Series 2001G
3.45%, 01/02/08 (a)(c)		14,120		14,120
California Infrastructure & Economic Development Bank
IDRB (American-De Rosa Lamp Arts) Series 1999
3.52%, 01/02/08 (a)(b)		4,950		4,950
IDRB (Fairmont Sign Co) Series 2000A
3.58%, 01/03/08 (a)(b)		4,250		4,250
IDRB (Nelson Name Plate Co) Series 1999
3.17%, 01/01/08 (a)(b)		2,450		2,450
IDRB (Roller Bearing Co) Series 1999
3.56%, 01/02/08 (a)(b)		2,400		2,400
RB (Asian Art Museum Foundation of SF) Series 2005
3.53%, 01/02/08 (a)(b)(c)		1,000		1,000
RB (Bay Area Toll Bridges Seismic Retrofit) Series 2003A
3.45%, 01/03/08 (a)(b)(c)(d)		37,270		37,270
3.47%, 01/03/08 (a)(b)(c)(d)(f)		47,540		47,540
RB (California Independent System Operator Corp) Series 2004A
3.30%, 01/02/08 (a)(b)(c)		2,000		2,000
RB (J. Paul Getty Trust) Series 2003D
3.50%, 01/02/08 (a)		300		300
RB (SRI International) Series 2003A
3.30%, 01/03/08 (a)(b)		2,350		2,350
RB (The J. Paul Getty Trust) Series 2003B
3.50%, 01/02/08 (a)		2,000		2,000
California Pollution Control Financing Auth
Refunding RB (Pacific Gas & Electric) Series 1996A
3.57%, 01/03/08 (a)(b)(c)(d)		14,830		14,830
Resource Recovery RB (Sanger) Series 1990A
3.49%, 01/02/08 (a)(b)		19,200		19,200
Resource Recovery RB (Wadham Energy) Series 1987B
3.35%, 01/02/08 (a)(b)		1,500		1,500
Solid Waste Disposal RB (Ag Resources III) Series 2004
3.47%, 01/02/08 (a)(b)		5,570		5,570
Solid Waste Disposal RB (Agrifab) Series 2003
3.47%, 01/02/08 (a)(b)		5,800		5,800
Solid Waste Disposal RB (Alameda Cnty Industries) Series 2000A
3.47%, 01/02/08 (a)(b)		2,555		2,555
Solid Waste Disposal RB (Athens Disposal Co) Series 1995A
3.47%, 01/02/08 (a)(b)		7,500		7,500
Solid Waste Disposal RB (Athens Disposal Co) Series 1999A
3.47%, 01/02/08 (a)(b)		3,685		3,685
Solid Waste Disposal RB (Athens Services) Series 2001A
3.47%, 01/02/08 (a)(b)		2,895		2,895
Solid Waste Disposal RB (Athens Services) Series 2006A
3.47%, 01/02/08 (a)(b)		20,565		20,565
Solid Waste Disposal RB (Atlas Disposal Industries) Series 1999A
3.47%, 01/02/08 (a)(b)		5,400		5,400
Solid Waste Disposal RB (BLT Enterprises of Fremont) Series 2005A
3.52%, 01/02/08 (a)(b)		7,280		7,280

See financial notes 11

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Solid Waste Disposal RB (BLT Enterprises of Sacramento) Series 1999A
3.47%, 01/02/08 (a)(b)		7,535		7,535
Solid Waste Disposal RB (Blue Line Transfer) Series 1999A
3.47%, 01/02/08 (a)(b)		3,680		3,680
Solid Waste Disposal RB (Blue Line Transfer) Series 2001A
3.47%, 01/02/08 (a)(b)		3,500		3,500
Solid Waste Disposal RB (Browning-Ferris Industries of California) Series 1997A
3.42%, 01/02/08 (a)(b)		15,400		15,400
Solid Waste Disposal RB (Burrtec Waste & Recycling Services) Series 2006A
3.45%, 01/02/08 (a)(b)		17,845		17,845
Solid Waste Disposal RB (Burrtec Waste Group Inc) Series 2004
3.45%, 01/02/08 (a)(b)		9,920		9,920
Solid Waste Disposal RB (Burrtec Waste Group Inc) Series 2006A
3.45%, 01/02/08 (a)(b)		18,445		18,445
Solid Waste Disposal RB (Burrtec Waste Industries Inc) Series 2000A
3.45%, 01/02/08 (a)(b)		4,705		4,705
Solid Waste Disposal RB (Burrtec Waste Industries Inc) Series 2002A
3.45%, 01/02/08 (a)(b)		9,900		9,900
Solid Waste Disposal RB (Burrtec Waste Industries Inc.) Series 1997B
3.45%, 01/02/08 (a)(b)		4,600		4,600
Solid Waste Disposal RB (California Waste Solutions) Series 2002A
3.47%, 01/02/08 (a)(b)		9,485		9,485
Solid Waste Disposal RB (California Waste Solutions) Series 2004A
3.47%, 01/02/08 (a)(b)		7,715		7,715
Solid Waste Disposal RB (California Waste Solutions) Series 2007A
3.47%, 01/02/08 (a)(b)		25,905		25,905
Solid Waste Disposal RB (Cedar Avenue Recycling & Transfer Station)
3.47%, 01/02/08 (a)(b)		2,500		2,500
Solid Waste Disposal RB (Cold Canyon Landfill) Series 1998A
3.44%, 01/02/08 (a)(b)		5,845		5,845
Solid Waste Disposal RB (Contra Costa Waste Service) Series 1995A
3.47%, 01/02/08 (a)(b)		2,425		2,425
Solid Waste Disposal RB (CR&R Inc) Series 1995A
3.50%, 01/02/08 (a)(b)		3,160		3,160
Solid Waste Disposal RB (CR&R Inc) Series 2000A
3.50%, 01/02/08 (a)(b)		2,610		2,610
Solid Waste Disposal RB (CR&R Inc) Series 2002A
3.50%, 01/02/08 (a)(b)		3,400		3,400
Solid Waste Disposal RB (CR&R Inc) Series 2006A
3.50%, 01/02/08 (a)(b)		7,840		7,840
Solid Waste Disposal RB (CR&R Inc) Series 2007A
3.50%, 01/02/08 (a)(b)		10,305		10,305
Solid Waste Disposal RB (Desert Properties) Series 2006B
3.50%, 01/02/08 (a)(b)		2,245		2,245
Solid Waste Disposal RB (EDCO Disposal Corp) Series 1996A
3.45%, 01/02/08 (a)(b)(f)		9,455		9,455
Solid Waste Disposal RB (EDCO Disposal Corp) Series 2004A
3.45%, 01/02/08 (a)(b)(f)		20,680		20,680
Solid Waste Disposal RB (EDCO Disposal Corp) Series 2007A
3.45%, 01/02/08 (a)(b)		7,990		7,990
Solid Waste Disposal RB (Escondido Disposal/Jemco Equipment Corp) Series 1998A
3.45%, 01/02/08 (a)(b)		7,600		7,600
Solid Waste Disposal RB (Federal Disposal Service) Series 2001A
3.52%, 01/02/08 (a)(b)		750		750
Solid Waste Disposal RB (Garaventa Enterprises Inc) Series 2006A
3.47%, 01/02/08 (a)(b)		8,970		8,970
Solid Waste Disposal RB (Garden City Sanitation Inc) Series 2007A
3.52%, 01/02/08 (a)(b)		8,110		8,110
Solid Waste Disposal RB (Greenteam of San Jose) Series 1997A
3.44%, 01/02/08 (a)(b)		800		800
Solid Waste Disposal RB (Greenteam of San Jose) Series 2001A
3.44%, 01/02/08 (a)(b)		8,640		8,640
Solid Waste Disposal RB (Greenwaste of Tehama) Series 1999A
3.44%, 01/02/08 (a)(b)		640		640
Solid Waste Disposal RB (GreenWaste Recovery Inc) Series 2006A
3.52%, 01/02/08 (a)(b)		2,930		2,930
Solid Waste Disposal RB (GreenWaste Recovery Inc) Series 2007A
3.52%, 01/02/08 (a)(b)		10,000		10,000

12 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Solid Waste Disposal RB (Madera Disposal Systems Inc) Series 1998A
3.44%, 01/02/08 (a)(b)		1,800		1,800
Solid Waste Disposal RB (MarBorg Industries) Series 2000A
3.47%, 01/02/08 (a)(b)		3,445		3,445
Solid Waste Disposal RB (MarBorg Industries) Series 2002
3.47%, 01/02/08 (a)(b)		4,010		4,010
Solid Waste Disposal RB (MarBorg Industries) Series 2004A
3.47%, 01/02/08 (a)(b)		5,215		5,215
Solid Waste Disposal RB (Marin Sanitary Service) Series 2006A
3.52%, 01/02/08 (a)(b)		3,910		3,910
Solid Waste Disposal RB (Mid-Valley Disposal) Series 2006A
3.52%, 01/02/08 (a)(b)		3,560		3,560
Solid Waste Disposal RB (Mill Valley Refuse Service Inc) Series 2003A
3.47%, 01/02/08 (a)(b)		2,225		2,225
Solid Waste Disposal RB (Mottra Corp) Series 2002A
3.52%, 01/02/08 (a)(b)		1,610		1,610
Solid Waste Disposal RB (Napa Recycling & Waste Services) Series 2005A
3.52%, 01/02/08 (a)(b)		4,680		4,680
Solid Waste Disposal RB (Northern Recycling & Waste Services) Series 2007A
3.52%, 01/02/08 (a)(b)		3,440		3,440
Solid Waste Disposal RB (Orange Ave Disposal Co) Series 2002A
3.47%, 01/02/08 (a)(b)		5,610		5,610
Solid Waste Disposal RB (Placer Cnty Eastern Regional Sanitary Landfill Inc) Series 2003A
3.47%, 01/02/08 (a)(b)		4,625		4,625
Solid Waste Disposal RB (Rainbow Disposal Company Inc) Series 2006A
3.52%, 01/02/08 (a)(b)		8,910		8,910
Solid Waste Disposal RB (Ratto Group of Companies) Series 2001A
3.47%, 01/02/08 (a)(b)		6,140		6,140
Solid Waste Disposal RB (Sanco Services) Series 2002A
3.45%, 01/02/08 (a)(b)		5,360		5,360
Solid Waste Disposal RB (Santa Clara Valley Industries) Series 1998A
3.52%, 01/02/08 (a)(b)		1,415		1,415
Solid Waste Disposal RB (Solag Disposal) Series 1997A
3.50%, 01/02/08 (a)(b)		2,135		2,135
Solid Waste Disposal RB (Specialty Solid Waste & Recycling) Series 2001A
3.52%, 01/02/08 (a)(b)		700		700
Solid Waste Disposal RB (Talco Plastics) Series 1997A
3.52%, 01/02/08 (a)(b)		2,975		2,975
Solid Waste Disposal RB (The Ratto Group of Companies Inc) Series 2007A
3.52%, 01/02/08 (a)(b)		26,400		26,400
Solid Waste Disposal RB (Valley Vista Services Inc) Series 2003A
3.52%, 01/02/08 (a)(b)		3,045		3,045
Solid Waste Disposal RB (Valley Vista Services Inc) Series 2007A
3.52%, 01/02/08 (a)(b)		2,920		2,920
Solid Waste Disposal RB (West Valley MRF) Series 1997A
3.52%, 01/02/08 (a)(b)		2,105		2,105
Solid Waste Disposal RB (Zanker Road Landfill) Series 1999C
3.52%, 01/02/08 (a)(b)		4,045		4,045
California Public Works Board
Lease RB (Office of Emergency Services) Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		10,315		10,315
Lease RB (Univ of California) Series 2005C
3.46%, 01/03/08 (a)(c)(d)		21,870		21,870
Lease RB Series 1999A
3.48%, 01/02/08 (a)(b)(c)(d)		9,985		9,985
Lease Refunding RB (Dept of Corrections & Rehabilitation) Series 2005J
3.46%, 01/03/08 (a)(b)(c)(d)		41,735		41,735
Lease Refunding RB (Dept of Corrections) Series 1993A
3.44%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Lease Refunding RB (Univ of California) Series 2007A
3.42%, 01/03/08 (a)(b)(c)(d)		8,935		8,935
3.52%, 01/03/08 (a)(b)(c)(d)		23,687		23,688
Lease Refunding RB (Univ of California) Series 2007C
3.47%, 01/03/08 (a)(b)(c)(d)		11,280		11,280
California Rural Home Mortgage Financing Auth Home Buyers Fund
S/F Mortgage RB Series 2005A
3.66%, 01/02/08 (a)(c)(e)		10,375		10,375
3.66%, 01/02/08 (a)(c)		20,230		20,230
California School Cash Reserve Program Auth
COP (2007-2008 TRANS) Series A
3.62%, 07/01/08 (b)		40,000		40,121
California State University
RB Series 2005A&B
3.47%, 01/03/08 (a)(b)(c)(d)		3,435		3,435

See financial notes 13

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB Series 2005C
3.47%, 01/03/08 (a)(b)(c)(d)		8,835		8,835
3.52%, 01/03/08 (a)(b)(c)(d)		2,900		2,900
3.52%, 01/03/08 (a)(b)(c)(d)		2,900		2,900
RB Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		24,750		24,750
Systemwide RB Series 2005A
3.44%, 01/03/08 (a)(b)(c)(d)		11,740		11,740
Systemwide RB Series 2005C
3.44%, 01/03/08 (a)(b)(c)(d)		37,365		37,365
3.46%, 01/03/08 (a)(b)(c)(d)		21,180		21,180
3.48%, 01/03/08 (a)(b)(c)(d)		20,135		20,135
3.52%, 01/03/08 (a)(b)(c)(d)		22,140		22,140
Systemwide RB Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		6,695		6,695
TECP Series A
3.40%, 01/09/08 (b)		12,770		12,770
3.05%, 02/07/08 (b)		3,900		3,900
3.29%, 03/03/08 (b)		30,000		30,000
California Statewide Communities Development Auth
COP (Sutter Health) Series 1999E
3.48%, 01/02/08 (a)(b)(c)(d)		5,000		5,000
COP (Sutter Health) Series 2004
3.47%, 01/03/08 (a)(b)(c)(d)		25,873		25,873
IDRB (Golden Valley Grape Juice & Wine) Series 1998
3.55%, 01/02/08 (a)(b)		210		210
IDRB (Integrated Rolling Co) Series 1999A
3.17%, 01/01/08 (a)(b)		500		500
M/F Housing RB (Agave at Elk Grove Apts) Series 2003DD
3.45%, 01/03/08 (a)(b)		15,100		15,100
M/F Housing RB (Bay Vista at MeadowPark Apts) Series 2003NN1
3.45%, 01/03/08 (a)(b)		14,600		14,600
M/F Housing RB (Creekside at MeadowPark Apts) Series 2002HH
3.45%, 01/03/08 (a)(b)		9,795		9,795
M/F Housing RB (Cypress Villa Apts) Series 2000F
3.45%, 01/03/08 (a)(b)		4,725		4,725
M/F Housing RB (Dublin Ranch Senior Apts) Series 2003OO
3.45%, 01/03/08 (a)(b)		15,090		15,090
M/F Housing RB (Dublin Ranch Senior Apts) Series 2006G
3.45%, 01/03/08 (a)(b)		5,010		5,010
M/F Housing RB (Emerald Gardens Apts) Series 2000E
3.45%, 01/03/08 (a)(b)		7,320		7,320
M/F Housing RB (Fairway Family Apts) Series 2003PP
3.45%, 01/03/08 (a)(b)		30,000		30,000
M/F Housing RB (Fairway Family Apts) Series 2006H
3.45%, 01/03/08 (a)(b)		7,000		7,000
M/F Housing RB (Heritage Oaks Apts) Series 2004YY
3.45%, 01/03/08 (a)(b)		6,900		6,900
M/F Housing RB (Kimberly Woods Apts) Series 1995B
3.46%, 01/02/08 (a)(b)		13,400		13,400
M/F Housing RB (Laurel Park Senior Apts) Series 2002H
3.55%, 01/03/08 (a)(b)		5,500		5,500
M/F Housing RB (Los Padres Apts) Series 2003E
3.45%, 01/03/08 (a)(b)		10,750		10,750
M/F Housing RB (Marlin Cove Apts) Series 2000V
3.45%, 01/03/08 (a)(b)		6,000		6,000
M/F Housing RB (Oak Center Towers) Series 2005L
3.45%, 01/03/08 (a)(b)		3,820		3,820
M/F Housing RB (Oakmont of Concord) Series 2002Q
3.45%, 01/03/08 (a)(b)		25,000		25,000
M/F Housing RB (Park David Senior Apts) Series 1999D
3.45%, 01/03/08 (a)(b)		8,220		8,220
M/F Housing RB (Plaza Club Apts) Series 1997A
3.43%, 01/03/08 (a)(b)		14,790		14,790
M/F Housing RB (Rancho Santa Fe Village Apts) Series 2004EE
3.52%, 01/03/08 (a)(b)		12,300		12,300
M/F Housing RB (Sagewood At Stonebridge Estates) Series 2005CC
3.45%, 01/03/08 (a)(b)		9,100		9,100
M/F Housing RB (The Belmont) Series 2005F
3.45%, 01/03/08 (a)(b)		10,500		10,500
M/F Housing RB (Valley Palms Apts) Series 2002C
3.45%, 01/03/08 (a)(b)		12,000		12,000
M/F Housing RB (Villas at Hamilton Apts) Series 2001HH
3.45%, 01/03/08 (a)(b)		11,440		11,440
M/F Housing RB (Wilshire Court Apts) Series 2004AAA
3.45%, 01/03/08 (a)(b)		15,000		15,000
M/F Housing RB (Woodsong Apts) Series 1997B
3.41%, 01/03/08 (a)(b)		3,127		3,127
M/F Housing RB (Wyndover Apts) Series 2004LL
3.45%, 01/03/08 (a)(b)		17,450		17,450
M/F Housing Refunding RB (Brandon Place Apts) Series 2006D
3.45%, 01/03/08 (a)(b)		6,070		6,070
M/F Housing Refunding RB (Crystal View Apts) Series 2004A
3.45%, 01/03/08 (a)(b)		7,075		7,075
RB (Children’s Hospital of Los Angeles) Series 2007
3.44%, 01/03/08 (a)(b)(c)(d)		37,500		37,500

14 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
RB (Elder Care Alliance) Series 2000
3.42%, 01/02/08 (a)(b)		12,560		12,560
RB (Gemological Institute) Series 2001
3.30%, 01/03/08 (a)(b)(c)		580		580
RB (Kaiser Permanente) Series 2002B
3.41%, 01/02/08 (a)		67,115		67,115
RB (Kaiser Permanente) Series 2003A
3.41%, 01/02/08 (a)		30,300		30,300
RB (Kaiser Permanente) Series 2004K
2.75%, 02/07/08		14,000		14,000
3.30%, 02/11/08		14,000		14,000
3.33%, 03/11/08		30,000		30,000
3.25%, 03/12/08		11,000		11,000
RB (Kaiser Permanente) Series 2004M
3.41%, 01/02/08 (a)		14,700		14,700
RB (Kaiser Permanente) Series 2006D
2.60%, 03/06/08		21,500		21,500
3.25%, 03/12/08		20,000		20,000
RB (Kaiser Permanente) Series 2007B
3.48%, 01/03/08 (a)(b)(c)(d)		75,000		75,000
RB (Painted Turtle) Series 2003
3.35%, 01/03/08 (a)(b)		11,650		11,650
RB (Sutter Health) Series 2003A
3.47%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
3.47%, 01/03/08 (a)(b)(c)(d)		14,850		14,850
RB (Sutter Health) Series 2003B
3.47%, 01/03/08 (a)(b)(c)(d)		47,430		47,430
TRAN Program Note Participations Series 2007A2
3.62%, 06/30/08		12,500		12,551
3.68%, 06/30/08		13,365		13,419
TRAN Program Note Participations Series 2007A3
3.18%, 06/30/08		3,000		3,013
3.62%, 06/30/08		15,000		15,063
3.66%, 06/30/08		25,000		25,105
TRAN Program Note Participations Series 2007A4
3.62%, 06/30/08		12,500		12,552
TRAN Program Note Participations Series 2007A5
3.62%, 06/30/08		10,000		10,040
3.68%, 06/30/08		25,520		25,622
Carlsbad
M/F Housing Refunding RB (Santa Fe Ranch Apts) Series 1993A
3.33%, 01/03/08 (a)(b)		14,500		14,500
Central USD
GO Refunding Bonds Series 2005
3.44%, 01/03/08 (a)(b)(c)(d)		11,855		11,855
Chaffey Community College District
GO Bonds (Election of 2002) Series 2007C
3.44%, 01/03/08 (a)(b)(c)(d)		6,000		6,000
Coast Community College District
GO Bonds (Election of 2002) Series 2006B
3.48%, 01/03/08 (a)(b)(c)(d)		7,480		7,480
GO Bonds (Election of 2002) Series 2006C
3.48%, 01/03/08 (a)(b)(c)(d)		17,785		17,785
Contra Costa Cnty
M/F Mortgage RB (El Cerrito Royale) Series 1987A
3.43%, 01/03/08 (a)(b)		2,480		2,480
TRAN Series A
3.27%, 12/05/08		50,000		50,325
3.28%, 12/05/08		65,000		65,423
Contra Costa Cnty Public Financing Auth
Tax Allocation RB Series 2007A
3.44%, 01/03/08 (a)(b)(c)(d)		9,500		9,500
Desert Community College District
GO Bonds (Election of 2004) Series 2007C
3.47%, 01/03/08 (a)(b)(c)(d)		28,080		28,080
Desert Sands USD
GO Bonds (Election of 2001) Series 2006
3.44%, 01/03/08 (a)(b)(c)(d)		11,150		11,150
Diamond Bar Public Financing Auth
Lease RB (Community/Senior Center) Series 2002A
3.55%, 01/02/08 (a)(b)		3,825		3,825
East Bay Municipal Utility District
Wastewater System Subordinated RB Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		6,600		6,600
Water System CP
3.00%, 02/12/08 (c)		4,000		4,000
3.28%, 03/06/08 (c)		15,200		15,200
3.35%, 03/06/08 (c)		25,000		25,000
3.25%, 03/12/08 (c)		40,000		40,000
Water System Subordinated RB Series 2005A
3.75%, 02/28/08 (b)(c)(d)		11,410		11,410
Water System Subordinated RB Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		66,000		66,000
3.52%, 01/03/08 (a)(b)(c)(d)		27,440		27,440
3.53%, 01/03/08 (a)(b)(c)(d)		11,620		11,620
Water System Subordinated Refunding RB Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		12,555		12,555
El Cajon Redevelopment Agency
M/F Housing RB (Park-Mollison & Madison Apts) Series 1998
3.43%, 01/03/08 (a)(b)		4,700		4,700
El Camino Community College District
GO Bonds (Election of 2002) Series 2006B
3.44%, 01/03/08 (a)(b)(c)(d)		2,895		2,895

See financial notes 15

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
GO Bonds Series 2003A
3.43%, 01/03/08 (a)(b)(c)(d)		16,100		16,100
El Camino Hospital District
GO Bonds Series 2006
3.46%, 01/03/08 (a)(b)(c)(d)		8,035		8,035
3.48%, 01/03/08 (a)(b)(c)(d)		6,600		6,600
3.60%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Elk Grove USD
Community Facilities District No.1 Special Tax Bonds (Election of 1998) Series 2005
3.44%, 01/03/08 (a)(b)(c)(d)		16,990		16,990
Elsinore Valley Muni Water District
COP Series 2007A
3.62%, 08/07/08 (b)(c)(d)		12,990		12,990
Emeryville Redevelopment Agency
M/F Housing RB (Bay St Apts) Series 2002A
3.44%, 01/03/08 (a)(b)(f)		87,715		87,715
Escondido
M/F Housing RB (Via Roble Apts) Series 2003A
3.45%, 01/03/08 (a)(b)		6,900		6,900
Evergreen Elementary SD
GO Refunding Bonds Series 2005
3.52%, 01/03/08 (a)(b)(c)(d)		16,085		16,085
Foothill-DeAnza Community College District
GO Bonds Series A
3.48%, 01/02/08 (a)(c)(d)		9,950		9,950
GO Bonds Series C
3.44%, 01/03/08 (a)(b)(c)(d)		14,995		14,995
Fresno IDA
IDRB (Keiser Corp) Series 1997
3.52%, 01/02/08 (a)(b)		1,160		1,160
Golden State Tobacco Securitization Corp
Enhanced Tobacco Settlement Asset-Backed Bonds Series 2005A
3.61%, 01/02/08 (a)(b)(c)(d)		22,550		22,550
3.61%, 01/02/08 (a)(b)(c)(d)		64,385		64,385
3.44%, 01/03/08 (a)(b)(c)(d)		16,995		16,995
3.46%, 01/03/08 (a)(b)(c)(d)		10,250		10,250
3.47%, 01/03/08 (a)(b)(c)(d)		19,805		19,805
3.47%, 01/03/08 (a)(b)(c)(d)		19,460		19,460
3.48%, 01/03/08 (a)(b)(c)(d)		7,500		7,500
3.51%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
3.52%, 01/03/08 (a)(b)(c)(d)		49,030		49,030
3.53%, 01/03/08 (a)(b)(c)(d)		49,500		49,500
3.68%, 01/03/08 (a)(b)(c)(d)		36,000		36,000
Enhanced Tobacco Settlement Asset-Backed Bonds Series 2007
3.61%, 01/02/08 (a)(b)(c)(d)		15,000		15,000
Tobacco Settlement Asset-Backed Bonds Series 2003A1
3.48%, 01/02/08 (a)(c)(d)		43,470		43,470
3.44%, 01/03/08 (a)(c)(d)		21,690		21,690
Tobacco Settlement Asset-Backed Bonds Series 2007A1
3.48%, 01/03/08 (a)(b)(c)(d)		8,990		8,990
3.48%, 01/03/08 (a)(b)(c)(d)		18,665		18,665
Golden Valley USD
GO Bonds (Election of 1999) Series D
3.47%, 01/03/08 (a)(b)(c)(d)		8,447		8,447
Golden West Schools Financing Auth
GO RB (Beverly Hills USD) Series 2005
3.46%, 01/03/08 (a)(b)(c)(d)		8,840		8,840
Grossmont Union High SD
GO Bonds (Election of 2004) Series 2006
3.60%, 01/03/08 (a)(b)(c)(d)		5,575		5,575
Hacienda La Puente Unified SD Facilities Financing Auth
RB Series 2007
3.48%, 01/02/08 (a)(b)(c)(d)		10,910		10,910
Hawthorne Community Facilities District No. 2006-1
Special Tax Bonds (Three Sixty Degrees at South Bay) Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		2,625		2,625
Hayward
M/F Housing RB (Lord Tennyson Apts) Series 2005A
3.52%, 01/03/08 (a)(b)		13,915		13,915
M/F Housing RB (Shorewood Apts) Series 1984A
3.37%, 01/03/08 (a)(b)		10,900		10,900
Hayward Housing Auth
M/F Mortgage Refunding RB (Huntwood Terrace Apts) Series 1993A
3.34%, 01/02/08 (a)(b)		5,055		5,055
Hercules Public Financing Auth
Lease RB Series 2003A
3.35%, 01/03/08 (a)(b)		6,755		6,755
Huntington Beach
M/F Housing RB (Five Points Seniors) Series 1991A
3.43%, 01/03/08 (a)(b)		9,500		9,500
Huntington Park Redevelopment Agency
M/F Housing RB (Casa Rita Apts) Series 1994A
3.43%, 01/03/08 (a)(b)		4,600		4,600
Irvine
Lease RB (Capital Improvement) Series 1985
3.35%, 01/03/08 (a)(b)		1,575		1,575
Irvine Assessment District
Limited Obligation Improvement Bonds (Assessment District No. 04-20) Series A
3.28%, 01/02/08 (a)(b)		1,390		1,390
Limited Obligation Improvement Bonds (Assessment District No.03-19) Series B
3.47%, 01/02/08 (a)(b)		1,864		1,864
Irwindale Community Redevelopment Agency
Tax Allocation Refunding Parity Bonds (City Industrial Development) Series 2006
3.45%, 01/03/08 (a)(b)(c)(d)		20,275		20,275

16 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Kern Cnty
2007-08 TRAN
3.62%, 06/30/08		25,000		25,106
Kern Community College Safety, Repair & Improvement District
GO Bonds (Election of 2002) Series 2006
3.46%, 01/03/08 (a)(b)(c)(d)		17,130		17,130
Loma Linda
RB (Loma Linda Univ Medical Center) Series 2007B1
3.30%, 01/03/08 (a)(b)		20,000		20,000
RB (Loma Linda Univ Medical Center) Series 2007B2
3.30%, 01/03/08 (a)(b)		36,000		36,000
Long Beach
RB Series 2002B
3.56%, 01/03/08 (a)(b)(c)(d)		11,985		11,985
Refunding RB Series 1998A
3.47%, 01/03/08 (a)(b)(c)(d)		6,570		6,570
Long Beach Harbor
Refunding RB Series 2005A
3.52%, 01/03/08 (a)(b)(c)(d)		2,520		2,520
TECP Series A
3.45%, 02/06/08 (c)		31,400		31,400
Long Beach USD
Capital Improvement Refinancing COP Series 2001
3.42%, 01/03/08 (a)(b)(c)		7,905		7,905
Los Angeles
GO Refunding Bonds Series 1998A
3.52%, 01/03/08 (a)(b)(c)(d)		4,150		4,150
M/F Housing RB (Beverly Park Apts) Series 1988A
3.19%, 01/02/08 (a)(b)		9,000		9,000
M/F Housing RB (Fountain Park Phase II) Series 2000B
3.45%, 01/03/08 (a)(b)		19,515		19,515
M/F Housing RB (Fountain Park) Series 1999P
3.45%, 01/03/08 (a)(b)		9,800		9,800
M/F Housing RB Series 1985K
3.30%, 01/01/08 (a)(b)		752		752
Sanitation Equipment Charge RB Series 2005A
3.52%, 01/03/08 (a)(b)(c)(d)		5,475		5,475
TRAN 2007
3.65%, 06/30/08 (f)		49,600		49,798
3.67%, 06/30/08 (f)		103,000		103,411
Wastewater System Refunding RB Series 2002A
3.47%, 01/03/08 (a)(b)(c)(d)		16,445		16,445
3.49%, 01/03/08 (a)(b)(c)(d)		6,800		6,800
Wastewater System Refunding RB Series 2005A
3.44%, 01/03/08 (a)(b)(c)(d)		5,735		5,735
Wastewater System Subordinate Refunding RB Series 2006A
3.35%, 01/03/08 (a)(b)(c)		1,600		1,600
Wastewater System Subordinate Refunding RB Series 2006D
3.36%, 01/03/08 (a)(b)(c)		4,280		4,280
Los Angeles Cnty
2007-08 TRAN
3.18%, 06/30/08		6,000		6,026
3.62%, 06/30/08		50,000		50,218
3.64%, 06/30/08		7,755		7,789
Los Angeles Cnty Metropolitan Transportation Auth
Prop A First Tier Sr Sales Tax RB Series 2001A
3.43%, 01/03/08 (a)(b)(c)(d)		12,600		12,600
Prop A First Tier Sr Sales Tax Refunding RB Series 2001B
3.53%, 01/03/08 (a)(b)(c)(d)		21,250		21,250
Prop A First Tier Sr Sales Tax Refunding RB Series 2005A
3.52%, 01/03/08 (a)(b)(c)(d)		4,445		4,445
Sales Tax Revenue CP Notes Series A-TE
3.32%, 03/10/08 (b)		4,500		4,500
Second Subordinate Sales Tax Revenue CP Series A
3.00%, 02/05/08 (b)		7,000		7,000
3.34%, 02/05/08 (b)		36,650		36,650
Los Angeles Cnty Sanitation District Financing Auth
Capital Projects RB Series 2005B
3.47%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Los Angeles Community College District
GO Bonds (Election of 2001) Series 2007A
3.53%, 01/03/08 (a)(b)(c)(d)		75,000		75,000
GO Bonds (Election of 2003) Series 2006E
3.52%, 01/03/08 (a)(b)(c)(d)		35,225		35,225
Los Angeles Community Redevelopment Agency
Lease RB Series 2007B1
3.53%, 01/03/08 (a)(b)(c)(d)		8,765		8,765
M/F Housing RB (Wilshire Station Apts) Series 2003A
3.70%, 01/02/08 (a)(b)		27,300		27,300
M/F Housing RB (Wilshire Station Apts) Series 2004A
3.70%, 01/02/08 (a)(b)		19,700		19,700
Los Angeles Convention & Exhibition Auth
Lease Refunding RB Series 2003B1
3.20%, 01/02/08 (a)(b)(c)		1,000		1,000
Los Angeles Department of Airports
TECP Series A
2.70%, 03/10/08 (b)		5,000		5,000
Los Angeles Dept of Water & Power
Power Supply RB Series 2005A1
3.48%, 01/03/08 (a)(b)(c)(d)		6,000		6,000
Power System RB Series 2001A
3.53%, 01/03/08 (a)(b)(c)(d)		21,250		21,250
Power System RB Series 2001A1
3.44%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
3.60%, 01/03/08 (a)(c)(d)		7,120		7,120
Power System RB Series 2005A1
3.44%, 01/03/08 (a)(b)(c)(d)		8,140		8,140
Power System RB Series 2005A2
3.47%, 01/03/08 (a)(b)(c)(d)		20,800		20,800
Power System RB Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		18,630		18,630

See financial notes 17

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Power System RB Series 2007A2
3.44%, 01/03/08 (a)(b)(c)(d)		48,280		48,280
Power System Revenue CP Notes
3.35%, 03/11/08 (c)		25,000		25,000
3.10%, 05/07/08 (c)		47,500		47,500
Water System RB Series 2001A
3.52%, 01/03/08 (a)(b)(c)(d)		13,555		13,555
Water System RB Series 2006A2
3.48%, 01/03/08 (a)(b)(c)(d)		13,330		13,330
Water Works RB Series 1999
3.48%, 01/02/08 (a)(b)(c)(d)		22,090		22,090
Los Angeles Harbor
RB Series 2006D
3.50%, 01/03/08 (a)(b)(c)(d)		12,675		12,675
Refunding RB Series 2005 A&B
3.52%, 01/03/08 (a)(b)(c)(d)		22,780		22,780
Refunding RB Series 2006B
3.47%, 01/03/08 (a)(b)(c)(d)		13,680		13,680
Los Angeles Municipal Improvement Corp
Lease RB (Police Headquarters Facility & Public Works Building) Series 2006A
3.61%, 01/02/08 (a)(b)(c)(d)		18,165		18,165
3.44%, 01/03/08 (a)(b)(c)(d)		14,545		14,545
3.44%, 01/03/08 (a)(b)(c)(d)		3,500		3,500
3.52%, 01/03/08 (a)(b)(c)(d)		23,490		23,490
Lease Revenue TECP Series A1
3.05%, 02/14/08 (b)		15,000		15,000
3.35%, 03/06/08 (b)		3,575		3,575
Los Angeles USD
GO Bonds
3.52%, 01/03/08 (a)(b)(c)(d)		6,570		6,570
GO Bonds (Election of 2002) Series 2005C&E
3.52%, 01/03/08 (a)(b)(c)(d)		28,960		28,960
GO Bonds (Election of 2002) Series 2007B
3.61%, 01/02/08 (a)(b)(c)(d)		10,730		10,730
3.47%, 01/03/08 (a)(b)(c)(d)		12,050		12,050
3.47%, 01/03/08 (a)(b)(c)(d)		7,250		7,250
3.48%, 01/03/08 (a)(b)(c)(d)		15,575		15,575
GO Bonds (Election of 2002) Series B
3.44%, 01/03/08 (a)(b)(c)(d)		3,250		3,250
3.52%, 01/03/08 (a)(b)(c)(d)		13,775		13,775
GO Bonds (Election of 2004) Series 2005E
3.44%, 01/03/08 (a)(b)(c)(d)		3,400		3,400
3.48%, 01/03/08 (a)(b)(c)(d)		3,830		3,830
GO Bonds (Election of 2004) Series 2006F
3.74%, 07/17/08 (b)(c)(d)		16,190		16,190
GO Bonds (Election of 2004) Series 2006G
3.44%, 01/03/08 (a)(b)(c)(d)		4,430		4,430
3.52%, 01/03/08 (a)(b)(c)(d)		8,275		8,275
GO Bonds (Election of 2004) Series 2007H
3.52%, 01/03/08 (a)(b)(c)(d)		24,650		24,650
GO Bonds (Election of 2004) Series H
3.47%, 01/03/08 (a)(b)(c)(d)		6,600		6,600
3.53%, 01/03/08 (a)(b)(c)(d)		17,700		17,700
GO Bonds (Elections of 2004& 2005) Series 2005E & 2006C
3.47%, 01/03/08 (a)(b)(c)(d)		33,999		33,999
GO Bonds Series 2004H
3.52%, 01/03/08 (a)(b)(c)(d)		24,750		24,750
GO Refunding Bonds Series 2005A1
3.52%, 01/03/08 (a)(b)(c)(d)		46,080		46,080
3.52%, 01/03/08 (a)(b)(c)(d)		8,050		8,050
GO Refunding Bonds Series 2005A2
3.52%, 01/03/08 (a)(b)(c)(d)		8,040		8,040
GO Refunding Bonds Series 2006B
3.44%, 01/03/08 (a)(b)(c)(d)		5,365		5,365
3.52%, 01/03/08 (a)(b)(c)(d)		4,330		4,330
GO Refunding Bonds Series 2007A1
3.44%, 01/03/08 (a)(b)(c)(d)		21,340		21,340
3.44%, 01/03/08 (a)(b)(c)(d)		18,565		18,565
3.52%, 01/03/08 (a)(b)(c)(d)		5,070		5,070
GO Refunding Bonds Series 2007A2
3.48%, 01/02/08 (a)(b)(c)(d)		2,420		2,420
3.47%, 01/03/08 (a)(b)(c)(d)		11,810		11,810
GO Refunding Bonds Series A1
3.44%, 01/03/08 (a)(b)(c)(d)		11,695		11,695
3.53%, 01/03/08 (a)(b)(c)(d)		2,135		2,135
GO Refunding Bonds Series B
3.44%, 01/03/08 (a)(b)(c)(d)		19,380		19,380
TRAN Series A
3.18%, 12/29/08		48,000		48,380
M-S-R Public Power Agency
Subordinate Lien RB (San Juan) Series 1997E
3.30%, 01/03/08 (a)(b)(c)		1,050		1,050
Madera Cnty
Lease RB (Madera Municipal Golf Course Refinancing) Series 1993
3.37%, 01/03/08 (a)(b)		2,715		2,715
Martinez
M/F Housing Refunding RB (Muirwood Garden Apts) Series 2003A
3.30%, 01/02/08 (a)(b)		6,800		6,800
Merced Irrigation District
Electric System Refunding RB Series 2005
3.53%, 01/03/08 (a)(b)(c)(d)		3,250		3,250
Metropolitan Water District of Southern California
RB Series 2000B4
3.33%, 01/02/08 (a)(c)		28,100		28,100
Modesto Irrigation District
COP (1996 Refunding & Capital Improvements) Series 2006A
3.52%, 01/03/08 (a)(b)(c)(d)		2,260		2,260
COP (1996 Refunding & Capital Improvements) Series 2007
3.61%, 01/02/08 (a)(b)(c)(d)		10,225		10,225

18 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Moreno Valley Community Redevelopment Agency
Tax Allocation Bonds Series A
3.44%, 01/03/08 (a)(b)(c)(d)		6,175		6,175
Mt Diablo USD
GO Bonds (Election of 2002) Series 2004
3.44%, 01/03/08 (a)(b)(c)(d)		10,590		10,590
Mt San Antonio Community College District
GO Bonds (Election of 2001) Series 2004B
3.43%, 01/03/08 (a)(b)(c)(d)		13,140		13,140
GO Bonds (Election of 2001) Series 2006C
3.48%, 01/03/08 (a)(b)(c)(d)		4,845		4,845
Natomas USD
GO Bonds (Election of 2006) Series 2006 & 2007
3.44%, 01/03/08 (a)(b)(c)(d)		13,500		13,500
Newport-Mesa USD
GO Bonds (Election of 2005) Series 2007
3.46%, 01/03/08 (a)(b)(c)(d)		31,425		31,425
Northern California Gas Auth
Gas Project RB Series 2007B
3.47%, 01/03/08 (a)(c)(d)		14,100		14,100
3.49%, 01/03/08 (a)(c)(d)(f)		44,422		44,422
Oakland
Insured RB (180 Harrison Foundation) Series 1999A
3.48%, 01/02/08 (a)(b)(c)(d)		4,500		4,500
Oakland USD
GO Bonds (Election of 2006) Series 2006
3.44%, 01/03/08 (a)(b)(c)(d)		24,985		24,985
Oceanside
M/F Mortgage RB (Riverview Springs Apts) Series 1990A
3.43%, 01/03/08 (a)(b)		13,870		13,870
Ohlone Community College District
GO Bonds (Election of 2002) Series B
3.44%, 01/03/08 (a)(b)(c)(d)		10,000		10,000
Ontario Housing Auth
M/F Housing RB (Parc Vista) Series 2006B
3.44%, 01/03/08 (a)(b)		6,960		6,960
M/F Housing RB (Terrace View) Series 2006A
3.44%, 01/03/08 (a)(b)		6,240		6,240
Orange Cnty
Apartment Development Refunding RB (Villas Aliento) Series 1998E
3.35%, 01/03/08 (a)(b)		4,500		4,500
COP (Florence Crittenton Services) Series 1990
3.19%, 01/02/08 (a)(b)		4,300		4,300
Orange Cnty Local Transportation Auth
Sales Tax Revenue CP Notes
3.34%, 03/05/08 (b)		17,600		17,600
Orange Cnty Sanitation District
COP Series 2003
3.52%, 01/03/08 (a)(b)(c)(d)		2,133		2,133
COP Series 2007B
3.44%, 01/03/08 (a)(b)(c)(d)		16,665		16,665
3.47%, 01/03/08 (a)(b)(c)(d)		7,810		7,810
3.48%, 01/03/08 (a)(b)(c)(d)		7,000		7,000
Refunding COP Series 2000A
3.28%, 01/02/08 (a)(c)		1,000		1,000
Oxnard Financing Auth
Water Revenue Project Bonds Series 2006
3.45%, 01/03/08 (a)(b)(c)(d)		11,740		11,740
Palm Desert Financing Auth
Tax Allocation Refunding RB (Project Area No.2) Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		6,500		6,500
Palm Springs USD
GO Bonds (Election of 2004) Series A
3.48%, 01/03/08 (a)(b)(c)(d)		10,400		10,400
Palomar Pomerado Health
GO Bonds (Election of 2004) Series 2007A
3.42%, 01/03/08 (a)(b)(c)(d)		9,835		9,835
3.45%, 01/03/08 (a)(b)(c)(d)		5,820		5,820
3.47%, 01/03/08 (a)(b)(c)(d)		15,525		15,525
Paramount USD
GO Bonds (Election of 2006) Series 2007
3.70%, 02/28/08 (a)(b)(c)(d)		5,000		5,000
Pasadena
COP (City Hall & Park Improvements) Series 2003
3.28%, 01/03/08 (a)(b)(c)		8,590		8,590
Peralta Community College District
GO Bonds (Election of 2006) Series 2007B
3.48%, 01/03/08 (a)(b)(c)(d)		12,800		12,800
Petaluma Community Development Commission
M/F Housing RB (Oakmont) Series 1996A
3.55%, 01/03/08 (a)(b)		3,150		3,150
Pinole Redevelopment Agency
M/F Housing RB (East Bluff Apts) Series 1998A
3.47%, 01/03/08 (a)(b)		4,959		4,959
Placer Cnty Water Agency
Second Sr Water Revenue COP Series 2007
3.45%, 01/03/08 (a)(b)(c)(d)		12,555		12,555
Pleasant Hill
M/F Mortgage RB (Brookside Apts) Series 1988A
3.28%, 01/02/08 (a)(b)		3,700		3,700
Pleasanton
M/F Housing RB (Busch Senior Housing) Series 2003A
3.45%, 01/03/08 (a)(b)		2,360		2,360
Port of Oakland
CP Series D
3.39%, 01/18/08 (b)		25,680		25,680
3.44%, 01/22/08 (b)		18,995		18,995

