N-CSRS 1 f92167nvcsrs.txt FORM N-CSRS FOR CHARLES SCHWAB FAMILY OF FUNDS 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: January 1, 2003 - June 30, 2003 Item 1: Report(s) to Shareholders Schwab Municipal Money Fund SEMIANNUAL REPORT June 30, 2003 [CHARLES SCHWAB LOGO] In This Report Management's Discussion............................................ 2 Fund yield figures and portfolio statistics, plus a discussion of factors that affected fund performance during the report period. Financial Statements Portfolio holdings and fund financials. Schwab Municipal Money Fund........................................ 5 Sweep Shares: SWXXX Value Advantage Shares: SWTXX Select Shares: SWLXX Institutional Shares: SWOXX Financial Notes.................................................... 54 Glossary........................................................... 56 [PHOTO OF CHARLES SCHWAB] From the Chairman Charles R. Schwab Chairman Without question, these are challenging times for America's investors. For money fund shareholders, one of the main concerns has been decline of short-term interest rates, since money fund yields are a reflection of those rates. Given the choice, I'm sure most of us would prefer that yields were higher. At the same time, I believe that a look at the larger picture reveals that the current low interest rate environment has a beneficial side that shouldn't be ignored. For example, Americans have recently had the opportunity to borrow money at the most attractive rates in decades, whether for buying a home, refinancing or realizing a life-long goal like starting a business. More importantly, the Federal Reserve's monetary policy, along with fiscal policies enacted by Congress and the President, should provide a powerful stimulus to economic recovery. That, too, is something that would benefit all Americans. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R),these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles Schwab Management's Discussion for the six months ended June 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here, and especially with their dedication to understanding the concerns of investors. That dedication is particularly important right now. Times of uncertainty about the economy and world events demand diligence from investment professionals. At SchwabFunds, we are keenly aware of this, and continue to work for the best interests of our shareholders. In recent months, money market funds have faced a very challenging environment. With interest rates on short-term investments falling in connection with the Fed's actions, some investors have expressed concerns about the potential for fund yields to fall to zero or even lower. I can assure you that we at SchwabFunds will continue to monitor the yields in all our money market funds. In consultation with fund trustees, we will take appropriate measures to maintain competitive yields. One thing we won't do in pursuit of yields is compromise our high standards for investment credit quality. We'll also continue to follow our time-tested management procedures and controls. In other words, we won't take short cuts that may jeopardize our long-term commitment to our investors. Thank you for choosing SchwabFunds. We're here to help you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab Municipal Money Fund 2 [PHOTO OF WALTER BEVERIDGE] WALTER BEVERIDGE, a portfolio manager, is responsible for day-to-day management of the fund. Prior to joining the firm in 1992, he worked for nearly ten years in asset management. The Investment Environment and the Fund THE U.S. ECONOMY REMAINED IN A HOLDING PATTERN DURING THE SIX MONTHS OF THE REPORT PERIOD. Concerned by geopolitical uncertainties, businesses put off making major decisions about capital spending and hiring, even after the major combat phase of the war in Iraq was over. Economic indicators reported during the period were mixed, providing little incentive for businesses to pursue expansion plans. ALREADY AT THEIR LOWEST LEVEL IN DECADES,INTEREST RATES FELL FURTHER AS THE REPORT PERIOD PROGRESSED. During the first months of 2003, a major factor in the decline of rates was anticipation of the war in Iraq. Toward the end of the period, deflation fears came to the forefront, leading to expectations that the Federal Reserve (the Fed) would cut interest rates. These expectations were confirmed on June 25, when the Fed, seeking to provide yet further economic stimulus, cut the Fed funds rate by 0.25%. FALLING INTEREST RATES PUSHED MONEY FUND YIELDS TO NEW LOWS (see next page for fund yield information). We sought to lessen the effects of falling rates on the fund by maintaining a comparatively long weighted average maturity. Although the fund's yield did decline, we were successful in slowing that decline, and in keeping the fund's yield higher than it otherwise would have been. STRONG ISSUANCE OF SHORT-TERM MUNI DEBT RELATIVE TO TAXABLE DEBT MADE MUNI YIELDS ATTRACTIVE COMPARED TO TAXABLE YIELDS. Typically, we have seen muni yields average about 80% of taxable yields. During the report period, muni yields at times exceeded 95% of taxable yields (although both were low on an absolute basis). These extremes of valuation allowed us to increase our exposure to high-yielding fixed-rate securities. IN GENERAL, WE HAVE SEEN MOST STATES TAKE RESPONSIBLE MEASURES TO ADDRESS THE REVENUE SHORTFALLS THEY HAVE FACED AS A RESULT OF A WEAK U.S. ECONOMY. Most states, especially those that have been hard hit by fall-offs in income tax revenue, such as California, New York and New Jersey, have resorted to a combination of spending cuts and one-time solutions in order to balance their budgets. California in particular had to address an unprecedented $38 billion deficit going into fiscal 2004. Although the fund did begin the report period with substantial holdings in California securities, we significantly decreased our California position over the period, and ended the period with a very small position in this state's securities. The views expressed here are those of fund management only. 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 Fund 3 Management's Discussion continued Performance and Fund Facts as of 6/30/03 SEVEN-DAY YIELDS The seven-day yields are calculated using standard SEC formulas. The effective yields include the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate, and that past performance is not an indication of future results.
SWEEP VALUE ADVANTAGE SELECT INSTITUTIONAL SHARES SHARES SHARES(R) SHARES ------------------------------------------------------------------------------------------------- SEVEN-DAY YIELD 1 0.41% 0.63% 0.73% 0.84% ------------------------------------------------------------------------------------------------- SEVEN-DAY EFFECTIVE YIELD 0.42% 0.63% 0.73% 0.84% ------------------------------------------------------------------------------------------------- SEVEN-DAY TAXABLE-EQUIVALENT 0.65% 0.97% 1.12% 1.29% EFFECTIVE YIELD 2 -------------------------------------------------------------------------------------------------
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 3 % of portfolio 100% Tier 1 -------------------------------------------------------------------------------- CREDIT-ENHANCED SECURITIES % of portfolio 70% -------------------------------------------------------------------------------- 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 $1 per share, it is possible to lose money by investing in a money fund. 1 A portion of the fund's expenses was reduced during the reporting period. Without this reduction, the seven-day yields for the fund's Sweep Shares, Value Advantage Shares, Select Shares and Institutional Shares would have been 0.26%, 0.49%, 0.49% and 0.49%, respectively. 2 Taxable-equivalent effective yield assumes a 2003 maximum federal regular income tax rate of 35.00%. 3 Portfolio holdings may have changed since the report date. Schwab Municipal Money Fund 4 SCHWAB MUNICIPAL MONEY FUND Financial Statements Schwab Municipal Money Fund FINANCIAL HIGHLIGHTS
1/1/03 - 1/1/02 - 1/1/01 - 1/1/00 - 1/1/99 - 1/1/98 - SWEEP SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 -------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) -------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------ Income from investment operations: Net investment income 0.00 1 0.01 0.02 0.03 0.03 0.03 ------------------------------------------------------------------------ Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.02) (0.03) (0.03) (0.03) ------------------------------------------------------------------------ Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------ Total return (%) 0.29 2 0.91 2.23 3.53 2.70 2.92 RATIOS/SUPPLEMENTAL DATA (%) -------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.66 3 0.66 0.66 0.66 4 0.66 0.66 Ratio of gross operating expenses to average net assets 0.81 3 0.82 0.83 0.83 4 0.85 0.88 Ratio of net investment income to average net assets 0.58 3 0.90 2.21 3.47 2.67 2.87 Net assets, end of period ($ x 1,000,000) 7,472 7,435 7,265 6,780 6,090 5,247
1/1/03 - 1/1/02 - 1/1/01 - 1/1/00 - 1/1/99 - 1/1/98 - VALUE ADVANTAGE SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 -------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) -------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------ Income from investment operations: Net investment income 0.00 1 0.01 0.02 0.04 0.03 0.03 ------------------------------------------------------------------------ Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.02) (0.04) (0.03) (0.03) ------------------------------------------------------------------------ Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------ Total return (%) 0.39 2 1.12 2.45 3.75 2.91 3.14 RATIOS/SUPPLEMENTAL DATA (%) -------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.45 3 0.45 0.45 0.45 5 0.45 0.45 Ratio of gross operating expenses to average net assets 0.58 3 0.59 0.61 0.63 5 0.65 0.69 Ratio of net investment income to average net assets 0.79 3 1.11 2.35 3.70 2.89 3.08 Net assets, end of period ($ x 1,000,000) 4,874 4,480 3,778 2,919 2,270 1,620
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.67% and 0.84%, respectively, if certain non-routine expenses (proxy fees) had been included. 5 The ratios of net and gross operating expenses would have been 0.46% and 0.64%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 5 SCHWAB MUNICIPAL MONEY FUND
6/2/03 1 - SELECT SHARES (R) 6/30/03* -------------------------------------------------------------------------------- PER-SHARE DATA ($) -------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 ------------------------------------- Income from investment operations: Net investment income 0.00 2 ------------------------------------- Less distributions: Dividends from net investment income (0.00) 2 ------------------------------------- Net asset value at end of period 1.00 ------------------------------------- Total return (%) 0.06 3 RATIOS/SUPPLEMENTAL DATA (%) -------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.35 4 Ratio of gross operating expenses to average net assets 0.58 4 Ratio of net investment income to average net assets 0.78 4 Net assets, end of period ($ x 1,000,000) 196
6/2/03 1 - INSTITUTIONAL SHARES 6/30/03* -------------------------------------------------------------------------------- PER-SHARE DATA ($) -------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 ------------------------------------- Income from investment operations: Net investment income 0.00 2 ------------------------------------- Less distributions: Dividends from net investment income (0.00) 2 ------------------------------------- Net asset value at end of period 1.00 ------------------------------------- Total return (%) 0.06 3 RATIOS/SUPPLEMENTAL DATA (%) -------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.24 4 Ratio of gross operating expenses to average net assets 0.58 4 Ratio of net investment income to average net assets 0.88 4 Net assets, end of period ($ x 1,000,000) 198
* Unaudited. 1 Commencement of operations. 2 Per-share amount was less than $0.01. 3 Not annualized. 4 Annualized. See financial notes. 6 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) ----------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 13,113,511 13,113,511 ----------------------------------------------------------- 100.0% TOTAL INVESTMENTS 13,113,511 13,113,511
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments -------------------------------------------------------------------------- ALABAMA 0.7% +@ ALABAMA STATE IDA RB (Scientific Project) 1.30%, 07/07/03 2,160 2,160 +@ BIRMINGHAM, ALABAMA SPECIAL CARE FACILITIES AUTHORITY RB (Medical Center East) Series 2003A 1.00%, 07/07/03 36,500 36,500 +@ CITRONELLE, ALABAMA IDB Pollution Control Revenue Refunding Bond (AKZO Chemicals, Inc. Project) 1.05%, 07/07/03 2,600 2,600 +~@ DAPHNE, ALABAMA UTILITIES BOARD OF WATER, GAS, & SEWER Revenue Refunding Bond 1.07%, 07/07/03 8,540 8,540 +@ DOTHAN, ALABAMA IDB RB (Baxley Blowpipe Project) 1.18%, 07/07/03 400 400 +@ FORT PAYNE, ALABAMA IDA RB (Charleston Hosiery Project) Series 1997 1.15%, 07/07/03 1,200 1,200 +@ HEADLAND, ALABAMA IDB RB (Golden Peanut Project) 1.15%, 07/07/03 1,585 1,585 +~@ HOOVER, ALABAMA BOARD OF EDUCATION Capital Outlay Tax Anticipation Warrants TOB 1.06%, 07/07/03 9,860 9,860 +@ INDIAN SPRINGS VILLAGE, ALABAMA EDUCATIONAL BUILDING AUTHORITY RB (J. Bruno Academy Project) 1.25%, 07/07/03 1,320 1,320 +@ MOBILE COUNTY, ALABAMA IDB RB (Ultraform Co. Project) Series 1995B 1.05%, 07/07/03 1,000 1,000 +@ SCOTTSBORO, ALABAMA GO 1.00%, 07/07/03 4,075 4,075 +@ STEVENSON, ALABAMA IDB Environmental Improvement RB (Mead Corp. Project) 1.03%, 07/07/03 17,300 17,300 +@ TUSCALOOSA, ALABAMA IDB RB (Knight Special Project) 1.35%, 07/07/03 990 990 ----------- 87,530
See financial notes. 7 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ALASKA 0.4% @ ALASKA STATE HOUSING FINANCE CORP Housing Development RB Series 2000A 1.05%, 07/07/03 18,715 18,715 +~ TOB Series 1999D 1.08%, 07/07/03 21,805 21,805 ~ TOB Series ROC 11-R 197 1.05%, 07/07/03 5,995 5,995 + ALASKA STUDENT LOAN CORP Student Loan RB Series 1998A 1.12%, 07/01/03 4,425 4,425 @ VALDEZ, ALASKA MARINE TERMINAL Revenue Refunding Bond (B.P Pipelines, Inc. Project) Series 2003A 0.95%, 07/01/03 1,500 1,500 Revenue Refunding Bond (Exxon Pipeline Co. Project) Series 1993C 0.85%, 07/01/03 4,400 4,400 ----------- 56,840 ARIZONA 0.8% @ ARIZONA EDUCATIONAL LOAN MARKETING CORP +~ RB Series 1990A 1.10%, 07/07/03 12,905 12,905 + RB Series 1991A 1.05%, 07/07/03 3,000 3,000 +~@ ARIZONA HEALTH FACILITIES AUTHORITY Hospital System RB (Arizona Volunteer Hospital Federation) Series 1985A 1.00%, 07/07/03 11,090 11,090 Hospital System RB (Arizona Volunteer Hospital Federation) Series 1985B 1.00%, 07/07/03 9,330 9,330 Hospital System RB (Northern Arizona Health Care) Series 1996B 1.00%, 07/07/03 7,350 7,350 +@ CHANDLER, ARIZONA IDA RB (South Bay Circuits Project) Series 1999A 1.15%, 07/07/03 1,400 1,400 +@ PHOENIX, ARIZONA CIVIC IMPROVEMENT Excise Tax RB (Airport Improvements) 1.02%, 07/07/03 1,000 1,000 SALT RIVER, ARIZONA PROJECT AGRICULTURE IMPROVEMENT TECP 0.90%, 10/09/03 40,250 40,250 +~@ YAVAPAI COUNTY, ARIZONA IDRB (Yavapai Regional Medical Center) 1.00%, 07/07/03 14,650 14,650 ----------- 100,975 ARKANSAS 0.1% +@ ARKANSAS DEVELOPMENT FINANCE AUTHORITY IDRB (C&C Holding Co. Project) Series 1998 1.15%, 07/07/03 1,130 1,130 +@ INDEPENDENCE COUNTY, ARKANSAS IDRB (Ideal Baking Project) 1.15%, 07/07/03 3,300 3,300 +@ IDRB (Townsends of Arkansas, Inc. Project) 1.05%, 07/07/03 9,000 9,000 ----------- 13,430 CALIFORNIA 8.3% +@ ACCESS LOANS FOR LEARNING STUDENT LOAN CORP. OF CALIFORNIA RB (Student Loan Program) Series II A-1 1.05%, 07/07/03 35,000 35,000 RB (Student Loan Program) Series II A-2 1.04%, 07/07/03 20,000 20,000 RB (Student Loan Program) Series II A-3 1.05%, 07/07/03 23,700 23,700
See financial notes. 8 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +~@ BAY AREA, CALIFORNIA TOLL BRIDGE AUTHORITY RB (San Francisco Bay Area Project) Series 2003C 1.00%, 07/07/03 21,500 21,500 += CALIFORNIA COLLEGE COMMUNITY FINANCING AUTHORITY TRAN Series 2003A 0.80%, 06/30/04 73,475 74,349 + CALIFORNIA HIGHER EDUCATION LOAN AUTHORITY Revenue Refunding Bond (Student Loan) Series 1987C-1 1.65%, 07/01/03 43,300 43,300 Student Loan RB Series 1992A-3 1.10%, 07/01/03 44,900 44,900 Student Loan RB Series 1992A-4 1.15%, 04/01/04 10,725 10,725 @ CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY Solid Waste Disposal RB (Shell Martinez Refining Project) Series 1994A 0.93%, 07/01/03 4,600 4,600 Solid Waste Disposal RB (Shell Martinez Refining Project) Series 1996A 0.95%, 07/01/03 3,000 3,000 + Solid Waste Disposal RB (Waste Management Project) Series 2002A 0.96%, 07/07/03 500 500 + CALIFORNIA SCHOOL CASH RESERVE PROGRAM AUTHORITY RB Series 2002A 1.59%, 07/03/03 21,640 21,642 1.67%, 07/03/03 50,000 50,004 = RB Series 2003A 0.90%, 07/06/04 153,870 155,567 CALIFORNIA STATE +@ GO Series 2003A-3 0.95%, 07/01/03 9,000 9,000 +@ GO Series 2003C-2 0.90%, 07/07/03 25,200 25,200 ~ GO TECP 1.20%, 07/09/03 38,000 38,000 +@ CALIFORNIA STATE DEPARTMENT OF WATER RESOURCES Power Supply RB Series 2000C-17 0.95%, 07/07/03 10,000 10,000 Power Supply RB Series 2001 B-1 1.00%, 07/01/03 2,000 2,000 Power Supply RB Series 2002B-2 1.10%, 07/01/03 10,000 10,000 Power Supply RB Series 2002B-5 0.95%, 07/01/03 35,700 35,700 ~ Power Supply RB Series 2002C-7 1.00%, 07/07/03 37,000 37,000 = CALIFORNIA STATEWIDE COMMUNITY DEVELOPMENT AUTHORITY TRAN Series 2003A-3 0.88%, 06/30/04 55,900 56,519 +~@ EAST BAY, CALIFORNIA MUNICIPAL UTILITIES DISTRICT Water System Revenue Refunding Bond Subseries 2002A 0.85%, 07/07/03 50,000 50,000 +@ IRVINE RANCH, CALIFORNIA IMPROVEMENT BOND ACT OF 1915 Special Assessment Bond (Assessment District No 93-14 0.90%, 07/01/03 19,420 19,420 +@ IRVINE RANCH, CALIFORNIA WATER DISTRICT COP (Capital Improvement Project) 0.90%, 07/01/03 16,900 16,900 +@ IRVINE, CALIFORNIA UNIFIED SCHOOL DISTRICT RB (Community Facilities District) Series 2003 DN 0.85%, 07/01/03 36,900 36,900
See financial notes. 9 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~ LOS ANGELES COUNTY, CALIFORNIA Wastewater System TECP 1.05%, 07/07/03 17,500 17,500 +~@ LOS ANGELES, CALIFORNIA COMMUNITY COLLEGE DISTRICT Revenue Refunding COP Series 2002A 0.85%, 07/07/03 2,900 2,900 ~@ METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Waterworks RB Series 2001B-3 0.90%, 07/01/03 21,300 21,300 Waterworks RB Series 2001C-1 1.00%, 07/01/03 32,775 32,775 +~@ NORTHERN CALIFORNIA POWER AGENCY Revenue Refunding Bond (Hydroelectric No. 1 Project) Series 2002 A 0.85%, 07/07/03 25,110 25,110 ~@ ORANGE COUNTY, CALIFORNIA SANITATION DISTRICT COP Series 2000A 0.85%, 07/01/03 4,000 4,000 + SAN DIEGO COUNTY, CALIFORNIA TECP 1.00%, 07/17/03 15,000 15,000 = SOUTH COAST, CALIFORNIA LOCAL EDUCATIONAL AGENCY TRAN 0.80%, 06/30/04 35,000 35,415 +@ SOUTHEAST CALIFORNIA RESOURCE RECOVERY FACILITIES AUTHORITY Lease Revenue Refunding Bond Series 1995A 0.92%, 07/07/03 7,700 7,700 ~@ SOUTHERN CALIFORNIA HFA S/F Mortgage RB TOBP (PT-629) 1.12%, 07/07/03 38,640 38,640 +@ SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY Revenue Refunding Bond (Southern Transmission Project) 0.85%, 07/07/03 22,300 22,300 +@ VALLEJO, CALIFORNIA UNIFIED SCHOOL DISTRICT COP (Capital Improvement Financing Projects) Series 1999E 0.95%, 07/07/03 7,450 7,450 ----------- 1,085,516 COLORADO 1.8% +@ ADAMS COUNTY, COLORADO IDRB (City View Park Project) 1.10%, 07/07/03 6,000 6,000 +@ ARAPAHOE COUNTY, COLORADO IDRB (Denver Jet Center Project) 1.30%, 07/30/03 3,500 3,500 +~@ ARVADA, COLORADO RB 1.25%, 07/01/03 4,300 4,300 +@ COLORADO HEALTH FACILITIES AUTHORITY RB (National Benevolent Association Project) 1.05%, 07/07/03 625 625 @ COLORADO HFA + Economic Development RB (Pemracs Limited, LLP Project) Series 2000A 1.15%, 07/07/03 3,715 3,715 ~ S/F Mortgage TOB Series 1999M 1.13%, 07/07/03 3,815 3,815 +~@ COLORADO STUDENT OBLIGATION BOND AUTHORITY Student Loan RB (Colorado University) Series 1990A 1.05%, 07/07/03 14,400 14,400 Student Loan RB Series 1989A 1.00%, 07/07/03 9,400 9,400
See financial notes. 10 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) Student Loan RB Series 1999A-2 1.00%, 07/07/03 8,400 8,400 Student Loan RB Series 1999A-3 1.00%, 07/07/03 29,800 29,800 +@ DENVER, COLORADO CITY & COUNTY AIRPORT SYSTEM RB Series 1992F 1.10%, 07/07/03 18,575 18,575 RB Series 1992G 1.10%, 07/07/03 19,050 19,050 ~ Revenue Refunding Bond RB Series 2000B 1.15%, 07/07/03 10,000 10,000 ~ Revenue Refunding Bond RB Series 2000C 1.10%, 07/07/03 50,000 50,000 +@ LOWRY, COLORADO ECONOMIC REDEVELOPMENT AUTHORITY Improvement RB Series 2003B 1.00%, 07/07/03 14,140 14,140 Revenue Refunding Bond Series 2003A 1.00%, 07/07/03 11,360 11,360 + REGIONAL TRANSPORTATION DISTRICT, COLORADO ~@ COP (Transit Vehicles Project) Series 2002A 0.95%, 07/07/03 15,000 15,000 TECP 1.00%, 11/06/03 7,500 7,500 +@ SMITH CREEK, COLORADO METROPOLITAN DISTRICT RB 0.95%, 07/07/03 2,250 2,250 +@ WESTMINSTER, COLORADO ECONOMIC DEVELOPMENT AUTHORITY Tax Increment RB (Westminster Plaza Urban Renewal Project) 1.15%, 07/07/03 6,460 6,460 ----------- 238,290 CONNECTICUT 0.0% @ CONNECTICUT STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY RB (Yale University) Series 2003X-2 0.85%, 07/07/03 5,000 5,000 DELAWARE 0.7% ~@ DELAWARE STATE GO Refunding Bond TOB Series 258 1.04%, 07/07/03 3,995 3,995 +~@ DELAWARE STATE ECONOMIC DEVELOPMENT AUTHORITY RB (Hospital Billing Collection Project) Series 1985B 0.95%, 07/07/03 20,900 20,900 RB (Hospital Billing Collection Project) Series 1985C 0.95%, 07/07/03 15,000 15,000 +@ NEW CASTLE COUNTY, DELAWARE Airport Facility RB (Flight Safety International, Inc. Project) 1.08%, 07/07/03 16,600 16,600 +@ SUSSEX COUNTY, DELAWARE IDRB (Perdue Agri-recycle, LLC Project) 1.05%, 07/07/03 5,300 5,300 RB (Baywood, LLC Project) Series 1997A 1.25%, 07/07/03 2,400 2,400 +@ WILMINGTON, DELAWARE RB (Delaware Art Museum, Inc. Project) 1.00%, 07/07/03 21,800 21,800 ----------- 85,995 DISTRICT OF COLUMBIA 0.8% +@ DISTRICT OF COLUMBIA ENTERPRISE ZONE RB (Crowell & Morning, LLP Project) 1.05%, 07/07/03 4,100 4,100 +@ DISTRICT OF COLUMBIA HFA M/F Housing RB (Edgewood Terrace III Development) 1.05%, 07/07/03 4,000 4,000
See financial notes. 11 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ DISTRICT OF COLUMBIA RB (American Psychological Association) 1.05%, 07/07/03 2,780 2,780 RB (Arnold & Porter Project) 1.05%, 07/07/03 3,000 3,000 ~ METROPOLITAN WASHINGTON, D.C AIRPORT AUTHORITY +@ RB TOB Series 240 1.11%, 07/07/03 6,900 6,900 +@ Revenue Refunding Bond Series 2002C 1.00%, 07/07/03 10,000 10,000 +@ TOBP (PT-689) 1.11%, 07/07/03 5,870 5,870 TECP 1.13%, 07/02/03 32,800 32,800 1.10%, 07/10/03 22,000 22,000 +~@ WASHINGTON, D.C Revenue Refunding TOBP (PT-750) 1.15%, 08/28/03 14,640 14,640 Revenue Refunding TOBP (PT-806) 1.10%, 11/13/03 6,215 6,215 ----------- 112,305 FLORIDA 8.0% +@ ALACHUA COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY RB (Oak Hammock University of Florida Project) Series 2002A 1.00%, 07/01/03 2,400 2,400 +@ BREVARD COUNTY, FLORIDA EDUCATIONAL FACILITIES AUTHORITY RB (Florida Institute of Technology) Series 2002B 1.00%, 07/07/03 10,000 10,000 BREVARD COUNTY, FLORIDA SCHOOL BOARD RAN 1.13%, 04/30/04 14,450 14,523 +@ BROWARD COUNTY, FLORIDA HFA M/F Housing RB (Landings Inverrary Apartments Project) 1.08%, 07/07/03 7,500 7,500 M/F Housing RB (Reflections Airport Project) 0.95%, 07/07/03 13,000 13,000 M/F Housing RB (Sanctuary Apartments Project) 1.08%, 07/07/03 9,000 9,000 M/F Housing Revenue Refunding Bond (Fishermen's Landing Project) 0.93%, 07/07/03 1,070 1,070 M/F Housing Revenue Refunding Bond (Island Club Apartments Project) Series 2001A 1.08%, 07/07/03 2,900 2,900 M/F Housing Revenue Refunding Bond (South Pointe Project) 0.95%, 07/07/03 7,750 7,750 M/F Housing Revenue Refunding Bond (Water's Edge Project) 0.95%, 07/07/03 400 400 +~@ BROWARD COUNTY, FLORIDA PORT FACILITIES Revenue Refunding Bond (Port Everglades Project) 1.00%, 07/07/03 9,400 9,400 +@ CHARLOTTE COUNTY, FLORIDA HFA M/F Housing RB (Murdock Circle Apartments Project) 1.13%, 07/07/03 6,250 6,250 +@ CLAY COUNTY, FLORIDA UTILITY SYSTEM RB Series 2003A 1.00%, 07/07/03 2,400 2,400 +@ COLLIER COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY RB (Cleveland Clinic Health) Series 2003C-2 1.00%, 07/01/03 3,100 3,100 +@ COLLIER COUNTY, FLORIDA HFA M/F Housing RB (Brittany Bay Apartments Project) Series 2001A 1.03%, 07/07/03 3,350 3,350
See financial notes. 12 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ COLLIER COUNTY, FLORIDA IDA IDRB (Community School of Naples, Inc. Project) 1.00%, 07/07/03 8,150 8,150 +@ DADE COUNTY, FLORIDA IDRB (Dolphins Stadium Project) Series 1985C 1.00%, 07/07/03 550 550 IDRB (Micheal-Ann Russell Jewish Community Center Project) 1.00%, 07/07/03 5,185 5,185 ~ RB (Water & Sewer Systems) 0.95%, 07/07/03 81,200 81,200 +@ EUSTIS, FLORIDA Multi-Purpose RB 1.00%, 07/07/03 2,700 2,700 +@ FLORIDA DEVELOPMENT FINANCE CORP IDRB (Sunshine State Project) Series 1999A-3 1.05%, 07/07/03 1,185 1,185 +@ FLORIDA HOUSING FINANCE CORP M/F Housing RB (Buena Vista Project) Series 1985MM 0.97%, 07/07/03 10,000 10,000 M/F Housing RB (South Pointe Project) Series 1998J 1.00%, 07/07/03 5,400 5,400 M/F Housing Revenue Refunding Bond RB (Reflections Project) Series 2001A 0.95%, 07/07/03 12,500 12,500 M/F RB (Victoria Park Apartments) Series J -1 1.00%, 07/07/03 8,370 8,370 RB (Ashley Lake II Project) Series 1989J 1.04%, 07/07/03 10,800 10,800 RB (Caribbean Key Apartments) Series 1996F 1.03%, 07/07/03 3,400 3,400 RB (Heritage Pointe Project) Series 1999I-1 1.00%, 07/07/03 9,500 9,500 RB (Heron Park Project) Series 1996U 1.04%, 07/07/03 130 130 RB (Tiffany Club Project) Series 1996P 1.03%, 07/07/03 6,900 6,900 RB (Timberline Apartments) Series 1999P 1.00%, 07/07/03 5,300 5,300 RB (Vinings Hampton Village) Series 2001D 1.10%, 07/07/03 10,800 10,800 + FLORIDA LOCAL GOVERNMENT FINANCE COMMISSION TECP 1.10%, 09/11/03 8,000 8,000 +@ FLORIDA OCEAN HIGHWAY & PORT AUTHORITY RB 1.10%, 07/07/03 10,700 10,700 +~@ FLORIDA STATE MUNICIPAL POWER AGENCY RB (Stanton Project) 0.95%, 07/07/03 6,150 6,150 +~@ FLORIDA STATE TURNPIKE AUTHORITY RB TOB Series 273 1.04%, 07/07/03 5,745 5,745 +~@ GREATER ORLANDO, FLORIDA AVIATION AUTHORITY Airport Facilities Revenue Refunding Bond Series 2002E 1.10%, 07/07/03 15,300 15,300 +~@ GULF BREEZE, FLORIDA RB (Local Government Loan Program) Series 1985B 1.00%, 07/07/03 26,930 26,930 RB (Local Government Loan Program) Series 1985C 1.00%, 07/07/03 29,160 29,160 RB (Local Government Loan Program) Series 1985E 1.00%, 07/07/03 3,505 3,505 +@ HALIFAX, FLORIDA HOSPITAL MEDICAL CENTER RB (Florida Health Care Plan, Inc. Project) 0.95%, 07/07/03 4,700 4,700
See financial notes. 13 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + HILLSBOROUGH COUNTY, FLORIDA @ IDRB (Tampa Metropolitan YMCA Project) Series 2000K 1.05%, 07/07/03 9,100 9,100 TECP Series B 1.00%, 08/26/03 700 700 +@ JACKSONVILLE, FLORIDA Industrial Development Revenue Refunding Bond (Pavilion Associates, Ltd. Project) 0.95%, 07/07/03 4,200 4,200 +@ JACKSONVILLE, FLORIDA ECONOMIC DEVELOPMENT COMMISSION RB (Bolles School Project) Series 1999A 1.00%, 07/07/03 2,400 2,400 JACKSONVILLE, FLORIDA ELECTRIC AUTHORITY ~@ RB (Water & Sewer Systems) Series 2000B 0.95%, 07/07/03 4,300 4,300 ~@ RB TOB Series 2000FF 1.08%, 07/07/03 3,585 3,585 Revenue Refunding Bond (St John River) Issue 2 Series 16 1.09%, 10/01/03 9,000 9,088 ~ Water & Sewer TECP 1.05%, 07/02/03 11,400 11,400 +@ JACKSONVILLE, FLORIDA HEALTH FACILITIES AUTHORITY RB Revenue Refunding Bond (Genesis Rehabilitation Hospital) 1.00%, 07/01/03 6,600 6,600 +@ LAKELAND, FLORIDA EDUCATIONAL FACILITIES RB (Florida Southern College Project) 1.00%, 07/07/03 30,000 30,000 +@ LEE COUNTY, FLORIDA HFA M/F Housing RB (Cape Coral Apartments Project) Series 1999A 1.13%, 07/07/03 6,160 6,160 M/F Housing RB (University Club Apartments Project) Series 2002A 1.25%, 07/07/03 6,700 6,700 +@ MANATEE COUNTY, FLORIDA HFA M/F Housing RB (La Mirada Gardens Project) Series 2002A 1.25%, 07/07/03 4,000 4,000 +@ MARION COUNTY, FLORIDA IDA M/F Housing Revenue Refunding Bond (Chambrel Project) 0.95%, 07/07/03 7,741 7,741 +~@ MIAMI-DADE COUNTY, FLORIDA IDRB (Airis Miami LLC Project) Series 1999A 0.95%, 07/07/03 54,200 54,200 + MIAMI-DADE COUNTY, FLORIDA AVIATION AUTHORITY TECP 1.13%, 07/02/03 9,005 9,005 1.15%, 07/11/03 4,500 4,500 0.97%, 08/06/03 12,538 12,538 0.95%, 09/12/03 1,098 1,098 +@ OKEECHOBEE COUNTY, FLORIDA Exempt Facility RB (Okeechobee Landfill, Inc. Project) 1.10%, 07/07/03 15,000 15,000 + ORANGE COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY TECP 1.10%, 07/22/03 9,000 9,000 0.95%, 09/04/03 21,000 21,000 0.95%, 09/09/03 20,000 20,000 +@ ORANGE COUNTY, FLORIDA HFA M/F Housing RB (Andover Place Apartments) 1.00%, 07/07/03 7,570 7,570 M/F Housing RB (Highland Pointe Apartments Project) Series 1988J 0.95%, 07/07/03 7,555 7,555 M/F Housing RB (Smokewood Project) Series 1992A 1.00%, 07/07/03 15,000 15,000
See financial notes. 14 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) M/F Housing RB (West Pointe Villas Project) Series 2000F 1.03%, 07/07/03 5,750 5,750 M/F Housing Revenue Refunding Bond RB (Heather Glenn Apartments Project) Series 2001E 0.90%, 07/07/03 11,900 11,900 +~@ ORANGE COUNTY, FLORIDA SCHOOL BOARD COP Series 2002B 0.90%, 07/01/03 3,000 3,000 + ORLANDO & ORANGE COUNTIES, FLORIDA EXPRESSWAY AUTHORITY RB Series 2003A 0.94%, 07/01/04 3,455 3,526 ~@ Revenue Refunding Bond Series 2003C-2 0.90%, 07/07/03 4,500 4,500 ~@ Revenue Refunding Bond Series 2003C-3 0.90%, 07/07/03 10,000 10,000 ~@ Revenue Refunding Bond Series 2003C-4 0.90%, 07/07/03 20,330 20,330 ~@ ORLANDO UTILITIES COMMISSION, FLORIDA RB (Water & Electric) Series 1985B 0.95%, 07/07/03 82,300 82,300 +@ PALM BEACH COUNTY, FLORIDA IDRB (Benjamin Private School Project) 1.00%, 07/07/03 9,000 9,000 RB (Raymond F. Kravis Center Project) 0.85%, 07/07/03 4,900 4,900 + PALM BEACH COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY @ Revenue Refunding Bond RB (Joseph L. Morse Geriatric Center) 1.00%, 07/07/03 7,155 7,155 TECP 1.10%, 07/14/03 4,800 4,800 +~@ PALM BEACH COUNTY, FLORIDA SCHOOL BOARD COP Series 2002B 0.90%, 07/07/03 19,400 19,400 +~@ PASCO COUNTY, FLORIDA COP 1.00%, 07/07/03 29,000 29,000 +@ PINELLAS COUNTY, FLORIDA EDUCATIONAL FACILITIES AUTHORITY RB (Caterbury School of Florida Project) 0.95%, 07/07/03 2,285 2,285 RB (Shorecrest Prep School Project) 0.95%, 07/07/03 1,000 1,000 +@ PINELLAS COUNTY, FLORIDA HFA M/F Housing RB (Mariners Pointe Apartments) 1.03%, 07/07/03 7,300 7,300 +@ PINELLAS COUNTY, FLORIDA INDUSTRIAL COUNCIL RB (Operation Par, Inc. Project) 1.05%, 07/07/03 5,260 5,260 +@ PINELLAS COUNTY, FLORIDA IDA RB (Pact, Inc. Project) 1.00%, 07/07/03 8,100 8,100 +@ SOUTHEAST VOLUSIA, FLORIDA HOSPITAL DISTRICT RB (Bert Fish Medical Center Project) 1.05%, 07/07/03 10,220 10,220 +~ SUNSHINE STATE OF FLORIDA GOVERNMENT FINANCE COMMISSION TECP 1.05%, 07/03/03 21,605 21,605 1.05%, 07/10/03 7,732 7,732 0.90%, 09/09/03 14,810 14,810 +@ TALLAHASSEE & LEON COUNTIES, FLORIDA CIVIC CENTER AUTHORITY Capital Improvement RB Series A 1.00%, 07/07/03 13,400 13,400
See financial notes. 15 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ TAMPA, FLORIDA RB (Tampa Prep School Project) 0.95%, 07/07/03 11,000 11,000 +~@ TAMPA, FLORIDA OCCUPATIONAL LICENSE TAX Revenue Refunding Bond Series 2002B 0.90%, 07/07/03 7,000 7,000 Revenue Refunding Bond Series 2002C 0.85%, 07/07/03 20,700 20,700 +@ TAMPA, FLORIDA REGIONAL WATER SUPPLY AUTHORITY Water Utility System RB 1.05%, 07/07/03 6,400 6,400 +@ VOLUSIA COUNTY, FLORIDA EDUCATIONAL FACILITY AUTHORITY RB (Bethune Cookman College Project) 1.00%, 07/07/03 10,675 10,675 +@ VOLUSIA COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY RB (South West Volusia Health Project) Series 1994A 1.00%, 07/07/03 6,000 6,000 +@ WEST ORANGE, FLORIDA HEALTHCARE DISTRICT RB Series 1999B 0.90%, 07/07/03 9,800 9,800 ----------- 1,046,591 GEORGIA 4.7% +@ ATHENS-CLARKE, JACKSON & MORGAN COUNTIES, GEORGIA IDRB (Mayfield Dairy Farms, Inc. Project) 1.10%, 07/07/03 7,350 7,350 + ATLANTA, GEORGIA AIRPORT ~@ RB TOB Series 376 1.08%, 07/07/03 11,195 11,195 Revenue Refunding Bond Series 2003A 0.89%, 01/01/04 15,895 15,983 ~@ Revenue Refunding Bond Series 2003B-1 1.00%, 07/07/03 46,330 46,330 ~@ Revenue Refunding Bond Series 2003C-2 1.00%, 07/07/03 11,710 11,710 ~@ TOBP (PT-737) 1.11%, 07/07/03 3,385 3,385 +@ ATLANTA, GEORGIA URBAN RESIDENTIAL FINANCE AUTHORITY M/F Housing RB (Brentwood Creek Apartments Project) 1.05%, 07/07/03 4,625 4,625 M/F Housing RB (Brentwood Meadows Apartments Project) 1.05%, 07/07/03 3,000 3,000 M/F Housing RB (Brentwood Village Apartments Project) 1.05%, 07/07/03 6,070 6,070 M/F Housing RB (Carver Redevelopment Phase III Project) 1.05%, 07/07/03 3,500 3,500 M/F Housing RB (Delmonte Brownlee Project) Series 2001A 1.05%, 07/07/03 4,600 4,600 M/F Housing RB (Peaks At West Atlanta Apartments Project) 1.05%, 07/07/03 5,000 5,000 M/F Housing RB (Street Apartments Project) Series 2003ZM 1.08%, 07/07/03 7,000 7,000 M/F Senior Housing RB (Big Bethel Village Project) 1.05%, 07/07/03 4,500 4,500 +@ AUGUSTA, GEORGIA HOUSING AUTHORITY M/F Housing RB (G-Hope Ltd. Partnership Project) 1.05%, 07/07/03 3,800 3,800 +@ BARTOW COUNTY, GEORGIA IDRB (Bartow Paving Co. Project) 1.15%, 07/07/03 2,000 2,000
See financial notes. 16 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) IDRB (Matthew Contracting Project) 1.10%, 07/07/03 1,600 1,600 +@ CARTERSVILLE, GEORGIA DEVELOPMENT AUTHORITY IDRB (Cartersville Facilities Project) 1.12%, 07/07/03 2,200 2,200 +@ CHEROKEE COUNTY, GEORGIA IDRB (Universal Alloy) 1.10%, 07/07/03 2,700 2,700 +@ CLAYTON COUNTY, GEORGIA DEVELOPMENT AUTHORITY IDRB (Wilson Holdings Project) 1.05%, 07/07/03 800 800 Special Facilities RB (Delta Air Lines) Series 2000C 1.05%, 07/07/03 19,500 19,500 +@ CLAYTON COUNTY, GEORGIA HOUSING AUTHORITY M/F Housing RB (Hyde Park Club Apartments Project) 1.05%, 07/07/03 12,195 12,195 +@ COBB COUNTY, GEORGIA HFA M/F Housing RB (Walton Green Project) 1.10%, 07/07/03 13,500 13,500 M/F Housing RB (Woodchase Village Apartments Project) 1.03%, 07/07/03 4,000 4,000 M/F Housing Revenue Refunding Bond RB (Walton Park Apartments Project) 1.05%, 07/07/03 21,100 21,100 +@ COLUMBUS, GEORGIA DEVELOPMENT AUTHORITY RB (Foundation Properties, Inc. Project) 1.05%, 07/07/03 11,500 11,500 RB (Foundation Property's, Inc. Project) 1.05%, 07/07/03 3,950 3,950 +@ COLUMBUS, GEORGIA HOUSING AUTHORITY M/F Housing RB (Eagles Trace Apartments Project) 1.05%, 07/07/03 6,400 6,400 +@ CRISP COUNTY - CORDELE, GEORGIA IDRB (Georgia Ductile Project) 1.09%, 07/07/03 13,400 13,400 +@ DAWSON COUNTY, GEORGIA DEVELOPMENT AUTHORITY IDRB (World Wide Manufacturing Project) 1.15%, 07/07/03 2,450 2,450 @ DEKALB COUNTY, GEORGIA DEVELOPMENT AUTHORITY + IDRB (Arbor Montessori School Project) 1.00%, 07/07/03 1,100 1,100 IDRB (Siemens Energy, Inc. Project) 1.05%, 07/07/03 7,500 7,500 +@ DEKALB COUNTY, GEORGIA HFA M/F Housing RB (Brittany Apartments Project) 0.98%, 07/07/03 8,000 8,000 M/F Housing RB (Eagle Trace Apartments Project) Series 1996 1.03%, 07/07/03 8,950 8,950 M/F Housing RB (Mountain Crest Apartments Project) Series 2002A-1 1.05%, 07/07/03 7,915 7,915 M/F Housing RB (Villas of Friendly Heights Apartments Project) 1.05%, 07/07/03 3,575 3,575 M/F Housing RB (Wesley Club Apartments Project) 1.05%, 07/07/03 5,970 5,970 DEKALB COUNTY, GEORGIA SCHOOL DISTRICT TAN Series 2002-2007 1.13%, 12/31/03 30,000 30,130
See financial notes. 17 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ DOUGLAS COUNTY, GEORGIA IDRB (Blue Circle Project) 1.10%, 07/07/03 3,800 3,800 +@ EFFINGHAM COUNTY, GEORGIA IDRB (Temcor Project) 1.05%, 07/07/03 4,000 4,000 +@ FAYETTE COUNTY, GEORGIA DEVELOPMENT AUTHORITY Educational Facilities RB (Catholic School Properties, Inc. Project) 1.00%, 07/07/03 10,100 10,100 + FULTON COUNTY, GEORGIA BUILDING AUTHORITY Revenue Refunding Bond RB Series 2002C 1.28%, 01/01/04 4,725 4,753 +@ FULTON COUNTY, GEORGIA DEVELOPMENT AUTHORITY RB (Atlanta International School Project) 1.00%, 07/07/03 2,700 2,700 RB (Federal Road, LLC Project) 1.05%, 07/07/03 7,000 7,000 RB (Trinity School Project) 1.00%, 07/07/03 7,000 7,000 RB (Woodruff Arts Center Project) 1.00%, 07/07/03 10,000 10,000 +@ GAINESVILLE, GEORGIA REDEVELOPMENT AUTHORITY Educational Facilities RB (Riverside Military Project) 1.00%, 07/07/03 30,000 30,000 ~@ GEORGIA STATE GO TOB Series 981003 1.05%, 07/07/03 20,245 20,245 GO TOB Series 795 1.04%, 07/07/03 4,000 4,000 GO TOBP (PA-897) 0.99%, 07/07/03 10,575 10,575 +@ GORDON COUNTY, GEORGIA DEVELOPMENT AUTHORITY RB (Constantine Dyeing, LLC Project) 1.05%, 07/07/03 5,280 5,280 +@ GWINNETT COUNTY, GEORGIA HFA M/F Housing RB 1.00%, 07/07/03 5,000 5,000 +@ HAPEVILLE, GEORGIA IDRB (Hapeville Hotel Ltd. Project) 0.90%, 07/01/03 4,600 4,600 +@ HART COUNTY, GEORGIA INDUSTRIAL BUILDING AUTHORITY IDRB (Awh Corp. Project) 1.10%, 07/07/03 4,300 4,300 IDRB (Dundee Mills Project) 1.05%, 07/07/03 2,505 2,505 +@ HOUSTON COUNTY, GEORGIA DEVELOPMENT AUTHORITY IDRB (Douglas Asphalt County Project) 1.05%, 07/07/03 2,100 2,100 +@ JEFFERSON COUNTY, GEORGIA DEVELOPMENT AUTHORITY IDRB (Grove River Mills Project) 1.15%, 07/07/03 2,100 2,100 +@ LAURENS COUNTY, GEORGIA DEVELOPMENT AUTHORITY Solid Waste Disposal RB (Southeast Paper Manufacturing Co. Project) 1.10%, 07/07/03 51,000 51,000 +@ LAWRENCEVILLE, GEORGIA HOUSING AUTHORITY M/F Housing RB Series 2002 1.10%, 07/07/03 7,700 7,700 +@ LOWNDES COUNTY, GEORGIA DEVELOPMENT AUTHORITY M/F Housing RB (FMPH Valdosta, Limited Partnership Project) 1.05%, 07/07/03 4,945 4,945 +@ MACON-BIBB COUNTY, GEORGIA HOSPITAL AUTHORITY RB (The Medical Center of Central Georgia Project) 1.00%, 07/07/03 4,000 4,000
See financial notes. 18 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ MILLER COUNTY, GEORGIA DEVELOPMENT AUTHORITY IDRB (Birdsong Corp. Project) 1.05%, 07/07/03 2,800 2,800 + ROCKDALE COUNTY, GEORGIA WATER SEWER AUTHORITY RB Series 1999B 1.38%, 07/01/03 12,710 12,710 +@ ROSWELL, GEORGIA HFA M/F Housing RB (Gables Realty Wood Crossing Project) 1.00%, 07/07/03 11,650 11,650 +@ SAVANNAH GEORGIA HOUSING AUTHORITY M/F Housing RB (Indigo Pointe Apartments) Series 2001A 1.05%, 07/07/03 3,500 3,500 M/F Housing RB (Live Oak Plantation Apartments) Series 2001A 1.05%, 07/07/03 2,500 2,500 +@ SAVANNAH, GEORGIA ECONOMIC DEVELOPMENT AUTHORITY RB (Georgia Kaolin, Inc.) 1.10%, 07/07/03 11,000 11,000 RB (Home Depot Project) Series 1995B 1.05%, 07/07/03 5,000 5,000 +@ SUMMERVILLE, GEORGIA DEVELOPMENT AUTHORITY RB (Image Industry Project) 1.10%, 07/07/03 11,000 11,000 +@ THOMASVILLE, GEORGIA HOSPITAL AUTHORITY RB (JD Archbold Project) 1.00%, 07/07/03 6,000 6,000 +@ WALTON COUNTY, GEORGIA DEVELOPMENT AUTHORITY RB (Tucker Door & Trim Corp. Project) 1.15%, 07/07/03 2,600 2,600 +@ WEBSTER COUNTY, GEORGIA IDRB (Tolleson Lumber Co., Inc. Project) 1.10%, 07/07/03 5,600 5,600 +@ WHITFIELD COUNTY, GEORGIA DEVELOPMENT AUTHORITY RB (Product Concepts Project) 1.05%, 07/07/03 960 960 +@ WINDER-BARROW COUNTY, GEORGIA JOINT DEVELOPMENT AUTHORITY Solid Waste Disposal RB 1.05%, 07/07/03 6,000 6,000 +@ WINDER-BARROW COUNTY, GEORGIA INDUSTRIAL BUILDING AUTHORITY IDRB (Progress Container Corp. Project) 1.05%, 07/07/03 2,795 2,795 +@ WORTH COUNTY, GEORGIA IDRB Revenue Refunding Bond (Seabrook Project) Series 1996B 1.05%, 07/07/03 1,300 1,300 ------- 621,601 HAWAII 0.4% +~@ HAWAII STATE DEPARTMENT OF BUDGET & FINANCE Special Purpose RB TOBP (PA-795R) 1.08%, 07/07/03 9,095 9,095 ~@ HAWAII STATE HOUSING FINANCE & DEVELOPMENT CORP. TOB 1.13%, 07/07/03 6,355 6,355 +~@ HONOLULU, HAWAII CITY & COUNTY GO Series 2001C 1.30%, 12/04/03 37,600 37,600 ------- 53,050 IDAHO 1.0% +@ IDAHO HFA Housing RB (Assisted Living Concepts Project) 1.10%, 07/07/03 3,380 3,380 = IDAHO STATE TAN 0.80%, 06/30/04 125,000 126,484
See financial notes. 19 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ IDAHO STATE UNIVERSITY FOUNDATION, INC. RB (L E & Thelma Stevens Project) 1.00%, 07/07/03 3,955 3,955 ------- 133,819 ILLINOIS 6.9% +@ AURORA, ILLINOIS M/F Housing RB (Apartments at Fox Valley) Series 1999A 1.00%, 07/07/03 9,445 9,445 +@ CAROL STREAM, ILLINOIS M/F Housing Revenue Refunding Bond RB (St. Charles Square Project) 1.15%, 07/07/03 4,415 4,415 +@ CENTRALIA, ILLINOIS IDRB (Consolidated Foods Corp. & Hollywood Brands, Inc. Project) 1.00%, 07/07/03 10,000 10,000 CHICAGO, ILLINOIS +~@ GO Series B 0.98%, 07/07/03 20,000 20,000 + GO Series 2003 1.15%, 01/07/04 2,000 2,001 +@ IDRB (Morse Automotive Project) 1.05%, 07/07/03 1,600 1,600 + Project & Refunding GO Series 2002A 1.19%, 01/01/04 5,180 5,253 +@ RB (Homestart Program) Series 2000A 1.09%, 07/07/03 20,000 20,000 +~@ Senior Lien RB TOB 1.05%, 07/07/03 12,975 12,975 ~@ S/F Mortgage RB TOB Series 1999N 1.13%, 07/07/03 6,025 6,025 +@ Water Second Lien RB 1.00%, 07/07/03 2,000 2,000 +~@ CHICAGO, ILLINOIS BOARD OF EDUCATION Unlimited Tax GO TOB 1.04%, 07/07/03 7,120 7,120 ~@ CHICAGO, ILLINOIS METROPOLITAN WATER RECLAMATION DISTRICT Capital Improvement GO Series 2003E 0.90%, 07/07/03 12,000 12,000 RB Series 2002A 0.90%, 07/07/03 7,100 7,100 +~@ CHICAGO, ILLINOIS MIDWAY AIRPORT RB TOB 1.05%, 07/07/03 24,480 24,480 +@ CHICAGO, ILLINOIS O'HARE INTERNATIONAL AIRPORT RB (ACES General Airport Second Lien) Series B1 1.02%, 07/07/03 25,400 25,400 RB (ACES General Airport Second Lien) Series B2 1.02%, 07/07/03 13,000 13,000 ~ Revenue Refunding TOBP (PT-755) 1.11%, 07/07/03 6,315 6,315 Special Facility RB (O'Hare Technical Center II Project) 1.06%, 07/07/03 15,500 15,500 Special Facility RB 1.10%, 07/07/03 41,484 41,484 ~ Special Facility RB TOB Series 2001B6 1.13%, 07/07/03 11,070 11,070 Special Facility Revenue Refunding Bond RB (Lufthansa German Project) 0.98%, 07/07/03 43,770 43,770 + CHICAGO, ILLINOIS SKYWAY TOLL BRIDGE Revenue Refunding Bond 0.87%, 01/01/04 5,000 5,246 +@ EAST DUNDEE, KANE & COOK COUNTIES, ILLINOIS IDRB (Otto Engine Project) 1.06%, 07/07/03 1,950 1,950 +@ ELMHURST, ILLINOIS IDRB (ELM Machining Corp. Project) 1.20%, 07/07/03 2,090 2,090