See financial notes 19

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Intermediate Lien Refunding RB Series 2007A
3.56%, 01/03/08 (a)(b)(c)(d)		7,500		7,500
RB Series 2000K
3.53%, 01/02/08 (a)(b)(c)(d)		15,000		15,000
3.52%, 01/03/08 (a)(b)(c)(d)		8,415		8,415
3.52%, 01/03/08 (a)(b)(c)(d)		9,700		9,700
RB Series 2002L
3.67%, 01/03/08 (a)(b)(c)(d)		13,000		13,000
Poway USD
GO Bonds (Election of 2002) Series 2006B
3.48%, 01/03/08 (a)(b)(c)(d)		7,100		7,100
Rancho Water District Financing Auth
RB Series 2002A
3.52%, 01/03/08 (a)(b)(c)(d)		8,435		8,435
Redwood City
COP (City Hall) Series 1998
3.35%, 01/03/08 (a)(b)		4,585		4,585
Richmond
M/F Housing RB (Baycliff Apts) Series 2004A
3.45%, 01/03/08 (a)(b)		28,800		28,800
Richmond Joint Powers Financing Auth
Lease RB (Refunding & Civic Center Project) Series 2007
3.42%, 01/03/08 (a)(b)(c)		40,000		40,000
Riverside Cnty
Transportation Commission CP Notes (Limited Tax Bonds)
3.37%, 03/06/08 (b)		6,900		6,900
Riverside Cnty Asset Leasing Corp
Leasehold RB (Southwest Justice Ctr) Series 2000B
3.34%, 01/02/08 (a)(b)(c)		1,300		1,300
Riverside Cnty Housing Auth
M/F Housing RB (Victoria Springs Apts) Series 1989C
3.43%, 01/03/08 (a)(b)		9,000		9,000
Riverside Community College District
GO Bonds (Election of 2004) Series 2007C
3.53%, 01/03/08 (a)(b)(c)(d)		8,600		8,600
Sacramento Area Flood Control Agency
Consolidated Capital Assessment District Bonds Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		7,160		7,160
Sacramento Cnty
COP (Animal Care/Youth Detention Facilities) Series 2007
3.47%, 01/03/08 (a)(b)(c)(d)		21,345		21,345
Housing Auth M/F Housing RB (Ashford Heights Apts) Series 2006H
3.45%, 01/03/08 (a)(b)		21,850		21,850
Special Facilities Airport RB (Cessna Aircraft Co) Series 1998
3.45%, 01/03/08 (a)(b)		7,800		7,800
TRAN Series 2007A
3.67%, 07/09/08		25,000		25,103
3.68%, 07/09/08		20,000		20,082
Sacramento Cnty Housing Auth
M/F Housing RB (Hastings Park Apts) Series 2004G
3.45%, 01/03/08 (a)(b)		16,500		16,500
M/F Housing RB (Logan Park Apts) Series 2007E
3.48%, 01/03/08 (a)(b)		24,000		24,000
M/F Housing Refunding RB (Chesapeake Commons Apts) Series 2001C
3.43%, 01/03/08 (a)(b)		32,500		32,500
Sacramento Cnty Sanitation District Financing Auth
RB Series 2004A
3.48%, 01/03/08 (a)(b)(c)(d)		3,230		3,230
Refunding RB (Sacramento Regional Cnty Sanitation District) Series 2007B
3.52%, 01/03/08 (a)(b)(c)(d)		11,165		11,165
Refunding RB Series 2007B
3.61%, 01/02/08 (a)(b)(c)(d)		5,000		5,000
Sacramento Cnty Water Finance Auth
RB (Water Agency Zones 40 & 41) Series 2007B
3.64%, 01/03/08 (a)(b)(c)(d)		57,950		57,950
Sacramento Finance Auth
Capital Improvement RB Series 2006A
3.52%, 01/03/08 (a)(b)(c)(d)		7,260		7,260
Refunding RB (Master Lease Program Facilities) Series 2006E
3.46%, 01/03/08 (a)(b)(c)(d)		15,600		15,600
3.52%, 01/03/08 (a)(b)(c)(d)		9,780		9,780
Sacramento Housing Auth
M/F Housing RB (Atrium Court Apts) 2002G
3.45%, 01/03/08 (a)(b)		17,200		17,200
M/F Housing RB (Carlton Plaza of Sacramento Senior Apts) Series 2003E
3.43%, 01/03/08 (a)(b)		14,000		14,000
M/F Housing RB (Hurley Creek Senior Apts) Series 2006E
3.45%, 01/03/08 (a)(b)		13,105		13,105
M/F Housing RB (St Anton Building Apts) Series 2003I
3.45%, 01/03/08 (a)(b)		8,000		8,000
M/F Housing RB (Valencia Point Apts) Series 2006I
3.45%, 01/03/08 (a)(b)		7,335		7,335
Sacramento Municipal Utility District Financing Auth
Consumers Project RB Series 2006
3.52%, 01/03/08 (a)(b)(c)(d)		10,475		10,475
Sacramento USD
GO Bonds (Election of 1999) Series C
3.44%, 01/03/08 (a)(b)(c)(d)		14,485		14,485
San Bernardino City USD
GO Bonds (Election of 2004) Series B
3.48%, 01/03/08 (a)(b)(c)(d)		11,325		11,325

20 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
San Bernardino Cnty Flood Control District
Judgment Obligation Bonds Series A
3.44%, 01/03/08 (a)(b)(c)(d)		6,430		6,430
San Diego
Water Utility COP Series 1998
3.53%, 01/03/08 (a)(b)(c)(d)		7,785		7,785
San Diego Cnty & SD Pool Program
TRAN Program Note Participations Series 2007A
3.60%, 06/30/08		10,000		10,043
TRAN Program Note Participations Series 2007B
3.62%, 06/30/08		12,500		12,552
San Diego Cnty Regional Airport Auth
3.53%, 01/09/08 (b)		22,254		22,254
3.48%, 01/10/08 (b)		8,376		8,376
Refunding RB Series 2005
3.52%, 01/03/08 (a)(b)(c)(d)		5,875		5,875
San Diego Cnty Regional Transportation Commission
Subordinate Sales Tax Revenue CP Notes (Limited Tax Bonds) Series A
2.82%, 02/06/08 (c)		13,026		13,026
2.77%, 02/07/08 (c)		5,950		5,950
Subordinate Sales Tax Revenue CP Notes (Limited Tax Bonds) Series B
3.10%, 02/12/08 (c)		1,675		1,675
San Diego Cnty Water Auth
CP Series 1
2.82%, 02/06/08 (c)		45,000		45,000
2.71%, 03/11/08 (c)		3,250		3,250
CP Series 2
2.77%, 02/07/08 (c)		50,500		50,500
3.20%, 06/12/08 (c)		25,000		25,000
San Diego Community College District
GO Bonds (Election of 2002) Series 2005
3.44%, 01/03/08 (a)(b)(c)(d)		5,300		5,300
3.48%, 01/03/08 (a)(b)(c)(d)		19,590		19,590
3.60%, 01/03/08 (a)(b)(c)(d)		5,225		5,225
GO Bonds (Election of 2006) Series 2007
3.44%, 01/03/08 (a)(b)(c)(d)		12,545		12,545
3.44%, 01/03/08 (a)(b)(c)(d)		14,085		14,085
GO Series 2005
3.44%, 01/03/08 (a)(b)(c)(d)		17,495		17,495
San Diego Housing Auth
M/F Housing RB (Hillside Garden Apts) Series 2004B
3.45%, 01/03/08 (a)(b)		9,000		9,000
M/F Housing RB (Villa Nueva Apts) Series 2007F
3.45%, 01/03/08 (a)(b)		34,100		34,100
M/F Mortgage Refunding RB (Creekside Villa Apts) Series 1999B
3.43%, 01/03/08 (a)(b)		6,000		6,000
San Diego Public Facilities Financing Auth
Subordinate Sewer Revenue Notes Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		31,500		31,500
San Diego USD
GO Bonds Series 2002D
3.44%, 01/03/08 (a)(b)(c)(d)		12,280		12,280
GO Bonds Series 2003E
3.44%, 01/03/08 (a)(b)(c)(d)		25,165		25,165
GO Refunding Bonds (Election of 1998) Series 2006 F1 & G1
3.46%, 01/03/08 (a)(b)(c)(d)		17,285		17,285
3.52%, 01/03/08 (a)(b)(c)(d)		5,710		5,710
GO Refunding Bonds (Election of 1998) Series 2006F1
3.60%, 01/03/08 (a)(b)(c)(d)		4,230		4,230
TRAN Series 2007-2008 A
3.66%, 07/22/08		25,000		25,111
3.67%, 07/22/08		26,500		26,618
San Francisco
GO Bonds (Laguna Honda Hospital) Series 2005A
3.48%, 01/03/08 (a)(b)(c)(d)		10,365		10,365
GO Bonds (Laguna Honda Hospital) Series 2005I
3.52%, 01/03/08 (a)(b)(c)(d)		4,340		4,340
M/F Housing Refunding RB (City Heights Apts) Series 1997A
3.46%, 01/02/08 (a)(b)		20,800		20,800
San Francisco Airports Commission
Refunding RB (San Francisco International Airport) Second Series Issue 27A
3.47%, 01/03/08 (a)(b)(c)(d)		4,500		4,500
Second Series RB (San Francisco International Airport) Series 18B
3.64%, 01/03/08 (a)(b)(c)(d)		16,255		16,255
Second Series RB (San Francisco International Airport) Series 24A
3.53%, 01/03/08 (a)(b)(c)(d)		12,670		12,670
Second Series Refunding RB (San Francisco International Airport) Series 32G
3.44%, 01/03/08 (a)(b)(c)(d)		7,600		7,600
Second Series Refunding RB (San Francisco International Airport) Series 33A
3.70%, 01/02/08 (a)(b)(c)		10,630		10,630
Second Series Refunding RB (San Francisco International Airport) Series 33E
3.36%, 01/02/08 (a)(b)(c)		25,000		25,000
Second Series Refunding RB (San Francisco International Airport) Series 33H
3.30%, 01/02/08 (a)(b)(c)		12,700		12,700
San Francisco Bay Area Rapid Transit
GO Bonds (Election of 2004) Series 2007B
3.47%, 01/03/08 (a)(c)(d)		19,080		19,080
3.47%, 01/03/08 (a)(c)(d)		9,900		9,900
3.48%, 01/03/08 (a)(c)(d)		4,950		4,950
3.48%, 01/03/08 (a)(c)(d)		9,205		9,205
3.48%, 01/03/08 (a)(c)(d)		7,175		7,175
3.50%, 01/03/08 (a)(c)(d)		8,205		8,205

See financial notes 21

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Sales Tax Refunding RB Series 2005A
3.61%, 01/02/08 (a)(b)(c)(d)		9,465		9,465
Sales Tax Refunding RB Series 2006A
3.44%, 01/03/08 (a)(b)(c)(d)		7,525		7,525
San Francisco City & Cnty Redevelopment Agency
M/F Housing Refunding RB (Fillmore Center) Series 1992A2
3.42%, 01/02/08 (a)(b)		3,750		3,750
San Francisco Cnty Transportation Auth
CP Series A&B
3.38%, 02/26/08 (c)		12,500		12,500
San Francisco Community College District
GO Bonds (Election of 2005) Series B
3.47%, 01/03/08 (a)(b)(c)(d)		11,410		11,410
San Francisco Public Utilities Commission
Wastewater CP
3.38%, 03/14/08 (b)		2,500		2,500
Water RB Series 2006A
3.44%, 01/03/08 (a)(b)(c)(d)		12,995		12,995
3.47%, 01/03/08 (a)(b)(c)(d)		26,940		26,940
3.52%, 01/03/08 (a)(b)(c)(d)		19,650		19,650
San Francisco USD
GO Bonds (Election of 2003) Series 2005B
3.48%, 01/03/08 (a)(b)(c)(d)		2,645		2,645
3.52%, 01/03/08 (a)(b)(c)(d)		9,720		9,720
San Gabriel Valley Council of Governments
Alameda Corridor-East Construction Project Grant Anticipation Notes
2.85%, 02/06/08 (b)		16,100		16,100
2.77%, 02/07/08 (b)		11,700		11,700
3.37%, 03/06/08 (b)		13,400		13,400
San Jacinto USD
GO Bonds (Election of 2006) Series 2007
3.48%, 01/02/08 (a)(b)(c)(d)		3,300		3,300
San Joaquin Cnty Public Facilities Financing Corporation
COP Series 2007 (Cnty Administration Building)
3.45%, 01/03/08 (a)(b)(c)(d)		41,075		41,075
San Joaquin Hills Transportation Corridor Agency
Toll Road Refunding RB Series 1997A
3.49%, 01/03/08 (a)(b)(c)(d)		5,690		5,690
San Jose
Airport RB Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		6,420		6,420
3.48%, 01/03/08 (a)(b)(c)(d)		5,530		5,530
3.50%, 01/03/08 (a)(b)(c)(d)		8,125		8,125
3.50%, 01/03/08 (a)(b)(c)(d)		7,500		7,500
GO Bonds Series 2002
3.47%, 01/03/08 (a)(b)(c)(d)		11,971		11,971
GO Bonds Series 2007
3.44%, 01/03/08 (a)(b)(c)(d)		14,995		14,995
M/F Housing RB (Almaden Family Apts) Series 2003D
3.45%, 01/03/08 (a)(b)		4,000		4,000
M/F Housing RB (Almaden Lake Village Apts) Series 1997A
3.43%, 01/03/08 (a)(b)		25,000		25,000
M/F Housing RB (Raintree Apts) Series 2005A
3.47%, 01/03/08 (a)(b)		10,500		10,500
M/F Housing RB (Siena at Renaissance Square Apts) Series 1996A
3.45%, 01/03/08 (a)(b)		10,500		10,500
San Jose Financing Auth
Lease RB (Civic Center) Series 2002C
3.25%, 01/02/08 (a)(b)(c)		4,420		4,420
Lease Refunding RB Series 2006A (Civic Center)
3.72%, 07/10/08 (b)(c)(d)		10,680		10,680
San Jose Redevelopment Agency
Subordinate Tax Allocation Bonds (Merged Area Redevelopment) Series 2005C
3.46%, 01/02/08 (a)(b)		7,785		7,785
Subordinate Tax Allocation Bonds (Merged Area Redevelopment) Series 2005D
3.43%, 01/02/08 (a)(b)		9,500		9,500
Tax Allocation Refunding Bonds (Merged Area Redevelopment) Series 2005A
3.52%, 01/03/08 (a)(b)(c)(d)		15,545		15,545
Tax Allocation Refunding Bonds (Merged Area Redevelopment) Series 2006C
3.42%, 01/03/08 (a)(b)(c)(d)		26,140		26,140
3.44%, 01/03/08 (a)(b)(c)(d)		16,900		16,900
Tax Allocation Refunding Bonds (Merged Area Redevelopment) Series 2006D
3.46%, 01/03/08 (a)(b)(c)(d)		24,600		24,600
3.47%, 01/03/08 (a)(b)(c)(d)		9,610		9,610
3.52%, 01/03/08 (a)(b)(c)(d)		23,000		23,000
San Jose USD
GO Bonds (Election of 2002) Series 2006C
3.52%, 01/03/08 (a)(b)(c)(d)		4,125		4,125
3.60%, 01/03/08 (a)(b)(c)(d)		1,410		1,410
San Jose-Evergreen Community College District
GO Bonds (Election of 2004) Series A
3.47%, 01/03/08 (a)(b)(c)(d)		12,412		12,413
San Juan USD
GO Bonds (Election of 2002) Series 2007
3.52%, 01/03/08 (a)(b)(c)(d)		10,775		10,775
San Luis Obispo Cnty Finance Auth
RB (Nacimiento Water Project) Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		12,210		12,210
3.52%, 01/03/08 (a)(b)(c)(d)		6,920		6,920

22 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
San Marcos Redevelopment Agency
M/F Housing RB (Grandon Village) Series 2002A
3.53%, 01/03/08 (a)(b)		13,390		13,390
San Mateo Cnty Community College District
GO Bonds (Election of 2001) Series 2005B
3.70%, 01/24/08 (a)(b)(c)(d)		2,655		2,655
GO Bonds (Election of 2001) Series 2005B & (Election of 2005) Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		13,035		13,035
GO Bonds (Election of 2005) Series 2006B
3.47%, 01/03/08 (a)(b)(c)(d)		1,500		1,500
3.49%, 01/03/08 (a)(b)(c)(d)		12,470		12,470
San Mateo Cnty Transit District
Limited Tax Refunding Bonds Series 2005A
3.44%, 01/03/08 (a)(b)(c)(d)		9,995		9,995
3.52%, 01/03/08 (a)(b)(c)(d)		8,685		8,685
San Pablo Redevelopment Agency
Subordinate Tax Allocation Bonds (Tenth Township Redevelopment) Series 2006
3.68%, 01/02/08 (a)(b)(c)		8,900		8,900
San Ramon Public Financing Auth
Tax Allocation Bonds Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		3,995		3,995
Santa Clara Cnty Financing Auth
Lease RB (Multiple Facilities) Series 2007K
3.47%, 01/03/08 (a)(b)(c)(d)		48,010		48,010
3.48%, 01/03/08 (a)(b)(c)(d)		14,285		14,285
Santa Clara Cnty Housing Auth
M/F Housing RB (Monte Vista Terrace Apts) Series 2005C
3.55%, 01/03/08 (a)(b)		10,070		10,070
Santa Clara Valley Water District
Revenue COP Series 2007A
3.61%, 01/02/08 (a)(b)(c)(d)		12,360		12,360
Santa Cruz Cnty
TRAN 2007-2008
3.66%, 07/11/08		25,000		25,106
Santa Fe Springs Community Development Commission
Consolidated Redevelopment Tax Allocation Bonds Series 2006A
3.44%, 01/03/08 (a)(b)(c)(d)		9,325		9,325
Santa Fe Springs IDA
IDRB (Tri-West) Series 1983
3.60%, 01/02/08 (a)(b)		4,000		4,000
Santa Rosa Housing Auth
M/F Housing RB (Quail Run Apts) Series 1997A
3.60%, 01/03/08 (a)(b)		7,790		7,790
Santee Cnty SD
GO Bonds (Election of 2006) Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		7,175		7,175
Sequoia Union High SD
GO Refunding Bonds Series 2006
3.45%, 01/03/08 (a)(b)(c)(d)		4,105		4,105
Simi Valley School Financing Auth
GO RB Series 2007
3.52%, 01/03/08 (a)(b)(c)(d)		7,035		7,035
Simi Valley USD
GO Bonds (Election of 2004) Series 2007C
3.46%, 01/03/08 (a)(b)(c)(d)		7,500		7,500
Sonoma Cnty Junior College District
GO Bonds (Election of 2002) Series B
3.60%, 01/03/08 (a)(b)(c)(d)		6,370		6,370
Sonoma Cnty Junior College District
GO Bonds (Election of 2002) Series B
3.73%, 03/13/08 (b)(c)(d)		16,490		16,490
South Coast Local Education Agencies
TRAN Program Note Participations Series 2007A
3.68%, 06/30/08		55,000		55,215
Southern California HFA
S/F Mortgage RB Series 2004A
3.37%, 01/02/08 (a)(c)		18,695		18,695
Southern California Home Financing Auth
S/F Mortgage RB Series 2004B
3.37%, 01/02/08 (a)(c)		62,775		62,775
3.37%, 01/02/08 (a)(c)		25,265		25,265
Southern California Metropolitan Water District
RB Series 1997B
3.28%, 01/03/08 (a)(c)		2,900		2,900
RB Series 1999A
3.48%, 01/02/08 (a)(c)(d)		17,000		17,000
RB Series 2000B3
3.52%, 01/02/08 (a)(c)		2,000		2,000
RB Series 2001C2
3.57%, 01/02/08 (a)(c)		800		800
RB Series 2005C
3.52%, 01/03/08 (a)(c)(d)		7,970		7,970
RB Series 2006A
3.44%, 01/03/08 (a)(c)(d)		5,495		5,495
3.46%, 01/03/08 (a)(c)(d)		15,625		15,625
3.47%, 01/03/08 (a)(c)(d)(f)		50,000		50,000
3.48%, 01/03/08 (a)(c)(d)		4,300		4,300
Southern California Public Power Auth
Gas Project RB Series 2007B
3.50%, 01/03/08 (a)(c)(d)		100,000		100,000
Transmission Project RB (Subordinate Refunding) Series 1991
3.34%, 01/02/08 (a)(b)		4,000		4,000
State Center Community College District
GO Bonds (Election of 2002) Series 2007A
3.44%, 01/03/08 (a)(b)(c)(d)		8,335		8,335
Stockton USD
GO Bonds (Election of 2005) Series 2007
3.44%, 01/03/08 (a)(b)(c)(d)		6,380		6,380

See financial notes 23

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Sweetwater Union High SD
GO Bonds (Election of 2000) Series C
3.47%, 01/03/08 (a)(b)(c)(d)		13,900		13,900
Tobacco Securitization Auth of Southern California
Tobacco Settlement Asset-Backed Sr Bonds Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		16,660		16,660
Univ of California
CP Notes Series A
3.42%, 01/08/08		34,000		34,000
General RB Series 2003A
3.45%, 01/03/08 (a)(b)(c)(d)		8,265		8,265
3.45%, 01/03/08 (a)(b)(c)(d)		9,005		9,005
General RB Series 2005F
3.47%, 01/03/08 (a)(b)(c)(d)		6,595		6,595
General RB Series 2007J
3.44%, 01/03/08 (a)(c)(d)		6,100		6,100
3.44%, 01/03/08 (a)(b)(c)(d)		5,635		5,635
3.47%, 01/03/08 (a)(b)(c)(d)		25,115		25,115
3.47%, 01/03/08 (a)(b)(c)(d)		24,000		24,000
3.48%, 01/03/08 (a)(b)(c)(d)		25,160		25,160
General RB Series G
3.52%, 01/03/08 (a)(b)(c)(d)		10,490		10,490
3.60%, 01/03/08 (a)(b)(c)(d)		7,405		7,405
GO Bonds Series J
3.45%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Limited Project RB Series 2005B
3.51%, 01/02/08 (a)(b)(c)(d)		4,600		4,600
3.45%, 01/03/08 (a)(b)(c)(d)		10,300		10,300
3.48%, 01/03/08 (a)(b)(c)(d)		6,470		6,470
Limited Project RB Series 2007D
3.44%, 01/03/08 (a)(b)(c)(d)		27,085		27,085
Medical Center Pooled RB Series 2007A
3.44%, 01/03/08 (a)(b)(c)(d)		19,380		19,380
Medical Center Pooled RB Series 2007B1
3.44%, 01/02/08 (a)(c)		3,700		3,700
Medical Center Pooled RB Series 2007C2
3.61%, 01/02/08 (a)(b)(c)(d)		8,000		8,000
3.61%, 01/02/08 (a)(b)(c)(d)		14,000		14,000
3.47%, 01/03/08 (a)(c)(d)		36,000		36,000
Medical Center Pooled RB Series A
3.44%, 01/03/08 (a)(b)(c)(d)		29,495		29,495
RB (Multiple Purpose) Series K
3.48%, 01/03/08 (a)(c)(d)		15,405		15,405
RB (Multiple Purpose) Series O
3.52%, 01/03/08 (a)(b)(c)(d)		7,995		7,995
Various California Education Issuers
Bonds Series 2006
3.47%, 01/03/08 (a)(b)(c)(d)		31,150		31,150
Victor Valley Community College District
COP Series 1997
3.55%, 01/03/08 (a)(b)		49,075		49,075
West Valley-Mission Community College District
GO Bonds (Election of 2004) Series 2006A
3.48%, 01/03/08 (a)(b)(c)(d)		12,470		12,470
Westminster
COP (Civic Center Refunding) Series 1998A
3.35%, 01/03/08 (a)(b)(c)		2,640		2,640
Westminster Redevelopment Agency
M/F Housing RB (Brookhurst Royale Senior Assisted Living) Series 2000A
3.47%, 01/03/08 (a)(b)		7,430		7,430
Tax Allocation Refunding RB (Commercial Project No.1) Series 1997
3.35%, 01/03/08 (a)(b)(c)		1,420		1,420
Whittier
Refunding RB (Whittier College) Series 2004
3.49%, 01/03/08 (a)(b)(c)		10,000		10,000
Yuba Community College District
GO Bonds (Election of 2006) Series B
3.48%, 01/03/08 (a)(b)(c)(d)		6,130		6,130
				10,443,157
Puerto Rico 4.8%
Puerto Rico
Public Improvement Bonds Series 2001A
3.47%, 01/03/08 (a)(b)(c)(d)		8,800		8,800
Public Improvement Refunding Bonds Series 2002A
3.55%, 01/03/08 (a)(b)(c)(d)		995		995
Public Improvement Refunding Bonds Series 2007A2
3.40%, 01/03/08 (a)(b)(c)		900		900
Public Improvement Refunding Bonds Series 2007A5
3.35%, 01/03/08 (a)(b)(c)		9,000		9,000
TRAN Series 2008
3.40%, 07/30/08 (b)		20,000		20,096
Puerto Rico Electric Power Auth
Power RB Series HH
3.52%, 01/03/08 (a)(b)(c)(d)		4,065		4,065
Power RB Series II
3.53%, 01/03/08 (a)(b)(c)(d)		7,405		7,405
Power RB Series NN
3.51%, 01/03/08 (a)(b)(c)(d)		11,035		11,035
Power Refunding RB Series UU
3.47%, 01/03/08 (a)(b)(c)(d)		48,590		48,590
3.47%, 01/03/08 (a)(b)(c)(d)(f)		159,580		159,580
3.47%, 01/03/08 (a)(b)(c)(d)		15,000		15,000
3.52%, 01/03/08 (a)(b)(c)(d)		17,785		17,785
Puerto Rico Highway & Transportation Auth
Highway RB Series Y
3.47%, 01/03/08 (a)(b)(c)(d)		1,225		1,225
Highway Refunding RB Series CC
3.44%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
3.44%, 01/03/08 (a)(b)(c)(d)		11,760		11,760
Highway Refunding RB Series AA
3.47%, 01/03/08 (a)(b)(c)(d)		3,995		3,995

24 See financial notes

Schwab California Municipal Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Transportation Refunding RB Series L
3.44%, 01/03/08 (a)(b)(c)(d)		12,065		12,065
Transportation Refunding RB Series N
3.48%, 01/02/08 (a)(b)(c)(d)		6,120		6,120
3.55%, 01/03/08 (a)(b)(c)(d)		4,160		4,160
Transportation Refunding RB Series 2005L
3.44%, 01/03/08 (a)(b)(c)(d)		72,505		72,505
3.44%, 01/03/08 (a)(b)(c)(d)		5,700		5,700
Puerto Rico Housing Finance Corp
Homeownership Mortgage RB Series 1998A
3.47%, 01/03/08 (a)(b)(c)(d)		9,900		9,900
Homeownership Mortgage RB Series 2000A
3.47%, 01/03/08 (a)(b)(c)(d)		815		815
Puerto Rico Infrastructure Financing Auth
Special Obligation Bonds Series 2000A
3.46%, 01/03/08 (a)(c)(d)		28,900		28,900
Puerto Rico Public Buildings Auth
Government Facilities Refunding RB Series M3
3.55%, 01/03/08 (a)(b)(c)		50,000		50,000
Refunding RB Series L
3.47%, 01/03/08 (a)(b)(c)(d)		3,145		3,145
Puerto Rico Sales Tax Financing Corp
Sales Tax RB Series 2007A
3.50%, 01/03/08 (a)(b)(c)(d)		3,500		3,500
3.51%, 01/03/08 (a)(b)(c)(d)		10,860		10,860
				528,901
Total Municipal Securities (Cost $10,972,058)				10,972,058
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $10,972,058.

(a)	Variable rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $6,228,689 or 56.6% of net assets.
(e)	Delayed-delivery security.
(f)	All or a portion of this security is held as collateral for delayed- delivery securities.

BAN — Bond anticipation note

COP — Certificate of participation

GO — General obligation

HFA — Housing finance agency

IDA — Industrial development authority

IDRB — Industrial development revenue bond

M/F — Multi-family

RAN — Revenue anticipation note

RB — Revenue bond

S/F — Single-family

SD — School district

TECP — Tax-exempt commercial paper

TRAN — Tax and revenue anticipation note

USD — Unified school district

See financial notes 25

Schwab California Municipal Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		10,972,058
Cash		800
Receivables:
Investments sold		887
Interest		89,973
Fund shares sold		45,036
Prepaid expenses	+	25
Total assets		11,108,779
Liabilities
Payables:
Investments bought		58,030
Investment adviser and administrator fees		242
Transfer agent and shareholder services fees		248
Fund shares redeemed		35,250
Distributions to shareholders		2,670
Accrued expenses	+	176
Total liabilities		96,616
Net Assets
Total assets		11,108,779
Total liabilities	−	96,616
Net assets		$11,012,163
Net Assets by Source
Capital received from investors		11,014,246
Net realized capital losses		(2,083	)

Net Asset Value (NAV) by Share Class 

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Sweep Shares	$5,745,010		5,746,749			$1.00
Value Advantage Shares	$5,267,153		5,267,612			$1.00

26 See financial notes

Schwab California Municipal Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$341,465
Net Realized Gains and Losses
Net realized gains on investments		458
Expenses
Investment adviser and administrator fees		30,596
Transfer agent and shareholder service fees:
Sweep Shares		16,607
Value Advantage Shares		10,403
Registration fees		329
Portfolio accounting fees		285
Custodian fees		221
Shareholder reports		167
Professional fees		54
Trustees’ fees		53
Interest expense		6
Other expenses	+	68
Total expenses		58,789
Expense reduction by adviser and Schwab	−	7,784
Custody credits	−	40
Net expenses		50,965
Increase (Decrease) in Net Assets from Operations
Total investment income		341,465
Net expenses	−	50,965
Net investment income		290,500
Net realized gains	+	458
Increase in net assets from operations		$290,958

See financial notes 27

Schwab California Municipal Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$290,500	$227,883
Net realized gains (losses)	+	458	(71)
Increase in net assets from operations		290,958	227,812
Distributions to Shareholders
Distributions from net investment income
Sweep Shares		141,300	115,966
Value Advantage Shares	+	149,200	111,917
Total distributions from net investment income		290,500	227,883
Transactions in Fund Shares*
Shares Sold
Sweep Shares		26,103,752	22,094,100
Value Advantage Shares	+	7,292,139	6,014,021
Total shares sold		33,395,891	28,108,121
Shares Reinvested
Sweep Shares		139,215	113,914
Value Advantage Shares	+	131,721	99,532
Total shares reinvested		270,936	213,446
Shares Redeemed
Sweep Shares		(25,037,373)	(21,802,931)
Value Advantage Shares	+	(6,357,899)	(5,152,150)
Total shares redeemed		(31,395,272)	(26,955,081)
Net transactions in fund shares		2,271,555	1,366,486
Net Assets
Beginning of period		8,740,150	7,373,735
Total increase	+	2,272,013	1,366,415
End of period		$11,012,163	$8,740,150

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

28 See financial notes

Schwab California AMT Tax-Free Money Fund ^tm

Financial Statements

Financial Highlights

	11/16/071-
	12/31/07
Per—Share Data ($)
Net asset value at beginning of period		1.00
Income (loss) from investment operations:
Net investment income (loss)		0.00	2
Less distributions:
Distributions from net investment income		(0.00	)2
Net asset value at end of period		1.00
Total return (%)		0.36	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.46	4,5
Gross operating expenses		0.73	4
Net investment income (loss)		2.72	4
Net assets, end of period ($ x 1,000,000)		278

¹ Commencement of operations.

² Per-share amount was less than $0.01.

³ Not annualized.

⁴ Annualized.

⁵ The ratio of net operating expenses would have been 0.45% if tax expense had not been included.

See financial notes 29

Schwab California AMT Tax-Free Money Fund

Portfolio Holdingsas of December 31, 2007

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

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.

For fixed rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	98	.3%	Municipal Securities		273,337		273,337
	98	.3%	Total Investments		273,337		273,337
	1	.7%	Other Assets and Liabilities				4,594
	100	.0%	Net Assets				277,931

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Municipal Securities 98.3% of net assets
California 94.1%
Affordable Housing Agency
M/F Housing RB (Westridge at Hilltop Apts) Series 2003A
3.33%, 01/03/08 (a)(b)		4,810		4,810
Association of Bay Area Governments
COP (The Harker School) Series 2007
3.35%, 01/02/08 (a)(b)		1,000		990
RB (Air Force Village West Inc) Series 2005
3.42%, 01/03/08 (a)(b)		600		600
Bakersfield
Wastewater RB Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
Bakersfield SD
GO Bonds (Election of 2006) Series 2007A
3.47%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
Bay Area Toll Auth
San Francisco Bay Area Toll Bridge RB Series 2006B1
3.22%, 01/03/08 (a)(b)(c)		2,450		2,450
California
Economic Recovery Bonds Series 2004A
3.52%, 01/02/08 (a)(c)(d)		1,500		1,500
Economic Recovery Bonds Series 2004C1
3.52%, 01/02/08 (a)(c)		1,200		1,200
Economic Recovery Bonds Series 2004C5
3.42%, 01/02/08 (a)(c)		2,100		2,100
GO Bonds
3.61%, 01/02/08 (a)(b)(c)(d)		14,780		14,780
3.44%, 01/03/08 (a)(b)(c)(d)		1,400		1,400
GO Bonds Series 2003C4
3.32%, 01/03/08 (a)(b)		2,400		2,400
GO Bonds Series 2004A1
3.45%, 01/02/08 (a)(b)		600		600
GO Bonds Series 2004A10
3.25%, 01/03/08 (a)(b)		800		800
GO Bonds Series 2004B3
3.27%, 01/02/08 (a)(b)		400		400
GO CP Notes
3.10%, 02/06/08 (c)		16,000		16,000
2.59%, 03/05/08 (c)		10,000		10,000
3.10%, 03/19/08 (c)		2,000		2,000
GO Refunding Bonds Series 2007A
3.45%, 01/03/08 (a)(b)(c)(d)		3,135		3,135
RAN
2.87%, 06/30/08		1,500		1,506
RAN Series 2007-08
3.29%, 06/30/08		2,500		2,510
Various Purpose GO Bonds
3.45%, 01/03/08 (a)(b)(c)(d)		500		500
3.47%, 01/03/08 (a)(b)(c)(d)		700		700
California Dept of Water Resources
Power Supply RB Series 2002B2
3.54%, 01/02/08 (a)(b)		1,800		1,800
Power Supply RB Series 2002B6
3.27%, 01/02/08 (a)(b)		1,500		1,500
Power Supply RB Series 2002C1
3.32%, 01/03/08 (a)(b)		700		700
Power Supply RB Series 2002C11
3.28%, 01/03/08 (a)(b)		700		700
Power Supply RB Series 2002C4
3.35%, 01/03/08 (a)(b)		1,000		1,000
Power Supply RB Series 2005F5
3.54%, 01/02/08 (a)(b)		500		500
California Educational Facilities Auth
RB (Chapman University) Series 2000
3.35%, 01/02/08 (a)(b)		500		500
California Health Facilities Financing Auth
RB (Catholic Healthcare West) Series 2004J
3.35%, 01/02/08 (a)(b)		500		500
RB (Kaiser Permanente) Series 2006C
3.41%, 01/02/08 (a)		3,000		3,000
RB (Sutter Health) Series 2007A
3.52%, 01/02/08 (a)(c)(d)		1,500		1,500
California Infrastructure & Economic Development Bank
Insured RB (Rand Corp) Series 2002B
3.57%, 01/02/08 (a)(b)(c)		3,000		3,000
RB (California Independent System Operator Corp) Series 2004A
3.30%, 01/02/08 (a)(b)(c)		600		600
RB (J. Paul Getty Trust) Series 2003D
3.50%, 01/02/08 (a)		200		200
RB (SRI International) Series 2003A
3.30%, 01/03/08 (a)(b)		1,500		1,500

30 See financial notes

Schwab California AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
California Pollution Control Financing Auth
Pollution Control Refunding RB (Pacific Gas & Electric) Series 1996E
3.55%, 01/02/08 (a)(b)		1,200		1,200
California State Univ
RB Series 2005A&B
3.47%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
TECP Series A
3.29%, 03/03/08 (b)		3,991		3,991
California Statewide Communities Development Auth
RB (Jewish Federation Council of Greater Los Angeles) Series 2000A
3.51%, 01/03/08 (a)(b)		1,600		1,600
RB (Kaiser Permanente) Series 2004M
3.41%, 01/02/08 (a)		750		750
RB (Kaiser Permanente) Series 2006D
2.60%, 03/06/08		5,000		5,000
RB (National Public Radio) Series 2002
3.44%, 01/02/08 (a)(b)		1,325		1,325
TRAN Program Note Participations Series 2007A3
3.18%, 06/30/08		7,000		7,043
Diamond Bar Public Financing Auth
Lease RB (Community/Senior Center) Series 2002A
3.55%, 01/02/08 (a)(b)		1,500		1,500
East Bay Municipal Utility District
Water System CP
2.77%, 02/07/08 (c)		4,000		4,000
Water System Subordinated Refunding RB Series 2007A
3.52%, 01/03/08 (a)(b)(c)(d)		500		500
East Side Union High SD
GO Bonds (Election of 1999) Series C
3.44%, 01/03/08 (a)(b)(c)(d)		8,895		8,895
Golden State Tobacco Securitization Corp
Enhanced Tobacco Settlement Asset-Backed Bonds Series 2005A
3.61%, 01/02/08 (a)(b)(c)(d)		1,400		1,400
3.52%, 01/03/08 (a)(b)(c)(d)		500		500
Tobacco Settlement Asset-Backed Bonds Series 2003A1
3.48%, 01/02/08 (a)(c)(d)		1,395		1,395
Tobacco Settlement Asset-Backed Bonds Series 2007A1
3.48%, 01/03/08 (a)(b)(c)(d)		2,435		2,435
Hawthorne Community Facilities District No. 2006-1
Special Tax Bonds (Three Sixty Degrees at South Bay) Series 2006
3.48%, 01/03/08 (a)(b)(c)(d)		1,500		1,500
Hayward
M/F Housing RB (Shorewood Apts) Series 1984A
3.37%, 01/03/08 (a)(b)		1,200		1,200
Irvine
Lease RB (Capital Improvement) Series 1985
3.35%, 01/03/08 (a)(b)		700		700
Irwindale Community Redevelopment Agency
Tax Allocation Refunding Parity Bonds (City Industrial Development) Series 2006
3.45%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
Lodi
Electric System Revenue COP Series 2002A
3.34%, 01/02/08 (a)(b)(c)		260		260
Los Angeles
TRAN 2007
3.18%, 06/30/08		5,000		5,031
Wastewater System Refunding RB Series 2002A
3.47%, 01/03/08 (a)(b)(c)(d)		800		800
Wastewater System Subordinate Refunding RB Series 2006A
3.35%, 01/03/08 (a)(b)(c)		4,000		4,000
Wastewater System Subordinate Refunding RB Series 2006D
3.36%, 01/03/08 (a)(b)(c)		700		700
Los Angeles Cnty
2007-08 TRAN
3.18%, 06/30/08		9,000		9,055
Los Angeles Cnty Metropolitan Transportation Auth
Second Subordinate Sales Tax Revenue CP Series A
3.00%, 02/05/08 (b)		3,000		3,000
Los Angeles Convention & Exhibition Auth
Lease Refunding RB Series 2003B1
3.20%, 01/02/08 (a)(b)(c)		3,000		3,000
Los Angeles Dept of Water & Power
Power System RB Series 2001B1
3.28%, 01/03/08 (a)(c)		1,000		1,000
Power System RB Series 2001B2
3.30%, 01/03/08 (a)(c)		9,750		9,750
Power System RB Series 2007A1
3.52%, 01/03/08 (a)(b)(c)(d)		500		500
Los Angeles USD
GO Bonds (Election of 2002) Series 2005C&E
3.52%, 01/03/08 (a)(b)(c)(d)		7,000		6,990
GO Bonds (Election of 2002) Series 2007B
3.47%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
TRAN Series A
3.18%, 12/29/08		2,000		2,016
Mt Diablo USD
GO Bonds (Election of 2002) Series 2004
3.44%, 01/03/08 (a)(b)(c)(d)		3,390		3,390
Orange County Sanitation District
COP Series 2007B
3.48%, 01/03/08 (a)(b)(c)(d)		4,000		4,000
Peralta Community College District
GO Bonds (Election of 2006) Series 2007B
3.48%, 01/03/08 (a)(b)(c)(d)		4,000		4,000

See financial notes 31

Schwab California AMT Tax-Free Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Placer Cnty Water Agency
Second Sr Water Revenue COP Series 2007
3.45%, 01/03/08 (a)(b)(c)(d)		3,000		3,000
Richmond Joint Powers Financing Auth
Lease RB (Refunding & Civic Center Project) Series 2007
3.42%, 01/03/08 (a)(b)(c)		3,800		3,800
Riverside Community College District
GO Bonds (Election of 2004) Series 2006C
3.60%, 01/03/08 (a)(b)(c)(d)		3,630		3,630
San Diego Cnty Water Auth
CP Series 2
2.77%, 02/07/08 (c)		7,000		7,000
San Diego Public Facilities Financing Auth
Subordinate Sewer Revenue Notes Series 2007
3.48%, 01/03/08 (a)(b)(c)(d)		4,500		4,500
San Diego USD
GO Refunding Bonds (Election of 1988) Series 2006F1 & G1
3.46%, 01/03/08 (a)(b)(c)(d)		1,000		1,000
3.52%, 01/03/08 (a)(b)(c)(d)		2,000		2,000
San Francisco Public Utilities Commission
Water Refunding RB Series 2006A
3.46%, 01/03/08 (a)(b)(c)(d)		8,155		8,155
San Jose Financing Auth
Lease RB (Civic Center) Series 2002C
3.25%, 01/02/08 (a)(b)(c)		1,000		1,000
San Juan USD
GO Bonds (Election of 2002) Series 2007
3.52%, 01/03/08 (a)(b)(c)(d)		550		550
San Mateo Cnty Community College District
GO Bonds (Election of 2005) Series 2006B
3.47%, 01/03/08 (a)(b)(c)(d)		1,745		1,745
3.47%, 01/03/08 (a)(b)(c)(d)		1,960		1,960
South Placer Wastewater Auth
RB Series B
3.25%, 01/03/08 (a)(b)(c)		5,200		5,200
Southern California Metropolitan Water District
RB Series 1997B
3.28%, 01/03/08 (a)(c)		1,000		1,000
RB Series 1999A
3.48%, 01/02/08 (a)(c)(d)		1,500		1,500
RB Series 2000B3
3.52%, 01/02/08 (a)(c)		1,200		1,200
RB Series 2006A
3.44%, 01/03/08 (a)(c)(d)		1,600		1,595
Southern California Public Power Auth
Transmission Project RB (Subordinate Refunding) Series 1991
3.34%, 01/02/08 (a)(b)		3,600		3,600
Univ of California
General RB Series 2005F
3.47%, 01/03/08 (a)(b)(c)(d)		1,600		1,600
GO Bonds Series J
3.45%, 01/03/08 (a)(b)(c)(d)		3,435		3,435
Limited Project RB Series 2005B
3.51%, 01/02/08 (a)(b)(c)(d)		2,400		2,400
				261,677
Puerto Rico 4.2%
Puerto Rico
Public Improvement Refunding Bonds Series 2007A5
3.35%, 01/03/08 (a)(b)(c)		500		500
Puerto Rico Electric Power Auth
Refunding RB Series UU
3.47%, 01/03/08 (a)(b)(c)(d)		2,500		2,500
Puerto Rico Highway & Transportation Auth
Transportation RB Series 1998A
3.30%, 01/02/08 (a)(b)(c)		2,000		2,000
Transportation Refunding RB Series 2005L
3.44%, 01/03/08 (a)(b)(c)(d)		300		300
3.44%, 01/03/08 (a)(b)(c)(d)		2,600		2,600
Puerto Rico Housing Finance Corp
Homeownership Mortgage RB Series 2000A
3.47%, 01/03/08 (a)(b)(c)(d)		1,860		1,860
Puerto Rico Public Buildings Auth
Refunding RB Series L
3.47%, 01/03/08 (a)(b)(c)(d)		1,900		1,900
				11,660
Total Municipal Securities (Cost $273,337)				273,337
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $273,337.

(a)	Variable-rate security.
(b)	Credit-enhanced security.
(c)	Liquidity-enhanced security.
(d)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $118,050 or 42.5% of net assets.

COP — Certificate of participation

GO — General obligation

M/F — Multi-family

RAN — Revenue anticipation note

RB — Revenue bond

SD — School district

TECP — Tax-exempt commercial paper

TRAN — Tax and revenue anticipation note

USD — Unified school district

32 See financial notes

Schwab California AMT Tax-Free Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		273,337
Cash		432
Receivables:
Investments sold		25
Fund shares sold		2,708
Interest	+	1,827
Total assets		278,329
Liabilities
Payables:
Investment adviser and administrator fees		3
Transfer agent and shareholder services fees		5
Fund shares redeemed		288
Distributions to shareholders		75
Accrued expenses	+	27
Total liabilities		398
Net Assets
Total assets		278,329
Total liabilities	−	398
Net assets		$277,931
Net Assets by Source
Capital received from investors		277,931

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$277,931		277,921		$1.00

See financial notes 33

Schwab California AMT Tax-Free Money Fund

Statement of

Operations

For November 16, 2007* through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$728
Net Realized Gains and Losses
Net realized gains on investments		13
Expenses
Investment adviser and administrator fees		80
Transfer agent and shareholder service fees		50
Professional fees		15
Registration fees		15
Tax expense		3
Portfolio accounting fees		2
Custodian fees	+	1
Total expenses		166
Expense reduction by adviser and Schwab	−	61
Net expenses		105
Increase (Decrease) in Net Assets from Operations
Total investment income		728
Net expenses	−	105
Net investment income		623
Net realized gains	+	13
Increase in net assets from operations		$636

*  Commencement of operations.

34 See financial notes

Schwab California AMT Tax-Free Money Fund

Statements of

Changes in Net Assets

For current report period. All numbers are x 1,000.

Operations

		11/16/07*-12/31/07
Net investment income		$623
Net realized gains	+	13
Increase in net assets from operations		636
Distributions to Shareholders
Distributions from net investment income		626
Transactions in Fund Shares**
Shares sold		338,341
Shares reinvested		550
Shares redeemed	+	(60,970)
Net transactions in fund shares		277,921
Net Assets
Beginning of period		−
Total increase	+	277,931
End of period		$277,931

*  Commencement of operations.

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

See financial notes 35

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

Financial Notes

1. Business Structure of the Funds:

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

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund
Schwab New Jersey AMT Tax-Free Money Fund Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab California Municipal Money Fund offers two share classes: Sweep Shares and Value Advantage Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums. Schwab California AMT Tax-Free Money Fund commenced operations on November 16, 2007 and the fund currently offers one share class: Value Advantage Shares.

Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

•  Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The fund has set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

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

36 

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

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(e) Expenses:

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

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

Each fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the funds’ financial statements.

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

37

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

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

	Transfer Agent Fees		Shareholder Service Fees
California Municipal Money Fund
Sweep Shares		0.15%		0.20%
Value Advantage Shares		0.05%		0.17%
California AMT Tax-Free Money Fund		0.05%		0.17%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses as follows so long as CSIM serves as the investment adviser to the funds:

California Municipal Money Fund
Sweep Shares	0.62%	*
Value Advantage Shares	0.45%
California AMT Tax-Free Money Fund	0.45%

*  Prior to April 30, 2007, the limit was 0.64% for Sweep Shares.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, each fund’s total security transactions with other Schwab Funds were as follow:

California Municipal Money Fund	$2,488,750
California AMT Tax-Free Money Fund	$164,495

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

Trustees

Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these

38 

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

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions (continued):

limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as disclosed in each fund’s Statement of Operations.

4. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds may obtain temporary bank loans through the trust to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. There was no borrowing from the lines of credit for the funds during the period. However, the California Municipal Money Fund utilized its overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.

5.  Federal Income Taxes:

(All dollar amounts are x 1,000)

As of December 31, 2007, the funds had no undistributed earnings on a tax basis.

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the following funds had capital loss carry forwards available to offset net capital gains before the expiration dates:

	California		California
	Municipal		AMT Tax-Free
Expire	Money Fund		Money Fund
2008		$497		$—
2011		508		—
2012		398		—
2013		610		—
2014		70		—
Total		$2,083		$—

For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2007, the funds had no deferred realized net capital losses and the capital losses utilized to offset capital gains were as follows:

	California		California
	Municipal		AMT Tax-Free
	Money Fund		Money Fund
Capital losses utilized		458		—

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

	California		California
	Municipal		AMT Tax-Free
	Money Fund		Money Fund
Current period distributions
Tax-exempt income		$290,500		$625
Ordinary income		—		1
Prior period distributions
Tax-exempt income		$227,883		—
Ordinary income		—		—

39

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

Financial Notes (continued)

5.  Federal Income Taxes (continued):
(All dollar amounts are x 1,000)

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 and losses; capital losses related to wash sales, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by each fund for financial reporting purposes. Each fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, the funds made the following reclassifications:

	California		California
	Municipal		AMT Tax-Free
	Money Fund		Money Fund
Capital shares		$—		$10
Undistributed net investment income		—		3
Net realized capital gains and losses		—		(13	)

40 

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:
Schwab California Municipal Money Fund
Schwab California AMT Tax-Free 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 California Municipal Money Fund and Schwab California AMT Tax-Free Money Fund (two of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Funds”) at December 31, 2007, the results of each of their operations for the period then ended, and the changes in each of their net assets and the financial highlights for each of the periods presented, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

41

Other Federal Tax Information: (unaudited)

The funds designate the following percentage of the distributions paid from net investment income as tax-exempt interest dividends for the fiscal year ended December 31, 2007.

	Percentage
California Municipal Money Fund		100
California AMT Tax-Free Money Fund		100

42 

Investment Advisory Agreement Approval

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

Consistent with these responsibilities, the Board of Trustees (the “Board”) called and held a meeting on June 5, 2007, in part, for the purpose of considering whether to approve the investment advisory agreement (the ‘Agreement‘) between The Charles Schwab Family of Funds (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) with respect to the Schwab California AMT Tax-Free Money Fund. In preparation for the meeting, the Board requested and reviewed a variety of materials provided by CSIM with respect to the services to be provided to the fund under the Agreement. In recognition of the fact that the fund had not yet commenced operations, the Board also considered information previously provided by CSIM in May 2007 in connection with the Board’s consideration of approval or renewal of the Agreement with respect to the other funds within the Trust. The Board also took into account the detailed information about other funds within the Trust that the Board reviews during the course of the year, including information that relates to operations and performance of these other funds. The trustees also received a memorandum from fund counsel regarding the responsibilities of trustees for the approval of investment advisory contracts. In addition, the Independent Trustees received advice from independent counsel to the Independent Trustees, meet in executive session outside the presence of fund management and participated in question and answer sessions with representatives of CSIM.

The Board, including a majority of the Independent Trustees approved the Agreement with respect to the fund for a two year term. The Board’s approval of the Agreement was based on consideration and evaluation of a variety of specific factors discussed at the meeting, and at prior meetings, including:

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

2.CSIM’s investment performance in managing other funds having relevant investment objectives and strategies;

3.the fund’s estimated expenses and how those expenses compared to those of certain other comparable mutual funds;

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

5.the extent to which economies of scale may be realized as the fund and the other funds managed by CSIM grow and whether fee levels in the Agreement relating to the fund reflect those economies of scale for the benefit of fund investors.

Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services to be provided by CSIM to the fund and the resources of CSIM and its affiliates will dedicate to the fund. In this regard, the trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The trustees also considered the fact that Schwab’s extensive branch network, Internet access, investment and research tools, telephone services, and array of account features may be expected to benefit the fund and its shareholders. The trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the trustees considered that the vast majority of the fund’s shareholders are expected to be either brokerage clients of Schwab or clients of investment advisers who use Schwab for certain brokerage and administrative services. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services to be provided by CSIM to the fund and the resources of CSIM and its affiliates dedicated to the fund supported approval of the Agreement with respect to the fund.

Performance. With regard to fund performance, since the fund had not commenced operations and therefore did not have any performance of its own, the Board considered performance of other funds having comparable investment objectives and strategies advised by CSIM in determining whether to approve the Agreement. For example, the Board

43

considered CSIM’s performance in managing other money market funds, including single-state municipal money funds, and other money funds that seek to provide income that is exempt from the alternative minimum tax. The trustees also considered both risk and shareholder risk expectations for the fund and the appropriateness of the benchmark that would be used to compare the performance of the fund. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of CSIM supported approval of the Agreement with respect to the fund.

Fund Expenses. With respect to the fund’s expenses, the trustees considered the rate of compensation called for by the Agreement, and the fund’s estimated net operating expense ratio in comparison to those of other comparable mutual funds. The trustees considered the effects of CSIM’s and Schwab’s commitment to waiving management and other fees to prevent total fund expenses from exceeding a specified cap. The trustees also considered fees charged by CSIM to other mutual funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the fund are reasonable and supported approval of the Agreement with respect to the fund.

Profitability. With regard to profitability, the trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the trustees considered information that was previously provided by CSIM with respect to other funds it manages regarding profitability and how this information might reasonably be expected to be predictive of profitability to CSIM under the Agreement with respect to the fund. The trustees also considered any other benefits derived by CSIM from its relationship with the fund, such as whether, by virtue of its management of the fund, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to the fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the expected profitability of CSIM, albeit uncertain, is reasonable and supported approval of the Agreement with respect to the fund.

Economies of Scale. Recognizing that the fund had not yet commenced operations and had no assets, the trustees considered the possible development of any economies of scale and whether those could be expected to be passed along to the fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of fund expenses, the trustees considered that CSIM and Schwab has committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets are relatively small through their contractual expense waivers that may only be amended or terminated with the approval of the Board. For example, such diseconomies of scale typically affect new funds, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The trustees also considered CSIM’s agreement to a contractual investment advisory fee schedule that includes lower fees at higher graduated asset levels. The Board also considered certain commitments by CSIM and Schwab that are designed to pass along potential economies of scale to fund shareholders. Specifically, the Board considered CSIM and Schwab’s commitments, which may be changed only with Board approval, relating to future net total operating expense reductions for non-taxable money funds as a group when aggregate assets of such group of funds exceed certain levels. Based on this evaluation, and in consideration of the commitments made by CSIM and Schwab as discussed above, the Board concluded, within the context of its full deliberations, that the fund may be expected to obtain reasonable benefit from economies of scale if such economies develop.

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

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Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

45

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President– Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President–Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

46 

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

47

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

48 

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

49

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

50 

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR26569-05

Schwab Advisor Cash Reserves^tm

Annual Report

December 31, 2007

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Fund	3
Performance and Fund Facts	5
Fund Expenses	6
Financial Statements	7
Financial Notes	16
Report of Independent Registered Public Accounting Firm	20
Trustees and Officers	21
Glossary	25

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Advisor Cash Reserves 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

2 Schwab Advisor Cash Reserves

The Investment Environment and the Fund

Linda Klingman (middle), managing director and portfolio manager, has overall responsibility for the management of the fund.

Mike Neitzke (right), managing director and portfolio manager, has day-to-day responsibility for management of the fund.

Michael Lin (left), portfolio manager, has day-to-day responsibility for management of the fund.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

Schwab Advisor Cash Reserves 3

The Investment Environment and the Fundcontinued

The reduced liquidity hit SIVs particularly hard. For nearly twenty years, SIVs have been a typical holding in the portfolios of many financial institutions, pension funds, mutual funds, municipalities and money market funds. However, not all SIVs were created equal—a handful of SIVs carried higher risk and had significant subprime investments. When those SIVs were recently unable to meet repayment of their debt obligations in the normal course of business, all SIVs came under scrutiny and the impact was felt throughout the marketplace.

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Advisor Cash Reserves maintained a weighted average maturity (WAM) that was longer than the peer group throughout the reporting period. In August, ramifications from trouble in the housing and credit markets were made clear as the market experienced unprecedented volatility and uncertainty throughout the third and fourth quarters. In response, we sought to reduce the weighted average maturity and increase the overnight cash position of the fund as a buffer against market volatility. Despite reduction of the WAM, the fund remained long relative to the peer group. Maintaining a longer WAM throughout the year benefited the fund as we were able to lock in higher yielding securities before the Fed lowered rates.

Given the unprecedented volatility in the subprime mortgage market, we focused on reviewing and evaluating our SIV exposure in the second half of the year. As of December 31, 2007, SIV exposure in the Schwab Advisor Cash Reserves was approximately 3.4% of the fund’s net assets (see Financial Note 6).

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

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

4 Schwab Advisor Cash Reserves

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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.

	Sweep Shares		Premier Sweep Shares
Ticker Symbol	SWQXX		SWZXX
Seven-Day Yield1		4.47%		4.54%
Seven-Day Yield—No Waiver2		4.25%		4.25%
Seven-Day Effective Yield1		4.57%		4.64%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

Weighted Average Maturity	52 days
Credit Quality of Holdings % of portfolio	100% Tier 1

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.

Schwab Advisor Cash Reserves 5

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab Advisor Cash Reserves Fundtm
Sweep Shares
Actual Return		0.65%	$	1,000	$	1,023.70	$	3.32
Hypothetical 5% Return		0.65%	$	1,000	$	1,021.93	$	3.31
Premier Sweep Shares
Actual Return		0.58%	$	1,000	$	1,024.10	$	2.96
Hypothetical 5% Return		0.58%	$	1,000	$	1,022.28	$	2.96

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

6 Schwab Advisor Cash Reserves

Schwab Advisor Cash Reserves^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			8/19/04-1
Sweep Shares	12/31/07			12/31/06			12/31/05			12/31/04
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.04			0.03			0.00	2
Less distributions:
Distributions from net investment income		(0.05	)		(0.04	)		(0.03	)		(0.00	)2
Net asset value at end of period		1.00			1.00			1.00			1.00
Total return (%)		4.78			4.47			2.63			0.45	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.66			0.68			0.69			0.69	4
Gross operating expenses		0.75			0.84			0.85			0.85	4
Net investment income (loss)		4.67			4.48			2.65			1.30	4
Net assets, end of period ($ x 1,000,000)		6,416			5,222			1,898			1,271

	1/1/07-			1/1/06-			1/1/05-			8/19/04-1
Premier Sweep Shares	12/31/07			12/31/06			12/31/05			12/31/04
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.04			0.03			0.00	2
Less distributions:
Distributions from net investment income		(0.05	)		(0.04	)		(0.03	)		(0.00	)2
Net asset value at end of period		1.00			1.00			1.00			1.00
Total Return (%)		4.86			4.57			2.73			0.48	3
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.59			0.59			0.59			0.59	4
Gross operating expenses		0.75			0.84			0.85			0.85	4
Net investment income (loss)		4.74			4.56			2.75			1.41	4
Net assets, end of period ($ x 1,000,000)		15,023			10,784			3,728			2,344

¹ Commencement of operations.

² Per-share amount was less than $0.01.

³ Not annualized.

⁴ Annualized.

See financial notes 7

Schwab Advisor Cash Reserves

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date, and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	79	.2%	Fixed-Rate Obligations		16,981,662		16,981,662
	12	.5%	Variable-Rate Obligations		2,676,949		2,676,949
	7	.8%	Other Investments		1,672,651		1,672,651
	99	.5%	Total Investments		21,331,262		21,331,262
	0	.5%	Other Assets and Liabilities				107,733
	100	.0%	Net Assets				21,438,995

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fixed-Rate Obligations 79.2% of net assets
Bank Notes 1.1%
Bank of America, N.A.
5.09%, 01/18/08		150,000		150,000
5.34%, 01/25/08		85,000		85,000
				235,000
Certificates of Deposit 34.6%
Alliance & Leicester PLC
5.32%, 04/18/08		4,000		4,000
5.32%, 05/13/08		70,000		70,000
Allied Irish Bank PLC
4.73%, 04/28/08		41,000		41,000
American Express Bank FSB
5.05%, 03/10/08		58,000		58,000
American Express Centurion Bank
5.15%, 02/28/08		50,000		50,000
Banco Bilbao Vizcaya Argentaria S.A.
5.23%, 01/09/08		21,000		21,000
5.23%, 01/10/08		50,000		50,000
5.23%, 01/14/08		11,000		11,000
5.34%, 01/25/08		71,000		71,000
5.15%, 02/29/08		89,000		89,000
Bank of Ireland
5.20%, 04/11/08		17,000		17,000
Bank of Montreal
5.35%, 01/22/08		43,000		43,000
5.38%, 04/14/08		51,000		50,999
Bank of Scotland
5.15%, 02/26/08		46,000		46,000
5.00%, 03/31/08		170,000		170,000
Bank of Tokyo Mitsubishi
5.15%, 01/17/08		85,000		85,000
5.15%, 01/18/08		5,000		5,000
5.12%, 02/19/08		30,000		30,000
Barclays Bank PLC
5.47%, 03/13/08		50,000		50,000
5.16%, 04/09/08		86,000		86,000
5.21%, 04/14/08		6,000		6,000
5.07%, 04/17/08		12,000		12,000
5.09%, 04/17/08		65,000		65,001
5.10%, 04/17/08		87,000		86,993
4.73%, 04/24/08		150,000		150,000
5.32%, 05/13/08		40,000		40,000
BNP Paribas
5.00%, 03/18/08		221,000		221,000
4.75%, 06/19/08		306,000		306,000
4.80%, 06/25/08		275,000		275,000
4.75%, 06/26/08		45,000		45,000
Canadian Imperial Bank of Commerce
4.88%, 01/08/08		34,000		34,000
5.28%, 02/07/08		14,000		14,000
5.09%, 03/17/08		80,000		80,000
Citibank, N.A.
4.88%, 02/14/08		50,000		50,000
4.90%, 02/15/08		139,000		139,000
Commerzbank AG
5.26%, 01/09/08		70,000		70,000
4.81%, 02/05/08		5,000		5,000
Credit Agricole S.A.
4.90%, 01/28/08		73,000		73,000
4.91%, 04/01/08		240,000		240,000
4.83%, 04/02/08		20,000		20,000
5.36%, 04/09/08		129,000		129,000
Credit Suisse
5.64%, 01/07/08		40,000		40,000
5.60%, 02/07/08		40,000		40,000
5.56%, 03/10/08		47,000		47,000
Depka Bank PLC
5.46%, 02/12/08		47,000		47,000
Dexia Credit Local.
4.88%, 01/04/08		99,000		99,000
4.82%, 01/11/08		70,000		70,000
DnB NOR Bank ASA
5.15%, 02/28/08		22,000		22,000
Dresdner Bank AG
5.35%, 01/14/08		36,000		36,000
HSBC U.S.A., Inc.
5.36%, 02/20/08		39,000		39,000
ING Bank N.V.
4.84%, 02/01/08		93,000		93,000
4.81%, 02/06/08		8,000		8,000
4.79%, 03/03/08		152,000		152,000
Intesa Sanpaolo
5.17%, 01/16/08		15,000		15,000
5.12%, 01/31/08		220,000		220,000
5.01%, 03/14/08		22,000		22,000

8 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
KBC Bank N.V.
5.18%, 01/30/08		91,000		91,000
Lloyds TSB Bank PLC
4.80%, 01/29/08		190,000		190,000
Mitsubishi UFJ Trust & Banking Corp.
4.91%, 02/12/08		35,000		35,000
5.32%, 02/14/08		42,000		42,000
5.38%, 04/09/08		58,000		58,000
Mizuho Corporate Bank Ltd.
5.40%, 01/02/08		184,000		184,000
4.88%, 01/04/08		11,000		11,000
5.17%, 01/30/08		30,000		30,000
Natixis S.A.
4.77%, 03/06/08		75,000		75,000
Norinchukin Bank Ltd.
5.36%, 01/28/08		45,000		45,000
4.82%, 02/06/08		4,000		4,000
Northern Rock PLC
5.57%, 03/14/08		53,000		53,000
Royal Bank of Scotland PLC
5.16%, 01/18/08		27,000		27,000
4.92%, 06/06/08		140,000		140,000
4.83%, 06/18/08		175,000		175,000
Skandinaviska Enskilda Banken AB
4.80%, 04/24/08		28,000		28,000
Societe Generale
5.17%, 01/18/08		60,000		60,000
5.20%, 01/31/08		20,000		20,001
4.84%, 02/01/08		107,000		107,000
5.20%, 02/08/08		81,000		81,000
5.14%, 02/20/08		28,000		28,000
5.33%, 02/25/08		8,000		8,000
5.12%, 02/29/08		7,000		7,000
5.13%, 03/13/08		63,000		63,001
4.96%, 04/17/08		7,000		7,000
4.80%, 06/10/08		9,000		9,000
4.78%, 06/20/08		14,000		14,000
4.81%, 06/24/08		113,000		113,000
Sumitomo Mitsui Banking Corp.
4.84%, 01/04/08		40,000		40,000
4.85%, 01/04/08		10,000		10,000
4.84%, 01/08/08		184,000		184,000
4.86%, 01/14/08		8,000		8,000
5.14%, 01/30/08		30,000		30,000
5.14%, 02/08/08		25,000		25,000
Sumitomo Trust & Banking Co.
5.44%, 01/16/08		11,000		11,000
5.38%, 02/15/08		25,000		25,000
5.12%, 02/21/08		57,000		57,000
4.96%, 04/15/08		35,000		35,000
Svenska Handelsbanken AB
5.05%, 01/24/08		25,000		25,000
Swedbank AB
4.88%, 02/11/08		10,000		10,000
Toronto Dominion Bank
5.02%, 03/12/08		206,000		206,000
4.92%, 05/07/08		65,000		65,000
4.70%, 05/13/08		15,000		15,000
4.86%, 06/20/08		22,000		22,000
UBS AG
4.99%, 02/04/08		99,000		99,017
4.98%, 03/18/08		44,000		44,000
4.99%, 03/27/08		47,000		47,000
5.40%, 04/14/08		162,000		162,000
4.76%, 05/07/08		8,000		8,000
5.28%, 05/13/08		10,000		10,000
Unicredito Italiano S.p.A.
5.36%, 01/11/08		5,000		5,000
5.35%, 01/18/08		10,000		10,000
4.93%, 06/04/08		109,000		109,000
4.90%, 06/19/08		50,000		50,001
4.80%, 06/27/08		28,000		28,000
Union Bank of California
5.35%, 01/15/08		45,000		45,000
4.77%, 03/05/08		60,000		60,000
Wachovia Bank, N.A.
5.40%, 03/27/08		65,000		65,000
Westpac Banking Corp.
5.12%, 02/15/08		75,000		75,000
5.38%, 04/09/08		58,000		58,000
Wilmington Trust Co.
4.90%, 06/19/08		20,000		20,000
				7,427,013
Commercial Paper & Other Corporate Obligations 43.5%
Allied Irish Banks North America, Inc.
4.79%, 04/07/08 (a)		10,000		9,874
Alpine Securitization Corp.
4.96%, 01/08/08 (a)(b)(c)		17,000		16,984
5.92%, 01/11/08 (a)(b)(c)		9,000		8,985
4.95%, 01/14/08 (a)(b)(c)		96,000		95,830
4.80%, 01/24/08 (a)(b)(c)		17,000		16,948
5.37%, 03/17/08 (a)(b)(c)		5,000		4,944
Amstel Funding Corp.
5.88%, 01/08/08 (b)(c)		13,000		12,985
6.34%, 01/17/08 (b)(c)		37,000		36,896
5.34%, 01/18/08 (b)(c)		43,000		42,894
5.01%, 01/22/08 (b)(c)		69,000		68,801
5.12%, 02/19/08 (b)(c)		13,000		12,911
5.35%, 02/20/08 (b)(c)		95,000		94,303
5.52%, 02/22/08 (b)(c)		27,868		27,649
5.33%, 03/26/08 (b)(c)		20,000		19,752
5.38%, 03/27/08 (b)(c)		9,000		8,886
Amsterdam Funding Corp.
5.15%, 01/17/08 (a)(b)(c)		12,000		11,973
5.01%, 02/15/08 (a)(b)(c)		7,000		6,957
Anglo Irish Bank
5.35%, 01/02/08 (c)		25,000		24,996
5.50%, 03/12/08 (c)		28,000		27,705
ANZ National (Int’l) Ltd.
5.36%, 01/14/08 (a)		28,000		27,947
5.35%, 01/18/08 (a)		61,000		60,850
Aquinas Funding, L.L.C.
4.86%, 02/05/08 (a)(b)(c)		25,000		24,883
4.99%, 02/25/08 (a)(b)(c)		11,000		10,918
5.34%, 02/28/08 (a)(b)(c)		34,000		33,711
5.66%, 03/18/08 (a)(b)(c)		5,000		4,941
5.43%, 03/20/08 (a)(b)(c)		6,000		5,930
Atlantic Asset Securitization, L.L.C.
4.82%, 01/07/08 (a)(b)(c)		115,000		114,908
4.85%, 01/17/08 (a)(b)(c)		70,000		69,851
5.72%, 02/29/08 (a)(b)(c)		27,000		26,750
5.59%, 03/13/08 (a)(b)(c)		67,918		67,171

See financial notes 9

Schwab Advisor Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Atlantis One Funding Corp.
4.82%, 01/08/08 (b)(c)		47,000		46,956
5.13%, 01/22/08 (b)(c)		137,000		136,596
5.05%, 01/24/08 (b)(c)		50,000		49,841
5.37%, 02/14/08 (b)(c)		108,000		107,316
5.15%, 02/26/08 (b)(c)		41,000		40,676
5.43%, 03/18/08 (b)(c)		8,000		7,908
4.95%, 06/05/08 (b)(c)		13,000		12,728
Bank of America Corp.
5.30%, 02/01/08		68,000		67,701
5.09%, 02/13/08		147,000		146,121
5.09%, 02/20/08		85,000		84,410
4.70%, 05/05/08		224,000		220,425
Bank of Ireland
5.35%, 01/14/08 (c)		6,000		5,989
5.42%, 01/16/08 (c)		8,000		7,982
5.20%, 02/12/08 (c)		45,000		44,732
Barton Capital, L.L.C.
4.94%, 01/02/08 (a)(b)(c)		60,000		59,992
4.92%, 01/04/08 (a)(b)(c)		26,000		25,989
5.07%, 02/05/08 (a)(b)(c)		22,000		21,893
Cancara Asset Securitization, L.L.C.
5.36%, 01/08/08 (a)(b)(c)		17,000		16,983
5.22%, 01/22/08 (a)(b)(c)		13,000		12,961
5.00%, 01/29/08 (a)(b)(c)		55,000		54,789
5.37%, 03/13/08 (a)(b)(c)		32,000		31,661
5.04%, 03/19/08 (a)(b)(c)		51,000		50,453
Chariot Funding, L.L.C.
5.94%, 01/10/08 (a)(b)(c)		108,000		107,841
5.41%, 01/30/08 (a)(b)(c)		34,000		33,853
5.06%, 04/17/08 (a)(b)(c)		95,000		93,597
Citigroup Funding, Inc.
4.88%, 01/03/08 (a)		80,000		79,978
4.85%, 01/07/08 (a)		50,000		49,960
4.87%, 01/11/08 (a)		98,000		97,869
4.80%, 01/16/08 (a)		74,000		73,854
5.18%, 01/18/08 (a)		12,000		11,971
5.35%, 01/28/08 (a)		12,000		11,953
4.85%, 02/06/08 (a)		50,000		49,761
5.40%, 02/20/08 (a)		11,000		10,920
4.80%, 02/26/08 (a)		10,000		9,926
5.56%, 03/11/08 (a)		119,000		117,750
5.05%, 03/14/08 (a)		5,000		4,949
4.94%, 06/06/08 (a)		82,000		80,276
Clipper Receivables Co., L.L.C.
6.08%, 01/04/08 (a)(b)(c)		57,000		56,971
6.24%, 01/14/08 (a)(b)(c)		137,000		136,693
4.93%, 02/05/08 (a)(b)(c)		98,000		97,536
5.36%, 02/25/08 (a)(b)(c)		11,000		10,911
Concord Minuteman Capital Co., Series A
5.34%, 01/10/08 (a)(b)(c)		17,000		16,978
DnB NOR Bank ASA
5.05%, 04/15/08		120,000		118,276
Fairway Finance Co., L.L.C.
5.06%, 02/14/08 (a)(b)(c)		11,000		10,933
5.28%, 02/14/08 (a)(b)(c)		50,000		49,682
5.51%, 02/14/08 (a)(b)(c)		5,000		4,967
5.26%, 03/05/08 (a)(b)(c)		25,000		24,769
5.27%, 03/14/08 (a)(b)(c)		12,000		11,873
Falcon Asset Securitization Corp.
5.07%, 01/10/08 (a)(b)(c)		51,463		51,398
5.41%, 01/31/08 (a)(b)(c)		50,000		49,777
4.94%, 02/11/08 (a)(b)(c)		31,000		30,828
5.32%, 02/27/08 (a)(b)(c)		13,000		12,892
Gemini Securitization Corp., L.L.C.
5.15%, 01/16/08 (a)(b)(c)		12,000		11,975
5.12%, 01/17/08 (a)(b)(c)		34,000		33,924
4.86%, 01/31/08 (a)(b)(c)		21,000		20,916
4.86%, 02/05/08 (a)(b)(c)		13,000		12,939
4.91%, 02/07/08 (a)(b)(c)		54,000		53,731
5.14%, 02/20/08 (a)(b)(c)		8,000		7,944
5.48%, 02/29/08 (a)(b)(c)		4,000		3,965
5.27%, 03/18/08 (a)(b)(c)		16,000		15,822
General Electric Capital Corp.
5.32%, 02/19/08		173,000		171,794
5.38%, 03/04/08		40,000		39,638
Grampian Funding, L.L.C.
4.84%, 03/06/08 (a)(b)(c)		29,000		28,751
5.21%, 03/28/08 (a)(b)(c)		60,000		59,264
5.21%, 03/31/08 (a)(b)(c)		25,000		24,683
5.22%, 04/02/08 (a)(b)(c)		47,000		46,389
5.26%, 04/07/08 (a)(b)(c)		2,000		1,972
5.02%, 04/18/08 (a)(b)(c)		4,000		3,941
Greenwich Capital Holdings, Inc.
4.82%, 06/16/08 (a)		9,000		8,803
Intesa Funding, L.L.C.
5.07%, 01/16/08 (a)		156,000		155,675
Irish Life & Permanent, PLC
5.35%, 01/16/08 (c)		15,000		14,967
J.P. Morgan Chase & Co.
5.02%, 04/18/08		160,000		157,653
Jupiter Securitization Corp.
5.33%, 01/25/08 (a)(b)(c)		23,000		22,919
K2 (USA), L.L.C.
5.34%, 01/24/08 (b)(c)(d)		11,000		10,963
5.40%, 06/13/08 (b)(c)(d)		4,000		4,000
5.42%, 07/15/08 (b)(c)(d)		38,000		38,000
KBC Financial Products International Ltd.
5.20%, 04/02/08 (a)(c)		20,000		19,741
Kitty Hawk Funding Corp.
4.94%, 02/13/08 (a)(b)(c)		32,817		32,626
5.15%, 03/19/08 (a)(b)(c)		40,000		39,560
Mont Blanc Capital Corp.
4.92%, 01/07/08 (a)(b)(c)		13,000		12,989
5.04%, 01/15/08 (a)(b)(c)		53,000		52,897
5.07%, 01/23/08 (a)(b)(c)		45,384		45,245
5.04%, 01/24/08 (a)(b)(c)		25,000		24,920
Morgan Stanley
5.43%, 02/20/08		85,000		84,377
5.20%, 04/14/08		36,000		35,474
5.21%, 04/22/08		150,000		147,634
4.91%, 04/29/08		24,000		23,620
Nationwide Building Society U.S.
5.20%, 02/27/08		31,000		30,748
Nieuw Amsterdam Receivables Corp.
5.30%, 01/11/08 (a)(b)(c)		92,000		91,867
5.18%, 03/27/08 (a)(b)(c)		15,000		14,819
Old Line Funding, L.L.C.
4.83%, 01/11/08 (a)(b)(c)		19,495		19,469
6.03%, 01/11/08 (a)(b)(c)		25,000		24,958
5.93%, 01/16/08 (a)(b)(c)		7,000		6,983
4.95%, 01/22/08 (a)(b)(c)		65,669		65,481
5.05%, 01/23/08 (a)(b)(c)		45,795		45,655
4.94%, 02/07/08 (a)(b)(c)		12,920		12,855
4.91%, 02/08/08 (a)(b)(c)		54,000		53,724

10 See financial notes

Schwab Advisor Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
5.01%, 02/13/08 (a)(b)(c)		50,000		49,704
5.09%, 02/22/08 (a)(b)(c)		11,000		10,920
5.14%, 02/22/08 (a)(b)(c)		7,000		6,949
5.45%, 02/27/08 (a)(b)(c)		13,517		13,402
5.73%, 02/27/08 (a)(b)(c)		38,000		37,660
Park Avenue Receivables Co., L.L.C.
6.07%, 01/03/08 (a)(b)(c)		170,000		169,943
5.12%, 02/22/08 (a)(b)(c)		269,000		267,038
Picaros Funding, L.L.C.
5.39%, 03/19/08 (a)(b)(c)		70,000		69,204
5.21%, 04/07/08 (a)(b)(c)		10,000		9,863
Ranger Funding Co., L.L.C.
5.40%, 01/24/08 (a)(b)(c)		50,000		49,829
5.17%, 01/25/08 (a)(b)(c)		75,000		74,744
5.43%, 01/31/08 (a)(b)(c)		12,000		11,946
5.07%, 02/21/08 (a)(b)(c)		135,151		134,194
5.12%, 02/25/08 (a)(b)(c)		66,798		66,283
5.08%, 04/11/08 (a)(b)(c)		9,000		8,874
Royal Bank of Scotland PLC
4.99%, 01/28/08		7,000		6,974
San Paolo IMI U.S. Financial Corp.
4.85%, 03/24/08 (a)		59,000		58,354
Scaldis Capital Ltd.
5.31%, 01/07/08 (a)(b)(c)		24,000		23,979
5.22%, 01/24/08 (a)(b)(c)		183,000		182,398
5.13%, 01/25/08 (a)(b)(c)		11,000		10,963
4.93%, 02/08/08 (a)(b)(c)		27,000		26,861
5.10%, 02/22/08 (a)(b)(c)		6,000		5,956
5.25%, 03/20/08 (a)(b)(c)		50,000		49,438
5.21%, 04/01/08 (a)(b)(c)		7,000		6,910
Sedna Finance, Inc.
5.41%, 06/13/08 (b)(c)		2,000		2,000
Sheffield Receivables Corp.
5.77%, 01/11/08 (a)(b)(c)		186,000		185,703
Sigma Finance, Inc.
5.35%, 01/03/08 (b)(c)		55,000		54,984
5.40%, 03/12/08 (b)(c)(d)		4,000		3,959
Skandinaviska Enskilda Banken AB
4.78%, 02/01/08		4,000		3,984
4.81%, 03/28/08		5,000		4,943
4.86%, 04/21/08		6,000		5,912
Solitaire Funding, L.L.C.
4.84%, 01/07/08 (a)(b)(c)		86,000		85,931
5.29%, 01/11/08 (a)(b)(c)		6,000		5,991
5.15%, 01/18/08 (a)(b)(c)		7,000		6,983
4.86%, 01/30/08 (a)(b)(c)		39,000		38,849
5.09%, 02/19/08 (a)(b)(c)		5,000		4,966
5.58%, 03/04/08 (a)(b)(c)		2,000		1,981
5.14%, 04/10/08 (a)(b)(c)		91,000		89,723
5.11%, 04/17/08 (a)(b)(c)		20,000		19,702
Swedbank AB
5.34%, 01/09/08		7,000		6,992
5.35%, 01/09/08		14,000		13,984
5.16%, 01/17/08		16,000		15,964
5.49%, 01/22/08		52,000		51,837
Swedbank Mortgage AB
4.94%, 03/25/08		41,000		40,537
4.87%, 03/26/08		46,000		45,482
4.87%, 06/17/08		6,000		5,867
Thames Asset Global Securitization No.1, Inc.
4.99%, 01/09/08 (a)(b)(c)		20,000		19,978
5.20%, 01/22/08 (a)(b)(c)		46,800		46,659
5.27%, 02/15/08 (a)(b)(c)		32,000		31,792
5.17%, 03/17/08 (a)(b)(c)		100,000		98,923
Thunder Bay Funding, L.L.C.
5.97%, 01/08/08 (a)(b)(c)		10,000		9,988
5.00%, 01/11/08 (a)(b)(c)		34,244		34,197
5.93%, 01/15/08 (a)(b)(c)		12,736		12,707
5.41%, 02/15/08 (a)(b)(c)		27,000		26,819
5.41%, 02/27/08 (a)(b)(c)		14,000		13,882
5.24%, 04/10/08 (a)(b)(c)		70,367		69,370
Ticonderoga Funding, L.L.C.
6.08%, 01/04/08 (a)(b)(c)		75,000		74,962
Tulip Funding Corp.
4.87%, 02/06/08 (a)(b)(c)		9,000		8,957
5.39%, 02/06/08 (a)(b)(c)		30,000		29,840
5.27%, 02/21/08 (a)(b)(c)		4,000		3,971
5.27%, 03/12/08 (a)(b)(c)		54,000		53,446
UBS Finance (Delaware), Inc.
5.35%, 01/22/08 (a)		19,000		18,942
5.38%, 03/18/08 (a)		4,000		3,955
5.09%, 04/16/08 (a)		120,000		118,249
5.09%, 07/07/08 (a)		178,000		173,445
UniCredit Bank (Ireland) PLC
5.42%, 01/15/08 (a)(c)		137,000		136,718
Variable Funding Capital Corp.
4.94%, 01/09/08 (a)(b)(c)		190,000		189,793
4.89%, 01/10/08 (a)(b)(c)		83,000		82,899
5.06%, 02/05/08 (a)(b)(c)		17,000		16,917
Whistlejacket Capital, L.L.C.
5.35%, 01/18/08 (b)(c)(d)		9,493		9,470
5.34%, 01/24/08 (b)(c)(d)		16,000		15,947
5.42%, 06/16/08 (b)(c)(d)		12,000		12,000
Windmill Funding Corp.
5.87%, 01/03/08 (a)(b)(c)		45,000		44,985
5.87%, 01/04/08 (a)(b)(c)		35,000		34,983
Yorktown Capital, L.L.C.
5.33%, 01/17/08 (a)(b)(c)		50,973		50,853
5.05%, 01/25/08 (a)(b)(c)		23,578		23,499
5.33%, 01/28/08 (a)(b)(c)		50,062		49,864
5.07%, 02/20/08 (a)(b)(c)		42,000		41,708
5.14%, 03/19/08 (a)(b)(c)		96,000		94,950
5.09%, 04/11/08 (a)(b)(c)		9,000		8,874
				9,319,649
Total Fixed-Rate Obligations (Cost $16,981,662)				16,981,662
Variable-Rate Obligations 12.5% of net assets
ABN AMRO Bank N.V.
5.27%, 01/11/08		137,000		137,000
Banco Espanol de Credito S.A.
5.20%, 01/18/08 (c)		50,000		50,000
Bank of Ireland
4.96%, 01/22/08 (c)		10,000		10,000
Barclays Bank PLC
4.99%, 01/16/08		100,000		99,997
BNP Paribas
5.17%, 01/03/08		10,000		9,999
Breckenridge Terrace L.L.C.
4.91%, 01/03/08 (a)		1,000		1,000
Canadian Imperial Bank of Commerce
4.91%, 01/23/08		25,000		25,000
4.92%, 01/29/08		82,000		82,000

See financial notes 11

Schwab Advisor Cash Reserves

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Cook County, IL
4.90%, 01/02/08 (a)		1,500		1,500
Credit Suisse
5.15%, 01/23/08		56,000		56,000
Danske Bank A/S
4.92%, 01/22/08 (c)		200,000		200,000
Danske Corp.
4.95%, 02/13/08 (a)(c)		70,000		70,000
4.99%, 02/18/08 (a)(c)		50,000		50,000
Deutsche Bank AG
5.33%, 01/07/08		85,000		85,000
5.29%, 01/14/08		100,000		100,003
4.96%, 01/23/08		250,000		250,000
4.96%, 01/28/08		100,000		100,003
Dexia Credit Local
4.82%, 01/25/08		15,000		15,000
Eagle County, CO
4.91%, 01/03/08 (a)		2,000		2,000
Five Finance, Inc.
5.18%, 01/09/08 (b)(c)		19,000		18,996
Fortis Bank
4.80%, 01/28/08		50,000		49,978
K2 (USA), L.L.C.
4.91%, 03/20/08 (b)(c)(d)		50,000		50,002
Liberty Lighthouse U.S. Capital Co., L.L.C.
5.19%, 01/02/08 (b)(c)(d)		15,000		14,999
5.21%, 01/10/08 (b)(c)(d)		4,000		4,000
4.83%, 02/15/08 (b)(c)(d)		13,000		12,999
Links Finance, L.L.C.
4.95%, 01/18/08 (b)(c)(d)		40,000		40,000
Merrill Lynch & Co., Inc.
5.17%, 01/15/08		25,000		25,000
5.14%, 01/18/08		50,000		50,000
Mitsubishi UFJ Trust & Banking Corp.
4.97%, 01/30/08		20,000		20,000
Morgan Stanley
5.35%, 01/03/08		20,000		20,000
5.33%, 01/18/08		27,420		27,422
Nordea Bank AB
5.26%, 01/11/08 (c)		25,000		25,000
Royal Bank of Canada
5.18%, 01/04/08		150,000		149,989
4.79%, 01/31/08		20,200		20,194
Royal Bank of Scotland PLC
4.94%, 01/22/08 (c)		20,000		20,000
4.81%, 01/28/08		50,000		49,997
Sedna Finance, Inc.
5.20%, 01/14/08 (b)(c)		48,000		47,999
Sigma Finance, Inc.
5.00%, 01/15/08 (b)(c)(d)		50,000		49,999
5.07%, 01/25/08 (b)(c)(d)		50,000		50,000
5.07%, 01/25/08 (b)(c)(d)		100,000		100,006
Societe Generale
5.23%, 01/02/08 (c)		15,000		15,000
Sumitomo Trust & Banking Co.
5.25%, 01/07/08		47,000		47,000
4.93%, 01/22/08		49,000		49,000
Tenderfoot Seasonal Housing, L.L.C.
4.91%, 01/03/08 (a)		2,885		2,885
The Goldman Sachs Group, Inc.
5.26%, 01/11/08 (d)		4,000		4,000
5.08%, 01/17/08 (c)(d)		77,000		77,000
Wachovia Bank, N.A.
4.98%, 01/25/08		35,000		35,000
Westpac Banking Corp.
5.02%, 01/16/08 (c)		25,000		25,000
4.88%, 02/05/08		50,000		50,000
Whistlejacket Capital, L.L.C.
4.91%, 01/22/08 (b)(c)(d)		43,000		42,998
4.85%, 02/06/08 (b)(c)(d)		88,000		87,990
4.86%, 02/07/08 (b)(c)(d)		40,000		39,995
4.86%, 02/19/08 (b)(c)(d)		10,000		9,999
Total Variable-Rate Obligations (Cost $2,676,949)				2,676,949
Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 7.8% of net assets
Repurchase Agreements 7.8%
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.77%, fully collateralized by U.S. Government Securities with a value of $780,303.		765,203		765,000
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.50%, fully collateralized by U.S. Government Securities with a value of $7,806.		7,653		7,651
Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.75%, fully collateralized by U.S. Government Securities with a value of $918,000.		900,237		900,000
Total Other Investments (Cost $1,672,651)				1,672,651
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $21,331,262.