See financial notes. 20 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ GILBERTS, ILLINOIS SPECIAL SERVICE AREA NO. 10 RB (Timber Trails Project) 1.05%, 07/07/03 4,883 4,883 +@ GLENDALE HEIGHTS, ILLINOIS IDRB (York Corrugated Container Project) 1.10%, 07/07/03 1,200 1,200 +@ HAMPSHIRE, ILLINOIS IDRB (Poli-Film America Project) Series 1998A 1.15%, 07/07/03 4,000 4,000 @ ILLINOIS DEVELOPMENT FINANCE AUTHORITY + IDRB (Arc Tronics, Inc. Project) 1.10%, 07/07/03 2,190 2,190 + IDRB (Camcraft, Inc. Project) 1.25%, 07/07/03 2,400 2,400 + IDRB (Catholic Charities) 1.20%, 07/07/03 910 910 + IDRB (Molding Project) 1.30%, 07/07/03 4,300 4,300 +~ IDRB (Presbyterian Home Lake Forest) Series 1996A 1.05%, 07/07/03 6,000 6,000 + IDRB (Radiological Society Project) 1.00%, 07/07/03 3,730 3,730 + IDRB (River Graphics Corp. Project) 1.20%, 07/07/03 2,690 2,690 + RB (Carmel High School Project) 1.05%, 07/07/03 3,200 3,200 + RB (Catholic Charities Housing Project) Series 1993A 1.20%, 07/07/03 9,160 9,160 + RB (Chicago Academy of Science Project) 1.05%, 07/07/03 8,415 8,415 + RB (Chicago Horticultural Society Project) 1.05%, 07/07/03 18,000 18,000 + RB (Korex Corp. Project) 1.15%, 07/07/03 4,000 4,000 + RB (Lake Forest Academy Project) 1.05%, 07/07/03 4,000 4,000 + RB (Loyola Academy Project) 1.05%, 07/07/03 13,000 13,000 + RB (McCormick Theological Project) Series 2001B 1.05%, 07/07/03 12,500 12,500 ~ RB (Palos Community Hospital Project) 1.00%, 07/07/03 10,000 10,000 + RB (Presbyterian Homes Project) 1.05%, 07/07/03 9,000 9,000 + RB (Roll Service, Inc. Project) 1.10%, 07/07/03 2,230 2,230 + RB (Sacred Heart School Project) 1.05%, 07/07/03 4,600 4,600 + RB (Slovak American Charitable Project) 1.05%, 07/07/03 7,940 7,940 + RB (St. Ignatius College Prep. Project) 1.05%, 07/07/03 2,200 2,200 + RB (St. Ignatius College Project) 1.05%, 07/07/03 2,500 2,500 + RB (Variable Rest Haven Illiana Christian) 1.07%, 07/07/03 8,295 8,295 + RB (Wheaton Academy Project) 1.05%, 07/07/03 8,000 8,000 + Residential Rental RB (River Oak Project) 1.05%, 07/07/03 32,000 32,000 + Revenue Refunding Bond RB (Francis W. Parker Project) 0.95%, 07/07/03 2,500 2,500 +~ Water Facilities Revenue Refunding Bond RB (Illinois American Water Co. Project) 1.05%, 07/07/03 5,000 5,000 +@ ILLINOIS EDUCATIONAL FACILITY AUTHORITY RB (Chicago Historical Society) 1.00%, 07/07/03 7,900 7,900 ~ TOB 1.08%, 07/07/03 2,000 2,000
See financial notes. 21 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ILLINOIS HDA Homeowner Mortgage RB Subseries 2003A-1 1.13%, 04/29/04 8,000 8,000 Homeowner Mortgage RB Subseries 2003A-2 1.18%, 04/29/04 26,500 26,500 +@ M/F Revenue Refunding Bond RB (Hyde Park Tower Apartments Project) Series 2000A 1.10%, 07/07/03 4,500 4,500 +@ ILLINOIS HEALTH FACILITY AUTHORITY RB (Bensenville Home Society Project) Series 1989A 1.00%, 07/07/03 2,125 2,125 RB (Washington & Jane Smith Home) 1.05%, 07/07/03 2,800 2,800 +~@ ILLINOIS METROPOLITAN PIER & EXPOSITION AUTHORITY Dedicated Tax RB TOB Series A42 1.08%, 07/07/03 18,490 18,490 TOB (McCormick Place Exposition Project) 1.05%, 07/07/03 9,790 9,790 TOB (McCormick Place) 1.05%, 07/07/03 14,355 14,355 +@ ILLINOIS REGIONAL TRANSPORTATION AUTHORITY GO TOB 1.05%, 07/07/03 12,055 12,055 ~ GO TOB 1.05%, 07/07/03 9,730 9,730 ILLINOIS STATE +~@ Dedicated Tax TOB Series N 1.08%, 07/07/03 2,940 2,940 GO Certificates Series 2003 0.98%, 05/15/04 200,000 200,897 +~@ GO TOB 1.05%, 07/07/03 14,125 14,125 +~@ GO TOB 1.05%, 07/07/03 14,000 14,000 +~@ GO TOB Series 2001-2 1.06%, 07/07/03 5,000 5,000 +@ ILLINOIS STUDENT ASSISTANCE COMMISSION Student Loan RB Series 1996A 1.03%, 07/07/03 7,600 7,600 +@ LOMBARD, ILLINOIS IDRB Revenue Refunding Bond (B & H Partnership Project) 1.40%, 07/07/03 1,850 1,850 +@ OAK FOREST, ILLINOIS RB (Homewood Pool-South Suburban Mayors & Managers Association Project) 1.04%, 07/07/03 10,000 10,000 +@ ORLAND PARK, ILLINOIS IDRB (Orland Properties Project) 1.40%, 07/07/03 825 825 +@ PALATINE, ILLINOIS SPECIAL FACILITIES Limited Obligation RB (Little City Community Development Project) 1.05%, 07/07/03 4,000 4,000 +@ RICHTON PARK, ILLINOIS IDRB (Avatar Corp. Project) 1.25%, 07/07/03 1,900 1,900 +@ ROCKFORD, ILLINOIS IDRB (Industrial Welding Supply, Inc. Project) 1.20%, 07/07/03 2,000 2,000 IDRB (Ring Can Corp. Project) 1.05%, 07/07/03 1,500 1,500 +@ TINLEY PARK, ILLINOIS IDRB (Beverly Manufacturing Co. Project) Series 1997A 1.24%, 07/07/03 2,270 2,270 +~@ UNIVERSITY OF ILLINOIS RB TOB (Merlot) Series 2000S 1.08%, 07/07/03 3,500 3,500 +@ WILL-KANKAKEE, ILLINOIS REGIONAL DEVELOPMENT AUTHORITY IDRB (Toltec Steel Services, Inc. Project) 1.00%, 07/07/03 8,030 8,030
See financial notes. 22 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ YORKVILLE, ILLINOIS IDRB (F.E. Wheaton & Co., Inc. Project) 1.20%, 07/07/03 1,080 1,080 -------- 908,844 INDIANA 3.5% +@ ELKHART COUNTY, INDIANA Economic Development RB (White Plains Apartments Project) Series 1998A 1.10%, 07/07/03 1,900 1,900 +@ GARY, INDIANA REDEVELOPMENT DISTRICT Economic Growth RB Series 20001-A 1.05%, 07/07/03 8,010 8,010 + INDIANA BOND BANK BAN (Advance Funding Program Notes) Series 2003A 1.10%, 01/27/04 207,500 208,562 TAN (Midyear Funding Program) Series 2003A 0.93%, 04/15/04 67,000 67,168 +@ INDIANA DEVELOPMENT FINANCE AUTHORITY IDRB (Big Sky Park Project) 1.06%, 07/07/03 5,600 5,600 IDRB (Cives Corp. Project) 1.10%, 07/07/03 7,150 7,150 INDIANA HEALTH FACILITY FINANCING AUTHORITY RB (Ascension Health Credit Group) Series 2001A-2 1.83%, 07/03/03 25,000 25,000 +~@ INDIANA HOSPITAL EQUIPMENT FINANCING AUTHORITY Insured RB Series 1985A 1.00%, 07/07/03 32,975 32,975 ~@ INDIANA STATE HFA S/F Mortgage RB TOB Series 2000P 1.15%, 07/07/03 7,370 7,370 TOB Series 1999A 1.13%, 07/07/03 9,995 9,995 + INDIANA TRANSPORTATION FINANCE AUTHORITY BAN 0.95%, 10/03/03 27,000 27,038 ~@ INDIANA UNIVERSITY, INDIANA RB 0.95%, 07/07/03 5,561 5,561 +@ INDIANAPOLIS, INDIANA M/F Housing RB (Nora Pines Apartments Project) 0.98%, 07/07/03 5,000 5,000 ~ Thermal Energy System RB TOB 1.05%, 07/07/03 9,900 9,900 +~@ INDIANAPOLIS, INDIANA LOCAL PUBLIC IMPROVEMENT BOND BANK TOB Series 784 1.04%, 07/07/03 8,000 8,000 +@ MARION, INDIANA Economic Development RB (Wesleyan University Project) 1.00%, 07/07/03 7,500 7,500 @ ST. JOSEPH COUNTY, INDIANA + Economic Development RB (Pine Oaks Apartments Project) Series 1997A 1.15%, 07/07/03 1,000 1,000 + Economic Development RB Series 1997B 1.15%, 07/07/03 3,430 3,430 ~ Educational Facilities RB (University of Notre Dame) 0.85%, 07/07/03 4,200 4,200 +@ SAINT JOSEPH COUNTY, INDIANA ECONOMICAL DEVELOPMENT AUTHORITY RB (Western Manor Project) 1.15%, 07/07/03 2,130 2,130 +~@ UNIVERSITY OF SOUTHERN INDIANA AUXILIARY SYSTEM RB Series 2001B 1.00%, 07/07/03 10,700 10,700
See financial notes. 23 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ VIGO COUNTY, INDIANA Economic Development Revenue Bond (Sister's Providence Project) 1.10%, 07/07/03 3,500 3,500 ------- 461,689 IOWA 1.0% +@ IOWA HIGHER EDUCATION LOAN AUTHORITY RB (Private College Graceland Project) 1.05%, 07/07/03 2,000 2,000 + IOWA SCHOOL CORP. Revenue Anticipation Warrant (School Cash Anticipation Program) Series 2003A 0.85%, 06/18/04 91,730 92,739 +~@ IOWA STUDENT LOAN LIQUIDITY CORP. Student Loan RB Series 1988B 0.98%, 07/07/03 33,600 33,600 ------- 128,339 KANSAS 0.9% ~@ KANSAS DEPARTMENT OF TRANSPORTATION HIGHWAY RB TOB Series 1999 1.05%, 07/07/03 37,500 37,500 OLATHE, KANSAS BAN Series 2003A 1.09%, 06/01/04 39,540 39,688 +@ WICHITA, KANSAS Airport Facilities Revenue Refunding Bond RB (Cessna Service Center Project) 1.10%, 07/07/03 11,245 11,245 Airport Facilities Revenue Refunding Bond RB (Flight Safety International, Inc. Project) 1.08%, 07/07/03 26,170 26,170 ------- 114,603 KENTUCKY 1.1% +@ ELIZABETHTOWN, KENTUCKY IDRB (Aztec Project) 1.10%, 07/07/03 3,000 3,000 +@ JEFFERSON COUNTY, KENTUCKY M/F Housing Revenue Refunding Bond RB (Camden Brookside Project) 1.05%, 07/07/03 8,900 8,900 RB (University of Louisville Athletic Department) 1.10%, 07/07/03 4,400 4,400 +~@ KENTUCKY HIGHER EDUCATION STUDENT LOAN CORP. Insured Student Loan RB Series 1991E 1.00%, 07/07/03 12,600 12,600 Insured Student Loan RB Series 1996A 1.00%, 07/07/03 23,850 23,850 ~@ KENTUCKY HOUSING CORP. RB TOB Series 1998W 1.13%, 07/07/03 19,320 19,320 TOB (Merlots) Series 2000U 1.13%, 07/07/03 9,685 9,685 TOB (Merlots) Series 2002A-31 1.13%, 07/07/03 5,915 5,915 +~@ LOUISVILLE & JEFFERSON COUNTIES, KENTUCKY METROPOLITAN SEWER DISTRICT TOB Series A 1.05%, 07/07/03 6,115 6,115 @ LOUISVILLE & JEFFERSON COUNTY, KENTUCKY REGIONAL AIRPORT AUTHORITY Special Facilities RB (UPS Project) Series 1999C 0.90%, 07/01/03 29,800 29,800 +@ MURRAY, KENTUCKY IDRB Revenue Refunding Bond (Dean Foods Co. Project) 1.10%, 07/07/03 6,000 6,000 +@ RICHMOND, KENTUCKY IDRB (Mikron Project) 1.10%, 07/07/03 7,175 7,175
See financial notes. 24 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ WICKLIFFE, KENTUCKY POLLUTION CONTROL & SOLID WASTE DISPOSAL Revenue Refunding Bond RB (Westvaco Corp. Project) 1.00%, 07/07/03 4,250 4,250 ------- 141,010 LOUISIANA 1.2% +@ CALCASIEU PARISH, LOUSIANA IDRB (Weingarten Realty Project) 1.05%, 07/07/03 1,990 1,990 @ EAST BATON ROUGE PARISH, LOUSIANA POLLUTION CONTROL Revenue Refunding Bonds RB (Exxon Corp. Project) 0.85%, 07/01/03 12,000 12,000 +@ LAFAYETTE PARISH, LOUISIANA IDRB (Westwood Village Project) 1.05%, 07/07/03 3,735 3,735 +@ LAKE CHARLES, LOUISIANA HARBOR & TERMINAL DISTRICT Dock & Wharf RB (Conoco, Inc. Project) 1.10%, 07/07/03 10,500 10,500 +@ LOUISIANA PUBLIC FACILITIES AUTHORITY IDRB (Kenner Hotel LTD. Project) 0.90%, 07/01/03 6,900 6,900 ~ Lease Purchase RB 1.03%, 07/07/03 20,000 20,000 +@ LOUISIANA STATE OFFSHORE TERMINAL AUTHORITY Revenue Refunding Bond (1st. Stage Loop, Inc.) 1.00%, 07/07/03 10,000 10,000 Revenue Refunding Bond (Deepwater Port) Series 2003B 1.05%, 07/07/03 5,700 5,700 +~@ NEW ORLEANS, LOUISIANA AVIATION BOARD RB Series 1993B 1.05%, 07/07/03 5,460 5,460 +@ OUACHITA PARISH, LOUISIANA IDRB (Sulzer Escher Wyss, Inc. Project) 1.10%, 07/07/03 1,500 1,500 ST. JAMES PARISH, LOUISIANA Pollution Control Revenue Refunding TECP (Texaco Project) Series 1988A 1.05%, 07/09/03 36,500 36,500 Pollution Control Revenue Refunding TECP (Texaco Project) Series 1988B 1.05%, 07/09/03 44,030 44,030 ------- 158,315 MAINE 0.2% +@ MAINE FINANCE AUTHORITY RB (Jackson Laboratories) 1.04%, 07/07/03 6,000 6,000 = MAINE STATE TAN 0.80%, 06/30/04 20,000 20,188 ~@ MAINE STATE HOUSING AUTHORITY Mortgage Purchase TOB Series 193 1.10%, 07/07/03 5,020 5,020 ------- 31,208 MARYLAND 0.6% ~ ANNE ARUNDEL COUNTY, MARYLAND TECP Series A 1.00%, 10/07/03 5,000 5,000 TECP Series B 1.00%, 10/08/03 5,000 5,000 ~ BALTIMORE COUNTY, MARYLAND CONSOLIDATED PUBLIC IMPROVEMENT TECP 1.05%, 07/07/03 20,000 20,000 ~@ MARYLAND STATE COMMUNITY HOUSING DEVELOPMENT ADMINISTRATION DEPARTMENT S/F Mortgage Revenue TOBP (PA-634) 1.08%, 07/07/03 5,105 5,105 TOB Series 1999G 1.13%, 07/07/03 32,335 32,335
See financial notes. 25 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ MARYLAND STATE ECONOMIC DEVELOPMENT CORP. Economic Development RB (Hunter Douglas Project) 1.05%, 07/07/03 3,400 3,400 IDRB (Dixon Valve Project) 1.15%, 07/07/03 2,225 2,225 +@ MARYLAND STATE ENGERY FINANCING ADMINISTRATION Limited Obligation Local District RB (Comfort Link Project) 1.05%, 07/07/03 10,000 10,000 ------- 83,065 MASSACHUSETTS 2.7% AYER, MASSACHUSETTS BAN 0.89%, 06/24/04 5,000 5,027 DOUGLAS, MASSACHUSETTS BAN 1.12%, 04/07/04 14,000 14,094 MASSACHUSETTS BAY TRANSPORTATION AUTHORITY Revenue Refunding Bond (General Transportation System Project) Series 1993A 1.11%, 03/01/04 1,000 1,027 +~@ TOBP (PT-1218) 0.96%, 07/07/03 9,000 9,000 ~ MASSACHUSETTS STATE +@ GO TOB Series 2001O 1.00%, 07/07/03 2,785 2,785 @ Revenue Refunding Bond Series 2001C 1.10%, 07/07/03 9,200 9,200 TECP 0.85%, 08/04/03 56,000 56,000 + MASSACHUSETTS STATE DEVELOPMENT FINANCE AGENCY @ RB (Assumption College) Series 2002A 0.99%, 07/07/03 6,600 6,600 ~@ RB Boston University) Series 2002R-3 1.05%, 07/07/03 10,000 10,000 @ RB (Brandon Residential Treatment) 1.00%, 07/07/03 2,355 2,355 @ RB (Fiba Technologies) 1.05%, 07/07/03 2,200 2,200 TECP 0.95%, 10/08/03 2,750 2,750 @ MASSACHUSETTS STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY +~ RB (Capital Assets Program) Series 1985D 0.90%, 07/01/03 25,900 25,900 RB (Harvard University) Series 2000BB 1.05%, 07/07/03 41,800 41,800 RB (Harvard University) Series 2000Y 0.85%, 07/07/03 32,000 32,000 RB (Massachusetts Institute of Technology) Series 2001J-1 0.95%, 07/07/03 15,700 15,700 RB (Massachusetts Institute of Technology) Series 2001J-2 0.85%, 07/07/03 22,800 22,800 RB (Partners Healthcare Systems) Series 2003D-6 0.95%, 07/01/03 4,200 4,200 RB (Williams College) Series 2003I 1.10%, 04/01/04 20,400 20,400 ~ RB TOB Series 2002D 1.00%, 07/07/03 1,510 1,510 MASSACHUSETTS STATE HFA +~@ RB Series 2003F 0.95%, 07/07/03 3,500 3,500 S/F Housing BAN Series 2003M 1.15%, 05/01/04 10,000 10,000 ~@ MASSACHUSETTS STATE INDUSTRIAL FINANCE AGENCY RB (Whitehead Institute BioMed Research Project) 0.90%, 07/07/03 5,000 5,000 +~@ MASSACHUSETTS STATE TURNPIKE AUTHORITY Metropolitan Highway System RB TOB Series 335 0.98%, 07/07/03 10,000 10,000
See financial notes. 26 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~@ MASSACHUSETTS STATE WATER POLLUTION ABATEMENT TRUST TOB (Merlots) Series 1999N 1.04%, 07/07/03 1,500 1,500 +~@ ROUTE 3 NORTH MASSACHUSETTS TRANSPORTATION IMPROVEMENT ASSOCIATION Lease RB Series 2002B 0.90%, 07/07/03 24,950 24,950 WOBURN, MASSACHUSETTS BAN 0.95%, 06/11/04 7,850 7,909 + WORCHESTER, MASSACHUSETTS REGIONAL TRANSPORTATION AUTHORITY RAN 0.88%, 06/30/04 6,000 6,037 ------- 354,244 MICHIGAN 5.0% ~@ ALLEN PARK, MICHIGAN PUBLIC SCHOOL DISTRICT TOB Series 229 1.05%, 07/07/03 6,410 6,410 +@ ANN ARBOR, MICHIGAN ECONOMIC DEVELOPMENT CORP. Limited Obligation RB (Glacier Hills, Inc. Project) Series 2000A 1.08%, 07/07/03 13,245 13,245 Limited Obligation RB (Glacier Hills, Inc. Project) Series 2000B 1.08%, 07/07/03 9,325 9,325 +~@ DETROIT, MICHIGAN CITY SCHOOL DISTRICT GO TOB Series 2002A 1.06%, 07/07/03 4,620 4,620 +~@ DETROIT, MICHIGAN SEWAGE DISPOSAL SYSTEM RB TOB Series 1999A 1.05%, 07/07/03 34,650 34,650 RB TOB Series 2002G 1.06%, 07/07/03 4,260 4,260 +~@ DETROIT, MICHIGAN WATER SUPPLY SYSTEM Refunding Revenue Bond (Senior Lien) Series 2003D 1.00%, 07/07/03 21,900 21,900 +@ GEORGETOWN TOWNSHIP, MICHIGAN ECONOMIC DEVELOPMENT CORP. Limited Obligation RB (Sunset Manor, Inc. Project) 1.08%, 07/07/03 9,180 9,180 +@ GRAND RAPIDS, MICHIGAN ECONOMIC DEVELOPMENT CORP. RB (Amway Hotel Corp. Project) Series 1991A 1.04%, 07/07/03 8,755 8,755 +@ MACOMB COUNTY, MICHIGAN HOSPITAL FINANCE AUTHORITY Hospital Revenue Refunding Bond (Mt. Clemens General) Series 2003A-2 0.98%, 07/01/03 5,000 5,000 1.00%, 07/01/03 9,200 9,200 MICHIGAN STATE GO 1.00%, 09/30/03 175,000 175,214 + MICHIGAN STATE BUILDING AUTHORITY TECP 1.05%, 08/28/03 55,500 55,500 MICHIGAN STATE HDA RB Series D 1.40%, 12/01/03 17,000 17,000 +~@ TOBP (PT-556) 1.08%, 07/07/03 3,630 3,630 +@ MICHIGAN STATE HOSPITAL FINANCE AUTHORITY RB (Martin Luther Memorial Home Inc. Project) 1.05%, 07/07/03 7,925 7,925 +@ MICHIGAN STATE STRATEGIC FUND Limited Obligation RB (Advance Plastics Corp.) 1.20%, 07/07/03 2,130 2,130 Limited Obligation RB (American Cancer Society Great Lakes) 1.05%, 07/07/03 4,670 4,670
See financial notes. 27 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) Limited Obligation RB (EPI Printers, Inc. Project) 1.20%, 07/07/03 1,200 1,200 Limited Obligation RB (Mans Project) 1.14%, 07/07/03 840 840 Limited Obligation RB (Mechanics Uniform Rental Project) 1.20%, 07/07/03 1,000 1,000 Limited Obligation RB (Orchestra Place Renewal Project) 1.14%, 07/07/03 15,000 15,000 Limited Obligation RB (United Machining Project) 1.20%, 07/07/03 5,000 5,000 Limited Obligation RB Series 1998B (Mans Project) 1.20%, 07/07/03 1,415 1,415 +~@ MICHIGAN STATE TRUNK LINE Revenue Refunding TOB Series 1998A 1.06%, 07/07/03 46,666 46,666 +@ OAKLAND COUNTY, MICHIGAN ECONOMIC DEVELOPMENT CORP. Limited Obligation RB (Husky Envelope Products, Inc. Project) 1.20%, 07/07/03 2,620 2,620 Limited Obligation RB (Pontiac Vision Schools Project) 1.05%, 07/07/03 10,200 10,200 +~@ WAYNE CHARTER COUNTY, MICHIGAN AIRPORT RB (Detroit Metropolitan Wayne County Airport Project) 1.02%, 07/07/03 87,500 87,500 RB (Detroit Metropolitan Wayne County Airport Project) Series 1996B 0.98%, 07/07/03 41,505 41,505 RB (Detroit Metropolitan Wayne County Airport Project) Series 2002A 0.98%, 07/07/03 52,900 52,900 ------- 658,460 MINNESOTA 2.1% +~@ BLOOMINGTON, MINNESOTA PORT AUTHORITY Special Tax Revenue Refunding Bond RB (Mall of America Project) Series 1999B 1.10%, 07/07/03 9,300 9,300 +~@ DAKOTA COUNTY, MINNESOTA COMMUNITY DEVELOPMENT AGENCY S/F RB TOBP (PT-627) 1.13%, 07/07/03 7,245 7,245 +@ EDEN PRAIRIE, MINNESOTA M/F Housing RB (Leased Housing Associates) Series 2003A 1.15%, 07/07/03 6,000 6,000 @ HENNEPIN COUNTY, MINNESOTA Unlimited GO Series 1996C 1.15%, 07/07/03 2,650 2,650 +@ HENNEPIN COUNTY, MINNESOTA HOUSING & REDEVELOPMENT AUTHORITY M/F Housing RB (City Apartments at Loring Park) 1.10%, 07/07/03 2,600 2,600 M/F Housing Revenue Refunding Bond RB (Stone Arch Apartments Project) 1.05%, 07/07/03 2,800 2,800 +@ MENDOTA HEIGHTS, MINNESOTA IDRB (Dakota Business Plaza Project) 1.30%, 07/07/03 2,300 2,300 + MINNEAPOLIS ST. PAUL METROPOLITAN AIRPORTS COMMISSION RB Series 2000B 1.35%, 01/01/04 2,875 2,934 TECP 0.95%, 08/06/03 15,400 15,400 1.00%, 09/03/03 24,500 24,500 ~@ TOBP (PT-735) 1.11%, 07/07/03 5,225 5,225
See financial notes. 28 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MINNESOTA SCHOOL DISTRICT COP (Tax & Aid Anticipation Borrowing Program) 1.47%, 08/20/03 42,745 42,790 +@ MINNESOTA STATE Agriculture & Economic Development RB (Evangelical Lutheran Project) 1.10%, 07/07/03 7,500 7,500 @ MINNESOTA STATE HFA Residential Housing RB Series 2001B 1.35%, 08/28/03 30,600 30,600 Residential Housing RB Series 2001C 1.35%, 08/28/03 10,000 10,000 S/F Housing RB Series 2001D 1.35%, 08/28/03 19,920 19,920 +@ MINNESOTA STATE HIGHER EDUCATION FACILITIES AUTHORITY RB (St. Thomas University Project) Series 5-L 1.05%, 07/07/03 4,000 4,000 RB (University of St. Thomas Project) 1.05%, 07/07/03 9,700 9,700 ROCHESTER, MINNESOTA HEALTH CARE FACILITIES ~@ RB TOB Series 177 1.04%, 07/07/03 7,130 7,130 TECP 1.00%, 08/21/03 1,500 1,500 ~ 1.05%, 08/21/03 46,000 46,000 1.05%, 08/21/03 18,550 18,550 +@ ST. LOUIS PARK, MINNESOTA M/F Housing RB (At the Park Project) Series 2002A 1.15%, 07/07/03 3,300 3,300 ------- 281,944 MISSISSIPPI 0.8% @ JACKSON COUNTY, MISSISSIPPI Pollution Control Revenue Refunding Bond (Chevron U.S.A., Inc. Project) 0.90%, 07/01/03 7,800 7,800 +@ MISSISSIPPI BUSINESS FINANCIAL CORP. IDRB (Electric Mills Wood Project) 1.15%, 07/07/03 5,000 5,000 IDRB (Omega Motion Project) 1.10%, 07/07/03 5,000 5,000 IDRB (VC Regional Assembly & Manufacturing Project) 1.05%, 07/07/03 8,110 8,110 +~@ MISSISSIPPI DEVELOPMENT BANK Special Obligation TOBP (PT-520) 1.03%, 07/07/03 38,365 38,365 +@ MISSISSIPPI HOSPITAL EQUIPMENT & FACILITIES AUTHORITY RB (Baptist Memorial Hospital Project) 1.01%, 07/07/03 16,870 16,870 ~@ MISSISSIPPI STATE GO Refunding Bond TOB 1.05%, 07/07/03 14,880 14,880 +~@ MISSISSIPPI STATE HFA S/F TOB Series 1997G 1.13%, 07/07/03 8,440 8,440 ------- 104,465 MISSOURI 0.2% +@ CLAY COUNTY, MONTANA IDRB (KC Salad Real Estate Project) 1.14%, 07/07/03 1,800 1,800 +@ MISSOURI STATE DEVELOPMENT FINANCE BOARD IDRB (Milbank Manufacturing Co. Project) 1.25%, 07/07/03 3,000 3,000 +@ MISSOURI STATE HEALTH AND EDUCATIONAL FACILITIES AUTHORITY Health Facilities RB (National Benevolent Association Project) 1.05%, 07/07/03 2,640 2,640
See financial notes. 29 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ ST. LOUIS, MISSOURI IDRB (Kessler Container Project) 1.10%, 07/07/03 2,200 2,200 = ST. LOUIS, MISSOURI GENERAL FUND TRAN 0.86%, 06/25/04 10,000 10,111 +@ WASHINGTON, MISSOURI IDRB (Pauwels Transformer Project) 1.28%, 07/07/03 3,000 3,000 ----------- 22,751 MONTANA 0.1% +~@ MONTANA STATE HEALTH FACILITY AUTHORITY RB (Health Care Pooled Loan Program Project) Series 1985A 0.95%, 07/07/03 5,155 5,155 NEBRASKA 0.3% +@ DODGE COUNTY, NEBRASKA IDRB (Oilgear Project) 1.24%, 07/07/03 1,390 1,390 +~@ LANCASTER COUNTY, NEBRASKA HOSPITAL AUTHORITY NO. 1 RB (Bryan Leigh Medical Center Project) 1.05%, 07/01/03 3,500 3,500 ~@ NEBRASKA INVESTMENT FINANCE AUTHORITY S/F Housing RB (Merlot) TOB Series 2000O 1.13%, 07/07/03 2,985 2,985 S/F Housing RB TOB Series 1998X 1.13%, 07/07/03 10,735 10,735 +@ STANTON COUNTY, NEBRASKA IDRB (Nucor Corp. Project) 1.13%, 07/07/03 19,300 19,300 ----------- 37,910 NEVADA 1.5% CLARK COUNTY, NEVADA +@ Economic Development RB (University of Nevada Las Vegas Project) 1.00%, 07/07/03 560 560 +@ IDRB (Southwest Gas Corp. Project) Series 2003A 1.10%, 07/07/03 12,500 12,500 +~@ TOB Series 801 1.04%, 07/07/03 7,468 7,468 +@ CLARK COUNTY, NEVADA AIRPORT Improvement RB (System Subordinate Lien) Series 1995A2 1.02%, 07/07/03 1,200 1,200 +@ Sub Lien RB Series 1999B1 0.98%, 07/07/03 47,960 47,960 +~@ Sub Lien RB Series 2001C 0.90%, 07/07/03 10,000 10,000 + CLARK COUNTY, NEVADA HIGHWAY MOTOR VEHICLE FUEL TAX TECP 1.05%, 08/21/03 6,700 6,700 +~@ CLARK COUNTY NEVADA SCHOOL DISTRICT TOB Series 2001F 1.06%, 07/07/03 21,715 21,715 +@ NEVADA HOUSING DIVISION M/F Housing RB (Apache Pines Apartments Project) Series 1999A 1.00%, 07/07/03 7,415 7,415 M/F Housing RB Series 1989A 0.95%, 07/07/03 5,100 5,100 Multi-Unit Housing RB (Banbridge Apartment Project) Series 2000A 1.00%, 07/07/03 3,960 3,960 Multi-Unit Housing RB (City Center Project) Series 2000A 1.00%, 07/07/03 9,350 9,350 Multi-Unit Housing RB (Oakmont Project) 1.00%, 07/07/03 4,350 4,350
See financial notes. 30 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) Multi-Unit Housing RB (Reno Apartments Project) Series 2002A 1.00%, 07/07/03 17,850 17,850 Multi-Unit Housing RB (Silver Pines Apartments) Series 2002A 0.95%, 07/07/03 5,400 5,400 Multi-Unit Housing RB (St. Rose Apartments Project) Series 2002A 1.00%, 07/07/03 14,770 14,770 Multi-Unit Housing RB Series 2003A 1.00%, 07/07/03 5,150 5,150 +~@ WASHOE COUNTY, NEVADA GO TOB 1.06%, 07/07/03 21,000 21,000 ----------- 202,448 NEW HAMPSHIRE 0.4% +~@ NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY RB (Dartmouth Hitchcock Obligation) Series 2001A 0.95%, 07/07/03 9,000 9,000 +@ NEW HAMPSHIRE STATE BUSINESS FINANCE AUTHORITY Solid Waste Disposal RB (Lonza Biologics, Inc. Project) 1.10%, 07/07/03 30,000 30,000 +~@ NEW HAMPSHIRE STATE HFA S/F Revenue TOB Series 1998G 1.13%, 07/07/03 3,635 3,635 S/F Revenue TOB Series 1998U 1.13%, 07/07/03 9,995 9,995 ----------- 52,630 NEW JERSEY 0.5% EAST BRUNSWICK TOWNSHIP, NEW JERSEY BAN 1.10%, 02/27/04 16,985 17,085 +@ NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY RB (Catholic Community Services Project) 0.95%, 07/07/03 50 50 +~@ NEW JERSEY SPORTS & EXPOSITION AUTHORITY RB Series 1992C 1.00%, 07/07/03 11,000 11,000 +~@ NEW JERSEY STATE TRANSIT CORP. TOB (Certificates) Series 2000-148 0.95%, 07/07/03 2,305 2,305 WOODBRIDGE TOWNSHIP, NEW JERSEY BAN 1.50%, 07/08/03 7,000 7,002 1.52%, 07/08/03 23,000 23,003 ----------- 60,445 NEW MEXICO 0.3% +~@ NEW MEXICO MORTGAGE FINANCE AUTHORITY TOBP (PT-646) 1.13%, 07/07/03 4,220 4,220 TOBP (PT-709) 1.13%, 07/07/03 12,565 12,565 +@ SANTA FE, NEW MEXICO GROSS RECEIPTS TAX Wastewater Systems RB Series 1997B 1.04%, 07/07/03 16,800 16,800 ----------- 33,585 NEW YORK 5.5% +@ DUTCHESS COUNTY, NEW YORK IDRB (Trinity Pawling School Corp. Project) 0.95%, 07/07/03 1,725 1,725 +@ LONG ISLAND, POWER AUTHORITY NEW YORK Electric System RB Series 1998-2B 0.85%, 07/01/03 10,500 10,500
See financial notes. 31 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~ Electric System RB TOB Series 1998A 1.01%, 07/07/03 10,970 10,970 METROPOLITAN TRANSPORTATION AUTHORITY, NEW YORK +~@ RB (Dedicated Tax Fund) Series 2002B 0.95%, 07/07/03 4,000 4,000 RB Series 2002F 1.50%, 11/15/03 15,900 15,989 NASSAU COUNTY INTERIM FINANCE AUTHORITY, NEW YORK BAN Series 2002B-2 1.15%, 09/11/03 21,920 21,967 +@ NEW YORK CITY, NEW YORK GO Subseries 1993E-3 0.85%, 07/01/03 6,400 6,400 ~ GO Subseries 1994H-3 0.85%, 07/01/03 2,000 2,000 ~ GO Series 1994H-3 0.85%, 07/01/03 4,100 4,100 +@ GO Subseries C-3 0.90%, 07/07/03 10,000 10,000 ~ GO TOB (Merlot) Series 1997C 1.04%, 07/07/03 17,825 17,825 TOB Subseries 2003G-2 0.90%, 07/07/03 5,500 5,500 ~ NEW YORK CITY MUNICIPAL WATER FINANCE AUTHORITY, NEW YORK TECP Series 6 1.07%, 07/17/03 23,800 23,800 +@ Water & Sewer System RB Series 1993C 0.90%, 07/01/03 5,400 5,400 +@ Water & Sewer System RB Series 1994G 0.85%, 07/01/03 5,000 5,000 @ Water & Sewer System RB Subseries 2003C-3 0.85%, 07/01/03 24,050 24,050 @ Water & Sewer System RB Subseries 2003F-2 0.95%, 07/01/03 1,500 1,500 +@ Water & Sewer System RB TOB Series 158 1.00%, 07/07/03 9,995 9,995 NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY, NEW YORK BAN 1.05%, 11/06/03 8,500 8,542 BAN Series 2 1.10%, 02/19/04 50,000 50,284 ~@ Future Tax Secured RB Series 2001B 0.95%, 07/01/03 1,200 1,200 @ Future Tax Secured TOB Series 1999B 1.04%, 07/07/03 14,790 14,790 ~@ RB Subseries 2002-2A 0.95%, 07/01/03 11,500 11,500 ~@ RB Subseries 2D 0.95%, 07/07/03 11,200 11,200 ~@ TOBP (PT-1724) 1.01%, 07/07/03 4,640 4,640 +~@ NEW YORK STATE DORMITORY AUTHORITY RB TOB Series 15 0.90%, 12/17/03 20,000 20,000 +~@ NEW YORK STATE ENERGY RESEARCH & DEVELOPMENT AUTHORITY Gas Facilities RB TOB Series 379 1.00%, 07/07/03 1,570 1,570 Pollution Control Revenue Refunding Bond RB (Orange & Rockland Utilities, Inc. Project) Series 1994A 0.85%, 07/07/03 19,000 19,000 +@ NEW YORK STATE HFA RB (101 West End Project) 0.90%, 07/07/03 67,250 67,250 RB (150 East 44th Street Project) Series 2000A 0.90%, 07/07/03 3,420 3,420 RB (345 East 94th Street Housing Project) 0.90%, 07/07/03 7,300 7,300 RB (East 84th Street Housing Project) Series 1995A 1.15%, 07/07/03 5,100 5,100 RB (Union Square South Housing Project) 1.00%, 07/07/03 21,800 21,800
See financial notes. 32 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) RB (West 23rd Street) 1.00%, 07/07/03 46,000 46,000 RB Series 1997A 1.00%, 07/07/03 27,100 27,100 Service Contract Revenue Refunding Bond Series 2003D 0.90%, 07/07/03 16,500 16,500 ~@ NEW YORK STATE MORTGAGE AGENCY RB Series 2000K 1.00%, 07/07/03 5,000 5,000 RB TOB Series 1999H 1.00%, 07/07/03 14,995 14,995 TOB Series 1999F 1.00%, 07/07/03 10,700 10,700 ~ NEW YORK STATE POWER AUTHORITY TECP 0.90%, 08/14/03 48,000 48,000 TECP Series 2 1.08%, 08/07/03 34,700 34,700 PORT AUTHORITY OF NEW YORK & NEW JERSEY BAN Series 2003VV 1.03%, 12/15/03 17,600 17,609 1.12%, 12/15/03 50,000 50,006 +~@ Special Obligation RB TOB 1.01%, 07/07/03 4,345 4,345 +~@ TRIBOROUGH BRIDGE & TUNNEL AUTHORITY, NEW YORK General Purpose RB Series 2001B 0.90%, 07/07/03 12,000 12,000 +@ WESTCHESTER COUNTY, NEW YORK IDA RB (Levister Redevelopment Co., LLC) Series A 0.90%, 07/07/03 1,000 1,000 +~@ YONKERS, NEW YORK CIVIC FACILITIES IDRB (Consumers Union Facility Project) Series 1994 1.05%, 07/07/03 460 460 ----------- 716,732 NORTH CAROLINA 1.6% +@ BURKE COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY IDRB (Bauer Industries, Inc. Project) 1.15%, 07/07/03 2,455 2,455 +@ DURHAM, NORTH CAROLINA HOUSING AUTHORITY M/F Housing RB (Pendleton Townhomes Project) 1.05%, 07/07/03 5,490 5,490 +~@ FAYETTEVILLE, NORTH CAROLINA PUBLIC WORKS COMMISSION Revenue Refunding Bond 0.90%, 07/07/03 6,400 6,400 +@ FORSYTH COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY RB (Plymouth Printing Project) 1.15%, 07/07/03 1,400 1,400 +@ GATES COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY IDRB (Coxe-Lewis Project) 1.20%, 07/07/03 1,315 1,315 +@ GUILFORD COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY RB (Neal Manufacturing Project) 1.10%, 07/07/03 1,800 1,800 RB (Vitafoam, Inc. Project) 1.10%, 07/07/03 5,000 5,000 @ HERTFORD COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY IDRB (Nucor Corp. Project) 1.08%, 07/07/03 17,500 17,500 IDRB (Nucor Corp. Project) Series 2000A 1.13%, 07/07/03 26,500 26,500 +@ JOHNSTON COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY RB (Flanders Corp. Project) 1.10%, 07/07/03 4,500 4,500
See financial notes. 33 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~@ MECKLENBURG COUNTY, NORTH CAROLINA GO Series 2003B 1.00%, 07/07/03 7,000 7,000 +@ NORTH CAROLINA CAPITAL FACILITIES FINANCE AGENCY Capital Facilities RB (Durham Academy Project) 1.00%, 07/07/03 23,400 23,400 @ NORTH CAROLINA EDUCATIONAL FACILITIES FINANCE AGENCY RB (Davidson College) Series 2000B 1.00%, 07/07/03 19,000 19,000 + RB (High Point University Project) 1.00%, 07/07/03 4,810 4,810 + RB (Queens College) Series 1999B 1.00%, 07/07/03 5,975 5,975 ~@ NORTH CAROLINA HFA TOB Series 1998L 1.65%, 07/10/03 12,000 12,000 +~@ NORTH CAROLINA MEDICAL CARE COMMUNITY HOSPITAL RB (Pooled Equipment Financing Project) 0.90%, 07/07/03 20,000 20,000 ~@ NORTH CAROLINA STATE Revenue Refunding Bond GO Series 2002E 0.95%, 07/07/03 10,200 10,200 Revenue Refunding Bond RB Series 2002B 0.90%, 07/07/03 550 550 +@ ROCKINGHAM COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY IDRB (McMichael Mills Project) 1.10%, 07/07/03 2,100 2,100 +@ ROWAN COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES POLLUTION CONTROL FINANCING AUTHORITY IDRB (Taylor-Clay Products Project) 1.10%, 07/07/03 4,100 4,100 +@ SAMPSON COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY IDRB (Crumpler Plastic Project) 1.15%, 07/07/03 3,700 3,700 +@ UNION COUNTY, NORTH CAROLINA INDUSTRIAL FACILITIES & POLLUTION CONTROL FINANCING AUTHORITY RB (Rock-Tenn Converting County Project) 1.05%, 07/07/03 1,750 1,750 ~@ WAKE COUNTY, NORTH CAROLINA Public Improvement GO Series 2003B 1.09%, 04/01/04 8,000 8,039 +@ WAKE COUNTY, NORTH CAROLINA HOUSING AUTHORITY M/F Housing RB (Walnut Ridge Apartments Project) 1.05%, 07/07/03 10,075 10,075 +@ WILMINGTON, NORTH CAROLINA HOUSING AUTHORITY M/F Housing RB (Garden Lake Estates Project) 1.05%, 07/07/03 7,215 7,215 ----------- 212,274 NORTH DAKOTA 0.1% +@ RICHLAND COUNTY, NORTH DAKOTA Solid Waste Disposal RB (Minn-Dak Farmers Co-Op Project) Series 1986B 1.25%, 07/07/03 740 740 Solid Waste Disposal RB (Minn-Dak Farmers Co-Op Project) Series 1996A 1.25%, 07/07/03 8,080 8,080 ----------- 8,820 OHIO 1.2% +@ CLEVELAND, OHIO AIRPORT SYSTEM RB Series 1997D 0.98%, 07/07/03 32,275 32,275
See financial notes. 34 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ CUYAHOGA COUNTY, OHIO Economic Development RB (Hathaway Brown School Project) 1.05%, 07/07/03 14,650 14,650 +~@ HAMILTON COUNTY, OHIO Sales Tax RB TOB Series 202 1.05%, 07/07/03 14,410 14,410 +~@ HAMILTON, OHIO Electric System RB Series 2002A 0.98%, 07/07/03 27,000 27,000 +@ OHIO AIR QUALITY DEVELOPMENT AUTHORITY RB (JMG Funding, LP) Series 1994A 1.02%, 07/07/03 16,400 16,400 RB (Limited Partnership Project) Series 1994B 1.10%, 07/07/03 14,400 14,400 OHIO STATE Major New State Infrastracture RB 0.85%, 06/15/04 6,400 6,592 ~@ OHIO STATE HFA Mortgage RB TOB 1.10%, 07/07/03 7,060 7,060 Mortgage RB TOB Series 2000AA 1.13%, 07/07/03 4,475 4,475 Mortgage RB TOBP (PA-806) 1.08%, 07/07/03 410 410 + OHIO STATE WATER DEVELOPMENT AUTHORITY Revenue Refunding Bond (Pure Water Development Project) 1.10%, 12/01/03 4,500 4,554 +@ PORT OF GREATER CINCINNATI, OHIO DEVELOPMENT AUTHORITY RB (National Underground Railroad) Series 2003RA 1.05%, 07/07/03 15,000 15,000 ----------- 157,226 OKLAHOMA 1.1% +@ BROKEN BOW, OKLAHOMA ECONOMIC DEVELOPMENT AUTHORITY Solid Waste Disposal RB (J M Huber Project) Series 2003A 1.05%, 07/07/03 7,500 7,500 +@ MULDROW, OKLAHOMA PUBLIC WORKS AUTHORITY IDRB (Oklahoma Foods Project) 1.30%, 07/07/03 5,500 5,500 +@ OKLAHOMA COUNTY, OKLAHOMA INDUSTRIAL AUTHORITY RB (National Cowboy Hall of Fame Project) 1.00%, 07/07/03 1,160 1,160 +@ OKLAHOMA DEVELOPMENT FINANCE AUTHORITY RB (Shawnee Funding, Ltd.) 1.05%, 07/07/03 3,100 3,100 ~@ OKLAHOMA HFA S/F Housing RB TOBP (PT-360) 1.08%, 07/07/03 5,250 5,250 +~@ OKLAHOMA STATE STUDENT LOAN AUTHORITY RB Series 1996A 1.00%, 07/07/03 32,580 32,580 RB Series 1997A 1.03%, 07/07/03 33,000 33,000 RB Series 1998A 1.03%, 07/07/03 33,100 33,100 RB Series 2000A-4 1.03%, 07/07/03 20,945 20,945 +@ TULSA, OKLAHOMA INDUSTRIAL AUTHORITY Hospital RB (YMCA of Greater Tulsa Project) 1.00%, 07/07/03 2,600 2,600 ----------- 144,735
See financial notes. 35 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) OREGON 0.9% +@ GILLIAM COUNTY, OREGON Solid Waste Disposal RB (Waste Management Project) Series 2000A 1.05%, 07/07/03 10,000 10,000 +@ OREGON STATE ECONOMIC DEVELOPMENT IDRB 1.00%, 07/07/03 4,100 4,100 RB (Kettle Foods Project) Series 186 1.10%, 07/07/03 5,260 5,260 RB (Pendleton Flour Mills Project) 1.10%, 07/07/03 4,845 4,845 +@ OREGON STATE HEALTH, HOUSING, EDUCATIONAL & CULTURAL FACILITIES AUTHORITY RB (Quatama Crossing Housing Project) 1.00%, 07/07/03 4,600 4,600 OREGON STATE HOUSING & COMMUNITY SERVICES DEPARTMENT S/F Mortgage RB Series 2002Q 1.35%, 12/23/03 27,500 27,500 +@ PORT OF PORTLAND, OREGON Special Obligation RB (Portland Bulk Terminals Limited Liability Corp. Project) 1.05%, 07/07/03 32,500 32,500 PORTLAND, OREGON +@ M/F Housing RB (Village of Lovejoy Fountain) 1.10%, 07/07/03 8,500 8,500 = TAN 0.83%, 06/29/04 22,165 22,420 ----------- 119,725 PENNSYLVANIA 7.6% +@ BUCKS COUNTY, PENNSYLVANIA IDRB (Schuman & Sons Project) 1.15%, 07/07/03 165 165 +@ CAMBRIA COUNTY, PENNSYLVANIA IDRB Resource Recovery (Cambria Cogen Co. Project) 1.05%, 07/07/03 74,750 74,750 IDRB Resource Recovery (Cambria Cogen Co. Project) 1.30%, 07/07/03 32,105 32,105 +~@ CENTRAL BUCKS, PENNSYLVANIA SCHOOL DISTRICT GO Series 2000A 1.05%, 07/07/03 1,650 1,650 +@ CHESTER COUNTY, PENNSYLVANIA HEALTH & EDUCATION FACILITIES AUTHORITY RB (Simpson Meadows Project) 1.00%, 07/07/03 930 930 +@ CLARION COUNTY, PENNSYLVANIA IDA IDRB Energy Development (Piney Creek Project) 0.98%, 07/07/03 465 465 +~@ DAUPHIN COUNTY, PENNSYLVANIA GENERAL AUTHORITY RB (Education & Health Loan Program) 1.06%, 07/07/03 7,785 7,785 +~@ DELAWARE RIVER PORT AUTHORITY OF PENNSYLVANIA & NEW JERSEY RB TOBP (PA-606) 1.01%, 07/07/03 3,250 3,250 +~@ DELAWARE VALLEY, PENNSYLVANIA REGIONAL FINANCE AUTHORITY Local Government RB TOB Series 2001J 1.06%, 07/07/03 14,510 14,510 +~@ ERIE COUNTY, SCHOOL DISTRICT GO TOB (Munitops Certificates) Series 2001-1B 1.10%, 10/08/03 15,845 15,845 +~@ EMMAUS, PENNSYLVANIA GENERAL AUTHORITY RB 1.00%, 07/07/03 1,725 1,725 +@ HARRISBURG, PENNSYLVANIA AUTHORITY RB 1.38%, 07/07/03 8,380 8,380
See financial notes. 36 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +~@ HARRISBURG, PENNSYLVANIA WATER AUTHORITY RB Series 2002B 1.05%, 07/07/03 2,500 2,500 +@ LANCASTER COUNTY, PENNSYLVANIA HOSPITAL AUTHORITY Health Center RB (Brethren Village Project) 1.05%, 07/07/03 4,100 4,100 ~ Health Center RB (Masonic Homes Project) 1.00%, 07/07/03 17,435 17,435 +~@ MERCER COUNTY, PENNSYLVANIA GO TOB (Munitops Certificates) Unlimited Series 2001-18 1.04%, 07/07/03 5,400 5,400 +@ MONTGOMERY COUNTY, PENNSYLVANIA HIGHER EDUCATION & HEALTH AUTHORITY RB (Madlyn & Leonard Abramson Project) 1.00%, 07/07/03 2,300 2,300 + MONTGOMERY COUNTY, PENNSYLVANIA IDA @ IDRB (Friends Central School Project) 1.03%, 07/07/03 8,000 8,000 Pollution Control Revenue Refunding TECP 1.05%, 08/18/03 27,160 27,160 1.05%, 08/21/03 9,200 9,200 1.08%, 09/05/03 9,530 9,530 +@ MONTGOMERY COUNTY, PENNSYLVANIA REDEVELOPMENT AUTHORITY M/F Housing RB (Brookside Manor Apartments) Series 2001A 0.85%, 07/07/03 8,210 8,210 M/F Housing RB (Glenmore Association) 1.05%, 07/07/03 3,750 3,750 M/F Housing RB (Kingswood Apartments Project) Series 2001A 0.85%, 07/07/03 1,205 1,205 +~@ NORTHAMPTON COUNTY, GENERAL PURPOSE AUTHORITY, PENNSYLVANIA RB TOB Series 2002-2 1.13%, 12/03/03 6,995 6,995 +@ NORTHAMPTON COUNTY IDA, PENNSYLVANIA IDRB (Binney & Smith) Series 2002A 1.10%, 07/07/03 3,250 3,250 IDRB (Binney & Smith) Series 2002B 1.10%, 07/07/03 870 870 +~@ PENNSYLVANIA CONVENTION CENTER AUTHORITY RB TOBP (PT-1224) 0.99%, 07/07/03 3,900 3,900 +@ PENNSYLVANIA ENERGY DEVELOPMENT AUTHORITY RB (B&W Ebensburg Project) 0.98%, 07/07/03 22,990 22,990 RB (Piney Creek Project) Series 1986A 0.98%, 07/07/03 24,035 24,035 RB (Piney Creek Project) Series 1986C 0.98%, 07/07/03 4,155 4,155 ~@ PENNSYLVANIA HFA RB TOB Series 1998Y 1.20%, 09/25/03 8,095 8,095 S/F Mortgage RB TOBP (PT-119A) Series 1997 0.99%, 07/07/03 395 395 S/F Mortgage TOBP (P-1055) 1.03%, 07/07/03 3,895 3,895 TOB Series 1999U 1.20%, 08/14/03 24,710 24,710 +@ PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY RB (Ursinus College) 1.05%, 07/07/03 3,200 3,200 ~ Student Loan RB Series 1984A 1.05%, 07/07/03 27,500 27,500 ~ Student Loan RB Series 1988A 1.00%, 07/07/03 72,700 72,700
See financial notes. 37 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~ Student Loan RB Series 1988B 1.00%, 07/07/03 24,300 24,300 ~ Student Loan RB Series 1994A 1.00%, 07/07/03 31,000 31,000 ~ Student Loan RB Series 1997A 1.05%, 07/07/03 23,900 23,900 ~ Student Loan RB Series 1999A 0.98%, 07/07/03 6,200 6,200 ~ Student Loan RB Series 2000A 1.05%, 07/07/03 39,000 39,000 ~ Student Loan RB Series 2001A 1.05%, 07/07/03 14,700 14,700 ~ Student Loan RB Series 2003A-1 1.05%, 07/07/03 2,000 2,000 ~@ PENNSYLVANIA STATE + TOB Series 1997C 1.05%, 07/07/03 1,000 1,000 + TOBP (PA-1035R) 0.90%, 12/18/03 10,000 10,000 + TOBP (PA-1112) 0.99%, 07/07/03 14,770 14,770 TOBP (PA-1131) 1.05%, 07/07/03 1,110 1,110 + TOBP (PA-935) 0.99%, 07/07/03 35,325 35,325 @ PENNSYLVANIA STATE ECONOMIC DEVELOPMENT FINANCE AUTHORITY + Exempt Facilities RB (AMTRAK Project) Series 2001B 1.00%, 07/07/03 2,600 2,600 + Exempt Facilities RB (Reliant Energy Seward Project) Series 2001A 1.03%, 07/07/03 58,100 58,100 + Exempt Facilities RB (Reliant Energy Seward, LLC Project) Series 2002A 1.03%, 07/07/03 35,000 35,000 + Exempt Facilities RB (Reliant Energy Seward, LLC Project) Series 2002B 1.15%, 07/07/03 18,000 18,000 RB (Merck & Co., Inc. West Point Project) 1.05%, 07/07/03 2,300 2,300 +~@ PENNSYLVANIA STATE PUBLIC SCHOOL BUILDING AUTHORITY RB Series 1999D 1.05%, 07/07/03 6,900 6,900 ~@ PENNSYLVANIA STATE TURNPIKE COMMISSION RB Series 2001U 0.95%, 07/07/03 39,200 39,200 RB Series A-3 0.95%, 07/07/03 7,000 7,000 @ PENNSYLVANIA STATE UNIVERSITY, PENNSYLVANIA RB Series 2001A 1.00%, 07/07/03 5,000 5,000 + RB Series 2002A 1.00%, 07/07/03 3,700 3,700 +@ PHILADELPHIA AUTHORITY FOR INDUSTRIAL DEVELOPMENT IDRB (City Line Holiday Inn Project) 0.95%, 07/07/03 6,800 6,800 IDRB (Girard Estate Aramark Project) 0.95%, 07/07/03 10,000 10,000 IDRB (Girard Estate Facility Leasing Project) 0.95%, 07/07/03 13,500 13,500 ~ IDRB TOBP (PA-982) (Philadelphia Airport) Series 1998A 1.68%, 07/10/03 12,710 12,710 +~@ PHILADELPHIA, PENNSYLVANIA GAS WORKS RB TOBP (PA-877) 0.99%, 07/07/03 5,995 5,995 +@ PHILADELPHIA, PENNSYLVANIA HOSPITALS & HIGHER EDUCATION FACILITIES AUTHORITY RB (Wills Eye Hospital Project) 0.95%, 07/07/03 13,800 13,800
See financial notes. 38 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +~@ PHILADELPHIA, PENNSYLVANIA WATER & WASTEWATER RB Series 1997B 0.90%, 07/07/03 11,900 11,900 Water & Wastewater Revenue Refunding Bond 0.90%, 07/07/03 27,915 27,915 +@ QUAKERTOWN, PENNSYLVANIA GENERAL AUTHORITY RB (Pooled Financing Program) Series 1996A 0.95%, 07/01/03 15,073 15,073 RB (Pooled Financing Program) Series 1998A 0.95%, 07/01/03 1,905 1,905 +@ QUAKERTOWN, PENNSYLVANIA HOSPITAL AUTHORITY RB (Hospital Pooled Financing Group) 0.95%, 07/01/03 7,400 7,400 TEMPLE UNIVERSITY OF THE COMMONWEALTH SYSTEM OF HIGHER EDUCATION, PENNSYLVANIA RB (University Funding Obligation) 1.20%, 05/04/04 14,000 14,000 +@ WASHINGTON COUNTY, PENNSYLVANIA AUTHORITY Municipal Facilities Lease RB Series 1995B-1 0.95%, 07/07/03 7,900 7,900 +@ WEST CORNWALL TOWNSHIP, PENNSYLVANIA MUNICIPAL AUTHORITY RB (Lebanon Valley Crethren Project) 1.05%, 07/07/03 200 200 ----------- 997,243 PUERTO RICO 0.0% +~@ PUERTO RICO COMMONWEALTH HIGHWAY & TRANSPORTATION AUTHORITY RB TOBP (PA-605) 0.96%, 07/07/03 1,210 1,210 RHODE ISLAND 0.5% ~@ RHODE ISLAND HOUSING & MORTGAGE FINANCE CORP. TOB Series 1999E 1.13%, 07/07/03 19,020 19,020 +@ RHODE ISLAND STATE INDUSTRIAL FACILITIES CORP. IDRB (Greystone of Lincoln Project) 1.30%, 07/07/03 2,200 2,200 +@ RHODE ISLAND STATE STUDENT LOAN AUTHORITY Higher Education Loan RB Series 1995-1 1.03%, 07/07/03 20,700 20,700 Higher Education Loan RB Series 1996-2 1.03%, 07/07/03 2,900 2,900 RB 1.05%, 06/01/04 19,000 19,000 ----------- 63,820 SOUTH CAROLINA 1.2% +~@ BERKELEY COUNTY, SOUTH CAROLINA SCHOOL DISTRICT TOB Series 32A 1.08%, 07/07/03 7,575 7,575 +~@ FLORENCE COUNTY, SOUTH CAROLINA PUBLIC FACILITIES CORP. COP (Law Enforcement Center) 1.02%, 07/07/03 29,515 29,515 +@ GREENVILLE, SOUTH CAROLINA COUNTY & CITY IDRB (Stevens Aviation Technology Services Project) 1.15%, 07/07/03 3,500 3,500 +@ SOUTH CAROLINA ECONOMIC DEVELOPMENT AUTHORITY Hospital Facility RB (Sanders Brothers Construction Project) 1.15%, 07/07/03 1,050 1,050 IDRB (Electric City Printing Project) 1.15%, 07/07/03 2,000 2,000
See financial notes. 39 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) RB (Thomas & Betts Corp. Project) 1.15%, 07/07/03 3,250 3,250 +@ SOUTH CAROLINA STATE HOUSING FINANCE & DEVELOPMENT AUTHORITY M/F Housing RB (Ashley Apartments Project) 1.05%, 07/07/03 4,300 4,300 M/F Rental Housing RB (Peidmont) Series 2000B-1 1.05%, 07/07/03 5,755 5,755 M/F Rental Housing RB (Spartanburg) Series 2000C-1 1.05%, 07/07/03 1,960 1,960 M/F Rental Housing Revenue Refunding Bond RB (Fairway Project) Series 2001A 0.95%, 07/07/03 7,735 7,735 ~ SOUTH CAROLINA STATE PUBLIC SERVICE AUTHORITY TECP 1.08%, 07/03/03 11,779 11,779 1.08%, 07/09/03 22,424 22,424 1.05%, 07/10/03 31,446 31,446 +~@ SOUTH CAROLINA TRANSPORTATION INFRASTRUCTURE RB TOB Series 1999A 1.05%, 07/07/03 22,610 22,610 +@ SPARTANBURG COUNTY, SOUTH CAROLINA IDRB (Bemis, Inc.) 1.05%, 07/07/03 4,750 4,750 ----------- 159,649 SOUTH DAKOTA 0.5% @ SOUTH DAKOTA HDA ~ Homeownership Mortgage RB Series 2001F 1.15%, 07/07/03 20,000 20,000 + M/F Housing RB (Harmon Apartments Project) 1.15%, 07/07/03 6,500 6,500 ~ RB (Home Ownership Mortgage Bonds) Series 2003 C-1 0.95%, 07/07/03 10,000 10,000 +@ SOUTH DAKOTA STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY ~ RB (Mckenna Hospital) 1.15%, 07/07/03 27,445 27,445 RB (Rapid City Regional Hospital) 1.00%, 07/01/03 3,500 3,500 ----------- 67,445 TENNESSEE 3.1% +@ BRISTOL, TENNESSEE HEALTH & EDUCATIONAL FACILITIES BOARD RB (Kings College Project) 1.00%, 07/07/03 7,650 7,650 +@ CHATTANOOGA, TENNESSEE HEALTH EDUCATION & HOUSING FACILITIES BOARD RB (Baylor School Project) 1.00%, 07/07/03 2,035 2,035 +@ CLARKSVILLE, TENNESSEE PUBLIC BUILDING AUTHORITY Pooled Financing RB 1.00%, 07/01/03 17,900 17,900 +@ FRANKLIN COUNTY, TENNESSEE IDRB (Hi-Tech Project) 1.10%, 07/07/03 4,700 4,700 +@ GRUNDY COUNTY, TENNESSEE IDRB Limited Obligation (Toyo Seat USA Corp. Project) 1.30%, 07/07/03 4,255 4,255 +@ HENDERSONVILLE, TENNESSEE IDRB Revenue Refunding Bond (Betty Machinery Co. Project) 1.05%, 07/07/03 5,300 5,300 +@ HUNTINGDON, TENNESSEE IDRB (Associated Rubber Co. Project) 1.05%, 07/07/03 2,500 2,500 +@ JACKSON COUNTY, TENNESSEE IDRB Solid Waste Facilities (Ameristeel Corp. Project) 1.10%, 07/07/03 3,800 3,800 ~ RB Energy Authority Gas System 1.00%, 07/07/03 5,900 5,900