(a)	Credit-enhanced security.
(b)	Asset-backed security.
(c)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $7,666,023 or 35.8% of net assets.
(d)	Illiquid security. At the period end, the value of these amounted to $678,326 or 3.2% of net assets.

12 See financial notes

Schwab Advisor Cash Reserves

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$21,331,262
Receivables:
Interest		109,236
Prepaid expenses	+	48
Total assets		21,440,546
Liabilities
Payables:
Investment adviser and administrator fees		344
Transfer agent and shareholder services fees		636
Accrued expenses	+	571
Total liabilities		1,551
Net Assets
Total assets		21,440,546
Total liabilities	−	1,551
Net assets		$21,438,995
Net Assets by Source
Capital received from investors		21,438,984
Net investment income not yet distributed		11

Net Asset Value (NAV) by Share Class 

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Sweep Shares	$6,416,408		6,416,405			$1.00
Premier Sweep Shares	$15,022,587		15,022,579			$1.00

See financial notes 13

Schwab Advisor Cash Reserves

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$946,742
Net Realized Gains and Losses
Net realized gains on investments		11
Expenses
Investment adviser and administrator fees		55,610
Transfer agent and shareholder service fees:
Sweep Shares		22,270
Premier Sweep Shares		48,829
Registration fees		4,508
Custodian fees		968
Shareholder reports		907
Portfolio accounting fees		463
Trustees’ fees		78
Professional fees		77
Interest expense		1
Other expenses	+	97
Total expenses		133,808
Expense reduction by adviser and Schwab	−	25,928
Custody credits	−	1
Net expenses		107,879
Increase (Decrease) in Net Assets from Operations
Total investment income		946,742
Net expenses	−	107,879
Net investment income		838,863
Net realized gains	+	11
Increase in net assets from operations		$838,874

14 See financial notes

Schwab Advisor Cash Reserves

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$838,863	$406,556
Net realized gains	+	11	−
Increase in net assets from operations		838,874	406,556
Distributions to Shareholders
Distributions from net investment income
Sweep Shares		260,184	133,882
Premier Sweep Shares	+	578,679	272,674
Total distributions from net investment income		838,863	406,556
Transactions in Fund Shares*
Shares Sold
Sweep Shares		31,327,170	19,878,167
Premier Sweep Shares	+	89,000,643	48,935,956
Total shares sold		120,327,813	68,814,123
Shares Reinvested
Sweep Shares		255,692	131,357
Premier Sweep Shares	+	568,461	267,897
Total shares reinvested		824,153	399,254
Shares Redeemed
Sweep Shares		(30,388,315)	(16,686,064)
Premier Sweep Shares	+	(85,330,951)	(42,147,121)
Total shares redeemed		(115,719,266)	(58,833,185)
Net transactions in fund shares		5,432,700	10,380,192
Net Assets
Beginning of period		16,006,284	5,626,092
Total increase	+	5,432,711	10,380,192
End of period		$21,438,995	$16,006,284
Net investment income not yet distributed		$11	$−

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

See financial notes 15

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 (the “1940 Act”), as amended. The list below shows all the funds in the trust including the fund discussed in this report, which is highlighted:

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund Schwab New Jersey AMT Tax-Free Money Fund
Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab Advisor Cash Reserves offers two share classes: Sweep Shares and Premier Sweep Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums.

Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the fund are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

Repurchase Agreements: The fund may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created. Any repurchase agreements with due dates later than seven days from issue dates may be subject to seven day put features for liquidity purposes.

The fund’s repurchase agreements will be fully collateralized by U.S. government securities. All collateral is held by the fund’s custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Delayed-Delivery: The fund may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The fund has set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security

16 

Schwab Advisor Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):

is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.

(e) Expenses:

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

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

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

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the fund’s financial statements.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring

17

Schwab Advisor Cash Reserves

Financial Notes (continued)

2. Significant Accounting Policies (continued):

fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact of adopting SFAS No. 157 on the fund’s financial statements.

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

	Transfer Agent Fees		Shareholder Service Fees
Sweep Shares		0.20%		0.20%
Premier Sweep Shares		0.20%		0.20%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses as follows for so long as CSIM serves as the investment adviser to the fund:

Sweep Shares	0.66%
Premier Sweep Shares	0.59%

The fund may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, the fund’s total security transactions with other Schwab Funds were $48,000.

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

Trustees

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

18 

Schwab Advisor Cash Reserves

Financial Notes (continued)

4. Borrowings from Banks:

The fund may borrow money from banks and custodians. The fund may obtain temporary bank loans through the trust to which the fund belongs, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The fund pays interest on the amounts it borrows at rates that are negotiated periodically. There was no borrowing from the lines of credit for the fund during the period. However, the fund utilized its overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.

5.  Federal Income Taxes:

(All dollar amounts are x 1,000)

As of December 31, 2007, the components of distributable earnings on a tax basis were as follows:.

Undistributed ordinary income	$11
Undistributed Long-term capital gains	—

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the fund had no capital loss carry forwards.

For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2007, the fund had no deferred realized net capital losses and there were no capital losses being utilized to offset capital gains.

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

	Current period distributions		Prior period distributions
Ordinary income		$838,863		$406,556
Long-term capital gains		—		—
Return of capital		—		—

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as short-term capital gains and losses; capital losses related to wash sales, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the 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.

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, the fund made the following reclassifications:

Undistributed net investment income	$11
Net realized capital gains and losses	(11	)

6.  Subsequent Event:

Subsequent to year-end, on February 11, 2008, Whistlejacket Capital LLC (Whistlejacket), a structured investment vehicle (“SIV”), experienced an “enforcement event” that has led to the appointment of a Receiver to manage Whistlejacket’s operations. On February 12, 2008, two nationally recognized statistical rating organizations downgraded the ratings of the medium term notes (Notes) issued by Whistlejacket, including the Notes held by the fund. As a result of the downgrade, the Notes are no longer money fund eligible pursuant to Rule 2a-7 of the 1940 Act. As required under Rule 2a-7, the Board of Trustees of the fund met on February 12, 2008 and, based on the recommendation of the fund’s investment adviser, determined that it was not in the best interest of the fund to dispose of the Notes at that time.

19

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, 2007, 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 periods presented, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

20 

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the fund covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

21

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

22 

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

23

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

24 

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

25

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

26 

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR31382-03

Schwab Taxable Money Funds

Annual Report

December 31, 2007

Schwab Government

Money Fund^tm

Schwab U.S. Treasury

Money Fund^tm

Schwab Value Advantage

Money Fund^®

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Funds	3
Performance and Fund Facts	6
Fund Expenses	7
Financial Statements
Schwab Government Money Fundtm	8
Schwab U.S. Treasury Money Fundtm	15
Schwab Value Advantage Money Fund®	21
Financial Notes	33
Report of Independent Registered Public Accounting Firm	38
Trustees and Officers	39
Glossary	43

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Taxable Money Funds 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

2 Schwab Taxable Money Funds

The Investment Environment and the Funds

Linda Klingman (far right), managing director and portfolio manager, has overall responsibility for the management of the funds.

Karen Wiggan (middle left), managing director and portfolio manager, has overall and day-to-day responsibility for the management of the Government Money and U.S. Treasury Money Funds.

Mike Neitzke (middle right), managing director and portfolio manager, has day-to-day responsibility for management of the Value Advantage Money Fund.

Michael Lin (far left), portfolio manager, has day-to-day responsibility for management of the Value Advantage Money Fund.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was

Schwab Taxable Money Funds 3

The Investment Environment and the Fundscontinued

disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

The reduced liquidity hit SIVs particularly hard. For nearly twenty years, SIVs have been a typical holding in the portfolios of many financial institutions, pension funds, mutual funds, municipalities and money market funds. However, not all SIVs were created equal—a handful of SIVs carried higher risk and had significant subprime investments. When those SIVs were recently unable to meet repayment of their debt obligations in the normal course of business, all SIVs came under scrutiny and the impact was felt throughout the marketplace.

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Government Money Fund maintained a slightly longer weighted average maturity throughout the year, a stance that benefited the fund in a falling rate environment. As the markets reacted to the subprime and credit crisis, we saw an unprecedented flight to quality. Investors looked to put their money in safe havens, namely government-backed agency securities, in an attempt to avoid market volatility. During the latter half of the year, the agencies, in particular the Federal Home Loan Bank, issued at near record levels. Correspondingly, there was a dramatic increase in the supply of agency issuance.

The Schwab U.S. Treasury Money Fund experienced a highly unusual year in response to the credit crisis. The subprime and credit crisis triggered a flight to quality, dramatically increasing net cash inflows to the fund. Much of the new cash inflows occurred during the volatile month of August, but remained positive despite tapering off throughout the remainder of the year. Even with substantial inflows, the fund was able to remain fully invested. Going into August with a longer weighted

4 Schwab Taxable Money Funds

The Investment Environment and the Fundscontinued

average maturity put the fund in a good position to absorb the inflows and manage potential outflows. As new money came in we placed it in short-term positions, but as the markets showed signs of stabilizing we looked toward extending these positions. U.S Treasuries are considered to be securities of the highest quality because they are backed by the full faith and credit of the U.S. government, and are generally seen as a place of safe haven during periods of extreme volatility.

The Schwab Value Advantage Money Fund maintained a weighted average maturity (WAM) that was longer than the peer group throughout the reporting period. In August, ramifications from trouble in the housing and credit markets were made clear as the market experienced unprecedented volatility and uncertainty throughout the third and fourth quarters. In response, we sought to reduce the weighted average maturity and increase the overnight cash position of the fund as a buffer against market volatility. Despite reduction of the WAM, the fund remained long relative to the peer group. Maintaining a longer WAM throughout the year benefited the fund as we were able to lock in higher yielding securities before the Fed lowered rates.

Given the unprecedented volatility in the subprime mortgage market, we focused on reviewing and evaluating our SIV exposure in the second half of the year. As of December 31, 2007, SIV exposure in the Schwab Value Advantage Money Fund was approximately 4.1% of the fund’s net assets (see Financial Note 6).

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

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

Schwab Taxable Money Funds 5

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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.

	Government		U.S. Treasury
	Money Fund		Money Fund		Value Advantage Money Fund
											Institutional
					Investor		Select		Institutional		Prime
					Shares		Shares®		Shares		Sharestm
Ticker Symbol	SWGXX		SWUXX		SWVXX		SWBXX		SWAXX		SNAXX
Seven-Day Yield1		3.93%		3.00%		4.66%		4.76%		4.87%		4.90%
Seven-Day Yield—No Waiver2		3.83%		2.70%		4.53%		4.63%		4.74%		4.76%
Seven-Day Effective Yield1		4.01%		3.05%		4.77%		4.88%		4.99%		5.02%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

	Government	U.S. Treasury	Value Advantage
	Money Fund	Money Fund	Money Fund
Weighted Average Maturity	21 days	72 days	49 days
Credit Quality of Holdings % of portfolio	100% Tier 1	100% Tier 1	100% Tier 1
Minimum Initial Investment3
Sweep Investments®	*	*	n/a
Investor Shares	n/a	n/a	$25,000
($15,000 for IRA and custodial accounts)
Select Shares®	n/a	n/a	$1,000,000
Institutional Shares	n/a	n/a	$3,000,000
Institutional Prime Sharestm	n/a	n/a	$10,000,000

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
3	Please see prospectus for further detail and eligibility requirements.

^*  Subject to the eligibility terms and conditions of your Schwab account agreement.

6 Schwab Taxable Money Funds

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio1		Account Value		(Net of Expenses)		During Period2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab Government Money Fundtm
Actual Return		0.74%	$	1,000	$	1,022.10	$	3.77
Hypothetical 5% Return		0.74%	$	1,000	$	1,021.48	$	3.77
Schwab U.S. Treasury Money Fundtm
Actual Return		0.59%	$	1,000	$	1,019.00	$	3.00
Hypothetical 5% Return		0.59%	$	1,000	$	1,022.23	$	3.01
Schwab Value Advantage Money Fundtm
Investor Shares
Actual Return		0.44%	$	1,000	$	1,024.90	$	2.25
Hypothetical 5% Return		0.44%	$	1,000	$	1,022.99	$	2.24
Select Shares®
Actual Return		0.34%	$	1,000	$	1,025.40	$	1.74
Hypothetical 5% Return		0.34%	$	1,000	$	1,023.49	$	1.73
Institutional Shares
Actual Return		0.24%	$	1,000	$	1,025.90	$	1.23
Hypothetical 5% Return		0.24%	$	1,000	$	1,024.00	$	1.22
Institutional Prime Sharestm
Actual Return		0.21%	$	1,000	$	1,026.10	$	1.07
Hypothetical 5% Return		0.21%	$	1,000	$	1,024.70	$	1.07

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

Schwab Taxable Money Funds 7

Schwab Government Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.04			0.03			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.04	)		(0.04	)		(0.03	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		4.55			4.37			2.52			0.65			0.48
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.74			0.75			0.75			0.75			0.75
Gross operating expenses		0.75			0.84			0.83			0.83			0.83
Net investment income (loss)		4.41			4.31			2.49			0.64			0.49
Net assets, end of period ($ x 1,000,000)		7,544			3,513			2,471			2,535			2,838

¹ Per-share amount was less than $0.01.

8 See financial notes

Schwab Government Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	28	.3%	Federal Agency Securities		2,134,547		2,134,547
	71	.3%	Other Investments		5,376,419		5,376,419
	99	.6%	Total Investments		7,510,966		7,510,966
	0	.4%	Other Assets and Liabilities				33,233
	100	.0%	Net Assets				7,544,199

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Federal Agency Securities 28.3% of net assets
Fixed-Rate Discount Notes 12.3%
Fannie Mae
5.02%, 01/11/08		15,800		15,778
5.03%, 01/24/08		3,240		3,230
4.57%, 02/01/08		124,859		124,374
4.33%, 03/19/08		50,000		49,536
5.24%, 04/10/08		40,000		39,443
4.25%, 04/18/08		50,000		49,372
Federal Farm Credit Bank
4.52%, 01/18/08		32,145		32,077
Federal Home Loan Bank
5.02%, 01/16/08		3,781		3,773
4.70%, 01/30/08		9,325		9,290
4.40%, 02/15/08		50,000		49,728
4.95%, 02/15/08		40,815		40,569
5.05%, 02/20/08		25,000		24,829
4.33%, 03/19/08		75,000		74,304
4.32%, 03/24/08		50,000		49,507
4.24%, 05/23/08		40,000		39,339
4.25%, 05/30/08		13,643		13,406
Freddie Mac
5.13%, 01/07/08		4,308		4,304
4.51%, 01/22/08		50,000		49,870
5.02%, 01/22/08		9,200		9,174
5.12%, 01/22/08		50,000		49,854
5.05%, 02/25/08		50,000		49,624
4.92%, 03/03/08		40,674		40,338
4.30%, 03/07/08		50,000		49,610
4.33%, 03/24/08		60,000		59,407
				930,736
Fixed-Rate Coupon Notes 5.1%
Federal Home Loan Bank
4.65%, 01/25/08		75,000		75,024
4.89%, 02/22/08		50,000		49,979
5.26%, 04/07/08		24,675		24,619
4.73%, 07/25/08		29,125		29,186
4.71%, 10/09/08		40,000		39,996
4.65%, 11/28/08		75,000		75,000
4.55%, 12/04/08		50,000		50,000
4.63%, 12/04/08		40,000		40,000
				383,804
Variable-Rate Coupon Notes 10.9%
Federal Farm Credit Bank
4.86%, 01/16/08		50,000		50,000
Federal Home Loan Bank
4.71%, 02/05/08		100,000		100,000
4.68%, 02/18/08		50,000		50,000
4.79%, 02/18/08		100,000		100,042
4.72%, 02/19/08		50,000		49,997
4.77%, 02/20/08		75,000		75,000
4.80%, 02/20/08		50,000		50,000
4.88%, 02/23/08		50,000		49,995
4.83%, 03/01/08		50,000		49,991
4.92%, 03/04/08		50,000		50,000
4.93%, 03/04/08		50,000		50,000
4.77%, 03/20/08		100,000		99,985
4.69%, 03/26/08		45,000		44,997
				820,007
Total Federal Agency Securities (Cost $2,134,547)				2,134,547
Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 71.3% of net assets
Repurchase Agreements 71.3%
Barclays Capital, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $678,300
4.30%, issued 12/20/07,
due 01/07/08		50,108		50,000
4.40%, issued 12/18/07,
due 01/07/08		50,122		50,000
4.40%, issued 11/13/07,
due 01/07/08		45,303		45,000
4.55%, issued 11/19/07,
due 01/07/08		50,310		50,000
4.55%, issued 11/26/07,
due 01/07/08		50,265		50,000
4.60%, issued 11/07/07,
due 01/07/08		50,390		50,000

See financial notes 9

Schwab Government Money Fund

Portfolio Holdings continued

Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
4.60%, issued 11/13/07,
due 01/07/08		50,351		50,000
4.60%, issued 12/07/07,
due 01/07/08		50,198		50,000
4.65%, issued 11/21/07,
due 01/07/08		100,607		100,000
4.65%, issued 11/26/07,
due 01/07/08		50,271		50,000
4.70%, issued 11/23/07,
due 01/07/08		40,235		40,000
4.70%, issued 11/26/07,
due 01/07/08		50,274		50,000
5.29%, issued 07/17/07,
due 01/07/08		30,767		30,000
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $712,760
4.77%, issued 12/31/07,
due 01/02/08		600,159		600,000
4.46%, issued 11/13/07,
due 01/07/08		50,341		50,000
4.54%, issued 10/22/07,
due 01/07/08		50,486		50,000
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $598,168
4.50%, issued 12/31/07,
due 01/02/08		71,437		71,419
4.80%, issued 12/27/07,
due 01/03/08		15,014		15,000
4.80%, issued 12/28/07,
due 01/04/08		50,047		50,000
4.30%, issued 12/12/07,
due 01/07/08		75,233		75,000
4.53%, issued 10/30/07,
due 01/07/08		50,434		50,000
4.56%, issued 11/06/07,
due 01/07/08		60,471		60,000
4.65%, issued 11/19/07,
due 01/07/08		100,633		100,000
4.51%, issued 10/25/07,
due 01/07/08		75,695		75,000
4.76%, issued 10/16/07,
due 01/07/08		50,549		50,000
4.83%, issued 09/14/07,
due 01/07/08		40,617		40,000
Deutche Bank Securities, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $836,400
4.60%, issued 12/14/07,
due 01/04/08		50,134		50,000
4.95%, issued 12/04/07,
due 01/04/08		45,192		45,000
4.38%, issued 12/14/07,
due 01/07/08		50,146		50,000
4.41%, issued 12/26/07,
due 01/07/08		50,074		50,000
4.52%, issued 10/29/07,
due 01/07/08		75,659		75,000
4.53%, issued 10/31/07,
due 01/07/08		50,428		50,000
4.55%, issued 12/10/07,
due 01/07/08		50,177		50,000
4.60%, issued 12/14/07,
due 01/07/08		50,153		50,000
4.60%, issued 12/11/07,
due 01/07/08		50,173		50,000
4.64%, issued 11/16/07,
due 01/07/08		75,503		75,000
4.72%, issued 10/16/07,
due 01/07/08		50,544		50,000
4.75%, issued 10/10/07,
due 01/07/08		40,470		40,000
4.80%, issued 12/10/07,
due 01/07/08		50,187		50,000
4.85%, issued 12/07/07,
due 01/07/08		50,209		50,000
4.85%, issued 12/06/07,
due 01/07/08		45,194		45,000
5.28%, issued 07/20/07,
due 01/07/08		41,003		40,000
Goldman Sachs & Co.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $1,162,800
3.38%, issued 12/21/07,
due 01/07/08		50,103		50,000
4.30%, issued 12/31/07,
due 01/07/08		60,050		60,000
4.30%, issued 12/31/07,
due 01/07/08		100,084		100,000
4.35%, issued 12/13/07,
due 01/07/08		30,091		30,000
4.36%, issued 12/27/07,
due 01/07/08		50,067		50,000
4.40%, issued 12/17/07,
due 01/07/08		40,103		40,000
4.40%, issued 12/21/07,
due 01/07/08		50,104		50,000
4.40%, issued 12/27/07,
due 01/07/08		100,134		100,000
4.41%, issued 12/28/07,
due 01/07/08		100,122		100,000
4.45%, issued 12/21/07,
due 01/07/08		50,105		50,000
4.45%, issued 12/13/07,
due 01/07/08		40,124		40,000
4.49%, issued 12/26/07,
due 01/07/08		100,150		100,000
4.52%, issued 11/14/07,
due 01/07/08		50,339		50,000
4.55%, issued 12/13/07,
due 01/07/08		40,126		40,000
4.56%, issued 12/17/07,
due 01/07/08		40,106		40,000
4.57%, issued 10/24/07,
due 01/07/08		50,476		50,000
4.58%, issued 10/22/07,
due 01/07/08		75,735		75,000
4.60%, issued 12/17/07,
due 01/07/08		40,107		40,000
4.65%, issued 10/19/07,
due 01/07/08		75,775		75,000

10 See financial notes

Schwab Government Money Fund

Portfolio Holdings continued

Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Morgan Stanley & Co., Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $40,975
5.29%, issued 07/10/07,due 01/07/08		41,064		40,000
UBS Financial Services, Inc.
Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $1,453,551
4.73%, issued 10/03/07,
due 01/03/08		50,604		50,000
4.80%, issued 12/03/07,
due 01/03/08		40,165		40,000
4.56%, issued 11/05/07,
due 01/04/08		40,304		40,000
4.43%, issued 11/09/07,
due 01/07/08		50,363		50,000
4.50%, issued 12/11/07,
due 01/07/08		50,169		50,000
4.51%, issued 11/08/07,
due 01/07/08		100,752		100,000
4.51%, issued 11/09/07,
due 01/07/08		50,370		50,000
4.55%, issued 11/16/07,
due 01/07/08		50,329		50,000
4.55%, issued 11/15/07,
due 01/07/08		75,502		75,000
4.58%, issued 11/19/07,
due 01/07/08		75,468		75,000
4.60%, issued 11/09/07,
due 01/07/08		75,565		75,000
4.60%, issued 11/08/07,
due 01/07/08		60,460		60,000
4.60%, issued 12/04/07,
due 01/07/08		50,217		50,000
4.60%, issued 12/05/07,
due 01/07/08		50,211		50,000
4.62%, issued 11/15/07,
due 01/07/08		75,510		75,000
4.65%, issued 12/05/07,
due 01/07/08		30,128		30,000
4.65%, issued 11/30/07,
due 01/07/08		40,196		40,000
4.66%, issued 10/19/07,
due 01/07/08		50,518		50,000
4.66%, issued 11/20/07,
due 01/07/08		75,466		75,000
4.66%, issued 11/27/07,
due 01/07/08		40,212		40,000
4.66%, issued 11/28/07,
due 01/07/08		40,207		40,000
4.72%, issued 11/27/07,
due 01/07/08		40,215		40,000
4.72%, issued 11/28/07,
due 01/07/08		40,210		40,000
4.77%, issued 10/17/07,
due 01/07/08		50,543		50,000
4.77%, issued 10/17/07,
due 01/07/08		30,326		30,000
4.77%, issued 10/17/07,
due 01/07/08		50,543		50,000
4.77%, issued 10/17/07,
due 01/07/08		50,543		50,000
				5,376,419
Total Other Investments (Cost $5,376,419)				5,376,419
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $7,510,966.

See financial notes 11

Schwab Government Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$2,134,547
Repurchase agreements, at cost and value	+	5,376,419
Total investments, at cost and value		7,510,966
Receivables:
Interest		33,976
Prepaid expenses	+	10
Total assets		7,544,952
Liabilities
Payables:
Investment adviser and administrator fees		219
Transfer agent and shareholder services fees		258
Accrued expenses	+	276
Total liabilities		753
Net Assets
Total assets		7,544,952
Total liabilities	−	753
Net assets		$7,544,199
Net Assets by Source
Capital received from investors		7,544,230
Net realized capital losses		(31	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$7,544,199		7,545,300		$1.00

12 See financial notes

Schwab Government Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$249,270
Net Realized Gains and Losses
Net realized gains on investments		11
Expenses
Investment adviser and administrator fees		15,767
Transfer agent and shareholder service fees		19,333
Registration fees		575
Shareholder reports		317
Portfolio accounting fees		138
Custodian fees		99
Trustees’ fees		39
Professional fees		34
Other expenses	+	30
Total expenses		36,332
Expense reduction by adviser and Schwab	−	347
Net expenses		35,985
Increase (Decrease) in Net Assets from Operations
Total investment income		249,270
Net expenses	−	35,985
Net investment income		213,285
Net realized gains	+	11
Increase in net assets from operations		$213,296

See financial notes 13

Schwab Government Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$213,285	$120,029
Net realized gains	+	11	−
Increase in net assets from operations		213,296	120,029
Distributions to Shareholders
Distributions from net investment income		213,285	120,029
Transactions in Fund Shares*
Shares sold		24,841,616	12,162,150
Shares reinvested		210,283	118,145
Shares redeemed	+	(21,020,623)	(11,237,966)
Net transactions in fund shares		4,031,276	1,042,329
Net Assets
Beginning of period		3,512,912	2,470,583
Total increase	+	4,031,287	1,042,329
End of period		$7,544,199	$3,512,912

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

14 See financial notes

Schwab U.S. Treasury Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.04			0.02			0.01			0.00	1
Less distributions:
Distributions from net investment income		(0.04	)		(0.04	)		(0.02	)		(0.01	)		(0.00	)1
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		4.15			4.18			2.36			0.62			0.49
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.60			0.62			0.64			0.65			0.65
Gross operating expenses		0.75			0.83			0.83			0.82			0.82
Net investment income (loss)		3.90			4.10			2.32			0.61			0.49
Net assets, end of period ($ x 1,000,000)		9,967			3,538			3,574			3,811			4,046

¹ Per-share amount was less than $0.01.

See financial notes 15

Schwab U.S. Treasury Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	101	.8%	U.S. Government Securities		10,144,001		10,144,001
	101	.8%	Total Investments		10,144,001		10,144,001
	(1	.8)%	Other Assets and Liabilities				(177,027	)
	100	.0%	Net Assets				9,966,974

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
U.S. Government Securities 101.8% of net assets
Treasury Notes 19.9%
U.S. Treasury Notes
4.38%, 01/31/08		215,000		214,962
3.00%, 02/15/08		19,545		19,497
3.38%, 02/15/08		51,415		51,445
4.63%, 02/29/08		553,645		554,462
4.63%, 03/31/08		118,845		118,942
4.88%, 04/30/08		330,505		331,552
2.63%, 05/15/08		298,480		296,900
3.75%, 05/15/08		178,260		178,283
5.63%, 05/15/08		100,000		100,500
5.13%, 06/30/08		64,980		65,557
5.00%, 07/31/08		36,215		36,553
4.88%, 08/31/08		14,890		15,030
				1,983,683
U.S. Treasury Bills 81.9%
U.S. Treasury Bills
3.03%, 01/03/08		11,857		11,855
3.08%, 01/03/08		72,275		72,263
3.15%, 01/03/08		150,000		149,974
3.81%, 01/03/08		172,355		172,319
3.91%, 01/03/08		75,000		74,984
3.92%, 01/03/08		1,565		1,565
4.93%, 01/03/08		120,950		120,918
4.94%, 01/03/08		50,000		49,987
4.95%, 01/03/08		90,000		89,976
2.55%, 01/10/08		220,310		220,170
2.72%, 01/10/08		70,287		70,239
3.07%, 01/10/08		27,540		27,519
3.95%, 01/10/08		8,295		8,287
3.99%, 01/10/08		2,160		2,158
4.94%, 01/10/08		5,785		5,778
4.95%, 01/10/08		100,000		99,879
4.96%, 01/10/08		102,075		101,951
2.37%, 01/17/08		200,000		199,789
2.57%, 01/17/08		50,000		49,943
2.60%, 01/17/08		21,025		21,001
2.80%, 01/17/08		83,000		82,897
3.15%, 01/17/08		3,155		3,151
4.03%, 01/17/08		75,000		74,867
4.06%, 01/17/08		75,000		74,866
4.25%, 01/17/08		50,000		49,907
4.96%, 01/17/08		6,475		6,461
4.99%, 01/17/08		25,000		24,946
2.42%, 01/24/08		100,000		99,846
2.47%, 01/24/08		200,000		199,686
2.66%, 01/24/08		39,140		39,074
2.76%, 01/24/08		50,000		49,912
4.13%, 01/24/08		42,935		42,823
4.84%, 01/24/08		30,715		30,622
5.00%, 01/24/08		80,000		79,750
5.01%, 01/24/08		40,000		39,875
2.41%, 01/31/08		145,000		144,710
2.60%, 01/31/08		50,000		49,892
3.71%, 01/31/08		75,000		74,772
3.81%, 01/31/08		40,000		39,875
3.94%, 01/31/08		150,000		149,512
2.69%, 02/07/08		50,000		49,862
3.24%, 02/07/08		100,000		99,669
3.65%, 02/07/08		50,000		49,814
3.92%, 02/07/08		75,000		74,703
3.94%, 02/07/08		30,000		29,880
4.52%, 02/07/08		50,000		49,773
4.55%, 02/07/08		35,000		34,840
4.76%, 02/07/08		50,000		49,761
2.81%, 02/14/08		150,000		149,487
3.24%, 02/14/08		100,000		99,607
3.33%, 02/14/08		150,000		149,395
3.34%, 02/14/08		200,000		199,191
3.45%, 02/14/08		75,000		74,686
4.26%, 02/14/08		10,000		9,949
4.35%, 02/14/08		50,000		49,740
4.84%, 02/14/08		150,000		149,135
3.13%, 02/21/08		40,000		39,824
3.36%, 02/21/08		43,700		43,494
4.03%, 02/21/08		16,495		16,403
3.26%, 02/28/08		125,000		124,348
3.32%, 02/28/08		200,000		198,940
4.47%, 02/28/08		100,000		99,296
4.50%, 02/28/08		50,000		49,646
4.69%, 02/28/08		50,000		49,631
3.11%, 03/06/08		300,000		298,326
3.12%, 03/06/08		200,000		198,881
3.13%, 03/06/08		11,510		11,445
4.34%, 03/06/08		4,140		4,108
4.35%, 03/06/08		50,000		49,615
4.38%, 03/06/08		30,000		29,768
4.51%, 03/06/08		40,000		39,681

16 See financial notes

Schwab U.S. Treasury Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
4.15%, 03/13/08		40,000		39,674
4.16%, 03/13/08		100,000		99,186
4.17%, 03/13/08		50,000		49,592
4.25%, 03/13/08		35,000		34,709
4.31%, 03/13/08		40,000		39,662
2.86%, 03/20/08		100,000		99,377
2.91%, 03/20/08		100,000		99,367
3.02%, 03/20/08		85,000		84,440
4.14%, 03/20/08		50,000		49,556
4.16%, 03/20/08		50,000		49,553
4.20%, 03/20/08		40,000		39,639
4.05%, 03/27/08		40,000		39,621
3.29%, 04/03/08		100,000		99,176
3.07%, 04/10/08		100,000		99,157
3.08%, 04/10/08		100,000		99,153
3.19%, 05/01/08		43,605		43,143
3.15%, 05/15/08		50,000		49,417
3.27%, 05/22/08		50,000		49,365
3.39%, 05/22/08		50,000		49,343
3.53%, 05/22/08		50,000		49,316
3.16%, 05/29/08		100,000		98,713
3.26%, 05/29/08		50,000		49,335
3.31%, 05/29/08		4,845		4,780
3.41%, 05/29/08		50,000		49,307
3.44%, 05/29/08		150,000		147,900
3.16%, 06/05/08		7,975		7,867
3.20%, 06/05/08		50,000		49,317
3.21%, 06/05/08		50,000		49,316
3.20%, 06/12/08		200,000		197,152
3.24%, 06/12/08		100,000		98,556
3.25%, 06/12/08		175,000		172,464
3.23%, 06/19/08		300,000		295,495
3.27%, 06/19/08		100,000		98,482
3.44%, 07/03/08		100,000		98,291
				8,160,318
Total U.S. Government Securities (Cost $10,144,001)				10,144,001
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $10,144,001.

See financial notes 17

Schwab U.S. Treasury Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$10,144,001
Cash		1
Receivables:
Interest		21,219
Prepaid expenses	+	8
Total assets		10,165,229
Liabilities
Payables:
Investments bought		197,467
Investment adviser and administrator fees		138
Transfer agent and shareholder services fees		341
Accrued expenses	+	309
Total liabilities		198,255
Net Assets
Total assets		10,165,229
Total liabilities	−	198,255
Net assets		$9,966,974
Net Assets by Source
Capital received from investors		9,967,440
Net realized capital losses		(466	)

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$9,966,974		9,967,649		$1.00

18 See financial notes

Schwab U.S. Treasury Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$237,994
Net Realized Gains and Losses
Net realized gains on investments		605
Expenses
Investment adviser and administrator fees		17,233
Transfer agent and shareholder service fees		21,166
Registration fees		843
Shareholder reports		160
Portfolio accounting fees		140
Custodian fees		101
Trustees’ fees		40
Professional fees		34
Other expenses	+	31
Total expenses		39,748
Expense reduction by adviser and Schwab	−	8,078
Custody credits	−	1
Net expenses		31,669
Increase (Decrease) in Net Assets from Operations
Total investment income		237,994
Net expenses	−	31,669
Net investment income		206,325
Net realized gains	+	605
Increase in net assets from operations		$206,930

See financial notes 19

Schwab U.S. Treasury Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$206,325	$140,319
Net realized gains (losses)	+	605	(116)
Increase in net assets from operations		206,930	140,203
Distributions to Shareholders
Distributions from net investment income		206,325	140,319
Transactions in Fund Shares*
Shares sold		27,832,003	13,136,670
Shares reinvested		203,898	138,181
Shares redeemed	+	(21,607,350)	(13,311,312)
Net transactions in fund shares		6,428,551	(36,461)
Net Assets
Beginning of period		3,537,818	3,574,395
Total increase (decrease)	+	6,429,156	(36,577)
End of period		$9,966,974	$3,537,818

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

20 See financial notes

Schwab Value Advantage Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Investor Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.05			0.03			0.01			0.01
Less distributions:
Distributions from net investment income		(0.05	)		(0.05	)		(0.03	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		5.01			4.72			2.86			0.98			0.80
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.45			0.45			0.45			0.45			0.45
Gross operating expenses		0.55			0.57			0.56			0.56			0.55
Net investment income (loss)		4.89			4.65			2.83			0.97			0.81
Net assets, end of period ($ x 1,000,000)		43,248			33,206			24,112			23,365			28,860

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			2/28/03-1
Select Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.05			0.03			0.01			0.01
Less distributions:
Distributions from net investment income		(0.05	)		(0.05	)		(0.03	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		5.12			4.82			2.96			1.09			0.72	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.35			0.35			0.35			0.35			0.35	3
Gross operating expenses		0.45			0.53			0.56			0.56			0.55	3
Net investment income (loss)		4.99			4.79			3.03			1.10			0.83	3
Net asset, end of period ($ x 1,000,000)		7,453			5,158			2,325			1,209			1,013

¹ Commencement of operations.

² Not annualized.

³ Annualized.

See financial notes 21

Financial Highlights continued

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
Institutional Shares	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.05			0.03			0.01			0.01
Less distributions:
Distributions from net investment income		(0.05	)		(0.05	)		(0.03	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		5.23			4.94			3.08			1.20			1.01
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.24			0.24			0.24			0.24			0.24
Gross operating expenses		0.34			0.49			0.56			0.56			0.55
Net investment income (loss)		5.10			4.90			3.11			1.20			1.00
Net assets, end of period ($ x 1,000,000)		4,748			3,817			1,929			1,054			720

	1/1/07-			10/5/06-1
Institutional Prime Shares	12/31/07			12/31/06
Per—Share Data ($)
Net asset value at beginning of period		1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.01
Less Distributions:
Distribution from investment income		(0.05	)		(0.01	)
Net asset value at end of period		1.00			1.00
Total return (%)		5.26			1.25	2
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.21			0.21	3
Gross operating expenses		0.32			0.36	3
Net investment income (loss)		5.12			5.18	3
Net assets, end of period ($ x 1,000,000)		4,235			1,693

¹ Commencement of operations.

² Not annualized.

³ Annualized.