See financial notes. 40 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~ RB Energy Authority Water System 1.00%, 07/07/03 5,000 5,000 +@ MCMINN COUNTY, TENNESSEE IDRB Solid Waste Disposal (Bowater, Inc. Project) 1.10%, 07/07/03 13,500 13,500 @ METROPOLITAN GOVERNMENT OF NASHVILLE & DAVIDSON COUNTY, IDB TENNESSEE + IDRB (David Lipscomb University Project) 1.00%, 07/07/03 8,840 8,840 + IDRB (Bind Technologies, Inc.) 1.10%, 07/07/03 3,050 3,050 + M/F Housing IDRB (Arbor Crest) Series 1985B 1.00%, 07/07/03 12,550 12,550 + M/F Housing IDRB (Arbor Knoll) Series 1985A 1.00%, 07/07/03 1,000 1,000 + RB (Nashville Symphony Project) 1.00%, 07/07/03 3,100 3,100 METROPOLITAN GOVERNMENT OF NASHVILLE & DAVIDSON COUNTY, TENNESSEE ~@ TOB Series 219 1.05%, 07/07/03 5,995 5,995 @ METROPOLITAN NASHVILLE & DAVIDSON COUNTY, TENNESSEE HEALTH & EDUCATIONAL FACILITIES BOARD RB (Ascension Health Credit) Series B-1 1.60%, 07/28/03 20,000 20,000 + RB (Ensworth School Project) 1.00%, 07/07/03 10,000 10,000 +@ MONTGOMERY COUNTY, TENNESSEE PUBLIC BUILDING AUTHORITY RB (Pooled Financing) 1.00%, 07/01/03 14,500 14,500 +~@ SEVIER COUNTY, TENNESSEE PUBLIC BUILDING AUTHORITY Local Government Public Improvement Bond Series 1996G 1.01%, 07/07/03 5,475 5,475 Local Government Public Improvement Bond Series II-C 1.01%, 07/07/03 855 855 Local Government Public Improvement Bond Series III-C1 1.01%, 07/07/03 8,530 8,530 RB Local Government Public Improvement Bond Series 1995C1 1.01%, 07/07/03 4,555 4,555 RB Local Government Public Improvement Bond Series 1996D1 1.01%, 07/07/03 1,970 1,970 RB Local Government Public Improvement Bond Series 1996E4 1.01%, 07/07/03 2,515 2,515 RB Local Government Public Improvement Bond Series 1996F1 1.01%, 07/07/03 8,850 8,850 RB Local Government Public Improvement Bond Series 1996F2 1.01%, 07/07/03 6,310 6,310 + SHELBY COUNTY, TENNESSEE HEALTH, EDUCATION, & HOUSING FACILITIES BOARD @ M/F Housing RB Series 1997A 1.15%, 07/07/03 5,000 5,000 @ RB (Rhodes College) 1.00%, 07/07/03 9,800 9,800 @ RB (St. Benedict at Auburndale High School Project) 1.03%, 07/07/03 5,000 5,000 TECP 0.95%, 07/21/03 59,300 59,300 ~@ TENNESSEE HDA + Mortgage Finance TOB Series 1997K 1.13%, 07/07/03 2,435 2,435 RB TOB Series 2001H 1.11%, 07/07/03 6,035 6,035
See financial notes. 41 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) TENNESSEE STATE TECP Series A 1.12%, 07/11/03 20,000 20,000 1.05%, 08/08/03 10,000 10,000 1.05%, 08/13/03 10,000 10,000 1.05%, 09/10/03 10,000 10,000 0.90%, 09/12/03 15,000 15,000 +@ TENNESSEE VOLUNTEER STATE STUDENT LOAN FUNDING CORP. RB Series 1987A 0.98%, 07/07/03 15,000 15,000 RB Series 1987A-2 0.98%, 07/07/03 3,100 3,100 RB Series 1997A-3 0.98%, 07/07/03 39,100 39,100 ----------- 400,405 TEXAS 10.8% +@ AMARILLO, TEXAS HEALTH FACILITIES CORP. RB (High Plains Baptist Hospital) 1.20%, 07/07/03 3,000 3,000 Revenue Refunding Bond RB 1.10%, 07/07/03 3,155 3,155 ~@ AUSTIN, TEXAS PUBLIC IMPROVEMENT TOB 1.05%, 07/07/03 6,000 6,000 +~@ AUSTIN, TEXAS WATER & WASTEWATER SYSTEMS RB TOB Series A63 1.08%, 07/07/03 6,425 6,425 +@ BEXAR COUNTY, TEXAS HEALTH FACILITIES DEVELOPMENT CORP. RB (Chandler Memorial Home Project) 1.04%, 07/07/03 3,945 3,945 ~@ BOARD OF REGENTS TEXAS A & M, TEXAS TOB (Permanent University Fund) 1.05%, 07/07/03 28,445 28,445 +@ BRAZOS RIVER, TEXAS HIGHER EDUCATION AUTHORITY RB Series 1993B1 0.98%, 07/07/03 33,000 33,000 +@ CALHOUN COUNTY, TEXAS NAVIGATION DISTRICT Solid Waste Disposal RB (Formosa Plastics Corp. Project) 1.05%, 07/07/03 19,800 19,800 +@ CAPITAL INDUSTRIAL DEVELOPMENT CORP., TEXAS Solid Waste Disposal RB (Texas Disposal System, Inc. Project) 1.10%, 07/07/03 4,500 4,500 +~@ CLEAR CREEK, TEXAS INDEPENDENT SCHOOL DISTRICT TOB Series 793 1.04%, 07/07/03 6,000 6,000 +@ COLLIN COUNTY, TEXAS HFA M/F Housing RB (Huntington Apartments Project) 1.13%, 07/07/03 6,150 6,150 +~@ DALLAS AREA RAPID TRANSIT, TEXAS RB TOB 1.05%, 07/07/03 16,130 16,130 + DALLAS FORT WORTH, TEXAS INTERNATIONAL AIRPORT Joint Revenue Refunding Bond RB 1.30%, 11/01/03 2,775 2,808 ~@ RB TOB Series 351 1.11%, 07/07/03 2,500 2,500 ~@ RB TOBP (PA-1061) 1.11%, 07/07/03 8,995 8,995 ~@ RB TOBP (PA-1125) 1.11%, 07/07/03 4,000 4,000 ~@ RB TOBP (PT-805) 1.15%, 11/13/03 9,995 9,995 @ DALLAS FORT WORTH, TEXAS INTERNATIONAL AIRPORT FACILITY IMPROVEMENT CORP. Revenue Refunding Bond RB (United Parcel Service, Inc. Project) 0.90%, 07/01/03 12,500 12,500
See financial notes. 42 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +~@ DENTON, TEXAS UTILITY SYSTEM RB TOB Series 369 1.04%, 07/07/03 5,230 5,230 +~@ EL PASO COUNTY, TEXAS Water & Sewer RB TOB Series 1999 1.13%, 07/07/03 11,535 11,535 +@ EULESS, TEXAS IDRB (Ferguson Enterprises, Inc. Project) 1.05%, 07/07/03 4,950 4,950 +@ GRAND PRAIRIE, TEXAS IDRB (NTA Leasing Co. Project) 1.15%, 07/07/03 1,515 1,515 +@ GRAPEVINE, TEXAS INDUSTRIAL DEVELOPMENT CORP. Airport RB (Singer County Project) 1.15%, 04/01/04 18,975 18,975 +@ GREATER EAST TEXAS HIGHER EDUCATION AUTHORITY RB (Student Loan Corp.) Series 1998A 1.04%, 07/07/03 6,500 6,500 Student Loan RB Series 1992B 1.75%, 07/01/03 14,000 14,000 1.04%, 07/07/03 30,200 30,200 Student Loan RB Series 1993A 1.04%, 07/07/03 48,150 48,150 Student Loan RB Series 1993B1 1.04%, 07/07/03 7,000 7,000 Student Loan RB Series 1995A 1.05%, 07/07/03 35,700 35,700 Student Loan RB Series 1995B 1.75%, 07/01/03 10,000 10,000 Student Loan RB Series 1996A 1.04%, 07/07/03 56,000 56,000 +@ GULF COAST INDUSTRIAL DEVELOPMENT AUTHORITY, TEXAS IDRB (Gruma Corp. Project) 1.10%, 07/07/03 6,440 6,440 GULF COAST WASTE DISPOSAL AUTHORITY, TEXAS @ RB Pollution Control (Amoco Oil Co. Project) 0.85%, 07/01/03 12,000 12,000 RB (Amoco Oil Project) 1.10%, 10/01/03 9,200 9,200 + HARRIS COUNTY, TEXAS FLOOD CONTROL DISTRICT TECP 1.08%, 08/22/03 25,300 25,300 0.95%, 08/26/03 5,235 5,235 +~@ HARRIS COUNTY, TEXAS HEALTH FACILITY DEVELOPMENT CORP. TOB 1.05%, 07/07/03 14,850 14,850 +@ HARRIS COUNTY, TEXAS HOUSING FINANCE CORP. M/F Housing RB (Dominion Square Apartments Project) 1.13%, 07/07/03 2,895 2,895 +~@ HARRIS COUNTY, TEXAS HOUSTON SPORTS AUTHORITY Special Jr. Lien RB (Rodeo Project) Series 2001C 0.95%, 07/07/03 2,000 2,000 + HOUSTON, TEXAS AIRPORT SYSTEM RB Series 1998B 1.78%, 07/01/03 2,900 2,900 ~@ HOUSTON, TEXAS INDEPENDENT SCHOOL DISTRICT School Building Refunding GO 1.09%, 06/03/04 100,000 99,963 ~@ HOUSTON, TEXAS PUBLIC IMPROVEMENT Revenue Refunding TOB Series 1998A 1.05%, 07/07/03 21,655 21,655
See financial notes. 43 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) HOUSTON, TEXAS WATER & SEWER SYSTEM +~@ RB TOB Series 2202F 1.06%, 07/07/03 6,530 6,530 + Revenue Refunding Bond Series 1992C 1.15%, 12/01/03 2,000 2,038 ~ TECP 1.10%, 07/09/03 25,000 25,000 +~@ HUMBLE, TEXAS INDEPENDENT SCHOOL DISTRICT School Building GO 1.06%, 09/18/03 42,000 42,002 +~@ KATY, TEXAS INDEPENDENT SCHOOL DISTRICT TOB (School Building) Series 2000A 1.05%, 07/07/03 10,145 10,145 +@ LAVACA-NAVIDAD RIVER, TEXAS AUTHORITY CONTRACT RB (Texas Water Supply System Contract) (Formosa Plastics Corp. Project) 1.05%, 07/07/03 13,600 13,600 @ LOWER NECHES VALLEY, TEXAS POLLUTION CONTROL AUTHORITY RB (Chevron USA, Inc. Project) 1.10%, 08/15/03 3,500 3,500 +~@ LOWER COLORADO RIVER AUTHORITY, TEXAS Revenue Refunding Bond TOB Series 1999A 1.05%, 07/07/03 10,770 10,770 +@ LUBBOCK, TEXAS EDUCATIONAL FACILITIES AUTHORITY RB (Lubbock Christian University Project) 1.10%, 07/07/03 6,300 6,300 +@ MANSFIELD, TEXAS INDUSTRIAL DEVELOPMENT CORP. RB (Southern Champion Tray Project) 1.05%, 07/07/03 2,500 2,500 +~@ MATAGORDA COUNTY, TEXAS NAVIGATION DISTRICT NO. 1 RB TOB (Merlots) Series 2001A44 1.13%, 07/07/03 19,385 19,385 +@ NORTH TEXAS HIGHER EDUCATION AUTHORITY ~ Income Tax Student Loan RB Series 1996C 1.00%, 07/07/03 5,600 5,600 Income Tax Student Loan RB Series 2000A 1.00%, 07/07/03 8,000 8,000 Income Tax Student Loan RB Series 2001A 1.00%, 07/07/03 13,405 13,405 Income Tax Student Loan Refunding RB Series 1987 1.00%, 07/07/03 87,750 87,750 Income Tax Student Loan Refunding RB Series 1990 1.00%, 07/07/03 27,100 27,100 ~ Income Tax Student Loan Refunding RB Series 1996A 1.00%, 07/07/03 8,600 8,600 ~ Income Tax Student Loan Refunding RB Series 1996B 1.00%, 07/07/03 4,000 4,000 ~ Income Tax Student Loan Refunding RB Series 1996D 1.00%, 07/07/03 4,000 4,000 Income Tax Student Loan Refunding RB Series 1998 1.00%, 07/07/03 9,000 9,000 +~@ PANHANDLE PLAINS, TEXAS HIGHER EDUCATION AUTHORITY Student Loan RB Series 1991A 1.03%, 07/07/03 2,200 2,200 Student Loan RB Series 1992A 1.03%, 07/07/03 20,300 20,300 Student Loan RB Series 1993A 1.03%, 07/07/03 45,700 45,700
See financial notes. 44 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ ROBERTSON COUNTY, TEXAS INDUSTRIAL DEVELOPMENT CORP. IDRB (Sanderson Farms Project) 1.10%, 07/07/03 3,700 3,700 +@ SAN ANTONIO, TEXAS IDA IDRB (Gruma Corp. Project) 1.10%, 07/07/03 4,095 4,095 ~@ SOUTHEAST TEXAS HOUSING FINANCE CORP. + TOBP (PT-165) 1.08%, 07/07/03 8,575 8,575 TOBP (PT-193) 1.08%, 07/07/03 8,710 8,710 +@ TEXAS CAPITAL HEALTH FACILITIES DEVELOPMENT CORP. RB (Island On Lake Travis Ltd. Project) 0.98%, 07/07/03 8,500 8,500 @ TEXAS DEPARTMENT OF HOUSING & COMMUNITY AFFAIRS + M/F Housing RB (Creek Point Apartments Project) 1.05%, 07/07/03 7,200 7,200 ~ RB TOB (Residential Mortgage) Series 1999C 1.13%, 07/07/03 14,950 14,950 +~ Single Family Housing RB TOB Series 178 1.10%, 07/07/03 4,250 4,250 +~@ TEXAS MUNICIPAL GAS CORP. Gas Reserve Senior Lien RB 1.00%, 07/07/03 2,435 2,435 TEXAS STATE ~@ GO (Veterans Housing Fund II) Series 2002A-2 1.00%, 07/07/03 6,000 6,000 ~@ Revenue Refunding Bond RB (Veterans Housing Assistance Fund) 0.90%, 07/07/03 12,761 12,761 ~@ TOB Series 290 1.04%, 07/07/03 8,660 8,660 TRAN 0.83%, 08/29/03 20,000 20,061 0.98%, 08/29/03 6,550 6,569 1.04%, 08/29/03 2,600 2,607 1.05%, 08/29/03 3,000 3,008 1.10%, 08/29/03 25,000 25,066 1.24%, 08/29/03 1,500 1,504 1.25%, 08/29/03 3,900 3,909 1.40%, 08/29/03 71,500 71,654 1.41%, 08/29/03 29,600 29,664 1.44%, 08/29/03 25,000 25,052 1.45%, 08/29/03 45,000 45,093 1.48%, 08/29/03 10,000 10,020 1.49%, 08/29/03 10,000 10,020 1.50%, 08/29/03 20,000 20,040 1.52%, 08/29/03 20,000 20,039 +@ TRINITY RIVER AUTHORITY, TEXAS Solid Waste Disposal RB (Community Waste Project) 1.05%, 07/07/03 5,795 5,795 ~@ UNIVERSITY OF TEXAS TOB Series 173 1.05%, 07/07/03 5,000 5,000 +~@ WACO, TEXAS EDUCATIONAL FINANCE CORP. RB (Baylor University) Series 2002A 1.05%, 07/07/03 9,900 9,900 ----------- 1,411,803 UTAH 1.6% +~@ INTERMOUNTAIN POWER AGENCY, UTAH Power Supply RB TOB Series 1997B 1.04%, 07/07/03 16,495 16,495 Power Supply RB TOB Series 409 1.04%, 07/07/03 15,330 15,330 +@ SALT LAKE CITY, UTAH RB (Rowland Hall St. Marks Project) 1.00%, 07/07/03 9,515 9,515 +@ SALT LAKE CITY, UTAH AIRPORT RB 1.03%, 07/07/03 9,600 9,600 +~@ SALT LAKE CITY, UTAH HOSPITAL RB TOB (IHC Health Services) 1.05%, 07/07/03 26,730 26,730
See financial notes. 45 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~@ UTAH STATE TOBP (PT-429) 1.03%, 07/07/03 31,085 31,085 +@ UTAH STATE BOARD OF REGENTS ~ Revenue Refunding TOB Series 1998A 1.05%, 07/07/03 30,060 30,060 Student Loan RB Series 1993A 1.00%, 07/07/03 35,000 35,000 ~ Student Loan RB Series 1995L 1.00%, 07/07/03 27,500 27,500 +~@ UTAH STATE BUILDING OWNERSHIP AUTHORITY Lease Revenue Refunding TOB Series 1998C 1.05%, 07/07/03 9,695 9,695 +@ WOODS CROSS CITY, UTAH M/F Housing RB (Springwood Apartments Project) Series 2001-A 1.00%, 07/07/03 3,605 3,605 ----------- 214,615 VERMONT 0.1% +@ VERMONT ECONOMIC DEVELOPMENT AUTHORITY IDRB (AGRI Mark, Inc. Project) Series 1999A 1.15%, 07/07/03 17,000 17,000 +@ IDRB (AGRI Mark, Inc. Project) Series 1999B 1.15%, 07/07/03 1,000 1,000 ----------- 18,000 VIRGINIA 0.7% +@ CHESTERFIELD COUNTY, VIRGINIA IDA Solid Waste Disposal Facility RB (Tidewater Fibre Corp. Project) 1.10%, 07/07/03 6,300 6,300 +@ KING GEORGE COUNTY, VIRGINA IDA Solid Waste Disposal Facility RB (Garnet of Virginia Project) 1.10%, 07/07/03 3,700 3,700 @ LOUDOUN COUNTY, VIRGINIA IDA RB (Howard Hughes Medical) Series 2003A 0.90%, 07/01/03 18,700 18,700 RB (Howard Hughes Medical) Series 2003B 0.90%, 07/07/03 4,200 4,200 RB (Howard Hughes Medical) Series 2003D 1.00%, 07/07/03 5,000 5,000 RB (Howard Hughes Medical) Series 2003F 0.90%, 07/07/03 4,000 4,000 +@ MONTGOMERY COUNTY, VIRGINIA IDRB (Virginia Tech Foundation Project) 1.00%, 07/07/03 4,655 4,655 IDRB (Virginia Tech Foundation) Series 2001A 1.00%, 07/07/03 9,300 9,300 IDRB (Virginia Tech Foundation) Series 2001B 1.10%, 07/07/03 1,585 1,585 +~@ NORFOLK, VIRGINIA PARKING SYSTEM Revenue Refunding TOB 1.05%, 07/07/03 9,450 9,450 +@ PORTSMOUTH, VIRGINIA REDEVELOPMENT & HOUSING AUTHORITY M/F Housing RB (Churchland North Apartments Project) 1.05%, 07/07/03 6,705 6,705 +@ RICHMOND, VIRGINIA IDRB (Church Schools of Virginia Diocese) 1.00%, 07/07/03 9,775 9,775 +@ VIRGINIA BEACH, VIRGINIA DEVELOPMENT AUTHORITY M/F Housing RB (Silver Hill at Thalia, LLC Project) 1.05%, 07/07/03 4,300 4,300 ----------- 87,670
See financial notes. 46 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) WASHINGTON 4.5% +@ DOUGLAS COUNTY, WASHINGTON ECONOMIC DEVELOPMENT CORP. RB (Executive Flight Program) 1.10%, 07/07/03 6,500 6,500 +@ ENERGY NORTHWEST, WASHINGTON ELECTRIC ~ RB TOB Project #3 1.05%, 07/07/03 29,700 29,700 ~ RB TOB (Project #3) Series 2003A 1.03%, 07/07/03 8,690 8,690 ~ RB TOB Series 150 1.05%, 07/07/03 12,495 12,495 ~ Revenue Refunding Bond (Project No. 3) Series 2003D-3-2 0.97%, 07/07/03 8,000 8,000 Revenue Refunding Bond (Project No. 3) Series 2003E 0.95%, 07/07/03 5,000 5,000 ~ TOBP (PT-615) 1.03%, 07/07/03 6,230 6,230 @ EVERETT, WASHINGTON INDUSTRIAL DEVELOPMENT CORP. Exempt Facilities RB (Kimberly Clark Corp. Project) 1.10%, 07/07/03 3,200 3,200 + IDRB (Partners Trust/Synsor Project) 1.10%, 07/07/03 3,500 3,500 KING COUNTY, WASHINGTON BAN 1.52%, 10/01/03 85,000 85,208 +@ OLYMPIA, WASHINGTON ECOMOMIC DEVELOPMENT AUTHORITY Solid Waste Disposal RB (Lemay Enterprises Project) 1.05%, 07/07/03 7,445 7,445 +@ PIERCE COUNTY, WASHINGTON ECONOMIC DEVELOPMENT CORP. RB (Flex-A-Lite Consolidated Project) 1.10%, 07/07/03 2,550 2,550 RB (K & M Holdings II Project) 1.15%, 07/07/03 1,500 1,500 RB (McFarland Cascade Project) 1.10%, 07/07/03 2,000 2,000 RB (Solid Waste Lemay Enterprises Project) 1.05%, 07/07/03 3,070 3,070 +@ PORT OF CENTRALIA, WASHINGTON IDRB Solid Waste Disposal (Lemay Enterprises Project) 1.05%, 07/07/03 1,930 1,930 +@ PORT OF MOSES LAKE, WASHINGTON PUBLIC CORP. RB (National Frozen Foods Corp.) 1.00%, 07/07/03 3,800 3,800 +~@ PORT OF SEATTLE, WASHINGTON RB TOBP (PT-728) 1.08%, 07/07/03 4,430 4,430 Special Facilities RB TOB Series 1999J 1.13%, 07/07/03 49,795 49,795 TOBP (PA-759R) 1.08%, 07/07/03 5,100 5,100 + PORT OF TACOMA, WASHINGTON TECP 0.95%, 07/10/03 4,000 4,000 1.05%, 07/10/03 20,000 20,000 1.10%, 07/10/03 5,000 5,000 +~@ SEATTLE, WASHINGTON Drain & Wastewater RB TOBP (PT-1605) 1.03%, 07/07/03 6,875 6,875 +@ SEATTLE, WASHINGTON HDA RB (Capitol Hill Housing Improvement & HRG Project) 1.10%, 07/07/03 3,560 3,560 RB (Casa Pacifica Apartments Project) 1.10%, 07/07/03 3,000 3,000 +~@ SNOHOMISH COUNTY, WASHINGTON PUBLIC UTILITY DISTRICT 001 Revenue Refunding Bond RB (Generation System) Series 2002A-1 0.90%, 07/07/03 26,300 26,300
See financial notes. 47 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) Revenue Refunding Bond RB (Generation System) Series 2002A-2 0.90%, 07/07/03 7,000 7,000 +@ SPOKANE COUNTY, WASHINGTON INDUSTRIAL DEVELOPMENT CORP. RB (Metal Sales Manufacturing Corp. Project) 1.18%, 07/07/03 1,260 1,260 +@ TACOMA, WASHINGTON HOUSING AUTHORITY RB (Crown Assisted Living Project) 1.10%, 07/07/03 3,305 3,305 +~@ TACOMA, WASHINGTON SCHOOL DISTRICT NO. 10 GO TOB 1.05%, 07/07/03 43,655 43,655 +@ WASHINGTON HEALTH CARE FACILITIES AUTHORITY RB (Yakima Valley Farm Workers Clinic) 1.00%, 07/07/03 3,300 3,300 ~@ WASHINGTON STATE GO TOB 1.05%, 07/07/03 13,380 13,380 + GO TOB Series B 1.05%, 07/07/03 30,485 30,485 + GO TOB Series 228 1.05%, 07/07/03 5,950 5,950 + TOB Series 2002G 1.09%, 07/07/03 5,170 5,170 Various Purpose GO TOB Series 1998C 1.05%, 07/07/03 12,150 12,150 +@ WASHINGTON STATE ECONOMIC DEVELOPMENT FINANCE AUTHORITY IDRB (Tonkin Building) Series 1997A 1.10%, 07/07/03 1,000 1,000 RB (Hunter Douglas Project) Series 1997A 1.05%, 07/07/03 3,500 3,500 RB (Skills, Inc. Project) 1.10%, 07/07/03 3,000 3,000 RB (Tank Project) Series 1998B 1.10%, 07/07/03 1,210 1,210 Solid Waste Disposal RB (Waste Management Project) Series 2000H 1.06%, 07/07/03 6,825 6,825 Solid Waste Disposal RB (Waste Management Project) Series 2000I 1.05%, 07/07/03 10,240 10,240 Solid Waste Disposal RB (Waste Management Project) Series 2000L 1.06%, 07/07/03 7,235 7,235 Solid Waste Disposal RB (Waste Management Project) Series 2001C 1.06%, 07/07/03 5,500 5,500 +@ WASHINGTON STATE HOUSING FINANCE COMMISSION M/F Housing Mortgage RB (Brittany Park Phase 3 Project) 0.98%, 07/07/03 3,480 3,480 M/F Housing Mortgage RB (Canyon Lake II) Series 1993A 0.98%, 07/07/03 4,440 4,440 M/F Housing Mortgage RB (Lake Washington Apartments Project) 1.10%, 07/07/03 8,350 8,350 M/F Housing Mortgage RB (Meridian Court Apartments) 1.05%, 07/07/03 6,700 6,700 M/F Housing Mortgage RB (Merrill Gardens Project) Series 1997A 0.98%, 07/07/03 6,125 6,125 M/F Housing Mortgage RB (Rosecreek Apartments Project) 1.03%, 07/07/03 3,570 3,570 M/F Housing Mortgage RB (Woodrose Apartment Project) Series 1999A 0.98%, 07/07/03 6,750 6,750
See financial notes. 48 SCHWAB MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) M/F Housing RB (Brittany Park Project) 0.98%, 07/07/03 8,405 8,405 M/F Housing RB (Carlyle Care Center Project) Series 2000A 1.15%, 07/01/03 3,055 3,055 M/F Housing RB (Lakewood Meadows Apartments Project) Series 2000A 1.05%, 07/07/03 3,140 3,140 Non-Profit Housing RB (Emerald Heights Project) 1.00%, 07/01/03 1,300 1,300 ~ TOBP (PT-636) 1.13%, 07/07/03 20,280 20,280 WASHINGTON STATE PUBLIC POWER SUPPLY SYSTEM Revenue Refunding Bond (Nuclear Project No. 2) Series 1998A 1.07%, 07/01/03 11,770 11,770 +@ YAKAMA INDIAN NATION, WASHINGTON CONFEDERATED TRIBES & BANDS RB (Yakama Forests Products Project) 1.10%, 07/07/03 4,300 4,300 +@ YAKIMA COUNTY, WASHINGTON PUBLIC CORP. IDRB (Cowiche Growers Project) 1.10%, 07/07/03 3,000 3,000 RB (Hi-Country Foods Project) 1.10%, 07/07/03 5,900 5,900 RB (Michaelson Packaging Project) 1.10%, 07/07/03 2,100 2,100 RB (Printing Press Project) 1.10%, 07/07/03 1,200 1,200 ----------- 586,908 WEST VIRGINIA 0.6% +@ FAYETTE COUNTY, WEST VIRGINA SOLID WASTE DISPOSAL FACILITIES RB (Georgia-Pacific Corp. Project) 1.05%, 07/07/03 11,100 11,100 +@ MARION COUNTY, WEST VIRGINIA SOLID WASTE DISPOSAL FACILITIES RB (Grant Town Project) Series 1990B 1.05%, 07/07/03 22,025 22,025 RB (Grant Town Project) Series 1990C 1.05%, 07/07/03 19,000 19,000 RB (Grant Town Project) Series 1990D 1.05%, 07/07/03 3,600 3,600 +@ WEST VIRGINIA STATE HOSPITAL FINANCE AUTHORITY RB (St. Joseph's Hospital Project) 1.04%, 07/07/03 1,500 1,500 +~@ WEST VIRGINIA STATE PARKWAYS, ECONOMIC DEVELOPMENT & TOURISM AUTHORITY Revenue Refunding Bond 0.90%, 07/07/03 17,600 17,600 ----------- 74,825 WISCONSIN 1.1% +@ CHILTON, WISCONSIN IDRB (Kaytee Products, Inc. Project) 1.20%, 07/07/03 520 520 +@ COLBURN, WISCONSIN IDRB (Heartland Farms Project) 1.24%, 07/07/03 5,900 5,900 +@ KENOSHA, WISCONSIN IDRB (Asyst Tech, LLC Project) 1.06%, 07/07/03 5,000 5,000 +@ LAC DU FLAMBEAU, BAND OF LAKE SUPERIOR, WISCONSIN CHIPPEWA INDIANS Special Obligation Bond (Simpson Electric Co. Project) 1.10%, 07/07/03 3,200 3,200 +~@ MILWAUKEE COUNTY, WISCONSIN AIRPORT RB TOBP (PT-681) 1.11%, 07/07/03 18,470 18,470
See financial notes. 49 SCHWAB MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) RACINE, WISCONSIN SCHOOL DISTRICT TRAN 1.52%, 07/15/03 26,900 26,904 +@ RHINELANDER, WISCONSIN IDRB (Lake Shore, Inc. Project) 1.24%, 07/07/03 3,820 3,820 +~@ SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT Sales Tax RB TOB Series 2000Y 1.08%, 07/07/03 5,000 5,000 @ WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY ~ Home Ownership RB Series 2002C 0.95%, 07/07/03 3,000 3,000 ~ Home Ownership RB Series 2002D 1.00%, 07/07/03 2,375 2,375 +~ Home Ownership RB TOB Series 1999R 1.10%, 07/07/03 17,625 17,625 +~ Home Ownership RB TOB Series 1999S 1.15%, 07/07/03 13,240 13,240 ~ Home Ownership TOBP (PT-194) 1.08%, 07/07/03 11,095 11,095 +~ Housing RB TOB Series 650 1.04%, 07/07/03 16,380 16,380 + RB (Ultratec, Inc. Project) 1.24%, 07/07/03 2,490 2,490 +@ WISCONSIN RAPIDS, WISCONSIN IDRB (Theile Kaolin of Wisconsin, Inc. Project) 1.05%, 07/07/03 4,500 4,500 +@ WISCONSIN STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY RB (Lutheran College) 1.15%, 07/07/03 7,000 7,000 ----------- 146,519 WYOMING 0.3% @ LINCOLN COUNTY, WYOMING Pollution Control RB (ExxonMobil Corp. Project) Series 1987A 0.90%, 07/01/03 25,300 25,300 @ UNITA COUNTY, WYOMING Pollution Control RB (Chevron U.S.A., Inc. Project) 0.90%, 07/01/03 5,000 5,000 ~@ WYOMING COMMUNITY DEVELOPMENT AUTHORITY Housing RB TOB 1.08%, 07/07/03 5,560 5,560 Housing RB TOBP (PT-533) 1.08%, 07/07/03 5,975 5,975 ----------- 41,835
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 50 Schwab Municipal Money Fund Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS -------------------------------------------------------------------------------- Investments, at market value $ 13,113,511 a Cash 85,045 Receivables: Fund shares sold 41,893 Interest 36,824 Investments sold 6,752 Prepaid expenses + 188 --------------- TOTAL ASSETS 13,284,213 LIABILITIES -------------------------------------------------------------------------------- Payables: Fund shares redeemed 28,499 Dividends to shareholders 2,625 Investments bought 512,094 Investment adviser and administrator fees 227 Transfer agent and shareholder service fees 361 Accrued expenses + 501 --------------- TOTAL LIABILITIES 544,307 NET ASSETS -------------------------------------------------------------------------------- TOTAL ASSETS 13,284,213 TOTAL LIABILITIES - 544,307 --------------- NET ASSETS $ 12,739,906 NET ASSETS BY SOURCE Capital received from investors 12,741,999 Net investment income not yet distributed 4 Net realized capital losses (2,097) NET ASSETS BY SHARE CLASS SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Sweep Shares $7,471,834 7,474,393 $1.00 Value Advantage Shares $4,873,912 4,873,714 $1.00 Select Shares(R) $196,252 196,251 $1.00 Institutional Shares $197,908 197,908 $1.00
a The amortized cost for the fund's securities was $13,113,511. During the reporting period, the fund had $2,186,231 in transactions with other SchwabFunds(R). FEDERAL TAX DATA -------------------------------------------------------------------------------- COST BASIS OF PORTFOLIO $13,113,586 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2004 $ 338 2005 523 2007 775 2008 + 873 ------------- $ 2,509
See financial notes. 51 Schwab Municipal Money Fund Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME -------------------------------------------------------------------------------- Interest $76,209 NET REALIZED GAINS AND LOSSES -------------------------------------------------------------------------------- Net realized gains on investments sold 497 EXPENSES -------------------------------------------------------------------------------- Investment adviser and administrator fees 21,325 a Transfer agent and shareholder service fees: Sweep Shares 16,775 b Value Advantage Shares 5,296 b Select Shares(R) 20 b Institutional Shares 19 b Trustees' fees 31 c Custodian and portfolio accounting fees 472 Professional fees 22 Registration fees 189 Shareholder reports 229 Other expenses + 36 ---------- Total expenses 44,414 Expense reduction - 8,925 d ---------- NET EXPENSES 35,489 INCREASE IN NET ASSETS FROM OPERATIONS -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 76,209 NET EXPENSES - 35,489 ---------- NET INVESTMENT INCOME 40,720 NET REALIZED GAINS + 497 ---------- INCREASE IN NET ASSETS FROM OPERATIONS $41,217
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets as follows:
TRANSFER AGENT SERVICES: % OF AVERAGE SHARE CLASS DAILY NET ASSETS ------------------------------------------------- Sweep Shares 0.25 Value Advantage Shares 0.05 Select Shares(R) 0.05 Institutional Shares 0.05 SHAREHOLDER SERVICES: % OF AVERAGE SHARE CLASS DAILY NET ASSETS ------------------------------------------------- Sweep Shares 0.20 Value Advantage Shares 0.17 Select Shares(R) 0.17 Institutional Shares 0.17
c For the fund's independent trustees only. d Includes $8,152 from the investment adviser (CSIM) and $773 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the annual operating expenses of this fund through at least April 30, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ------------------------------------------------- Sweep Shares 0.66 Value Advantage Shares 0.45 Select Shares(R) 0.35 Institutional Shares 0.24
This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 52 Schwab Municipal Money Fund Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS -------------------------------------------------------------------------------------------- 1/1/03-6/30/03 1/1/02-12/31/02 Net investment income $ 40,720 $ 109,422 Net realized gains + 497 347 --------------- ------------ INCREASE IN NET ASSETS FROM OPERATIONS 41,217 109,769 DISTRIBUTIONS PAID -------------------------------------------------------------------------------------------- DIVIDENDS FROM NET INVESTMENT INCOME Sweep Shares 21,584 64,407 Value Advantage Shares 18,987 45,015 Select Shares(R) 68 -- Institutional Shares + 77 -- --------------- ------------ TOTAL DIVIDENDS FROM NET INVESTMENT INCOME 40,716 109,422 TRANSACTIONS IN FUND SHARES a -------------------------------------------------------------------------------------------- SHARES SOLD Sweep Shares 12,529,214 24,400,497 Value Advantage Shares 3,316,817 5,574,437 Select Shares(R) 221,922 -- Institutional Shares + 201,633 -- --------------- ------------ TOTAL SHARES SOLD 16,269,586 29,974,934 SHARES REINVESTED Sweep Shares 19,982 63,259 Value Advantage Shares 16,193 41,570 Select Shares(R) 17 -- Institutional Shares + 24 -- --------------- ------------ TOTAL SHARES REINVESTED 36,216 104,829 SHARES REDEEMED Sweep Shares (12,513,056) (24,293,754) Value Advantage Shares (2,939,412) (4,913,621) Select Shares(R) (25,688) -- Institutional Shares + (3,749) -- --------------- ------------ TOTAL SHARES REDEEMED (15,481,905) (29,207,375) NET TRANSACTIONS IN FUND SHARES 823,897 872,388 b NET ASSETS -------------------------------------------------------------------------------------------- Beginning of period 11,915,508 11,042,773 Total increase + 824,398 872,735 c --------------- ------------ END OF PERIOD $ 12,739,906 $ 11,915,508
a Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. The fund started offering Select Shares(R) and Institutional Shares on June 2, 2003. b Represents shares sold plus shares reinvested, minus shares redeemed. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 53 Schwab Municipal Money Fund Financial Notes unaudited Business Structure of the Fund THE FUND DISCUSSED IN THIS REPORT IS A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS(TM), A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. The company is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the fund in this report and its trust. THE FUND OFFERS FOUR SHARE CLASSES: Sweep Shares, Value Advantage Shares, Select Shares and Institutional Shares. Shares of each class represent interests 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 trust may issue as many shares as necessary. Fund Operations Most of the fund's investments are described in sections earlier in this report. However, there are certain other investments and policies that may affect a fund's financials. The most significant of these are described below. Other policies concerning the fund's business operations also are described here. THE FUND DECLARES DIVIDENDS EVERY DAY IT IS OPEN FOR BUSINESS. These dividends, which are equal to the 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. THE FUND MAY BUY SECURITIES ON A DELAYED-DELIVERY BASIS. In these transactions, the 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. THE FUND PAYS FEES FOR VARIOUS SERVICES. Through its trust, the fund has agreements with Charles Schwab Investment Management, Inc.(CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent and shareholder services. Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the fund that may limit the total expenses charged. The rates and limitations for these fees are described in the fund's Statement of Operations. 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 TRUST AND ITS FUNDS This list shows all of the funds included in The Charles Schwab Family of Funds. The fund discussed in this report 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(R) Schwab Municipal Money Fund Schwab California Municipal Money Fund Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) Schwab Government Cash Reserves 54 Schwab Municipal Money Fund the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund's Statement of Operations. THE FUND MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING AFFILIATES. The fund may make direct transactions with certain other SchwabFunds(R) 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. THE FUND INTENDS TO MEET FEDERAL INCOME AND EXCISE TAX REQUIREMENTS FOR REGULATED INVESTMENT COMPANIES. Accordingly, the fund distributes substantially all of their 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. UNDER THE FUND'S ORGANIZATIONAL DOCUMENTS, ITS OFFICERS AND TRUSTEES ARE INDEMNIFIED AGAINST CERTAIN LIABILITY 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. Accounting Policies The following are the main policies the fund uses in preparing their financial statements. THE FUND VALUES ITS SECURITIES AT AMORTIZED COST, which approximates market value. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. INTEREST INCOME is recorded as it accrues. If the fund bought a debt instrument at a discount (that is, for less than its face value) or a premium (more than its 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. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. EXPENSES that are specific to the fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their net assets. FOR FUNDS OFFERING MULTIPLE SHARE CLASSES, all of the realized and unrealized gains or losses and net investment income, other than class specific expenses, are allocated daily to each class in proportion to its net assets. THE FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, the fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE 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. 55 Glossary Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. 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 Securities that are backed by various assets, which may include loans, accounts receivable or investments of an entity, such as a bank or credit card company. These securities are obligations that the issuer intends to repay using the assets backing them (once collected or liquidated). Therefore, repayment depends largely on the cash flows generated by the assets backing the securities. 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." 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 SECURITY A security that is 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. 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 TOB Tender option bond TOBP Tender option bond partnership TRAN Tax and revenue anticipation note VRD Variable-rate demand Schwab Municipal Money Fund 56 CREDIT RATINGS Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Moody's Investor Service, Standard & Poor's and Fitch, Inc., 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. 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 Generally, 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, corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, banker's acceptances, notes and time deposits. 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. 144A SECURITY A security exempt from a registration requirement pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, to qualified institutional buyers, as defined in Rule 144A. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. REVENUE ANTICIPATION NOTES Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc. 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 an annual rate and calculated as a percentage of the investment's market value. Schwab Municipal Money Fund 57 NOTES NOTES NOTES Contact Schwab SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any SchwabFund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments(TM) may not be purchased directly over the Internet. 2 Orders placed in person or through a telephone representative may be subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab Small-Cap Equity Fund(TM) Schwab Hedged Equity Fund(TM) Schwab Dividend Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S.MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.3 Choose from taxable or tax-advantaged alternatives. Many can be linked to your Schwab account to "sweep" cash balances automatically when you're between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments(R). 3 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) 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. (C) 2003 Charles Schwab & Co.,Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG25720 SCHWAB MUNICIPAL MONEY FUNDS SEMIANNUAL REPORT June 30, 2003 Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund [CHARLES SCHWAB LOGO] In This Report Management's Discussion ............................................... 2 Fund yield figures and portfolio statistics, plus a discussion of factors that affected fund performance during the report period. Financial Statements Portfolio holdings and fund financials. Schwab New York Municipal Money Fund ............................... 6 Sweep Shares: SWNXX Value Advantage Shares: SWYXX Schwab New Jersey Municipal Money Fund ............................. 16 Ticker Symbol: SWJXX Schwab Pennsylvania Municipal Money Fund ........................... 24 Ticker Symbol: SWEXX Schwab Florida Municipal Money Fund ................................ 31 Ticker Symbol: SWFXX Schwab Massachusetts Municipal Money Fund .......................... 43 Ticker Symbol: SWDXX Financial Notes ....................................................... 50 Glossary .............................................................. 52 From the Chairman [PHOTO OF CHARLES R. SCHWAB] Charles R. Schwab Chairman Without question, these are challenging times for America's investors. For money fund shareholders, one of the main concerns has been decline of short-term interest rates, since money fund yields are a reflection of those rates. Given the choice, I'm sure most of us would prefer that yields were higher. At the same time, I believe that a look at the larger picture reveals that the current low interest rate environment has a beneficial side that shouldn't be ignored. For example, Americans have recently had the opportunity to borrow money at the most attractive rates in decades, whether for buying a home, refinancing or realizing a life-long goal like starting a business. More importantly, the Federal Reserve's monetary policy, along with fiscal policies enacted by Congress and the President, should provide a powerful stimulus to economic recovery. That, too, is something that would benefit all Americans. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R), these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles R. Schwab Management's Discussion for the six months ended June 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here, and especially with their dedication to understanding the concerns of investors. That dedication is particularly important right now. Times of uncertainty about the economy and world events demand diligence from investment professionals. At SchwabFunds, we are keenly aware of this, and continue to work for the best interests of our shareholders. In recent months, money market funds have faced a very challenging environment. With interest rates on short-term investments falling in connection with the Fed's actions, some investors have expressed concerns about the potential for fund yields to fall to zero or even lower. I can assure you that we at SchwabFunds will continue to monitor the yields in all our money market funds. In consultation with fund trustees, we will take appropriate measures to maintain competitive yields. One thing we won't do in pursuit of yields is compromise our high standards for investment credit quality. We'll also continue to follow our time-tested management procedures and controls. In other words, we won't take short cuts that may jeopardize our long-term commitment to our investors. Thank you for choosing SchwabFunds. We're here to help you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab Municipal Money Funds 2 [PHOTO OF KEVIN SHAUGHNESSY] KEVIN SHAUGHNESSY, a portfolio manager, is responsible for the day-to-day management of the Schwab New York, New Jersey and Massachusetts municipal money funds. Prior to joining the firm in 2000, he worked for more than ten years in fixed-income portfolio management. [PHOTO OF WALTER BEVERIDGE] WALTER BEVERIDGE, a portfolio manager, has been responsible for day-to-day management of the Schwab Pennsylvania and Florida municipal money funds since their inception in 1998. Prior to joining the firm in 1992, he worked for nearly ten years in asset management. The Investment Environment and the Funds THE U.S. ECONOMY REMAINED IN A HOLDING PATTERN DURING THE SIX MONTHS OF THE REPORT PERIOD. Concerned by geopolitical uncertainties, businesses put off making major decisions about capital spending and hiring, even after the major combat phase of the war in Iraq was over. Economic indicators reported during the period were mixed, providing little incentive for businesses to pursue expansion plans. ALREADY AT THEIR LOWEST LEVEL IN DECADES, INTEREST RATES FELL FURTHER AS THE REPORT PERIOD PROGRESSED. During the first months of 2003, a major factor in the decline of rates was anticipation of the war in Iraq. Toward the end of the period, deflation fears came to the forefront, leading to expectations that the Federal Reserve (the Fed) would cut interest rates. These expectations were confirmed on June 25, when the Fed, seeking to provide yet further economic stimulus, cut the Fed funds rate by 0.25%. FALLING INTEREST RATES PUSHED MONEY FUND YIELDS TO NEW LOWS (see page 5 for fund yield information). We sought to lessen the effects of falling rates on the funds by maintaining comparatively long weighted average maturities. Although the funds' yields did decline, we were successful in slowing that decline, and in keeping the yields higher than they otherwise would have been. STRONG ISSUANCE OF SHORT-TERM MUNI DEBT RELATIVE TO TAXABLE DEBT MADE MUNI YIELDS ATTRACTIVE COMPARED TO TAXABLE YIELDS. Typically, we have seen muni yields average about 80% of taxable yields. During the report period, muni yields at times exceeded 95% of taxable yields (although both were low on an absolute basis). These extremes of valuation allowed us to increase our exposure to high-yielding fixed-rate securities. SCHWAB NEW YORK MUNICIPAL MONEY FUND. To balance its budget in the past two fiscal years, the state has made some spending cuts, but has also relied heavily on one-time solutions (such as deferring aid payments and drawing on tobacco bond proceeds). The budget that the state legislature passed in May (over Governor Pataki's veto) projects a general fund surplus of only $730 million, or 1.8% of expenditures, at the end of fiscal 2004 (3/31/04). In spite of these concerns, the state's revenue raising ability and the diversity of its economy have kept New York a strong investment-grade credit. As of the report date, the state's credit ratings were A2 from Moody's, AA from Standard & Poor's (with a negative outlook) and AA- from Fitch. SCHWAB NEW JERSEY MUNICIPAL MONEY FUND. New Jersey's personal income tax receipts continued to decline in fiscal 2003. The state was able to end fiscal 2003 (6/30/03) with a modest surplus of $250 million, Schwab Municipal Money Funds 3 Management's Discussion continued In general, we have seen most states taking responsible measures to address the revenue shortfalls they have faced as a result of a weak U.S. economy. or 1.1% of expenditures, rather than an anticipated $1.3 billion general fund deficit, although it had to rely on several one-time solutions in addition to cutting expenditures. The diversity of the state's economy as well as its revenue raising ability have kept New Jersey a strong investment-grade credit. As of the report date, the state's credit ratings were Aa2 from Moody's (with a negative outlook), AA from Standard & Poor's and AA from Fitch (with a negative watch). SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND. Conservative fiscal management has left Pennsylvania better able to weather revenue shortfalls than many of its neighbors. The state used the last of its "rainy day" fund to close an estimated budget shortfall of 3.4% for fiscal 2003 (which ended 6/30/03). A fiscal 2004 budget, most parts of which were approved in March 2003, is designed to close an expected $2.4 billion budget gap. As of the report date, the state's credit ratings were Aa2 from Moody's, AA from Standard & Poor's and AA from Fitch. SCHWAB FLORIDA MUNICIPAL MONEY FUND. Although it has drawn on some reserves to balance its budget in the last two years, the State of Florida projected a nearly $1.1 billion fund balance for the end of fiscal 2003 (6/30/03). The state has benefited from its reliance on sales taxes rather than personal income taxes. The number of jobs in the state actually grew 0.5% in 2002, and overall tourism revenues have held fairly steady. With its substantial reserves and strong financial controls, the state's ratings as of the end of the report period were Aa2 from Moody's, AA+ from Standard & Poor's and AA from Fitch. SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND. On May 15, 2003, Schwab introduced the Schwab Massachusetts Municipal Money Fund to replace the Federated Massachusetts Municipal Cash Trust as a sweep money fund option for Schwab customers. Through a combination of dipping into reserves and cutting social services and aid to local governments, Massachusetts overcame a projected $900 million revenue shortfall to end fiscal 2003 (6/30/03) with a $895 million surplus, or 4% of expenditures. A similar balance is projected for fiscal 2004. With its diverse economy and strong revenue raising ability, the state's ratings as of the end of the report period were Aa2 from Moody's (with a negative outlook), AA- from Standard & Poor's and AA- from Fitch. The views expressed here are those of fund management only. 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 4 Performance and Fund Facts as of 6/30/03 SEVEN-DAY YIELDS The seven-day yields are calculated using standard SEC formulas. The effective yields include the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate, and that past performance is not an indication of future results.
NEW YORK NEW JERSEY PENNSYLVANIA FLORIDA MASSACHUSETTS MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MONEY FUND MONEY FUND MONEY FUND MONEY FUND MONEY FUND ----------------------------------------------------------------------------------------------------------------------- Value Sweep Advantage Shares Shares ----------------------------------------------------------------------------------------------------------------------- SEVEN-DAY YIELD 1 0.34% 0.58% 0.38% 0.46% 0.44% 0.39% ----------------------------------------------------------------------------------------------------------------------- SEVEN-DAY 0.34% 0.58% 0.38% 0.46% 0.44% 0.40% EFFECTIVE YIELD ----------------------------------------------------------------------------------------------------------------------- SEVEN-DAY 0.58% 1.00% 0.62% 0.73% 0.68% 0.65% TAXABLE-EQUIVALENT EFFECTIVE YIELD 2 -----------------------------------------------------------------------------------------------------------------------
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).
NEW YORK NEW JERSEY PENNSYLVANIA FLORIDA MASSACHUSETTS MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MONEY FUND MONEY FUND MONEY FUND MONEY FUND MONEY FUND ----------------------------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE 48 days 53 days 45 days 52 days 58 days MATURITY ----------------------------------------------------------------------------------------------------------------------- CREDIT QUALITY 100% Tier 1 100% Tier 1 100% Tier 1 100% Tier 1 100% Tier 1 OF HOLDINGS 3 % of portfolio ----------------------------------------------------------------------------------------------------------------------- CREDIT-ENHANCED 68% 75% 77% 75% 61% SECURITIES % of portfolio -----------------------------------------------------------------------------------------------------------------------
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 $1 per share, it is possible to lose money by investing in a money fund. 1 A portion of each fund's expenses was reduced during the reporting period. Without this reduction, the seven-day yields for Schwab New York Municipal Money Fund's Sweep Shares and Value Advantage Shares would have been 0.19% and 0.42%, respectively. The seven-day yields for Schwab New Jersey, Pennsylvania, Florida and Massachusetts Municipal Money Funds would have been 0.18%, 0.23%, 0.25% and 0.13%, respectively. 2 For New York Municipal Money Fund, the seven-day taxable-equivalent effective yield assumes a 2003 maximum combined federal regular income tax, New York state and New York city rate of 41.82%. Schwab New Jersey, Pennsylvania and Massachusetts Municipal Money Funds assume a 2003 maximum combined federal regular income and state personal income tax rate of 39.14%, 36.82% and 38.45%, respectively. The Florida Municipal Money Fund assumes a 2003 maximum federal regular income tax rate of 35.00%. 3 Portfolio holdings may have changed since the report date. Schwab Municipal Money Funds 5 SCHWAB NEW YORK MUNICIPAL MONEY FUND Financial Statements Schwab New York Municipal Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- SWEEP SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ---------------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ---------------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 --------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.02 0.03 0.03 0.03 --------------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.02) (0.03) (0.03) (0.03) --------------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 --------------------------------------------------------------------------------- Total return (%) 0.26 2 0.80 2.06 3.39 2.59 2.78 RATIOS/SUPPLEMENTAL DATA (%) ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.69 3 0.69 0.69 0.69 4 0.69 0.69 Ratio of gross operating expenses to average net assets 0.84 3 0.85 0.86 0.87 4 0.91 0.97 Ratio of net investment income to average net assets 0.53 3 0.80 2.04 3.35 2.57 2.73 Net assets, end of period ($ x 1,000,000) 1,048 944 889 798 604 468
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- VALUE ADVANTAGE SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ---------------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ---------------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 --------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.02 0.04 0.03 0.03 --------------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.02) (0.04) (0.03) (0.03) --------------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 --------------------------------------------------------------------------------- Total return (%) 0.38 2 1.04 2.30 3.64 2.83 3.03 RATIOS/SUPPLEMENTAL DATA (%) ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.45 3 0.45 0.45 0.45 5 0.45 0.45 Ratio of gross operating expenses to average net assets 0.61 3 0.62 0.64 0.67 5 0.71 0.78 Ratio of net investment income to average net assets 0.77 3 1.04 2.23 3.59 2.81 2.96 Net assets, end of period ($ x 1,000,000) 734 676 604 419 296 238
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.70% and 0.88%, respectively, if certain non-routine expenses (proxy fees) had been included. 5 The ratios of net and gross operating expenses would have been 0.46% and 0.68%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 6 SCHWAB NEW YORK MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 1,764,048 1,764,048 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 1,764,048 1,764,048
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments -------------------------------------------------------------------------------- NEW YORK 98.4% +@ ALBANY, NEW YORK IDA IDRB (Newkirk Products Project) Series 1995A 1.05%, 07/07/03 1,000 1,000 IDRB (United Cerebral Palsy Project) Series B 1.00%, 07/07/03 10,985 10,985 +~@ BABYLON, NEW YORK Resource Recovery (Ogden Martin Project) Series 1998 1.00%, 07/07/03 5,000 5,000 +@ CHAUTAUQUA COUNTY, NEW YORK IDA Civic Facilities RB (Jamestown Center City Development Project) Series 2000A 1.04%, 07/07/03 4,950 4,950 IDRB (Grafco Industry Project) 1.05%, 07/07/03 7,600 7,600 +@ CHENANGO COUNTY, NEW YORK IDA IDRB (Baille Lumber Project) Series 2000A 1.20%, 07/07/03 4,551 4,551 +@ DUTCHESS COUNTY, NEW YORK IDRB (Mechtroncis Corp. Project) Series 1998 1.16%, 07/07/03 3,025 3,025 IDRB (Trinity Pawling School Corp. Project) 0.95%, 07/07/03 3,075 3,075 EAST MEADOW, NEW YORK UNION FREE SCHOOL DISTRICT TAN 0.82%, 06/29/04 4,000 4,036 ERIE COUNTY, NEW YORK RAN 1.43%, 09/17/03 10,325 10,348 HEMPSTEAD, NEW YORK UNION FREE SCHOOL DISTRICT TAN 0.92%, 06/29/04 4,400 4,447 +@ HERKIMER COUNTY, NEW YORK IDA Civic Facilities RB (Templeton Foundation Project) 1.10%, 07/07/03 2,000 2,000 +@ JAY STREET, NEW YORK DEVELOPMENT CORP Lease (RB (Jay Street Project) Series 2001A-1 0.95%, 07/07/03 2,200 2,200 +@ LONG ISLAND, NEW YORK POWER AUTHORITY ~ Electric System RB Series 2003G 0.85%, 07/07/03 4,400 4,400 Electric System RB Subseries 3A 0.90%, 07/07/03 13,000 13,000
See financial notes. 7 SCHWAB NEW YORK MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~ Electric System RB Subseries 7B 0.95%, 07/07/03 13,450 13,450 ~ Electric System RB TOB Series 1998A 1.01%, 07/07/03 1,900 1,900 ~ Electric System RB TOBP (PA 841) 1.00%, 07/07/03 4,365 4,365 ~ Electric System RB TOBP (PA-522) 1.00%, 07/07/03 21,000 21,000 +@ MONROE COUNTY, NEW YORK IDRB (ENBI Corp. Lease Rent Project) Series 1988 1.05%, 07/07/03 2,000 2,000 NASSAU COUNTY, NEW YORK INTERIM FINANCE AUTHORITY BAN Series 2002B-2 1.15%, 09/11/03 25,000 25,054 +~@ Sales Tax Secured Bond Series 2002 B 0.90%, 07/07/03 5,000 5,000 +~@ Sales Tax Secured Bond Series 2002A 0.88%, 07/07/03 15,000 15,000 +@ NEW YORK CITY, NEW YORK ~ GO Series 1992D 0.95%, 07/07/03 4,300 4,300 ~ GO Series 1993B 0.95%, 07/01/03 300 300 GO Subseries 1993E-3 0.85%, 07/01/03 800 800 ~ GO Subseries 1994H-3 0.85%, 07/01/03 2,600 2,600 GO Subseries 1994H-3 0.85%, 07/01/03 3,500 3,500 GO Subseries A-7 0.85%, 07/01/03 200 200 ~ GO Subseries A-8 0.90%, 07/07/03 6,700 6,700 GO Subseries C-2 0.90%, 07/07/03 5,000 5,000 GO Subseries C-3 0.90%, 07/07/03 15,000 15,000 GO Subseries C-4 0.90%, 07/07/03 9,900 9,900 ~ GO TOB (Merlot) Series 1997C 1.04%, 07/07/03 26,000 26,000 ~ GO TOB Series 394 1.00%, 07/07/03 6,920 6,920 ~ GO TOB Series F 0.98%, 07/07/03 3,395 3,395 ~ TOB 20013204 1.01%, 07/07/03 24,750 24,750 TOB Subseries 2003G-2 0.90%, 07/07/03 4,755 4,755 ~ TOBP (PT-820) 1.00%, 07/07/03 10,910 10,910 +~@ NEW YORK CITY, NEW YORK HEALTH & HOSPITAL CORP. RB TOBP (PA-555) 0.98%, 07/07/03 17,620 17,620 +@ NEW YORK CITY, NEW YORK HOUSING DEVELOPMENT CORP. M/F Housing RB (100 Jane Street Development Project) Series A 0.96%, 07/07/03 6,525 6,525 M/F Housing RB (One Columbus Project) Series A 0.96%, 07/07/03 20,700 20,700 M/F Housing RB (Sierra Development) Series 2003A 0.96%, 07/07/03 18,000 18,000 M/F Rental Housing RB (Tribeca Tower Project) Series 1997A 1.00%, 07/07/03 2,300 2,300 +@ NEW YORK CITY, NEW YORK IDA Civic Facility RB (Jewish Board of Family Services Project) 1.00%, 07/07/03 15,820 15,820 RB (Allway Tools, Inc. Project) 1.05%, 07/07/03 1,635 1,635 ~ RB TOBP (PT-459) 1.01%, 07/07/03 4,065 4,065 Special Facility RB (Korean Airlines Co. Project) Series 1997A 0.90%, 07/07/03 7,400 7,400
See financial notes. 8 SCHWAB NEW YORK MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) NEW YORK CITY MUNICIPAL WATER FINANCE AUTHORITY, NEW YORK ~@ RB TOBP (PA-1109) 1.00%, 07/01/03 7,495 7,495 + TECP Series 5 0.95%, 09/08/03 15,000 15,000 ~ TECP Series 6 1.00%, 07/17/03 17,900 17,900 0.95%, 09/02/03 25,000 25,000 +~@ Water & Sewer System RB 0.98%, 07/07/03 4,995 4,995 ~@ Water & Sewer System RB Series C 0.95%, 07/01/03 200 200 +~@ Water & Sewer System RB Series 1994G 0.85%, 07/01/03 1,350 1,350 ~@ Water & Sewer System RB Series 2002C-2 0.88%, 07/07/03 5,200 5,200 ~@ Water & Sewer System RB Sub-Series 2003C-3 0.85%, 07/01/03 3,300 3,300 ~@ Water & Sewer Systems RB Series 2003F Subseries F-1 0.97%, 07/07/03 20,000 20,000 +~@ Water & Sewer System RB TOBP (PA-1054) 1.00%, 07/07/03 10,000 10,000 +~@ Water & Sewer System RB TOBP (PA-523) Series 1999B 0.98%, 07/07/03 4,735 4,735 ~@ Water & Sewer System RB TOBP (PA-838) 1.02%, 07/07/03 4,995 4,995 NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY, NEW YORK BAN Series 1 1.63%, 11/06/03 25,000 25,075 BAN Series 2 0.95%, 02/19/04 8,525 8,581 1.07%, 02/19/04 25,000 25,147 1.10%, 02/19/04 40,000 40,226 Future Secured Tax Revenue Refunding Bond Series 2003A 1.45%, 11/01/03 20,210 20,347 +@ RB (Future Tax Secured) Series 2001C 0.95%, 07/07/03 2,000 2,000 ~@ RB Subseries 2002-2A 0.95%, 07/01/03 10,000 10,000 ~@ RB Subseries 2D 0.95%, 07/07/03 2,500 2,500 +~@ RB TOB Series 2000A 1.01%, 07/07/03 15,720 15,720 ~@ RB TOBP (PA-917) 1.07%, 07/07/03 14,545 14,545 ~@ TOBP (PT-1724) 1.01%, 07/01/03 6,000 6,000 +@ NEW YORK CITY, NEW YORK TRUST FOR CULTURAL RESOURCES RB (American Museum of Natural History Project) Series 1999B 1.60%, 07/01/03 13,360 13,360 + NEW YORK METROPOLITAN TRANSPORTATION AUTHORITY ~@ RB (Dedicated Tax Fund) Series 2002B 0.95%, 07/07/03 9,000 9,000 @ RB TOB Series 724X 1.00%, 07/07/03 22,000 22,000 ~@ RB TOBP (PA-1031-R) 1.15%, 08/21/03 19,995 19,995 ~@ Revenue Refunding Bond Series 2002G-2 0.96%, 07/07/03 5,000 5,000 ~@ Revenue Refunding Bond Series 2002D-1 0.90%, 07/07/03 9,600 9,600 ~@ Revenue Refunding Bond Series 2002G-1 0.96%, 07/07/03 4,725 4,725 ~@ Service Contract TOB Series 678 1.00%, 07/07/03 19,000 19,000 Transportation Facilities RB (Service Contract) Series 1993P 1.15%, 07/01/03 4,000 4,060 TECP 1.10%, 09/10/03 18,500 18,500
See financial notes. 9 SCHWAB NEW YORK MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) TECP Series 1-A 0.90%, 09/09/03 25,000 25,000 0.90%, 11/10/03 5,000 5,000 + NEW YORK STATE Environmental Quality GO Series 1998G 1.48%, 10/02/03 14,300 14,300 @ GO Series A 1.50%, 10/09/03 16,200 16,200 +@ NEW YORK STATE DORMITORY AUTHORITY RB (New York Foundling Charitable Corp. Project) 0.96%, 07/07/03 4,355 4,355 ~ RB Putters Series 107 1.20%, 09/04/03 11,625 11,625 ~ RB TOB Series 15 0.90%, 12/17/03 27,030 27,030 ~ RB TOB Series 2001D 1.00%, 07/07/03 2,900 2,900 ~ TOB 1.01%, 07/07/03 12,375 12,375 ~ TOBP (PT-797) Series 2003A 0.98%, 07/07/03 7,295 7,295 +~@ NEW YORK STATE ENERGY RESEARCH & DEVELOPMENT AUTHORITY Gas Facilities RB TOB Series 379 1.00%, 07/07/03 14,125 14,125 TOB (Eagle Trust) Series 1994A 1.01%, 07/07/03 14,850 14,850 ~@ NEW YORK STATE ENVIRONMENTAL FACILITIES CORP. Environmental Pollution Control RB TOB Series 1994D 1.01%, 07/07/03 17,050 17,050 TOB (Eagle Trust) 1.01%, 07/07/03 24,225 24,225 +@ NEW YORK STATE HFA Housing RB (345 East 94th Street Housing Project) 0.90%, 07/07/03 26,165 26,165 Housing RB (Worth Street Housing Project) Series A 1.15%, 07/07/03 10,000 10,000 M/F Housing RB Series 1999A 0.96%, 07/07/03 17,500 17,500 RB (101 West End Project) Series 1998 0.90%, 07/07/03 10,600 10,600 RB (101 West End Project) Series 1999 0.90%, 07/07/03 1,600 1,600 RB (150 East 44th Street Project) Series 2000A 0.90%, 07/07/03 43,500 43,500 RB (345 East 94th Street Housing Project) 0.90%, 07/07/03 3,800 3,800 RB (350 West 43rd Street Housing Project) Series 2002A 0.98%, 07/07/03 14,000 14,000 RB (66 West 38th Street Project) Series A 1.00%, 07/07/03 11,400 11,400 RB (70 Battery Place Project) Series 1999A 0.96%, 07/07/03 10,100 10,100 RB (Chelsea Arms Housing Project) Series 1998A 0.95%, 07/07/03 18,000 18,000 RB (East 84th Street Housing Project) Series 1995A 1.15%, 07/07/03 4,000 4,000 RB (Tribeca Landing) Series 1997A 1.00%, 07/07/03 4,500 4,500 RB (Tribeca Park) Series 1997A 0.95%, 07/07/03 13,000 13,000 RB (Union Square South Housing Project) 1.00%, 07/07/03 9,000 9,000 RB (West 20th Street Project) Series 2001A 1.05%, 07/07/03 30,600 30,600 RB (West 38th Street Project) Series 2001A 1.00%, 07/07/03 5,200 5,200 RB Series 1997A 1.00%, 07/07/03 20,000 20,000
See financial notes. 10 SCHWAB NEW YORK MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) Service Contract Revenue Refunding Bond Series 2003B 0.90%, 07/07/03 10,000 10,000 Service Contract Revenue Refunding Bond Series 2003D 0.90%, 07/07/03 15,000 15,000 Service Contract Revenue Refunding Bond Series 2003E 0.90%, 07/07/03 5,000 5,000 Service Contract Revenue Refunding Bond Series 2003G 1.05%, 07/07/03 10,000 10,000 Service Contract Revenue Refunding Bond Series 2003I 1.05%, 07/07/03 12,500 12,500 +@ NEW YORK STATE LOCAL GOVERNMENT ASSISTANCE CORP. RB Series 1993A 0.90%, 07/07/03 6,600 6,600 RB Series 1994B 0.90%, 07/07/03 17,100 17,100 RB Series 1995D 0.90%, 07/07/03 7,500 7,500 RB Series 1995G 0.85%, 07/07/03 8,800 8,800 ~ Revenue Refunding Bond Series 2003A-5V 0.92%, 07/07/03 10,000 10,000 ~ Revenue Refunding Bond Series 2003A-7V 0.90%, 07/07/03 5,000 5,000 ~ TOB 1.01%, 07/07/03 9,900 9,900 TOB Series 2000-23 1.01%, 07/07/03 20,965 20,965 ~@ NEW YORK STATE MORTGAGE AGENCY RB TOB Series 1999Z 1.00%, 07/07/03 8,765 8,765 RB TOB Series 2000B3 1.09%, 07/07/03 790 790 RB TOBP (PA-153C) 1.01%, 07/07/03 4,640 4,640 RB TOBP (PA-627R) 1.01%, 07/07/03 13,995 13,995 RB TOBP (PT-289) 1.15%, 07/07/03 5,465 5,465 TOB Series 1999F 1.00%, 07/07/03 24,795 24,795 ~@ NEW YORK STATE POWER AUTHORITY RB Series 5 0.95%, 07/07/03 8,400 8,400 NEW YORK STATE THRUWAY AUTHORITY General Revenue BAN Series 2003A 1.10%, 04/20/04 30,000 30,006 ~@ General Revenue TOB Series 456 1.00%, 07/07/03 6,995 6,995 +~@ RB TOBP (Second General Highway & Bridge Trust Fund) (PT-777) 0.98%, 07/07/03 10,000 10,000 ~@ Service Contract RB (Roc-R-142) Series II 1.01%, 07/07/03 4,995 4,995 NORTH SYRACUSE, NEW YORK CENTRAL SCHOOL DISTRICT BAN Series 2003 0.95%, 06/18/04 29,200 29,423 PORT AUTHORITY OF NEW YORK & NEW JERSEY BAN Series 2003VV 1.12%, 12/15/03 35,000 35,004 +~@ Special Obligation RB TOB Series 2000B5 1.08%, 07/07/03 1,485 1,485 +@ SCHENECTADY, NEW YORK IDRB (Fortitech Holding Corp. Project) Series 1995A 1.10%, 07/07/03 900 900 SHERBURNE EARLVILLE, NEW YORK CENTRAL SCHOOL DISTRICT BAN Series 2002 1.52%, 09/18/03 5,978 5,989 SUFFOLK COUNTY, NEW YORK TAN 1.05%, 08/14/03 5,000 5,003 1.50%, 09/09/03 8,300 8,316
See financial notes. 11 SCHWAB NEW YORK MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~@ SUFFOLK COUNTY, NEW YORK WATER AUTHORITY BAN 2003 0.90%, 07/07/03 10,000 10,000 ~@ TOMPKINS COUNTY, NEW YORK INDUSTRIAL DEVELOPMENT AGENCY RB (Civic Facility Cornell) Series 2002A 0.95%, 07/07/03 6,525 6,525 RB (Civic Facility Cornell) Series 2002B 0.95%, 07/07/03 7,000 7,000 ~@ TRIBOROUGH, BRIDGE & TUNNEL AUTHORITY, NEW YORK RB Putters Series 293 1.00%, 07/07/03 9,995 9,995 RB Series 194 1.01%, 07/07/03 9,995 9,995 RB TOB Series 2002-14 1.01%, 07/07/03 20,000 20,000 + Revenue Refunding Bond Series 2002C 0.85%, 07/07/03 10,000 10,000 + Special Obligation RB Series C 0.90%, 07/07/03 13,200 13,200 + Special Obligation Refunding Bond Series 2000A 0.90%, 07/07/03 8,550 8,550 TOBP (PA-1070) 1.00%, 07/07/03 14,000 14,000 ULSTER COUNTY, NEW YORK BAN 2003 1.00%, 06/11/04 6,500 6,546 WEST GENESEE CENTRAL, NEW YORK SCHOOL DISTRICT BAN 2002 1.60%, 07/11/03 13,935 13,939 +@ WESTCHESTER COUNTY, NEW YORK IDA IDRB (Levister Redevelopment Co., LLC) Series B 0.90%, 07/07/03 6,000 6,000 +@ YONKERS, NEW YORK CIVIC FACILITIES IDRB (Consumers Union Facility Project) Series 1989 1.05%, 07/07/03 1,300 1,300 IDRB (Consumers Union Facility Project) Series 1991 1.05%, 07/07/03 700 700 ~ IDRB (Consumers Union Facility Project) Series 1994 1.05%, 07/07/03 1,740 1,740 ----------- 1,735,148 PUERTO RICO 1.6% GOVERNMENT DEVELOPMENT BANK OF PUERTO RICO TECP 1.00%, 08/07/03 19,000 19,000 +~@ PUERTO RICO HOUSING FINANCE CORPORATION RB TOB Series J 1.20%, 04/01/04 9,900 9,900 ----------- 28,900
------------------------------------------------------------------------------- END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 12 SCHWAB NEW YORK MUNICIPAL MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------------ Investments, at market value $ 1,764,048 a Cash 19,997 Receivables: Fund shares sold 1,455 Interest 5,329 Investments sold 3,000 Prepaid expenses + 21 --------------- TOTAL ASSETS 1,793,850 LIABILITIES ------------------------------------------------------------------------------ Payables: Fund shares redeemed 3,068 Dividends to shareholders 330 Investments bought 8,490 Investment adviser and administrator fees 33 Transfer agent and shareholder service fees 52 Accrued expenses + 98 --------------- TOTAL LIABILITIES 12,071 NET ASSETS ------------------------------------------------------------------------------ TOTAL ASSETS 1,793,850 TOTAL LIABILITIES - 12,071 --------------- NET ASSETS $ 1,781,779 NET ASSETS BY SOURCE Capital received from investors 1,781,798 Net realized capital losses (19) NET ASSETS BY SHARE CLASS SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Sweep Shares $1,047,748 1,047,837 $1.00 Value Advantage Shares $ 734,031 734,024 $1.00
a The amortized cost for the fund's securities was $1,764,048. During the reporting period, the fund had $224,410 in transactions with other SchwabFunds(R). FEDERAL TAX DATA ---------------------------------------- COST BASIS OF PORTFOLIO $ 1,764,048 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2008 $ 58 2009 + 43 --------------- $ 101
See financial notes. 13 SCHWAB NEW YORK MUNICIPAL MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000.
INVESTMENT INCOME --------------------------------------------------------------------------- Interest $10,403 NET REALIZED GAINS AND LOSSES --------------------------------------------------------------------------- Net realized gains on investments sold 98 EXPENSES --------------------------------------------------------------------------- Investment adviser and administrator fees 3,144 a Transfer agent and shareholder service fees: Sweep Shares 2,225 b Value Advantage Shares 795 b Trustees' fees 17 c Custodian and portfolio accounting fees 82 Professional fees 14 Registration fees 24 Shareholder reports 35 Other expenses + 10 ------------ Total expenses 6,346 Expense reduction - 1,308 d ------------ NET EXPENSES 5,038 INCREASE IN NET ASSETS FROM OPERATIONS --------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 10,403 NET EXPENSES - 5,038 ------------ NET INVESTMENT INCOME 5,365 NET REALIZED GAINS + 98 ------------ INCREASE IN NET ASSETS FROM OPERATIONS $ 5,463
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets as follows: TRANSFER AGENT SERVICES:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ---------------------------------------- Sweep Shares 0.25 Value Advantage Shares 0.05
SHAREHOLDER SERVICES:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ---------------------------------------- Sweep Shares 0.20 Value Advantage Shares 0.17
c For the fund's independent trustees only. d Includes $1,272 from the investment adviser (CSIM) and $36 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the annual operating expenses of this fund through at least April 30, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ---------------------------------------- Sweep Shares 0.69 Value Advantage Shares 0.45
This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 14 SCHWAB NEW YORK MUNICIPAL MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------ 1/1/03-6/30/03 1/1/02-12/31/02 Net investment income $ 5,365 $ 14,200 Net realized gains + 98 198 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------ 5,463 14,398 DISTRIBUTIONS PAID ------------------------------------------------------------------------------ Dividends from net investment income Sweep Shares 2,599 7,395 Value Advantage Shares + 2,766 6,805 ------------------------------------ TOTAL DIVIDENDS FROM NET INVESTMENT INCOME 5,365 14,200 TRANSACTIONS IN FUND SHARES a ------------------------------------------------------------------------------ SHARES SOLD Sweep Shares 1,595,693 2,917,032 Value Advantage Shares + 412,572 691,543 ------------------------------------ TOTAL SHARES SOLD 2,008,265 3,608,575 SHARES REINVESTED Sweep Shares 2,413 7,250 Value Advantage Shares + 2,433 6,470 ------------------------------------ TOTAL SHARES REINVESTED 4,846 13,720 SHARES REDEEMED Sweep Shares (1,493,981) (2,869,694) Value Advantage Shares + (357,184) (625,673) ------------------------------------ TOTAL SHARES REDEEMED (1,851,165) (3,495,367) NET TRANSACTIONS IN FUND SHARES 161,946 126,928 b NET ASSETS ------------------------------------------------------------------------------ Beginning of period 1,619,735 1,492,609 Total increase + 162,044 127,126 c ------------------------------------ END OF PERIOD $1,781,779 $ 1,619,735
a Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. b Represents shares sold plus shares reinvested, minus shares redeemed. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 15 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND Financial Statements Schwab New Jersey Municipal Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 2/2/98 1- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) ------------------------------------------------------------------------------------------------------------------------------------ Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------ -------------------------------------------------------------- Income from investment operations: Net investment income 0.00 2 0.01 0.02 0.03 0.03 0.03 ------ -------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 2 (0.01) (0.02) (0.03) (0.03) (0.03) ------ -------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------ -------------------------------------------------------------- Total return (%) 0.27 3 0.84 2.13 3.38 2.58 2.60 3 RATIOS/SUPPLEMENTAL DATA (%) ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.65 4 0.65 5 0.65 0.65 6 0.65 0.65 4 Ratio of gross operating expenses to average net assets 0.86 4 0.88 5 0.90 0.92 6 0.94 1.13 4 Ratio of net investment income to average net assets 0.53 4 0.83 2.08 3.35 2.60 2.75 4 Net assets, end of period ($ x 1,000,000) 489 425 382 321 206 98
* Unaudited. 1 Commencement of operations. 2 Per-share amount was less than $0.01. 3 Not annualized. 4 Annualized. 5 The ratios of net and gross operating expenses would have been 0.66% and 0.89%, respectively, if certain non-routine expenses (taxes) had been included. 6 The ratios of net and gross operating expenses would have been 0.66% and 0.93%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 16 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 467,283 467,283 ------------------------------------------------------------------ 100.0% TOTAL INVESTMENTS 467,283 467,283
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments -------------------------------------------------------------------------- NEW JERSEY 99.7% +~@ DELAWARE RIVER PORT AUTHORITY RB TOBP (PA-606) 1.01%, 07/07/03 14,050 14,050 RB TOBP (PA-611) 1.01%, 07/07/03 1,695 1,695 DELRAN TOWNSHIP, NEW JERSEY BAN 1.10%, 01/14/04 2,842 2,852 EAST BRUNSWICK TOWNSHIP, NEW JERSEY BAN 1.10%, 02/27/04 8,000 8,048 +~@ ESSEX COUNTY, NEW JERSEY IMPROVEMENT AUTHORITY Lease Revenue TOBP (PA-648) 0.97%, 07/07/03 5,995 5,995 RB (County Asset Sale Project) Series 1995 0.95%, 07/07/03 1,000 1,000 +@ MONMOUTH COUNTY, NEW JERSEY IMPROVEMENT AUTHORITY RB (Pooled Government Loan Program) 0.83%, 07/07/03 12,085 12,085 + NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY Market Transition Facility Sr. Lien RB Series 1994A 0.87%, 07/01/03 5,000 5,000 ~@ Natural Gas Facilities RB TOB (Nui Corp. Project) Series 161 1.01%, 07/07/03 1,525 1,525 @ RB (500 International Partners Project) 0.95%, 07/07/03 5,800 5,800 @ RB (Catholic Community Services Project) 0.95%, 07/07/03 4,910 4,910 @ RB (Geriatric Services Housing Corp. Project) 0.95%, 07/07/03 10,475 10,475 @ RB (Golf Holdings, LLC) Series 2001A 0.95%, 07/07/03 22,000 22,000 @ RB (Graphic Management, Inc. Project) 0.95%, 07/07/03 5,245 5,245 @ RB (Hamilton Industrial Development Project) Series 1998 1.10%, 07/07/03 6,220 6,220 @ RB (Jewish Home Rockleigh Project) Series 1998A 1.27%, 07/07/03 4,900 4,900 @ RB (Job Haines Home Project) 1.00%, 07/07/03 3,700 3,700 @ RB (St. James Prep & Social Service Project) Series 1998 1.00%, 07/07/03 3,240 3,240
See financial notes. 17 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) -------------------------------------------------------------------------- @ RB (Stone Brothers Secaucus Project) 1.03%, 07/07/03 1,860 1,860 @ RB (Toys R Us, Inc. Project) Series 1984 1.35%, 07/30/03 3,000 3,000 @ RB (Wechsler Coffee Corp. Project) Series 1998 1.15%, 07/07/03 870 870 ~@ RB TOBP (PT-779) 0.97%, 07/07/03 9,995 9,995 ~@ Revenue Refunding Bond (Airis Newark, LLC Project) 0.95%, 07/07/03 3,800 3,800 @ Revenue Refunding Bond (Plaza Park Project 1.10%, 07/07/03 3,615 3,615 @ Special Facility RB (Port Newark Container, LLC) 1.03%, 07/07/03 14,300 14,300 TECP (Chambers Cogen) 0.90%, 09/10/03 10,300 10,300 TECP (Keystone) 0.90%, 09/09/03 3,600 3,600 0.90%, 09/10/03 2,300 2,300 @ Thermal Energy Facilities RB (Marina Energy, LLC Project) Series 2001A 0.95%, 07/07/03 7,100 7,100 @ Thermal Energy Facilities RB (Thermal Energy, Ltd. Partnership I Project) Series 1997 1.10%, 07/07/03 4,600 4,600 +@ NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY RB (Community Hospital Group) Series 2003A-1 0.95%, 07/07/03 1,500 1,500 RB (Matheny School Hospital) Series 2003A-2 0.95%, 07/07/03 1,750 1,750 RB (Meridian Health System) Series 2003A 0.90%, 07/07/03 5,000 5,000 RB (Meridian Health System) Series 2003B 1.00%, 07/07/03 3,000 3,000 RB (Princeton Medical Center Project) Series 1999A-3 0.95%, 07/07/03 2,100 2,100 RB (Robert Wood Johnson) Series 2003A-3 0.95%, 07/07/03 2,500 2,500 RB (St. Joseph's) Series 2003A-6 0.95%, 07/07/03 3,250 3,250 RB Series 2001A1 0.90%, 07/07/03 6,300 6,300 RB Series 2001A3 0.90%, 07/07/03 7,000 7,000 ~ RB TOBP (PA-504) 0.97%, 07/07/03 11,630 11,630 Revenue Refunding Bond (Christian Health Project) Series 1998B 0.94%, 07/07/03 9,400 9,400 +~@ NEW JERSEY SPORTS & EXPOSITION AUTHORITY RB (State Contract) Series 2002B-1 0.90%, 07/07/03 4,675 4,675 RB Series 1992C 0.90%, 07/07/03 3,500 3,500 NEW JERSEY STATE EDUCATIONAL FACILITIES AUTHORITY +@ RB (Caldwell College) Series 2000B 1.00%, 07/07/03 2,300 2,300 RB (Higher Education Equipment Leasing Fund) Series 2001A 1.02%, 09/01/03 3,300 3,316 +~@ TOB Series II-R 213 0.98%, 07/07/03 8,610 8,610 +~@ NEW JERSEY STATE HOUSING & MORTGAGE FINANCE AGENCY TOB PT-635 1.00%, 07/07/03 4,305 4,305 RB TOBP (PT-285) 1.25%, 07/17/03 645 645 RB TOBP (PT-287) 1.00%, 07/01/03 1,000 1,000 + RB (Home Buyer Project) Series EE 1.10%, 04/01/04 7,430 7,430
See financial notes. 18 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) -------------------------------------------------------------------------- +~@ NEW JERSEY STATE TRANSIT CORP. TOB (Certificates) Series 2000- 148 0.95%, 07/07/03 500 500 +@ NEW JERSEY STATE TRANSPORTATION TRUST FUND AUTHORITY ~ TOB Series 203 0.98%, 07/07/03 4,895 4,895 TOB Series 2000C 0.98%, 07/07/03 11,495 11,495 ~ TOB Series II-R 221 0.98%, 07/07/03 4,995 4,995 +@ NEW JERSEY STATE TURNPIKE AUTHORITY RB Series 1991D 0.90%, 07/07/03 2,000 2,000 ~ RB TOB (2000-3002) 0.98%, 07/07/03 8,000 8,000 ~ RB TOBP (PA-719) 1.01%, 07/07/03 3,665 3,665 ~ RB TOBP (PT-747) 1.06%, 07/07/03 3,595 3,595 ~ TOB (Munitops) Series 2000-6 1.01%, 07/07/03 7,000 7,000 NEWARK, NEW JERSEY BAN 1.65%, 08/01/03 7,984 7,990 1.75%, 08/01/03 3,650 3,652 1.85%, 08/01/03 6,735 6,739 +~@ NORTH HUDSON, NEW JERSEY SEWAGE AUTHORITY RB Series 2001B 0.90%, 07/07/03 11,650 11,650 + PASSAIC VALLEY, NEW JERSEY SEWAGE COMMISSION Sewer System RB Series 2003F 1.15%, 12/01/03 4,470 4,505 PORT AUTHORITY OF NEW YORK & NEW JERSEY BAN Series 2003VV 1.03%, 12/15/03 2,400 2,401 1.12%, 12/15/03 15,000 15,002 + RB (119th Series) 1.55%, 09/15/03 2,975 2,996 RB Series 2003UU 1.04%, 10/15/03 12,000 12,033 +~@ Special Obligation RB TOB Series 2000B5 1.08%, 07/07/03 800 800 + TECP 1.05%, 08/11/03 7,000 7,000 0.90%, 09/08/03 2,000 2,000 +~@ TOB Series 153 1.00%, 07/07/03 370 370 +~@ TOB Series 693 1.01%, 07/07/03 7,000 7,000 +@ TOBP (PA-518) 1.10%, 04/08/04 6,795 6,795 PRINCETON BOROUGH, NEW JERSEY BAN 0.90%, 06/11/04 8,214 8,260 PRINCETON TOWNSHIP, NEW JERSEY BAN 0.88%, 06/11/04 8,962 9,014 SPARTA TOWNSHIP, NEW JERSEY BAN 1.02%, 06/04/04 6,595 6,639 +~@ TRENTON, NEW JERSEY PARKING AUTHORITY Putters RB TOB Series 221 0.95%, 07/07/03 4,320 4,320 +@ UNION COUNTY, NEW JERSEY IMPROVEMENT AUTHORITY RB (Cedar Glen Housing Corp.) Series 2001A 0.90%, 07/07/03 13,100 13,100 +~@ UNIVERSITY MEDICINE & DENTISTRY OF NEW JERSEY RB Series 2002B 0.98%, 07/07/03 7,000 7,000 WOODBRIDGE TOWNSHIP, NEW JERSEY BAN 1.52%, 07/08/03 7,000 7,001 -------- 465,703
See financial notes. 19 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) -------------------------------------------------------------------------- PUERTO RICO 0.3% +~@ PUERTO RICO COMMONWEALTH Public Improvement TOB Series 2001R 1.00%, 07/07/03 635 635 Public Improvement TOB Series 3 0.98%, 07/07/03 200 200 +~@ PUERTO RICO HOUSING FINANCE CORP. RB TOB Series R 1.00%, 07/07/03 745 745 ----- 1,580 --------------------------------------------------------------------------
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 20 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS -------------------------------------------------------------------------------- Investments, at market value $ 467,283 a Cash 9,607 Receivables: Interest receivable 1,632 Investments sold 11,041 Prepaid expenses + 10 ------------ TOTAL ASSETS 489,573 LIABILITIES -------------------------------------------------------------------------------- Payables: Dividends to shareholders 75 Investment adviser and administrator fees 7 Transfer agent and shareholder service fees 18 Accrued expenses + 32 ------------ TOTAL LIABILITIES 132 NET ASSETS -------------------------------------------------------------------------------- TOTAL ASSETS 489,573 TOTAL LIABILITIES - 132 ------------ NET ASSETS $ 489,441 NET ASSETS BY SOURCE Capital received from investors 489,432 Net realized capital gains 9 NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $489,441 489,172 $1.00
a The amortized cost for the fund's securities was $467,283. During the reporting period, the fund had $288,300 in transactions with other SchwabFunds(R). FEDERAL TAX DATA ------------------------------------ COST BASIS OF PORTFOLIO $467,283
See financial notes. 21 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME -------------------------------------------------------------------------------- Interest $ 2,715 NET REALIZED GAINS AND LOSSES -------------------------------------------------------------------------------- Net realized gains on investments sold 9 EXPENSES -------------------------------------------------------------------------------- Investment adviser and administrator fees 871 a Transfer agent and shareholder service fees 1,032 b Trustees' fees 14 c Custodian and portfolio accounting fees 19 Professional fees 10 Registration fees 10 Shareholder reports 9 Other expenses + 6 ----------- Total expenses 1,971 Expense reduction - 480 d ----------- NET EXPENSES 1,491 Increase in net assets from operations -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 2,715 NET EXPENSES - 1,491 ----------- NET INVESTMENT INCOME 1,224 NET REALIZED GAINS + 9 ----------- INCREASE IN NET ASSETS FROM OPERATIONS $ 1,233
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004, to 0.65% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 22 SCHWAB NEW JERSEY MUNICIPAL MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS -------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $1,224 $3,334 Net realized gains + 9 339 ------------------------------------ INCREASE IN NET ASSETS FROM OPERATIONS 1,233 3,673 DISTRIBUTIONS PAID -------------------------------------------------------------------------------- Dividends from net investment income 1,224 3,348 TRANSACTIONS IN FUND SHARES a -------------------------------------------------------------------------------- Shares sold 601,826 1,159,279 Shares reinvested 1,136 3,302 Shares redeemed + (538,333) (1,120,441) ------------------------------------ NET TRANSACTIONS IN FUND SHARES 64,629 42,140 NET ASSETS -------------------------------------------------------------------------------- Beginning of period 424,803 382,338 Total increase + 64,638 42,465 b ------------------------------------ END OF PERIOD $489,441 $424,803
a Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. b Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 23 SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND Financial Statements Schwab Pennsylvania Municipal Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 2/2/98 1- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 --------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) --------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 2 0.01 0.02 0.04 0.03 0.03 Less distributions: Dividends from net investment income (0.00)2 (0.01) (0.02) (0.04) (0.03) (0.03) ------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------- Total return (%) 0.30 3 0.87 2.20 3.57 2.71 2.72 3 RATIOS/SUPPLEMENTAL DATA (%) --------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.65 4 0.65 0.65 0.65 5 0.65 0.65 4 Ratio of gross operating expenses to average net assets 0.87 4 0.89 0.92 0.92 5 0.94 1.16 4 Ratio of net investment income to average net assets 0.61 4 0.87 2.14 3.52 2.68 2.85 4 Net assets, end of period ($ x 1,000,000) 316 301 292 225 164 122
* Unaudited. 1 Commencement of operations. 2 Per-share amount was less than $0.01. 3 Not annualized. 4 Annualized. 5 The ratios of net and gross operating expenses would have been 0.66% and 0.93%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 24 SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 315,577 315,577 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 315,577 315,577
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments PENNSYLVANIA 95.6% +@ ALLEGHENY COUNTY, PENNSYLVANIA IDA RB (Saureisen Project) 1.30%, 07/07/03 1,200 1,200 ~ RB TOB MERLOTS 2002-A48 1.08%, 07/07/03 14,495 14,495 +@ BERKS COUNTY, PENNSYLVANIA IDA RB (Beacon Container Project) 1.20%, 07/07/03 1,420 1,420 +@ BLAIR COUNTY, PENNSYLVANIA IDA RB (Village of Penn State Project) Series 2002C 0.97%, 07/07/03 5,000 5,000 +@ BUCKS COUNTY, PENNSYLVANIA IDA RB (Klearfold Project) 1.30%, 07/07/03 4,000 4,000 +@ CAMBRIA COUNTY, PENNSYLVANIA IDRB Resource Recovery (Cambria Cogen Co. Project) 1.05%, 07/07/03 15,250 15,250 +@ CHESTER COUNTY, PENNSYLVANIA HEALTH & EDUCATION FACILITIES AUTHORITY RB (Simpson Meadows Project) 1.00%, 07/07/03 3,000 3,000 +@ CLARION COUNTY, PENNSYLVANIA IDA IDRB Energy Development (Piney Creek Project) 0.98%, 07/07/03 16,000 16,000 +@ DELAWARE COUNTY, PENNSYLVANIA AUTHORITY Hospital RB (Crozer Chester Medical Center) 1.00%, 07/07/03 5,000 5,000 +@ DELAWARE COUNTY, PENNSYLVANIA IDA RB (YMCA of Philadelphia Project) Series 1999 1.10%, 07/07/03 2,565 2,565 +~@ DELAWARE VALLEY, PENNSYLVANIA REGIONAL FINANCE AUTHORITY Local Government RB TOB Series 2002E 1.04%, 07/07/03 4,555 4,555 +~@ ERIE COUNTY, PENNSYLVANIA SCHOOL DISTRICT GO Series 2001 TOB 2001-5 1.10%, 10/08/03 16,800 16,800 +~@ HARRISBURG, PENNSYLVANIA AUTHORITY RB Series 2002B 1.25%, 07/07/03 2,500 2,500 +@ LANCASTER COUNTY, PENNSYLVANIA HOSPITAL AUTHORITY Health Center RB (Brethren Village Project) 1.05%, 07/07/03 1,300 1,300
See financial notes. 25 SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +~@ MERCER COUNTY, PENNSYLVANIA GO TOB (Munitops Certificates) Unlimited Series 2001-18 1.04%, 07/07/03 3,600 3,600 +@ MONTGOMERY COUNTY, PENNSYLVANIA HIGHER EDUCATION & HEALTH AUTHORITY RB (Madlyn & Leonard Abramson Project) 1.00%, 07/07/03 3,200 3,200 + MONTGOMERY COUNTY, PENNSYLVANIA IDA @ Environmental Facilities RB (Lonza, Inc. Project) 1.09%, 07/07/03 7,000 7,000 TECP Exelon 1.10%, 07/03/03 10,000 10,000 TECP PECO Energy 1.05%, 08/18/03 5,400 5,400 +@ MONTGOMERY COUNTY, PENNSYLVANIA REDEVELOPMENT AUTHORITY M/F Housing RB (Brookside Manor Apartments) Series 2001A 0.85%, 07/07/03 1,300 1,300 + NORTHAMPTON COUNTY, PENNSYLVANIA HIGHER EDUCATION AUTHORITY RB (Lehigh University) 0.82%, 08/15/03 1,500 1,509 +~@ NORTHAMPTON COUNTY, PENNSYLVANIA GENERAL PURPOSE AUTHORITY RB TOB Series 2002-2 1.13%, 12/03/03 3,000 3,000 +~@ NORWIN PENNSYLVANIA SCHOOL DISTRICT GO TOB (Munitops Certificates) Series 2001-12 1.15%, 12/03/03 8,710 8,710 PENNSYLVANIA STATE GO Series 2003 0.92%, 07/01/04 4,990 5,242 +@ GO (Macon Trust Receipts) Series 2001F 1.06%, 07/07/03 3,575 3,575 +~@ TOB Series 1997C 1.05%, 07/07/03 11,870 11,870 +~@ TOBP (PA-1035R) 0.90%, 12/18/03 4,995 4,995 +@ TOBP (PA-1131) 0.99%, 07/07/03 10,000 10,000 +~@ PENNSYLVANIA CONVENTION CENTER AUTHORITY RB TOBP (PT-1224) 0.99%, 07/07/03 3,345 3,345 @ PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCE AUTHORITY + Exempt Facilities RB (AMTRAK Project) Series 2001B 1.00%, 07/07/03 9,900 9,900 Exempt Facilities RB (Merck & Company Project) Series 2000 1.05%, 07/07/03 5,000 5,000 + Exempt Facilities RB (Reliant Energy Seward Project) Series 2001A 1.03%, 07/07/03 7,900 7,900 +@ Exempt Facilities RB (Reliant Energy Seward, LLC Project) Series 2002B 1.15%, 07/07/03 6,000 6,000 RB (Merck & Co., Inc. West Point Project) 1.05%, 07/07/03 11,700 11,700 +@ PENNSYLVANIA ENERGY DEVELOPMENT AUTHORITY RB (B&W Ebensburg Project) 0.98%, 07/07/03 8,100 8,100 PENNSYLVANIA HFA ~@ RB TOB Series1998Y 1.20%, 09/25/03 7,400 7,400 Residential Development Revenue Refunding Bond 1.25%, 07/01/03 1,375 1,375 ~@ S/F Mortgage RB TOBP (PT-278) Series 1999-66A 0.90%, 12/18/03 10,340 10,340
26 See financial notes. SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~@ S/F Mortgage RB TOBP (PT-119A) Series 1997 0.99%, 07/07/03 3,965 3,965 ~@ S/F Mortgage TOBP (P-1055) 1.03%, 07/07/03 3,600 3,600 ~@ TOB (PA-989R) 1.03%, 07/07/03 5,600 5,600 ~@ TOB (Regulation D) Series L10 1.15%, 07/07/03 6,000 6,000 ~ TOB Series 1999U 1.20%, 08/14/03 4,895 4,895 PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY RB (Trustees of University of Pennsylvania) Series B 1.46%, 09/01/03 2,000 2,017 +~@ Student Loan RB Series 2000A 1.05%, 07/07/03 4,200 4,200 +~@ Student Loan RB Series 2001A 1.05%, 07/07/03 7,800 7,800 @ PENNSYLVANIA STATE UNIVERSITY RB Series 2002A 1.00%, 07/07/03 1,300 1,300 +~@ PHILADELPHIA AUTHORITY FOR INDUSTRIAL DEVELOPMENT, PENNSYLVANIA IDRB TOBP (1998PZ) (Philadelphia Airport) Series 1998A 1.68%, 07/10/03 5,000 5,000 + PHILADELPHIA SCHOOL DISTRICT, PENNSYLVANIA Revenue Refunding Bond Series 1999D 0.87%, 03/01/04 1,000 1,028 +~@ SPRING FORD, PENNSYLVANIA AREA SCHOOL DISTRICT TOB Series 247 1.01%, 07/07/03 3,500 3,500 TEMPLE UNIVERSITY OF THE COMMONWEALTH SYSTEM OF HIGHER EDUCATION, PENNSYLVANIA RB (University Funding Obligation) 1.20%, 05/04/04 7,100 7,100 + TRINITY, PENNSYLVANIA AREA SCHOOL DISTRICT Revenue Refunding GO Series 1993A 1.10%, 11/01/03 500 506 +@ WEST CORNWALL TOWNSHIP, PENNSYLVANIA MUNICIPAL AUTHORITY RB (Lebanon Valley Brethren Project) 1.05%, 07/07/03 1,520 1,520 ------- 301,577 PUERTO RICO 4.4% GOVERNMENT DEVELOPMENT BANK OF PUERTO RICO TECP 1.00%, 08/07/03 3,500 3,500 1.00%, 08/15/03 6,500 6,500 0.90%, 09/19/03 4,000 4,000 ------- 14,000
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 27 SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS -------------------------------------------------------------------------------- Investments, at market value $ 315,577 a Cash 45 Interest receivable 792 Prepaid expenses + 19 -------------- TOTAL ASSETS 316,433 LIABILITIES -------------------------------------------------------------------------------- Payables: Dividends to shareholders 58 Investment adviser and administrator fees 4 Transfer agent and shareholder service fees 12 Accrued expenses + 27 -------------- TOTAL LIABILITIES 101 NET ASSETS -------------------------------------------------------------------------------- TOTAL ASSETS 316,433 TOTAL LIABILITIES - 101 -------------- NET ASSETS $ 316,332 NET ASSETS BY SOURCE Capital received from investors 316,332 NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $316,332 316,346 $1.00
a The amortized cost for the fund's securities was $315,577. During the reporting period, the fund had $409,290 in transactions with other SchwabFunds(R). FEDERAL TAX DATA ------------------------------------- COST BASIS OF PORTFOLIO $315,577
See financial notes. 28 SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME -------------------------------------------------------------------------------- Interest $ 1,960 EXPENSES -------------------------------------------------------------------------------- Investment adviser and administrator fees 590 a Transfer agent and shareholder service fees 699 b Trustees' fees 16 c Custodian and portfolio accounting fees 16 Professional fees 11 Registration fees 8 Shareholder reports 7 Other expenses + 7 -------- Total expenses 1,354 Expense reduction - 344 d -------- NET EXPENSES 1,010 INCREASE IN NET ASSETS FROM OPERATIONS -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 1,960 NET EXPENSES - 1,010 -------- NET INVESTMENT INCOME 950 -------- INCREASE IN NET ASSETS FROM OPERATIONS $ 950
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004, to 0.65% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 29 SCHWAB PENNSYLVANIA MUNICIPAL MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS -------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 950 $ 2,481 Net realized gains + -- 27 ------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 950 2,508 DISTRIBUTIONS PAID -------------------------------------------------------------------------------- Dividends from net investment income 950 2,485 TRANSACTIONS IN FUND SHARES a -------------------------------------------------------------------------------- Shares sold 466,220 836,701 Shares reinvested 879 2,427 Shares redeemed + (451,968) (829,555) ------------------------------------- NET TRANSACTIONS IN FUND SHARES 15,131 9,573 NET ASSETS -------------------------------------------------------------------------------- Beginning of period 301,201 291,605 Total increase + 15,131 9,596 b ------------------------------------- END OF PERIOD $ 316,332 $ 301,201
a Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. b Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 30 SCHWAB FLORIDA MUNICIPAL MONEY FUND Financial Statements Schwab Florida Municipal Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 3/18/98 1- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 -------------------------------------------------------------- Income from investment operations: Net investment income 0.00 2 0.01 0.02 0.04 0.03 0.02 -------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 2 (0.01) (0.02) (0.04) (0.03) (0.02) -------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 -------------------------------------------------------------- Total return (%) 0.29 3 0.96 2.32 3.62 2.78 2.37 3 RATIOS/SUPPLEMENTAL DATA (%) ------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.61 4 0.59 0.59 0.59 5 0.59 0.59 4 Ratio of gross operating expenses to average net assets 0.85 4 0.87 0.87 0.88 5 0.92 1.00 4 Ratio of net investment income to average net assets 0.59 4 0.95 2.30 3.56 2.75 2.95 4 Net assets, end of period ($ x 1,000,000) 1,016 1,785 1,518 1,435 1,215 1,016
* Unaudited. 1 Commencement of operations. 2 Per-share amount was less than $0.01. 3 Not annualized. 4 Annualized. 5 The ratios of net and gross operating expenses would have been 0.60% and 0.89%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 31 SCHWAB FLORIDA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($ x 1,000) ($ x 1,000) -------------------------------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 1,055,035 1,055,035 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 1,055,035 1,055,035
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments -------------------------------------------------------------------------------- CALIFORNIA 4.9% + CALIFORNIA HIGHER EDUCATION LOAN AUTHORITY Revenue Refunding Bond (Student Loan) Series 1987C-1 1.65%, 07/01/03 10,000 10,000 ~ CALIFORNIA STATE GO TECP 1.05%, 08/07/03 16,000 16,000 1.10%, 08/07/03 1,000 1,000 1.15%, 08/12/03 25,000 25,000 ----------- 52,000 DISTRICT OF COLUMBIA 1.2% ~ METROPOLITAN WASHINGTON, D.C. AIRPORT AUTHORITY TECP 1.10%, 07/10/03 13,000 13,000 FLORIDA 79.6% +@ ALACHUA COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY RB (Oak Hammock University of Florida Project) Series 2002A 1.00%, 07/01/03 2,400 2,400 +@ BREVARD COUNTY, FLORIDA HFA M/F Housing Revenue Refunding Bond (Shore View Apartment Project) 1.00%, 07/07/03 1,900 1,900 +@ BROWARD COUNTY, FLORIDA EDUCATIONAL FACILITIES AUTHORITY RB (Nova SouthEastern) Series 2000A 1.00%, 07/07/03 5,500 5,500 +@ BROWARD COUNTY, FLORIDA HFA M/F Housing Revenue Refunding Bond (Island Club Apartments Project) Series 2001A 1.08%, 07/07/03 100 100 ~ S/F Mortgage RB TOBP (PT-589) 1.08%, 07/07/03 2,615 2,615 BROWARD COUNTY, FLORIDA SCHOOL DISTRICT Refunding GO 1.10%, 02/15/04 9,625 9,857 +@ CHARLOTTE COUNTY, FLORIDA HFA M/F Housing RB (Murdock Circle Apartments Project) 1.13%, 07/07/03 4,200 4,200 +@ CLAY COUNTY, FLORIDA UTILITY SYSTEM RB Series 2003A 1.00%, 07/07/03 840 840
See financial notes. 32 SCHWAB FLORIDA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ DADE COUNTY, FLORIDA IDRB (Dolphins Stadium Project) Series 1985C 1.00%, 07/07/03 500 500 ~ Water & Sewer Systems RB 0.95%, 07/07/03 600 600 += DADE COUNTY, FLORIDA SCHOOL DISTRICT Refunding GO 0.90%, 07/15/04 15,530 16,194 ~@ ESCAMBIA COUNTY, FLORIDA HFA + S/F Mortgage RB Series 2001C 1.10%, 07/07/03 2,290 2,290 S/F Mortgage RB Series 2002B 1.15%, 09/04/03 2,725 2,725 + S/F Mortgage RB TOB Series 1997A 1.13%, 07/07/03 4,365 4,365 S/F Mortgage RB TOBP (PT-121) 1.08%, 07/07/03 6,100 6,100 + S/F Mortgage RB TOBP (PT-519) 1.08%, 07/07/03 3,135 3,135 +@ EUSTIS, FLORIDA Multi-Purpose RB 1.00%, 07/07/03 1,010 1,010 + FLORIDA CAPITAL PROJECTS FINANCIAL AUTHORITY Airport RB Series 2001I 1.09%, 06/01/04 3,480 3,580 +@ FLORIDA DEVELOPMENT FINANCE CORP. IDRB (Central Farms, Ltd. Project) Series 1999A4 1.10%, 07/07/03 1,180 1,180 IDRB (Pioneer Ram Project) Series 1998A3 1.10%, 07/07/03 1,070 1,070 IDRB (Schmitt Family Project) Series 1999A2 1.10%, 07/07/03 2,125 2,125 IDRB (Sunshine State Project) Series 1999A-3 1.05%, 07/07/03 115 115 IDRB (Vutec Corp. Project) Series 1999A1 1.10%, 07/07/03 1,760 1,760 +@ FLORIDA HOUSING FINANCE CORP. M/F Housing RB 1.09%, 07/07/03 6,100 6,100 M/F Housing RB Series 1983J 0.97%, 07/07/03 3,270 3,270 M/F Housing RB (South Pointe Project) Series 1998J 1.00%, 07/07/03 100 100 M/F RB (Victoria Park Apartments) Series J -1 1.00%, 07/07/03 1,000 1,000 RB (Heron Park Project) Series 1996U 1.04%, 07/07/03 3,605 3,605 RB (Tiffany Club Project) Series 1996P 1.03%, 07/07/03 350 350 RB (Timberline Apartments) Series 1999P 1.00%, 07/07/03 835 835 ~ RB TOB Series 2000J 1.10%, 07/07/03 4,225 4,225 RB TOBP (PT-471) 1.15%, 10/02/03 14,760 14,760 + FLORIDA LOCAL GOVERNMENT FINANCE COMMUNITY TECP 1.10%, 08/05/03 8,855 8,855 1.15%, 08/08/03 2,989 2,989 1.10%, 08/12/03 2,000 2,000 1.10%, 08/15/03 30,615 30,615 FLORIDA STATE BOARD OF EDUCATION +~@ Capital Outlay Public Education GO TOB Series 1998A 1.11%, 07/07/03 11,000 11,000 +~@ Capital Outlay Revenue Refunding Series 2001B TOB 1.05%, 07/07/03 14,100 14,100
See financial notes. 33 SCHWAB FLORIDA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +~@ Capital Outlay TOB Series 137 1.08%, 07/07/03 17,905 17,905 ~@ Capital Outlay TOB Series 233 1.04%, 07/07/03 6,145 6,145 ~@ Capital Outlay TOB Series 286 1.20%, 07/16/03 5,275 5,275 +~@ Capital Outlay TOB Series 1998E 1.05%, 07/07/03 12,280 12,280 ~@ Capital Outlay TOBP (PA-697) 1.15%, 08/14/03 16,015 16,015 ~ Lottery RB Series 2001B 1.44%, 07/01/03 6,030 6,030 + FLORIDA STATE BOARD OF FINANCE DEPARTMENT OF GENERAL SERVICES RB (Environmental Department Preservation 2000 Project) Series 1997A 1.10%, 07/01/03 1,700 1,700 ~@ RB TOB Series 317 1.04%, 07/07/03 23,090 23,090 + FLORIDA STATE CORRECTIONAL PRIVATIZATION COMMISSION COP 1.08%, 08/01/03 1,565 1,569 + FLORIDA STATE EDUCATION SYSTEM University System Improvement Revenue Refunding Bond Series 2003A 0.84%, 07/01/04 5,230 5,394 +@ GAINESVILLE, FLORIDA IDRB (Exactech, Inc. Project) 1.05%, 07/07/03 3,000 3,000 IDRB (Lifesouth Community Blood Centers Project) Series 1999 1.00%, 07/07/03 5,870 5,870 + GREATER ORLANDO, FLORIDA AVIATION AUTHORITY ~@ Airport Facilities Revenue Refunding Bond Series 2002E 1.10%, 07/07/03 100 100 TECP 1.15%, 08/21/03 16,337 16,337 +@ HALIFAX, FLORIDA HOSPITAL MEDICAL CENTER RB (Florida Health Care Plan, Inc. Project) 0.95%, 07/07/03 500 500 + HILLSBOROUGH COUNTY, FLORIDA AVIATION AUTHORITY ~@ RB TOBP (PT-745) 1.11%, 07/07/03 5,495 5,495 TECP 1.10%, 07/24/03 35,000 35,000 1.10%, 08/07/03 4,000 4,000 1.10%, 08/13/03 2,700 2,700 1.00%, 08/26/03 2,000 2,000 + HILLSBOROUGH COUNTY, FLORIDA CAPITAL IMPROVEMENT PROGRAM ~@ RB TOB Series 222 1.04%, 07/07/03 9,230 9,230 TECP 1.12%, 12/18/03 31,148 31,148 1.15%, 12/18/03 9,000 9,000 TECP Series B 1.00%, 08/26/03 7,000 7,000 +@ HILLSBOROUGH COUNTY, FLORIDA EDUCATIONAL FACILITIES AUTHORITY RB (University of Tampa Project) 1.05%, 07/07/03 5,700 5,700 +@ HILLSBOROUGH COUNTY, FLORIDA IDA Educational Facilities RB (Berkeley Preparatory School) 1.00%, 07/07/03 4,785 4,785 RB (Independent Day School Project) 1.05%, 07/07/03 2,000 2,000 +@ JACKSONVILLE, FLORIDA Industrial Development Revenue Refunding Bond (Pavilion Associates, Ltd. Project) 0.95%, 07/07/03 600 600