22 See financial notes

Schwab Value Advantage Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	79	.4%	Fixed-Rate Obligations		47,358,993		47,358,993
	13	.4%	Variable-Rate Obligations		8,016,478		8,016,478
	6	.6%	Other Investments		3,959,643		3,959,643
	99	.4%	Total Investments		59,335,114		59,335,114
	0	.6%	Other Assets and Liabilities				349,215
	100	.0%	Net Assets				59,684,329

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fixed-Rate Obligations 79.4% of net assets
Certificates of Deposit 34.8%
ABN AMRO Bank N.V.
5.34%, 02/04/08		263,000		263,000
Alliance & Leicester PLC
5.32%, 04/18/08		7,000		7,000
Allied Irish Bank PLC
4.80%, 04/28/08		74,000		74,000
4.73%, 04/28/08		153,000		153,000
American Express Bank FSB
5.15%, 02/28/08		174,000		174,000
American Express Centurion Bank
5.25%, 03/07/08		172,000		172,000
Banco Bilbao Vizcaya Argentaria S.A.
5.25%, 01/02/08		80,000		80,000
5.23%, 01/09/08		119,000		119,000
5.23%, 01/10/08		433,000		433,000
5.24%, 01/15/08		9,000		9,000
5.15%, 02/29/08		40,000		40,000
Bank of Ireland
5.32%, 01/23/08		55,000		55,000
4.85%, 03/26/08		30,000		30,000
5.20%, 04/11/08		123,000		123,000
4.77%, 05/09/08		39,000		39,000
Bank of Montreal
5.35%, 01/22/08		89,000		89,000
4.80%, 03/06/08		55,000		55,000
5.37%, 03/20/08		120,000		120,000
Bank of Scotland PLC
5.15%, 02/26/08		113,000		113,000
5.05%, 03/17/08		50,000		50,000
5.00%, 03/31/08		19,000		19,000
Bank of Tokyo Mitsubishi UFJ, Ltd.
5.15%, 01/17/08		111,000		111,000
5.15%, 01/18/08		193,000		193,000
5.15%, 01/22/08		350,000		350,000
5.12%, 02/19/08		100,000		100,000
Barclays Bank PLC
5.32%, 02/22/08		12,000		12,000
4.98%, 03/04/08		69,000		69,031
5.25%, 03/05/08		400,000		400,000
5.47%, 03/13/08		210,000		210,000
5.34%, 04/03/08		152,000		152,001
4.87%, 04/09/08		27,000		27,022
5.16%, 04/09/08		19,000		19,000
5.21%, 04/14/08		137,000		137,000
5.10%, 04/17/08		147,000		146,986
5.07%, 04/17/08		17,000		17,000
5.09%, 04/17/08		30,000		30,001
4.89%, 04/18/08		79,250		79,276
4.97%, 04/18/08		100,000		100,014
4.73%, 04/24/08		12,000		12,000
5.11%, 05/06/08		73,000		73,000
5.14%, 06/19/08		100,000		100,105
Bayerische Hypo-und Vereinsbank AG
5.20%, 02/28/08		57,000		57,001
BNP Paribas
5.35%, 01/22/08		138,000		138,000
5.00%, 03/18/08		229,000		229,000
4.64%, 05/30/08		673,000		673,000
4.75%, 06/19/08		172,000		172,000
4.80%, 06/25/08		100,000		100,000
4.75%, 06/26/08		535,000		535,000
Calyon
5.31%, 01/31/08		98,000		98,000
5.38%, 04/11/08		39,000		39,000
Canadian Imperial Bank of Commerce
5.28%, 02/07/08		39,000		39,000
5.09%, 03/17/08		100,000		100,000
5.76%, 05/12/08		32,000		32,000
Citibank, N.A.
4.86%, 01/23/08		112,000		112,000
4.88%, 02/14/08		100,000		100,000
Commerzbank AG
5.26%, 01/09/08		210,000		210,000
4.81%, 02/05/08		20,000		20,000
Credit Agricole S.A.
5.30%, 01/15/08		264,000		264,000
5.35%, 01/18/08		17,000		17,000
4.90%, 01/28/08		399,000		399,000
4.91%, 04/01/08		500,000		500,000
4.83%, 04/02/08		129,000		129,000
5.37%, 04/09/08		31,000		31,000
Credit Suisse
5.56%, 03/10/08		571,000		571,000
5.37%, 03/20/08		170,000		170,000
DePfa Bank PLC
5.46%, 02/12/08		25,000		25,000

See financial notes 23

Schwab Value Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
5.37%, 02/20/08		65,000		65,000
Dexia Credit Local S.A.
4.88%, 01/04/08		94,000		94,000
4.82%, 01/11/08		440,000		440,001
DnB NOR Bank ASA
5.64%, 01/10/08		25,000		25,000
5.03%, 01/24/08		50,000		50,000
5.15%, 02/28/08		100,000		100,000
Dresdner Bank AG
5.35%, 01/14/08		48,000		48,000
5.35%, 01/17/08		100,000		100,000
Fortis Bank
5.34%, 03/04/08		66,000		66,000
HBOS Treasury Services PLC
5.64%, 01/10/08 (a)		50,000		50,000
5.31%, 02/22/08 (a)		19,000		19,000
5.34%, 03/03/08 (a)		20,000		20,000
HSBC Bank PLC
4.75%, 04/14/08		370,000		370,005
ING Bank N.V.
4.84%, 02/01/08		408,000		408,000
4.81%, 02/06/08		29,000		29,000
4.79%, 03/03/08		467,000		467,000
Intesa Sanpaolo
5.17%, 01/16/08		53,000		53,000
5.12%, 01/31/08		50,000		50,000
5.01%, 03/14/08		100,000		100,000
KBC Bank N.V.
5.13%, 01/30/08		170,000		170,000
5.12%, 02/27/08		20,000		20,000
Lloyds TSB Bank PLC
4.80%, 01/29/08		584,000		584,000
Mitsubishi UFJ Trust & Banking Corp.
4.85%, 02/05/08		30,000		30,000
4.91%, 02/12/08		5,000		5,000
Mizuho Corporate Bank Ltd.
5.40%, 01/02/08		25,000		25,000
4.88%, 01/04/08		364,000		364,000
Nationwide Building Society
5.15%, 02/29/08		35,000		35,000
5.32%, 05/13/08		100,000		100,000
5.30%, 05/14/08		6,000		6,000
Natixis S.A.
4.81%, 02/06/08		227,000		227,000
Norinchukin Bank Ltd.
5.03%, 01/25/08		15,000		15,000
5.36%, 01/28/08		256,000		255,999
4.82%, 02/06/08		8,000		8,000
Royal Bank of Canada
5.34%, 02/04/08		175,000		175,000
Royal Bank of Scotland PLC
5.16%, 01/18/08		106,000		106,000
4.80%, 03/07/08		107,000		107,000
4.92%, 06/06/08		10,000		10,000
Skandinaviska Enskilda Banken AB
5.37%, 03/17/08		139,000		139,000
5.20%, 04/10/08		47,000		47,000
4.80%, 04/24/08		90,000		90,000
4.90%, 05/23/08		14,000		14,000
4.91%, 05/28/08		188,000		188,000
Societe Generale
5.23%, 01/09/08		183,000		183,000
5.18%, 01/16/08		70,000		70,000
5.17%, 01/18/08		84,000		84,000
5.20%, 01/31/08		66,000		66,002
4.84%, 02/01/08		76,000		76,000
5.20%, 02/08/08		163,000		163,000
5.14%, 02/20/08		10,000		10,000
5.39%, 03/12/08		19,000		19,000
5.13%, 03/13/08		155,000		155,002
5.37%, 03/26/08		50,000		50,000
5.34%, 04/07/08		56,000		56,000
4.96%, 04/17/08		20,000		20,000
4.80%, 06/10/08		10,000		10,000
4.78%, 06/20/08		20,000		20,000
4.81%, 06/24/08		289,000		289,000
Sumitomo Mitsui Banking Corp.
4.85%, 01/04/08		110,000		110,000
4.85%, 01/07/08		150,000		150,000
4.84%, 01/08/08		206,000		206,000
4.85%, 01/08/08		100,000		100,000
4.85%, 01/09/08		200,000		200,000
4.86%, 01/14/08		92,000		92,000
5.14%, 01/30/08		8,000		8,000
Sumitomo Trust & Banking Co.
5.44%, 01/16/08		70,000		70,000
5.37%, 01/22/08		79,000		79,000
5.12%, 02/21/08		107,000		107,000
5.40%, 04/11/08		54,000		54,000
4.81%, 06/20/08		44,000		44,000
5.12%, 07/14/08		30,000		30,000
Svenska Handelsbanken AB
5.05%, 01/24/08		283,000		283,000
Toronto Dominion Bank
5.34%, 02/04/08		100,000		100,000
5.02%, 03/12/08		38,000		38,000
5.34%, 03/28/08		75,000		75,000
4.78%, 06/23/08		300,000		300,000
UBS AG
4.99%, 02/04/08		330,000		330,057
4.98%, 03/18/08		168,000		168,000
5.40%, 04/14/08		136,000		136,000
5.35%, 04/15/08		265,000		265,000
4.70%, 05/09/08		130,000		130,000
5.27%, 05/12/08		10,000		10,000
5.28%, 05/13/08		270,000		270,000
4.90%, 06/02/08		43,000		43,000
Unicredito Italiano S.p.A.
5.36%, 01/11/08		17,000		17,000
5.35%, 01/18/08		38,000		38,000
5.37%, 03/18/08		10,000		10,000
4.93%, 06/04/08		387,000		387,000
4.80%, 06/27/08		200,000		200,000
Union Bank of California
5.13%, 02/15/08		200,000		200,000
4.77%, 03/05/08		13,000		13,000
Wachovia Bank, N.A.
5.40%, 03/27/08		100,000		100,000
Westpac Banking Corp.
5.12%, 02/19/08		350,000		350,002
5.37%, 04/10/08		76,000		76,000
5.36%, 04/23/08		79,000		78,990
Wilmington Trust Co.
4.90%, 06/19/08		56,000		56,000
				20,785,495

24 See financial notes

Schwab Value Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Commercial Paper & Other Corporate Obligations 43.2%
Alpine Securitization Corp.
5.92%, 01/11/08 (a)(b)(c)		34,000		33,944
4.95%, 01/14/08 (a)(b)(c)		158,000		157,720
4.80%, 01/14/08 (a)(b)(c)		27,000		26,918
Amstel Funding Corp.
4.95%, 01/09/08 (b)(c)		32,201		32,166
5.34%, 01/18/08 (b)(c)		60,464		60,315
4.96%, 01/22/08 (b)(c)		35,799		35,696
4.86%, 01/29/08 (b)(c)		66,000		65,754
4.87%, 01/31/08 (b)(c)		241,385		240,417
5.12%, 02/19/08 (b)(c)		18,000		17,876
5.35%, 02/20/08 (b)(c)		130,000		129,047
5.37%, 03/13/08 (b)(c)		158,865		157,181
5.38%, 03/27/08 (b)(c)		15,000		14,810
5.16%, 04/15/08 (b)(c)		133,000		131,033
Amsterdam Funding Corp.
5.15%, 01/17/08 (a)(b)(c)		83,000		82,813
5.01%, 02/15/08 (a)(b)(c)		9,000		8,944
Anglo Irish Bank Corp. PLC
5.35%, 01/02/08 (c)		25,000		24,996
5.36%, 01/10/08 (c)		43,000		42,944
5.07%, 01/24/08 (c)		49,000		48,843
5.50%, 03/12/08 (c)		43,000		42,547
ANZ National (Int’l) Ltd.
5.36%, 01/14/08 (a)		14,000		13,974
Aquinas Funding, L.L.C.
5.35%, 01/09/08 (a)(b)(c)		15,000		14,983
5.09%, 01/30/08 (a)(b)(c)		17,000		16,931
4.86%, 02/05/08 (a)(b)(c)		8,000		7,963
5.25%, 02/20/08 (a)(b)(c)		55,000		54,607
5.07%, 02/21/08 (a)(b)(c)		30,000		29,787
5.46%, 02/27/08 (a)(b)(c)		34,000		33,710
5.48%, 02/28/08 (a)(b)(c)		37,000		36,678
5.66%, 03/18/08 (a)(b)(c)		15,000		14,824
5.22%, 04/03/08 (a)(b)(c)		20,732		20,459
Atlantic Asset Securitization, L.L.C.
4.89%, 01/07/08 (a)(b)(c)		21,484		21,467
5.53%, 01/08/08 (a)(b)(c)		71,000		70,924
4.85%, 01/14/08 (a)(b)(c)		10,530		10,512
4.85%, 01/16/08 (a)(b)(c)		81,328		81,165
4.93%, 01/16/08 (a)(b)(c)		157,000		156,681
4.96%, 02/11/08 (a)(b)(c)		5,000		4,972
4.96%, 02/12/08 (a)(b)(c)		78,000		77,554
4.95%, 02/15/08 (a)(b)(c)		113,320		112,629
5.12%, 02/21/08 (a)(b)(c)		87,000		86,378
5.48%, 02/28/08 (a)(b)(c)		29,341		29,086
5.49%, 02/28/08 (a)(b)(c)		72,625		71,991
5.72%, 02/29/08 (a)(b)(c)		50,000		49,537
5.59%, 03/13/08 (a)(b)(c)		33,000		32,637
Atlantis One Funding Corp.
4.85%, 01/02/08 (b)(c)		120,000		119,984
4.85%, 01/03/08 (b)(c)		350,000		349,906
5.35%, 01/18/08 (b)(c)		154,000		153,621
5.13%, 01/23/08 (b)(c)		250,000		249,227
5.34%, 01/25/08 (b)(c)		38,013		37,881
5.37%, 02/14/08 (b)(c)		200,000		198,734
5.43%, 03/18/08 (b)(c)		9,000		8,897
5.11%, 04/21/08 (b)(c)		3,000		2,954
4.78%, 05/08/08 (b)(c)		42,000		41,303
Bank of America Corp.
5.09%, 02/13/08		669,000		665,001
5.09%, 02/20/08		238,000		236,347
4.70%, 05/05/08		224,000		220,425
Bank of Ireland
5.35%, 01/14/08 (c)		19,000		18,964
5.42%, 01/16/08 (c)		21,000		20,954
4.79%, 01/28/08 (c)		84,000		83,702
5.20%, 02/12/08 (c)		45,000		44,732
Barclays US Funding Corp.
4.85%, 03/25/08 (a)		7,000		6,922
Barton Capital L.L.C.
4.94%, 01/02/08 (a)(b)(c)		24,000		23,997
5.53%, 01/02/08 (a)(b)(c)		9,000		8,999
4.92%, 01/04/08 (a)(b)(c)		9,000		8,996
6.24%, 01/09/08 (a)(b)(c)		71,000		70,902
5.07%, 02/05/08 (a)(b)(c)		26,000		25,873
Cancara Asset Securitisation, L.L.C.
5.53%, 01/02/08 (a)(b)(c)		7,000		6,999
5.31%, 01/07/08 (a)(b)(c)		57,000		56,950
5.36%, 01/08/08 (a)(b)(c)		7,000		6,993
5.29%, 01/11/08 (a)(b)(c)		7,000		6,990
5.28%, 01/14/08 (a)(b)(c)		211,000		210,604
5.29%, 01/15/08 (a)(b)(c)		24,000		23,951
5.22%, 01/22/08 (a)(b)(c)		106,000		105,682
5.00%, 01/29/08 (a)(b)(c)		13,000		12,950
4.85%, 02/15/08 (a)(b)(c)		5,000		4,970
5.32%, 03/14/08 (a)(b)(c)		330,000		326,487
5.04%, 03/19/08 (a)(b)(c)		7,000		6,925
Chariot Funding, L.L.C.
5.48%, 01/02/08 (a)(b)(c)		100,000		99,985
5.48%, 01/04/08 (a)(b)(c)		232,064		231,959
5.67%, 01/08/08 (a)(b)(c)		128,062		127,921
5.94%, 01/11/08 (a)(b)(c)		53,278		53,191
5.41%, 01/30/08 (a)(b)(c)		91,000		90,607
5.45%, 01/30/08 (a)(b)(c)		82,000		81,643
5.06%, 04/17/08 (a)(b)(c)		100,760		99,272
Citigroup Funding, Inc.
4.88%, 01/03/08 (a)		163,000		162,956
4.80%, 01/16/08 (a)		219,000		218,567
5.18%, 01/18/08 (a)		100,000		99,759
5.34%, 01/23/08 (a)		93,000		92,704
5.34%, 01/24/08 (a)		100,000		99,668
5.35%, 01/25/08 (a)		200,000		199,306
5.35%, 01/28/08 (a)		60,000		59,766
4.84%, 01/30/08 (a)		200,000		199,231
4.85%, 02/06/08 (a)		41,000		40,804
4.80%, 02/15/08 (a)		150,000		149,113
5.35%, 02/25/08 (a)		183,000		181,545
4.80%, 02/26/08 (a)		250,000		248,161
4.83%, 03/07/08 (a)		74,000		73,356
5.56%, 03/11/08 (a)		218,000		215,710
5.51%, 03/24/08 (a)		28,000		27,655
Clipper Receivables Co., L.L.C.
6.08%, 01/02/08 (a)(b)(c)		260,000		259,956
6.24%, 01/11/08 (a)(b)(c)		83,000		82,857
4.94%, 02/01/08 (a)(b)(c)		229,000		228,038
4.93%, 02/05/08 (a)(b)(c)		174,000		173,176
4.94%, 02/05/08 (a)(b)(c)		140,000		139,336
Concord Minuteman Capital Co., Series A
5.35%, 01/03/08 (a)(b)(c)		97,752		97,724
5.35%, 01/14/08 (a)(b)(c)		102,773		102,580

See financial notes 25

Schwab Value Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Danske Corp.
5.30%, 02/22/08 (a)(c)		115,000		114,154
DnB NOR Bank ASA
5.02%, 03/12/08		161,000		159,425
5.05%, 04/15/08		54,000		53,224
Fairway Finance Co., L.L.C.
4.94%, 02/05/08 (a)(b)(c)		83,000		82,606
5.06%, 02/14/08 (a)(b)(c)		13,000		12,921
5.51%, 02/14/08 (a)(b)(c)		5,000		4,967
5.34%, 02/15/08 (a)(b)(c)		23,000		22,848
5.34%, 02/22/08 (a)(b)(c)		50,000		49,619
Falcon Asset Securitization Corp.
5.07%, 01/10/08 (a)(b)(c)		124,000		123,844
5.41%, 01/31/08 (a)(b)(c)		209,456		208,520
5.12%, 02/21/08 (a)(b)(c)		210,000		208,498
5.33%, 02/25/08 (a)(b)(c)		202,840		201,210
5.32%, 02/27/08 (a)(b)(c)		145,000		143,795
5.06%, 04/17/08 (a)(b)(c)		37,164		36,615
Gemini Securitization Corp., L.L.C.
5.28%, 01/07/08 (a)(b)(c)		80,000		79,931
5.15%, 01/16/08 (a)(b)(c)		38,000		37,920
5.12%, 01/17/08 (a)(b)(c)		16,000		15,964
4.86%, 01/31/08 (a)(b)(c)		7,000		6,972
4.92%, 02/05/08 (a)(b)(c)		13,000		12,939
4.91%, 02/07/08 (a)(b)(c)		130,000		129,352
5.14%, 02/20/08 (a)(b)(c)		54,000		53,620
5.48%, 02/29/08 (a)(b)(c)		103,000		102,088
5.32%, 03/05/08 (a)(b)(c)		22,000		21,795
5.27%, 03/19/08 (a)(b)(c)		3,000		2,966
General Electric Capital Corp.
5.32%, 02/19/08		231,000		229,390
5.38%, 03/04/08		12,000		11,891
5.33%, 03/20/08		15,000		14,831
Grampian Funding, L.L.C.
5.15%, 02/11/08 (a)(b)(c)		50,750		50,457
4.84%, 03/06/08 (a)(b)(c)		9,000		8,923
5.21%, 03/31/08 (a)(b)(c)		228,000		225,107
5.22%, 04/02/08 (a)(b)(c)		63,000		62,181
5.26%, 04/07/08 (a)(b)(c)		144,000		142,013
5.24%, 04/07/08 (a)(b)(c)		147,000		144,976
5.24%, 04/08/08 (a)(b)(c)		68,500		67,547
5.02%, 04/18/08 (a)(b)(c)		50,000		49,266
4.79%, 04/25/08 (a)(b)(c)		26,000		25,611
Greenwich Capital Holdings, Inc.
4.82%, 06/16/08 (a)		41,000		40,104
4.80%, 06/30/08 (a)		50,000		48,823
Intesa Funding, L.L.C.
5.23%, 01/15/08 (a)		198,000		197,603
5.07%, 01/16/08 (a)		123,000		122,743
5.12%, 01/31/08 (a)		50,000		49,789
Irish Life & Permanent PLC
5.35%, 01/16/08 (c)		41,000		40,911
J.P. Morgan Chase & Co.
5.02%, 04/18/08		540,000		532,078
Jupiter Securitization Corp.
5.33%, 03/03/08 (a)(b)(c)		102,856		101,926
K2 (USA), L.L.C.
5.34%, 01/24/08 (b)(c)(d)		21,000		20,930
5.42%, 07/15/08 (b)(c)(d)		44,000		44,000
KBC Financial Products International, Ltd.
5.39%, 02/21/08 (a)(c)		23,000		22,829
5.39%, 03/12/08 (a)(c)		70,000		69,275
Mont Blanc Capital Corp.
4.92%, 01/07/08 (a)(b)(c)		87,000		86,929
5.25%, 01/09/08 (a)(b)(c)		23,000		22,974
5.04%, 01/24/08 (a)(b)(c)		25,000		24,920
5.27%, 02/22/08 (a)(b)(c)		74,000		73,444
Morgan Stanley
5.19%, 03/31/08		100,000		98,737
5.17%, 04/07/08		375,000		369,918
5.16%, 04/08/08		54,000		53,262
5.20%, 04/14/08		22,000		21,678
5.21%, 04/22/08		24,000		23,621
4.91%, 04/29/08		67,000		65,939
4.80%, 05/12/08		200,000		196,568
4.84%, 05/12/08		50,000		49,135
Nationwide Building Society U.S.
5.35%, 01/16/08		50,000		49,891
5.10%, 01/24/08		76,000		75,756
5.20%, 02/27/08		200,000		198,375
5.28%, 03/03/08		118,000		116,942
Nieuw Amsterdam Receivables Corp.
5.18%, 03/27/08 (a)(b)(c)		124,000		122,504
5.19%, 03/31/08 (a)(b)(c)		108,000		106,636
Old Line Funding, L.L.C.
6.23%, 01/08/08 (a)(b)(c)		150,000		149,819
5.01%, 01/10/08 (a)(b)(c)		42,426		42,373
4.94%, 02/11/08 (a)(b)(c)		79,158		78,718
4.98%, 02/11/08 (a)(b)(c)		204,846		203,698
4.94%, 02/12/08 (a)(b)(c)		47,466		47,196
5.00%, 02/13/08 (a)(b)(c)		57,295		56,957
5.01%, 02/13/08 (a)(b)(c)		37,000		36,781
5.29%, 02/20/08 (a)(b)(c)		115,000		114,166
5.09%, 02/22/08 (a)(b)(c)		14,000		13,898
5.14%, 02/22/08 (a)(b)(c)		41,000		40,700
5.48%, 02/27/08 (a)(b)(c)		10,000		9,914
5.29%, 02/27/08 (a)(b)(c)		18,045		17,896
5.48%, 03/04/08 (a)(b)(c)		50,641		50,162
5.14%, 03/19/08 (a)(b)(c)		30,519		30,185
Park Avenue Receivables Co., L.L.C.
5.33%, 01/30/08 (a)(b)(c)		343,000		341,544
5.12%, 02/22/08 (a)(b)(c)		14,000		13,898
Picaros Funding, L.L.C.
5.29%, 01/08/08 (a)(b)(c)		96,000		95,903
5.21%, 04/07/08 (a)(b)(c)		80,000		78,905
5.23%, 04/08/08 (a)(b)(c)		117,000		115,376
Ranger Funding Co., L.L.C.
5.14%, 01/07/08 (a)(b)(c)		149,557		149,430
5.40%, 01/24/08 (a)(b)(c)		120,000		119,590
5.42%, 01/29/08 (a)(b)(c)		124,077		123,559
5.43%, 01/31/08 (a)(b)(c)		103,902		103,436
5.61%, 02/22/08 (a)(b)(c)		155,089		153,846
5.12%, 02/25/08 (a)(b)(c)		100,000		99,228
4.91%, 03/14/08 (a)(b)(c)		124,101		122,886
5.05%, 03/19/08 (a)(b)(c)		157,000		155,309
5.05%, 04/11/08 (a)(b)(c)		19,000		18,735
5.08%, 04/11/08 (a)(b)(c)		96,766		95,409
5.14%, 04/11/08 (a)(b)(c)		10,362		10,215
5.09%, 04/18/08 (a)(b)(c)		137,673		135,608
Royal Bank of Scotland PLC
4.99%, 01/28/08		20,000		19,926
4.74%, 04/11/08		55,000		54,282
Scaldis Capital Ltd.
5.31%, 01/07/08 (a)(b)(c)		87,850		87,773
5.15%, 01/23/08 (a)(b)(c)		175,000		174,457

26 See financial notes

Schwab Value Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
5.22%, 01/24/08 (a)(b)(c)		117,000		116,615
5.10%, 01/25/08 (a)(b)(c)		30,000		29,899
5.13%, 01/25/08 (a)(b)(c)		315,000		313,937
4.93%, 02/08/08 (a)(b)(c)		16,000		15,918
5.00%, 02/14/08 (a)(b)(c)		45,000		44,728
5.25%, 03/20/08 (a)(b)(c)		50,000		49,438
5.19%, 03/25/08 (a)(b)(c)		54,000		53,357
Sedna Finance, Inc.
5.41%, 06/13/08 (b)(c)		19,000		19,000
Sheffield Receivables Corp.
5.02%, 01/14/08 (a)(b)(c)		129,710		129,477
5.07%, 01/15/08 (a)(b)(c)		85,000		84,834
5.03%, 01/23/08 (a)(b)(c)		32,000		31,903
5.03%, 01/25/08 (a)(b)(c)		50,000		49,834
4.92%, 02/07/08 (a)(b)(c)		174,000		173,131
5.03%, 02/08/08 (a)(b)(c)		50,000		49,738
Sigma Finance, Inc.
5.35%, 01/03/08 (b)(c)		69,000		68,980
5.40%, 03/12/08 (b)(c)(d)		10,000		9,898
5.38%, 04/09/08 (b)(c)(d)		69,000		68,020
Skandinaviska Enskilda Banken AB
4.78%, 02/01/08		4,000		3,984
5.04%, 03/19/08		6,000		5,936
4.81%, 03/28/08		5,000		4,943
4.86%, 04/21/08		85,000		83,756
Solitaire Funding, L.L.C.
5.29%, 01/04/08 (a)(b)(c)		55,000		54,976
5.15%, 01/18/08 (a)(b)(c)		19,000		18,954
5.13%, 01/25/08 (a)(b)(c)		200,000		199,325
4.86%, 01/30/08 (a)(b)(c)		27,000		26,896
4.95%, 02/08/08 (a)(b)(c)		200,000		198,968
5.09%, 02/19/08 (a)(b)(c)		79,000		78,460
5.14%, 02/20/08 (a)(b)(c)		91,000		90,359
5.58%, 03/04/08 (a)(b)(c)		60,000		59,422
5.11%, 04/17/08 (a)(b)(c)		9,000		8,866
Swedbank AB
5.34%, 01/09/08		10,000		9,988
5.16%, 01/17/08		24,000		23,946
5.49%, 03/11/08		289,000		285,999
Swedbank Mortgage AB
4.94%, 03/25/08		5,000		4,944
4.87%, 03/26/08		10,000		9,887
5.22%, 04/10/08		19,000		18,732
4.87%, 06/17/08		18,000		17,601
4.87%, 06/18/08		210,000		205,317
Thames Asset Global Securitisation No.1, Inc.
5.29%, 01/07/08 (a)(b)(c)		109,382		109,287
5.20%, 01/22/08 (a)(b)(c)		44,000		43,868
Thunder Bay Funding, L.L.C.
5.66%, 01/03/08 (a)(b)(c)		32,489		32,479
5.04%, 01/15/08 (a)(b)(c)		11,000		10,979
4.99%, 01/15/08 (a)(b)(c)		13,000		12,975
4.92%, 01/25/08 (a)(b)(c)		37,660		37,538
4.91%, 02/05/08 (a)(b)(c)		22,519		22,413
4.94%, 02/13/08 (a)(b)(c)		35,733		35,525
5.28%, 02/14/08 (a)(b)(c)		126,274		125,470
5.14%, 02/21/08 (a)(b)(c)		84,569		83,962
5.29%, 02/22/08 (a)(b)(c)		36,000		35,729
5.19%, 03/07/08 (a)(b)(c)		24,702		24,471
Ticonderoga Funding, L.L.C.
6.23%, 01/02/08 (a)(b)(c)		98,000		97,983
6.08%, 01/04/08 (a)(b)(c)		45,000		44,977
5.93%, 01/08/08 (a)(b)(c)		115,000		114,868
4.99%, 01/11/08 (a)(b)(c)		55,447		55,371
5.43%, 01/31/08 (a)(b)(c)		37,514		37,346
Tulip Funding Corp.
4.91%, 02/06/08 (a)(b)(c)		173,000		172,161
5.27%, 02/21/08 (a)(b)(c)		185,000		183,637
UBS Finance (Delaware), Inc.
5.35%, 01/22/08 (a)		200,000		199,393
5.60%, 02/06/08 (a)		75,000		74,590
5.55%, 03/06/08 (a)		34,000		33,668
5.39%, 03/17/08 (a)		7,000		6,922
5.09%, 04/16/08 (a)		75,000		73,906
5.09%, 07/07/08 (a)		279,000		271,861
UniCredit Bank (Ireland) PLC
5.42%, 01/15/08 (a)(c)		230,000		229,526
Variable Funding Capital Corp.
5.50%, 01/04/08 (a)(b)(c)		98,000		97,955
4.89%, 01/10/08 (a)(b)(c)		108,000		107,869
5.06%, 02/05/08 (a)(b)(c)		180,000		179,124
4.94%, 02/12/08 (a)(b)(c)		450,000		447,438
4.81%, 04/14/08 (a)(b)(c)		50,000		49,321
Westpac Securities NZ Ltd.
5.18%, 01/17/08 (a)(c)		105,000		104,762
Whistlejacket Capital, L.L.C.
5.34%, 01/11/08 (b)(c)(d)		35,963		35,911
5.36%, 01/11/08 (b)(c)(d)		32,294		32,247
5.34%, 01/15/08 (b)(c)(d)		20,000		19,960
5.35%, 01/18/08 (b)(c)(d)		12,000		11,970
5.34%, 01/24/08 (b)(c)(d)		25,000		24,917
5.34%, 01/25/08 (b)(c)(d)		35,000		34,879
5.42%, 06/16/08 (b)(c)(d)		34,000		34,000
Windmill Funding Corp.
5.14%, 01/17/08 (a)(b)(c)		66,000		65,851
Yorktown Capital, L.L.C.
4.98%, 01/17/08 (a)(b)(c)		152,500		152,165
6.09%, 01/18/08 (a)(b)(c)		25,000		24,929
5.07%, 02/20/08 (a)(b)(c)		200,000		198,611
5.64%, 02/22/08 (a)(b)(c)		58,000		57,533
5.12%, 03/18/08 (a)(b)(c)		191,252		189,194
5.05%, 03/19/08 (a)(b)(c)		65,000		64,300
5.14%, 03/19/08 (a)(b)(c)		100,000		98,906
				25,758,498
Promissory Note 0.5%
Merrill Lynch & Co., Inc.
5.37%, 02/22/08 (c)(d)		300,000		300,000
Time Deposit 0.9%
Deutsche Bank AG
2.00%, 01/02/08		515,000		515,000
Total Fixed-Rate Obligations (Cost $47,358,993)				47,358,993
Variable-Rate Obligations 13.4% of net assets
Banco Espanol de Credito S.A.
5.20%, 01/18/08 (c)		100,000		100,000
Bank of Ireland
4.96%, 01/22/08 (c)		40,000		40,000
Bank of New York Co., Inc.
4.93%, 01/28/08 (c)		50,000		50,000

See financial notes 27

Schwab Value Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Barclays Bank PLC
4.99%, 01/16/08		75,000		74,998
Beta Finance, Inc.
4.87%, 01/25/08 (b)(c)		39,000		39,001
BNP Paribas
5.17%, 01/03/08 (a)		23,000		22,998
Canadian Imperial Bank of Commerce
4.91%, 01/23/08		10,000		10,000
4.92%, 01/29/08		165,000		165,000
4.88%, 01/29/08		39,000		39,000
4.90%, 02/15/08		18,000		18,000
City of New Britain, CT
4.98%, 01/03/08 (a)		40,000		40,000
Commonwealth Bank of Australia
4.92%, 01/24/08 (c)		50,000		50,000
Credit Suisse
5.15%, 01/23/08		185,000		185,000
Danske Corp.
4.92%, 01/22/08 (a)(c)		100,000		100,000
4.95%, 02/13/08 (a)(c)		215,000		215,000
4.96%, 02/15/08 (a)(c)		135,000		135,000
4.99%, 02/18/08 (a)(c)		150,000		150,000
Deutsche Bank AG
5.33%, 01/07/08		311,000		311,002
5.30%, 01/14/08		42,000		42,000
5.29%, 01/14/08		295,000		295,008
4.96%, 01/23/08		300,000		300,000
4.96%, 01/28/08		285,000		285,008
Development Authority of Columbus, GA
4.88%, 01/03/08 (a)		4,635		4,635
Dorada Finance, Inc.
5.21%, 01/07/08 (b)(c)		76,000		75,986
Five Finance, Inc.
5.18%, 01/09/08 (b)(c)		54,000		53,989
Fortis Bank
4.80%, 01/28/08		145,000		144,937
K2 (USA), L.L.C.
5.00%, 01/15/08 (b)(c)(d)		35,000		34,996
4.94%, 02/01/08 (b)(c)(d)		9,000		9,002
4.86%, 02/07/08 (b)(c)(d)		80,000		79,990
4.91%, 03/20/08 (b)(c)(d)		277,500		277,511
Lexington Parker Capital Co., L.L.C.
5.19%, 01/07/08 (a)(b)(c)		160,000		159,999
Liberty Lighthouse U.S. Capital Co., L.L.C.
5.19%, 01/02/08 (b)(c)(d)		22,000		21,999
5.21%, 01/10/08 (b)(c)(d)		65,000		64,993
4.83%, 02/15/08 (b)(c)(d)		43,000		42,997
Links Finance, L.L.C.
5.23%, 01/07/08 (b)(c)		50,000		50,000
5.02%, 01/15/08 (b)(c)(d)		93,000		93,004
4.84%, 01/25/08 (b)(c)(d)		20,000		19,999
Merlot 2000 B
5.27%, 01/02/08 (a)(c)		30,000		30,000
Merrill Lynch & Co., Inc.
5.17%, 01/15/08		75,000		75,000
5.14%, 01/18/08		150,000		150,000
4.89%, 01/22/08		120,000		120,000
Met Life Insurance Co. of CT
5.27%, 01/01/08 (d)		25,000		25,000
5.10%, 01/17/08 (d)		100,000		100,000
4.97%, 01/28/08 (d)		25,000		25,000
Metropolitan Life Insurance Co.
5.27%, 01/02/08 (d)		100,000		100,000
Mitsubishi UFJ Trust & Banking Corp.
4.97%, 01/30/08		40,000		40,000
Morgan Stanley
5.35%, 01/03/08		140,000		140,000
5.33%, 01/18/08		25,000		24,998
New Jersey Economic Development Authority
4.95%, 01/02/08 (a)		4,500		4,500
Nordea Bank AB
5.23%, 01/09/08 (c)		50,000		50,000
5.26%, 01/11/08 (c)		80,000		80,000
Royal Bank of Canada
5.18%, 01/04/08		155,000		154,988
5.30%, 01/10/08		40,000		40,000
4.79%, 01/31/08		29,000		28,992
Royal Bank of Scotland PLC
5.28%, 01/08/08		243,000		243,000
5.26%, 01/11/08 (c)		11,000		11,001
4.94%, 01/22/08 (c)		20,000		20,000
4.81%, 01/28/08		207,000		206,986
Sedna Finance, Inc.
5.21%, 01/10/08 (b)(c)		14,000		13,999
5.20%, 01/14/08 (b)(c)		110,000		109,999
4.94%, 02/21/08 (b)(c)		27,000		26,999
Sigma Finance, Inc.
5.00%, 01/15/08 (b)(c)(d)		77,000		76,999
5.21%, 01/16/08 (b)(c)(d)		150,000		150,008
4.84%, 01/25/08 (b)(c)(d)		150,000		149,996
5.07%, 01/25/08 (b)(c)(d)		100,000		100,001
4.82%, 01/29/08 (b)(c)(d)		100,000		99,997
Societe Generale
5.06%, 01/17/08		28,000		28,000
4.82%, 01/28/08		325,000		324,981
Sumitomo Trust & Banking Co.
5.25%, 01/07/08		49,000		49,000
5.10%, 01/14/08		15,000		15,000
4.93%, 01/22/08		40,000		40,000
The Goldman Sachs Group, Inc.
5.26%, 01/11/08 (d)		200,000		200,000
5.08%, 01/16/08 (c)(d)		210,000		210,000
4.93%, 01/29/08 (d)		56,000		56,000
Wachovia Bank, N.A.
4.98%, 01/25/08		100,000		100,000
Washington Mutual Bank
5.24%, 01/18/08		50,000		50,004
Wells Fargo & Co.
5.11%, 01/15/08 (c)		120,000		120,002
Westpac Banking Corp.
5.02%, 01/16/08 (a)(c)		75,000		75,000
4.88%, 02/05/08 (a)(c)		136,000		136,000
Whistlejacket Capital, L.L.C.
5.19%, 01/02/08 (b)(c)(d)		30,000		29,998
4.99%, 01/15/08 (b)(c)(d)		42,000		41,998
5.17%, 01/17/08 (b)(c)(d)		50,000		49,995
4.91%, 01/22/08 (b)(c)(d)		19,000		18,999
4.83%, 01/25/08 (b)(c)(d)		54,000		53,998
4.85%, 02/06/08 (b)(c)(d)		60,000		59,993
4.89%, 02/11/08 (b)(c)(d)		150,000		149,995
4.86%, 02/19/08 (b)(c)(d)		9,000		9,000
Total Variable-Rate Obligations (Cost $8,016,478)				8,016,478

28 See financial notes

Schwab Value Advantage Money Fund

Portfolio Holdings continued

Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 6.6% of net assets
Repurchase Agreements 6.6%
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement, dated 12/31/07, due 01/02/08 at 4.77%, fully collateralized by U.S. Government Securities with a value of $1,723,803.		1,690,448		1,690,000
Credit Suisse Securities (USA) LLC
Tri-Party Repurchase Agreement, dated 12/31/07, due 01/02/08 at 4.50%, fully collateralized by U.S. Government Securities with a value of $71,038.		69,661		69,643
Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.75%, fully collateralized by U.S. Government Securities with a value of $1,224,000.		1,200,317		1,200,000
Goldman Sachs & Co.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.75%, fully collateralized by U.S. Government Securities with a value of $1,020,000.		1,000,264		1,000,000
Total Other Investments (Cost $3,959,643)				3,959,643
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $59,335,114.

(a)	Credit-enhanced security.
(b)	Asset-backed security.
(c)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $22,395,667 or 37.5% of net assets.
(d)	Illiquid security. At the period end, the value of these amounted to $2,988,200 or 5.0% of net assets.

See financial notes 29

Schwab Value Advantage Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$59,335,114
Receivables:
Investments sold		590
Fund shares sold		474,582
Interest		329,916
Prepaid expenses	+	126
Total assets		60,140,328
Liabilities
Payables:
Investment adviser and administrator fees		841
Transfer agent and shareholder services fees		977
Fund shares redeemed		410,911
Distributions to shareholders		42,279
Accrued expenses	+	991
Total liabilities		455,999
Net Assets
Total assets		60,140,328
Total liabilities	−	455,999
Net assets		$59,684,329
Net Assets by Source
Capital received from investors		59,684,326
Net investment income not yet distributed		3

Net Asset Value (NAV) by Share Class 

			Shares
Share Class	Net Assets	¸	Outstanding	=	NAV
Investor Shares	$43,248,265		43,248,474			$1.00
Select Shares	$7,453,453		7,453,453			$1.00
Institutional Shares	$4,747,549		4,747,549			$1.00
Institutional Prime Shares	$4,235,062		4,235,062			$1.00

30 See financial notes

Schwab Value Advantage Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$2,715,722
Net Realized Gains and Losses
Net realized gains on investments		2
Expenses
Investment adviser and administrator fees		143,520
Transfer agent and shareholder service fees:
Investor Shares		93,457
Select Shares		9,281
Institutional Shares		1,655
Institutional Prime Shares		636
Registration fees		4,541
Custodian fees		2,454
Portfolio accounting fees		1,135
Shareholder reports		486
Professional fees		179
Trustees’ fees		167
Interest expense		13
Other expenses	+	328
Total expenses		257,852
Expense reduction by adviser and Schwab	−	53,531
Custody credits	−	12
Net expenses		204,309
Increase (Decrease) in Net Assets from Operations
Total investment income		2,715,722
Net expenses	−	204,309
Net investment income		2,511,413
Net realized gains	+	2
Increase in net assets from operations		$2,511,415

See financial notes 31

Schwab Value Advantage Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$2,511,413	$1,680,557
Net realized gains	+	2	2
Increase in net assets from operations		2,511,415	1,680,559
Distributions to Shareholders
Distributions from net investment income
Investor Shares		1,828,799	1,336,262
Select Shares		308,809	178,684
Institutional Shares		210,837	152,174
Institutional Prime Shares*	+	162,968	13,437
Total distributions from net investment income		2,511,413	1,680,557
Transactions in Fund Shares**
Shares Sold
Investor Shares		51,102,370	41,633,818
Select Shares		12,082,396	9,664,714
Institutional Shares		8,133,233	9,726,382
Institutional Prime Shares*	+	14,584,673	2,316,760
Total shares sold		85,902,672	63,341,674
Shares Reinvested
Investor Shares		1,654,340	1,210,114
Select Shares		276,157	160,269
Institutional Shares		186,049	137,057
Institutional Prime Shares*	+	139,775	12,887
Total shares reinvested		2,256,321	1,520,327
Shares Redeemed
Investor Shares		(42,714,439)	(33,750,042)
Select Shares		(10,062,958)	(6,992,162)
Institutional Shares		(7,389,164)	(7,975,344)
Institutional Prime Shares*	+	(12,182,481)	(636,552)
Total shares redeemed		(72,349,042)	(49,354,100)
Net transactions in fund shares		15,809,951	15,507,901
Net Assets
Beginning of period		43,874,376	28,366,473
Total increase	+	15,809,953	15,507,903
End of period		$59,684,329	$43,874,376
Net investment income not yet distributed		$3	$-

*  The fund started offering institutional prime shares on October 5, 2006.

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

32 See financial notes

Schwab Taxable Money Funds

Financial Notes

1. Business Structure of the Funds:

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

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund Schwab New Jersey AMT Tax-Free Money Fund
Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab Value Advantage Money Fund offers four share classes: Investor Shares, Select Shares, Institutional Shares and Institutional Prime Shares. Shares of each class represent interest in the same portfolio, but each class has different expenses and investment minimums. Schwab Government Money Fund and U.S. Treasury Money Fund each offer one share class.

Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

Repurchase Agreements: The funds may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created. Any repurchase agreements with due dates later than seven days from issue dates may be subject to seven day put features for liquidity purposes.

Each fund’s repurchase agreements will be fully collateralized by U.S. government securities. All collateral is held by the funds’ custodian (or, in the case of tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a funds agree to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then

33

Schwab Taxable Money Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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

(e) Expenses:

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

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

Each fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to off set its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the funds’ financial statements.

34 

Schwab Taxable Money Funds

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

	Transfer Agent Fees		Shareholder Service Fees
Government Money Fund		0.20%		0.20%
U.S. Treasury Money Fund		0.20%		0.20%
Value Advantage Money Fund
Investor Shares		0.05%		0.20%
Select Shares		0.05%		0.10%
Institutional Shares		0.01%		0.03%
Institutional Prime Shares		0.01%		0.01%

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

Government Money Fund	0.75%	*
U.S. Treasury Money Fund	0.61%	*
Value Advantage Money Fund
Investor Shares	0.45%	*
Select Shares	0.35%	**
Institutional Shares	0.24%	**
Institutional Prime Shares	0.21%	**

*   CSIM and Schwab have agreed to limit this fund’s or fund share class’s expenses as described above for so long as CSIM serves as the investment adviser to the fund.

** CSIM and Schwab have agreed to limit this share class’s expenses as described above through April 29, 2009.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs.

35

Schwab Taxable Money Funds

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions: (continued)
(All dollar amounts are x 1,000) (continued):

This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, each fund’s total security transactions with other Schwab Funds were as follows:

Government Money Fund	$38,926
U.S. Treasury Money Fund	—
Value Advantage Money Fund	1,184,000

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

Trustees

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

4. Borrowings from Banks:

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

5.  Federal Income Taxes:

(All dollar amounts are x 1,000)

As of December 31, 2007, the components of distributable earnings on a tax-basis were as follows:

					Value
	Government		U.S. Treasury		Advantage
	Money Fund		Money Fund		Money Fund
Undistributed ordinary income		$—		$—		$3
Undistributed long-term capital gains		—		—		—

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the following funds had capital loss carry forwards expiring in:

					Value
	Government		U.S. Treasury		Advantage
Expire	Money Fund		Money Fund		Money Fund
2008		$14		$—		$—
2010		1		62		—
2011		16		74		—
2012		—		125		—
2013		—		205		—
Total		$31		$466		$—

36 

Schwab Taxable Money Funds

Financial Notes (continued)

5. Federal Income Taxes (continued):

For tax purposes, realized capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following year. As of December 31, 2007, the funds had deferred realized net capital losses and capital losses utilized as follows:

					Value
	Government		U.S. Treasury		Advantage
	Money Fund		Money Fund		Money Fund
Deferred capital losses		$—		$—		$—
Capital losses utilized		11		583		—
Capital losses expired		172		—		—

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

					Value
	Government		U.S. Treasury		Advantage
	Money Fund		Money Fund		Money Fund
Current period distributions
Ordinary income		$213,285		$206,325		$2,511,413
Long-term capital gains		—		—		—
Return of capital		—		—		—
Prior period distributions
Ordinary income		$120,029		$140,319		$1,680,557
Long-term capital gains		—		—		—
Return of capital		—		—		—

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

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, the funds made the following reclassifications:

						Value
	Government			U.S. Treasury		Advantage
	Money Fund			Money Fund		Money Fund
Capital shares		$(172	)		$—		$1
Undistributed net investment income		—			—		3
Net realized capital gains and losses		172			—		(4	)

6.  Subsequent Event:

Subsequent to year-end, on February 11, 2008, Whistlejacket Capital LLC (Whistlejacket), a structured investment vehicle (“SIV”), experienced an “enforcement event” that has led to the appointment of a Receiver to manage Whistlejacket’s operations. On February 12, 2008, two nationally recognized statistical rating organizations downgraded the ratings of the medium term notes (Notes) issued by Whistlejacket, including the Notes held by Schwab Value Advantage Money Fund. As a result of the downgrade, the Notes are no longer money fund eligible pursuant to Rule 2a-7 of the 1940 Act. As required under Rule 2a-7, the Board of Trustees of the fund met on February 12, 2008 and, based on the recommendation of the fund’s investment adviser, determined that it was not in the best interest of the fund to dispose of the Notes at that time.