See financial notes. 34 SCHWAB FLORIDA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ JACKSONVILLE, FLORIDA ECONOMIC DEVELOPMENT COMMISSION Educational Facilities RB (Espisopal High School) 1.00%, 07/07/03 6,000 6,000 RB (Bolles School Project) Series 1999A 1.00%, 07/07/03 830 830 ~ JACKSONVILLE, FLORIDA ELECTRIC AUTHORITY @ RB (Water & Sewer Systems) Series 2000B 0.95%, 07/07/03 150 150 @ RB TOB Series 2000FF 1.08%, 07/07/03 9,955 9,955 @ RB TOB Series 226 1.04%, 07/07/03 5,000 5,000 Water & Sewer TECP 1.05%, 07/02/03 5,600 5,600 1.10%, 07/02/03 45,000 45,000 +@ JACKSONVILLE, FLORIDA HEALTH FACILITIES AUTHORITY Hospital RB Series 2003B 0.95%, 07/01/03 8,500 8,500 Hospital RB Series 2003C 0.95%, 07/01/03 9,500 9,500 RB Revenue Refunding Bond (Genesis Rehabilitation Hospital) 1.00%, 07/01/03 900 900 RB (River Garden Project) Series 1994 1.05%, 07/07/03 3,555 3,555 +~@ JACKSONVILLE, FLORIDA PORT AUTHORITY TOB 1.34%, 07/07/03 10,100 10,100 +@ LAKE SHORE, FLORIDA HOSPITAL AUTHORITY Health Facilities RB (Lakeshore Hospital Project) Series 1991 1.00%, 07/07/03 3,200 3,200 +~@ LEE COUNTY, FLORIDA AIRPORT RB TOB Series 811X 1.09%, 07/07/03 4,958 4,958 +@ LEE COUNTY, FLORIDA IDA Educational Facilities RB (Canterbury School, Inc. Project) 1.00%, 07/07/03 6,000 6,000 Health Care Facilities RB (Cypress Cove Health Park Project) Series 2002B 1.05%, 07/07/03 2,850 2,850 + LEON COUNTY, FLORIDA SCHOOL DISTRICT Sales tax RB 1.05%, 07/01/04 5,590 5,615 +@ MANATEE COUNTY, FLORIDA HFA M/F Housing RB (Centre Court Apartments Project) Series 2000A 1.03%, 07/07/03 3,760 3,760 M/F Housing RB (Sabal Palm Harbor Project) Series 2000A 1.13%, 07/07/03 7,285 7,285 M/F Housing RB (Sabal Palm Harbor Project) Series 2000B 1.13%, 07/07/03 3,920 3,920 M/F Housing Revenue Refunding Bond (Hampton McGuire Project) Series 1989A 1.00%, 07/07/03 3,635 3,635 + MARTIN COUNTY, FLORIDA Refunding GO 0.93%, 02/01/04 1,970 1,982 + MIAMI, FLORIDA Refunding GO 0.83%, 07/01/04 1,760 1,780 +@ MIAMI, FLORIDA HFA RB (Jewish Home for the Aged, Inc. Project) Series 1996 1.00%, 07/07/03 8,300 8,300 +~@ MIAMI-DADE COUNTY, FLORIDA IDRB (Airis Miami LLC Project) Series 1999A 0.95%, 07/07/03 11,200 11,200
See financial notes. 35 SCHWAB FLORIDA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ IDRB (Gulliver Schools Project) Series 2000 1.05%, 07/07/03 3,900 3,900 + MIAMI-DADE COUNTY, FLORIDA AVIATION AUTHORITY TECP 1.05%, 07/02/03 8,066 8,066 1.10%, 07/02/03 2,007 2,007 1.02%, 08/06/03 8,641 8,641 1.10%, 09/03/03 7,500 7,500 1.15%, 09/03/03 7,500 7,500 0.95%, 09/12/03 12,500 12,500 +@ MIAMI-DADE COUNTY, FLORIDA IDA IDRB (Airbus Service Co. Project) Series 1998A 1.15%, 07/07/03 9,040 9,040 IDRB (Arctic Partners, Ltd. Project) 1.10%, 07/07/03 2,440 2,440 IDRB (Badia Spices, Inc. Project) 1.05%, 07/07/03 3,575 3,575 IDRB (Fine Arts Lamps Project) Series 1998 1.05%, 07/07/03 1,800 1,800 RB (Belen Jesuit Preparatory School Project) Series 1999 1.00%, 07/07/03 7,240 7,240 +@ NASSAU COUNTY, FLORIDA Pollution Control RB (Rayonier Project) Series 1999 0.95%, 07/07/03 7,515 7,515 +@ ORANGE COUNTY, FLORIDA HFA M/F Housing RB (Andover Place Apartments) 1.00%, 07/07/03 200 200 M/F Housing RB (Glenn Millenia Project) Series 2001C 1.12%, 07/07/03 3,355 3,355 M/F Housing RB (Smokewood Project) Series 1992A 1.00%, 07/07/03 4,950 4,950 M/F Housing RB Series 2000E (Windsor Pines) 1.13%, 07/07/03 3,200 3,200 RB (Adventist Health Systems) Series 1992B 0.95%, 07/07/03 3,400 3,400 +@ ORANGE COUNTY, FLORIDA IDA IDRB (Central Florida Kidney Centers Project) 1.00%, 07/07/03 5,000 5,000 IDRB (Central Florida YMCA Project) Series 2002A 1.05%, 07/07/03 5,000 5,000 IDRB (Goodwill Industries, Inc. Project) 1.00%, 07/07/03 6,000 6,000 RB (Center For Drug Free Living Project) 1.00%, 07/07/03 9,360 9,360 +@ PALM BEACH COUNTY, FLORIDA IDRB (Palm Beach Day Care School Project) Series 1999 1.00%, 07/07/03 7,000 7,000 IDRB (South Florida Blood Banks Project) 1.00%, 07/07/03 8,940 8,940 RB (Complete Alcohol Rehabilitation Project) 1.00%, 07/07/03 5,300 5,300 RB (Norton Gallery Art School Project) Series 1995 1.00%, 07/07/03 2,500 2,500 RB (Raymond F. Kravis Center Project) 0.85%, 07/07/03 100 100 RB (Zoological Society, Inc. Project) 1.05%, 07/07/03 5,500 5,500 Student Housing Revenue Refunding Bond (Community College Foundation Project) 1.00%, 07/07/03 3,000 3,000 +@ PALM BEACH COUNTY, FLORIDA AIRPORT RB (Galaxy Aviation Project) Series 2000A 1.05%, 07/07/03 6,000 6,000 +~@ PALM BEACH COUNTY, FLORIDA CRIMINAL JUSTICE FACILITIES TOB Series 191 1.45%, 09/10/03 7,495 7,495
See financial notes. 36 SCHWAB FLORIDA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ PALM BEACH COUNTY, FLORIDA EDUCATIONAL FACILITIES AUTHORITY RB (Lynn University Project) 1.00%, 07/07/03 3,590 3,590 + PALM BEACH COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY TECP 1.10%, 07/17/03 10,000 10,000 +@ PALM BEACH COUNTY, FLORIDA HFA M/F Housing RB (Azalea Place Apartments Project) Series 1999A 1.13%, 07/07/03 3,100 3,100 M/F Revenue Refunding Bond (Spinnaker Landing Project) 1.00%, 07/07/03 2,945 2,945 +~@ PALM BEACH COUNTY, FLORIDA SCHOOL BOARD COP Series 2002B 0.90%, 07/07/03 850 850 + PINELLAS COUNTY, FLORIDA Resource Recovery RB 1.20%, 10/01/03 2,850 2,878 @ PINELLAS COUNTY, FLORIDA HFA + M/F Housing RB (Mariners Pointe Apartments) 1.03%, 07/07/03 1,600 1,600 ~ S/F Housing RB TOBP (PT-352) 1.08%, 07/07/03 3,500 3,500 +@ PINELLAS COUNTY, FLORIDA IDA IDRB (H&S Swanson's Tool Co. Project) 1.05%, 07/07/03 3,785 3,785 IDRB (Restorative Care of America Project) 1.15%, 07/07/03 1,745 1,745 +@ POLK COUNTY, FLORIDA IDA IDRB (Juice Bowl Products, Inc. Project) 1.05%, 07/07/03 2,170 2,170 RB (Pavermodule, Inc. Project) 1.05%, 07/07/03 3,310 3,310 + SARASOTA COUNTY, FLORIDA @ RB (Sarasota County Family YMCA Project) 1.00%, 07/07/03 3,005 3,005 Utility Systems Revenue Refunding Bond Series 2002C 1.69%, 10/01/03 2,375 2,383 + SAROSOTA COUNTY, FLORIDA SCHOOL BOARD Refunding COP 0.97%, 07/01/04 7,940 8,020 +@ SEMINOLE COUNTY, FLORIDA IDA IDRB (Amrhein Family Project) 1.05%, 07/07/03 4,560 4,560 +@ SOUTHEAST VOLUSIA, FLORIDA HOSPITAL DISTRICT RB (Bert Fish Medical Center Project) 1.05%, 07/07/03 1,185 1,185 +@ ST. PETERSBURG, FLORIDA Capital Improvement RB (Airport & Golf Course Project) Series 1997C 1.05%, 07/07/03 585 585 Capital Improvement RB (Airport & Golf Course Project) Series B 1.00%, 07/07/03 3,315 3,315 +@ SUMTER COUNTY, FLORIDA IDA RB (Robbins Manufacturing Project) Series 1997 1.15%, 07/07/03 1,500 1,500 +@ TALLAHASSEE & LEON COUNTIES, FLORIDA CIVIC CENTER AUTHORITY Capital Improvement RB Series A 1.00%, 07/07/03 1,290 1,290 +~@ TAMPA BAY, FLORIDA WATER UTILITY SYSTEM RB TOB Series 2001N 1.06%, 07/07/03 5,200 5,200 +@ TAMPA, FLORIDA Education Facilities RB (Pepin Academy of Tampa, Inc.) 1.03%, 07/07/03 4,100 4,100
See financial notes. 37 SCHWAB FLORIDA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ TAMPA, FLORIDA HEALTH CARE FACILITIES RB (Lifelink Foundation Inc., Project) 1.00%, 07/07/03 5,000 5,000 +~@ TAMPA, FLORIDA OCCUPATIONAL LICENSE TAX Revenue Refunding Bond Series 2002C 0.85%, 07/07/03 500 500 +@ TAMPA, FLORIDA REGIONAL WATER SUPPLY AUTHORITY Water Utility System RB 1.05%, 07/07/03 600 600 +@ VOLUSIA COUNTY, FLORIDA HEALTH FACILITIES AUTHORITY RB (South West Volusia Health Project) Series 1994A 1.00%, 07/07/03 2,890 2,890 +@ WEST ORANGE, FLORIDA HEALTHCARE DISTRICT RB Series 1999B 0.90%, 07/07/03 1,100 1,100 ----------- 840,138 GEORGIA 3.3% +~@ ATLANTA, GEORGIA AIRPORT Revenue Refunding Bond Series 2003B-1 1.00%, 07/07/03 26,000 26,000 Revenue Refunding Bond Series 2003C-2 1.00%, 07/07/03 5,000 5,000 +@ PIKE COUNTY, GEORGIA DEVELOPMENT AUTHORITY RB (Southern Mills, Inc. Project) 1.15%, 07/07/03 4,000 4,000 ----------- 35,000 INDIANA 0.5% ~@ INDIANA STATE HFA S/F Mortgage Revenue TOB Series A45 1.13%, 07/07/03 5,185 5,185 KENTUCKY 1.2% ~@ KENTUCKY HOUSING CORP. Revenue TOB Series 1998O 1.65%, 07/10/03 11,995 11,995 MAINE 2.4% = MAINE STATE TAN 0.80%, 06/30/04 25,000 25,235 MASSACHUSETTS 0.5% CLINTON, MASSACHUSETTS BAN 1.20%, 02/06/04 5,000 5,024 MICHIGAN 0.4% +~@ WAYNE CHARTER COUNTY, MICHIGAN AIRPORT RB (Detroit Metropolitan Wayne County Airport Project) Series 2002A 0.98%, 07/07/03 4,500 4,500 NORTH CAROLINA 0.1% ~@ NORTH CAROLINA STATE Revenue Refunding Bond GO Series 2002E 0.95%, 07/07/03 800 800 PENNSYLVANIA 0.9% +~@ DELAWARE VALLEY, PENNSYLVANIA REGIONAL FINANCE AUTHORITY Local Government RB TOBP (PT-1651) 1.04%, 07/07/03 9,870 9,870 SOUTH CAROLINA 0.4% + MYRTLE BEACH, SOUTH CAROLINA Water & Sewer System Revenue Refunding Bond 1.16%, 03/01/04 4,160 4,238 TEXAS 0.7% @ GULF COAST OF TEXAS WASTE DISPOSAL AUTHORITY Environmental Facilities RB (Exxonmobil Project) Series 2001B 0.90%, 07/01/03 7,200 7,200
See financial notes. 38 SCHWAB FLORIDA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) WASHINGTON 2.2% +~@ ENERGY NORTHWEST, WASHINGTON ELECTRIC Putters RB TOB Series 242Z 1.08%, 07/07/03 6,295 6,295 TOBP (PT-615) 1.03%, 07/07/03 10,000 10,000 WASHINGTON PUBLIC POWER SUPPLY SYSTEM Revenue Refunding Bond (Nuclear Project No. 2) Series 1997B 1.12%, 07/01/03 7,000 7,000 ----------- 23,295 WEST VIRGINIA 1.7% +~@ WEST VIRGINIA SCHOOL BUILDING AUTHORITY RB TOBP (PA-914) 0.90%, 12/18/03 17,555 17,555
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 39 SCHWAB FLORIDA MUNICIPAL MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------------- Investments, at market value $ 1,055,035 a Cash 58 Receivables: Interest 2,861 Prepaid expenses + 18 -------------- TOTAL ASSETS 1,057,972 LIABILITIES ------------------------------------------------------------------------------- Payables: Dividends to shareholders 181 Investment adviser and administrator fees 16 Transfer agent and shareholder service fees 37 Investments bought 41,428 Accrued expenses + 56 -------------- TOTAL LIABILITIES 41,718 NET ASSETS ------------------------------------------------------------------------------- TOTAL ASSETS 1,057,972 TOTAL LIABILITIES - 41,718 -------------- NET ASSETS $ 1,016,254 NET ASSETS BY SOURCE Capital received from investors 1,016,339 Net realized capital losses (85) NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $1,016,254 1,016,362 $1.00
a The amortized cost for the fund's securities was $1,055,035. During the reporting period, the fund had $1,178,246 in transactions with other SchwabFunds(R). FEDERAL TAX DATA --------------------------------------------- COST BASIS OF PORTFOLIO $1,055,035 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2008 $ 99 2010 + 31 ------------- $ 130
See financial notes. 40 SCHWAB FLORIDA MUNICIPAL MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ------------------------------------------------------------------------------- Interest $ 6,787 NET REALIZED GAINS AND LOSSES ------------------------------------------------------------------------------- Net realized gains on investments sold 45 EXPENSES ------------------------------------------------------------------------------- Investment adviser and administrator fees 2,130 a Transfer agent and shareholder service fees 2,547 b Trustees' fees 17 c Custodian and portfolio accounting fees 45 Professional fees 11 Registration fees 25 Shareholder reports 14 Other expenses + 6 ----------- Total expenses 4,795 Expense reduction - 1,333 d ----------- NET EXPENSES 3,462 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 6,787 NET EXPENSES - 3,462 ----------- NET INVESTMENT INCOME 3,325 NET REALIZED GAINS + 45 ----------- INCREASE IN NET ASSETS FROM OPERATIONS $3,370
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004, to 0.66% of average daily net assets. Prior to May 1, 2003, this limit was 0.59%. These limits do not include interest, taxes and certain non-routine expenses. See financial notes. 41 SCHWAB FLORIDA MUNICIPAL MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 3,325 $ 8,632 Net realized gains or losses + 45 (31) ------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 3,370 8,601 DISTRIBUTIONS PAID ------------------------------------------------------------------------------- Dividends from net investment income 3,325 8,632
TRANSACTIONS IN FUND SHARES a ------------------------------------------------------------------------------- Shares sold 1,634,595 3,528,005 Shares reinvested 3,040 8,424 Shares redeemed + (2,406,321) (3,269,159) ------------------------------------- NET TRANSACTIONS IN FUND SHARES (768,686) 267,270 NET ASSETS Beginning of period 1,784,895 1,517,656 Total increase or decrease + (768,641) 267,239 b ------------------------------------- END OF PERIOD $ 1,016,254 $ 1,784,895
a Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. b Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 42 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND Financial Statements Schwab Massachusetts Municipal Money Fund FINANCIAL HIGHLIGHTS
5/16/03 1 - 6/30/03 * -------------------------------------------------------------------------------- PER-SHARE DATA ($) -------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 ------------------------------------ Income from investment operations: Net investment income 0.00 2 ------------------------------------ Less distributions: Dividends from net investment income (0.00) 2 ------------------------------------ Net asset value at end of period 1.00 ------------------------------------ Total return (%) 0.06 3 RATIOS/SUPPLEMENTAL DATA (%) -------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.60 4 Ratio of gross operating expenses to average net assets 0.88 4 Ratio of net investment income to average net assets 0.49 4 Net assets, end of period ($ x 1,000,000) 331
* Unaudited. 1 Commencement of operations. 2 Per-share amount is less than $0.01. 3 Not annualized. 4 Annualized. See financial notes. 43 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 330,458 330,458 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 330,458 330,458
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments MASSACHUSETTS 94.5% AYER, MASSACHUSETTS BAN 0.89%, 06/24/04 5,063 5,090 CANTON, MASSACHUSETTS BAN 0.90%, 01/29/04 5,000 5,032 DIGHTON & REHOBOTH, MASSACHUSETTS REGIONAL SCHOOL DISTRICT BAN 1.00%, 06/04/04 5,000 5,023 1.03%, 06/04/04 5,000 5,033 +~@ MASSACHUSETTS BAY TRANSPORTATION AUTHORITY TOBP (PT-1218) 0.96%, 07/07/03 1,000 1,000 +~@ MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC CO. POWER SUPPLY SYSTEM RB TOB Series 674 0.98%, 07/07/03 8,000 8,000 + MASSACHUSETTS PORT AUTHORITY TECP 1.05%, 07/07/03 1,000 1,000 MASSACHUSETTS STATE BAN Series 2001A 1.00%, 09/01/03 3,000 3,015 ~@ Refunding GO Series 2001B 1.10%, 07/07/03 10,000 10,000 ~@ Revenue Refunding Bond Series 2001C 1.10%, 07/07/03 10,800 10,800 +~@ TOB Series 2002C 1.00%, 07/07/03 3,485 3,485 +~@ TOBP (PA-793) 0.96%, 07/07/03 3,000 3,000 +~@ TOBP (PT-789) 0.96%, 07/07/03 12,495 12,495 +@ MASSACHUSETTS STATE DEVELOPMENT FINANCE AGENCY RB (Assumption College) Series 2002A 0.99%, 07/07/03 13,300 13,300 ~ RB (Boston University) Series 2002R-3 1.05%, 07/07/03 7,000 7,000 RB (Dean College Issue) 1.00%, 07/07/03 5,000 5,000 RB (Gordon College) 0.99%, 07/07/03 5,000 5,000 RB (Judge Rotenburg Center) 1.00%, 07/07/03 4,000 4,000 RB (The Rivers School) 1.00%, 07/07/03 5,000 5,000 ~ RB (Wentworth Institute) 1.00%, 07/07/03 9,600 9,600 RB (YOU, Inc.) 1.00%, 07/07/03 5,000 5,000
See financial notes. 44 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + TECP 0.95%, 09/10/03 3,500 3,500 0.95%, 10/08/03 3,000 3,000 @ MASSACHUSETTS STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY +~ RB (Capital Assets Program) Series 1985D 0.90%, 07/07/03 200 200 + RB (Endicott College) Series 1998B 0.95%, 07/07/03 4,000 4,000 +~ RB (Hallmark Health System) Series 1998B 1.00%, 07/07/03 12,625 12,625 RB (Massachusetts Institute of Technology) Series 2001J-1 0.95%, 07/07/03 1,300 1,300 ~ RB (Partners Healthcare Systems) Series 2003D-4 0.90%, 07/07/03 10,000 10,000 RB (Partners Healthcare Systems) Series 2003D-6 0.95%, 07/07/03 300 300 + RB (Sherrill House) Series 2002A-1 0.95%, 07/07/03 10,000 10,000 + RB (The Boston Home, Inc.) Series 2002B 0.99%, 07/07/03 5,000 5,000 RB (Williams College) Series 1993E 0.90%, 07/07/03 9,105 9,105 ~ RB TOB Series 2002D 1.00%, 07/07/03 14,000 14,000 +~@ MASSACHUSETTS STATE HFA RB Series 2003F 0.95%, 07/07/03 6,600 6,600 TOBP (PT-162) 0.96%, 07/07/03 5,000 5,000 @ MASSACHUSETTS STATE INDUSTRIAL FINANCE AGENCY + IDRB (Ark-Les Electronic Products Corp. Project) 1.15%, 07/07/03 2,200 2,200 ~ RB (Whitehead Institute BioMed Research Project) 0.90%, 07/07/03 2,200 2,200 + RB (Williston Northampton Project) Series 1995B 1.00%, 07/07/03 5,000 5,000 + MASSACHUSETTS STATE PORT AUTHORITY Revenue Refunding Bond Series 2003C 1.02%, 07/01/04 2,200 2,221 +~@ MASSACHUSETTS STATE TURNPIKE AUTHORITY TOB (Western Turnpike) Series N 1.00%, 07/07/03 10,000 10,000 ~@ MASSACHUSETTS STATE WATER ABATEMENT TRUST TOB (Merlots) Series 1999N 1.04%, 07/07/03 15,000 15,000 TOBP (PT-1185) 0.96%, 07/07/03 5,000 5,000 + MASSACHUSETTS WATER RESOURCES AUTHORITY TECP 1.10%, 07/07/03 5,000 5,000 0.95%, 08/12/03 10,000 10,000 1.05%, 08/12/03 10,000 10,000 0.95%, 09/04/03 4,000 4,000 PLAINVILLE, MASSACHUSETTS BAN 2003 0.96%, 12/19/03 9,335 9,358 +~@ ROUTE 3 NORTH MASSACHUSETTS TRANSPORTATION IMPROVEMENT ASSOCIATION Lease RB Series 2002B 0.90%, 07/07/03 3,050 3,050 WOBURN, MASSACHUSETTS BAN 2003 0.95%, 06/11/04 10,000 10,075 += WORCHESTER, MASSACHUSETTS REGIONAL TRANSPORTATION AUTHORITY RAN 0.88%, 06/30/04 7,560 7,607 ----------- 312,214
See financial notes. 45 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ----------- ----------- PUERTO RICO 5.5% GOVERNMENT DEVELOPMENT BANK OF PUERTO RICO TECP 1.00%, 08/07/03 3,500 3,500 1.00%, 08/15/03 6,500 6,500 1.00%, 09/04/03 1,619 1,619 0.90%, 09/19/03 4,225 4,225 +~@ PUERTO RICO COMMONWEALTH HIGHWAY & TRANSPORTATION AUTHORITY Highway RB TOB Series II-R-66 1.01%, 07/07/03 2,400 2,400 ----------- 18,244
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 46 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------------ Investments, at market value $330,458 a Cash 199 Receivables: Interest + 623 ------------- TOTAL ASSETS 331,280 LIABILITIES ------------------------------------------------------------------------------ Payables: Dividends to shareholders 53 Investment adviser and administrator fees 3 Transfer agent and shareholder service fees 12 Accrued expenses + 12 ------------- TOTAL LIABILITIES 80 NET ASSETS ------------------------------------------------------------------------------ TOTAL ASSETS 331,280 TOTAL LIABILITIES - 80 ------------- NET ASSETS $ 331,200 NET ASSETS BY SOURCE Capital received from investors 331,200 NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $331,200 331,200 $1.00
a The amortized cost for the fund's securities was $330,458. During the reporting period, the fund had $184,600 in transactions with other SchwabFunds(R). FEDERAL TAX DATA ----------------------------------- COST BASIS OF PORTFOLIO $330,458
See financial notes. 47 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND Statement of OPERATIONS For May 16, 2003 (commencement of operation) through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ------------------------------------------------------------------------------ Interest $465 EXPENSES ------------------------------------------------------------------------------ Investment adviser and administrator fees 162 a Transfer agent and shareholder service fees 192 b Trustees' fees 3 c Custodian and portfolio accounting fees 4 Professional fees 2 Registration fees 6 Shareholder reports 4 Other expenses + 1 --------- Total expenses 374 Expense reduction - 118 d --------- NET EXPENSES 256 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------------ TOTAL INVESTMENT INCOME 465 NET EXPENSES - 256 --------- NET INVESTMENT INCOME 209 --------- INCREASE IN NET ASSETS FROM OPERATIONS $209
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d Includes $115 from the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004, to 0.60% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 48 SCHWAB MASSACHUSETTS MUNICIPAL MONEY FUND Statements of CHANGES IN NET ASSETS For the current report period only; unaudited. Because the fund commenced operations on May 16, 2003, it has no prior report period. All numbers x 1,000. OPERATIONS ------------------------------------------------------------------------------ 5/16/03-6/30/03 Net investment income $ 209 --------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 209 DISTRIBUTIONS PAID ------------------------------------------------------------------------------ Dividends from net investment income 209 TRANSACTIONS IN FUND SHARES a ------------------------------------------------------------------------------ Shares sold 444,597 Shares reinvested 157 Shares redeemed + (113,554) --------------------------------- NET TRANSACTIONS IN FUND SHARES 331,200 SHARES OUTSTANDING AND NET ASSETS ------------------------------------------------------------------------------ Beginning of period -- Total increase + 331,200 b --------------------------------- END OF PERIOD $331,200
a Because all transactions in this section and in "Shares outstanding and net assets" took place at $1.00 a share, figures for share quantities are the same as for dollars. b Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 49 SCHWAB MUNICIPAL MONEY FUNDS Financial Notes unaudited BUSINESS STRUCTURE OF THE FUNDS EACH OF THE FUNDS DISCUSSED IN THIS REPORT IS A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS(TM), A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. The company is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the funds in this report and their trust. THE SCHWAB NEW YORK MUNICIPAL MONEY FUND OFFERS TWO SHARE CLASSES : Sweep Shares and Value Advantage Shares. Shares of each class represent interests in the same portfolio, but each class has different expenses and investment minimums. The Schwab New Jersey, Pennsylvania, Florida Municipal Money and Massachusetts Funds 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 trust may issue as many shares as necessary. FUND OPERATIONS Most of the funds' investments are described in the fund-by-fund sections earlier in this report. However, there are certain other investments and policies that may affect a fund's financials. The most significant of these are described below. Other policies concerning the funds' business operations also are described here. THE FUNDS DECLARE DIVIDENDS EVERY DAY THEY ARE OPEN FOR BUSINESS. These dividends, which are 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. 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. THE FUNDS PAY FEES FOR VARIOUS SERVICES. Through their trust, the funds have agreements with Charles Schwab Investment Management, Inc. (CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent and shareholder services. Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds that may limit the total expenses charged. The rates and limitations for these fees vary from fund to fund, and are described in each fund's Statement of Operations. THE TRUST AND ITS FUNDS This list shows all of the funds included in The Charles Schwab Family of Funds. The funds discussed in this report 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(R) Schwab Municipal Money Fund Schwab California Municipal Money Fund Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) Schwab Government Cash Reserves 50 SCHWAB MUNICIPAL MONEY FUNDS TRUSTEES MAY INCLUDE PEOPLE WHO ARE OFFICERS AND/OR DIRECTORS OF THE INVESTMENT ADVISER OR SCHWAB. Federal securities law limits the percentage of such "interested persons" who may serve on a trust's board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund's Statement of Operations. THE FUNDS MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING AFFILIATES. The funds may make direct transactions with certain other SchwabFunds(R) 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. THE FUNDS INTEND TO MEET FEDERAL INCOME AND EXCISE TAX REQUIREMENTS FOR REGULATED INVESTMENT COMPANIES. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax. UNDER THE FUNDS' ORGANIZATIONAL DOCUMENTS, ITS OFFICERS AND TRUSTEES ARE INDEMNIFIED AGAINST CERTAIN LIABILITY 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. ACCOUNTING POLICIES The following are the main policies the funds use in preparing their financial statements. THE FUNDS VALUE THEIR SECURITIES AT AMORTIZED COST, which approximates market value. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. INTEREST INCOME is recorded as it accrues. If a fund bought a debt instrument at a discount (that is, for less than its 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. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. EXPENSES that are specific to a fund are charged directly to that fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their net assets. FOR FUNDS OFFERING MULTIPLE SHARE CLASSES, all of the realized and unrealized gains or losses and net investment income, other than class specific expenses, are allocated daily to each class in proportion to its net assets. EACH FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, each fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE 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. 51 GLOSSARY Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. 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 Securities that are backed by various assets, which may include loans, accounts receivable or investments of an entity, such as a bank or credit card company. These securities are obligations that the issuer intends to repay using the assets backing them (once collected or liquidated). Therefore, repayment depends largely on the cash flows generated by the assets backing the securities. 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." 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 SECURITY A security that is 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. 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 TOB Tender option bond TOBP Tender option bond partnership TRAN Tax and revenue anticipation note VRD Variable-rate demand
Schwab Municipal Money Funds 52 CREDIT RATINGS Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Moody's Investor Service, Standard & Poor's and Fitch, Inc., 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. 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 Generally, 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, corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, banker's acceptances, notes and time deposits. 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. 144A SECURITY A security exempt from a registration requirement pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, to qualified institutional buyers, as defined in Rule 144A. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. REVENUE ANTICIPATION NOTES Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc. 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 an annual rate and calculated as a percentage of the investment's market value. Schwab Municipal Money Funds 53 NOTES NOTES NOTES CONTACT SCHWAB SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any SchwabFund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments(TM) may not be purchased directly over the Internet. 2 Orders placed in person or through a telephone representative may be subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab Small-Cap Equity Fund(TM) Schwab Hedged Equity Fund(TM) Schwab Dividend Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S. MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and Liquidity.3 Choose from taxable or tax-advantaged alternatives. Many can be linked to your Schwab account to "sweep" cash balances automatically when you're between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments(R). 3 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) 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. (C) 2003 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG13603-06 Schwab California Municipal Money Fund SEMIANNUAL REPORT June 30, 2003 [CHARLES SCHWAB LOGO] In This Report Management's Discussion........................................... 2 Fund yield figures and portfolio statistics, plus a discussion of factors that affected fund performance during the report period. Financial Statements Portfolio holdings and fund financials. Schwab California Municipal Money Fund............................ 6 Sweep Shares: SWCXX Value Advantage Shares: SWKXX Financial Notes................................................... 28 Glossary.......................................................... 30 From the Chairman [PHOTO OF CHARLES R. SCHWAB] Charles R. Schwab Chairman Without question, these are challenging times for America's investors. For money fund shareholders, one of the main concerns has been decline of short-term interest rates, since money fund yields are a reflection of those rates. Given the choice, I'm sure most of us would prefer that yields were higher. At the same time,I believe that a look at the larger picture reveals that the current low interest rate environment has a beneficial side that shouldn't be ignored. For example, Americans have recently had the opportunity to borrow money at the most attractive rates in decades, whether for buying a home, refinancing or realizing a life-long goal like starting a business. More importantly, the Federal Reserve's monetary policy, along with fiscal policies enacted by Congress and the President, should provide a powerful stimulus to economic recovery. That, too, is something that would benefit all Americans. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R), these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles R. Schwab Management's Discussion for the six months ended June 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here, and especially with their dedication to understanding the concerns of investors. That dedication is particularly important right now. Times of uncertainty about world events and the economy -- particularly here in California -- demand diligence from investment professionals. At SchwabFunds, we are keenly aware of this, and continue to work for the best interests of our shareholders. In recent months, money market funds have faced a very challenging environment. With interest rates on short-term investments falling in connection with the Fed's actions, some investors have expressed concerns about the potential for fund yields to fall to zero or even lower. I can assure you that we at SchwabFunds will continue to monitor the yields in all our money market funds. In consultation with fund trustees, we will take appropriate measures to maintain competitive yields. One thing we won't do in pursuit of yields is compromise our high standards for investment credit quality. We'll also continue to follow our time-tested management procedures and controls. In other words, we won't take short cuts that may jeopardize our long-term commitment to our investors. Although there has been uncertainty about California's fiscal health, I have confidence in our portfolio team's ability to manage our funds appropriately. Thank you for choosing SchwabFunds. We're here to help you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab California Municipal Money Fund 2 [PHOTO OF KEVIN SHAUGHNESSY] KEVIN SHAUGHNESSY, a portfolio manager, is responsible for the day-to-day management of the fund. Prior to joining the firm in 2000, he worked for more than ten years in fixed-income portfolio management. The Investment Environment and the Fund THE U.S. ECONOMY REMAINED IN A HOLDING PATTERN DURING THE SIX MONTHS OF THE REPORT PERIOD. Concerned by geopolitical uncertainties, businesses put off making major decisions about capital spending and hiring, even after the major combat phase of the war in Iraq was over. Economic indicators reported during the period were mixed, providing little incentive for businesses to pursue expansion plans. ALREADY AT THEIR LOWEST LEVEL IN DECADES, INTEREST RATES FELL FURTHER AS THE REPORT PERIOD PROGRESSED. During the first months of 2003, a major factor in the decline of rates was anticipation of the war in Iraq. Toward the end of the period, deflation fears came to the forefront, leading to expectations that the Federal Reserve (the Fed) would cut interest rates. These expectations were confirmed on June 25, when the Fed, seeking to provide yet further economic stimulus, cut the Fed funds rate by 0.25%. FALLING INTEREST RATES PUSHED MONEY FUND YIELDS TO NEW LOWS (see page 5 for fund yield information). We sought to lessen the effects of falling rates on the fund by maintaining a comparatively long weighted average maturity. Although the fund's yield did decline, we were successful in slowing that decline, and in keeping the fund's yield higher than it otherwise would have been. STRONG ISSUANCE OF SHORT-TERM MUNI DEBT RELATIVE TO TAXABLE DEBT MADE MUNI YIELDS ATTRACTIVE COMPARED TO TAXABLE YIELDS. Typically, we have seen muni yields average about 80% of taxable yields. During the report period, muni yields at times exceeded 95% of taxable yields (although both were low on an absolute basis). These extremes of valuation allowed us to increase our exposure to high-yielding fixed-rate securities. CALIFORNIA FACED AN UNPRECEDENTED $38 BILLION DEFICIT GOING INTO FISCAL 2004. After a protracted and partisan session, the state legislature adopted a budget in late July, closing the gap through a combination of spending cuts, deferrals and the anticipated sale of $10.7 billion in deficit bonds. The state legislative analyst's office projects a fiscal 2005 deficit of $8 billion, absent further corrective action. During the past two years, the state lost 2% of its jobs (mostly in technology-heavy Northern California). It is uncertain how quickly it may regain these jobs. Schwab California Municipal Money Fund 3 Management's Discussion continued We invested in securities from a diverse range of California issuers, evalu- ating each investment individually and buying only those that met our highest standards for credit quality. Although the state lost a larger percentage of its job base in the recession of the early 1990s, in recent years it had grown more dependent on income taxes. Much of the tax revenue was derived from stock-related income, especially options, which became widely used by the technology and business services industries in the late 1990s. Further, the state increased spending without full regard for the volatility of these revenues. As economic and revenue growth slowed, a politically divided legislature failed to cut spending or raise revenues proportionately, passing deficit budgets and relying on one-time solutions that left the underlying problems largely unaddressed. AFTER THE REPORT PERIOD ENDED, STANDARD & POOR'S AND MOODY'S DOWN-GRADED THEIR CREDIT RATINGS FOR THE STATE. S&P RATED CALIFORNIA BBB, A LOW INVESTMENT-GRADE RATING, and Moody's rated it A3, a mid-level investment-grade rating. Both cited the state's lack of progress in adopting a fiscal 2004 budget and the size of projected future budget gaps. As of the report date, Fitch rated the state A, but both Moody's and Fitch continue to have California on their watch lists for possible further downgrades. Although a budget is now in place for fiscal 2004, the agencies may still adjust their ratings to reflect future shortfall projections and the state's reliance on bond sales to close the gap for fiscal 2004. Although California has experienced fiscal crises before, so far the state has always paid its general obligation debt on time. General and related obligations have a continuing appropriation that requires the state's controller to make cash payments to its bondholders even if the state has not adopted a budget. We also note that the type of direct state securities the fund buys have constitutional priority over most state spending. DURING THE REPORT PERIOD, THE FUND TOOK SEVERAL STEPS TO HELP ENSURE THAT ITS INVESTMENTS WOULD CONTINUE TO BE OF THE HIGHEST CREDIT QUALITY. First, as the budget crisis deepened, we reduced our holdings of direct state obligations and increased our holdings of other municipal issuers within the state, such as cities, universities, counties and school districts. In addition, we favored securities whose credit was enhanced by highly rated banks and insurance companies. As of the report date, approximately 70% of the portfolio carried these credit enhancements, including many of our direct state holdings. The views expressed here are those of fund management only. 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 4 Performance and Fund Facts as of 6/30/03 SEVEN-DAY YIELDS The seven-day yields are calculated using standard SEC formulas. The effective yields include the effect of reinvesting daily dividends. Please remember that money market fund yields fluctuate, and that past performance is not an indication of future results.
VALUE ADVANTAGE SWEEP SHARES SHARES ----------------------------------------------------------------- SEVEN-DAY YIELD 1 0.44% 0.64% ----------------------------------------------------------------- SEVEN-DAY EFFECTIVE YIELD 0.44% 0.64% ----------------------------------------------------------------- SEVEN-DAY TAXABLE-EQUIVALENT 0.75% 1.09% EFFECTIVE YIELD 2 -----------------------------------------------------------------
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 61 days ----------------------------------------------------------------- CREDIT QUALITY OF HOLDINGS 3 % of portfolio 100% Tier 1 ----------------------------------------------------------------- CREDIT-ENHANCED SECURITIES % of portfolio 70% -----------------------------------------------------------------
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 $1 per share, it is possible to lose money by investing in a money fund. 1 A portion of the fund's expenses was reduced during the reporting period. Without this reduction, the seven-day yields for the fund's Sweep Shares and Value Advantage Shares would have been 0.27% and 0.50%, respectively. 2 Taxable-equivalent effective yield assumes a 2003 maximum combined federal regular income and California state personal income tax rate of 41.05%. 3 Portfolio holdings may have changed since the report date. Schwab California Municipal Money Fund 5 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND Financial Statements Schwab California Municipal Money Fund FINANCIAL HIGHLIGHTS
1/1/03 - 1/1/02 - 1/1/01 - 1/1/00 - 1/1/99 - 1/1/98 - SWEEP SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ----------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ----------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.02 0.03 0.02 0.03 ------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.02) (0.03) (0.02) (0.03) ------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------- Total return (%) 0.28 2 0.83 1.99 3.02 2.42 2.64 RATIOS/SUPPLEMENTAL DATA (%) ----------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.65 3 0.65 0.65 0.65 4 0.65 0.65 Ratio of gross operating expenses to average net assets 0.82 3 0.82 0.82 0.83 4 0.85 0.89 Ratio of net investment income to average net assets 0.56 3 0.83 1.98 2.98 2.41 2.60 Net assets, end of period ($ x 1,000,000) 4,058 4,056 3,897 3,923 3,457 2,611
1/1/03 - 1/1/02 - 1/1/01 - 1/1/00 - 1/1/99 - 1/1/98 - VALUE ADVANTAGE SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ----------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ----------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.02 0.03 0.03 0.03 ------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.02) (0.03) (0.03) (0.03) ------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------- Total return (%) 0.38 2 1.03 2.19 3.22 2.62 2.84 RATIOS/SUPPLEMENTAL DATA (%) ----------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.45 3 0.45 0.45 0.45 5 0.45 0.45 Ratio of gross operating expenses to average net assets 0.59 3 0.59 0.61 0.62 5 0.65 0.70 Ratio of net investment income to average net assets 0.76 3 1.03 2.11 3.20 2.60 2.79 Net assets, end of period ($ x 1,000,000) 3,305 3,081 2,563 2,170 1,604 1,359
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.66% and 0.84%, respectively, if certain non-routine expenses (proxy fees) had been included. 5 The ratios of net and gross operating expenses would have been 0.46% and 0.63%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 6 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: + Credit-enhanced security ~ Liquidity-enhanced security @ Variable-rate security = Delayed delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase. For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 100.0% MUNICIPAL SECURITIES 7,797,585 7,797,585 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 7,797,585 7,797,585
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) MUNICIPAL SECURITIES 100.0% of investments -------------------------------------------------------------------------- CALIFORNIA 97.4% +@ ABAG FINANCING AUTHORITY FOR NON-PROFIT CORPORATIONS, CALIFORNIA COP (Harker School Project) 1.00%, 07/07/03 4,700 4,700 ~ COP (Lucile Salter Packard Project) 0.95%, 07/07/03 4,600 4,600 M/F Housing RB (Artech Building Project) 0.95%, 07/07/03 3,200 3,200 M/F Housing RB (Crossing Apartments) Series 2002A 0.92%, 07/07/03 55,700 55,700 M/F Housing RB (Miramar Apartments) 0.92%, 07/07/03 30,000 30,000 M/F Housing RB (Mountain View Apartments) Series 1997A 1.15%, 07/07/03 6,325 6,325 ~ Munitops RB TOB Series 2002A 1.25%, 07/07/03 9,995 9,995 ~ RB (Lease Pass Thru Obligations) Series 2003A 1.05%, 07/07/03 8,000 8,000 RB (Public Policy Institute of California Project) Series 2002A 1.00%, 07/07/03 9,000 9,000 Revenue Refunding Bond (Valley Christian Schools) 1.05%, 07/07/03 17,000 17,000 +@ ALAMEDA COUNTY, CALIFORNIA IDRB (Aitchison Family Project) Series 1993A 1.05%, 07/07/03 2,640 2,640 IDRB (JMS Family Partners) Series A 1.05%, 07/07/03 1,000 1,000 IDRB (Malmberg Engineering, Inc. Project) Series 1999A 1.00%, 07/07/03 2,520 2,520 IDRB (Scientific Technology Project) Series 1994A 1.10%, 07/07/03 2,300 2,300 +~@ ANAHEIM, CALIFORNIA COP (1993 Refunding Project) 0.85%, 07/07/03 10,215 10,215 COP (Police Facility Financing Project) 0.85%, 07/07/03 2,200 2,200 +@ ANAHEIM, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Casa Grande Apartments) Series 1997A 0.90%, 07/07/03 3,695 3,695
See financial notes. 7 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
PORTFOLIO HOLDINGS continued ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) M/F Housing RB (Park Vista Apartments) 1.00%, 07/07/03 21,000 21,000 M/F Housing RB (Port Trinidad Apartments) Series 1997C 0.90%, 07/07/03 2,040 2,040 M/F Housing RB (Sage Park Project) Series A 0.92%, 07/07/03 5,500 5,500 +~@ ANAHEIM, CALIFORNIA UNION HIGH SCHOOL DISTRICT COP 0.90%, 07/07/03 5,500 5,500 +~@ BAY AREA, CALIFORNIA TOLL BRIDGE AUTHORITY RB (San Francisco Bay Area Project) Series 2001A 1.05%, 07/07/03 6,700 6,700 RB (San Francisco Bay Area Project) Series 2001C 0.90%, 07/07/03 34,050 34,050 = RB (San Francisco Bay Area Project) Series 2003C 0.90%, 07/07/03 33,300 33,300 Toll Bridge RB TOB Series 2001Q 1.00%, 07/07/03 10,125 10,125 +~@ BIG BEAR LAKE, CALIFORNIA Water RB TOBP (PA-597) 1.15%, 10/09/03 8,445 8,445 +@ BURBANK, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing RB 1.00%, 07/07/03 14,060 14,060 @ CALIFORNIA ALTERNATIVE ENERGY SOURCE FINANCING AUTHORITY RB (GE Capital Corp. Arroyo Project) Series 1993B 1.00%, 07/07/03 13,360 13,360 RB (GE Capital Corp. Arroyo Project) Series A 0.90%, 07/07/03 25,330 25,330 CALIFORNIA EDUCATION FACILITIES AUTHORITY +@ RB (Chapman University) 1.10%, 07/07/03 4,800 4,800 +@ RB (San Francisco Conservatory) 0.95%, 07/07/03 2,830 2,830 ~+@ RB (St Mary's College Project) Series B 0.95%, 07/07/03 8,150 8,150 +@ RB (University of Judaism Project) Series A 1.05%, 07/07/03 5,400 5,400 +@ RB (University of San Francisco) 1.00%, 07/07/03 57,000 57,000 +~@ RB TOB Series 413 0.98%, 07/07/03 8,995 8,995 TECP (Stanford Project) 0.90%, 09/12/03 5,000 5,000 +@ CALIFORNIA HEALTH FACILITIES FINANCING AUTHORITY ~= RB (California Prebyterian Homes) Series 1998 0.98%, 07/07/03 29,900 29,900 ~ RB (Catholic Health Care) Series A 1.00%, 07/07/03 9,300 9,300 RB (Scripps Memorial Hospital) Series A 0.95%, 07/07/03 13,800 13,800 ~ TOB Putters Series 181 1.00%, 07/07/03 9,995 9,995 ~@ CALIFORNIA HFA + Home Mortgage RB Series 1999J-2 1.00%, 07/07/03 12,855 12,855 + Home Mortgage RB Series 2002B 1.15%, 07/01/03 22,500 22,500 + Home Mortgage RB Series 2002F 0.95%, 07/01/03 17,000 17,000 + Home Mortgage RB Series N 0.95%, 07/01/03 19,385 19,385 M/F Housing RB Series 2001G 1.05%, 07/07/03 66,695 66,695 M/F Housing RB Series 2002A 1.00%, 07/07/03 26,175 26,175 M/F Housing RB Series 2002E 1.00%, 07/07/03 71,055 71,055 + RB Series 2002P 1.05%, 07/07/03 61,000 61,000
See financial notes. 8 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + RB Series 2003D 0.93%, 07/07/03 25,000 25,000 + RB Series 2003D 0.93%, 07/07/03 25,000 25,000 + RB TOBP (PT-651A) 1.12%, 07/07/03 40,445 40,445 Revenue TOB Series 1998E 1.01%, 07/07/03 5,210 5,210 + Revenue TOB Series 1998R 1.50%, 08/28/03 9,995 9,995 CALIFORNIA INFRASTRUCTURE & ECONOMIC DEVELOPMENT BANK +@ IDRB (American Derosa-Lamparts) 1.10%, 07/07/03 4,950 4,950 +@ IDRB (Fairmont Sign Co. Project) Series 2000A 1.20%, 07/07/03 4,250 4,250 +~@ IDRB (Independent System Operation Corporation Project) Series A 1.05%, 07/07/03 11,600 11,600 +@ IDRB (Lafayette Textile Industries Project) 1.10%, 07/07/03 1,745 1,745 +@ IDRB (Nelson Name Plate Co. Project) 1.10%, 07/07/03 3,450 3,450 +@ IDRB (Roller Bearing Co. of America Santa Ana Project) 1.10%, 07/07/03 2,400 2,400 +@ RB (Buck Institute) 0.90%, 07/07/03 40,100 40,100 @ RB (J.P. Getty Trust) Series 2003B 1.00%, 07/01/03 20,000 20,000 @ RB (J.P. Getty Trust) Series 2003C 1.00%, 07/01/03 20,000 20,000 TECP (J.P. Getty Trust Project) 1.00%, 07/08/03 2,550 2,550 @ CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY + RB (Borax, Inc. Project) Series A 0.95%, 07/07/03 10,200 10,200 + RB (Green Team of San Jose Project) Series 1997A 1.05%, 07/07/03 1,100 1,100 + RB (Wadham Energy Project) Series 1987B 1.00%, 07/07/03 4,000 4,000 + Resource Recovery RB (Sanger Project) Series 1990A 1.00%, 07/07/03 19,200 19,200 + Resource Recovery Solid Waste Disposal RB (Atlas Disposal Industrial Project) Series 1999A 1.10%, 07/07/03 3,000 3,000 + Solid Waste Disposal RB (Alameda County, Industries Project) Series 2000A 1.05%, 07/07/03 4,075 4,075 + Solid Waste Disposal RB (Athens Disposal Co. Project) Series 1995A 1.05%, 07/07/03 13,020 13,020 + Solid Waste Disposal RB (Athens Disposal Co. Project) Series 1999A 1.05%, 07/07/03 7,000 7,000 + Solid Waste Disposal RB (Athens Services Project) Series 2001A 1.05%, 07/07/03 4,500 4,500 + Solid Waste Disposal RB (BLT Enterprises) Series 1999A 1.05%, 07/07/03 7,330 7,330 + Solid Waste Disposal RB (Blue Line Transfer, Inc. Project) Series 2001A 1.05%, 07/07/03 4,800 4,800 + Solid Waste Disposal RB (Blue Line Transfer, Inc. Project) 1.05%, 07/07/03 4,700 4,700 + Solid Waste Disposal RB (Burrtec Waste Industries Project) Series 1998A 1.55%, 07/07/03 1,270 1,270 + Solid Waste Disposal RB (CR & R, Inc. Project) Series A 1.15%, 07/07/03 3,900 3,900
See financial notes. 9 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
PORTFOLIO HOLDINGS continued ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + Solid Waste Disposal RB (California Waste Solutions Project) Series 2002A 1.05%, 07/07/03 3,760 3,760 + Solid Waste Disposal RB (Calsan, Inc. Project) Series 1999B 1.05%, 07/07/03 3,305 3,305 + Solid Waste Disposal RB (Cheese & Protein International Project) Series 2001A 1.00%, 07/07/03 10,000 10,000 + Solid Waste Disposal RB (Cold Cyn Landfill Project) 1.10%, 07/07/03 5,845 5,845 + Solid Waste Disposal RB (Colmac Energy Project) Series 1990A 0.90%, 07/07/03 7,320 7,320 + Solid Waste Disposal RB (Contra Costa Services) Series 1995A 1.05%, 07/07/03 2,600 2,600 + Solid Waste Disposal RB (Edco Disposal Corp. Project) Series 1996A 1.05%, 07/07/03 15,720 15,720 + Solid Waste Disposal RB (Federal Disposal Service Project) Series 2001A 1.15%, 07/07/03 2,800 2,800 + Solid Waste Disposal RB (Greenteam of San Jose Project) Series 2001A 1.05%, 07/07/03 5,000 5,000 + Solid Waste Disposal RB (Greenwaste of Tehama Project) Series 1999A 1.15%, 07/07/03 2,535 2,535 + Solid Waste Disposal RB (Madera Disposable Project) Series 1998A 1.10%, 07/07/03 1,800 1,800 + Solid Waste Disposal RB (Marborg Industries Project) Series 2002A 1.05%, 07/07/03 4,830 4,830 + Solid Waste Disposal RB (Orange Avenue) Series 2002A 1.05%, 07/07/03 6,250 6,250 + Solid Waste Disposal RB (Met Recycling Corporation Project) Series B 1.15%, 07/07/03 4,160 4,160 + Solid Waste Disposal RB (Mottra Corp. Project) Series 2002A 1.05%, 07/07/03 2,625 2,625 + Solid Waste Disposal RB (NorCal Waste System, Inc. Project) Series 2002A 1.10%, 07/07/03 6,000 6,000 + Solid Waste Disposal RB (Norcal Waste System, Inc. Project) Series 2001A 1.10%, 07/07/03 8,740 8,740 + Solid Waste Disposal RB (Ratto Group Co., Inc. Project) Series 2001A 1.05%, 07/07/03 4,610 4,610 + Solid Waste Disposal RB (Sanco Services LP Project) Series 2002A 1.55%, 07/07/03 4,000 4,000 + Solid Waste Disposal RB (Santa Clara Project) Series 1998A 1.15%, 07/07/03 3,100 3,100 + Solid Waste Disposal RB (Santa Clara Valley Project) Series 2001A 1.05%, 07/07/03 7,075 7,075 Solid Waste Disposal RB (Shell Martinez Refining Project) Series 1996A 0.95%, 07/07/03 18,300 18,300 + Solid Waste Disposal RB (Solag Disposal Project) Series 1997A 1.15%, 07/07/03 2,670 2,670 + Solid Waste Disposal RB (Specialty Solid Waste Project) Series 2001A 1.15%, 07/07/03 3,945 3,945
See financial notes. 10 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + Solid Waste Disposal RB (Talco Plastics Project) Series 1997A 1.10%, 07/07/03 3,925 3,925 + Solid Waste Disposal RB (Tri-Ced Community Recycle Project) 1.10%, 07/07/03 1,920 1,920 + Solid Waste Disposal RB (Waste Management Project) Series 2002A 0.96%, 07/07/03 16,000 16,000 + Solid Waste Disposal RB (Waste Management, Inc. Project) Series 2001A 1.05Su%, 07/07/03 5,000 5,000 + Solid Waste Disposal RB (West Valley Project) Series 1997A 1.10%, 07/07/03 4,560 4,560 + Solid Waste Disposal RB (Zanker Road Landfill Project) Series C 1.15%, 07/07/03 6,370 6,370 + Solid Waste Disposal RB (Burtec Waste Industries) Series 1997B 1.55%, 07/07/03 3,615 3,615 + Solid Waste Disposal RB (Escondido Disposal) Series 1998A 1.55%, 07/07/03 7,845 7,845 + Solid Waste Disposal RB (Browning Ferris Industries) Series 1997A 1.00%, 07/07/03 10,000 10,000 + CALIFORNIA SCHOOL CASH RESERVE PROGRAM AUTHORITY RB Series 2002A 1.46%, 07/03/03 10,020 10,020 1.67%, 07/03/03 100,000 100,007 = RB Series 2003A 0.90%, 07/06/04 150,000 151,651 +@ CALIFORNIA SCHOOL FACILITIES FINANCING CORP. (VALLEJO USD) COP (Capital Improvement Financing Projects) Series 1999E 0.95%, 07/07/03 5,545 5,545 CALIFORNIA STATE +~@ Eagle TOB Series 1997C 1.01%, 07/07/03 10,900 10,900 +~@ Eagle TOB Series 2000 1.01%, 07/07/03 15,580 15,580 1.03%, 07/07/03 9,900 9,900 +~@ Eagle TOB Series 2000 1.01%, 07/07/03 13,675 13,675 1.03%, 07/07/03 30,540 30,540 +~@ GO TOB Series ROC, 2001I-2 1.01%, 07/07/03 17,840 17,840 +@ GO Series 2003B-4 1.00%, 07/07/03 13,800 13,800 +@ GO Series 2003C-1 1.00%, 07/07/03 17,000 17,000 +@ GO Series 2003C-2 0.90%, 07/07/03 5,000 5,000 +@ GO Series 2003C-3 0.95%, 07/07/03 5,000 5,000 +@ GO Series 2003C-4 1.00%, 07/07/03 10,000 10,000 +~@ GO TOB Series 779 1.03%, 07/07/03 11,195 11,195 ~ GO TECP 1.18%, 07/07/03 47,000 47,000 1.18%, 07/08/03 32,000 32,000 1.20%, 07/09/03 172,000 172,000 1.00%, 08/05/03 24,500 24,500 1.05%, 08/06/03 78,000 78,000 1.05%, 08/07/03 38,500 38,500 1.15%, 08/07/03 31,000 31,000 1.10%, 08/12/03 18,500 18,500 1.15%, 08/12/03 92,000 92,000 +~@ GO TOB Series 195 1.03%, 07/07/03 10,835 10,835 +~@ GO TOBP (PA-676R) 1.60%, 04/08/04 26,125 26,125 +~@ GO TOBP (PA-815R) 1.04%, 07/07/03 13,835 13,835 +~@ GO TOBP (PT-1236) 1.03%, 07/07/03 23,405 23,405 +~@ GO TOBP (PT-1257) 1.03%, 07/07/03 29,495 29,495 ~ Revenue Anticipation Warrant Series A 1.12%, 06/16/04 100,000 100,855 1.07%, 06/16/04 75,000 75,663
See financial notes. 11 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
PORTFOLIO HOLDINGS continued ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) ~ Revenue Anticipation Warrant Series B 1.11%, 06/16/04 205,000 205,000 1.12%, 06/16/04 112,500 113,441 +~@ GO TOB Putters Series 132 1.00%, 07/07/03 94,950 94,950 +@ CALIFORNIA STATE DEPARTMENT OF WATER RESOURCES Power Supply RB Series 2002B-2 1.10%, 07/01/03 83,800 83,800 Power Supply RB Series 2002B-3 0.95%, 07/01/03 17,500 17,500 Power Supply RB Series 2002C-1 1.05%, 07/07/03 13,300 13,300 Power Supply RB Series 2002C-10 0.94%, 07/07/03 44,440 44,440 Power Supply RB Series 2002C-14 1.00%, 07/07/03 31,000 31,000 ~ Power Supply RB TOB (Regulation D) Series L-12 1.10%, 11/19/03 15,000 15,000 ~ Power Supply RB TOB (Regulation D) Series L-13 1.10%, 11/19/03 7,500 7,500 ~ Power Supply RB TOB (Regulation D) Series L-14 1.10%, 11/19/03 12,500 12,500 ~ Power Supply RB TOB (Regulation D) Series L11 1.10%, 11/19/03 33,325 33,325 Power Supply RB Series 2002B-1 1.00%, 07/01/03 59,940 59,940 ~ Power Supply RB Series 2002C-7 1.00%, 07/07/03 37,000 37,000 ~ Power Supply RB TOBP (PA-1100) 1.01%, 07/07/03 19,995 19,995 ~ Power Supply RB TOBP (PA-1120R) 1.01%, 07/07/03 12,835 12,835 ~ Power Supply RB TOBP (PT-730) 1.01%, 07/07/03 34,740 34,740 +@ CALIFORNIA STATE ECONOMIC DEVELOPMENT FINANCING AUTHORITY IDRB (Calco Project) 1.05%, 07/07/03 565 565 IDRB (Gaiser Tool Project) 1.05%, 07/07/03 2,120 2,120 IDRB (Mercury Air Group) 1.00%, 07/07/03 14,000 14,000 RB (Costa Macoroni Project) 1.05%, 07/07/03 2,945 2,945 RB (Lion Raisin Project) 1.00%, 07/07/03 1,350 1,350 +~@ CALIFORNIA STATE PUBLIC WORKS BOARD Lease Revenue TOB Putters Series 209 1.00%, 07/07/03 9,995 9,995 Lease Revenue TOB Series 1999F 1.03%, 07/07/03 9,985 9,985 Lease Revenue TOB Series 2000D 1.01%, 07/07/03 3,000 3,000 + CALIFORNIA STATE UNIVERSITY INSTITUTE TECP 1.05%, 07/11/03 5,400 5,400 @ CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY + COP (SVDP Management) Series 1998 0.95%, 07/07/03 7,485 7,485 +~ COP TOB Series 1999E 1.03%, 07/07/03 5,000 5,000 + IDRB (13th I Associates Project) 1.80%, 07/07/03 4,400 4,400 + IDRB (Cowden Metal Stamping Project) 1.80%, 07/07/03 1,430 1,430
See financial notes. 12 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + IDRB (Drip In Irrigation Co. Project) 1.10%, 07/07/03 3,600 3,600 + IDRB (Biocol Investments, LP) Series 1997B 1.80%, 07/07/03 1,500 1,500 + IDRB (Golden Valley Project) Series A 1.10%, 07/07/03 1,050 1,050 + IDRB (Integrated Rolling Co. Project) Series 1999A 1.10%, 07/07/03 2,200 2,200 + IDRB (The Diamond Foods Project) Series 1991 1.80%, 07/07/03 790 790 + IDRB Series (RL Group) 1998C 1.10%, 07/07/03 1,715 1,715 +~ Insured RB (Fremont Rideout Project) Series 2001A 0.95%, 07/01/03 31,655 31,655 + M/F Housing RB (Cypress Villa Apartments) Series F 0.90%, 07/07/03 4,725 4,725 + M/F Housing RB (Emerald Gardens Apartments) Series E 0.90%, 07/07/03 7,320 7,320 + M/F Housing RB (Kimberly Woods Project) Series 1995B 1.00%, 07/07/03 13,400 13,400 + M/F Housing RB (Laurel Park Senior Apartments Project) Series 2003H 0.95%, 07/07/03 5,500 5,500 + M/F Housing RB (Los Padres Apartments) Series 2003E 0.92%, 07/07/03 10,250 10,250 + M/F Housing RB (Oakmont Concord Project) Series Q 1.10%, 07/07/03 25,000 25,000 + M/F Housing RB (Park David Senior Apartments Project) Series 1999D 0.95%, 07/07/03 8,220 8,220 + M/F Housing RB (Plaza Club Apartments) Series 1997A 1.00%, 07/07/03 10,290 10,290 + RB (Biola University Project) Series 2002B 0.95%, 07/07/03 22,900 22,900 + RB (Dr. Nichols Pistachio) Series C 1.05%, 07/07/03 600 600 + RB (Elder Care Alliance) 1.00%, 07/07/03 12,760 12,760 +~ RB (Gemological Institute Project) 0.90%, 07/07/03 34,790 34,790 + RB (Japanese American Museum Project) Series 2000A 1.00%, 07/07/03 4,800 4,800 + RB (Jewish Federation of Los Angeles) Series 2000A 1.05%, 07/07/03 7,400 7,400 RB (Kaiser Permanente) Series 2001A 1.38%, 07/01/03 19,000 19,000 RB (Kaiser Permanente) Series 2002B 1.05%, 07/07/03 17,000 17,000 + RB (Masters College Project) 0.95%, 07/07/03 11,250 11,250 + RB (National Public Radio Project) 1.00%, 07/07/03 7,800 7,800 + RB (Valley Palms Apartments Project) 0.90%, 07/07/03 12,000 12,000 + RB (Woodsong Apartments) Series 1997B 0.90%, 07/07/03 3,327 3,327 +@ CARLSBAD, CALIFORNIA M/F Housing Revenue Refunding Bond COP (La Costa Apartment Project) Series 1993A 0.95%, 07/07/03 14,400 14,400 +@ CONCORD, CALIFORNIA M/F Housing Mortgage RB (Bel Air Apartments Project) Series 1986A 1.00%, 07/07/03 3,000 3,000 +@ CONTRA COSTA COUNTY, CALIFORNIA M/F Housing Mortgage RB (El Cerrito Project) Series A 1.00%, 07/07/03 2,480 2,480
See financial notes. 13 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
PORTFOLIO HOLDINGS continued ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) CONTRA COSTA COUNTY, CALIFORNIA BOARD OF EDUCATION TRAN 1.66%, 07/01/03 26,700 26,700 +@ DAVIS, CALIFORNIA COMMUNITY FACILITIES DISTRICT Special Tax Bond (East Davis Mace Ranch Project) District No. 1999-2 1.00%, 07/07/03 3,200 3,200 = DESERT SANDS, CALIFORNIA UNIFIED SCHOOL DISTRICT BAN 0.82%, 06/30/04 52,200 52,681 +@ DIAMOND BAR, CALIFORNIA PUBLIC FINANCING AUTHORITY Lease RB (Community Senior Center Project) Series 2002A 1.05%, 07/07/03 9,755 9,755 +@ DUBLIN, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Park Siera Project) Series A 0.95%, 07/07/03 12,700 12,700 +~@ DUBLIN SAN RAMON, CALIFORNIA SERVICES DISTRICT COP 0.95%, 07/07/03 15,400 15,400 ~ EAST BAY, CALIFORNIA MUNICIPAL UTILITIES DISTRICT TECP 1.00%, 07/23/03 12,000 12,000 1.05%, 08/07/03 9,500 9,500 1.00%, 08/12/03 14,800 14,800 1.00%, 08/13/03 31,300 31,300 1.00%, 08/14/03 7,000 7,000 0.90%, 09/10/03 13,800 13,800 +@ Water System Revenue Refunding Bond Subseries 2002A 0.85%, 07/07/03 14,800 14,800 +@ Water System Revenue Refunding Bond Subseries 2003B 0.85%, 07/07/03 20,000 20,000 +@ Water System Subordinated RB Series 2002B 0.85%, 07/07/03 9,900 9,900 +@ EL CAJON, CALIFORNIA M/F Housing RB (Pinewood Apartments Project) 1.00%, 07/07/03 1,450 1,450 Redevelopment Bond M/F Housing RB (Mollison & Madison Project) 1.00%, 07/07/03 5,000 5,000 +~@ EL CAMINO, CALIFORNIA COMMUNITY COLLEGE DISTRICT TOB (Election of 2002) Series 2003-12 1.11%, 11/26/03 16,100 16,100 +@ EMERYVILLE, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing RB (Baystreet Apartments) 1.00%, 07/07/03 33,215 33,215 ~@ FOOTHILL-DE ANZA, CALIFORNIA COMMUNITY COLLEGE DISTRICT Merlot TOB Series 2000YY 1.03%, 07/07/03 9,990 9,990 = FRESNO COUNTY, CALIFORNIA TRAN 0.90%, 06/30/04 57,000 57,620 +@ FRESNO, CALIFORNIA IDA RB (Keiser Corp.) 1.10%, 07/07/03 1,815 1,815 +@ GOLDEN EMPIRE SCHOOLS FINANCING AUTHORITY OF CALIFORNIA Lease RB (Kern High School District Project) 1.00%, 07/07/03 10,600 10,600 ~ GOLDEN GATE BRIDGE HIGHWAY & TRANSPORTATION DISTRICT OF CALIFORNIA TECP 1.00%, 09/04/03 19,700 19,700 +@ HAYWARD, CALIFORNIA HOUSING AUTHORITY ~ M/F Housing RB (Shorewood Apartment Project) Series A 0.85%, 07/07/03 19,700 19,700
See financial notes. 14 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) M/F Housing Revenue Refunding Bond (Huntwood Terrace Apartments) 0.98%, 07/07/03 5,465 5,465 +@ HERCULES, CALIFORNIA PUBLIC FINANCING AUTHORITY Lease RB Series 2003A 1.00%, 07/07/03 7,000 7,000 +@ HERCULES, CALIFORNIA REDEVELOPMENT AGENCY IDRB (Pro Media Project) Series 2000A 1.00%, 07/07/03 2,500 2,500 +@ HUNTINGTON BEACH, CALIFORNIA M/F Housing RB (Five Points Project) 1.00%, 07/07/03 9,500 9,500 +@ HUNTINGTON PARK, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing RB (Casa Rita Apartments) Series 1994A 1.00%, 07/07/03 4,100 4,100 +~@ INDIAN WELLS, CALIFORNIA REDEVELOPMENT AGENCY Special Tax TOB Series R-230 1.01%, 07/07/03 4,520 4,520 +@ IRVINE, CALIFORNIA Assessment District No. 97-16 0.85%, 07/01/03 1,400 1,400 RB (Assessment District No. 00-18) Series 2001A 0.85%, 07/01/03 2,500 2,500 RB (Assessment District No. 87-8) 0.85%, 07/01/03 15,380 15,380 Special Assessment Bond (Assessment District No. 93-14 0.90%, 07/01/03 2,500 2,500 +@ IRVINE RANCH, CALIFORNIA WATER DISTRICT COP (Capital Improvement Project) 0.90%, 07/01/03 1,000 1,000 Consolidated RB Series 1985 0.85%, 07/01/03 3,600 3,600 KERN COUNTY, CALIFORNIA +@ COP (Kern Public Facilities Project) Series A 0.95%, 07/07/03 2,800 2,800 = TRAN 0.92%, 06/30/04 50,000 50,524 +@ LIVERMORE, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing Revenue Refunding Bond (Livermore Apartments) Series 2002A 1.00%, 07/01/03 11,450 11,450 +~@ LODI, CALIFORNIA ELECTRIC SYSTEM COP Series 2002A 0.85%, 07/07/03 38,360 38,360 LONG BEACH, CALIFORNIA HARBOR +~ RB Series 2002B 1.15%, 05/14/04 56,560 58,177 ~ TECP 1.05%, 08/06/03 17,250 17,250 +@ LONG BEACH, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Channel Point Apartments Project) 0.87%, 07/07/03 7,000 7,000 +~@ LONG BEACH, CALIFORNIA UNIFIED SCHOOL DISTRICT COP (Capital Improvement Refinancing Project) 1.00%, 07/07/03 30,965 30,965 +@ LOS ANGELES, CALIFORNIA M/F Housing RB (Beverly Park Apartments) Series 1988A 0.92%, 07/07/03 34,000 34,000 M/F Housing RB (Channel Gateway Apartments) Series 1989B 1.00%, 07/07/03 67,700 67,700 M/F Housing RB (Fountain Park Project) Series 1999P 0.92%, 07/07/03 24,300 24,300 M/F Housing RB (Fountain Park Project Phase II) Series 2000B 0.92%, 07/07/03 3,500 3,500 M/F Housing RB (Studio Colony) Series 1985C 0.93%, 07/07/03 15,931 15,931
See financial notes. 15 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
PORTFOLIO HOLDINGS continued ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) M/F Housing RB Series 1985K 1.00%, 07/07/03 12,555 12,555 M/F Housing Revenue Refunding Bond (Tri City Project) Series 2001I 0.92%, 07/07/03 3,700 3,700 ~ TOBP (PA-554) 1.01%, 07/07/03 3,150 3,150 + LOS ANGELES, CALIFORNIA AIRPORT TECP Series A 1.00%, 07/07/03 3,000 3,000 TECP Series B 1.10%, 07/07/03 11,128 11,128 1.05%, 07/07/03 2,500 2,500 1.05%, 08/14/03 10,103 10,103 1.05%, 08/18/03 22,101 22,101 +~@ LOS ANGELES, CALIFORNIA COMMUNITY COLLEGE DISTRICT Revenue Refunding COP Series 2002A 0.85%, 07/07/03 30,150 30,150 +@ LOS ANGELES, CALIFORNIA COMMUNITY REDEVELOPMENT AGENCY M/F Housing RB (Metropolitan Lofts Apartments) Series 2002A 0.95%, 07/07/03 17,750 17,750 M/F Housing Revenue Refunding Bond (Promenade Towers Project) Series 2000 0.90%, 07/07/03 39,600 39,600 +~@ LOS ANGELES, CALIFORNIA CONVENTION CENTER & EXHIBIT CENTER AUTHORITY Revenue Refunding Bond Series 2003E 0.97%, 07/07/03 41,700 41,700 Revenue Refunding Bond Sub- Series 2003B-2 0.97%, 07/07/03 4,000 4,000 @ LOS ANGELES, CALIFORNIA DEPARTMENT OF WATER & POWER +~ Eagle TOB Series 2001 1.01%, 07/07/03 24,750 24,750 +~ Electric Plant TOB Series 1997I 1.03%, 07/07/03 19,995 19,995 ~ Electric Plant TOB Series 370 0.98%, 07/07/03 11,620 11,620 +~ RB TOB Series 1999L 1.03%, 07/07/03 22,090 22,090 ~ TOB (PA 1087) 1.03%, 07/07/03 7,120 7,120 +~ TOB Putters Series 184 1.00%, 07/07/03 15,000 15,000 ~ Water & Power RB Subseries 2001B-1 0.85%, 07/07/03 36,300 36,300 +~ Waterworks RB TOB Series 754 0.98%, 07/07/03 12,708 12,708 LOS ANGELES, CALIFORNIA UNIFIED SCHOOL DISTRICT +~@ Munitops TOB Series 1997C 0.98%, 07/07/03 15,400 15,400 +~@ TOBP (PT-1730) 1.01%, 07/07/03 30,000 30,000 +~@ TOBP (PT-1764) 1.01%, 07/07/03 9,305 9,305 = TRAN Series 2003A 0.94%, 07/01/04 50,000 50,528 TRAN Series B 1.68%, 07/01/03 15,000 15,000 ~ LOS ANGELES, CALIFORNIA WASTEWATER SYSTEM +@ RB TOB Series 2002J 1.00%, 07/07/03 12,245 12,245 +@ Revenue Refunding Bond Series 2001A 1.25%, 07/07/03 18,000 18,000 +@ Revenue Refunding Bond Series 2001B 1.25%, 07/07/03 22,200 22,200 +@ Revenue Refunding Bond Series 2001C 1.25%, 07/07/03 24,200 24,200 TECP 1.00%, 07/10/03 24,375 24,375 0.95%, 08/11/03 34,000 34,000 +@ TOB 98-25 0.98%, 07/07/03 17,000 17,000
See financial notes. 16 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) LOS ANGELES COUNTY, CALIFORNIA +@ COP ACES (Los Angeles County Museum of Art Project) Series 1985A 0.90%, 07/07/03 1,500 1,500 +@ COP ACES (Los Angeles County Museum of Art Project) Series 1985B 0.90%, 07/07/03 1,600 1,600 = TRAN Series 2003A 0.90%, 06/30/04 100,000 101,087 + LOS ANGELES COUNTY, CALIFORNIA CAPITAL ASSET LEASING CORP TECP 1.05%, 07/14/03 11,000 11,000 1.05%, 07/24/03 6,000 6,000 0.90%, 09/10/03 16,200 16,200 +@ LOS ANGELES COUNTY, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Malibu Canyon Apartments Project) Series B 1.00%, 07/07/03 28,520 28,520 + LOS ANGELES COUNTY, CALIFORNIA METROPOLITAN TRANSIT AUTHORITY ~@ Eagle Sales Tax Revenue Refunding TOB Series 2001B 1.01%, 07/07/03 24,750 24,750 ~@ Revenue Refunding Bond Series 1993A 0.85%, 07/07/03 14,000 14,000 ~@ Sales Tax RB TOB Series 2003-A 1.15%, 08/06/03 12,600 12,600 TECP 1.00%, 08/11/03 25,266 25,266 1.00%, 08/14/03 57,990 57,990 0.95%, 09/04/03 25,267 25,267 ~@ TOB Series 1998B 1.03%, 07/07/03 23,830 23,830 +~@ LOS ANGELES COUNTY, CALIFORNIA PENSION Revenue Refunding Bond Series 1996C 0.85%, 07/07/03 12,130 12,130 Revenue Refunding Bond Series 1996A 0.85%, 07/07/03 16,000 16,000 Revenue Refunding Bond Series 1996B 0.85%, 07/07/03 8,600 8,600 += LOS ANGELES COUNTY, CALIFORNIA SCHOOLS POOLED FINANCING PROGRAM TRAN Series 2003A 0.92%, 06/30/04 12,000 12,098 +~@ LOS ANGELES COUNTY, CALIFORNIA TRANSPORTATION COMMISSION Sales Tax RB Series 1992A 0.85%, 07/07/03 8,050 8,050 +@ MADERA, CALIFORNIA PUBLIC FINANCING AUTHORITY (Municipal Golf Course Revenue Refinancing) RB 0.95%, 07/07/03 3,250 3,250 ~@ METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA + Revenue Refunding Bond Series 1996A 0.80%, 07/07/03 16,800 16,800 Revenue Refunding Bond Series 1997C 0.90%, 07/07/03 15,000 15,000 Revenue Refunding Bond Series 1997B 0.85%, 07/07/03 8,500 8,500 Revenue Refunding Bond Series 2001-B2 0.85%, 07/07/03 15,500 15,500 Revenue Refunding Bonds Series 1999C 0.90%, 07/07/03 4,100 4,100 Waterworks RB Series 2001B-3 RB (Waterworks) S 0.90%, 07/01/03 9,500 9,500 Waterworks Revenue TOB Series 1999O 1.03%, 07/07/03 18,500 18,500 Waterworks RB Series 2001C-2 0.80%, 07/01/03 32,600 32,600 Waterworks Revenue Refunding Bond Series 2001B-1 0.85%, 07/07/03 45,100 45,100
See financial notes. 17 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) Waterworks Revenue Refunding Bond Series 2002A 1.05%, 07/07/03 9,000 9,000 +~@ MODESTO-SANTA CLARA-REDDING, CALIFORNIA PUBLIC POWER AGENCY RB (San Juan Project) Subordinate Lien Series 1997E 0.90%, 07/07/03 5,000 5,000 Subordinate Lien RB (San Juan Project) Series 1997D 1.05%, 07/07/03 2,500 2,500 MORENO VALLEY, CALIFORNIA UNIFIED SCHOOL DISTRICT TRAN 1.44%, 07/24/03 7,450 7,457 +@ MOUNT SAN JACINTO, CALIFORNIA WINTER PARK AUTHORITY COP (Palm Springs Aerial Project) Series 1998 1.00%, 07/07/03 7,900 7,900 COP (Palm Springs Aerial Project) Series 2000B 1.00%, 07/07/03 2,900 2,900 +~@ NORTHERN CALIFORNIA POWER AGENCY Revenue Refunding Bond (Hydroelectric No. 1 Project) Series 2002 A 0.85%, 07/07/03 7,000 7,000 Revenue Refunding Bond (Hydroelectric No.1 Project) Series 2002B 0.95%, 07/07/03 9,010 9,010 Revenue Refunding Bond (Hydroelectric Project No. 1) Series 2003A 0.95%, 07/07/03 9,500 9,500 +~@ NORTHERN, CALIFORNIA TRANSMISSION AGENCY Revenue Refunding Bonds (California-Ore Transmission Project) Series A 0.88%, 07/07/03 9,800 9,800 +~@ OAKLAND, CALIFORNIA Revenue TOB (180 Harrison Foundation Project) Series 2000M 1.03%, 07/07/03 4,500 4,500 +@ OCEANSIDE, CALIFORNIA M/F Mortgage RB (Riverview Springs) Series 1990A 1.00%, 07/07/03 12,570 12,570 ~@ ORANGE COUNTY, CALIFORNIA SANITATION DISTRICT COP Series 2002B 0.85%, 07/01/03 3,000 3,000 + COP (Sanitation Districts 1-3, 5-7 & 11) Series 1992C 0.85%, 07/07/03 16,200 16,200 +@ ORANGE COUNTY, CALIFORNIA COP (Florence Crittenton Services Project) Series 1990 0.97%, 07/07/03 5,500 5,500 M/F Housing RB (Lantern Pines Project) 0.95%, 07/07/03 14,700 14,700 +@ ORANGE COUNTY, CALIFORNIA APARTMENT DEVELOPMENT RB (Hidden Hills) Series 1985C 1.00%, 07/07/03 13,300 13,300 RB (Villas Aliento) Series 1998E 0.90%, 07/07/03 4,500 4,500 RB Series 1998F 0.90%, 07/07/03 15,900 15,900 RB Series (WCLO LF) Series 1998G-3 0.87%, 07/07/03 14,100 14,100 Revenue Refunding Bond (Jess L. Frost Project) Series 1985B 0.95%, 07/07/03 10,200 10,200 Revenue Refunding Bond (Pointe Niguel Project) Series 1992C 0.85%, 07/07/03 18,000 18,000 Revenue Refunding Bond (Vintage Woods) Series 1988H 0.87%, 07/07/03 10,000 10,000
See financial notes. 18 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + ORANGE COUNTY, CALIFORNIA LOCAL TRANSIT AUTHORITY TECP 0.90%, 09/08/03 38,000 38,000 0.90%, 09/10/03 4,000 4,000 ~@ ORANGE COUNTY, CALIFORNIA WATER DISTRICT COP Series 2003A 0.95%, 07/07/03 25,000 25,000 ~@ PALO ALTO, CALIFORNIA UNIFIED SCHOOL DISTRICT Merlot TOB Series 1997R 1.03%, 07/07/03 6,000 6,000 +~@ PASADENA, CALIFORNIA COP (City Hall & Park Improvement Projects) 0.95%, 07/07/03 35,290 35,290 PERALTA, CALIFORNIA COMMUNITY COLLEGE DISTRICT BAN 1.12%, 03/04/04 28,500 28,506 +@ PETALUMA, CALIFORNIA COMMUNITY AUTHORITY M/F Housing RB (Oakmont At Petaluma Project) 0.95%, 07/07/03 3,450 3,450 +@ PINOLE, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing RB (East Bluff Apartments Project) Series 1998A 1.15%, 07/07/03 4,959 4,959 +@ PLEASANT HILL, CALIFORNIA M/F Housing RB (Brookside Apartments Project) Series 1998A 0.90%, 07/07/03 4,600 4,600 + PORT OF OAKLAND, CALIFORNIA TECP Series D 1.05%, 07/03/03 13,000 13,000 ~@ TOBP (PA-663) 1.05%, 07/07/03 8,415 8,415 ~@ Merlot TOB (First Union) Series 2000JJ 1.08%, 07/07/03 15,000 15,000 +~@ RANCHO, CALIFORNIA WATER DISTRICT FINANCING AUTHORITY RB Series 2001B 0.90%, 07/07/03 25,000 25,000 +@ REDWOOD CITY, CALIFORNIA COP (City Hall Project) 1.00%, 07/07/03 2,305 2,305 +~@ RIVERSIDE COUNTY, CALIFORNIA ASSET LEASING CORP Leasehold RB (South West Justice Center) Series 2000B 0.85%, 07/07/03 15,900 15,900 +@ RIVERSIDE COUNTY, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Briarwood Apartment Project) Series 1985C 0.95%, 07/07/03 4,500 4,500 M/F Housing RB (Tyler Springs Apartments) Series 1999C 0.87%, 07/07/03 8,000 8,000 M/F Housing Revenue Refunding Bond (Victoria Springs Apartments) 1.00%, 07/07/03 9,000 9,000 +@ RIVERSIDE COUNTY, CALIFORNIA IDA RB (Calmold, Inc. Project) 1.50%, 07/07/03 3,070 3,070 +~@ ROSEVILLE, CALIFORNIA ELECTRIC SYSTEM COP Series 2002 0.95%, 07/07/03 30,365 30,365 SACRAMENTO, CALIFORNIA CITY FINANCING AUTHORITY Revenue Refunding Bond 1.90%, 07/01/03 3,825 3,825 + SACRAMENTO, CALIFORNIA MUNICIPAL UTILITY DISTRICT TECP 1.00%, 08/29/03 38,850 38,850 +@ SACRAMENTO, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing RB (18th & L Apartments) Series 2002E 0.92%, 07/07/03 10,525 10,525
See financial notes. 19 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ SACRAMENTO COUNTY, CALIFORNIA COP (Administration Center & Court House Project) 1.00%, 07/07/03 7,665 7,665 +@ SACRAMENTO COUNTY, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Chesapeake Commons Project) Series C 1.00%, 07/07/03 28,000 28,000 M/F Housing RB (Hidden Oaks Apartments) Series 1999C 0.95%, 07/07/03 6,300 6,300 ~@ SACRAMENTO COUNTY, CALIFORNIA SANITATION DISTRICT FINANCING AUTHORITY TOB Series 366 0.98%, 07/07/03 12,445 12,445 TOBP (PA-694) 1.01%, 07/07/03 6,090 6,090 +@ SACRAMENTO COUNTY, CALIFORNIA SPECIAL FACILITIES RB (Cessna Aircraft Corp. Project) 1.05%, 07/07/03 3,300 3,300 +@ SALINAS, CALIFORNIA APARTMENT DEVELOPMENT M/F Housing RB (Mariner Villa Project) Series 1985B 0.95%, 07/07/03 2,825 2,825 SAN BERNARDINO COUNTY, CALIFORNIA +~@ COP (Medical Center Financing Project) Series 1998 1.05%, 07/07/03 35,660 35,660 TRAN 1.68%, 07/01/03 35,000 35,000 = SAN DIEGO, CALIFORNIA COUNTY & SCHOOL DISTRICT TRAN Series 2003A 0.90%, 06/30/04 51,000 51,428 +@ SAN DIEGO, CALIFORNIA HOUSING AUTHORITY M/F Mortgage RB (Creekside Villa) Series 1999B 1.00%, 07/07/03 6,000 6,000 M/F Mortgage RB (La Cima) Series 1999K 0.85%, 07/07/03 9,140 9,140 M/F Mortgage RB (Nobel Courts) Series 1999L 0.85%, 07/07/03 15,815 15,815 +~@ SAN DIEGO, CALIFORNIA PUBLIC FACILITIES FINANCING AUTHORITY Waters RB TOB Series 757 0.98%, 07/07/03 19,840 19,840 SAN DIEGO, CALIFORNIA UNIFIED SCHOOL DISTRICT +~@ Munitop TOB 2002-28 1.13%, 11/05/03 12,280 12,280 TRAN Series A 1.52%, 07/28/03 61,850 61,917 ~ SAN DIEGO, CALIFORNIA WATER AUTHORITY TECP 1.00%, 08/07/03 10,500 10,500 +~@ SAN FRANCISCO, CALIFORNIA CITY & COUNTY AIRPORTS COMMISSION International Airport Certificates Series 476 0.98%, 07/07/03 16,255 16,255 International Airports RB TOBP (PA-662) 1.12%, 07/07/03 12,670 12,670 +~@ SAN FRANCISCO, CALIFORNIA CITY & COUNTY FINANCING CORP Lease RB (Moscone Center Expansion Project) Series 2000-2 0.85%, 07/07/03 10,500 10,500 +@ SAN FRANCISCO, CALIFORNIA CITY & COUNTY REDEVELOPMENT AGENCY M/F Housing RB (3rd & Mission) Series 1999C 1.10%, 07/07/03 21,500 21,500 M/F Housing RB (City Heights) Series 1997A 1.00%, 07/07/03 16,800 16,800 M/F Housing RB (Fillmore Center Project) Series 1992 A2 0.97%, 07/07/03 3,750 3,750
See financial notes. 20 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) M/F Housing RB (Ocean Beach Apartments) Series 2001B 1.03%, 07/07/03 4,850 4,850 M/F Housing RB (Post Street Towers) Series 2000A 0.95%, 07/07/03 17,000 17,000 RB (CFD4) 0.90%, 07/07/03 23,440 23,440 + SAN JOAQUIN COUNTY, CALIFORNIA TRANSPORTATION AUTHORITY Sales Tax Revenue TECP 1.00%, 09/10/03 15,000 15,000 +@ SAN JOSE, CALIFORNIA ~ GO TOB Series 760 0.98%, 07/07/03 11,223 11,223 M/F Housing RB (Almeden Lake Apartments Project) Series 1997A 1.00%, 07/07/03 15,900 15,900 M/F Housing RB (Betty Anne Apartments Project) Series 2002A 1.00%, 07/07/03 11,000 11,000 M/F Housing RB (El Paseo Apartments Project) Series 2002B 1.00%, 07/07/03 5,000 5,000 M/F Housing RB (Seinna at Renaissance Project) Series 1996A 0.92%, 07/07/03 21,500 21,500 +~@ SAN JOSE, CALIFORNIA HOUSING FINANCING AUTHORITY Revenue Refunding & Improvement Bond (Hayes Mansion Project) Series 2001D 0.95%, 07/07/03 10,800 10,800 +@ SAN JOSE, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing (101 San Fernando Apartments Project) Series 1998A 1.00%, 07/07/03 38,000 38,000 RB (Merged Area Redevelopment Project) Series 1996B 0.90%, 07/07/03 6,000 6,000 ~ Tax Allocation TOB Putters Series 158 1.00%, 07/07/03 30,095 30,095 + SAN JOSE, CALIFORNIA UNIFIED SCHOOL DISTRICT Santa Clara County GO Series 2002A 1.40%, 08/01/03 2,000 2,004 +@ SAN MARCOS, CALIFORNIA REDEVELOPMENT AGENCY M/F RB (Grandon Villiage Project) Series A 1.00%, 07/07/03 13,500 13,500 +@ SANGER, CALIFORNIA PUBLIC FINANCING AUTHORITY Revenue Refunding Bond (Utility Systems Financing Project) Series 2002A 1.00%, 07/07/03 10,000 10,000 SANTA BARBARA COUNTY, CALIFORNIA TRAN Series A 1.52%, 07/25/03 12,000 12,011 = 0.80%, 07/23/04 11,000 11,139 +~@ SANTA CLARA, CALIFORNIA Electric Revenue Series 1985C 0.85%, 07/07/03 16,700 16,700 +@ SANTA CLARA COUNTY, CALIFORNIA M/F Housing Revenue Refunding Bond (Brairwood Apartments Project) Series 1996B 0.87%, 07/07/03 12,400 12,400 M/F Housing Revenue Refunding Bond (Grove Garden Apartments) Series 1997A 0.87%, 07/07/03 14,000 14,000
See financial notes. 21 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) +@ SANTA CLARA COUNTY -- EL CAMINO, CALIFORNIA HOSPITAL DISTRICT RB (Valley Medical Center Project) Series 1985A 1.50%, 07/07/03 16,200 16,200 +~@ SANTA CLARA VALLEY, CALIFORNIA WATER DISTRICT COP TOB Series 2000-411 0.98%, 07/07/03 15,120 15,120 +@ SANTA FE SPRINGS, CALIFORNIA IDA RB (Tri-West) Series 1983 1.35%, 07/30/03 4,000 4,000 +@ SANTA PAULA, CALIFORNIA PUBLIC FINANCING AUTHORITY Lease Water System RB (Aquis Project) Series 1996 1.10%, 07/07/03 9,000 9,000 +@ SANTA ROSA, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Apple Creek Apartments Project) Series 1985E 0.95%, 07/07/03 17,140 17,140 M/F Housing RB (Quail Run Apartments) Series 1997A 0.95%, 07/07/03 4,710 4,710 = SOUTH COAST, CALIFORNIA LOCAL EDUCATIONAL AGENCIES TRAN Series 2003A 0.80%, 06/30/04 35,000 35,415 +~@ SOUTH PLACER, CALIFORNIA WASTEWATER AUTHORITY RB Series B 0.95%, 07/07/03 29,500 29,500 +@ SOUTH SAN FRANCISCO, CALIFORNIA HOUSING AUTHORITY M/F Housing RB (Magnolia Plaza Project) Series A 1.00%, 07/07/03 5,500 5,500 +@ SOUTHEAST, CALIFORNIA RESOURCE RECOVERY FACILITIES AUTHORITY Lease Revenue Refunding Bond Series 1995A 0.92%, 07/07/03 18,305 18,305 Lease Revenue Refunding Bond Series 1995B 0.97%, 07/07/03 14,200 14,200 ~@ SOUTHERN CALIFORNIA HFA S/F Mortgage RB TOBP (PT-629) 1.12%, 07/07/03 28,350 28,350 +~@ SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY Revenue Refunding Bond (Palo Verdes Project) Series 1996B 0.85%, 07/07/03 1,100 1,100 Subordinate RB (Southern Transmission Project) Series 2000A 0.95%, 07/07/03 6,500 6,500 Subordinate Revenue Refunding Bond (Southern Tranmission Project) Series 2001A 0.95%, 07/07/03 16,795 16,795 +@ STOCKTON, CALIFORNIA COMMUNITY FACILITIES DISTRICT Special Tax RB (Arch Road East No.99-02) 1.00%, 07/07/03 1,430 1,430 +~@ SUNNYVALE, CALIFORNIA COP (Government Center Site Acquisition) Series 2001A 0.90%, 07/07/03 13,280 13,280 +@ UNION CITY, CALIFORNIA M/F Housing RB (Greenhaven Apartments Project) Series 1997A 0.87%, 07/07/03 10,975 10,975 UNIVERSITY OF CALIFORNIA BOARD OF REGENTS ~@ Eagle TOB Series K 1.01%, 07/07/03 19,430 19,430
See financial notes. 22 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ X 1,000) ($ X 1,000) +~@ RB TOB Series 762 0.98%, 07/07/03 7,835 7,835 TECP 1.05%, 07/07/03 13,545 13,545 1.00%, 08/11/03 14,220 14,220 1.00%, 09/04/03 13,100 13,100 +~@ VAL VERDE, CALIFORNIA UNIFIED SCHOOL DISTRICT COP RB Series 2001A 0.93%, 07/07/03 2,205 2,205 +@ VALLECITOS, CALIFORNIA WATER DISTRICT RB (Twin Oaks Reservoir Project) 0.95%, 07/07/03 19,000 19,000 VENTURA COUNTY, CALIFORNIA TRAN 1.66%, 07/01/03 20,000 20,000 = 0.90%, 07/01/04 25,000 25,149 +@ VERNON, CALIFORNIA ELECTRIC SYSTEM RB (Malburg Project) Series 2003A 0.95%, 07/07/03 11,000 11,000 +@ VICTOR VALLEY, CALIFORNIA COMMUNITY COLLEGE DISTRICT COP 0.95%, 07/07/03 53,450 53,450 +@ VISTA, CALIFORNIA IDRB (Desalination System, Inc. Project) Series 1995 1.05%, 07/07/03 4,945 4,945 +@ WEST BASIN, CALIFORNIA MUNICIPAL WATER DISTRICT RB COP (Phase ll Recycled Water Project) Series 1997B 1.00%, 07/07/03 25,000 25,000 RB COP (Phase III Recycled Water Project) Series 1999A 1.00%, 07/07/03 8,400 8,400 RB COP (Phase III Recycled Water Project) Series 1999B 1.05%, 07/07/03 13,460 13,460 +@ WEST SACRAMENTO, CALIFORNIA SPECIAL TAX RB (Community Facilities District #6) Series 1997A 1.50%, 07/07/03 3,735 3,735 +~@ WESTERN MUNICIPAL WATER DISTRICT OF CALIFORNIA FACILITIES AUTHORITY RB COP Series 2002A 0.95%, 07/07/03 15,700 15,700 +@ WESTERN RIVERSIDE COUNTY, CALIFORNIA REGIONAL WASTEWATER AUTHORITY RB Series 1996 0.85%, 07/01/03 1,200 1,200 +~@ WESTMINSTER, CALIFORNIA COP (Civic Center Refunding Program) Series 1998A 1.00%, 07/07/03 3,610 3,610 +@ WESTMINSTER, CALIFORNIA REDEVELOPMENT AGENCY M/F Housing RB (Brookhurst Royale) Series 2000A 1.75%, 07/07/03 7,700 7,700 ~ Tax Allocation Bond (Community Redevelopment Project) Series 1997 1.00%, 07/07/03 9,155 9,155 --------- 7,598,570 PUERTO RICO 2.6% +~@ PUERTO RICO COMMONWEALTH Infrastructure Eagle TOB Series 2000 1.01%, 07/07/03 33,105 33,105 Public Improvement TOB Series 2001R 1.00%, 07/07/03 12,200 12,200 Public Improvement TOB Robin Series 3 0.98%, 07/07/03 13,395 13,395 TOB Putters Series 232 0.95%, 07/07/03 24,245 24,245
See financial notes. 23 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER SECURITY TYPE, PROJECT, SERIES, FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) TOB Series 204 0.95%, 07/07/03 7,295 7,295 TOBP (PA-652) 0.96%, 07/07/03 8,730 8,730 TOBP (PT-812) 0.96%, 07/07/03 13,050 13,050 Unlimited GO Series 2001II-R-124 1.10%, 07/07/03 4,995 4,995 +~@ PUERTO RICO COMMONWEALTH HIGHWAY & TRANSPORTATION AUTHORITY Highway RB TOB Series II-R-66 1.01%, 07/07/03 6,200 6,200 RB Series 1998A 0.95%, 07/07/03 2,700 2,700 RB TOB Series R-227 1.01%, 07/07/03 3,995 3,995 RB TOBP (PA-605) 0.96%, 07/07/03 6,590 6,590 Transportation Revenue Merlot TOB Series 2000FFF 1.00%, 07/07/03 4,970 4,970 +~@ PUERTO RICO COMMONWEALTH INFRASTRUCTURE FINANCING AUTHORITY TOBP (PA-498 ) 0.96%, 07/07/03 3,290 3,290 +~@ PUERTO RICO ELECTRIC POWER AUTHORITY Putters RB TOB Series 147 0.95%, 07/07/03 5,000 5,000 Eagle RB Series II 1.03%, 07/01/03 7,405 7,405 RB TOB Putters Series 164 0.95%, 07/07/03 15,765 15,765 +~@ PUERTO RICO HOUSING FINANCE CORP. RB TOB Series 2000R 1.00%, 07/07/03 5,545 5,545 +~@ PUERTO RICO PUBLIC BUILDING AUTHORITY Government Facilities RB TOB Putter Series 211 0.95%, 07/07/03 13,995 13,995 Revenue Guaranteed RB TOB Series II-R-56 1.01%, 07/07/03 6,545 6,545 ------- 199,015
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 24 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------ Investments, at market value $7,797,585 a Cash 44,423 Receivables: Fund shares sold 22,512 Interest 21,347 Investments sold 111,430 Prepaid expenses + 14 -------------- TOTAL ASSETS 7,997,311 LIABILITIES ------------------------------------------------------------------------ Payables: Fund shares redeemed 33,263 Dividends to shareholders 1,570 Investments bought 599,321 Investment adviser and administrator fees 175 Transfer agent and shareholder service fees 156 Accrued expenses + 265 -------------- TOTAL LIABILITIES 634,750 NET ASSETS ------------------------------------------------------------------------ TOTAL ASSETS 7,997,311 TOTAL LIABILITIES - 634,750 -------------- NET ASSETS $7,362,561 NET ASSETS BY SOURCE Capital received from investors 7,363,383 Net realized capital losses (822) NET ASSETS BY SHARE CLASS SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Sweep Shares $4,058,061 4,059,029 $1.00 Value Advantage Shares $3,304,500 3,304,469 $1.00
a The amortized cost for the fund's securities was $7,797,585. During the reporting period, the fund had $621,955 in transactions with other SchwabFunds(R). FEDERAL TAX DATA ---------------------------------------------- COST BASIS OF PORTFOLIO $7,797,585 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2008 $955
See financial notes. 25 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ------------------------------------------------------------------------ Interest $42,988 NET REALIZED GAINS AND LOSSES ------------------------------------------------------------------------ Net realized gains on investments sold 319 EXPENSES ------------------------------------------------------------------------ Investment adviser and administrator fees 12,631 a Transfer agent and shareholder service fees: Sweep Shares 9,038 b Value Advantage Shares 3,427 b Trustees' fees 27 c Custodian and portfolio accounting fees 280 Professional fees 20 Registration fees 48 Shareholder reports 118 Other expenses + 20 ----------- Total expenses 25,609 Expense reduction - 5,544 d ----------- NET EXPENSES 20,065 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------ TOTAL INVESTMENT INCOME 42,988 NET EXPENSES - 20,065 ----------- NET INVESTMENT INCOME 22,923 NET REALIZED GAINS + 319 ----------- INCREASE IN NET ASSETS FROM OPERATIONS $23,242 a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets as follows: TRANSFER AGENT SERVICES:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ---------------------------------------- Sweep Shares 0.25 Value Advantage Shares 0.05
SHAREHOLDER SERVICES:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ---------------------------------------- Sweep Shares 0.20 Value Advantage Shares 0.17
c For the fund's independent trustees only. d Includes $4,941 from the investment adviser (CSIM) and $603 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the annual operating expenses of this fund through at least April 30, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ---------------------------------------- Sweep Shares 0.65 Value Advantage Shares 0.45
This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 26 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 22,923 $ 59,336 Net realized gains + 319 419 -------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 23,242 59,755 Distributions Paid ------------------------------------------------------------------------------------- Dividends from Net Investment Income Sweep Shares 11,156 31,864 Value Advantage Shares + 11,767 27,472 -------------------------------------- TOTAL DIVIDENDS FROM NET INVESTMENT INCOME 22,923 59,336 Transactions in Fund Shares a ------------------------------------------------------------------------------------- Shares Sold Sweep Shares 6,213,368 12,462,311 Value Advantage Shares + 1,773,249 3,283,142 -------------------------------------- TOTAL SHARES SOLD 7,986,617 15,745,453 Shares Reinvested Sweep Shares 10,291 31,365 Value Advantage Shares + 10,232 26,012 -------------------------------------- TOTAL SHARES REINVESTED 20,523 57,377 Shares Redeemed Sweep Shares (6,221,411) (12,335,422) Value Advantage Shares + (1,560,415) (2,791,080) -------------------------------------- TOTAL SHARES REDEEMED (7,781,826) (15,126,502) NET TRANSACTIONS IN FUND SHARES 225,314 676,328 b NET ASSETS ------------------------------------------------------------------------------------- Beginning of period 7,136,928 6,460,181 Total increase + 225,633 676,747 c -------------------------------------- END OF PERIOD $ 7,362,561 $ 7,136,928
a Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. b Represents shares sold plus shares reinvested, minus shares redeemed. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 27 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND Financial Notes unaudited Business Structure of the Fund THE FUND DISCUSSED IN THIS REPORT IS A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS(TM), A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. The company is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the fund in this report and its trust. THE FUND OFFERS TWO SHARE CLASSES: Sweep Shares and Value Advantage Shares. Shares of each class represent interests 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 trust may issue as many shares as necessary. Fund Operations Most of the fund's investments are described in sections earlier in this report. However, there are certain other investments and policies that may affect a fund's financials. The most significant of these are described below. Other policies concerning the fund's business operations also are described here. THE FUND DECLARES DIVIDENDS EVERY DAY IT IS OPEN FOR BUSINESS. These dividends, which are equal to the 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. THE FUND MAY BUY SECURITIES ON A DELAYED-DELIVERY BASIS. In these transactions, the 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. THE FUND PAYS FEES FOR VARIOUS SERVICES. Through its trust, the fund has agreements with Charles Schwab Investment Management, Inc. (CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent and shareholder services. Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the fund that may limit the total expenses charged. The rates and limitations for these fees are described in the fund's Statement of Operations. 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 THE TRUST AND ITS FUNDS This list shows all of the funds included in The Charles Schwab Family of Funds. The funds discussed in this report 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(R) Schwab Municipal Money Fund Schwab California Municipal Money Fund Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) Schwab Government Cash Reserves 28 SCHWAB CALIFORNIA MUNICIPAL MONEY FUND persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund's Statement of Operations. THE FUND MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING AFFILIATES. The fund may make direct transactions with certain other SchwabFunds(R) 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. 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. UNDER THE FUND'S ORGANIZATIONAL DOCUMENTS, ITS OFFICERS AND TRUSTEES ARE INDEMNIFIED AGAINST CERTAIN LIABILITY 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. Accounting Policies The following are the main policies the fund uses in preparing its financial statements. THE FUND VALUES ITS SECURITIES AT AMORTIZED COST, which approximates market value. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. INTEREST INCOME is recorded as it accrues. If the fund bought a debt instrument at a discount (that is, for less than its 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. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. EXPENSES that are specific to the fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their net assets. FOR FUNDS OFFERING MULTIPLE SHARE CLASSES, all of the realized and unrealized gains or losses and net investment income, other than class specific expenses, are allocated daily to each class in proportion to its net assets. THE FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, the fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE 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. 29 Glossary Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. 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 Securities that are backed by various assets, which may include loans, accounts receivable or investments of an entity, such as a bank or credit card company. These securities are obligations that the issuer intends to repay using the assets backing them (once collected or liquidated). Therefore, repayment depends largely on the cash flows generated by the assets backing the securities. 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." 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 SECURITY A security that is 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. 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 TOB Tender option bond TOBP Tender option bond partnership TRAN Tax and revenue anticipation note VRD Variable-rate demand Schwab California Municipal Money Fund 30 CREDIT RATINGS Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Moody's Investor Service, Standard & Poor's and Fitch, Inc., 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. 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 Generally, 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, corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, banker's acceptances, notes and time deposits. 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. 144A SECURITY A security exempt from a registration requirement pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, to qualified institutional buyers, as defined in Rule 144A. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. REVENUE ANTICIPATION NOTES Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc. 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 an annual rate and calculated as a percentage of the investment's market value. Schwab California Municipal Money Fund 31 NOTES Contact Schwab SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any SchwabFund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments((TM)) may not be purchased directly over the Internet. 2 Orders placed in person or through a telephone representative may be subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab Small-Cap Equity Fund(TM) Schwab Hedged Equity Fund(TM) Schwab Dividend Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S. MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.3 Choose from taxable or tax-advantaged alternatives. Many can be linked to your Schwab account to "sweep" cash balances automatically when you're between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments(R). 3 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) 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. (C) 2003 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG25721 Schwab Money Funds SEMIANNUAL REPORT June 30, 2003 Schwab Money Market Fund Schwab Government Money Fund Schwab U.S. Treasury Money Fund Schwab Value Advantage Money Fund(R) [CHARLES SCHWAB LOGO] In This Report Management's Discussion ............................................. 2 Fund yield figures and portfolio statistics, plus a discussion of factors that affected fund performance during the report period. Financial Statements Portfolio holdings and fund financials. Schwab Money Market Fund ........................................ 5 Ticker Symbol: SWMXX Schwab Government Money Fund .................................... 20 Ticker Symbol: SWGXX Schwab U.S. Treasury Money Fund ................................. 27 Ticker Symbol: SWUXX Schwab Value Advantage Money Fund(R) ............................ 33 Investor Shares: SWVXX Select Shares(R): SWBXX Institutional Shares: SWAXX Financial Notes ..................................................... 47 Glossary ............................................................ 50 [PHOTO OF CHARLES R. SCHWAB] Charles R. Schwab Chairman From the Chairman Without question, these are challenging times for America's investors. For money fund shareholders, one of the main concerns has been decline of short-term interest rates, since money fund yields are a reflection of those rates. Given the choice, I'm sure most of us would prefer that yields were higher. At the same time, I believe that a look at the larger picture reveals that the current low interest rate environment has a beneficial side that shouldn't be ignored. For example, Americans have recently had the opportunity to borrow money at the most attractive rates in decades, whether for buying a home, refinancing or realizing a life-long goal like starting a business. More importantly, the Federal Reserve's monetary policy, along with fiscal policies enacted by Congress and the President, should provide a powerful stimulus to economic recovery. That, too, is something that would benefit all Americans. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R), these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles R. Schwab Management's Discussion for the six months ended June 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here, and especially with their dedication to understanding the concerns of investors. That dedication is particularly important right now. Times of uncertainty about the economy and world events demand diligence from investment professionals. At SchwabFunds, we are keenly aware of this, and continue to work for the best interests of our shareholders. In recent months, money market funds have faced a very challenging environment. With interest rates on short-term investments falling in connection with the Fed's actions, some investors have expressed concerns about the potential for fund yields to fall to zero or even lower. I can assure you that we at SchwabFunds will continue to monitor the yields in all our money market funds. In consultation with fund trustees, we will take appropriate measures to maintain competitive yields. One thing we won't do in pursuit of yields is compromise our high standards for investment credit quality. We'll also continue to follow our time-tested management procedures and controls. In other words, we won't take short cuts that may jeopardize our long-term commitment to our investors. Thank you for choosing SchwabFunds. We're here to help you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab Money Funds 2 [PHOTO OF MIKE NEITZKE AND LINDA KLINGMAN] LINDA KLINGMAN, a vice president of the investment advisor and senior portfolio manager, has overall responsibility for the management of the Money Market and Value Advantage Money funds. She joined the firm in 1990 and has managed money market funds since 1988. MIKE NEITZKE, a portfolio manager, has day-to-day responsibility for management of the Money Market and Value Advantage Money funds. Prior to joining the firm in March 2001, he worked for more than 15 years in the financial industry as a portfolio manager. [PHOTO OF KAREN WIGGAN] KAREN WIGGAN, a portfolio manager, has been responsible for day-to-day management of the Government Money and U.S. Treasury Money funds since 1999. She joined the firm in 1987 and has worked in fixed-income portfolio management since 1991. The Investment Environment and the Funds THE U.S. ECONOMY REMAINED IN A HOLDING PATTERN DURING THE SIX MONTHS OF THE REPORT PERIOD. Concerned by geopolitical uncertainties, businesses put off making major decisions about capital spending and hiring, even after the major combat phase of the war in Iraq was over. Economic indicators reported during the period were mixed, providing little incentive for businesses to pursue expansion plans. ALREADY AT THEIR LOWEST LEVEL IN DECADES, INTEREST RATES FELL FURTHER AS THE REPORT PERIOD PROGRESSED. During the first months of 2003, a major factor in the decline of rates was anticipation of the war in Iraq. Toward the end of the period, deflation fears came to the forefront, leading to expectations that the Federal Reserve (the Fed) would cut interest rates. These expectations were confirmed on June 25, when the Fed, seeking to provide yet further economic stimulus, cut the Fed funds rate by 0.25%. FALLING INTEREST RATES PUSHED MONEY FUND YIELDS TO NEW LOWS (see next page for fund yield information). We sought to lessen the effects of falling rates on the funds by maintaining comparatively long weighted average maturities. Although the funds' yields did decline, we were successful in slowing that decline, and in keeping the yields higher than they otherwise would have been. The funds also benefited from the decision to purchase Freddie Mac securities. Although some of this issuer's accounting practices were called into question during the report period, our analysis indicated that the creditworthiness of its securities was not in doubt. In the two non-government funds, we added to our holdings in government and agency securities. Typically, these securities offer lower yields than bank CDs and commercial paper because of their higher creditworthiness. However, during the report period yields in the corporate and government markets converged. We took advantage of this opportunity to buy higher credit quality securities with little or no sacrifice in yield. The views expressed here are those of fund management only. 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 Money Funds 3 Management's Discussion continued Performance and Fund Facts as of 6/30/03 SEVEN-DAY YIELDS 1 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, and that past performance is not an indication of future results.
MONEY GOVERNMENT U.S. TREASURY VALUE ADVANTAGE MARKET FUND MONEY FUND MONEY FUND MONEY FUND(R) ------------------------------------------------------------------------------------------------------------- Investor Select Institutional Shares Shares(R) Shares ------------------------------------------------------------------------------------------------------------- SEVEN-DAY YIELD 1 0.46% 0.45% 0.46% 0.76% 0.86% 0.97% ------------------------------------------------------------------------------------------------------------- SEVEN-DAY EFFECTIVE YIELD 0.46% 0.45% 0.46% 0.76% 0.87% 0.98% -------------------------------------------------------------------------------------------------------------
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).