37

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage 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 Government Money Fund, Schwab U.S. Treasury Money Fund and Schwab Value Advantage Money Fund (three of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the “Funds”) at December 31, 2007, 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 periods presented, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

38 

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

39

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President– Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President–Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

40 

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

41

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

42 

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

43

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

44 

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR31360-03

Schwab Retirement Advantage Money Fund^tm

Schwab Investor Money Fund^tm

Annual Report

December 31, 2007

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Funds	3
Performance and Fund Facts	5
Fund Expenses	6
Financial Statements
Schwab Retirement Advantage Money Fundtm	7
Schwab Investor Money Fundtm	15
Financial Notes	23
Report of Independent Registered Public Accounting Firm	28
Trustees and Officers	29
Glossary	33

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

2 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

The Investment Environment and the Funds

Linda Klingman (middle), managing director and portfolio manager, has overall responsibility for the management of the funds.

Mike Neitzke (right), managing director and portfolio manager, has day-to-day responsibility for management of the funds.

Michael Lin (left), portfolio manager, has day-to-day responsibility for management of the funds.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 3

The Investment Environment and the Fundscontinued

The reduced liquidity hit SIVs particularly hard. For nearly twenty years, SIVs have been a typical holding in the portfolios of many financial institutions, pension funds, mutual funds, municipalities and money market funds. However, not all SIVs were created equal—a handful of SIVs carried higher risk and had significant subprime investments. When those SIVs were recently unable to meet repayment of their debt obligations in the normal course of business, all SIVs came under scrutiny and the impact was felt throughout the marketplace.

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund maintained a weighted average maturity (WAM) that was longer than the peer group throughout the reporting period. In August, ramifications from trouble in the housing and credit markets were made clear as the market experienced unprecedented volatility and uncertainty throughout the third and fourth quarters. In response, we sought to reduce the weighted average maturity and increase the overnight cash position of the funds as a buffer against market volatility. Despite reduction of the WAM, the funds remained long relative to the peer groups. Maintaining a longer WAM throughout the year benefited the funds as we were able to lock in higher yielding securities before the Fed lowered rates.

Given the unprecedented volatility in the subprime mortgage market, we focused on reviewing and evaluating our SIV exposure in the second half of the year. As of December 31, 2007, SIV exposure in the Schwab Retirement Advantage Money Fund was approximately 5.1% of the fund’s net assets, and SIV exposure in the Schwab Investor Money Fund was approximately 3.5% of the fund’s net assets (see Financial Note 6).

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

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

4 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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.

	Retirement
	Advantage		Investor
	Money Fund		Money Fund
Ticker Symbol	SWIXX		SWRXX
Seven-Day Yield1		4.65%		4.50%
Seven-Day Yield—No Waiver2		4.25%		4.50%
Seven-Day Effective Yield1		4.75%		4.60%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

	Retirement
	Advantage	Investor
	Money Fund	Money Fund
Weighted Average Maturity	47 days	47 days
Credit Quality of Holdings % of portfolio	100% Tier 1	100% Tier 1
Minimum Initial Investment3	$25,000	$1 Retirement Plan Participants
		$2500 Other Investors

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.
3	Please see prospectus for further detail and eligibility requirements.

Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund 5

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio 1		Account Value		(Net of Expenses)		During Period 2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab Retirement Advantage Money Fundtm
Actual Return		0.48%	$	1,000	$	1,024.60	$	2.45
Hypothetical 5% Return		0.48%	$	1,000	$	1,022.79	$	2.45
Schwab Investor Money Fundtm
Actual Return		0.62%	$	1,000	$	1,023.90	$	3.16
Hypothetical 5% Return		0.62%	$	1,000	$	1,022.08	$	3.16

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

6 Schwab Retirement Advantage Money Fund & Schwab Investor Money Fund

Schwab Retirement Advantage Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per-Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.05			0.03			0.01			0.01
Less distributions:
Distributions from net investment income		(0.05	)		(0.05	)		(0.03	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		4.96			4.67			2.81			0.95			0.74
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.48			0.49			0.49			0.49			0.50
Gross operating expenses		0.62			0.64			0.63			0.63			0.63
Net investment income (loss)		4.85			4.59			2.75			0.94			0.75
Net assets, end of period ($ x 1,000,000)		946			802			571			680			766

See financial notes 7

Schwab Retirement Advantage Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	73	.3%	Fixed-Rate Obligations		693,743		693,743
	13	.7%	Variable-Rate Obligations		129,893		129,893
	4	.8%	Other Investments		45,334		45,334
	91	.8%	Total Investments		868,970		868,970
	8	.2%	Other Assets and Liabilities				77,495
	100	.0%	Net Assets				946,465

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fixed-Rate Obligations 73.3% of net assets
Bank Notes 1.5%
Bank of America, N.A.
5.09%, 01/18/08		8,000		8,000
4.75%, 04/11/08		6,000		6,000
				14,000
Certificates of Deposit 27.9%
Alliance & Leicester PLC
5.34%, 03/04/08		2,000		2,000
American Express Bank FSB
5.05%, 03/10/08		3,000		3,000
Banco Bilbao Vizcaya Argentaria S.A.
5.34%, 01/25/08		4,000		4,000
5.15%, 02/29/08		1,000		1,000
5.37%, 03/11/08		6,000		6,000
Barclays Bank PLC
5.33%, 02/29/08		7,000		7,000
4.98%, 03/04/08		6,000		6,003
5.25%, 03/05/08		1,000		1,000
5.34%, 04/03/08		2,000		2,000
5.11%, 05/06/08		8,000		8,000
Bayerische Hypo-und Vereinsbank AG
5.20%, 02/28/08		3,000		3,000
BNP Paribas
5.00%, 03/18/08		7,000		7,000
4.75%, 06/19/08		16,000		16,000
4.75%, 06/26/08		11,000		11,000
Canadian Imperial Bank of Commerce
5.09%, 03/17/08		3,000		3,000
5.76%, 05/12/08		1,000		1,000
Citibank, N.A.
4.86%, 01/23/08		4,000		4,000
4.90%, 02/15/08		8,000		8,000
Commerzbank AG
5.26%, 01/09/08		3,000		3,000
4.80%, 01/29/08		2,000		2,000
Credit Agricole S.A.
4.85%, 02/01/08		14,000		14,000
4.83%, 04/02/08		7,000		7,000
Credit Suisse
5.37%, 03/20/08		1,000		1,000
DePfa Bank PLC
5.37%, 02/20/08		3,000		3,000
Dexia Credit Local
4.82%, 01/11/08		3,000		3,000
DnB NOR Bank ASA
5.03%, 01/24/08		10,000		10,000
Dresdner Bank AG
5.25%, 01/30/08		4,000		4,000
HBOS Treasury Services PLC
5.30%, 02/13/08 (a)		2,000		2,000
HSBC Bank PLC
4.76%, 05/09/08		5,000		5,000
Intesa Sanpaolo
5.17%, 01/16/08		8,000		8,000
5.01%, 03/14/08		4,000		4,000
Mitsubishi UFJ Trust & Banking Corp.
5.32%, 02/14/08		4,000		4,000
Mizuho Corporate Bank Ltd.
5.40%, 01/02/08		9,000		9,000
Natixis S.A.
4.81%, 02/06/08		3,000		3,000
Norinchukin Bank Ltd.
5.03%, 01/25/08		3,000		3,000
5.36%, 01/28/08		2,000		2,000
Royal Bank of Scotland PLC
4.83%, 06/18/08		3,000		3,000
Skandinaviska Enskilda Banken AB
4.90%, 05/23/08		1,000		1,000
Societe Generale
5.23%, 01/09/08		6,000		6,000
4.84%, 02/01/08		3,000		3,000
5.13%, 03/13/08		2,000		2,000
4.81%, 06/24/08		2,000		2,000
Sumitomo Mitsui Banking Corp.
4.84%, 01/04/08		2,000		2,000
4.85%, 01/04/08		2,000		2,000
4.84%, 01/08/08		4,000		4,000
Sumitomo Trust & Banking Co.
5.12%, 02/21/08		1,000		1,000
Svenska Handelsbanken AB
5.05%, 01/24/08		5,000		5,000
Toronto Dominion Bank
5.37%, 02/21/08		1,000		1,000
5.02%, 03/12/08		1,000		1,000
5.02%, 03/25/08		1,000		1,000
4.70%, 05/13/08		10,000		10,000

8 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
UBS AG
4.99%, 02/04/08		10,000		10,002
4.98%, 03/18/08		5,000		5,000
4.99%, 03/27/08		1,000		1,000
Unicredito Italiano S.p.A.
5.38%, 03/20/08		9,000		9,000
4.80%, 06/27/08		1,000		1,000
Union Bank of California
4.77%, 03/05/08		3,000		3,000
4.85%, 03/26/08		1,000		1,000
Westpac Banking Corp.
5.12%, 02/15/08		5,000		5,000
Wilmington Trust Co.
4.90%, 06/19/08		5,000		5,000
				264,005
Commercial Paper & Other Corporate Obligations 43.9%
Allied Irish Banks North America, Inc.
4.79%, 04/07/08 (a)		3,000		2,962
Alpine Securitization Corp.
4.96%, 02/11/08 (a)(b)(c)		6,000		5,966
Amstel Funding Corp.
6.34%, 01/17/08 (b)(c)		6,000		5,983
5.34%, 01/18/08 (b)(c)		3,000		2,993
5.73%, 03/14/08 (b)(c)		4,000		3,954
Anglo Irish Bank Corp. PLC
5.35%, 01/02/08 (c)		2,000		2,000
ANZ National (Int’l) Ltd.
5.35%, 01/18/08 (a)		2,000		1,995
Aquinas Funding, L.L.C.
4.99%, 02/25/08 (a)(b)(c)		2,000		1,985
5.66%, 03/18/08 (a)(b)(c)		1,000		988
Atlantic Asset Securitization, L.L.C.
5.53%, 01/08/08 (a)(b)(c)		4,000		3,996
4.85%, 01/17/08 (a)(b)(c)		5,992		5,979
4.94%, 02/08/08 (a)(b)(c)		2,000		1,990
Atlantis One Funding Corp.
5.28%, 01/07/08 (b)(c)		10,000		9,991
5.13%, 01/22/08 (b)(c)		3,000		2,991
5.15%, 02/26/08 (b)(c)		4,000		3,968
Bank of America Corp.
5.30%, 02/01/08		10,000		9,956
5.09%, 02/20/08		16,000		15,889
4.70%, 05/05/08		3,000		2,952
Bank of Ireland
5.42%, 01/16/08 (c)		4,000		3,991
5.20%, 02/12/08 (c)		2,000		1,988
Barclays US Funding Corp.
4.88%, 03/26/08 (a)		1,000		989
Barton Capital L.L.C.
5.23%, 01/03/08 (a)(b)(c)		10,000		9,997
Cancara Asset Securitization, L.L.C.
5.29%, 01/11/08 (a)(b)(c)		1,000		999
5.00%, 01/29/08 (a)(b)(c)		1,000		996
4.85%, 02/15/08 (a)(b)(c)		5,000		4,970
5.37%, 03/13/08 (a)(b)(c)		4,000		3,958
Chariot Funding, L.L.C.
5.45%, 01/28/08 (a)(b)(c)		4,000		3,984
Citigroup Funding, Inc.
5.20%, 01/10/08 (a)		8,000		7,990
4.80%, 01/16/08 (a)		7,000		6,986
5.18%, 01/18/08 (a)		8,000		7,981
4.94%, 06/06/08 (a)		1,000		979
Clipper Receivables Co., L.L.C.
6.08%, 01/04/08 (a)(b)(c)		5,000		4,997
4.94%, 02/01/08 (a)(b)(c)		8,000		7,966
Concord Minuteman Capital Co., Series A
5.35%, 01/03/08 (a)(b)(c)		1,000		1,000
Danske Corp.
5.30%, 02/22/08 (a)(c)		12,000		11,912
Fairway Finance Co., L.L.C.
4.94%, 02/05/08 (a)(b)(c)		1,000		995
5.34%, 02/15/08 (a)(b)(c)		3,000		2,980
Falcon Asset Securitization Corp.
5.07%, 01/10/08 (a)(b)(c)		13,000		12,984
5.12%, 02/21/08 (a)(b)(c)		3,000		2,978
Galaxy Funding, Inc.
5.25%, 01/11/08 (b)(c)		1,000		999
Gemini Securitization Corp., L.L.C.
4.86%, 01/31/08 (a)(b)(c)		1,000		996
5.48%, 02/29/08 (a)(b)(c)		3,000		2,973
5.32%, 03/05/08 (a)(b)(c)		2,000		1,981
5.27%, 03/18/08 (a)(b)(c)		1,000		989
General Electric Capital Corp.
5.32%, 02/19/08		3,000		2,979
5.38%, 03/04/08		5,500		5,450
5.33%, 03/20/08		3,000		2,966
Grampian Funding, L.L.C.
5.21%, 03/20/08 (a)(b)(c)		3,000		2,967
5.21%, 03/28/08 (a)(b)(c)		5,000		4,939
Intesa Funding, L.L.C.
5.23%, 01/15/08 (a)		5,000		4,990
Jupiter Securitization Corp.
5.33%, 01/25/08 (a)(b)(c)		17,000		16,940
K2 (USA), L.L.C.
5.34%, 01/24/08 (b)(c)(d)		4,000		3,987
5.40%, 06/13/08 (b)(c)(d)		1,000		1,000
KBC Financial Products International, Ltd.
5.39%, 02/21/08 (a)(c)		4,000		3,970
Kitty Hawk Funding Corp.
4.94%, 02/13/08 (a)(b)(c)		9,000		8,948
Mont Blanc Capital Corp.
5.25%, 01/09/08 (a)(b)(c)		1,000		999
5.27%, 02/22/08 (a)(b)(c)		5,000		4,962
Morgan Stanley
5.20%, 04/14/08		16,000		15,766
Nationwide Building Society US
5.20%, 02/27/08		8,000		7,935
Nieuw Amsterdam Receivables Corp.
5.18%, 03/27/08 (a)(b)(c)		3,000		2,964
Old Line Funding, L.L.C.
4.83%, 01/11/08 (a)(b)(c)		4,184		4,178
4.96%, 02/12/08 (a)(b)(c)		9,000		8,949
5.14%, 02/22/08 (a)(b)(c)		1,032		1,024
Park Avenue Receivables Co., L.L.C.
4.94%, 02/08/08 (a)(b)(c)		1,000		995
5.12%, 02/22/08 (a)(b)(c)		5,000		4,963
Picaros Funding, L.L.C.
5.29%, 01/08/08 (a)(b)(c)		4,000		3,996
Ranger Funding Co., L.L.C.
4.91%, 03/14/08 (a)(b)(c)		2,000		1,980
San Paolo IMI U.S. Financial Corp.
4.85%, 03/24/08 (a)		4,000		3,956
Scaldis Capital Ltd.
5.15%, 01/23/08 (a)(b)(c)		3,000		2,991

See financial notes 9

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
5.10%, 02/22/08 (a)(b)(c)		4,000		3,971
5.21%, 04/01/08 (a)(b)(c)		6,000		5,923
Sheffield Receivables Corp.
5.07%, 01/25/08 (a)(b)(c)		7,000		6,977
Sigma Finance, Inc.
5.35%, 01/03/08 (b)(c)		1,000		1,000
5.37%, 03/20/08 (b)(c)(d)		4,000		3,955
Skandinaviska Enskilda Banken AB
5.04%, 03/19/08		4,500		4,452
4.81%, 03/28/08		3,000		2,966
Solitaire Funding, L.L.C.
5.09%, 02/19/08 (a)(b)(c)		5,000		4,966
5.14%, 02/20/08 (a)(b)(c)		1,000		993
5.50%, 03/04/08 (a)(b)(c)		4,000		3,962
Swedbank AB
5.05%, 03/19/08		8,000		7,915
Thames Asset Global Securitization No. 1, Inc.
5.33%, 04/04/08 (a)(b)(c)		8,000		7,890
Thunder Bay Funding, L.L.C.
4.99%, 01/15/08 (a)(b)(c)		2,131		2,127
Tulip Funding Corp.
5.27%, 02/21/08 (a)(b)(c)		6,000		5,956
UBS Finance (Delaware), Inc.
5.38%, 03/18/08 (a)		14,000		13,843
Variable Funding Capital Corp.
4.89%, 01/10/08 (a)(b)(c)		6,000		5,993
Westpac Securities NZ Ltd.
5.18%, 01/17/08 (a)(c)		5,000		4,989
Yorktown Capital, L.L.C.
4.98%, 01/17/08 (a)(b)(c)		5,000		4,989
5.64%, 02/22/08 (a)(b)(c)		1,000		992
5.05%, 03/19/08 (a)(b)(c)		1,000		989
				415,738
Total Fixed-Rate Obligations (Cost $693,743)				693,743
Variable-Rate Obligations 13.7% of net assets
Beta Finance, Inc.
4.86%, 01/25/08 (b)(c)		3,000		3,000
BMC Special Care Facilities Financing Authority of the City of Montgomery, Alabama
4.86%, 01/03/08 (a)		1,660		1,660
Canadian Imperial Bank of Commerce
4.88%, 01/29/08		6,000		6,000
4.90%, 02/15/08		2,000		2,000
CC (USA), Inc.
4.86%, 01/25/08 (b)(c)		10,000		10,000
City of New Britain, Connecticut
4.98%, 01/03/08 (a)		2,100		2,100
City of Palm Springs, California
4.85%, 01/03/08 (a)		8,000		8,000
Credit Suisse
5.15%, 01/23/08		9,000		9,000
Deutsche Bank AG
5.29%, 01/14/08		5,000		5,000
5.30%, 01/14/08		4,000		4,000
Dexia Credit Local S.A.
4.82%, 01/25/08		5,000		5,000
Fortis Bank
4.80%, 01/28/08		5,000		4,998
K2 (USA), L.L.C.
4.94%, 02/01/08 (b)(c)(d)		5,000		5,001
Lexington Parker Capital Co., L.L.C.
5.19%, 01/07/08 (a)(b)(c)		4,000		4,000
Liberty Lighthouse U.S. Capital Co., L.L.C.
5.21%, 01/10/08 (b)(c)(d)		2,000		2,000
4.83%, 02/15/08 (b)(c)(d)		1,000		1,000
Links Finance, L.L.C.
5.02%, 01/15/08 (b)(c)(d)		2,000		2,000
4.84%, 01/25/08 (b)(c)(d)		4,000		4,000
New York City IDA
5.00%, 01/03/08 (a)		135		135
Royal Bank of Canada
5.18%, 01/04/08		10,000		9,999
Royal Bank of Scotland PLC
5.28%, 01/08/08		10,000		10,000
5.26%, 01/11/08 (c)		3,000		3,000
Sedna Finance, Inc.
5.20%, 01/14/08 (b)(c)		2,000		2,000
Sigma Finance, Inc.
5.00%, 01/15/08 (b)(c)(d)		6,000		6,000
The Goldman Sachs Group, Inc.
5.26%, 01/11/08 (d)		7,000		7,000
Wachovia Bank, N.A.
4.98%, 01/25/08		10,000		10,000
Whistlejacket Capital, L.L.C.
4.99%, 01/15/08 (b)(c)(d)		2,000		2,000
4.86%, 02/19/08 (b)(c)(d)		1,000		1,000
Total Variable-Rate Obligations (Cost $129,893)				129,893
Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 4.8% of net assets
Repurchase Agreements 4.8%
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement, dated 12/31/07, due 01/02/08 at 4.77%, fully collateralized by U.S. Government Securities with a value of $40,804.		40,011		40,000
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.50%, fully collateralized by U.S. Government Securities with a value of $5,441.		5,336		5,334
Total Other Investments (Cost $45,334)				45,334
End of Investments.

10 See financial notes

Schwab Retirement Advantage Money Fund

Portfolio Holdings continued

(All dollar amounts are x 1,000)

At 12/31/07, the tax basis cost of the fund’s investments was $868,970.

(a)	Credit-enhanced security.
(b)	Asset-backed security.
(c)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $328,842 or 34.7% of net assets.
(d)	Illiquid security. At the period end, the value of these amounted to $38,943 or 4.1% of net assets.

IDA — Industrial development authority

See financial notes 11

Schwab Retirement Advantage Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$868,970
Receivables:
Fund shares sold		76,948
Interest	+	4,378
Total assets		950,296
Liabilities
Payables:
Investment adviser and administrator fees		23
Transfer agent and shareholder services fees		15
Fund shares redeemed		3,552
Distributions to shareholders		188
Accrued expenses	+	53
Total liabilities		3,831
Net Assets
Total assets		950,296
Total liabilities	−	3,831
Net assets		$946,465
Net Assets by Source
Capital received from investors		946,465

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$946,465		946,523		$1.00

12 See financial notes

Schwab Retirement Advantage Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$42,092
Expenses
Investment adviser and administrator fees		2,763
Transfer agent and shareholder service fees		1,737
Registration fees		231
Portfolio accounting fees		67
Custodian fees		46
Trustees’ fees		29
Professional fees		23
Shareholder reports		4
Other expenses	+	12
Total expenses		4,912
Expense reduction by adviser and Schwab	−	1,083
Net expenses		3,829
Increase (Decrease) in Net Assets from Operations
Total investment income		42,092
Net expenses	−	3,829
Net investment income		38,263
Increase in net assets from operations		$38,263

See financial notes 13

Schwab Retirement Advantage Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$38,263	$30,235
Increase in net assets from operations		38,263	30,235
Distributions to Shareholders
Distributions from net investment income		38,263	30,235
Transactions in Fund Shares*
Shares sold		895,960	646,474
Shares reinvested		37,018	29,329
Shares redeemed	+	(788,743)	(444,633)
Net transactions in fund shares		144,235	231,170
Net Assets
Beginning of period		802,230	571,060
Total increase	+	144,235	231,170
End of period		$946,465	$802,230

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

14 See financial notes

Schwab Investor Money Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per-Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.04			0.03			0.01			0.01
Less distributions:
Distributions from net investment income		(0.05	)		(0.04	)		(0.03	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		4.82			4.50			2.63			0.77			0.58
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.62			0.67			0.67			0.66			0.66
Gross operating expenses		0.63			0.67			0.67			0.66			0.66
Net investment income (loss)		4.71			4.50			2.61			0.76			0.58
Net assets, end of period ($ x 1,000,000)		2,089			1,314			521			492			578

See financial notes 15

Schwab Investor Money Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	77	.5%	Fixed-Rate Obligations		1,617,573		1,617,573
	14	.0%	Variable-Rate Obligations		292,678		292,678
	8	.0%	Other Investments		167,382		167,382
	99	.5%	Total Investments		2,077,633		2,077,633
	0	.5%	Other Assets and Liabilities				11,210
	100	.0%	Net Assets				2,088,843

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fixed-Rate Obligations 77.5% of net assets
Bank Notes 0.8%
Bank of America, N.A.
5.09%, 01/18/08		6,000		6,000
5.34%, 01/25/08		10,000		10,000
				16,000
Certificates of Deposit 35.2%
ABN AMRO Bank N.V.
5.34%, 02/04/08		2,000		2,000
5.36%, 03/04/08		9,000		9,000
Alliance & Leicester PLC
5.32%, 04/18/08		6,000		6,000
Allied Irish Bank PLC
4.73%, 04/28/08		5,000		5,000
4.80%, 04/28/08		2,000		2,000
American Express Bank FSB
5.05%, 03/10/08		4,000		4,000
American Express Centurion Bank
5.15%, 02/28/08		5,000		5,000
Banco Bilbao Vizcaya Argentaria S.A.
5.25%, 01/02/08		18,000		18,000
5.23%, 01/10/08		3,000		3,000
5.34%, 01/25/08		2,000		2,000
5.15%, 02/29/08		1,000		1,000
Bank of Ireland
4.85%, 03/26/08		1,000		1,000
Bank of Tokyo Mitsubishi UFJ Ltd.
5.15%, 01/17/08		3,000		3,000
5.12%, 02/19/08		8,000		8,000
Barclays Bank PLC
5.33%, 02/29/08		13,000		13,000
4.98%, 03/04/08		2,000		2,001
5.25%, 03/05/08		15,000		15,000
4.87%, 04/09/08		3,000		3,002
5.16%, 04/09/08		4,000		4,000
5.07%, 04/17/08		7,000		7,000
Bayerische Hypo-und Vereinsbank AG
5.20%, 02/28/08		10,000		10,000
BNP Paribas
5.00%, 03/18/08		8,000		8,000
4.64%, 05/30/08		7,000		7,000
4.80%, 06/25/08		10,000		10,000
4.75%, 06/26/08		50,000		50,000
Calyon
5.31%, 01/31/08		11,000		11,000
Canadian Imperial Bank of Commerce
5.28%, 02/07/08		17,000		17,000
5.09%, 03/17/08		7,000		7,000
Citibank, N.A.
4.86%, 01/23/08		35,000		35,000
4.90%, 02/15/08		9,000		9,000
Commerzbank AG
5.26%, 01/09/08		7,000		7,000
Credit Agricole S.A.
5.35%, 01/18/08		13,000		13,000
4.90%, 01/28/08		26,000		26,000
4.83%, 04/02/08		1,000		1,000
Credit Suisse
5.56%, 03/10/08		8,000		8,000
5.37%, 03/20/08		6,000		6,000
Dexia Credit Local
4.88%, 01/04/08		8,000		8,000
DnB NOR Bank ASA
5.03%, 01/24/08		12,000		12,000
4.86%, 01/30/08		10,000		10,000
5.15%, 02/28/08		2,000		2,000
Fortis Bank
5.34%, 03/04/08		15,000		15,000
HBOS Treasury Services PLC
5.48%, 03/11/08 (a)		1,000		1,000
ING Bank N.V.
4.79%, 03/03/08		15,000		15,000
KBC Bank N.V.
5.18%, 01/30/08		10,000		10,000
Mitsubishi UFJ Trust & Banking Corp.
4.85%, 02/05/08		8,000		8,000
Mizuho Corporate Bank Ltd.
4.88%, 01/04/08		15,000		15,000
Nationwide Building Society
5.32%, 05/13/08		4,000		4,000
Natixis S.A.
4.77%, 03/06/08		7,000		7,000
Norinchukin Bank Ltd.
5.03%, 01/25/08		1,000		1,000
5.36%, 01/28/08		8,000		8,000

16 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Northern Rock PLC
5.57%, 03/14/08		1,000		1,000
Royal Bank of Canada
5.34%, 02/04/08		5,000		5,000
Royal Bank of Scotland PLC
4.83%, 06/18/08		14,000		14,000
Skandinaviska Enskilda Banken AB
4.90%, 05/23/08		12,000		12,000
Societe Generale
5.23%, 01/09/08		5,000		5,000
5.20%, 01/31/08		2,800		2,800
4.84%, 02/01/08		20,000		20,000
5.12%, 02/29/08		1,500		1,500
5.13%, 03/13/08		6,000		6,000
4.80%, 06/10/08		1,000		1,000
4.81%, 06/24/08		11,000		11,000
Sumitomo Mitsui Banking Corp.
4.84%, 01/08/08		4,000		4,000
5.14%, 02/08/08		25,000		25,000
Sumitomo Trust & Banking Co.
5.44%, 01/16/08		9,000		9,000
5.12%, 02/21/08		6,000		6,000
4.81%, 06/20/08		6,000		6,000
Svenska Handelsbanken AB
5.05%, 01/24/08		12,000		12,000
Toronto Dominion Bank
5.02%, 03/25/08		25,000		25,000
4.92%, 05/07/08		4,000		4,000
UBS AG
4.99%, 02/04/08		28,000		28,005
4.98%, 03/18/08		10,000		10,000
4.99%, 03/27/08		2,000		2,000
5.40%, 04/14/08		14,000		14,000
4.76%, 05/07/08		4,000		4,000
4.70%, 05/09/08		4,000		4,000
Unicredito Italiano S.p.A.
5.38%, 03/20/08		15,000		15,000
5.12%, 04/16/08		5,000		5,000
4.90%, 06/19/08		2,000		2,000
4.80%, 06/27/08		1,000		1,000
Union Bank of California
4.85%, 03/26/08		6,000		6,000
Westpac Banking Corp.
5.12%, 02/15/08		3,000		3,000
5.36%, 04/23/08		11,000		10,999
Wilmington Trust Co.
4.90%, 06/19/08		5,000		5,000
				734,307
Commercial Paper & Other Corporate Obligations 41.5%
Alpine Securitization Corp.
4.96%, 01/08/08 (a)(b)(c)		12,000		11,989
5.37%, 03/17/08 (a)(b)(c)		2,000		1,978
Amstel Funding Corp.
5.34%, 01/18/08 (b)(c)		11,000		10,973
5.01%, 01/22/08 (b)(c)		17,000		16,951
5.16%, 04/15/08 (b)(c)		2,000		1,970
Amsterdam Funding Corp.
4.94%, 01/04/08 (a)(b)(c)		6,000		5,998
5.15%, 01/17/08 (a)(b)(c)		2,000		1,996
Anglo Irish Bank Corp. PLC
4.79%, 05/01/08 (c)		5,000		4,921
ANZ National (Int’l) Ltd.
5.36%, 01/14/08 (a)		8,000		7,985
Aquinas Funding, L.L.C.
5.09%, 01/30/08 (a)(b)(c)		1,000		996
6.04%, 01/30/08 (a)(b)(c)		1,000		995
4.99%, 02/25/08 (a)(b)(c)		5,000		4,963
5.66%, 03/18/08 (a)(b)(c)		1,000		988
Atlantic Asset Securitization, L.L.C.
4.82%, 01/07/08 (a)(b)(c)		10,119		10,111
5.53%, 01/08/08 (a)(b)(c)		11,085		11,073
Atlantis One Funding Corp.
4.85%, 01/02/08 (b)(c)		4,000		4,000
5.35%, 01/18/08 (b)(c)		2,000		1,995
5.13%, 01/22/08 (b)(c)		20,000		19,941
5.37%, 02/14/08 (b)(c)		6,000		5,962
5.34%, 02/25/08 (b)(c)		8,000		7,937
Bank of America Corp.
5.09%, 02/13/08		15,000		14,910
5.09%, 02/20/08		14,000		13,903
4.70%, 05/05/08		10,000		9,840
Bank of Ireland
5.35%, 01/14/08 (c)		9,000		8,983
5.20%, 02/12/08 (c)		5,000		4,970
Barclays US Funding Corp.
4.88%, 03/26/08 (a)		2,000		1,977
Barton Capital L.L.C.
4.92%, 01/04/08 (a)(b)(c)		10,000		9,996
Cancara Asset Securitisation, L.L.C.
5.36%, 01/08/08 (a)(b)(c)		17,000		16,983
5.29%, 01/11/08 (a)(b)(c)		2,000		1,997
5.29%, 01/15/08 (a)(b)(c)		6,000		5,988
5.05%, 01/28/08 (a)(b)(c)		1,000		996
Chariot Funding, L.L.C.
5.48%, 01/02/08 (a)(b)(c)		9,850		9,849
5.94%, 01/10/08 (a)(b)(c)		12,000		11,982
5.06%, 04/17/08 (a)(b)(c)		8,000		7,882
Citigroup Funding, Inc.
4.88%, 01/03/08 (a)		6,000		5,998
5.20%, 01/10/08 (a)		15,000		14,981
4.87%, 01/11/08 (a)		4,000		3,995
5.18%, 01/18/08 (a)		4,000		3,990
4.85%, 02/06/08 (a)		9,000		8,957
5.35%, 02/25/08 (a)		11,000		10,913
5.56%, 03/11/08 (a)		3,000		2,969
5.51%, 03/24/08 (a)		11,000		10,864
Clipper Receivables Co., L.L.C.
6.08%, 01/04/08 (a)(b)(c)		4,000		3,998
6.33%, 01/11/08 (a)(b)(c)		8,000		7,986
5.29%, 01/31/08 (a)(b)(c)		5,000		4,978
4.94%, 02/01/08 (a)(b)(c)		13,000		12,945
Concord Minuteman Capital Co., Series A
5.35%, 01/03/08 (a)(b)(c)		4,000		3,999
Fairway Finance Co., L.L.C.
4.97%, 01/10/08 (a)(b)(c)		1,000		999
4.96%, 02/07/08 (a)(b)(c)		3,000		2,985
5.34%, 02/15/08 (a)(b)(c)		2,000		1,987
5.34%, 02/22/08 (a)(b)(c)		13,000		12,901
Falcon Asset Securitization Corp.
5.41%, 01/31/08 (a)(b)(c)		12,000		11,946
4.94%, 02/11/08 (a)(b)(c)		17,000		16,906
5.32%, 02/27/08 (a)(b)(c)		5,000		4,958
Galaxy Funding, Inc.
5.25%, 01/11/08 (b)(c)		4,000		3,994

See financial notes 17

Schwab Investor Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Gemini Securitization Corp., L.L.C.
5.14%, 02/20/08 (a)(b)(c)		5,000		4,965
5.48%, 02/29/08 (a)(b)(c)		3,000		2,973
5.32%, 03/05/08 (a)(b)(c)		2,442		2,419
5.27%, 03/18/08 (a)(b)(c)		5,000		4,944
General Electric Capital Corp.
5.32%, 02/19/08		2,000		1,986
5.38%, 03/04/08		1,500		1,486
Grampian Funding, L.L.C.
5.21%, 03/28/08 (a)(b)(c)		6,000		5,926
5.21%, 03/31/08 (a)(b)(c)		1,000		987
5.22%, 04/02/08 (a)(b)(c)		10,000		9,870
4.79%, 04/25/08 (a)(b)(c)		6,000		5,910
Intesa Funding, L.L.C.
5.23%, 01/15/08 (a)		13,000		12,974
Jupiter Securitization Corp.
5.33%, 01/25/08 (a)(b)(c)		24,000		23,916
K2 (USA), L.L.C.
5.42%, 07/15/08 (b)(c)(d)		2,000		2,000
Mont Blanc Capital Corp.
5.25%, 01/09/08 (a)(b)(c)		7,341		7,333
5.27%, 02/22/08 (a)(b)(c)		6,198		6,151
Morgan Stanley
5.43%, 02/20/08		2,000		1,985
5.20%, 04/14/08		19,000		18,722
5.21%, 04/22/08		6,000		5,905
4.91%, 04/29/08		9,000		8,858
Nationwide Building Society U.S.
5.10%, 01/24/08		9,000		8,971
5.20%, 02/27/08		7,000		6,943
Nieuw Amsterdam Receivables Corp.
5.30%, 01/11/08 (a)(b)(c)		1,000		999
5.18%, 03/27/08 (a)(b)(c)		3,000		2,964
5.21%, 04/04/08 (a)(b)(c)		4,000		3,947
Old Line Funding, L.L.C.
5.77%, 01/11/08 (a)(b)(c)		5,000		4,992
4.91%, 02/08/08 (a)(b)(c)		7,000		6,964
4.94%, 02/08/08 (a)(b)(c)		8,000		7,959
4.98%, 02/11/08 (a)(b)(c)		1,000		994
5.01%, 02/13/08 (a)(b)(c)		1,000		994
5.14%, 02/22/08 (a)(b)(c)		1,000		993
5.41%, 02/27/08 (a)(b)(c)		7,000		6,941
5.45%, 02/27/08 (a)(b)(c)		4,000		3,966
Park Avenue Receivables Co., L.L.C.
5.33%, 01/30/08 (a)(b)(c)		12,000		11,949
5.12%, 02/22/08 (a)(b)(c)		1,000		993
Picaros Funding, L.L.C.
5.21%, 04/07/08 (a)(b)(c)		10,000		9,863
Ranger Funding Co., L.L.C.
5.12%, 02/26/08 (a)(b)(c)		29,000		28,772
4.91%, 03/14/08 (a)(b)(c)		14,000		13,863
5.05%, 04/11/08 (a)(b)(c)		2,000		1,972
Scaldis Capital Ltd.
5.31%, 01/09/08 (a)(b)(c)		22,000		21,974
4.93%, 02/08/08 (a)(b)(c)		3,000		2,985
5.19%, 03/25/08 (a)(b)(c)		1,000		988
5.21%, 04/01/08 (a)(b)(c)		5,000		4,936
Sedna Finance, Inc.
5.41%, 06/13/08 (b)(c)		2,000		2,000
Sheffield Receivables Corp.
5.77%, 01/11/08 (a)(b)(c)		1,000		998
5.01%, 02/07/08 (a)(b)(c)		17,000		16,914
Sigma Finance, Inc.
5.35%, 01/03/08 (b)(c)		3,000		2,999
Skandinaviska Enskilda Banken AB
5.04%, 03/19/08		5,000		4,947
4.86%, 04/21/08		2,000		1,971
Solitaire Funding, L.L.C.
5.50%, 03/04/08 (a)(b)(c)		7,000		6,934
5.58%, 03/04/08 (a)(b)(c)		8,000		7,923
5.11%, 04/17/08 (a)(b)(c)		10,000		9,851
Stadshypotek Delaware, Inc.
4.80%, 03/05/08 (a)(c)		6,000		5,950
Swedbank AB
5.05%, 03/19/08		4,500		4,452
Swedbank Mortgage AB
4.94%, 03/25/08		1,000		989
4.87%, 06/17/08		4,000		3,911
Thames Asset Global Securitization No. 1, Inc.
4.89%, 01/07/08 (a)(b)(c)		4,000		3,997
5.29%, 01/07/08 (a)(b)(c)		6,000		5,995
5.27%, 02/15/08 (a)(b)(c)		2,000		1,987
5.33%, 04/04/08 (a)(b)(c)		1,000		986
Thunder Bay Funding, L.L.C.
5.24%, 04/10/08 (a)(b)(c)		12,000		11,830
Ticonderoga Funding, L.L.C.
4.90%, 01/11/08 (a)(b)(c)		15,000		14,980
Tulip Funding Corp.
5.39%, 02/06/08 (a)(b)(c)		5,000		4,973
5.27%, 02/21/08 (a)(b)(c)		2,000		1,985
5.27%, 03/12/08 (a)(b)(c)		6,000		5,939
UBS Finance (Delaware), Inc.
5.60%, 02/06/08 (a)		7,000		6,962
Variable Funding Capital Corp.
4.89%, 01/10/08 (a)(b)(c)		6,000		5,993
5.49%, 01/16/08 (a)(b)(c)		4,000		3,991
Westpac Securities NZ Ltd.
5.18%, 01/17/08 (a)(c)		5,000		4,989
Whistlejacket Capital, L.L.C.
5.34%, 01/24/08 (b)(c)(d)		2,000		1,993
5.42%, 06/16/08 (b)(c)(d)		2,000		2,000
Yorktown Capital, L.L.C.
5.64%, 02/22/08 (a)(b)(c)		11,000		10,911
5.15%, 03/18/08 (a)(b)(c)		3,285		3,249
5.05%, 03/19/08 (a)(b)(c)		5,343		5,285
5.14%, 03/19/08 (a)(b)(c)		7,000		6,923
				867,266
Total Fixed-Rate Obligations (Cost $1,617,573)				1,617,573
Variable-Rate Obligations 14.0% of net assets
Barclays Bank PLC
4.99%, 01/16/08		10,000		10,000
Beta Finance, Inc.
4.87%, 01/25/08 (b)(c)		16,000		16,000
BNP Paribas
5.17%, 01/03/08		2,000		2,000
California Pollution Control Financing Authority
4.85%, 01/02/08 (a)		1,760		1,760
Credit Suisse
5.15%, 01/23/08		10,000		10,000
Danske Corp.
4.95%, 02/13/08 (a)(c)		15,000		15,000

18 See financial notes

Schwab Investor Money Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
4.96%, 02/15/08 (a)(c)		15,000		15,000
Deutsche Bank AG
5.30%, 01/14/08		19,000		19,000
4.96%, 01/28/08		10,000		10,000
Development Authority of Columbus, GA
4.88%, 01/03/08 (a)		1,455		1,455
Dexia Credit Local S.A.
4.82%, 01/25/08		10,500		10,499
Eagle County, Colorado Taxable Housing Facilities
4.86%, 01/03/08 (a)		1,500		1,500
Five Finance, Inc.
5.18%, 01/09/08 (b)(c)		1,000		1,000
K2 (USA), L.L.C.
5.00%, 01/15/08 (b)(c)(d)		2,000		2,000
4.94%, 02/01/08 (b)(c)(d)		10,000		10,002
Lexington Parker Capital Co., L.L.C.
5.19%, 01/07/08 (a)(b)(c)		6,000		6,000
Liberty Lighthouse U.S. Capital Co., L.L.C.
5.19%, 01/02/08 (b)(c)(d)		1,000		1,000
5.21%, 01/10/08 (b)(c)(d)		2,000		2,000
Links Finance, L.L.C.
4.84%, 01/25/08 (b)(c)(d)		4,000		4,000
LP Pinewoods SPV
5.11%, 01/03/08 (a)		15,000		15,000
Merrill Lynch & Co., Inc.
4.89%, 01/22/08		20,000		20,000
Royal Bank of Canada
5.18%, 01/04/08		25,000		24,998
Royal Bank of Scotland PLC
5.26%, 01/11/08 (c)		7,000		7,000
4.81%, 01/28/08		18,000		17,999
Sedna Finance, Inc.
5.20%, 01/14/08 (b)(c)		1,000		1,000
Sigma Finance, Inc.
5.00%, 01/15/08 (b)(c)(d)		17,000		17,000
Societe Generale
5.06%, 01/17/08		4,000		4,000
Sumitomo Trust & Banking Co.
4.93%, 01/21/08		2,000		2,000
The Goldman Sachs Group, Inc.
5.26%, 01/11/08 (d)		15,000		15,000
Village of Sturtevant, WI
5.03%, 01/03/08 (a)		465		465
Wachovia Bank, N.A.
4.98%, 01/25/08		15,000		15,000
Westpac Banking Corp.
4.88%, 02/05/08		7,000		7,000
Whistlejacket Capital, L.L.C.
4.99%, 01/15/08 (b)(c)(d)		4,000		4,000
4.83%, 01/25/08 (b)(c)(d)		2,000		2,000
4.86%, 02/19/08 (b)(c)(d)		2,000		2,000
Total Variable-Rate Obligations (Cost $292,678)				292,678
Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 8.0% of net assets
Repurchase Agreements 8.0%
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement, dated 12/31/07, due 01/02/08 at 4.77%, fully collateralized by U.S. Government Securities with a value of $61,204.		60,016		60,000
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.50%, fully collateralized by U.S. Government Securities with a value of $7,534.		7,384		7,382
Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.75%, fully collateralized by U.S. Government Securities with a value of $102,000.		100,026		100,000
Total Other Investments (Cost $167,382)				167,382
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $2,077,633.