MONEY GOVERNMENT U.S. TREASURY VALUE ADVANTAGE MARKET FUND MONEY FUND MONEY FUND MONEY FUND ------------------------------------------------------------------------------------------------------------ WEIGHTED AVERAGE 60 days 59 days 81 days 59 days MATURITY ------------------------------------------------------------------------------------------------------------ CREDIT QUALITY 100% Tier 1 100% Tier 1 100% Tier 1 100% Tier 1 OF HOLDINGS 2 % of portfolio ------------------------------------------------------------------------------------------------------------
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 $1 per share, it is possible to lose money by investing in a money fund. 1 A portion of each fund's expenses was reduced during the reporting period. Without this reduction, the seven-day yields for Schwab Money Market, Government Money and U.S. Treasury Money Funds would have been 0.43%, 0.37% and 0.29%, respectively. The seven-day yields for Schwab Value Advantage Money Fund's Investor Shares, Select Shares and Institutional Shares would have been 0.66%. 2 Portfolio holdings may have changed since the report date. Schwab Money Funds 4 SCHWAB MONEY MARKET FUND Financial Statements Schwab Money Market Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ------------------------------------------------------------------------------------------------------------------------------------ PER-SHARE DATA ($) ------------------------------------------------------------------------------------------------------------------------------------ Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.04 0.06 0.05 0.05 ----------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.04) (0.06) (0.05) (0.05) ----------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------- Total return (%) 0.31 2 1.23 3.73 5.84 4.64 4.99 RATIOS/SUPPLEMENTAL DATA (%) ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net operating expenses to average net assets 0.75 3 0.75 0.75 0.75 4 0.75 0.75 Ratio of gross operating expenses to average net assets 0.78 3 0.78 0.79 0.80 4 0.84 0.86 Ratio of net investment income to average net assets 0.62 3 1.22 3.63 5.70 4.56 4.87 Net assets, end of period ($ x 1,000,000) 51,642 51,063 49,116 41,823 36,099 27,439
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.76% and 0.81%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 5 SCHWAB MONEY MARKET FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: * Asset-backed security + Credit-enhanced security o Illiquid restricted security = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. government agency coupon notes and U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) ------------------------------------------------------------------- 77.8% FIXED-RATE OBLIGATIONS 40,384,663 40,384,663 8.4% U.S. GOVERNMENT SECURITIES 4,384,761 4,384,761 4.4% VARIABLE-RATE OBLIGATIONS 2,265,187 2,265,187 9.4% OTHER INVESTMENTS 4,852,258 4,852,258 ------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 51,886,869 51,886,869
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) FIXED-RATE OBLIGATIONS 77.8% of investments COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS 42.3% --------------------------------------------------------------------- AB SPINTAB 1.22%, 07/14/03 50,000 49,978 0.92%, 10/30/03 50,000 49,845 ALLIANCE & LEICESTER, PLC, 144A 1.31%, 07/09/03 16,000 15,995 1.26%, 07/14/03 24,000 23,989 1.20%, 09/02/03 13,000 12,973 0.99%, 09/17/03 10,000 9,979 AMSTEL FUNDING CORP. 1.00%, 09/16/03 60,000 59,872 *+ AMSTERDAM FUNDING CORP., 144A 1.21%, 07/10/03 48,000 47,985 1.23%, 07/24/03 95,000 94,925 1.23%, 08/07/03 40,000 39,949 1.20%, 09/02/03 55,000 54,884 1.16%, 09/05/03 50,000 49,894 1.20%, 09/05/03 30,000 29,934 0.95%, 09/25/03 44,000 43,900 1.09%, 09/26/03 31,000 30,918 + ANZ (DELAWARE), INC. 1.19%, 08/22/03 50,000 49,914 *+ APRECO, INC , 144A 1.25%, 07/15/03 10,000 9,995 1.23%, 08/15/03 19,000 18,971 0.98%, 09/16/03 20,000 19,958 0.99%, 09/16/03 20,000 19,958 1.23%, 09/16/03 10,000 9,974 *+ AQUINAS FUNDING, L.L.C., 144A 1.23%, 08/20/03 37,000 36,937 1.22%, 08/25/03 34,000 33,937 1.13%, 09/08/03 50,000 49,892 1.00%, 09/09/03 50,000 49,903 1.06%, 12/10/03 50,000 49,764 ASAP FUNDING, LTD., 144A 1.29%, 07/01/03 36,970 36,970 1.28%, 07/14/03 20,000 19,991 1.29%, 07/18/03 57,074 57,039 1.28%, 07/24/03 50,000 49,959 1.01%, 09/12/03 43,000 42,912 + ASSET PORTFOLIO FUNDING CORP. 0.95%, 09/22/03 80,000 79,825 *+ ASSET SECURITIZATION COOPERATIVE CORP., 144A 1.24%, 08/08/03 94,700 94,576 1.22%, 08/12/03 70,360 70,260 *+ ATLANTIS ONE FUNDING CORP., 144A 1.24%, 07/02/03 143,000 142,995 1.27%, 07/24/03 104,293 104,209 1.26%, 07/25/03 28,000 27,977
See financial notes. 6 SCHWAB MONEY MARKET FUND ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.26%, 07/28/03 47,324 47,279 1.23%, 08/08/03 48,963 48,899 1.23%, 08/14/03 276,609 276,193 1.22%, 08/19/03 142,000 141,764 1.12%, 09/04/03 75,000 74,850 1.20%, 09/11/03 17,000 16,959 1.11%, 09/16/03 143,783 143,445 1.20%, 09/16/03 161,703 161,291 0.91%, 11/13/03 15,000 14,949 0.90%, 12/18/03 10,000 9,957 1.08%, 12/19/03 14,000 13,929 BANK OF IRELAND 1.21%, 08/19/03 90,000 89,852 1.20%, 08/20/03 116,000 115,807 BANK OF NOVA SCOTIA 1.21%, 07/14/03 125,000 124,945 BANK ONE CORP. 1.22%, 07/29/03 45,000 44,957 BANK OF AMERICA CORP. 1.25%, 07/18/03 217,000 216,872 1.25%, 07/22/03 250,000 249,818 + BARCLAYS U.S. FUNDING CORP. 1.19%, 08/18/03 115,520 115,337 1.20%, 10/16/03 65,000 64,770 BEAR STEARNS COMPANIES, INC. 1.21%, 07/10/03 49,000 48,985 1.25%, 07/25/03 91,000 90,924 1.20%, 08/22/03 27,000 26,953 1.21%, 08/28/03 86,000 85,833 0.91%, 09/26/03 51,000 50,888 *+ BETA FINANCE, INC., 144A 1.31%, 07/15/03 50,000 49,975 1.26%, 07/25/03 26,000 25,978 1.23%, 08/01/03 97,000 96,897 1.21%, 08/28/03 35,000 34,932 0.99%, 09/17/03 50,000 49,893 1.03%, 09/17/03 50,000 49,888 0.93%, 09/22/03 17,000 16,964 1.58%, 11/20/03 50,000 50,000 + BNP PARIBAS FINANCE, INC. 1.20%, 08/29/03 58,000 57,886 0.90%, 12/30/03 225,000 223,976 *+ CAFCO, L.L.C., 144A 1.20%, 08/04/03 100,000 99,887 1.15%, 09/10/03 40,000 39,909 + CBA (DELAWARE) FINANCE, INC. 1.25%, 07/07/03 50,000 49,990 1.21%, 07/10/03 100,000 99,970 1.21%, 08/15/03 68,500 68,397 1.19%, 08/22/03 18,000 17,969 * CC (USA), INC., 144A 1.33%, 07/08/03 50,000 49,987 1.23%, 07/10/03 25,000 24,992 1.31%, 07/10/03 17,000 16,994 1.23%, 07/29/03 30,000 29,971 1.23%, 08/07/03 50,000 49,937 1.23%, 08/15/03 11,000 10,983 1.00%, 09/10/03 30,000 29,941 CITICORP 1.25%, 07/18/03 39,000 38,977 1.25%, 07/21/03 80,000 79,944 1.25%, 07/24/03 160,000 159,872 1.21%, 08/08/03 57,000 56,927 CITIGROUP GLOBAL MARKETS HOLDINGS, INC. 1.22%, 07/10/03 20,000 19,994 1.22%, 07/15/03 23,000 22,989 1.27%, 07/30/03 19,000 18,981 1.20%, 08/11/03 205,000 204,720 1.22%, 08/12/03 136,000 135,806 1.19%, 08/14/03 90,000 89,869 1.19%, 08/15/03 100,000 99,851 1.19%, 08/20/03 165,000 164,727 1.20%, 09/04/03 31,000 30,933 *+ CLIPPER RECEIVABLES CORP. 1.27%, 07/25/03 65,000 64,945 1.26%, 08/07/03 81,000 80,896 * CONCORD MINUTEMEN CAPITAL CO., L.L.C., 144A Series A 1.24%, 07/02/03 40,000 39,999 1.23%, 07/08/03 100,000 99,976 1.25%, 07/08/03 17,000 16,996 1.27%, 07/08/03 50,000 49,988 1.25%, 07/09/03 13,000 12,996 1.27%, 07/11/03 30,164 30,153 1.27%, 07/18/03 11,000 10,993 1.24%, 08/05/03 39,122 39,075 1.07%, 08/07/03 50,000 49,945 1.24%, 08/15/03 5,336 5,328 1.22%, 08/18/03 115,000 114,813 *+ CRC FUNDING, L.L.C., 144A 1.20%, 08/04/03 100,000 99,887 1.00%, 09/12/03 85,000 84,829
See financial notes. 7 SCHWAB MONEY MARKET FUND PORTFOLIO HOLDINGS continued ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + CREDIT LYONNAIS N.A., INC. 1.15%, 09/08/03 13,000 12,971 1.00%, 09/15/03 10,000 9,979 0.98%, 10/09/03 9,000 8,976 * DAKOTA CP NOTES OF CITIBANK CREDIT CARD ISSUANCE TRUST, 144A 1.22%, 07/01/03 40,000 40,000 1.22%, 07/02/03 15,000 14,999 1.25%, 07/08/03 50,000 49,988 1.23%, 07/21/03 20,000 19,986 1.07%, 08/04/03 195,000 194,803 1.07%, 08/05/03 10,000 9,990 1.24%, 08/05/03 50,000 49,940 1.07%, 08/07/03 15,000 14,984 1.22%, 08/28/03 40,000 39,921 1.21%, 08/29/03 20,000 19,960 1.13%, 09/05/03 50,000 49,896 1.09%, 09/09/03 50,000 49,894 1.05%, 09/10/03 40,000 39,917 + DANSKE CORP. 1.22%, 07/14/03 20,000 19,991 1.25%, 07/17/03 85,000 84,953 1.22%, 08/13/03 125,000 124,818 1.19%, 08/22/03 74,000 73,873 1.04%, 08/29/03 75,000 74,872 0.96%, 09/18/03 82,000 81,827 1.06%, 12/09/03 120,000 119,434 DEN NORSKE BANK ASA 1.23%, 08/04/03 83,600 83,503 1.23%, 08/15/03 10,000 9,985 1.19%, 09/02/03 70,000 69,855 1.26%, 09/04/03 25,000 24,943 DEPFA BANK, 144A 1.03%, 09/16/03 28,000 27,938 + DEXIA DELAWARE, L.L.C. 0.89%, 09/25/03 43,000 42,909 * DORADA FINANCE, INC., 144A 1.24%, 07/07/03 10,000 9,998 1.24%, 07/10/03 19,000 18,994 1.27%, 07/11/03 38,000 37,987 1.25%, 07/18/03 72,000 71,958 1.27%, 07/18/03 40,000 39,976 1.23%, 07/29/03 41,000 40,961 1.23%, 08/01/03 125,000 124,868 1.24%, 08/12/03 61,000 60,912 1.23%, 08/13/03 18,000 17,974 1.21%, 08/26/03 87,393 87,229 1.22%, 08/26/03 30,000 29,943 1.04%, 09/17/03 30,000 29,933 0.95%, 09/24/03 21,000 20,953 * DORADA FINANCE, INC., 144A 1.96%, 09/16/03 30,000 30,000 *+ EDISON ASSET SECURITIZATION CORP., L.L.C., 144A 1.31%, 07/08/03 180,000 179,955 1.31%, 07/11/03 98,029 97,993 1.29%, 08/07/03 6,000 5,992 1.23%, 08/13/03 229,000 228,664 0.93%, 09/23/03 200,000 199,566 1.05%, 12/10/03 150,000 149,298 *+ FAIRWAY FINANCE CORP., 144A 1.25%, 07/15/03 30,000 29,985 1.25%, 07/23/03 21,003 20,987 1.26%, 07/25/03 48,948 48,907 1.25%, 07/29/03 18,546 18,528 1.25%, 08/01/03 53,750 53,692 0.97%, 09/12/03 15,000 14,970 1.00%, 09/12/03 46,000 45,907 1.22%, 09/15/03 50,000 49,872 1.22%, 11/10/03 20,000 19,912 1.21%, 11/17/03 25,000 24,884 *+ FALCON ASSET SECURITIZATION CORP., 144A 1.07%, 07/31/03 253,649 253,423 1.23%, 08/11/03 70,846 70,747 0.97%, 09/15/03 43,000 42,912 1.23%, 09/22/03 14,550 14,509 FORENINGSSPARBANKEN AB (SWEDBANK) 1.26%, 07/07/03 97,000 96,980 1.00%, 09/10/03 70,000 69,862 1.09%, 09/10/03 27,000 26,942 + FORRESTAL FUNDING MASTER TRUST NOTES 2000A, 144A 1.08%, 07/29/03 56,726 56,678 1.09%, 07/29/03 30,000 29,975 + FORTIS FUNDING, L.L.C., 144A 1.30%, 07/15/03 50,000 49,975 *+ GALAXY FUNDING, INC., 144A 1.24%, 07/08/03 40,000 39,990 1.23%, 07/18/03 55,000 54,968 1.23%, 07/23/03 46,000 45,965 1.26%, 07/23/03 25,000 24,981 1.26%, 07/24/03 25,000 24,980 1.26%, 07/29/03 30,000 29,971 1.21%, 08/14/03 86,000 85,873
See financial notes. 8 SCHWAB MONEY MARKET FUND ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.22%, 08/22/03 41,000 40,928 1.21%, 08/26/03 73,000 72,863 0.92%, 09/25/03 49,000 48,892 0.92%, 09/26/03 12,000 11,973 + GE CAPITAL INTERNATIONAL FUNDING, INC., 144A 1.25%, 07/23/03 91,000 90,930 1.26%, 07/25/03 21,000 20,982 1.23%, 08/12/03 43,000 42,938 1.19%, 08/25/03 121,000 120,780 1.05%, 12/09/03 50,000 49,767 1.02%, 12/11/03 61,000 60,721 0.92%, 12/18/03 193,000 192,162 0.90%, 12/23/03 17,000 16,926 GE FINANCIAL ASSURANCE HOLDINGS, INC., 144A 1.01%, 09/04/03 53,000 52,903 0.94%, 09/16/03 46,900 46,806 0.96%, 10/16/03 20,000 19,943 0.92%, 12/18/03 75,000 74,674 GENERAL ELECTRIC CAPITAL CORP. 1.20%, 07/09/03 148,000 147,961 1.27%, 07/15/03 115,000 114,944 1.23%, 07/16/03 95,000 94,951 1.25%, 07/21/03 184,000 183,872 1.28%, 08/06/03 160,000 159,797 1.28%, 08/07/03 50,000 49,935 1.20%, 08/26/03 13,000 12,976 1.20%, 08/28/03 115,000 114,778 1.29%, 09/23/03 106,000 105,683 1.11%, 12/03/03 146,000 145,309 GENERAL ELECTRIC CAPITAL SERVICES 1.25%, 07/21/03 60,000 59,958 1.25%, 07/23/03 95,000 94,928 1.25%, 07/24/03 39,000 38,969 GENERAL ELECTRIC CO. 1.25%, 07/22/03 105,000 104,923 1.25%, 07/24/03 98,000 97,922 1.25%, 07/25/03 35,000 34,971 *+ GIRO FUNDING U.S. CORP., 144A 1.21%, 07/08/03 50,000 49,988 1.24%, 07/31/03 40,000 39,959 1.07%, 08/05/03 100,000 99,896 1.26%, 08/06/03 34,000 33,957 1.23%, 08/11/03 12,846 12,828 1.23%, 08/13/03 18,278 18,251 1.21%, 08/15/03 28,473 28,430 1.20%, 08/20/03 79,212 79,080 0.98%, 09/15/03 147,887 147,581 0.94%, 09/24/03 50,000 49,889 *+ GRAMPIAN FUNDING, LTD., 144A 1.23%, 08/19/03 10,000 9,983 0.98%, 10/01/03 33,000 32,918 *+o GREENWICH FUNDING CORP., 144A 0.95%, 09/12/03 75,000 74,856 *+ HATTERAS FUNDING CORP., 144A 1.26%, 07/14/03 49,000 48,978 1.24%, 08/08/03 67,469 67,381 1.26%, 08/11/03 38,000 37,946 1.23%, 08/14/03 13,000 12,980 1.13%, 08/26/03 60,000 59,895 + HBOS TREASURY SERVICES, PLC 1.25%, 07/25/03 156,000 155,870 1.25%, 07/28/03 53,000 52,950 1.22%, 08/05/03 90,900 90,792 1.28%, 08/05/03 84,000 83,896 0.97%, 09/16/03 30,000 29,938 1.01%, 09/16/03 45,000 44,903 *+ INDEPENDENCE FUNDING, L.L.C., 144A 1.25%, 07/02/03 57,000 56,998 1.07%, 08/12/03 143,000 142,822 + ING (U.S.) FUNDING, L.L.C. 1.21%, 07/07/03 97,000 96,980 1.21%, 07/10/03 30,000 29,991 1.23%, 07/11/03 17,000 16,994 1.30%, 07/18/03 45,000 44,973 1.23%, 08/08/03 100,000 99,871 *+ INTREPID FUNDING MASTER TRUST, 144A 1.07%, 07/31/03 29,000 28,974 1.10%, 07/31/03 50,000 49,954 IRISH LIFE & PERMANENT, PLC, 144A 0.95%, 09/17/03 22,000 21,955 J.P. MORGAN CHASE & CO. 1.25%, 07/23/03 67,000 66,949 1.25%, 08/04/03 90,000 89,894 1.22%, 08/18/03 125,000 124,797 *+ JUPITER SECURITIZATION CORP., 144A 1.23%, 07/08/03 76,144 76,126 1.07%, 07/29/03 230,830 230,638 1.07%, 07/30/03 75,072 75,007 1.25%, 07/31/03 26,918 26,890 1.23%, 08/11/03 25,321 25,286
See financial notes. 9 SCHWAB MONEY MARKET FUND PORTFOLIO HOLDINGS continued ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) *+ K2 (USA), L.L.C. 1.33%, 07/07/03 10,000 9,998 1.28%, 07/10/03 11,500 11,496 1.30%, 07/15/03 28,000 27,986 1.27%, 07/17/03 10,000 9,994 1.25%, 07/25/03 7,000 6,994 1.28%, 09/02/03 113,000 112,748 1.29%, 09/02/03 7,200 7,184 1.13%, 09/17/03 32,000 31,922 1.18%, 10/23/03 14,500 14,446 + KBC FINANCIAL PRODUCTS INTERNATIONAL, LTD., 144A 1.23%, 08/06/03 103,000 102,873 *+ KITTY HAWK FUNDING CORP., 144A 0.94%, 09/22/03 48,616 48,511 0.95%, 09/22/03 40,000 39,912 + LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, 144A 1.22%, 08/15/03 13,000 12,980 1.26%, 08/27/03 100,000 99,802 1.29%, 03/09/04 108,000 107,040 1.34%, 03/18/04 50,000 49,522 1.24%, 03/26/04 10,000 9,909 1.33%, 03/26/04 35,000 34,657 1.35%, 04/15/04 10,000 9,893 * LEXINGTON PARKER CAPITAL CO., L.L.C., 144A 1.27%, 07/11/03 20,000 19,993 1.30%, 07/22/03 15,000 14,989 1.27%, 07/24/03 160,000 159,871 1.23%, 07/25/03 47,000 46,962 1.28%, 07/25/03 64,000 63,946 1.23%, 09/02/03 67,000 66,855 1.11%, 09/03/03 50,000 49,901 1.28%, 10/16/03 38,757 38,611 *+ LINKS FINANCE, L.L.C., 144A 1.13%, 09/15/03 15,000 14,964 LLOYDS TSB BANK, PLC 1.19%, 07/29/03 96,000 95,911 *+ MONT BLANC CAPITAL CORP., 144A 1.23%, 07/03/03 16,000 15,999 1.23%, 07/10/03 53,000 52,984 1.23%, 08/12/03 20,066 20,037 1.23%, 09/03/03 43,202 43,108 MORGAN STANLEY 1.23%, 07/23/03 95,000 94,929 1.25%, 07/25/03 75,000 74,938 1.20%, 08/26/03 125,000 124,767 * NEWCASTLE CERTIFICATES PROGRAM, 144A Series 2000A 1.24%, 07/08/03 46,900 46,889 1.26%, 07/15/03 83,000 82,960 1.26%, 07/23/03 30,000 29,977 1.21%, 08/14/03 70,000 69,896 0.95%, 09/19/03 50,000 49,894 0.94%, 09/25/03 82,000 81,816 + NORDEA N.A., INC. 1.20%, 07/07/03 93,000 92,981 0.99%, 09/22/03 115,000 114,739 1.22%, 11/03/03 30,000 29,874 0.90%, 12/22/03 31,000 30,865 *+ PREFERRED RECEIVABLES FUNDING CORP., 144A 1.07%, 07/31/03 78,000 77,931 1.23%, 08/12/03 25,725 25,688 1.20%, 08/29/03 55,000 54,892 + SANTANDER CENTRAL HISPANO FINANCE (DELAWARE), INC. 1.21%, 09/02/03 110,000 109,767 1.21%, 09/05/03 185,000 184,591 1.10%, 09/09/03 20,000 19,957 *+ SIGMA FINANCE, INC., 144A 1.25%, 07/14/03 12,000 11,995 1.26%, 07/14/03 15,000 14,993 1.27%, 07/14/03 48,000 47,978 1.25%, 07/16/03 80,000 79,958 1.25%, 07/22/03 40,000 39,971 1.29%, 08/05/03 60,000 59,925 1.21%, 08/20/03 10,000 9,983 1.28%, 08/26/03 67,000 66,868 1.22%, 08/29/03 50,000 49,900 1.23%, 09/02/03 100,000 99,786 0.97%, 09/08/03 33,000 32,939 1.13%, 09/08/03 10,000 9,978 0.95%, 09/15/03 26,000 25,948 0.98%, 09/15/03 23,500 23,451 + SOCIETE GENERALE N.A., INC. 1.20%, 07/01/03 99,000 99,000 1.20%, 07/02/03 290,000 289,990 1.22%, 07/10/03 50,000 49,985 1.23%, 07/10/03 140,000 139,957 1.22%, 07/15/03 125,000 124,941 1.26%, 07/17/03 10,000 9,994 1.10%, 09/10/03 56,000 55,879 *+ STELLAR FUNDING GROUP, INC., 144A 1.25%, 07/14/03 34,170 34,155
See financial notes. 10 SCHWAB MONEY MARKET FUND ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.26%, 07/14/03 7,136 7,133 1.27%, 07/14/03 15,630 15,623 + SVENSKA HANDELSBANKEN, INC. 1.28%, 07/21/03 15,000 14,989 1.22%, 08/15/03 149,000 148,773 *+ THUNDER BAY FUNDING, INC., 144A 1.24%, 07/09/03 11,201 11,198 1.26%, 07/21/03 40,000 39,972 1.25%, 07/25/03 45,301 45,263 1.23%, 08/11/03 30,098 30,056 1.21%, 08/20/03 68,227 68,112 + TORONTO-DOMINION HOLDINGS 1.26%, 07/15/03 67,500 67,467 1.18%, 08/19/03 100,000 99,839 *+ TULIP FUNDING CORP., 144A 1.07%, 07/31/03 45,000 44,960 *+ VARIABLE FUNDING CAPITAL CORP., 144A 1.21%, 08/25/03 60,000 59,889 1.01%, 09/10/03 43,000 42,914 WESTLB AG, 144A 1.19%, 08/19/03 23,000 22,963 + WESTPAC CAPITAL CORP. 1.25%, 07/07/03 28,000 27,994 1.20%, 09/03/03 149,000 148,683 *+ WINDMILL FUNDING CORP., 144A 1.23%, 07/25/03 40,000 39,967 1.23%, 08/07/03 35,000 34,956 1.21%, 08/13/03 15,000 14,978 1.22%, 08/13/03 20,000 19,971 1.21%, 08/15/03 55,000 54,917 0.95%, 09/25/03 15,000 14,966 ---------- 21,927,566 CERTIFICATES OF DEPOSIT 31.5% ---------------------------------------------------------------------- ABN AMRO BANK, NV 1.19%, 08/27/03 50,000 50,005 ALLIANCE & LEICESTER, PLC 1.20%, 11/19/03 90,000 90,000 AMERICAN EXPRESS CENTURION BANK 0.92%, 09/22/03 85,000 85,000 0.92%, 09/23/03 50,000 50,000 0.92%, 09/24/03 20,000 20,000 AUSTRALIA & NEW ZEALAND BANKING GROUP, LTD. 1.24%, 07/08/03 50,000 50,000 1.24%, 07/10/03 100,000 100,000 BANK OF MONTREAL 1.21%, 07/09/03 100,000 100,000 1.19%, 08/28/03 80,000 80,000 1.25%, 10/17/03 99,000 99,000 BANK OF NEW YORK 1.29%, 08/18/03 44,000 44,000 BANK OF NOVA SCOTIA 1.20%, 07/09/03 50,000 50,000 1.21%, 07/11/03 125,000 125,000 1.21%, 07/14/03 145,000 145,000 1.19%, 08/25/03 87,000 87,000 BANK OF SCOTLAND 1.23%, 08/07/03 50,000 50,000 BARCLAYS BANK, PLC 1.25%, 07/15/03 45,000 45,000 1.25%, 07/28/03 55,000 55,000 1.26%, 07/28/03 220,000 220,000 1.20%, 08/04/03 52,000 52,002 1.06%, 08/12/03 98,000 98,000 1.19%, 08/28/03 330,000 330,000 1.03%, 09/10/03 100,000 100,014 1.60%, 11/25/03 120,000 120,002 1.10%, 04/19/04 46,000 46,092 BAYERISCHE LANDESBANK GIROZENTRALE 1.22%, 08/18/03 113,000 113,000 1.19%, 08/29/03 80,000 80,000 1.27%, 09/02/03 95,000 95,000 1.20%, 09/03/03 215,000 215,000 1.25%, 03/15/04 30,000 29,999 1.30%, 03/26/04 195,000 194,989 BNP PARIBAS 1.25%, 07/21/03 175,000 175,000 1.25%, 07/23/03 200,000 200,000 1.23%, 08/01/03 200,000 200,000 1.22%, 08/18/03 50,000 50,000 1.09%, 11/10/03 230,000 230,000 1.05%, 12/10/03 150,000 150,000 0.90%, 12/30/03 61,000 61,000 CANADIAN IMPERIAL BANK OF COMMERCE 1.23%, 08/14/03 30,000 30,000 1.20%, 08/28/03 14,000 14,000 CHASE MANHATTAN BANK (USA), N.A. 1.27%, 07/22/03 215,000 215,000 1.27%, 07/23/03 69,000 69,000 1.23%, 08/11/03 196,000 196,006
See financial notes. 11 SCHWAB MONEY MARKET FUND PORTFOLIO HOLDINGS continued ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) CITIBANK, N.A. 1.25%, 07/28/03 200,000 200,000 1.25%, 07/30/03 50,000 50,000 1.23%, 08/06/03 135,000 135,000 1.23%, 08/07/03 20,000 20,000 1.23%, 08/21/03 240,000 240,000 1.20%, 08/27/03 155,000 155,000 1.10%, 09/10/03 95,000 95,000 1.11%, 09/10/03 75,000 75,000 1.10%, 09/12/03 140,000 140,000 0.96%, 09/18/03 200,000 200,000 0.96%, 09/19/03 90,000 90,000 0.95%, 09/24/03 80,000 80,000 0.93%, 09/25/03 48,000 48,000 CREDIT AGRICOLE INDOSUEZ 1.20%, 07/10/03 11,000 11,000 1.30%, 07/17/03 159,000 159,000 1.06%, 08/05/03 138,000 138,000 CREDIT LYONNAIS S.A. 1.00%, 09/17/03 177,000 177,000 CREDIT SUISSE FIRST BOSTON 1.30%, 07/16/03 232,000 232,000 1.25%, 07/17/03 10,000 10,000 DANSKE BANK A/S 1.22%, 08/15/03 100,000 100,000 DEN NORSKE BANK ASA 1.15%, 09/08/03 15,000 15,001 DEPFA BANK, PLC 0.92%, 12/23/03 74,000 74,000 DEUTSCHE BANK, AG 1.31%, 07/01/03 315,000 315,000 1.32%, 07/09/03 20,000 20,000 1.21%, 07/16/03 292,000 292,000 1.21%, 07/17/03 300,000 300,000 1.19%, 08/27/03 282,000 282,000 1.10%, 09/09/03 160,000 160,000 0.90%, 09/25/03 85,000 85,006 1.85%, 10/15/03 150,000 149,996 1.10%, 11/10/03 160,000 160,046 1.50%, 05/24/04 300,000 300,000 DEXIA BANK, SA 2.41%, 07/18/03 133,000 132,999 FORENINGSSPARBANKEN (SWEDBANK) 1.25%, 07/30/03 42,000 42,000 FORENINGSSPARBANKEN, AB (SWEDBANK) 1.25%, 07/31/03 24,000 24,000 FORTIS BANK 1.23%, 07/09/03 41,000 41,000 1.23%, 07/10/03 60,000 60,000 1.23%, 07/14/03 50,000 50,000 1.18%, 08/25/03 48,000 48,000 1.27%, 09/03/03 45,000 45,000 + HBOS TREASURY SERVICES, PLC 1.21%, 07/03/03 55,000 55,000 1.27%, 08/11/03 150,000 150,000 1.20%, 08/26/03 40,000 39,999 1.11%, 09/12/03 10,000 10,000 ING BANK, N.V. 1.21%, 07/03/03 130,000 130,000 1.25%, 07/08/03 60,000 60,000 1.22%, 07/09/03 70,000 70,000 1.25%, 07/14/03 10,000 10,000 1.31%, 07/14/03 38,000 38,000 1.31%, 07/15/03 30,000 30,000 1.25%, 07/31/03 100,000 100,000 1.23%, 08/08/03 350,000 350,000 1.22%, 08/13/03 250,000 250,000 LANDESBANK BADEN WURTTEMBERG 1.20%, 07/03/03 95,000 95,000 1.06%, 08/12/03 135,000 135,001 1.20%, 08/22/03 100,000 100,000 1.20%, 08/29/03 100,000 100,000 1.20%, 09/03/03 65,000 65,000 0.96%, 09/12/03 100,000 100,024 0.91%, 12/12/03 21,000 21,012 0.90%, 12/29/03 50,000 50,000 0.91%, 12/30/03 55,000 55,000 LANDESBANK HESSEN-THURINGEN GIROZENTRALE 1.40%, 07/09/03 45,000 45,000 1.30%, 08/21/03 10,000 10,000 1.27%, 08/29/03 157,000 157,000 1.30%, 02/03/04 108,000 108,068 LLOYDS TSB BANK, PLC 1.10%, 09/15/03 50,000 50,000 NATEXIS BANQUES POPULAIRES 1.20%, 08/29/03 156,000 156,000 NATIONAL CITY BANK, CLEVELAND 1.20%, 07/07/03 100,000 100,000
See financial notes. 12 SCHWAB MONEY MARKET FUND ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) NORDDEUTSCHE LANDESBANK GIROZENTRALE 1.20%, 07/07/03 99,000 99,000 1.25%, 07/18/03 54,000 54,000 1.28%, 08/21/03 65,000 65,002 1.57%, 11/07/03 75,000 74,997 1.49%, 12/29/03 48,000 48,000 1.25%, 03/15/04 70,000 69,995 1.30%, 04/13/04 70,000 69,997 NORDEA BANK FINLAND, PLC 1.21%, 07/11/03 47,000 47,000 1.22%, 08/15/03 168,000 168,000 1.20%, 09/02/03 75,000 75,000 ROYAL BANK OF CANADA 1.61%, 11/25/03 120,000 119,998 ROYAL BANK OF SCOTLAND, PLC 1.20%, 07/01/03 150,000 150,000 1.20%, 07/02/03 220,000 220,000 0.99%, 09/04/03 145,000 145,000 0.97%, 09/17/03 15,000 15,000 1.19%, 09/17/03 19,750 19,809 1.85%, 10/20/03 160,000 159,995 SAN PAOLO IMI SPA 1.30%, 07/17/03 95,000 95,000 SOCIETE GENERALE 1.20%, 07/01/03 65,000 65,000 1.30%, 07/09/03 30,000 30,000 1.30%, 07/15/03 15,000 15,000 1.25%, 07/18/03 50,000 50,000 1.25%, 10/16/03 46,000 46,000 SOUTHTRUST BANK 1.30%, 07/11/03 79,000 79,000 1.05%, 12/19/03 25,000 25,000 STATE STREET BANK & TRUST CO., N.A. 1.19%, 08/26/03 125,000 125,000 1.10%, 12/04/03 60,000 60,000 SVENSKA HANDELSBANKEN AB 1.21%, 08/18/03 10,000 10,000 0.99%, 09/04/03 94,000 94,037 TORONTO DOMINION BANK 1.25%, 07/07/03 40,000 40,000 0.92%, 09/17/03 55,000 55,007 1.25%, 10/15/03 15,000 15,000 1.20%, 11/13/03 65,000 65,002 0.89%, 12/22/03 110,000 110,000 UBS AG 1.59%, 12/16/03 128,000 128,000 UNICREDITO ITALIANO SPA 1.22%, 07/03/03 10,000 10,000 1.34%, 07/09/03 200,000 200,000 1.24%, 07/11/03 100,000 100,000 1.25%, 07/16/03 48,000 48,000 1.27%, 07/17/03 45,000 45,001 1.31%, 07/17/03 10,000 10,000 1.26%, 07/22/03 209,000 209,000 1.10%, 09/15/03 80,000 80,000 0.98%, 09/19/03 35,000 35,000 WESTLB AG 1.35%, 07/08/03 14,000 14,000 1.77%, 09/08/03 70,000 69,996 1.93%, 09/18/03 140,000 140,000 1.84%, 10/15/03 74,000 73,998 1.06%, 12/09/03 10,000 10,000 1.26%, 04/02/04 55,000 55,000 1.30%, 04/07/04 180,000 180,000 1.34%, 04/14/04 100,000 100,000 WESTPAC BANKING CORP. 1.19%, 08/01/03 70,000 70,002 WILMINGTON TRUST CO. 1.27%, 07/24/03 25,000 25,000 ---------- 16,383,097 PROMISSORY NOTES 2.0% ----------------------------------------------------------------- o THE GOLDMAN SACHS GROUP, INC. 1.40%, 07/01/03 32,000 32,000 1.29%, 07/15/03 55,000 55,000 1.36%, 07/28/03 145,000 145,000 1.36%, 08/05/03 67,000 67,000 1.35%, 08/21/03 20,000 20,000 1.30%, 09/19/03 12,000 12,000 1.26%, 09/22/03 250,000 250,000 1.30%, 09/23/03 14,000 14,000 1.31%, 10/24/03 19,000 19,000 1.23%, 11/26/03 19,000 19,000 1.26%, 12/05/03 180,000 180,000 1.12%, 12/11/03 150,000 150,000 1.14%, 12/11/03 12,000 12,000 1.02%, 12/18/03 56,000 56,000 1.05%, 12/18/03 15,000 15,000 --------- 1,046,000
See financial notes. 13 SCHWAB MONEY MARKET FUND PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) BANK NOTES 2.0% -------------------------------------------------------------------------- BANK OF AMERICA, N.A. 1.20%, 08/06/03 218,000 218,000 1.20%, 08/07/03 300,000 300,000 LASALLE NATIONAL BANK, N.A. 1.20%, 07/07/03 135,000 135,000 1.19%, 08/22/03 90,000 90,000 0.90%, 09/23/03 33,000 33,000 STANDARD FEDERAL BANK, N.A. 1.25%, 07/21/03 82,000 82,000 1.19%, 08/26/03 80,000 80,000 1.00%, 09/12/03 90,000 90,000 --------- 1,028,000 U.S. GOVERNMENT SECURITIES 8.4% of investments -------------------------------------------------------------------------- DISCOUNT NOTES 8.4% -------------------------------------------------------------------------- FANNIE MAE 1.18%, 08/27/03 115,000 114,786 1.13%, 09/03/03 105,000 104,789 0.89%, 09/24/03 50,000 49,895 = 0.94%, 10/01/03 95,000 94,772 0.89%, 11/20/03 80,000 79,721 1.03%, 12/03/03 40,000 39,823 1.05%, 12/03/03 305,000 303,628 1.06%, 12/03/03 170,000 169,232 0.89%, 12/10/03 115,200 114,741 1.06%, 12/12/03 15,000 14,928 0.89%, 12/17/03 224,762 223,825 0.90%, 12/17/03 100,000 99,578 1.04%, 12/29/03 150,000 149,223 1.22%, 03/05/04 223,120 221,260 FEDERAL HOME LOAN BANK 1.03%, 12/05/03 50,000 49,776 FREDDIE MAC 1.05%, 08/29/03 50,000 49,914 1.10%, 09/04/03 160,000 159,682 1.13%, 09/04/03 100,000 99,796 1.10%, 09/11/03 100,000 99,782 1.01%, 09/17/03 60,500 60,368 1.10%, 09/22/03 50,000 49,874 1.02%, 09/29/03 100,000 99,745 1.00%, 09/30/03 78,000 77,803 1.02%, 09/30/03 231,974 231,376 1.04%, 10/20/03 103,400 103,070 1.04%, 10/22/03 27,000 26,912 1.09%, 10/24/03 210,000 209,269 1.00%, 10/31/03 100,000 99,661 1.01%, 10/31/03 147,069 146,568 1.02%, 11/12/03 49,900 49,711 1.03%, 12/04/03 60,339 60,071 1.05%, 12/04/03 129,100 128,515 1.06%, 12/04/03 18,000 17,918 0.95%, 12/19/03 300,000 298,660 0.95%, 12/31/03 200,000 199,039 0.96%, 12/31/03 94,000 93,546 1.23%, 03/12/04 19,775 19,605 1.00%, 03/25/04 19,671 19,526 1.30%, 03/25/04 155,858 154,373 --------- 4,384,761 VARIABLE-RATE OBLIGATIONS 4.4% of investments -------------------------------------------------------------------------- + 6700 CHERRY AVENUE PARTNERS Demand Bond Series 1993 1.13%, 07/07/03 9,300 9,300 + ABAG FINANCIAL AUTHORITY FOR NONPROFIT CORPS., CALIFORNIA RB (Public Pole Institute) Series 2002B 1.18%, 07/07/03 17,905 17,905 BANK OF NEW YORK CO., INC., 144A 1.01%, 07/28/03 75,000 75,000 + BROOKS COUNTY, GEORGIA DEVELOPMENT AUTHORITY RD (Langboard, Inc. Project) 1.02%, 07/07/03 10,000 10,000 CANADIAN IMPERIAL BANK OF COMMERCE 1.20%, 07/15/03 100,000 100,000 + CFM INTERNATIONAL, INC., 144A 1.15%, 07/07/03 27,055 27,055 CHASE MANHATTAN BANK (USA) 1.07%, 07/30/03 100,000 100,000 o GE LIFE & ANNUITY ASSURANCE CO. 1.37%, 07/01/03 50,000 50,000 1.38%, 07/01/03 100,000 100,000 1.39%, 08/01/03 50,000 50,000
See financial notes. 14 SCHWAB MONEY MARKET FUND
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) GENERAL ELECTRIC CAPITAL CORP. 1.32%, 07/08/03 175,000 175,000 1.17%, 07/16/03 75,000 75,000 + LOANSTAR ASSETS PARTNERS II, L.P., 144A 1.03%, 07/07/03 45,000 45,000 + LOWNDES CORP., GEORGIA Taxable Demand Bond Series 1997, 144A 1.04%, 07/07/03 5,250 5,250 + MERLOT TRUST Series 2000B, 144A 1.17%, 07/07/03 32,630 32,630 Series 2001A7, 144A 1.17%, 07/07/03 15,470 15,470 Series 2001A67, 144A 1.17%, 07/07/03 35,065 35,065 o METROPOLITAN LIFE INSURANCE CO. 1.33%, 07/30/03 50,000 50,000 1.39%, 08/01/03 100,000 100,000 o MONUMENTAL LIFE INSURANCE CO. 1.49%, 07/01/03 100,000 100,000 MORGAN STANLEY 144A 1.28%, 07/15/03 50,000 50,000 + NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY Adjustable Rate Lease Revenue Taxable Bonds (Camden Center Project) Series 2002A 1.03%, 07/07/03 23,000 23,000 Adjustable Rate Lease Revenue Taxable Bonds (Camden Center Project) Series 2002B 1.03%, 07/07/03 20,000 20,000 Adjustable Rate Lease Revenue Taxable Bonds (Barnes & Noble, Inc. Distribution & Freight Consolidation Center Project) Series 1995A 1.03%, 07/07/03 15,930 15,930 Adjustable Rate Lease Revenue Taxable Bonds (Barnes & Noble, Inc. Distribution & Freight Consolidation Center Project) Series 1995B 1.03%, 07/01/03 10,000 10,000 o PACIFIC LIFE INSURANCE CO. 1.33%, 07/01/03 100,000 100,000 ROYAL BANK OF SCOTLAND 1.14%, 07/16/03 100,000 100,000 + SANTA ROSA, CALIFORNIA Wastewater RB Series 2001A 1.18%, 07/07/03 15,050 15,050 + SE CHRISTIAN CHURCH, JEFFERSON COUNTY, KENTUCKY Series 2003 1.07%, 07/03/03 11,700 11,700 * SIGMA FINANCE, INC., 144A 1.30%, 07/01/03 200,000 199,993 1.27%, 07/07/03 125,000 124,996 1.14%, 07/15/03 45,000 44,995 1.23%, 07/15/03 50,000 49,990 1.04%, 07/23/03 90,000 89,998 1.26%, 08/06/03 50,000 50,000 + SISTERS OF MERCY OF THE AMERICAS REGIONAL COMMUNITY OF OMAHA, NEBRASKA Series 2001 1.02%, 07/07/03 11,860 11,860 o TRAVELERS INSURANCE CO. 1.37%, 08/01/03 100,000 100,000 WELLS FARGO & CO. 1.31%, 07/02/03 75,000 75,000 ---------- 2,265,187
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) OTHER INVESTMENTS 9.4% of investments -------------------------------------------------------------------------- REPURCHASE AGREEMENTS 9.4% -------------------------------------------------------------------------- BANK OF AMERICA SECURITIES, L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $1,020,000 1.32%, issued 06/30/03, due 07/01/03 1,000,037 1,000,000
See financial notes. 15 SCHWAB MONEY MARKET FUND PORTFOLIO HOLDINGS continued
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) BEAR STEARNS & CO., INC Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $190,743 1.32%, issued 06/30/03, due 07/01/03 127,005 127,000 1.29%, issued 01/15/03, due 07/07/03 60,372 60,000 CREDIT SUISSE FIRST BOSTON L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $785,666 1.32%, issued 06/30/03, due 07/01/03 770,286 770,258 LEHMAN BROTHERS, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $336,605 1.20%, issued 04/07/03, due 07/07/03 170,516 170,000 1.20%, issued 05/07/03, due 07/07/03 160,325 160,000 MORGAN STANLEY & CO., INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $290,700 1.18%, issued 06/03/03, due 07/07/03 285,318 285,000 UBS FINANCIAL SERVICES, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $2,325,614 1.32%, issued 06/30/03, due 07/01/03 1,000,037 1,000,000 0.92%, issued 06/23/03, due 07/07/03 200,072 200,000 0.93%, issued 06/20/03, due 07/07/03 400,176 400,000 1.18%, issued 06/02/02, due 07/07/03 680,780 680,000 ---------- 4,852,258
---------- END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 16 SCHWAB MONEY MARKET FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------------- Investments, at market value $51,886,869 a Interest receivable 64,859 Prepaid expenses + 738 --------------- TOTAL ASSETS 51,952,466 LIABILITIES ------------------------------------------------------------------------------- Payables: Dividends to shareholders 9,335 Investments bought 295,671 Investment adviser and administrator fees 1,180 Transfer agent and shareholder service fees 1,906 Accrued expenses + 2,586 --------------- TOTAL LIABILITIES 310,678 NET ASSETS ------------------------------------------------------------------------------- TOTAL ASSETS 51,952,466 TOTAL LIABILITIES - 310,678 --------------- NET ASSETS $51,641,788 NET ASSETS BY SOURCE Capital received from investors 51,641,864 Net realized capital losses (76) NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $51,641,788 51,642,396 $1.00
a Includes illiquid restricted securities worth $1,770,856, or 3.41% of the fund's investments. The fund's amortized cost for these securities was $51,886,869 FEDERAL TAX DATA ----------------------------------- COST BASIS OF PORTFOLIO $ 51,886,869 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2003 $ 27 2007 + 49 --------------- $ 76
See financial notes. 17 SCHWAB MONEY MARKET FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ------------------------------------------------------------------------------ Interest $ 355,894 EXPENSES ------------------------------------------------------------------------------ Investment adviser and administrator fees 79,499 a Transfer agent and shareholder service fees 116,546 b Trustees' fees 94 c Custodian and portfolio accounting fees 2,202 Professional fees 47 Registration fees 510 Shareholder reports 2,874 Other expenses + 222 ------------ Total expenses 201,994 Expense reduction - 7,750 d ------------ NET EXPENSES 194,244 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------------ TOTAL INVESTMENT INCOME 355,894 NET EXPENSES - 194,244 ------------ NET INVESTMENT INCOME 161,650 ------------ INCREASE IN NET ASSETS FROM OPERATIONS $ 161,650
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004 to 0.75% of average daily net assets. This limit does not include interest, taxes and certain non-routine expenses. See financial notes. 18 SCHWAB MONEY MARKET FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------ 1/1/03-6/30/03 1/1/02-12/31/02 Net investment income $ 161,650 $ 613,708 ------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 161,650 613,708 DISTRIBUTIONS PAID -------------------------------------------------------------------------------- Dividends from net investment income 161,650 613,708 a TRANSACTIONS IN FUND SHARES b -------------------------------------------------------------------------------- Shares sold 64,535,495 137,199,724 Shares reinvested 150,426 604,716 Shares redeemed + (64,107,516) (135,856,854) ------------------------------------- NET TRANSACTIONS IN FUND SHARES 578,405 1,947,586 NET ASSETS -------------------------------------------------------------------------------- Beginning of period 51,063,383 49,115,797 Total increase + 578,405 1,947,586 c ------------------------------------- END OF PERIOD $ 51,641,788 $ 51,063,383
a The tax-basis components of distributions paid for the prior period were: Ordinary income $613,708 Long-term capital gains $ --
b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 19 SCHWAB GOVERNMENT MONEY FUND Financial Statements Schwab Government Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ----------------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ----------------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.04 0.06 0.04 0.05 ----------------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.04) (0.06) (0.04) (0.05) ----------------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------------- Total return (%) 0.30 2 1.20 3.63 5.69 4.50 4.88 RATIOS/SUPPLEMENTAL DATA (%) ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.75 3 0.75 0.75 0.75 4 0.75 0.75 Ratio of gross operating expenses to average net assets 0.83 3 0.83 0.84 0.84 4 0.85 0.92 Ratio of net investment income to average net assets 0.60 3 1.19 3.52 5.54 4.42 4.76 Net assets, end of period ($ x 1,000,000) 3,078 3,092 3,054 2,509 2,545 2,207
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.76% and 0.85%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 20 SCHWAB GOVERNMENT MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbol below to designate certain characteristics: = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. government agency coupon notes and U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 61.7% U.S. GOVERNMENT - SECURITIES 1,915,866 1,915,866 38.3% OTHER INVESTMENTS 1,189,536 1,189,536 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 3,105,402 3,105,402
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) U.S. GOVERNMENT SECURITIES 61.7% of investments ------------------------------------------------------------------------- DISCOUNT NOTES 54.3% ------------------------------------------------------------------------- FANNIE MAE 1.20%, 07/09/03 10,000 9,997 1.13%, 07/11/03 20,000 19,994 1.21%, 07/16/03 40,000 39,980 1.19%, 07/18/03 68,905 68,866 1.10%, 07/25/03 30,000 29,978 1.77%, 07/25/03 35,000 34,959 1.17%, 07/30/03 13,913 13,900 1.23%, 07/30/03 26,000 25,974 1.15%, 08/13/03 3,470 3,465 1.14%, 08/20/03 15,000 14,976 1.18%, 08/20/03 30,000 29,951 1.20%, 08/20/03 20,000 19,967 1.17%, 08/27/03 60,000 59,889 1.18%, 08/27/03 20,000 19,963 1.20%, 09/02/03 48,000 47,900 1.06%, 09/03/03 25,000 24,953 1.13%, 09/03/03 40,000 39,920 1.17%, 09/03/03 30,000 29,938 1.09%, 09/10/03 25,000 24,947 1.75%, 09/19/03 12,000 11,954 1.77%, 09/19/03 20,000 19,922 = 0.94%, 10/01/03 30,000 29,928 1.31%, 11/14/03 15,000 14,927 1.33%, 11/14/03 10,000 9,951 1.38%, 11/14/03 15,000 14,923 1.57%, 11/14/03 8,000 7,953 1.06%, 12/03/03 3,344 3,329 1.05%, 12/12/03 4,600 4,578 1.06%, 01/09/04 8,360 8,313 1.20%, 03/05/04 10,000 9,918 1.33%, 03/05/04 2,300 2,279 1.22%, 04/02/04 15,000 14,861 1.32%, 04/02/04 15,000 14,851 FEDERAL FARM CREDIT BANK 1.27%, 02/13/04 20,000 19,842 FEDERAL HOME LOAN BANK 1.20%, 07/09/03 23,600 23,594 1.15%, 07/23/03 28,000 27,980 FREDDIE MAC 1.11%, 07/10/03 11,831 11,828 1.77%, 07/17/03 20,000 19,985 1.96%, 07/17/03 20,000 19,983 2.02%, 07/17/03 10,000 9,991 1.77%, 07/30/03 21,227 21,197 1.15%, 07/31/03 15,000 14,986 1.14%, 08/01/03 25,000 24,976 1.18%, 08/11/03 5,000 4,993 1.17%, 08/14/03 25,000 24,964 1.25%, 08/14/03 15,000 14,977 1.78%, 08/14/03 20,000 19,957 1.15%, 08/21/03 23,000 22,963 1.39%, 08/22/03 11,265 11,243 1.05%, 08/29/03 30,000 29,948 1.14%, 08/29/03 37,000 36,931 1.10%, 09/04/03 30,000 29,940
See financial notes. 21 SCHWAB GOVERNMENT MONEY FUND PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.17%, 09/04/03 50,000 49,894 1.14%, 09/12/03 30,000 29,931 0.96%, 09/17/03 7,000 6,985 0.90%, 09/18/03 34,180 34,112 1.44%, 09/22/03 10,000 9,967 1.21%, 09/24/03 40,000 39,887 1.16%, 10/09/03 30,000 29,904 1.77%, 10/09/03 10,000 9,952 0.90%, 10/20/03 30,000 29,917 0.91%, 10/20/03 50,000 49,860 1.04%, 10/20/03 25,000 24,920 1.48%, 10/20/03 12,000 11,946 0.91%, 10/24/03 36,782 36,676 1.09%, 10/24/03 30,000 29,896 0.91%, 10/28/03 30,000 29,910 1.10%, 11/06/03 4,567 4,549 1.11%, 11/07/03 25,000 24,901 0.90%, 11/20/03 12,238 12,195 0.99%, 11/26/03 20,000 19,919 0.97%, 12/04/03 3,000 2,987 1.05%, 12/04/03 15,232 15,163 1.09%, 12/04/03 25,000 24,883 1.27%, 03/25/04 15,000 14,860 1.30%, 03/25/04 23,000 22,781 TENNESSEE VALLEY AUTHORITY 1.15%, 07/31/03 2,000 1,998 ----------- 1,685,475 COUPON NOTES 7.4% ------------------------------------------------------------------------- FANNIE MAE 4.75%, 11/14/03 13,710 13,873 3.63%, 04/15/04 20,000 20,357 FEDERAL HOME LOAN BANK 4.13%, 08/15/03 21,790 21,868 5.13%, 09/15/03 42,675 43,007 3.13%, 11/14/03 17,000 17,102 1.36%, 03/05/04 15,000 15,000 3.75%, 04/15/04 25,000 25,482 1.40%, 05/10/04 10,000 10,000 FREDDIE MAC 5.75%, 07/15/03 5,000 5,008 3.25%, 12/15/03 22,936 23,163 3.25%, 01/15/04 15,000 15,149 3.75%, 04/15/04 20,000 20,382 ----------- 230,391
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) OTHER INVESTMENTS 38.3% of investments ------------------------------------------------------------------------- REPURCHASE AGREEMENTS 38.3% ------------------------------------------------------------------------- BANK OF AMERICA SECURITIES, L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $107,100 1.32%, issued 06/30/03, due 07/01/03 105,004 105,000 BEAR STEARNS & CO., INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $178,506 1.32%, issued 06/30/03, due 07/01/03 105,004 105,000 1.03%, issued 06/18/03, due 07/07/03 40,022 40,000 1.22%, issued 05/07/03, due 07/07/03 30,062 30,000 CREDIT SUISSE FIRST BOSTON L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $259,638 1.20%, issued 05/02/03, due 07/01/03 70,140 70,000 1.25%, issued 06/03/02, due 07/01/03 25,024 25,000 1.32%, issued 06/30/03, due 07/01/03 104,540 104,536 1.22%, issued 04/17/03, due 07/07/03 30,082 30,000 1.23%, issued 04/15/03, due 07/07/03 25,071 25,000 LEHMAN BROTHERS, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $91,807 1.20%, issued 04/07/03, due 07/07/03 50,152 50,000 1.20%, issued 05/07/03, due 07/07/03 30,061 30,000
See financial notes. 22 SCHWAB GOVERNMENT MONEY FUND
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) 1.22%, issued 04/14/03, due 07/07/03 10,028 10,000 MORGAN STANLEY & CO., INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $229,501 0.98%, issued 06/13/03, due 07/07/03 30,020 30,000 1.18%, issued 06/03/03, due 07/07/03 30,033 30,000 1.21%, issued 04/28/03, due 07/07/03 35,082 35,000 1.21%, issued 05/06/03, due 07/07/03 40,083 40,000 1.22%, issued 04/25/03, due 07/07/03 40,099 40,000 1.22%, issued 05/05/03, due 07/07/03 20,043 20,000 1.22%, issued 05/15/03, due 07/07/03 30,054 30,000 UBS FINANCIAL SERVICES, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $346,782 0.94%, issued 06/23/03, due 07/07/03 50,018 50,000 1.01%, issued 06/16/03, due 07/07/03 160,094 160,000 1.02%, issued 06/20/03, due 07/07/03 40,019 40,000 1.06%, issued 06/17/03, due 07/07/03 65,038 65,000 1.22%, issued 04/14/03, due 07/07/03 25,071 25,000 ----------- 1,189,536
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 23 SCHWAB GOVERNMENT MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------------ Investments, at market value $1,915,866 a Repurchase agreements, at market value 1,189,536 a Interest receivable 3,302 Prepaid expenses + 60 -------------- TOTAL ASSETS 3,108,764 LIABILITIES ------------------------------------------------------------------------------ Payables: Dividends to shareholders 541 Investments bought 29,928 Investment adviser and administrator fees 70 Transfer agent and shareholder service fees 114 Accrued expenses + 157 -------------- TOTAL LIABILITIES 30,810 NET ASSETS ------------------------------------------------------------------------------ TOTAL ASSETS 3,108,764 TOTAL LIABILITIES - 30,810 -------------- NET ASSETS $3,077,954 NET ASSETS BY SOURCE Capital received from investors 3,078,836 Net realized capital losses (882) NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $ 3,077,954 3,079,066 $1.00
a The amortized cost for the fund's securities was $3,105,402. FEDERAL TAX DATA ------------------------------------------ COST BASIS OF PORTFOLIO $3,105,409 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2003 $161 2004 162 2005 226 2006 119 2007 184 2008 13 2010 + 1 ------------ $866
See financial notes. 24 SCHWAB GOVERNMENT MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ------------------------------------------------------------------------------ Interest $ 21,010 NET REALIZED GAINS AND LOSSES ------------------------------------------------------------------------------ Net realized losses on investments sold (16) EXPENSES ------------------------------------------------------------------------------ Investment adviser and administrator fees 5,581 a Transfer agent and shareholder service fees 6,984 b Trustees' fees 22 c Custodian and portfolio accounting fees 122 Professional fees 13 Registration fees 92 Shareholder reports 85 Other expenses + 13 -------------- Total expenses 12,912 Expense reduction - 1,271 d -------------- NET EXPENSES 11,641 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------------ TOTAL INVESTMENT INCOME 21,010 NET EXPENSES - 11,641 -------------- NET INVESTMENT INCOME 9,369 NET REALIZED LOSSES + (16) -------------- INCREASE IN NET ASSETS FROM OPERATIONS $ 9,353
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004 to 0.75% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 25 SCHWAB GOVERNMENT MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------ 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 9,369 $ 38,140 Net realized losses + (16) (1) ------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 9,353 38,139 DISTRIBUTIONS PAID ------------------------------------------------------------------------------ Dividends from net investment income 9,369 38,140 a TRANSACTIONS IN FUND SHARES b ------------------------------------------------------------------------------ Shares sold 4,055,824 7,912,017 Shares reinvested 8,727 37,703 Shares redeemed + (4,078,152) (7,911,680) ------------------------------------- NET TRANSACTIONS IN FUND SHARES (13,601) 38,040 NET ASSETS ------------------------------------------------------------------------------ Beginning of period 3,091,571 3,053,532 Total increase or decrease + (13,617) 38,039 c ------------------------------------- END OF PERIOD $3,077,954 $3,091,571
a The tax-basis components of distributions paid for the prior period were: Ordinary income $38,140 Long-term capital gains $ --
b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 26 SCHWAB U.S. TREASURY MONEY FUND FINANCIAL STATEMENTS Schwab U.S. Treasury Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ----------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ----------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 --------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.04 0.05 0.04 0.05 Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.04) (0.05) (0.04) (0.05) --------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 --------------------------------------------------------------- Total return (%) 0.30 2 1.15 3.61 5.40 4.25 4.69 RATIOS/SUPPLEMENTAL DATA (%) ----------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.65 3 0.65 0.65 0.65 4 0.65 0.65 Ratio of gross operating expenses to average net assets 0.82 3 0.82 0.84 0.84 4 0.86 0.91 Ratio of net investment income to average net assets 0.61 3 1.15 3.44 5.27 4.18 4.58 Net assets, end of period ($ x 1,000,000) 4,032 4,323 4,042 2,750 2,592 2,131
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.66% and 0.85%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 27 SCHWAB U.S. TREASURY MONEY FUND PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) -------------------------------------------------------------------------------- 100.0% U.S. GOVERNMENT SECURITIES 4,020,206 4,020,206 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 4,020,206 4,020,206
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) U.S. GOVERNMENT SECURITIES 100.0% of investments -------------------------------------------------------------------------- TREASURY BILLS 77.9% -------------------------------------------------------------------------- U.S. TREASURY BILLS 0.86%, 07/03/03 8,515 8,515 1.10%, 07/03/03 7,440 7,440 1.12%, 07/03/03 5,180 5,180 1.16%, 07/03/03 5,840 5,840 1.21%, 07/03/03 95,000 94,994 0.88%, 07/17/03 18,950 18,943 1.14%, 07/17/03 7,365 7,361 1.16%, 07/17/03 112,285 112,228 1.17%, 07/17/03 200,000 199,897 1.18%, 07/17/03 15,000 14,992 1.23%, 07/17/03 150,000 149,918 1.09%, 07/31/03 20 20 1.11%, 07/31/03 40,620 40,582 1.13%, 07/31/03 47,615 47,570 1.16%, 07/31/03 7,495 7,488 1.17%, 07/31/03 200,000 199,807 1.14%, 08/14/03 4,380 4,374 1.16%, 08/14/03 2,416 2,412 1.18%, 08/14/03 14,470 14,449 0.85%, 08/28/03 5,320 5,313 0.86%, 08/28/03 78,600 78,492 0.98%, 08/28/03 4,940 4,932 1.10%, 08/28/03 64,255 64,141 1.12%, 08/28/03 82,525 82,377 1.16%, 08/28/03 125,000 124,767 1.17%, 08/28/03 65,000 64,878 1.18%, 08/28/03 50,000 49,906 0.85%, 09/18/03 200,000 199,629 0.98%, 09/18/03 100,000 99,785 1.05%, 09/18/03 6,815 6,799 1.07%, 09/18/03 20,175 20,128 1.08%, 09/18/03 79,225 79,038 1.09%, 09/18/03 67,225 67,065 1.12%, 09/18/03 35,185 35,099 0.85%, 10/02/03 150,000 149,671 1.07%, 10/02/03 30,000 29,917 1.16%, 10/02/03 50,000 49,851 0.85%, 10/16/03 41,335 41,231 0.86%, 10/16/03 2,850 2,843 1.16%, 10/16/03 50,000 49,829 1.19%, 10/16/03 200,000 199,298 0.96%, 10/30/03 100,000 99,679 1.15%, 10/30/03 150,000 149,423 1.16%, 10/30/03 25,000 24,903 1.09%, 11/13/03 50,000 49,796 1.05%, 11/20/03 575 573 1.06%, 11/20/03 2,495 2,485 1.09%, 11/28/03 225,000 223,984 0.80%, 12/11/03 9,105 9,072 0.81%, 12/11/03 6,905 6,880 0.82%, 12/11/03 19,380 19,308 0.99%, 12/11/03 100,000 99,556 --------- 3,132,658 TREASURY NOTES 22.1% -------------------------------------------------------------------------- U.S. TREASURY NOTES 3.88%, 07/31/03 73,455 73,608 5.25%, 08/15/03 240,535 241,750 5.75%, 08/15/03 180,000 181,018 3.63%, 08/31/03 29,360 29,469 2.75%, 09/30/03 10,000 10,033 4.25%, 11/15/03 95,000 96,098 3.00%, 11/30/03 76,110 76,791 3.25%, 12/31/03 71,049 71,899
See financial notes. 28 SCHWAB U.S. TREASURY MONEY FUND
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 3.00%, 01/31/04 50,000 50,566 5.88%, 02/15/04 30,000 30,881 3.63%, 03/31/04 10,000 10,175 3.38%, 04/30/04 15,000 15,260 --------- 887,548
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 29 SCHWAB U.S. TREASURY MONEY FUND Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS -------------------------------------------------------------------------------- Investments, at market value $ 4,020,206 a Interest receivable 12,424 Prepaid expenses + 87 --------------- TOTAL ASSETS 4,032,717 LIABILITIES -------------------------------------------------------------------------------- Payables: Dividends to shareholders 723 Investment adviser and administrator fees 61 Transfer agent and shareholder service fees 150 Accrued expenses + 148 --------------- TOTAL LIABILITIES 1,082 NET ASSETS -------------------------------------------------------------------------------- TOTAL ASSETS 4,032,717 TOTAL LIABILITIES - 1,082 --------------- NET ASSETS $ 4,031,635 NET ASSETS BY SOURCE Capital received from investors 4,032,494 Net realized capital losses (859) NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $4,031,635 4,032,558 $1.00
a The amortized cost for the fund's securities was $4,020,206. FEDERAL TAX DATA --------------------------------------------------- COST BASIS OF PORTFOLIO $4,020,238 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2005 $ 62 2006 89 2007 580 2010 + 66 ------------- $ 797
See financial notes. 30 SCHWAB U.S. TREASURY MONEY FUND Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME -------------------------------------------------------------------------------- Interest $ 26,328 NET REALIZED GAINS AND LOSSES -------------------------------------------------------------------------------- Net realized losses on investments sold (43) EXPENSES -------------------------------------------------------------------------------- Investment adviser and administrator fees 7,478 a Transfer agent and shareholder service fees 9,423 b Trustees' fees 22 c Custodian and portfolio accounting fees 156 Professional fees 13 Registration fees 74 Shareholder reports 53 Other expenses + 17 ------------- Total expenses 17,236 Expense reduction - 3,625 d ------------- NET EXPENSES 13,611 INCREASE IN NET ASSETS FROM OPERATIONS -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 26,328 NET EXPENSES - 13,611 ------------- NET INVESTMENT INCOME 12,717 NET REALIZED LOSSES + (43) ------------- INCREASE IN NET ASSETS FROM OPERATIONS $ 12,674
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004 to 0.65% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 31 SCHWAB U.S. TREASURY MONEY FUND Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS -------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 12,717 $ 45,709 Net realized losses + (43) (72) -------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 12,674 45,637 DISTRIBUTIONS PAID -------------------------------------------------------------------------------- Dividends from net investment income 12,717 45,709 a TRANSACTIONS IN FUND SHARES b -------------------------------------------------------------------------------- Shares sold 4,910,082 10,640,600 Shares reinvested 11,854 45,056 Shares redeemed + (5,213,640) (10,404,554) -------------------------------------- NET TRANSACTIONS IN FUND SHARES (291,704) 281,102 NET ASSETS -------------------------------------------------------------------------------- Beginning of period 4,323,382 4,042,352 Total increase or decrease + (291,747) 281,030 c -------------------------------------- END OF PERIOD $ 4,031,635 $ 4,323,382
a The tax-basis components of distributions paid for the prior period were: Ordinary income $45,709 Long-term capital gains $ -- b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 32 SCHWAB VALUE ADVANTAGE MONEY FUND(R) Financial Statements Schwab Value Advantage Money Fund FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- INVESTOR SHARES 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ---------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.02 0.04 0.06 0.05 0.05 ----------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.02) (0.04) (0.06) (0.05) (0.05) ----------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ----------------------------------------------------------------------------- Total return (%) 0.46 2 1.55 4.05 6.22 5.01 5.35 RATIOS/SUPPLEMENTAL DATA (%) ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.45 3 0.45 0.43 0.40 4 0.40 0.40 Ratio of gross operating expenses to average net assets 0.55 3 0.54 0.56 0.59 4 0.61 0.67 Ratio of net investment income to average net assets 0.93 3 1.55 3.92 6.07 4.91 5.21 Net assets, end of period ($ x 1,000,000) 34,255 38,728 44,247 36,319 27,265 22,196
2/28/03 5- SELECT SHARES (R) 6/30/03* ---------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 ----------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 ----------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 ----------------------------------------------------------------------------- Net asset value at end of period 1.00 ----------------------------------------------------------------------------- Total return (%) 0.33 2 RATIOS/SUPPLEMENTAL DATA (%) ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.35 3 Ratio of gross operating expenses to average net assets 0.55 3 Ratio of net investment income to average net assets 0.95 3 Net assets, end of period ($ x 1,000,000) 941
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.41% and 0.60%, respectively, if certain non-routine expenses (proxy fees) had been included. 5 Commencement of operations. See financial notes. 33 SCHWAB VALUE ADVANTAGE MONEY FUND(R)
1/1/03- 7/1/02 1- INSTITUTIONAL SHARES 6/30/03* 12/31/02 ---------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 ----------------------------------------------------------------------------- Income from investment operations: Net investment income 0.01 0.01 ----------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.01) (0.01) ----------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 ----------------------------------------------------------------------------- Total return (%) 0.56 2 0.81 2 RATIOS/SUPPLEMENTAL DATA (%) ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.24 3 0.24 3 Ratio of gross operating expenses to average net assets 0.55 3 0.55 3 Ratio of net investment income to average net assets 1.13 3 1.57 3 Net assets, end of period ($ x 1,000,000) 682 521
* Unaudited. 1 Commencement of operations. 2 Not annualized. 3 Annualized. See financial notes. 34 SCHWAB VALUE ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: * Asset-backed security + Credit-enhanced security o Illiquid restricted security = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. government agency coupon notes and 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. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($X1,000) ($X1,000) --------------------------------------------------------------------------- 78.1% FIXED-RATE OBLIGATIONS 28,460,378 28,460,378 7.9% U.S. GOVERNMENT SECURITIES 2,882,247 2,882,247 5.9% VARIABLE-RATE OBLIGATIONS 2,162,953 2,162,953 8.1% OTHER INVESTMENTS 2,937,699 2,937,699 --------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 36,443,277 36,443,277
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000 ($ x 1,000) FIXED-RATE OBLIGATIONS 78.1% of investments
COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS 42.1% ------------------------------------------------------------------------------ AB SPINTAB 1.22%, 07/14/03 73,000 72,968 1.23%, 08/11/03 14,000 13,980 0.92%, 10/30/03 20,000 19,938 ALLIANCE & LEICESTER, PLC, 144A 1.26%, 07/14/03 37,000 36,983 0.99%, 09/17/03 20,000 19,957 * AMSTEL FUNDING CORP., 144A 1.21%, 08/19/03 24,000 23,961 1.22%, 09/02/03 21,000 20,955 *+ AMSTERDAM FUNDING CORP., 144A 1.23%, 07/10/03 97,000 96,970 1.23%, 08/07/03 59,000 58,925 1.21%, 08/15/03 50,000 49,924 1.20%, 09/02/03 39,000 38,918 1.20%, 09/05/03 20,000 19,956 1.09%, 09/26/03 15,000 14,961 + ANZ (DELAWARE), INC. 1.19%, 08/22/03 46,000 45,921 *+ AQUINAS FUNDING, L.L.C., 144A 1.23%, 08/20/03 28,000 27,952 1.22%, 08/25/03 34,000 33,937 * ASAP FUNDING, LTD., 144A 1.28%, 07/24/03 50,000 49,959 1.01%, 09/12/03 97,515 97,315 * ASSET PORTFOLIO FUNDING CORP., 144A 0.93%, 09/22/03 40,000 39,914 0.95%, 09/22/03 64,880 64,738 *+ ASSET SECURITIZATION COOPERATIVE CORP., 144A 1.22%, 08/12/03 20,000 19,972 1.06%, 08/13/03 44,000 43,944 1.21%, 08/22/03 33,500 33,441 *+ ATLANTIS ONE FUNDING CORP., 144A 1.24%, 07/02/03 30,000 29,999 1.21%, 07/09/03 74,000 73,980 1.26%, 07/25/03 12,000 11,990 1.26%, 07/28/03 25,000 24,976 1.21%, 08/13/03 32,700 32,653 1.22%, 08/15/03 58,000 57,912 1.20%, 09/11/03 74,979 74,799 1.11%, 09/16/03 55,000 54,871 1.19%, 09/16/03 126,000 125,679 0.91%, 11/13/03 80,000 79,727 0.91%, 12/16/03 39,000 38,834 0.90%, 12/17/03 20,000 19,916 0.90%, 12/18/03 84,000 83,643 BANK OF IRELAND 1.21%, 08/19/03 65,000 64,893 1.20%, 08/20/03 75,000 74,875
See financial notes. 35 SCHWAB VALUE ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) BANK OF NOVA SCOTIA 1.21%, 07/08/03 110,000 109,974 BANK ONE CORP. 1.22%, 07/29/03 10,000 9,991 1.22%, 08/04/03 25,000 24,971 BANK OF AMERICA CORP. 1.25%, 07/18/03 22,000 21,987 + BARCLAYS U.S. FUNDING CORP. 1.19%, 08/18/03 60,000 59,905 BEAR STEARNS COMPANIES, INC. 1.24%, 07/24/03 10,000 9,992 1.25%, 07/25/03 25,000 24,979 0.95%, 09/17/03 20,000 19,959 0.94%, 09/23/03 100,000 99,781 0.91%, 09/26/03 37,000 36,919 *+ BETA FINANCE, INC., 144A 1.31%, 07/15/03 31,500 31,484 1.08%, 08/04/03 43,000 42,956 1.23%, 08/18/03 38,300 38,237 1.02%, 09/18/03 6,000 5,987 1.58%, 11/20/03 48,000 48,000 + BNP PARIBAS FINANCE, INC. 1.20%, 08/29/03 120,000 119,764 + CBA (DELAWARE) FINANCE, INC. 1.21%, 07/10/03 96,000 95,971 1.18%, 08/21/03 89,000 88,851 1.19%, 08/22/03 32,000 31,945 * CC (USA), INC., 144A 1.23%, 07/10/03 68,000 67,979 1.31%, 07/10/03 15,500 15,495 1.23%, 08/18/03 25,000 24,959 1.23%, 08/26/03 10,000 9,981 0.99%, 09/10/03 25,000 24,951 CITICORP 1.25%, 07/21/03 62,000 61,957 1.21%, 08/08/03 150,000 149,808 CITIGROUP GLOBAL MARKETS HOLDINGS, INC. 1.27%, 07/30/03 80,000 79,919 1.20%, 08/11/03 45,000 44,939 1.22%, 08/12/03 100,000 99,858 1.20%, 08/13/03 95,000 94,864 1.23%, 08/14/03 173,000 172,741 1.19%, 08/15/03 80,000 79,881 *+ CLIPPER RECEIVABLES CORP. 1.24%, 07/11/03 33,576 33,564 1.25%, 07/11/03 196,000 195,932 1.27%, 07/25/03 30,000 29,975 1.25%, 08/07/03 34,000 33,956 1.21%, 08/12/03 50,000 49,929 1.25%, 08/12/03 42,287 42,225 1.21%, 08/28/03 23,000 22,955 * CONCORD MINUTEMEN CAPITAL CO., L.L.C., 144A Series A 1.24%, 07/02/03 55,315 55,313 1.27%, 07/11/03 20,000 19,993 1.27%, 07/18/03 25,000 24,985 1.25%, 08/05/03 50,000 49,940 1.07%, 08/06/03 30,000 29,968 1.24%, 08/08/03 38,000 37,950 1.22%, 08/18/03 83,000 82,865 1.28%, 10/10/03 27,000 26,904 *+ CAFCO, L.L.C., 144A 1.15%, 09/10/03 55,000 54,875 *+ CRC FUNDING, L.L.C., 144A 1.17%, 09/09/03 47,000 46,893 1.00%, 09/12/03 62,000 61,875 + CREDIT LYONNAIS N.A., INC. 1.00%, 09/15/03 101,000 100,787 0.98%, 10/09/03 17,000 16,954 * DAKOTA CP NOTES OF CITIBANK CREDIT CARD ISSUANCE TRUST, 144A 1.22%, 07/01/03 58,000 58,000 1.23%, 07/08/03 80,000 79,981 1.25%, 07/08/03 30,000 29,993 1.23%, 07/21/03 55,000 54,962 1.07%, 08/05/03 90,000 89,906 1.09%, 09/09/03 49,000 48,896 1.05%, 09/10/03 60,000 59,876 + DANSKE CORP. 1.25%, 07/08/03 99,000 98,976 1.22%, 07/14/03 23,000 22,990 1.25%, 07/17/03 15,000 14,992 1.18%, 08/20/03 150,000 149,754 1.19%, 08/22/03 50,000 49,914 0.96%, 09/18/03 117,000 116,754 1.24%, 10/27/03 16,000 15,936 DEN NORSKE BANK ASA 1.21%, 08/14/03 24,000 23,965 1.23%, 08/15/03 20,000 19,969 1.26%, 09/04/03 105,000 104,762
See financial notes. 36 SCHWAB VALUE ADVANTAGE MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + DEXIA DELAWARE, L.L.C. 0.89%, 09/25/03 43,000 42,909 * DORADA FINANCE, INC., 144A 1.27%, 07/11/03 10,000 9,997 1.26%, 07/18/03 70,000 69,958 1.31%, 07/25/03 75,000 74,935 1.23%, 07/30/03 21,335 21,314 1.23%, 08/13/03 48,500 48,429 1.21%, 08/26/03 16,000 15,970 1.21%, 08/28/03 20,000 19,961 1.04%, 09/17/03 20,000 19,955 * DORADA FINANCE, INC., 144A 1.95%, 09/16/03 122,000 122,000 1.96%, 09/16/03 45,000 45,000 *+ EDISON ASSET SECURITIZATION CORP., L.L.C., 144A 1.31%, 07/08/03 67,000 66,983 0.93%, 09/23/03 228,000 227,505 1.10%, 11/10/03 20,000 19,920 1.20%, 11/10/03 46,000 45,799 1.05%, 12/10/03 75,000 74,649 *+ FAIRWAY FINANCE CORP., 144A 0.97%, 09/12/03 106,739 106,529 0.98%, 09/15/03 50,131 50,027 1.22%, 09/15/03 44,000 43,888 0.97%, 09/16/03 33,000 32,932 *+ FALCON ASSET SECURITIZATION CORP., 144A 0.97%, 09/15/03 37,136 37,060 0.98%, 09/15/03 85,145 84,969 FORENINGSSPARBANKEN AB (SWEDBANK) 1.26%, 07/07/03 80,000 79,983 1.09%, 09/10/03 19,000 18,959 *+ FORRESTAL FUNDING MASTER TRUST NOTES 2000A, 144A 1.08%, 07/29/03 140,000 139,882 FORTIS FUNDING, L.L.C., 144A 1.27%, 07/21/03 49,000 48,966 1.25%, 07/22/03 43,455 43,423 *+ GALAXY FUNDING, INC., 144A 1.25%, 07/23/03 100,000 99,924 1.26%, 07/24/03 35,000 34,972 1.25%, 07/28/03 35,000 34,967 1.25%, 07/29/03 25,000 24,976 0.98%, 09/12/03 13,000 12,974 0.92%, 09/26/03 28,000 27,938 + GE CAPITAL INTERNATIONAL FUNDING, INC., 144A 1.22%, 07/11/03 68,000 67,977 1.26%, 07/24/03 100,000 99,920 1.19%, 08/25/03 104,000 103,811 1.20%, 08/26/03 74,000 73,862 1.21%, 08/28/03 225,000 224,561 1.05%, 12/09/03 50,000 49,767 1.02%, 12/11/03 29,000 28,867 GENERAL ELECTRIC CAPITAL CORP. 1.27%, 07/15/03 300,000 299,853 1.25%, 07/21/03 22,000 21,985 1.28%, 08/07/03 40,000 39,948 1.29%, 09/23/03 50,000 49,851 1.11%, 12/03/03 104,000 103,507 GENERAL ELECTRIC CAPITAL SERVICES 1.25%, 07/23/03 115,000 114,912 1.25%, 07/24/03 185,000 184,852 1.25%, 07/25/03 120,000 119,900 1.25%, 07/28/03 130,000 129,878 GENERAL ELECTRIC CO. 1.25%, 07/22/03 286,000 285,791 *+ GIRO FUNDING U.S. CORP., 144A 1.25%, 07/16/03 45,000 44,977 1.24%, 07/31/03 60,000 59,938 1.07%, 08/05/03 11,000 10,989 1.26%, 08/06/03 70,000 69,912 1.21%, 08/15/03 70,000 69,894 1.02%, 09/12/03 30,694 30,631 0.98%, 09/15/03 45,000 44,907 0.94%, 09/24/03 48,000 47,893 *+ GRAMPIAN FUNDING, LTD., 144A 0.98%, 10/01/03 23,000 22,943 *+o GREENWICH FUNDING CORP., 144A 1.23%, 07/11/03 30,725 30,715 1.25%, 07/15/03 46,655 46,632 0.95%, 09/12/03 40,000 39,923 *+ HATTERAS FUNDING CORP., 144A 1.26%, 08/11/03 58,000 57,917 1.23%, 08/14/03 19,000 18,971 1.13%, 08/26/03 50,000 49,912 1.19%, 09/22/03 16,000 15,956 0.96%, 10/17/03 52,000 51,850 + HBOS TREASURY SERVICES, PLC 1.25%, 07/25/03 144,000 143,880
See financial notes. 37 SCHWAB VALUE ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.07%, 08/07/03 19,000 18,979 0.97%, 09/16/03 20,000 19,959 1.01%, 09/16/03 30,000 29,935 1.10%, 11/19/03 113,283 112,799 *+ INDEPENDENCE FUNDING, L.L.C., 144A 1.25%, 07/02/03 86,296 86,293 1.07%, 08/12/03 50,000 49,938 + ING (U.S.) FUNDING, L.L.C. 1.21%, 07/10/03 70,000 69,979 1.23%, 07/11/03 73,000 72,975 1.30%, 07/18/03 10,000 9,994 1.23%, 08/08/03 48,000 47,938 1.04%, 12/10/03 147,000 146,319 *+ INTREPID FUNDING MASTER TRUST, 144A 1.09%, 07/14/03 54,056 54,035 IRISH LIFE & PERMANENT, PLC, 144A 0.95%, 09/17/03 23,000 22,953 J.P. MORGAN CHASE & CO. 1.25%, 08/04/03 115,000 114,865 1.22%, 08/18/03 118,000 117,808 *+ JUPITER SECURITIZATION CORP., 144A 1.25%, 07/14/03 99,000 98,955 1.07%, 07/25/03 159,000 158,887 1.07%, 07/29/03 15,000 14,988 1.21%, 08/18/03 9,965 9,949 1.20%, 09/02/03 9,000 8,981 *+ K2 (USA), L.L.C. 1.23%, 07/03/03 8,000 7,999 1.32%, 07/14/03 21,000 20,990 1.30%, 07/15/03 18,500 18,491 1.32%, 07/16/03 19,000 18,990 1.27%, 07/21/03 7,000 6,995 1.28%, 09/02/03 50,000 49,888 1.13%, 09/17/03 18,000 17,956 1.18%, 10/20/03 26,000 25,906 KBC FINANCIAL PRODUCTS INTERNATIONAL, LTD., 144A 1.22%, 07/08/03 30,000 29,993 *+ KITTY HAWK FUNDING CORP., 144A 1.07%, 07/28/03 52,131 52,089 0.98%, 09/15/03 8,000 7,983 0.95%, 09/22/03 36,431 36,351 + LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, 144A 1.26%, 08/27/03 95,000 94,812 1.29%, 03/09/04 90,000 89,200 1.33%, 03/26/04 30,000 29,706 1.35%, 04/15/04 35,000 34,625 * LEXINGTON PARKER CAPITAL CO., L.L.C., 144A 1.23%, 07/10/03 100,000 99,969 1.28%, 07/11/03 24,000 23,992 1.32%, 07/14/03 35,724 35,707 1.30%, 07/22/03 45,000 44,966 1.27%, 07/24/03 40,000 39,968 1.28%, 07/25/03 47,000 46,960 1.23%, 09/02/03 33,000 32,929 *+ LINKS FINANCE, L.L.C., 144A 1.10%, 09/08/03 20,000 19,958 1.00%, 09/12/03 11,000 10,978 1.13%, 09/15/03 13,000 12,969 LLOYDS TSB BANK, PLC 1.19%, 08/01/03 100,000 99,898 1.18%, 08/20/03 84,000 83,863 *+ MONT BLANC CAPITAL CORP., 144A 1.26%, 07/14/03 15,000 14,993 1.10%, 07/28/03 24,000 23,980 1.06%, 08/13/03 100,000 99,873 1.23%, 09/03/03 25,000 24,945 MORGAN STANLEY 1.23%, 07/23/03 150,000 149,887 1.25%, 07/25/03 48,000 47,960 1.20%, 08/26/03 100,000 99,813 * NEWCASTLE CERTIFICATES PROGRAM, 144A Series 2000A 1.26%, 07/15/03 16,000 15,992 1.24%, 08/06/03 9,000 8,989 1.23%, 08/14/03 137,155 136,949 0.94%, 09/25/03 91,000 90,796 + NORDEA N.A., INC. 0.98%, 08/21/03 125,000 124,826 0.99%, 09/22/03 60,000 59,864 *+ OLD LINE FUNDING CORP., 144A 1.08%, 07/24/03 40,191 40,163 *+ PREFERRED RECEIVABLES FUNDING CORP., 144A 1.20%, 08/29/03 44,592 44,504 *+ QUINCY CAPITAL CORP., 144A 1.08%, 07/24/03 25,553 25,535 + SAN PAOLO IMI U.S.FINANCIAL CO. 1.04%, 12/09/03 25,000 24,885
See financial notes. 38 SCHWAB VALUE ADVANTAGE MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + SANTANDER CENTRAL HISPANO FINANCE (DELAWARE), INC. 1.21%, 09/02/03 86,000 85,818 1.21%, 09/03/03 50,000 49,892 1.21%, 09/05/03 11,000 10,976 1.10%, 09/09/03 70,000 69,850 * SIGMA FINANCE, INC., 144A 1.23%, 07/07/03 10,000 9,998 1.23%, 07/09/03 50,000 49,986 1.31%, 07/15/03 10,000 9,995 1.27%, 07/16/03 35,000 34,982 1.24%, 08/05/03 44,000 43,947 1.29%, 08/05/03 8,000 7,990 1.29%, 08/11/03 29,000 28,958 1.28%, 08/26/03 8,000 7,984 1.22%, 08/29/03 15,000 14,970 0.97%, 09/12/03 17,000 16,967 0.98%, 09/15/03 21,000 20,957 + SOCIETE GENERALE N.A., INC. 1.20%, 07/01/03 11,000 11,000 1.20%, 07/02/03 400,000 399,987 1.23%, 07/10/03 15,000 14,995 1.03%, 09/10/03 96,000 95,805 1.04%, 12/08/03 15,000 14,931 + STADSHYPOTEK DELAWARE, INC., 144A 1.25%, 07/01/03 15,000 15,000 *+ STELLAR FUNDING GROUP, INC., 144A 1.25%, 07/14/03 7,018 7,015 + SVENSKA HANDELSBANKEN, INC. 1.21%, 07/01/03 100,000 100,000 *+ THUNDER BAY FUNDING, INC., 144A 1.26%, 07/01/03 60,000 60,000 1.10%, 08/04/03 35,016 34,980 1.07%, 08/19/03 30,050 30,006 1.21%, 08/20/03 18,059 18,029 *+ TULIP FUNDING CORP., 144A 1.07%, 07/31/03 34,000 33,970 + WESTPAC CAPITAL CORP. 1.25%, 07/07/03 72,000 71,985 1.03%, 09/09/03 47,500 47,405 + WESTPAC TRUST SECURITIES NZ 1.20%, 09/04/03 50,000 49,892 *+ WINDMILL FUNDING CORP., 144A 1.21%, 08/08/03 25,000 24,968 1.21%, 08/15/03 18,000 17,973 0.95%, 09/25/03 35,000 34,921 ---------- 15,346,166 CERTIFICATES OF DEPOSIT 31.2% -------------------------------------------------------------------------------- ABN AMRO BANK, NV 2.42%, 07/18/03 125,000 124,998 1.19%, 08/27/03 50,000 50,004 ALLIANCE & LEICESTER, PLC 1.20%, 11/19/03 50,000 50,000 AMERICAN EXPRESS CENTURION BANK 0.92%, 09/22/03 100,000 100,000 AUSTRALIA & NEW ZEALAND BANKING GROUP, LTD. 1.24%, 07/08/03 145,000 145,000 1.24%, 07/09/03 100,000 100,000 BANK OF MONTREAL 1.21%, 07/09/03 85,000 85,000 1.19%, 08/28/03 70,000 70,000 BANK OF NEW YORK 1.29%, 08/18/03 44,000 44,000 BANK OF NOVA SCOTIA 1.21%, 07/08/03 91,000 91,000 1.20%, 07/09/03 49,000 49,000 1.21%, 07/11/03 75,000 75,000 1.21%, 07/14/03 40,000 40,000 1.18%, 08/25/03 47,000 47,000 BARCLAYS BANK, PLC 1.25%, 07/15/03 150,000 150,000 1.25%, 07/16/03 98,000 98,000 1.25%, 07/28/03 50,000 50,000 1.26%, 07/28/03 161,000 161,000 1.20%, 08/04/03 41,000 41,002 1.06%, 08/12/03 300,000 300,000 1.19%, 08/28/03 18,000 18,000 1.60%, 11/25/03 174,000 174,004 1.10%, 04/19/04 25,000 25,050 BAYERISCHE LANDESBANK GIROZENTRALE 1.19%, 08/29/03 80,000 80,000 1.27%, 09/02/03 189,000 189,000 1.20%, 09/03/03 50,000 50,000 1.25%, 03/15/04 100,000 99,992 1.30%, 03/26/04 100,000 99,994 BNP PARIBAS 1.25%, 07/21/03 265,000 265,000 1.25%, 07/23/03 181,000 181,000
See financial notes. 39 SCHWAB VALUE ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ X 1,000) ($ x 1,000) 1.23%, 08/01/03 297,000 297,000 1.09%, 11/10/03 225,000 225,000 1.03%, 12/09/03 90,000 90,016 1.05%, 12/10/03 90,000 90,000 CANADIAN IMPERIAL BANK OF COMMERCE 1.24%, 07/15/03 80,000 80,000 1.14%, 09/15/03 40,000 40,000 CHASE MANHATTAN BANK (USA), N.A. 1.27%, 07/22/03 50,000 50,000 1.27%, 07/23/03 129,000 129,000 CITIBANK, N.A. 1.25%, 07/28/03 125,000 125,000 1.23%, 08/06/03 150,000 150,000 1.23%, 08/07/03 20,000 20,000 1.22%, 08/20/03 80,000 80,000 1.20%, 08/27/03 170,000 170,000 1.10%, 09/10/03 65,000 65,000 1.11%, 09/10/03 53,000 53,000 0.95%, 09/18/03 45,000 45,000 0.96%, 09/19/03 75,000 75,000 0.95%, 09/24/03 270,000 270,000 0.93%, 09/25/03 48,000 48,000 CREDIT AGRICOLE INDOSUEZ 1.20%, 07/10/03 47,000 47,000 1.30%, 07/17/03 75,000 75,000 1.06%, 08/04/03 94,000 94,000 CREDIT LYONNAIS S.A. 0.91%, 09/23/03 25,000 25,002 CREDIT SUISSE FIRST BOSTON 1.30%, 07/16/03 45,000 45,000 1.25%, 07/17/03 50,000 50,000 DEPFA BANK, PLC 0.98%, 09/18/03 66,000 66,000 DEUTSCHE BANK, AG 1.31%, 07/01/03 80,000 80,000 1.32%, 07/09/03 223,000 223,000 1.21%, 07/16/03 200,000 200,000 1.21%, 07/17/03 200,000 200,000 1.19%, 08/27/03 87,000 87,000 1.10%, 09/09/03 160,000 160,000 0.90%, 09/25/03 46,000 46,003 1.85%, 10/15/03 247,000 246,993 1.10%, 11/10/03 100,000 100,029 1.50%, 05/24/04 100,000 100,000 FORENINGSSPARBANKEN, AB (SWEDBANK) 1.25%, 07/30/03 20,000 20,000 0.90%, 11/25/03 11,000 11,000 FORTIS BANK 1.18%, 08/25/03 25,000 25,000 + HBOS TREASURY SERVICES, PLC 1.27%, 08/11/03 150,000 150,000 1.11%, 09/12/03 40,000 40,000 ING BANK, N.V. 1.21%, 07/03/03 76,000 76,000 1.25%, 07/08/03 50,000 50,000 1.25%, 07/17/03 120,000 120,000 1.25%, 07/31/03 13,000 13,000 1.23%, 08/08/03 180,000 180,000 1.22%, 08/13/03 120,000 120,000 KBC BANK NV 1.21%, 07/07/03 47,000 47,000 LANDESBANK BADEN WURTTEMBERG 1.06%, 08/12/03 35,000 35,000 1.20%, 08/22/03 95,000 95,000 1.20%, 09/03/03 10,000 10,000 0.96%, 09/12/03 100,000 100,024 1.73%, 09/30/03 25,000 25,004 1.85%, 10/17/03 94,000 94,000 0.91%, 12/12/03 20,000 20,012 0.91%, 12/30/03 45,000 45,000 LANDESBANK HESSEN-THURINGEN GIROZENTRALE 1.40%, 07/09/03 30,000 30,000 1.30%, 08/21/03 60,000 60,000 1.86%, 10/20/03 70,000 70,000 1.30%, 02/03/04 36,000 36,023 NATEXIS BANQUES POPULAIRES 1.20%, 08/29/03 107,000 107,000 NATIONAL CITY BANK, CLEVELAND 1.20%, 07/07/03 100,000 100,000 NORDDEUTSCHE LANDESBANK GIROZENTRALE 1.25%, 07/18/03 40,000 40,000 1.27%, 08/21/03 35,000 35,001 1.18%, 08/25/03 10,000 10,000 1.57%, 11/07/03 25,000 24,999 0.90%, 12/29/03 63,000 63,000 1.49%, 12/29/03 48,000 48,000 1.25%, 04/05/04 50,000 50,000 1.30%, 04/13/04 55,000 54,998
See financial notes. 40 SCHWAB VALUE ADVANTAGE MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) NORDEA BANK FINLAND, PLC 1.20%, 09/02/03 22,000 22,000 RABOBANK NEDERLAND 0.95%, 12/03/03 49,000 49,050 ROYAL BANK OF CANADA 1.61%, 11/25/03 125,000 124,997 ROYAL BANK OF SCOTLAND, PLC 1.20%, 07/01/03 174,000 174,000 0.97%, 09/17/03 135,000 134,997 SOCIETE GENERALE 1.20%, 07/01/03 35,000 35,000 1.30%, 07/15/03 65,000 65,000 1.25%, 07/18/03 30,000 30,000 SOUTHTRUST BANK 1.30%, 07/11/03 51,000 51,000 1.05%, 12/19/03 23,000 23,000 STATE STREET BANK & TRUST CO., N.A. 1.19%, 08/26/03 121,000 121,000 1.10%, 12/04/03 34,000 34,000 TORONTO DOMINION BANK 1.20%, 07/07/03 43,000 43,000 1.31%, 07/07/03 115,000 115,000 1.30%, 07/10/03 58,000 58,000 0.92%, 09/17/03 75,000 75,010 1.20%, 11/13/03 33,000 33,001 0.89%, 12/22/03 37,000 37,000 UBS, AG 1.59%, 12/16/03 115,000 115,000 UNICREDITO ITALIANO SPA 1.34%, 07/09/03 50,000 50,000 1.28%, 07/17/03 47,000 47,001 1.31%, 07/17/03 60,000 60,000 1.26%, 07/22/03 50,000 50,000 0.96%, 09/15/03 93,000 93,017 1.10%, 09/15/03 180,000 180,000 0.98%, 09/19/03 33,000 33,000 WESTLB AG 1.23%, 08/14/03 30,000 30,000 1.93%, 09/18/03 97,000 97,000 1.84%, 10/15/03 46,000 45,999 1.26%, 04/02/04 105,000 105,000 1.34%, 04/14/04 99,000 99,000 1.35%, 04/23/04 100,000 99,992 WILMINGTON TRUST CO. 1.28%, 07/22/03 25,000 25,000 ---------- 11,360,212 BANK NOTES 2.8% -------------------------------------------------------------------------------- BANK OF AMERICA, N.A. 1.23%, 07/09/03 50,000 50,000 1.20%, 08/07/03 400,000 400,000 BANK ONE, N.A. 1.29%, 07/10/03 200,000 200,000 LASALLE NATIONAL BANK, N.A. 1.20%, 07/07/03 34,000 34,000 1.19%, 08/22/03 85,000 85,000 1.20%, 08/29/03 67,000 67,000 STANDARD FEDERAL BANK, N.A. 1.19%, 08/26/03 80,000 80,000 1.20%, 09/05/03 93,000 93,000 1.00%, 09/12/03 10,000 10,000 --------- 1,019,000 PROMISSORY NOTES 2.0% -------------------------------------------------------------------------------- o THE GOLDMAN SACHS GROUP, INC. 1.36%, 07/28/03 80,000 80,000 1.36%, 08/05/03 80,000 80,000 1.28%, 09/12/03 10,000 10,000 1.26%, 09/24/03 250,000 250,000 1.29%, 09/25/03 45,000 45,000 1.26%, 12/05/03 35,000 35,000 1.12%, 12/11/03 7,000 7,000 1.02%, 12/18/03 43,000 43,000 1.05%, 12/18/03 185,000 185,000 --------- 735,000 U.S. GOVERNMENT SECURITIES 7.9% of investments AGENCY DISCOUNT NOTES 7.9% -------------------------------------------------------------------------------- FANNIE MAE 1.18%, 08/27/03 196,925 196,559 1.13%, 09/03/03 70,000 69,859 0.89%, 09/24/03 125,000 124,737 = 0.94%, 10/01/03 90,000 89,784 1.09%, 11/19/03 130,000 129,447 0.89%, 11/20/03 59,200 58,993
See financial notes. 41 SCHWAB VALUE ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.09%, 11/26/03 128,250 127,679 1.05%, 12/03/03 10,000 9,955 1.08%, 12/12/03 12,099 12,040 0.89%, 12/17/03 49,404 49,199 0.90%, 12/17/03 105,000 104,556 1.04%, 12/29/03 150,000 149,223 FREDDIE MAC 1.05%, 08/29/03 153,600 153,336 1.10%, 09/04/03 105,000 104,791 1.10%, 09/11/03 84,000 83,817 1.01%, 09/17/03 50,000 49,891 1.10%, 09/22/03 20,000 19,950 1.02%, 09/30/03 270,000 269,304 0.99%, 10/24/03 25,000 24,921 1.02%, 10/24/03 12,000 11,961 1.09%, 10/24/03 250,000 249,129 1.00%, 10/31/03 150,000 149,492 1.03%, 11/12/03 98,517 98,139 1.09%, 11/21/03 65,000 64,720 0.99%, 11/26/03 80,000 79,676 1.00%, 12/04/03 34,000 33,853 1.02%, 12/04/03 99,000 98,567 1.03%, 12/04/03 70,000 69,689 1.00%, 12/05/03 150,000 149,349 1.00%, 03/25/04 50,000 49,631 --------- 2,882,247 VARIABLE-RATE OBLIGATIONS 5.9% OF INVESTMENTS + ACCESS LOANS FOR LEARNING STUDENT LOAN CORP. Taxable Student Loan RB Series II-A-6 1.12%, 07/07/03 27,800 27,800 + ACTIVE LIVING OF GLENVIEW, L.L.C. Senior Floating Rate Note Series 1998, 144A 1.07%, 07/07/03 10,900 10,900 BANK OF NEW YORK CO., INC., 144A 1.01%, 07/28/03 50,000 50,000 *+ BETA FINANCE, INC., 144A 1.15%, 07/15/03 80,000 79,998 CANADIAN IMPERIAL BANK OF COMMERCE 1.20%, 07/15/03 100,000 100,000 CHASE MANHATTAN BANK (USA) 1.07%, 07/30/03 100,000 100,000 * CITY OF NEW BRITAIN, CONNECTICUT GO Pension Bonds 1.12%, 07/07/03 40,000 40,000 * COLUMBUS, GEORGIA DEVELOPMENT AUTHORITY Taxable RB (Jay Leasing, Inc. Project) Series 1997 1.12%, 07/07/03 6,310 6,310 * DORADA FINANCE, INC., 144A 1.00%, 07/25/03 30,000 29,996 + FILLMORE, CALIFORNIA PUBLIC FINANCING AUTHORITY VRD Tax Allocation Bond (Fillmore Redevelopment Agency Central City Redevelopment Project Area) Series 1998A 1.17%, 07/07/03 10,120 10,120 o GE LIFE & ANNUITY ASSURANCE CO. 1.37%, 07/01/03 50,000 50,000 GENERAL ELECTRIC CAPITAL CORP. 1.17%, 07/17/03 225,000 225,000 + LOANSTAR ASSETS PARTNERS II, L.P., 144A 1.03%, 07/07/03 25,000 25,000 + MERLOT TRUST Series 2000B, 144A 1.17%, 07/07/03 30,000 30,000 o METROPOLITAN LIFE INSURANCE CO. 1.33%, 07/30/03 50,000 50,000 1.39%, 08/01/03 100,000 100,000 o MONUMENTAL LIFE INSURANCE CO. 1.40%, 07/01/03 100,000 100,000 1.42%, 07/01/03 100,000 100,000 1.49%, 07/01/03 10,000 10,000 MORGAN STANLEY, 144A 1.28%, 07/15/03 50,000 50,000 + NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY Taxable Economic Development Bonds (MSNBC CNBC Project) Series 1997A, 144A 1.30%, 07/01/03 25,600 25,600 ROYAL BANK OF SCOTLAND 1.14%, 07/16/03 100,000 100,000
See financial notes. 42 SCHWAB VALUE ADVANTAGE MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + SANTA ROSA, CALIFORNIA Wastewater RB Series 1998A 1.18%, 07/07/03 17,000 17,000 Wastewater RB Series 2002A 1.18%, 07/07/03 40,000 40,000 o SECURITY LIFE OF DENVER INSURANCE CO. 1.43%, 07/22/03 100,000 100,000 * SIGMA FINANCE, INC., 144A 1.30%, 07/01/03 30,000 29,999 1.42%, 07/02/03 20,000 20,006 1.28%, 07/07/03 35,000 34,995 1.30%, 07/07/03 97,000 96,996 1.14%, 07/15/03 150,000 149,988 1.04%, 07/23/03 100,000 99,998 1.26%, 08/06/03 50,000 49,999 1.25%, 08/15/03 100,000 99,998 + TOWN OF ISLIP, NEW YORK IDA Taxable Adjustable Rate IDRB (Nussdorf Associates/Quality King Distributions, Inc. Facility) Series 1992, 144A 1.25%, 07/07/03 3,250 3,250 o TRAVELERS INSURANCE CO. 1.37%, 08/01/03 50,000 50,000 1.36%, 08/21/03 50,000 50,000 --------- 2,162,953
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) OTHER INVESTMENTS 8.1% of investments REPURCHASE AGREEMENTS 8.1% -------------------------------------------------------------------------------- BANK OF AMERICA SECURITIES, L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $761,940 1.32%, issued 06/30/03, due 07/01/03 747,027 747,000 BEAR STEARNS & CO., INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $183,601 1.29%, issued 01/15/03, due 07/07/03 180,116 180,000 CREDIT SUISSE FIRST BOSTON L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $422,993 1.32%, issued 06/30/03, due 07/01/03 414,714 414,699 LEHMAN BROTHERS, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $291,723 1.20%, issued 04/07/03, due 07/07/03 126,382 126,000 1.20%, issued 05/07/03, due 07/07/03 160,325 160,000 UBS FINANCIAL SERVICES, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $1,336,205 1.32%, issued 06/30/03, due 07/01/03 1,000,037 1,000,000 0.93%, issued 06/30/03, due 07/07/03 310,136 310,000 --------- 2,937,699
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 43 SCHWAB VALUE ADVANTAGE MONEY FUND(R) Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS ------------------------------------------------------------------------------- Investments, at market value $36,443,277 a Receivables: Fund shares sold 113,928 Interest 52,392 Prepaid expenses + 467 --------------- TOTAL ASSETS 36,610,064 LIABILITIES ------------------------------------------------------------------------------- Payables: Fund shares redeemed 165,119 Dividends to shareholders 10,844 Investments bought 554,786 Investment adviser and administrator fees 628 Transfer agent and shareholder service fees 624 Accrued expenses + 643 --------------- TOTAL LIABILITIES 732,644 NET ASSETS ------------------------------------------------------------------------------- TOTAL ASSETS 36,610,064 TOTAL LIABILITIES - 732,644 --------------- NET ASSETS $35,877,420 NET ASSETS BY SOURCE Capital received from investors 35,877,524 Net realized capital losses (104) NET ASSETS BY SHARE CLASS SHARES SHARE CLASS NET ASSETS / OUTSTANDING = NAV Investor Shares $34,254,988 34,255,201 $1.00 Select Shares(R) $ 940,910 940,910 $1.00 Institutional Shares $ 681,522 681,522 $1.00
a Includes illiquid restricted securities worth $1,462,270, or 4.01% of the fund's investments. The amortized cost for the fund's securities was $36,443,277. FEDERAL TAX DATA --------------------------------------------- COST BASIS OF PORTFOLIO $36,443,277 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2003 $ 104
See financial notes. 44 SCHWAB VALUE ADVANTAGE MONEY FUND(R) Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ------------------------------------------------------------------------------- Interest $265,528 EXPENSES ------------------------------------------------------------------------------- Investment adviser and administrator fees 61,387 a Transfer agent and shareholder service fees: Investor Shares 41,086 b Select Shares(R) 513 b Institutional Shares 766 b Trustees' fees 89 c Custodian and portfolio accounting fees 1,663 Professional fees 57 Registration fees 439 Shareholder reports 201 Other expenses + 146 ------------ Total expenses 106,347 Expense reduction - 20,657 d ------------ NET EXPENSES 85,690 INCREASE IN NET ASSETS FROM OPERATIONS ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 265,528 NET EXPENSES - 85,690 ------------ NET INVESTMENT INCOME 179,838 ------------ INCREASE IN NET ASSETS FROM OPERATIONS $179,838
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services 0.17% of the fund's assets. c For the fund's independent trustees only. d Includes $19,693 from the investment adviser (CSIM) and $964 from the transfer agent and shareholder service agent (Schwab). These reductions reflect a guarantee by CSIM and Schwab to limit the annual operating expenses of this fund through at least April 30, 2004, as follows:
% OF AVERAGE SHARE CLASS DAILY NET ASSETS ------------------------------------------ Investor Shares 0.45 Select Shares (R) 0.35 Institutional Shares 0.24
This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 45 SCHWAB VALUE ADVANTAGE MONEY FUND(R) Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------ 1/1/03-6/30/03 1/1/02-12/31/02 Net investment income $ 179,838 $ 650,804 ---------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 179,838 650,804 DISTRIBUTIONS PAID ------------------------------------------------------------------------------ Dividends from net investment income Investor Shares 173,702 648,150 Select Shares(R) 2,208 -- Institutional Shares + 3,928 2,654 ---------------------------------- TOTAL DIVIDENDS FROM NET INVESTMENT INCOME 179,838 650,804 a TRANSACTIONS IN FUND SHARES b ------------------------------------------------------------------------------ SHARES SOLD Investor Shares 12,638,928 34,345,512 Select Shares(R) 1,411,980 -- Institutional Shares + 1,205,494 1,058,467 ---------------------------------- TOTAL SHARES SOLD 15,256,402 35,403,979 SHARES REINVESTED Investor Shares 152,416 608,484 Select Shares(R) 1,688 -- Institutional Shares + 3,101 1,551 ---------------------------------- TOTAL SHARES REINVESTED 157,205 610,035 SHARES REDEEMED Investor Shares (17,264,310) (40,473,102) Select Shares(R) (472,758) -- Institutional Shares + (1,048,465) (538,626) ---------------------------------- TOTAL SHARES REDEEMED (18,785,533) (41,011,728) NET TRANSACTIONS IN FUND SHARES (3,371,926) (4,997,714) c NET ASSETS ------------------------------------------------------------------------------ Beginning of period 39,249,346 44,247,060 Total decrease + (3,371,926) (4,997,714) d ---------------------------------- END OF PERIOD $ 35,877,420 $ 39,249,346
a The tax-basis components of distributions paid for the prior period were: Ordinary income $650,804 Long-term capital gains $ --
b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. The fund started offering Select Shares(R) on February 28, 2003. c Represents shares sold plus shares reinvested, minus shares redeemed. d Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 46 SCHWAB MONEY FUNDS Financial Notes unaudited Business Structure of the Funds EACH OF THE FUNDS DISCUSSED IN THIS REPORT IS A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS(TM), A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. The company is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the funds in this report and their trust. THE SCHWAB VALUE ADVANTAGE MONEY FUND(R) OFFERS THREE SHARE CLASSES: Investor Shares, Select Shares(R) and Institutional Shares. Shares of each class represent interests in the same portfolio, but each class has different expenses and investment minimums. The Schwab Money Market, Government Money and U.S. Treasury Money Funds 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 trust may issue as many shares as necessary. FUND OPERATIONS Most of the funds' investments are described in the fund-by-fund sections earlier in this report. However, there are certain other investments and policies that may affect a fund's financials. The most significant of these are described below. Other policies concerning the funds' business operations also are described here. THE FUNDS DECLARE DIVIDENDS EVERY DAY THEY ARE OPEN FOR BUSINESS. These dividends, which are 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. 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. 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, 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. THE FUNDS PAY FEES FOR VARIOUS SERVICES. Through their trust, the funds have agreements with Charles Schwab THE TRUST AND ITS FUNDS This list shows all of the funds included in The Charles Schwab Family of Funds. The funds discussed in this report 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(R) Schwab Municipal Money Fund Schwab California Municipal Money Fund Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) Schwab Government Cash Reserves 47 SCHWAB MONEY FUNDS Investment Management, Inc. (CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent and shareholder services. Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds that may limit the total expenses charged. The rates and limitations for these fees vary from fund to fund, and are described in each fund's Statement of Operations. TRUSTEES MAY INCLUDE PEOPLE WHO ARE OFFICERS AND/OR DIRECTORS OF THE INVESTMENT ADVISER OR SCHWAB. Federal securities law limits the percentage of such "interested persons" who may serve on a trust's board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund's Statement of Operations. THE FUNDS MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING AFFILIATES. The funds may make direct transactions with certain other SchwabFunds(R) 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. THE FUNDS INTEND TO MEET FEDERAL INCOME AND EXCISE TAX REQUIREMENTS FOR REGULATED INVESTMENT COMPANIES. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax. UNDER THE FUNDS' ORGANIZATIONAL DOCUMENTS, ITS OFFICERS AND TRUSTEES ARE INDEMNIFIED AGAINST CERTAIN LIABILITY 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. ACCOUNTING POLICIES The following are the main policies the funds use in preparing their financial statements. THE FUNDS VALUE THEIR SECURITIES AT AMORTIZED COST, which approximates market value. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. INTEREST INCOME is recorded as it accrues. If a fund bought a debt security at a discount (that is, for less than its 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. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. EXPENSES that are specific to a fund are charged directly to that fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their net assets. FOR FUNDS OFFERING MULTIPLE SHARE CLASSES, all of the realized and unrealized gains or losses and net investment income, other than class specific expenses, are allocated daily to each class in proportion to its net assets. 48 SCHWAB MONEY FUNDS EACH FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, each fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE 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. 49 Glossary Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. 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 Securities that are backed by various assets, which may include loans, accounts receivable or investments of an entity, such as a bank or credit card company. These securities are obligations that the issuer intends to repay using the assets backing them (once collected or liquidated). Therefore, repayment depends largely on the cash flows generated by the assets backing the securities. 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." 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 SECURITY A security that is 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. 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 TOB Tender option bond TOBP Tender option bond partnership TRAN Tax and revenue anticipation note VRD Variable-rate demand SCHWAB MONEY FUNDS 50 CREDIT RATINGS Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Moody's Investor Service, Standard & Poor's and Fitch, Inc., 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. 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 Generally, 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, corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, banker's acceptances, notes and time deposits. 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. 144A SECURITY A security exempt from a registration requirement pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, to qualified institutional buyers, as defined in Rule 144A. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. REVENUE ANTICIPATION NOTES Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc. 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 an annual rate and calculated as a percentage of the investment's market value. SCHWAB MONEY FUNDS 51 NOTES Contact Schwab SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any SchwabFund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments(TM) may not be purchased directly over the Internet. 2 Orders placed in person or through a telephone representative may be subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab Small-Cap Equity Fund(TM) Schwab Hedged Equity Fund(TM) Schwab Dividend Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S. MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.3 Choose from taxable or tax-advantaged alternatives. Many can be linked to your Schwab account to "sweep" cash balances automatically when you're between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments(R). 3 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) 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. (C) 2003 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG13602-06 Schwab Government Cash Reserves SEMIANNUAL REPORT June 30, 2003 [CHARLES SCHWAB LOGO] In This Report Management's Discussion .................................. 2 Fund yield figures and portfolio statistics, plus a discussion of factors that affected fund performance during the report period. Financial Statements Portfolio holdings and fund financials. Schwab Government Cash Reserves .......................... 5 Ticker Symbol: SWHXX Financial Notes .......................................... 11 Glossary ................................................. 13 From the Chairman [PHOTO OF CHARLES R. SCHWAB] Charles R. Schwab Chairman Without question, these are challenging times for America's investors. For money fund shareholders, one of the main concerns has been decline of short-term interest rates, since money fund yields are a reflection of those rates. Given the choice, I'm sure most of us would prefer that yields were higher. At the same time, I believe that a look at the larger picture reveals that the current low interest rate environment has a beneficial side that shouldn't be ignored. For example, Americans have recently had the opportunity to borrow money at the most attractive rates in decades, whether for buying a home, refinancing or realizing a life-long goal like starting a business. More importantly, the Federal Reserve's monetary policy, along with fiscal policies enacted by Congress and the President, should provide a powerful stimulus to economic recovery. That, too, is something that would benefit all Americans. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R), these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles R. Schwab Management's Discussion for the six months ended June 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here, and especially with their dedication to understanding the concerns of investors. That dedication is particularly important right now. Times of uncertainty about the economy and world events demand diligence from investment professionals. At SchwabFunds, we