(a)	Credit-enhanced security.
(b)	Asset-backed security.
(c)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $769,924 or 36.9% of net assets.
(d)	Illiquid security. At the period end, the value of these amounted to $64,995 or 3.1% of net assets.

See financial notes 19

Schwab Investor Money Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$2,077,633
Receivables:
Investments sold		60
Fund shares sold		17,370
Interest		11,233
Prepaid expenses	+	4
Total assets		2,106,300
Liabilities
Payables:
Investment adviser and administrator fees		57
Transfer agent and shareholder services fees		44
Fund shares redeemed		16,609
Distributions to shareholders		680
Accrued expenses	+	67
Total liabilities		17,457
Net Assets
Total assets		2,106,300
Total liabilities		17,457
Net assets		$2,088,843
Net Assets by Source
Capital received from investors		2,088,842
Net investment income not yet distributed		1

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$2,088,843		2,088,900		$1.00

20 See financial notes

Schwab Investor Money Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$92,059
Net Realized Gains and Losses
Net realized gains on investments		1
Expenses
Investment adviser and administrator fees		5,827
Transfer agent and shareholder service fees		4,318
Registration fees		264
Shareholder reports		151
Portfolio accounting fees		96
Custodian fees		94
Trustees’ fees		31
Professional fees		26
Other expenses	+	11
Total expenses		10,818
Expense reduction by adviser and Schwab	−	86
Net expenses		10,732
Increase (Decrease) in Net Assets from Operations
Total investment income		92,059
Net expenses	−	10,732
Net investment income		81,327
Net realized gains	+	1
Increase in net assets from operations		$81,328

See financial notes 21

Schwab Investor Money Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$81,327	$42,536
Net realized gains	+	1	−
Increase in net assets from operations		81,328	42,536
Distributions to Shareholders
Distributions from net investment income		81,327	42,536
Transactions in Fund Shares *
Shares sold		2,756,366	1,796,715
Shares reinvested		76,781	40,767
Shares redeemed	+	(2,057,959)	(1,044,875)
Net transactions in fund shares		775,188	792,607
Net Assets
Beginning of period		1,313,654	521,047
Total increase	+	775,189	792,607
End of period		$2,088,843	$1,313,654
Net investment income not yet distributed		$1	$−

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

22 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 (the “1940 Act”), as amended. The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund Schwab New Jersey AMT Tax-Free Money Fund
Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund each offers one share class. Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the funds are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

Repurchase Agreements: The funds may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created. Any repurchase agreements with due dates later than seven days from issue dates may be subject to seven day put features for liquidity purposes.

The funds’ repurchase agreements will be fully collateralized by U.S. government securities. All collateral is held by the funds’ custodian (or, in the case of tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Delayed-Delivery: The funds may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, a fund could end up paying more for the security than its market value at the time of settlement. The funds have set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (that is, for less than face value) or a premium (more than face value), it amortizes the discount or premium from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security

23

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):

is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.

(e) Expenses:

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

Each fund has an arrangement with its custodian bank under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts (if any) are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the funds’ financial statements.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.

24 

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):

SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact of adopting SFAS No. 157 on the funds’ financial statements.

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to $10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $40 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

	Transfer Agent Fees		Shareholder Service Fees
Retirement Advantage Money Fund		0.05%		0.17%
Investor Money Fund		0.05%		0.20%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the Retirement Advantage Money Fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses to 0.49% through April 29, 2009.

The funds may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, each fund’s total security transactions with other Schwab Funds were as follows:

Retirement Advantage Money Fund	$—
Investor Money Fund	$16,000

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

Trustees

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

25

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

4. Borrowing from Banks:

The funds may borrow money from banks and custodians. The funds may obtain temporary bank loans through the trust to which they belong, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. There was no borrowing from the lines of credit for the funds during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.

5. Federal Income Taxes:

As of December 31, 2007, the components of distributable earnings on a tax-basis were as follows:

	Retirement Advantage Money Fund		Investor Money Fund
Undistributed ordinary income		$—		$1
Undistributed long-term capital gains		—		—

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the funds had no capital loss carry forwards.

For tax purposes, realized capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2007, the funds had no deferred realized net capital losses, and there were no capital losses being utilized to offset capital gains.

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

	Retirement Advantage Money Fund		Investor Money Fund
Current period distributions
Ordinary income		$38,263		$81,327
Long-term capital gains		—		—
		—		—
Prior period distributions
Ordinary income		$30,235		$42,536
Long-term capital gains		—		—
		—		—

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 and losses; capital losses related to wash sales, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by each fund for financial reporting purposes. Each fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, the funds made the following reclassifications:

	Retirement Advantage Money Fund		Investor Money Fund
Undistributed net investment income		$—		$1
Net realized capital gains and losses		—		(1	)

26 

Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund

Financial Notes (continued)

6.  Subsequent Event:

Subsequent to year-end, on February 11, 2008, Whistlejacket Capital LLC (Whistlejacket), a structured investment vehicle (“SIV”), experienced an “enforcement event” that has led to the appointment of a Receiver to manage Whistlejacket’s operations. On February 12, 2008, two nationally recognized statistical rating organizations downgraded the ratings of the medium term notes (Notes) issued by Whistlejacket, including the Notes held by the funds. As a result of the downgrade, the Notes are no longer money fund eligible pursuant to Rule 2a-7 of the 1940 Act. As required under Rule 2a-7, the Board of Trustees of the funds met on February 12, 2008 and, based on the recommendation of the funds’ investment adviser, determined that it was not in the best interest of the funds to dispose of the Notes at that time.

27

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, 2007, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

28 

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

29

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President– Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President–Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

30 

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002-present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

31

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

32 

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

33

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

34 

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR13860-11

Schwab Money Market Fund^tm

Annual Report

December 31, 2007

In This Report
From the Chairman	1
From the President	2
The Investment Environment and the Fund	3
Performance and Fund Facts	5
Fund Expenses	6
Financial Statements	7
Financial Notes	16
Report of Independent Registered Public Accounting Firm	20
Trustees and Officers	22
Glossary	26

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

From the Chairman

Charles Schwab

Chairman

Dear Shareholder,

I’ve always believed that an asset allocation plan and a diversified portfolio are the foundation of a well designed investment strategy. Years of research have indicated that spreading your money across different asset classes, such as stocks, bonds, and cash equivalents can be the most important factor in weathering market volatility and determining portfolio performance.

Schwab Funds provides an uncomplicated and effective way to build a well diversified portfolio. You can choose from a range of funds with distinct investment objectives and styles to develop your own individual asset allocation strategy. Or, if you prefer a single investment solution, Schwab offers asset allocation funds based on either risk tolerance or time horizon.

Here at Schwab, our goal is to help you reach your financial goals. With quality funds and services backed by the guidance and support you need—whatever type of investor you are—we’ll do all we can to help you succeed.

Thank you for investing with us.

Sincerely,

Schwab Money Market Fund 1

From the President

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

Dear Shareholder,

I am pleased to present your Schwab money fund annual report for the period ended December 31, 2007. In returning to my role as President and CEO of Charles Schwab Investment Management, I would like to thank you for investing in Schwab Funds and share my thoughts with you on the current market environment.

Although the economy grew at a robust pace during the second and third quarters, there was a reemergence of market volatility during the latter half of the year. Increased defaults on subprime loans engendered risk aversion throughout the fixed income market, driving up treasury prices and pushing down the prices of very high-quality, non-treasury securities. All asset-backed and mortgage-backed securities seemed to get painted with the same broad brush, despite the fact that subprime mortgages represented a very small fraction of the sector.

In light of this, I want to assure you that we remain committed to a comprehensive analysis of all fund portfolio holdings, while implementing an investment strategy that relies on time-tested fundamentals. For all our money market funds, we perform our own ongoing and independent analysis of the credit worthiness of each security purchased, and employ an investment process that emphasizes liquidity, high-quality investments and diversification.

We will continue to manage our funds consistent with the tenets of successful investing—rigorous research, guided by long-term perspective and prudence. Thank you for your continued trust and support.

Sincerely,

2 Schwab Money Market Fund

The Investment Environment and the Fund

Linda Klingman (middle), managing director and portfolio manager, has overall responsibility for the management of the fund.

Mike Neitzke (right), managing director and portfolio manager, has day-to-day responsibility for management of the fund.

Michael Lin (left), portfolio manager, has day-to-day responsibility for management of the fund.

Despite continued expansion of the U.S. economy and growth in the market throughout the past year, the reporting period proved to be unnervingly volatile with strong economic headwinds developing in the third and fourth quarters. Falling home prices, a credit crunch, and high oil prices were among the myriad forces acting to curtail consumer spending and erode investor confidence in the marketplace. A tightening of lending standards and reduced liquidity caused by credit turmoil acted to further slow economic growth, but whether or not these events have the potential to precipitate a full-blown recession remains uncertain.

Opening the year with a mere 0.6% growth in Gross Domestic Product (GDP), the economy surged ahead in the second and third quarters. GDP rose 3.8% in the second quarter, and 4.9% in the third quarter, buoyed by strength in exports, personal consumption expenditures, and private inventory investment. However, estimates for the fourth quarter placed GDP growth at a tepid 1.5% or less, reflecting a significant downturn in economic growth rates, and indicating that trouble in the housing and credit markets has finally taken its toll. While higher energy prices and credit woes suppressed consumer spending and cut into GDP numbers, a healthy demand for exports spurred by a decline in the dollar helped to partially offset these domestic concerns.

Since peaking in early 2002, the U.S. dollar has declined in value by more than 24% making exports more affordable to foreign buyers, but raising concerns over inflation. An increase in net exports throughout 2007 accounted for about a third of GDP growth in the second and third quarters. Real exports of goods and services increased 19.1% in the third quarter, compared to a 7.5% increase in the second. While a weak dollar has stimulated exports, it has raised serious concerns over inflation as energy prices continue to rise. The Consumer Price Index rose by 0.8% in November, fueled by a 5.7% jump in energy prices, while the core index increased by 0.3%. Inclusive of energy prices, inflation outpaced a 2.8% growth in wages during the period.

Of greatest concern to investors during the latter half of this period was the market volatility created in large part by trouble in the housing market and the resulting credit crunch. From 1995 to 2006, housing prices outpaced inflation by 70% creating around 4 to 8 trillion dollars in new wealth - a figure that ultimately proved unsustainable. In May 2007, sales of new homes declined by 1.6% to a seasonally adjusted annual rate of 915,000 units, making waves in the market as inventory increased and prices fell. In November, new home sales declined by an astounding 9% to 647,000 units, the largest drop in 12 years. As housing prices fell, homeowners became less able to leverage their homes as a source of cash.

Subprime borrowers, those with below-average credit ratings, were disproportionately affected in the correction. Although subprime adjustable rate mortgages accounted for just 6.8% of outstanding loans in the U.S., they represented 43% of foreclosures in the third quarter of 2007. In many cases the credit and risk of these loans was passed from the original lender to third-party investors in the form of mortgage-backed securities. With the increase in defaults on subprime loans, all asset-backed and mortgage-backed securities in the market seemed to get caught in the turmoil, despite the fact that subprime mortgages represented a very small fraction of the sector. Even very high-quality securities were rapidly unloaded as investors fled to safer investments, such as U.S. Treasuries. As a result, lending was disrupted between major banks and other financial institutions that were heavily invested in subprime, collateralized debt obligations (CDOs), and structured investment vehicles (SIVs).

Schwab Money Market Fund 3

The Investment Environment and the Fundcontinued

The reduced liquidity hit SIVs particularly hard. For nearly twenty years, SIVs have been a typical holding in the portfolios of many financial institutions, pension funds, mutual funds, municipalities and money market funds. However, not all SIVs were created equal—a handful of SIVs carried higher risk and had significant subprime investments. When those SIVs were recently unable to meet repayment of their debt obligations in the normal course of business, all SIVs came under scrutiny and the impact was felt throughout the marketplace.

While the subprime debacle and corresponding credit crisis has yet to fully percolate throughout the economy, measures to control the effects are already in place. Banks, the U.S. Government, and other lending institutions were quick to initiate damage control measures by manipulating lending rates, developing stricter lending standards, and reorganizing outstanding debt. Action by the Fed resulted in a 100 basis point drop in interest rates during the latter half of the year, moving rates from 5.25% to 4.25%. Though some investors had hoped for a greater reduction, the Fed remained cautious of bringing the rates down too far as inflationary pressures mounted. Even though the financial sector was relatively quick in its implementation of crisis management techniques, lingering liquidity issues as well as souring investor sentiment and the perceived threat of a recession proved to be more than enough to take the wind out of economic sails in the fourth quarter.

Closing out 2007, economic indicators remained decidedly mixed in November and December. The Dow Jones Industrial Average finished 2007 up 6.4% for the year, but posted its first fourth quarter decline in ten years. Financial stocks helped lead the decline in the fourth quarter, with many large banks and other financial corporations taking huge losses, as mortgage woes wormed their way through corporate balance sheets. In commodities, oil and gold continued to rise, sparking inflationary concerns as oil went over $100 a barrel for the first time. On the positive side, data showed that factory orders were up 1.5% in November and that new jobs were created in December, throwing some upbeat reports into a downbeat marketplace.

The Schwab Money Market Fund maintained a weighted average maturity (WAM) that was longer than the peer group throughout the reporting period. In August, ramifications from trouble in the housing and credit markets were made clear as the market experienced unprecedented volatility and uncertainty throughout the third and fourth quarters. In response, we sought to reduce the weighted average maturity and increase the overnight cash position of the fund as a buffer against market volatility. Despite reduction of the WAM, the fund remained long relative to the peer group. Maintaining a longer WAM throughout the year benefited the fund as we were able to lock in higher yielding securities before the Fed lowered rates.

Given the unprecedented volatility in the subprime mortgage market, we focused on reviewing and evaluating our SIV exposure in the second half of the year. As of December 31, 2007, SIV exposure in the Schwab Money Market Fund was approximately 3.7% of the fund’s net assets (see Financial Note 6).

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

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

4 Schwab Money Market Fund

Performance and Fund Factsas of 12/31/07

 Seven-Day Yields

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 Money Market Fundtm	Ticker Symbol: SWMXX
Seven-Day Yield1		4.43%
Seven-Day Yield—No Waiver2		4.41%
Seven-Day Effective Yield1		4.53%

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than performance data quoted. To obtain more current performance information, please visit www.schwab.com/schwabfunds.

 Statistics

Money funds must maintain a dollar-weighted average maturity of no longer than 90 days, and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).

Schwab Money Market Fundtm	Ticker Symbol: SWMXX
Weighted Average Maturity	48 days
Credit Quality of Holdings % of portfolio	100% Tier 1

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

Portfolio holdings may have changed since the report date.

1	Fund expenses have been partially absorbed by CSIM and Schwab.
2	Yield if fund expenses had not been partially absorbed by CSIM and Schwab.

Schwab Money Market Fund 5

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, 2007 and held through December 31, 2007.

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

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

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

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

					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio 1		Account Value		(Net of Expenses)		During Period 2
	(Annualized)		at 7/1/07		at 12/31/07		7/1/07 - 12/31/07
Schwab Money Market Fundtm
Actual Return		0.72%	$	1,000	$	1,023.40	$	3.67
Hypothetical 5% Return		0.72%	$	1,000	$	1,021.58	$	3.67

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

6 Schwab Money Market Fund

Schwab Money Market Fund^tm

Financial Statements

Financial Highlights

	1/1/07-			1/1/06-			1/1/05-			1/1/04-			1/1/03-
	12/31/07			12/31/06			12/31/05			12/31/04			12/31/03
Per-Share Data ($)
Net asset value at beginning of period		1.00			1.00			1.00			1.00			1.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.04			0.03			0.01			0.01
Less distributions:
Distributions from net investment income		(0.05	)		(0.04	)		(0.03	)		(0.01	)		(0.01	)
Net asset value at end of period		1.00			1.00			1.00			1.00			1.00
Total return (%)		4.72			4.40			2.56			0.68			0.50
Ratios/Supplemental Data (%)
Ratios to average net assets:
Net operating expenses		0.72			0.74			0.74			0.75			0.75
Gross operating expenses		0.73			0.79			0.78			0.78			0.78
Net investment income (loss)		4.62			4.24			2.52			0.67			0.50
Net assets, end of period ($ x 1,000,000)		19,584			21,762			42,552			44,023			49,079

See financial notes 7

Schwab Money Market Fund

Portfolio Holdingsas of December 31, 2007

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

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

For fixed rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date and the maturity date shown is the next interest rate change date.

				Cost		Value
Holdings by Category				($ x 1,000)		($ x 1,000)
	76	.1%	Fixed-Rate Obligations		14,911,326		14,911,326
	16	.4%	Variable-Rate Obligations		3,211,775		3,211,775
	6	.9%	Other Investments		1,341,932		1,341,932
	99	.4%	Total Investments		19,465,033		19,465,033
	0	.6%	Other Assets and Liabilities				119,139
	100	.0%	Net Assets				19,584,172

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fixed-Rate Obligations 76.1% of net assets
Bank Notes 0.9%
Bank of America, N.A.
5.09%, 01/18/08		49,000		49,000
4.75%, 04/11/08		120,000		120,000
				169,000
Certificates of Deposit 32.9%
Alliance & Leicester PLC
5.36%, 02/21/08		68,000		68,000
Allied Irish Bank PLC
4.73%, 04/28/08		65,000		65,000
American Express Bank FSB
5.05%, 03/10/08		57,000		57,000
American Express Centurion Bank
5.15%, 02/28/08		55,000		55,000
Banco Bilbao Vizcaya Argentaria S.A.
5.23%, 01/14/08		129,000		129,000
5.24%, 01/15/08		38,000		38,000
5.34%, 03/17/08		63,000		63,009
Bank of Montreal
5.32%, 01/22/08		55,000		55,000
5.38%, 04/14/08		10,000		10,000
Bank of Scotland
5.15%, 02/26/08		84,000		84,000
Bank of Tokyo Mitsubishi
5.15%, 01/17/08		100,000		100,000
5.12%, 02/19/08		19,000		19,000
5.02%, 03/25/08		56,000		56,000
Barclays Bank PLC
5.33%, 02/29/08		236,000		236,000
4.98%, 03/04/08		103,000		103,047
5.25%, 03/05/08		29,000		29,000
4.87%, 04/09/08		10,000		10,008
5.07%, 04/17/08		13,000		13,000
5.32%, 05/13/08		160,000		160,000
Bayerische Hypo-und Vereinsbank AG
5.20%, 02/28/08		65,000		65,001
BNP Paribas
4.64%, 05/30/08		100,000		100,000
4.75%, 06/26/08		325,000		325,000
Calyon
5.31%, 01/31/08		150,000		150,000
Canadian Imperial Bank of Commerce
5.28%, 02/07/08		15,000		15,000
5.09%, 03/17/08		65,000		65,000
Citibank, N.A.
4.86%, 01/23/08		329,000		329,000
4.88%, 02/14/08		50,000		50,000
Commerzbank AG
5.26%, 01/09/08		25,000		25,000
4.80%, 01/29/08		50,000		50,000
Credit Agricole S.A.
4.85%, 02/01/08		161,000		161,000
4.83%, 04/02/08		173,000		173,000
Depka Bank PLC
5.46%, 02/12/08		12,000		12,000
Dexia Credit Local S.A.
4.83%, 01/11/08		14,000		14,000
DnB NOR Bank ASA
4.86%, 01/30/08		75,000		75,000
Dresdner Bank AG
5.35%, 01/14/08		90,000		90,000
5.25%, 01/30/08		66,000		66,000
HBOS Treasury Services PLC
5.30%, 02/13/08 (a)		58,000		58,000
HSBC Bank PLC
4.76%, 05/09/08		90,000		90,002
HSBC Bank U.S.A.
5.36%, 02/20/08		26,000		26,000
ING Bank N.V.
4.84%, 02/01/08		77,000		77,000
4.79%, 03/03/08		161,000		161,000
KBC Bank N.V.
5.13%, 01/30/08		66,000		66,000
Mitsubishi UFJ Trust & Banking Corp.
4.85%, 02/05/08		22,000		22,000
5.38%, 04/09/08		30,000		30,000
5.18%, 07/23/08		40,000		40,000
Mizuho Corporate Bank Ltd.
5.40%, 01/02/08		99,000		99,000
5.17%, 01/30/08		198,000		198,000
Natixis S.A.
4.81%, 02/06/08		77,000		77,000
Norinchukin Bank Ltd.
4.82%, 02/06/08		80,000		80,000

8 See financial notes

Schwab Money Market Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Royal Bank of Scotland PLC
4.83%, 06/18/08		96,000		96,000
Skandinaviska Enskilda Banken AB
4.90%, 05/23/08		179,000		179,000
Societe Generale
4.84%, 02/01/08		55,000		55,000
5.33%, 02/25/08		154,000		154,000
5.12%, 02/29/08		10,000		10,000
5.39%, 03/12/08		31,000		31,000
5.13%, 03/13/08		58,000		58,001
5.37%, 03/26/08		18,000		18,000
4.81%, 06/24/08		95,000		95,000
Sumitomo Mitsui Banking Corp.
4.84%, 01/04/08		58,000		58,000
4.85%, 01/04/08		65,000		65,000
4.84%, 01/08/08		13,000		13,000
5.14%, 01/30/08		19,000		19,000
Toronto Dominion Bank
5.11%, 03/28/08		132,000		132,000
5.34%, 03/28/08		85,000		85,000
4.86%, 06/20/08		75,000		75,000
UBS AG
4.99%, 03/27/08		65,000		65,000
5.40%, 04/14/08		265,000		265,000
5.32%, 04/15/08		145,000		145,000
4.76%, 05/07/08		25,000		25,000
5.27%, 05/12/08		90,000		90,000
Unicredito Italiano S.p.A.
5.35%, 01/18/08		118,000		118,000
5.37%, 03/18/08		50,000		50,000
5.12%, 04/16/08		60,000		60,000
4.80%, 06/27/08		15,000		15,000
Union Bank of California
5.13%, 02/15/08		65,000		65,000
Wachovia Bank, N.A.
5.40%, 03/27/08		62,000		62,000
Westpac Banking Corp.
5.12%, 02/19/08		150,000		150,001
5.38%, 04/09/08		35,000		35,000
Wilmington Trust Co.
4.90%, 06/19/08		19,000		19,000
				6,446,069
Commercial Paper & Other Corporate Obligations 42.3%
Alpine Securitization Corp.
5.92%, 01/11/08 (a)(b)(c)		82,000		81,866
4.80%, 01/14/08 (a)(b)(c)		28,000		27,915
Amstel Funding Corp.
5.88%, 01/08/08 (b)(c)		18,000		17,980
5.01%, 01/22/08 (b)(c)		91,000		90,737
5.01%, 01/23/08 (b)(c)		62,497		62,308
4.86%, 01/29/08 (b)(c)		32,000		31,881
4.87%, 01/31/08 (b)(c)		33,000		32,868
5.12%, 02/19/08 (b)(c)		55,000		54,622
Amsterdam Funding Corp.
5.15%, 01/17/08 (a)(b)(c)		29,000		28,935
5.01%, 02/15/08 (a)(b)(c)		5,000		4,969
Anglo Irish Bank
5.35%, 01/02/08 (c)		23,000		22,997
5.36%, 01/10/08 (c)		26,000		25,966
5.07%, 01/24/08 (c)		6,000		5,981
ANZ National (Int’l) Ltd.
5.36%, 01/14/08 (a)		50,000		49,906
5.35%, 01/18/08 (a)		48,000		47,882
Aquinas Funding, L.L.C.
4.98%, 02/14/08 (a)(b)(c)		39,000		38,765
5.66%, 03/18/08 (a)(b)(c)		4,000		3,953
5.51%, 04/04/08 (a)(b)(c)		30,000		29,575
Atlantic Asset Securitization, L.L.C.
4.89%, 01/07/08 (a)(b)(c)		88,000		87,929
5.53%, 01/08/08 (a)(b)(c)		24,000		23,974
4.85%, 01/17/08 (a)(b)(c)		56,518		56,397
4.94%, 02/08/08 (a)(b)(c)		23,000		22,882
5.48%, 02/28/08 (a)(b)(c)		10,000		9,913
5.72%, 02/29/08 (a)(b)(c)		50,000		49,537
5.18%, 03/20/08 (a)(b)(c)		18,000		17,801
Atlantis One Funding Corp.
4.85%, 01/02/08 (b)(c)		126,000		125,983
5.13%, 01/22/08 (b)(c)		25,000		24,926
5.05%, 01/24/08 (b)(c)		100,000		99,682
5.37%, 02/14/08 (b)(c)		37,000		36,766
5.33%, 02/15/08 (b)(c)		64,000		63,590
5.15%, 02/26/08 (b)(c)		37,000		36,708
Bank of America Corp.
5.09%, 02/13/08		105,000		104,372
5.09%, 02/20/08		142,000		141,014
4.70%, 05/05/08		111,000		109,229
Bank of Ireland
5.42%, 01/16/08 (c)		8,000		7,982
5.20%, 02/12/08 (c)		96,000		95,428
Barclays US Funding Corp.
4.88%, 03/26/08 (a)		17,000		16,808
Barton Capital, L.L.C.
6.24%, 01/09/08 (a)(b)(c)		52,000		51,928
4.94%, 02/05/08 (a)(b)(c)		45,000		44,786
Cancara Asset Securitization, L.L.C.
5.53%, 01/02/08 (a)(b)(c)		6,000		5,999
5.31%, 01/07/08 (a)(b)(c)		35,000		34,969
5.31%, 01/09/08 (a)(b)(c)		40,000		39,953
5.29%, 01/11/08 (a)(b)(c)		61,000		60,912
5.24%, 01/30/08 (a)(b)(c)		95,000		94,607
4.85%, 02/15/08 (a)(b)(c)		28,000		27,833
Chariot Funding, L.L.C.
5.94%, 01/10/08 (a)(b)(c)		32,000		31,953
5.41%, 01/30/08 (a)(b)(c)		10,000		9,957
5.06%, 04/17/08 (a)(b)(c)		76,000		74,877
Citigroup Funding, Inc.
4.88%, 01/03/08 (a)		63,000		62,983
4.87%, 01/11/08 (a)		145,000		144,805
5.18%, 01/18/08 (a)		57,000		56,862
5.34%, 01/22/08 (a)		20,000		19,939
5.35%, 01/28/08 (a)		45,000		44,824
4.84%, 01/30/08 (a)		100,000		99,615
5.40%, 02/20/08 (a)		100,000		99,270
4.94%, 06/06/08 (a)		55,000		53,844
Clipper Receivables Co., L.L.C.
6.08%, 01/04/08 (a)(b)(c)		114,000		113,943
4.99%, 01/09/08 (a)(b)(c)		45,000		44,950
6.24%, 01/16/08 (a)(b)(c)		77,000		76,801
5.00%, 02/08/08 (a)(b)(c)		50,000		49,739
5.36%, 02/25/08 (a)(b)(c)		6,000		5,952
DnB NOR Bank ASA
5.02%, 03/12/08		30,000		29,707

See financial notes 9

Schwab Money Market Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Fairway Finance Co., L.L.C.
4.95%, 01/09/08 (a)(b)(c)		12,500		12,486
4.97%, 01/10/08 (a)(b)(c)		23,600		23,571
4.96%, 02/07/08 (a)(b)(c)		47,000		46,763
5.34%, 02/15/08 (a)(b)(c)		25,000		24,835
Falcon Asset Securitization Corp.
5.41%, 01/31/08 (a)(b)(c)		38,000		37,830
Gemini Securitization Corp., L.L.C.
5.28%, 01/08/08 (a)(b)(c)		45,000		44,954
4.92%, 02/05/08 (a)(b)(c)		39,000		38,816
4.94%, 02/12/08 (a)(b)(c)		68,000		67,613
5.48%, 02/29/08 (a)(b)(c)		4,000		3,965
General Electric Capital Corp.
5.32%, 02/19/08		126,000		125,122
5.33%, 03/20/08		12,000		11,865
Grampian Funding, L.L.C.
5.21%, 03/31/08 (a)(b)(c)		50,000		49,366
5.22%, 04/02/08 (a)(b)(c)		26,000		25,662
5.26%, 04/07/08 (a)(b)(c)		35,000		34,517
5.24%, 04/08/08 (a)(b)(c)		13,500		13,312
4.79%, 04/25/08 (a)(b)(c)		26,000		25,611
Intesa Funding, L.L.C.
5.12%, 01/31/08 (a)		150,000		149,366
Irish Life & Permanent PLC
5.35%, 01/16/08 (c)		6,000		5,987
J.P. Morgan Chase & Co.
5.01%, 03/14/08		290,000		287,116
Jupiter Securitization Corp.
5.33%, 01/25/08 (a)(b)(c)		233,000		232,180
K2 (USA), L.L.C.
5.40%, 06/13/08 (b)(c)(d)		23,000		23,000
5.42%, 07/15/08 (b)(c)(d)		119,000		119,000
KBC Financial Products International Ltd.
5.20%, 04/02/08 (a)(c)		28,000		27,637
Kitty Hawk Funding Corp.
5.41%, 01/28/08 (a)(b)(c)		54,222		54,004
Mont Blanc Capital Corp.
5.25%, 01/09/08 (a)(b)(c)		90,000		89,896
5.27%, 02/22/08 (a)(b)(c)		30,000		29,775
Morgan Stanley
5.19%, 03/31/08		100,000		98,737
5.17%, 04/07/08		25,000		24,661
Nationwide Building Society U.S.
5.35%, 01/16/08		30,000		29,935
5.20%, 02/27/08		50,000		49,594
5.28%, 03/03/08		55,000		54,507
5.00%, 03/25/08		63,000		62,280
Nieuw Amsterdam Receivables Corp.
5.30%, 01/11/08 (a)(b)(c)		45,000		44,935
5.18%, 03/27/08 (a)(b)(c)		72,000		71,131
Old Line Funding, L.L.C.
4.94%, 02/08/08 (a)(b)(c)		191,324		190,338
5.09%, 02/08/08 (a)(b)(c)		18,606		18,507
4.98%, 02/11/08 (a)(b)(c)		47,000		46,737
5.14%, 02/22/08 (a)(b)(c)		15,000		14,890
5.41%, 02/27/08 (a)(b)(c)		7,000		6,941
5.48%, 02/27/08 (a)(b)(c)		12,000		11,897
Park Avenue Receivables Co., L.L.C.
5.33%, 01/30/08 (a)(b)(c)		20,000		19,915
5.12%, 02/22/08 (a)(b)(c)		84,000		83,387
Picaros Funding, L.L.C.
5.24%, 03/12/08 (a)(b)(c)		58,000		57,413
5.23%, 04/08/08 (a)(b)(c)		41,000		40,431
Ranger Funding Co., L.L.C.
5.40%, 01/25/08 (a)(b)(c)		302,000		300,923
4.91%, 03/14/08 (a)(b)(c)		50,000		49,510
5.05%, 03/19/08 (a)(b)(c)		79,000		78,149
San Paolo IMI U.S. Financial Co.
4.85%, 03/24/08 (a)		89,000		88,025
Scaldis Capital Ltd.
5.31%, 01/09/08 (a)(b)(c)		102,000		101,881
5.07%, 01/10/08 (a)(b)(c)		15,286		15,267
5.27%, 01/15/08 (a)(b)(c)		86,000		85,826
5.19%, 03/25/08 (a)(b)(c)		62,000		61,262
5.14%, 04/16/08 (a)(b)(c)		25,000		24,628
Sedna Finance, Inc.
5.41%, 06/13/08 (b)(c)		56,000		56,000
Sheffield Receivables Corp.
5.07%, 01/15/08 (a)(b)(c)		27,000		26,947
5.07%, 01/25/08 (a)(b)(c)		46,000		45,847
4.92%, 02/07/08 (a)(b)(c)		22,000		21,890
5.01%, 02/07/08 (a)(b)(c)		50,000		49,746
5.03%, 02/08/08 (a)(b)(c)		30,000		29,843
Sigma Finance, Inc.
5.35%, 01/03/08 (b)(c)		117,000		116,966
5.40%, 03/12/08 (b)(c)(d)		5,000		4,949
5.37%, 03/20/08 (b)(c)(d)		24,000		23,728
Solitaire Funding, L.L.C.
5.20%, 02/15/08 (a)(b)(c)		30,000		29,809
5.21%, 02/15/08 (a)(b)(c)		73,000		72,535
5.14%, 04/10/08 (a)(b)(c)		24,000		23,663
5.11%, 04/16/08 (a)(b)(c)		50,000		49,261
5.11%, 04/17/08 (a)(b)(c)		61,000		60,090
Swedbank AB
5.49%, 01/22/08		110,000		109,654
5.05%, 03/19/08		12,500		12,367
Swedbank Mortgage AB
5.22%, 04/10/08		48,000		47,323
Thames Asset Global Securitization No. 1, Inc.
5.74%, 01/11/08 (a)(b)(c)		4,000		3,994
Thunder Bay Funding, L.L.C.
4.92%, 01/15/08 (a)(b)(c)		44,629		44,544
5.04%, 01/15/08 (a)(b)(c)		6,000		5,988
5.41%, 02/27/08 (a)(b)(c)		10,000		9,915
5.19%, 03/07/08 (a)(b)(c)		10,000		9,906
5.03%, 03/17/08 (a)(b)(c)		32,000		31,666
Ticonderoga Funding, L.L.C.
6.08%, 01/08/08 (a)(b)(c)		65,000		64,924
5.43%, 01/31/08 (a)(b)(c)		15,000		14,933
Tulip Funding Corp.
5.92%, 01/10/08 (a)(b)(c)		28,000		27,959
UBS Finance (Delaware), Inc.
5.35%, 01/22/08 (a)		33,000		32,900
5.38%, 03/18/08 (a)		5,000		4,944
5.09%, 07/07/08 (a)		50,000		48,721
Variable Funding Capital Corp.
5.50%, 01/04/08 (a)(b)(c)		50,000		49,977
4.89%, 01/10/08 (a)(b)(c)		10,000		9,988
5.49%, 01/16/08 (a)(b)(c)		96,000		95,782
5.06%, 02/05/08 (a)(b)(c)		7,000		6,966
4.94%, 02/07/08 (a)(b)(c)		27,000		26,865
5.48%, 02/20/08 (a)(b)(c)		34,000		33,747
4.81%, 04/14/08 (a)(b)(c)		50,000		49,321
Whistlejacket Capital, L.L.C.
5.35%, 01/15/08 (b)(c)(d)		50,000		49,898
5.42%, 06/16/08 (b)(c)(d)		13,000		13,000

10 See financial notes

Schwab Money Market Fund

Portfolio Holdings continued

Issuer	Face Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Windmill Funding Corp.
5.78%, 01/03/08 (a)(b)(c)		43,000		42,986
6.18%, 01/08/08 (a)(b)(c)		66,000		65,921
Yorktown Capital, L.L.C.
4.98%, 01/17/08 (a)(b)(c)		175,000		174,616
5.07%, 02/20/08 (a)(b)(c)		42,000		41,708
5.05%, 03/19/08 (a)(b)(c)		21,000		20,774
5.14%, 03/19/08 (a)(b)(c)		27,000		26,705
				8,296,257
Total Fixed-Rate Obligations (Cost $14,911,326)				14,911,326
Variable-Rate Obligations 16.4% of net assets
ABAG Financial Authority for Nonprofit Corps., California
4.85%, 01/03/08 (a)		17,680		17,680
ABN AMRO Bank N.V.
5.27%, 01/11/08		20,000		20,000
Albuquerque, New Mexico Airport Series B
5.14%, 01/02/08 (a)		14,800		14,800
Bank of Ireland
4.96%, 01/22/08 (c)		50,000		50,000
Bank of New York Co., Inc.
4.93%, 01/28/08 (c)		75,000		75,000
Canadian Imperial Bank of Commerce
4.91%, 01/23/08		65,000		65,000
4.88%, 01/29/08		140,000		140,000
CFM International, Inc.
4.67%, 01/07/08 (a)(c)		8,010		8,010
City of Santa Rosa, California
4.85%, 01/03/08 (a)		9,100		9,100
Commonwealth Bank of Australia
4.92%, 01/24/08 (c)		50,000		50,000
Cook County, IL
4.90%, 01/02/08 (a)		30,000		30,000
Credit Suisse
5.15%, 01/23/08		277,000		277,000
Danske Corp.
4.99%, 02/18/08 (a)(c)		80,000		80,000
Deutsche Bank AG
5.33%, 01/07/08		75,000		75,000
4.96%, 01/23/08		75,000		75,000
4.96%, 01/28/08		60,000		60,002
Fortis Bank
4.80%, 01/28/08		50,000		49,978
Genworth Life & Annuity
5.29%, 01/01/08 (d)		50,000		50,000
5.31%, 01/01/08 (d)		100,000		100,000
Liberty Lighthouse U.S. Capital Co., L.L.C.
4.83%, 02/15/08 (b)(c)(d)		16,000		15,999
4.95%, 03/17/08 (b)(c)(d)		65,000		64,998
Links Finance, L.L.C.
4.95%, 01/18/08 (b)(c)(d)		50,000		50,000
Lowndes Corp., Georgia
5.22%, 01/03/08 (a)(c)		850		850
Merlot 2000 B
5.27%, 01/02/08 (a)(c)		32,630		32,630
Merlot 2001 A67
5.27%, 01/02/08 (a)(c)		5,360		5,360
Merlot 2001 A7
5.27%, 01/02/08 (a)(c)		15,470		15,470
Merrill Lynch & Co., Inc.
5.17%, 01/15/08		100,000		100,000
4.89%, 01/22/08		50,000		50,000
Met Life Insurance Co. of CT
4.97%, 01/28/08 (d)		100,000		100,000
Metropolitan Life Insurance Co.
5.27%, 01/02/08 (d)		100,000		100,000
Mitsubishi UFJ Trust & Banking Corp.
4.97%, 01/30/08		20,000		20,000
Morgan Stanley
5.35%, 01/03/08		240,000		240,000
New Jersey Economic Development Authority
4.77%, 01/07/08 (a)		18,500		18,500
4.77%, 01/07/08 (a)		39,410		39,410
Nordea Bank AB
5.23%, 01/09/08 (c)		50,000		50,000
5.26%, 01/11/08 (c)		45,000		45,000
Royal Bank of Canada
5.30%, 01/10/08		60,000		60,000
Royal Bank of Scotland PLC
5.29%, 01/11/08		200,000		200,000
4.94%, 01/22/08 (c)		185,000		185,000
SE Christian Church, Jefferson County, Kentucky
4.86%, 01/03/08 (a)		5,985		5,985
Societe Generale
5.23%, 01/02/08 (c)		60,000		60,000
The Goldman Sachs Group, Inc.
5.08%, 01/16/08 (c)(d)		80,000		80,000
Wells Fargo & Co.
5.29%, 01/02/08 (c)		75,000		75,000
5.11%, 01/15/08 (c)		165,000		165,004
Westpac Banking Corp.
4.88%, 02/05/08		10,000		10,000
Whistlejacket Capital, L.L.C.
4.86%, 01/22/08 (b)(c)(d)		59,000		58,997
5.15%, 01/23/08 (b)(c)(d)		100,000		100,003
4.86%, 02/19/08 (b)(c)(d)		17,000		16,999
Total Variable-Rate Obligations (Cost $3,211,775)				3,211,775
Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Other Investments 6.9% of net assets
Repurchase Agreements 6.9%
Bear Stearns & Co., Inc.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.77%, fully collateralized by U.S. Government Securities with a value of $846,603.		830,220		830,000

See financial notes 11

Schwab Money Market Fund

Portfolio Holdings continued

Issuer	Maturity Amount		Value
Rate, Maturity Date	($ x 1,000)		($ x 1,000)
Credit Suisse Securities (USA), L.L.C.
Tri-Party Repurchase Agreement dated 12/31/07, due 01/02/08 at 4.50%, fully collateralized by U.S. Government Securities with a value of $12,172.		11,935		11,932
Deutsche Bank Securities, Inc.
Tri-Party Repurchase Agreement issued 12/31/07, due 01/02/08 at 4.75%, fully collateralized by U.S. Government Securities with a value of $510,000.		500,132		500,000
Total Other Investments (Cost $1,341,932)				1,341,932
End of Investments.
(All dollar amounts are x 1,000)
At 12/31/07, the tax basis cost of the fund’s investments was $19,465,033.

(a)	Credit-enhanced security.
(b)	Asset-backed security.
(c)	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $7,262,400 or 37.1% of net assets.
(d)	Illiquid security. At the period end, the value of these amounted to $970,571 or 5.0% of net assets.

12 See financial notes

Schwab Money Market Fund

Statement of

Assets and Liabilities

As of December 31, 2007. All numbers x 1,000 except NAV.

Assets
Investments, at cost and value (Note 2a)		$19,465,033
Receivables:
Investments sold		985
Interest		120,101
Prepaid expenses	+	46
Total assets		19,586,165
Liabilities
Payables:
Investment adviser and administrator fees		509
Transfer agent and shareholder services fees		645
Accrued expenses	+	839
Total liabilities		1,993
Net Assets
Total assets		19,586,165
Total liabilities	−	1,993
Net assets		$19,584,172
Net Assets by Source
Capital received from investors		19,584,170
Net investment income not yet distributed		2

Net Asset Value (NAV)

		Shares
Net Assets	¸	Outstanding	=	NAV
$19,584,172		19,584,263			$1.00

See financial notes 13

Schwab Money Market Fund

Statement of

Operations

For January 1, 2007 through December 31, 2007. All numbers are x 1,000.

Investment Income
Interest		$1,070,798
Net Realized Gains and Losses
Net realized gains on investments		556
Expenses
Investment adviser and administrator fees		62,354
Transfer agent and shareholder service fees		80,213
Shareholder reports		1,738
Custodian fees		886
Portfolio accounting fees		417
Registration fees		227
Professional fees		80
Trustees’ fees		70
Tax expense		44
Interest expense		4
Other expenses	+	306
Total expenses		146,339
Expense reduction by adviser and Schwab	−	1,271
Custody credits	−	6
Net expenses		145,062
Increase (Decrease) in Net Assets from Operations
Total investment income		1,070,798
Net expenses	−	145,062
Net investment income		925,736
Net realized gains	+	556
Increase in net assets from operations		$926,292

14 See financial notes

Schwab Money Market Fund

Statements of

Changes in Net Assets

For current and prior report periods. All numbers are x 1,000.

Operations

		1/1/07-12/31/07	1/1/06-12/31/06
Net investment income		$925,736	$1,341,222
Net realized gains	+	556	5
Increase in net assets from operations		926,292	1,341,227
Distributions to Shareholders
Distributions from net investment income		925,780	1,341,222
Transactions in Fund Shares*
Shares sold		57,195,861	103,610,347
Shares reinvested		908,081	1,283,663
Shares redeemed	+	(60,282,186)	(125,684,521)
Net transactions in fund shares		(2,178,244)	(20,790,511)
Net Assets
Beginning of period		21,761,904	42,552,410
Total decrease	+	(2,177,732)	(20,790,506)
End of period		$19,584,172	$21,761,904
Net investment income not yet distributed		$2	$−

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

See financial notes 15

Schwab Money Market Fund

Financial Notes

1. Business Structure of the Fund:

Schwab Money Market Fund 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 (the “1940 Act”), as amended. The list below shows all the funds in the trust including the fund discussed in this report, which is highlighted:

The Charles Schwab Family of Funds (organized October 20, 1989)
Schwab Money Market Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Value Advantage Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York AMT Tax-Free Money Fund Schwab New Jersey AMT Tax-Free Money Fund
Schwab Pennsylvania Municipal Money Fund
Schwab AMT Tax-Free Money Fund
Schwab Massachusetts AMT Tax-Free Money Fund
Schwab Retirement Advantage Money Fund
Schwab Investor Money Fund
Schwab Advisor Cash Reserves
Schwab Cash Reserves
Schwab California AMT Tax-Free Money Fund

Schwab Money Market Fund offers one share class. Shares are bought and sold at $1.00 per share. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.

2. Significant Accounting Policies:

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

(a) Security Valuation:

Securities in the fund are valued utilizing amortized cost (which approximates market value) permitted in accordance with Rule 2a-7 of the 1940 Act. When such valuations do not approximate market value, securities may be valued as determined in accordance with procedures adopted by the Board of Trustees.

(b) Portfolio Investments:

Repurchase Agreements: The fund may enter into repurchase agreements. In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The date, price and other conditions are all specified when the agreement is created. Any repurchase agreements with due dates later than seven days from issue dates may be subject to seven day put features for liquidity purposes.

The fund’s repurchase agreements will be fully collateralized by U.S. government securities. All collateral is held by the fund’s custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.

Delayed-Delivery: The fund may buy securities on a delayed-delivery basis. In these transactions, a fund agrees to buy a security for a stated price, with settlement generally occurring within two weeks. If the security’s value falls before settlement occurs, the fund could end up paying more for the security than its market value at the time of settlement. The fund has set aside sufficient securities as collateral for those securities bought on a delayed-delivery basis.

(c) Security Transactions:

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

(d) Investment Income:

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

16 

Schwab Money Market Fund

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(e) Expenses:

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

(f) Distributions to Shareholders:

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

(g) Custody Credit:

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

(h) Accounting Estimates:

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

(i) Federal Income Taxes:

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

The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes.

(j) Indemnification:

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

(k) New Accounting Standards:

Financial Accounting Standards Board Interpretation (FIN) No. 48 — Accounting for Uncertainty in Income Taxes — an Interpretation of SFAS No. 109, was issued in July 2006 and is effective for fiscal years beginning after December 15, 2006. This Interpretation provides new requirements for the recognition, measurement, and disclosure in the financial statements of a tax position taken or expected to be taken in a tax return when there is uncertainty about whether that tax position will ultimately be sustained. As of December 31, 2007, management has reviewed the tax positions for open tax years (December 31, 2004 through December 31, 2007), and determined that no provision for income tax is required in the fund’s financial statements.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements.

SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact of adopting SFAS No. 157 on the fund’s financial statements.

17

Schwab Money Market Fund

Financial Notes (continued)

3.  Affiliates and Affiliated Transactions:

(All dollar amounts are x 1,000.)

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

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

Average daily net assets
First $1 billion	0.35%
$1 billion to 10 billion	0.32%
$10 billion to $20 billion	0.30%
$20 billion to $30 billion	0.27%
Over $40 billion	0.25%

Charles Schwab & Co., Inc. (“Schwab”) is an affiliate of the investment adviser and is the trust’s transfer agent and shareholder services agent.

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

Transfer Agent Fees		Shareholder Service Fees
	0.20%		0.20%

Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the fund to limit the total expenses charged, excluding interest, taxes and certain non-routine expenses to 0.73% for so long as CSIM serves as the investment adviser to the fund.

The fund may make direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the period ended December 31, 2007, the fund’s total security transactions with other Schwab Funds were $450,000.

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

Trustees

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

4.  Borrowing from Banks:

The fund may borrow money from banks and custodians. The fund may obtain temporary bank loans through the trust to which it belongs, to use for meeting shareholder redemptions or for extraordinary or emergency purposes. The Schwab Funds have custodian overdraft facilities and uncommitted line of credit arrangements of $150 million and $100 million with State Street Corporation and Bank of America, N.A., respectively. The fund pays interest on the amounts it borrows at rates that are negotiated periodically. There was no borrowing from the lines of credit for the fund during the period. However, the fund utilized its overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations.

18 

Schwab Money Market Fund

Financial Notes (continued)

5.  Federal Income Taxes:

(All dollar amounts are x 1,000.)

As of December 31, 2007, the components of distributable earnings on a tax-basis were as follows:

Undistributed ordinary income	$2
Undistributed long-term capital gains	—

Capital loss carry forwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2007, the fund had no capital loss carry forwards.

For tax purposes, realized capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following fiscal year. As of December 31, 2007, the fund had no deferred realized net capital losses and the capital losses utilized to offset capital gains was $44.

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

	Current period distributions		Prior period distributions
Ordinary income		$925,780		$1,341,222
Long-term capital gains		—		—

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 and losses; capital losses related to wash sales, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the 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.

The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of December 31, 2007, the fund made the following reclassifications:

Capital shares	$466
Undistributed net investment income	46
Net realized capital gains and losses	(512	)

6.  Subsequent Event:

Subsequent to year-end, on February 11, 2008, Whistlejacket Capital LLC (Whistlejacket), a structured investment vehicle (“SIV”), experienced an “enforcement event” that has led to the appointment of a Receiver to manage Whistlejacket’s operations. On February 12, 2008, two nationally recognized statistical rating organizations downgraded the ratings of the medium term notes (Notes) issued by Whistlejacket, including the Notes held by the fund. As a result of the downgrade, the Notes are no longer money fund eligible pursuant to Rule 2a-7 of the 1940 Act. As required under Rule 2a-7, the Board of Trustees of the fund met on February 12, 2008 and, based on the recommendation of the fund’s investment adviser, determined that it was not in the best interest of the fund to dispose of the Notes at that time.

19

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of:
Schwab Money Market Fund

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 Money Market Fund (one of the portfolios constituting The Charles Schwab Family of Funds, hereafter referred to as the ‘Fund‘) at December 31, 2007, 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, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Francisco, California
February 14, 2008

20 

Other Federal Tax Information: (unaudited)

(All dollar amounts are x 1,000)

For the period ended December 31, 2007, the fund designates $378 as a capital gain dividend.

21

Trustees and Officers

The tables below give information as of December 31, 2007, about the trustees and officers for The Charles Schwab Family of Funds, which includes the fund covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, and Laudus Trust. As of December 31, 2007, the Fund Complex included 72 funds.

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

Independent Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	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.		72	Board 1–Director, Redwood Trust, Inc. Board 2–Director, PMI Group, Inc.
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Fellow: The Hoover Institution at Stanford University; Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University		61	Board 1–Director, Gilead Sciences, Inc. Board 2–Director, Monaco Coach Corporation Board 3–Director, Venture Lending and Leasing, Inc.
William A. Hasler 1941 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Dean Emeritus, Haas School of Business, University of California, Berkeley. Until February 2004, Co-Chief Executive Officer, Aphton Corp. (bio-pharmaceuticals).		72	Board 1–Director, Mission West Properties Board 2–Director, TOUSA Board 3–Director, Harris-Stratex Networks Board 4–Director, Genitope Corp. Board 5–Director, Ditech Networks Board 6–Director, Rubicon Limited
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds since 2000.)	Chairman, Chief Executive Officer and founder of Smith Graham & Co.(investment advisors).		61	Board 1–Board of Cooper Industries Board 2–Chairman of the Audit Committee of Oneok Partners LP
Donald R. Stephens 1938 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Managing Partner, D. R. Stephens & Company (investments).		61	None.
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	Senior Managing Director, Chairman of the Finance Committee, GSC Group; General Partner, Goldman Sachs & Co., until June 2005.		61	Board 1–Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals

22 

Independent Trustees continued
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served1)	Past Five Years	the Trustee		Other Directorships
Michael W. Wilsey 1943 Trustee (Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments).		61	None.

Interested Trustees
Name, Year of Birth,		Number of
and Position(s) with	Principal	Portfolios in
the trust; (Terms of	Occupations	Fund Complex
office, and length of	During the	Overseen by
Time Served )	Past Five Years	the Trustee		Other Directorships
Charles R. Schwab2 1937 Chairman and Trustee (Chairman and Trustee of The Charles Schwab Family of Funds since 1989.)	Chairman, Chief Executive Officer and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc.; Chairman and Director, Charles Investment Management, Inc., Charles Schwab Bank, N.A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer and Director, Schwab Holdings, Inc. Through June 2007, Director, U.S. Trust Company, N.A., U.S. Trust Company of New York. Until May 2003, Co-Chief Executive Officer, The Charles Schwab Corporation.		61	None.
Walt Bettinger2 1960 Trustee (Trustee of The Charles Schwab Family of Funds since 2008.)	President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation; Director, Charles Schwab Bank; Executive Vice President and President – Schwab Investor Services, The Charles Schwab Corporation; Executive Vice President and President – Schwab Investor Services, Charles Schwab & Co., Inc.; Chairman and President, Schwab Retirement Plan Services, Inc.; President and Chief Executive Officer, The Charles Schwab Trust Company, Director, Charles Schwab Bank, N.A., Schwab Retirement Plan Services, and Schwab Retirement Technologies.		72	None.

23

Officers of the Trust
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Randall W. Merk 1954 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds since 2007.)	Executive Vice President and President, Investment Management Services, Charles Schwab & Co., Inc.; Executive Vice President, Charles Schwab & Co., Inc. (2002 – present); President and Chief Executive Officer, Charles Schwab Investment Management, Inc. (2007-present); Director, Charles Schwab Asset Management (Ireland) Limited and Charles Schwab Worldwide Funds PLC. From September 2002 to July 2004, Chief Executive Officer and President, Charles Schwab Investment Management, Inc. and Executive Vice President, Charles Schwab & Co., Inc.
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc.; Chief Financial Officer, Laudus Trust and Laudus Variable Insurance Trust; Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited. Through June 2007, Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust; Chief Financial Officer, Mutual Fund Division, UST Advisors, Inc. From December 1999 to November 2004, Sr. Vice President, Financial Reporting, Charles Schwab & Co. Inc.
Kimon Daifotis 1959 Senior Vice President and Chief Investment Officer-Fixed Income (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Fixed Income, Charles Schwab Investment Management, Inc. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Jeffrey Mortimer 1963 Senior Vice President and Chief Investment Officer-Equities (Officer of The Charles Schwab Family of Funds since 2004.)	Senior Vice President and Chief Investment Officer-Equities, Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer, Laudus Trust and Laudus Variable Insurance Trust. Prior to 2004, Vice President and Sr. Portfolio Manager, Charles Schwab Investment Management, Inc.
Randall Fillmore 1960 Chief Compliance Officer and AML Officer (Officer of The Charles Schwab Family of Funds since 2002.)	Senior Vice President and Chief Compliance Officer, Charles Schwab Investment Management, Inc.; Senior Vice President, Charles Schwab & Co. Inc.; Chief Compliance Officer, Laudus Trust and Laudus Variable Insurance Trust. Through June 2007, Chief Compliance Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust. From 2002 to 2003, Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc.
Koji E. Felton 1959 Secretary and Chief Legal Officer (Officer of The Charles Schwab Family of Funds since 1998.)	Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc.; Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. Through June 2007, Chief Legal Officer, Excelsior Funds Inc., Excelsior Tax Exempt Funds, Inc. and Excelsior Funds Trust.
Catherine MacGregor 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President, Charles Schwab & Co., Inc. and Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust; since 2006, Chief Counsel, Laudus Trust and Variable Insurance Trust. Until July 2005, Senior Associate, Paul Hastings Janofsky & Walker LLP.
Cathy Sabo 1964 Vice President (Officer of The Charles Schwab Family of Funds since 2005.)	Vice President-Compliance, Charles Schwab Investment Management, Inc., Laudus Trust and Laudus Variable Insurance Trust. Until 2004, Vice President, Client, Sales & Services Controls, Charles Schwab & Co., Inc.

24 

Officers of the Trust continued
Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served3)	Principal Occupations During the Past Five Years
Michael Haydel 1970 Vice President (Officer of The Charles Schwab Family of Funds since 2006.)	Vice President, Asset Management Client Services, Charles Schwab & Co., Inc.; Vice President and AML Officer, Laudus Trust and Laudus Variable Insurance Trust. Until March 2004, Director Charles Schwab & Co., Inc.

1	Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010.
2	In addition to their employment with the investment advisor and the distributor, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the advisor.
3	The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each other officer serves at the pleasure of the Board.

25

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.

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

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

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.” An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.

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

bond anticipation notes Obligations sold by a municipality on an interim basis in anticipation of the municipality’s issuance of a longer-term bond in the future.

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

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

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

credit quality The capacity of an issuer to make its interest and principal payments. Federal regulations strictly limit 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 principal to its debtholders.

dollar-weighted average maturity (DWAM) See weighted average maturity.

effective yield A measurement of a fund’s yield that assumes that all dividends were 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 a 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 A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

maturity The date a debt security is scheduled to be “retired” and its principal amount returned to the bondholder.

money market securities High-quality, short-term debt securities that may be issued by entities such as the U.S. government,

Portfolio terms

To help reduce the space occupied by the portfolio holdings, we use the following terms. Most of them appear within descriptions of individual securities in municipal funds, and describe features of the issuer or the security. Some of these are more fully defined elsewhere in the Glossary.

ACES	Adjustable convertible extendable security
BAN	Bond anticipation note
COP	Certificate of participation
GAN	Grant anticipation note
GO	General obligation
HDA	Housing Development Authority
HFA	Housing Finance Agency
IDA	Industrial Development Authority
IDB	Industrial Development Board
IDRB	Industrial Development Revenue Bond
M/F	Multi-family
RAN	Revenue anticipation note
RB	Revenue bond
S/F	Single-family
TAN	Tax anticipation note
TECP	Tax-exempt commercial paper
TRAN	Tax and revenue anticipation note
VRD	Variable-rate demand

26 

corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, bankers acceptances, notes and time deposits.

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

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

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

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

revenue anticipation notes Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc.

section 3c7 securities Section 3c7 of the Investment Company Act of 1940 (the “1940 Act”) exempts certain issuers from many regulatory requirements applicable to investment companies under the 1940 Act. An issuer whose outstanding securities are exclusively owned by “qualified purchasers” and who is not making or proposing to make a public offering of the securities may qualify for this exemption.

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

Structured Investment Vehicle  SIVs are special purpose finance companies that issue high-quality, short-term instruments, like commercial paper (CP) and medium-term notes (MTNs), for purchase by investors. In turn, SIVs seek to generate returns by purchasing high-quality, higher yielding medium to longer term fixed income securities. SIVs can only purchase eligible investments that fall within criteria outlined by the rating agencies and the SIV program guidelines.

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

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

tax anticipation notes Notes that typically are sold to finance the cash flow needs of municipalities in anticipation of the receipt of taxes on a future date.

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.

weighted average maturity For mutual funds, the maturity of all the debt securities in its portfolio, calculated as a weighted average. As a rule, the longer a fund’s weighted average maturity, the greater its interest rate risk. Money funds are required to maintain a weighted average maturity of no more than 90 days.

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

27

Notes

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 Schwab Funds.

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

Proxy Voting Policies, Procedures and Results

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

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

The Schwab Funds Family^®

Stock Funds

Schwab Premier Equity Fund^tm

Schwab Core Equity Fund^tm

Schwab Dividend Equity Fund^tm

Schwab Large-Cap Growth Fund^tm

Schwab Small-Cap Equity Fund^tm

Schwab Hedged Equity Fund^tm

Schwab Financial Services Fund^tm

Schwab Health Care Fund^tm

Schwab Technology Fund^tm

Schwab Fundamental US Large Company Index Fund^tm

Schwab Fundamental US Small-Mid Company Index Fund^tm

Schwab Fundamental International Large Company Index Fund^tm

Schwab Fundamental International Small-Mid Company Index Fund^tm

Schwab Fundamental Emerging Markets Index Fund^tm

Schwab Global Real Estate Fund^tm

Schwab Institutional Select^® S&P 500 Fund

Schwab S&P 500 Index Fund

Schwab 1000 Index^® Fund

Schwab Small-Cap Index Fund^®

Schwab Total Stock Market Index Fund^®

Schwab International Index Fund^®

Asset Allocation Funds

Schwab Viewpoints Fund^tm

Schwab MarketTrack All Equity Portfolio^tm

Schwab MarketTrack Growth Portfolio^tm

Schwab MarketTrack Balanced Portfolio^tm

Schwab MarketTrack Conservative Portfolio^tm

Schwab Target 2010 Fund

Schwab Target 2020 Fund

Schwab Target 2030 Fund

Schwab Target 2040 Fund

Schwab Retirement Income Fund

Bond Funds

Schwab YieldPlus Fund^®

Schwab Short-Term Bond Market Fund^tm

Schwab^® Premier Income Fund

Schwab Total Bond Market Fund^tm

Schwab GNMA Fund^tm

Schwab Inflation Protected Fund^tm

Schwab Tax-Free YieldPlus Fund^tm

Schwab Tax-Free Bond Fund^tm

Schwab California Tax-Free YieldPlus Fund^tm

Schwab California Tax-Free Bond Fund^tm

Schwab Money Funds

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

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

Investment Adviser

Charles Schwab Investment Management, Inc.

101 Montgomery Street, San Francisco, CA 94104

Funds

Schwab Funds^®

P.O. Box 3812, Englewood, CO 80155–3812

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

^© 2006 Charles Schwab & Co., Inc. All rights reserved.

Member SIPC

Printed on recycled paper.

MFR31359-03

Item 2: Code of Ethics.

(a)	Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other persons who perform a similar function, regardless of whether these individuals are employed by Registrant or a third party.
(c)	During the period covered by the report, no amendments were made to the provisions of this code of ethics.
(d)	During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics.
(f)(1)	Registrant has filed this code of ethics as an exhibit pursuant to Item 11(a)(1) of Form N-CSR.

Item 3: Audit Committee Financial Expert.

Registrant’s Board of Trustees has determined that William Hasler, Mariann Byerwalter and Donald Stephens, currently serving on its audit committee, are “audit committee financial experts,” as such term is defined in Item 3 of Form N-CSR. Each of these members of Registrant’s audit committee is “independent” under the standards set forth in Item 3 of Form N-CSR.

The designation of each of Messrs. Hasler and Stephens and Ms. Byerwalter as an “audit committee financial expert” pursuant to Item 3 of Form N-CSR does not (i) impose upon such individual any duties, obligations, or liability that are greater than the duties, obligations and liability imposed upon such individual as a member of Registrant’s audit committee or Board of Trustees in the absence of such designation; and (ii) affect the duties, obligations or liability of any other member of Registrant’s audit committee or Board of Trustees.

Item 4: Principal Accountant Fees and Services.

(a) Below are the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

          Audit Fees

          2007: $374,750                    2006: $350,505

(b) Below are the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the

performance of the audit of Registrant’s financial statements and are not reported under paragraph (a) above.

          Audit-Related Fees

          For services rendered to Registrant:

          2007: $29,119                    2006: $26,635

          Nature of these services: tax provision review.

          In each of the last two fiscal years there were no “Audit-Related Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(c) Below are the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

          Tax Fees

          For services rendered to Registrant:

          2007: $33,120                    2006: $30,150

          Nature of these services: preparation and review of tax returns.

          In each of the last two fiscal years there were no “Tax Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(d) Below are the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.

          All Other Fees

          For services rendered to Registrant:

          2007: $6,579                    2006: $6,579

          Nature of these services: review of the methodology of allocation of Charles Schwab & Co., Inc. (“Schwab”) expenses for purposes of Section 15(c) of the Investment Company Act of 1940.

          In each of the last two fiscal years there were no “All Other Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(e)(1) Registrant’s audit committee does not have pre-approval policies and procedures as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

(2) There were no services described in each of paragraphs (b) through (d) above (including services required to be approved by Registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by Registrant’s audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not applicable.

(g) Below are the aggregate non-audit fees billed in each of the last two fiscal years by Registrant’s principal accountant for services rendered to Registrant, to Registrant’s investment adviser, and to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant.

     2007: $115,204                    2006: $183,424

     Although not required to be included in the amounts disclosed under this paragraph (g) or any other paragraph of this Item 4, below are the aggregate fees billed in each of the last two fiscal years by Registrant’s principal accountant for tax compliance services rendered to U.S. Trust, an entity under common control with Registrant’s investment adviser that does not provide services to Registrant.

     2007: $2,541,476                    2006: $4,195,947

(h) During the past fiscal year, all non-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant were pre-approved. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence.

Item 5: Audit Committee of Listed Registrants.

Not applicable.

     Item 6: Schedule of Investments.

The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.

Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8: Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10: Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11: Controls and Procedures.

(a)

Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Randall W. Merk and Registrant’s Principal Financial Officer, George Pereira, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above.

(b)

During the second fiscal quarter of the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting.

Item 12: Exhibits.

(a) (1) Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached.

      (2) Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached.

(3) Not applicable.

(b) A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) The Charles Schwab Family of Funds

By:	/s/ Randall W. Merk
	Randall W. Merk
	Chief Executive Officer
Date:	February 12, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Randall W. Merk
	Randall W. Merk
	Chief Executive Officer
Date:	February 12, 2008
By:	/s/ George Pereira
	George Pereira
	Principal Financial Officer
Date:	February 12, 2008

EX-99.CODEETH

THE SCHWAB FUNDS
CODE OF BUSINESS CONDUCT AND ETHICS
FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS

OUR VISION

Provide shareholders with the most useful and ethical Mutual Funds in the world.

OUR VALUES

Be fair, empathetic and responsive in serving our shareholders.
Strive relentlessly to innovate what we do and how we do it.
Always earn and be worthy of our shareholders’ trust.

SHAREHOLDER VALUE

The Schwab Funds’ Principal Executive Officer and Principal Financial Officer and any other
officers who serve a similar function shall endeavor to act in the best interests of the Schwab
Funds and their shareholders.

Introduction

The Schwab Funds Code of Business Conduct and Ethics (“Code”) covers all of the investment companies within the Schwab Funds’ complex. This Code applies to the Schwab Funds’ Principal Executive Officer and Principal Financial Officer and any other officers who serve a similar function (each an “Officer”).

The Schwab Funds are committed to the highest standards of ethical conduct in the fulfillment of our Vision and Values. We are proud of our long-standing reputation for integrity and honesty that strengthens our Vision to provide our shareholders with the most useful and ethical mutual funds in the world. This reputation is not just a source of competitive advantage in the financial services industry; it is fundamental to the way we do business.

This Code provides guidance on how you, as an Officer, uphold these ethical standards. It applies to your service to the Schwab Funds.

The Code consists of an outline of policies regarding conduct in several key areas: ethical behavior and legal compliance, conflicts of interest, confidentiality and business practices. You are responsible for reviewing the Code and for acting in compliance with the Code in your daily activities.

The Code is not exhaustive; it provides guidance for carrying out your responsibilities on behalf of the Schwab Funds and observing the highest standards of ethical conduct. Because the Code does not address every possible situation that may arise, you are responsible for exercising good judgment, applying ethical principles, and raising questions when in doubt. Your integrity and good judgment enhance the Schwab Funds’ brand, build the Schwab Funds’ reputation, and are the foundation of trust for our shareholder and business relationships.

General Schwab Funds and Personal Standards of Conduct

As an Officer you have a responsibility to act in a manner in which you earn the public’s trust and confidence. Your conduct is guided by our values, which are to:

• Be fair, empathetic and responsive in serving our shareholders.

• Strive relentlessly to innovate what we do and how we do it.

• Always earn and be worthy of our shareholders’ trust.

- 1 -

Schwab Funds Conduct

The following general principles guide our Schwab Funds conduct:

• You will act in accordance with applicable laws and regulations and will not tolerate behavior that is otherwise.

• You will make public disclosures as required by law and regulation and as deemed appropriate to enable reasonable evaluation of the Schwab Funds.

• You will strive to provide an equitable return for our investors.

• You will provide products and services designed to help shareholders achieve their financial goals.

• You will conduct business fairly, in open competition.

Individual Conduct

The following general principles guide your individual conduct:

• You will not take any action that will violate any applicable law or regulation.

• You will adhere to the highest standards of ethical conduct.

• You will maintain the confidentiality of all information you obtain in the course of your employment.

• You will escalate issues which you reasonably believe may place the Schwab Funds at risk, and report any behavior you reasonably believe is wrong.

• You will not abuse or take the Schwab Funds’ assets or use them for your personal gain.

• You will not engage in any activities that create a conflict of interest (as defined below) between you and the Schwab Funds.

• You will comport yourself publicly in a manner that does not bring discredit on the Schwab Funds.

• You will deal fairly with shareholders, colleagues and others.

• You will comply with this Code.

You have personal responsibility to conduct the Schwab Funds’ business in a manner consistent with these principles, and you cannot avoid this responsibility by contrary instructions from a supervisor or by turning a blind eye. Many of these principles are explained in more detail below and in the Schwab Funds’ other polices and procedures. If you have questions on any of them, you should consult with the Chief Legal Officer of the Schwab Funds or the Chief Compliance Officer of Charles Schwab Investment Management, Inc. (“CSIM”).

Ethical Behavior

Your decisions and behavior have far-reaching implications. Standards of ethical and professional conduct reflect on the individual, on the Schwab Funds brand, and on the investment industry as a whole. A strong personal sense of ethics should always play a significant role in guiding you towards a proper course of action.

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Compliance with Laws, Rules, Regulations and Policies

The foundation of the Schwab Funds’ ethical standards is compliance with the letter and spirit of the law. You must respect and obey all of the laws, rules and regulations applicable to our business, including among others, securities and other federal, state and local laws. You are responsible for being familiar and complying with the Schwab Funds’ policies and procedures. Although you are not expected to know the details of each law governing our business, you are expected to be familiar with and comply with the Schwab Funds’ policies and procedures and, when in doubt, to seek advice from the Chief Legal Officer or Chief Compliance Officer as outlined in this Code.

Consequences for Failure to Comply and Reporting Certain Conduct

You can be subject to discipline up to and including termination of employment if you violate this Code. If you know of, or reasonably believe there is, a violation of applicable laws or this Code, you must report that information immediately to the Chief Legal Officer. You should not conduct preliminary investigations, unless authorized to do so by the Chief Legal Officer. Anyone who in good faith raises an issue regarding a possible violation of law regulation or Schwab Funds policy or any suspected illegal or unethical behavior will be protected from retaliation.

Conflicts of Interest

To maintain the highest ethical standards in conducting our business, it is important that you do not place yourself in a position that would cloud your judgment in carrying out the business affairs of the Schwab Funds. A “conflict of interest” occurs when your private interest interferes in any way — or even appears to interfere — with the interests of the Schwab Funds. You have a duty to report any material transaction or relationship that reasonably could be expected to be or to create a conflict of interest with the Schwab Funds. If you have any questions regarding what might constitute a conflict of interest, or to report any transaction or relationship that you believe has occurred or may occur that might constitute a conflict of interest, contact the Chief Legal Officer or Chief Compliance Officer.

Certain conflicts of interest arise out of the relationships between Officers and the Schwab Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”). For example, Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Schwab Funds because of their status as “affiliated persons” of the Schwab Funds. The Schwab Funds’ and CSIM’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Schwab Funds and CSIM. Each Officer may also be an officer or employee of CSIM or Schwab. As a result, this Code recognizes that the Officers will, in the normal course of their duties (whether formally for the Schwab Funds or for CSIM, or for both), be involved in establishing policies and implementing decisions that will have different effects on CSIM and the Schwab Funds. The participation of the Officers in such activities is inherent in the contractual relationship between the Schwab Funds and CSIM and is consistent with the performance by the Officers of their duties as officers of the Schwab Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Trustees that the Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

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Inside Information

It is unlawful to trade in the securities of any Schwab Funds on the basis of material nonpublic (or inside) information or to disclose such information to others who may profit from it. Generally, material information is any information that an investor would likely consider important in deciding whether to buy, sell or hold securities or that could affect the market price of the securities. Examples include actual or estimated financial results or change in dividends; significant discoveries or product developments; possible mergers, acquisitions or divestitures; major changes in business strategies; obtaining or losing significant contracts; and threatened major litigation or related developments. Do not disclose inside information to anyone except those who have a need to know it in order to fulfill their responsibilities for the Schwab Funds and in accordance with Schwab Funds policy. If you have or receive information and are unsure whether it is within the definition of inside information or whether its release might be contrary to a fiduciary or other obligation, contact the Chief Legal Officer prior to disclosing any such information.

Acceptance of Gifts or Entertainment

The acceptance of gifts or excessive entertainment from shareholders, vendors, suppliers, competitors or other employees must not constitute a conflict of interest or create the appearance of impropriety. You may accept small gifts and entertainment that are worth less than the amount Charles Schwab Corporation policy sets as a limit, but you must be personally satisfied that the gift or entertainment is not intended to influence your judgment or the performance of your duties. If you have any questions regarding the appropriateness of a gift, you must obtain approval from the Chief Compliance Officer before accepting it.

Confidentiality of Information

As mutual funds, we have particular responsibilities for safeguarding the information of our shareholders and the proprietary information of the Schwab Funds. You should be mindful of this obligation when you use the telephone, fax, telex, electronic mail, and other electronic means of storing and transmitting information. You should not discuss confidential information in public areas where it can be overheard, read confidential documents in public places, nor leave or discard confidential documents where they can be retrieved by others.

Confidentiality of Shareholder Information

Information concerning the identity of Schwab Funds’ underlying shareholders and their transactions and accounts is confidential. Such information may not be disclosed to persons working on behalf of the Schwab Funds except as they may need to know it in order to fulfill their responsibilities to the Schwab Funds. You may not disclose such information to anyone or any firm outside the Schwab Funds unless (i) the outside firm needs to know the information in order to perform services for the Schwab Funds and is bound to maintain its confidentiality; (ii) when the shareholder has consented or been given an opportunity to request that the information not be shared; (iii) as required by law; or (iv) as authorized by the Chief Legal Officer or Chief Compliance Officer.

Information regarding shareholder or Schwab Funds transactions must not be used in any way to influence trades in personal accounts or in the accounts of other shareholders, including those of other employees, officers and directors. Trading ahead of shareholder or Schwab Funds transactions is known as frontrunning and is prohibited. Following shareholder or Schwab Funds transactions with your trading activity is known as piggybacking or shadowing and is likewise prohibited. If you reasonably believe improper trading in personal, shareholder or Schwab Funds accounts has occurred, you must report such conduct to the Chief Legal Officer.

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Privacy

The Schwab Funds is committed to safeguarding its customers’ privacy. We do not sell any personally identifiable customer information. Sharing of such information with third parties is limited to situations related to the processing and servicing of customer accounts, and to specifically delineated exceptions in the federal privacy law. We share information with our affiliates as allowed by federal law. You must be familiar with the procedural and systemic safeguards we maintain to protect this information and report any breaches of these safeguards to the Chief Legal Officer or Chief Compliance Officer.

Proprietary Information of the Schwab Funds

You have the responsibility to safeguard the Schwab Funds’ proprietary information. Proprietary information includes intellectual property (copyrights, trademarks or patents or trade secrets), particular know-how (business or organizational designs, or business, marketing or service plans or ideas) and sensitive information about the Schwab Funds (databases, records, salary information or unpublished financial reports). If you have any questions about what constitutes proprietary information, or if you believe such information has been compromised, contact the Chief Legal Officer.

Protection and Use of Schwab Funds Assets

You are obligated to protect the Schwab Funds’ assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Schwab Funds. Schwab Funds equipment should not be used for non-Schwab Funds business, though incidental personal use may be permitted. Breaches of this obligation must be reported to the Chief Legal Officer.

Non-Retaliation

It is your obligation to report issues regarding possible violations of business regulations or this Code when you suspect in good faith that a violation may have or might occur. No Officer will be retaliated against for making a good faith complaint or bringing inappropriate conduct to the Schwab Funds’ attention, for assisting another Officer in making a good faith report, for cooperating in an investigation, or for filing an administrative claim with a state or federal governmental agency. Any employee who engages in retaliatory conduct in violation of our policies will be subject to disciplinary action, up to and including termination of employment. If you reasonably believe retaliatory conduct has occurred, you must report such conduct to the Chief Legal Officer.

Business Practices

It is your obligation to report issues regarding possible violations of business regulations or this Code when you suspect in good faith that a violation may have or might occur. As a financial institution, it is imperative that we operate with efficiency, and the highest business standards and that we maintain and provide accurate information.

Financial Disclosures

The Schwab Funds are committed to providing full, fair, accurate, timely and understandable disclosure in reports and documents that the Schwab Funds file with, or submit to, the Securities and Exchange Commission and other regulatory agencies and in other public communications made by the Schwab Funds. You are required to comply with Schwab Funds policies and procedures to provide such full, fair, accurate, timely and understandable disclosure. If you have any questions about your duties in supporting the Schwab Funds’ financial reporting processes, contact the Chief Legal Officer or Chief Compliance Officer.

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Conduct of Audits

Neither you nor any other person acting under your direction shall directly or indirectly take any action to fraudulently influence, coerce, manipulate, or mislead any independent public or certified public accountant engaged in the performance of an audit or review of the Schwab Funds’ financial statements.

Types of conduct that constitute improper influence include, but are not limited to, directly or indirectly:

• Offering or paying bribes or other financial incentives, including offering future employment or contracts for non-audit services;

• Providing an auditor with inaccurate or misleading legal analysis;

• Threatening to cancel or canceling existing non-audit or audit engagements if the auditor objects to the issuer’s accounting;

• Seeking to have a partner removed from the audit engagement because the partner objects to the Schwab Funds’ accounting;

• Blackmailing; and

• Making physical threats.

If you reasonably believe improper influence has occurred, you must report such conduct to the Chief Legal Officer or the Chief Compliance Officer.

Record-Keeping

We require honest and accurate recording and reporting of information to maintain the integrity of our business records and to make responsible business decisions. The Schwab Funds’ books, records and accounts must (i) accurately reflect all transactions of the Schwab Funds and all other events that are subject of a specific regulatory record-keeping requirement; (ii) be maintained in reasonable detail; and (iii) conform both to applicable legal requirements and to the Schwab Funds’ system of internal controls. Unrecorded or “off the books” funds or assets are prohibited unless permitted by applicable law or regulation. Business records must not contain exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies. This applies equally to e-mail, internal memoranda, formal reports, and all other forms of business records. You must be familiar with the Schwab Funds’ record retention policies and always retain or destroy records according to them. In the event of litigation, governmental investigation or the threat of such action, you should consult the Chief Legal Officer or the Chief Compliance Officer regarding record retention.

Sales Practices

If you transact business for shareholders, you are required to know and observe the Schwab Funds’ specific policies and procedures for shareholder sales and transactions, such as the content and use of sales materials, documentation for transactions, quotations and suitability. Likewise, if you transact business with third parties (such as vendors or suppliers), you will be required to know and observe the Schwab Funds’ policies and procedures for such transactions, such as marketing policies, procedures for performing due diligence on third parties, and obtaining proper authorizations for any agreements. You must be familiar with any enumerated policies and procedures governing your sales activities and use good judgment in complying with them. You must seek advice from the Chief Legal Officer or the Chief Compliance Officer if you have any questions.

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Competition and Fair Dealing

We operate our business fairly and honestly. We seek competitive advantage through performance and dedication to our Vision and Values and never through unethical or illegal business practices. It is our policy to comply with anti-trust laws. These laws are complex and not easily summarized but at a minimum require that there be no agreement or understanding between the Schwab Funds and their competitors that affect prices, terms or conditions of sale or that unreasonably restrain full and fair competition. You must always respect the rights of and deal fairly with the Schwab Funds’ shareholders and competitors. You must never take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice. If you have any question about what constitutes an unfair business practice, you should consult the Chief Legal Officer.

Prohibition of Bribery and Kickbacks

Our policies prohibit bribery or kickbacks of any kind and to anyone in the conduct of our business. The U.S. government has a number of laws and regulations applicable specifically to business gratuities that may be accepted by U.S. and foreign government personnel. The promise, offer or delivery to an official or employee of the U.S. government or an official, employee or candidate of a foreign government of a gift, favor, payment or other gratuity in violation of these rules would not only violate Schwab Funds policy but could also be a criminal offense. Similarly, federal law, as well as the laws of many states, prohibits engaging in “commercial bribery.” Commercial bribery involves soliciting, demanding or agreeing to accept anything of value from any person intending to influence or be rewarded in connection with any business or transaction, and prohibits all such behavior, for example, with respect to vendors, competitors, shareholders, and government employees. If you have any questions or need any guidance, you should contact the Chief Legal Officer.

Compliance Procedures

We will work together to ensure compliance with the Code and to take prompt action in response to reported violations of the Code.

Seeking Guidance

If you are unsure of what to do in any situation, seek guidance before you act. Use the Schwab Funds resources, including the Chief Legal Officer or the Chief Compliance Officer. If you feel that it is not appropriate to discuss a matter with the Chief Legal Officer or the Chief Compliance Officer, you may contact the Ombudsperson for the Charles Schwab Corporation. Remember that you must report all incidents of misconduct, and you may do so without fear of retaliation. If you have violated the Code, however, making a report will not protect you from the consequences of your actions.

Reporting Conduct that May be in Violation of the Code

You must report conduct that you believe to be in violation of the Code, Schwab Funds policy, law or regulation. Reports should be escalated in the following manner:

• If you have a reasonable belief that a violation has occurred, or may occur, you must report the conduct to the Chief Legal Officer.

• The Chief Legal Officer will take all appropriate action to investigate any potential violation reported to the Chief Legal Officer and will notify counsel for Schwab Funds independent Trustees (“Trustees”) and counsel for the Schwab Funds of the substance of the potential violation.

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• If after investigation, the Chief Legal Officer reasonably believes that no violation has occurred, the Chief Legal Officer is not required to take any further action.

• Any matter that the Chief Legal Officer believes is a violation will be reported to the Trustees.

• If the Trustees concur that a violation has occurred, the Trustees will consider appropriate action, which may include review of, and appropriate modification to, applicable policies and procedures; notification to appropriate personnel of CSIM or its board; notification to appropriate personnel of the Charles Schwab Corporation or its board; or a recommendation to dismiss the Officer.

Roles in Observing Compliance

As Officer of the Schwab Funds, you have a role in observing compliance with the Code. In general, that includes:

Role of Officers

• Read and be familiar with conduct rules outlined in this Code and periodically review them.

• Affirm in writing to the Trustees that the Officer has received, read and understands the Code.

• Annually affirm to the Trustees that the Officer has complied with the requirements of the Code.

• Comply with the conduct standards outlined in this Code in all dealings and actions, including those with shareholders, the public and vendors.

• Report in a timely manner to the Chief Legal Officer any conduct that may constitute a violation of the Code, Schwab Funds policies, or laws, rules and regulations.

• Raise questions or concerns about conduct issues with your supervisor, the Chief Legal Officer or Chief Compliance Officer, and seek advice when in doubt.

• Cooperate with management during fact-finding investigations and comply with any confidentiality rules imposed.

Role of Trustees

• Review the Code annually and recommend any changes.

• Review the Officer reports of compliance with the Code.

Interpretation of Code and Waivers of the Code

The Chief Legal Officer is responsible for applying the Code to specific situations in which questions are presented under it and has the authority to interpret the Code in any particular situation. However, waivers of the Code may be made only by the Trustees and will be promptly disclosed publicly as required by law.

Amendments

This Code may not be amended except in written form, which is specifically approved or ratified by a majority of the Trustees including a majority of the independent Trustees. Any amendments will, to the extent required, be disclosed in accordance with law.

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Other Policies and Procedures

This Code constitutes the sole code of ethics adopted by the Schwab Funds for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Schwab Funds, CSIM, Charles Schwab & Co., Charles Schwab Corporation or other Schwab Funds service providers govern or purport to govern the behavior or activities of an Officer who is subject to this Code, they are superseded by this Code to the extent that they conflict with the provisions of this Code. CSIM’s code of ethics under Rule 17j-1 pursuant to the Investment Company Act of 1940 and CSIM’s, Charles Schwab & Co.’s, and the Charles Schwab Corporation’s policies and procedures set forth in their respective compliance manuals and elsewhere are separate requirements applying to the Officers and are not part of this Code.

Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees, CSIM, the Charles Schwab Corporation and their respective counsel.

Internal Use

This Code is intended for internal use by the Schwab Funds and does not constitute an admission, by or on behalf of any Schwab Funds, as to any fact, circumstance, or legal conclusion.

Contacts

If you have further questions about the Code, or about its applicability with respect to a particular matter, please contact the Chief Legal Officer or Chief Compliance Officer. If you feel that it is not appropriate to discuss a matter with Chief Legal Officer or the Chief Compliance Officer, you may contact the Ombudsperson.

Chief Legal Officer:
Koji Felton 415-667-3461

Chief Compliance Officer:
Randy Fillmore 415-636-3680

Charles Schwab Corporation Ombudsperson:
Sam Scott Miller, Esq. 212-506-5130
Orrick Herrington & Sutcliffe LLP

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EX-99.CERT

CERTIFICATIONS

I, Randall W. Merk, certify that:

1. I have reviewed this report on Form N-CSR of The Charles Schwab Family of Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 12, 2008	/s/ Randall W. Merk
	Randall W. Merk
	President and Chief Executive Officer

CERTIFICATIONS

I, George Pereira, certify that:

1. I have reviewed this report on Form N-CSR of The Charles Schwab Family of Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     February 12, 2008	/s/ George Pereira
	George Pereira
	Treasurer and Principal Financial Officer

EX-99.906CERT

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report for The Charles Schwab Family of Funds (“issuer”) on Form N-CSR for the period ended December 31, 2007 (“periodic report”), each of the undersigned, being the Chief Executive Officer and Principal Financial Officer, hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The periodic report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer for the period presented therein.

/s/ Randall W. Merk	Date:	February 12, 2008
Randall W. Merk
President and Chief Executive Officer
/s/ George Pereira	Date:	February 12, 2008
George Pereira
Treasurer and Principal Financial Officer

This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission.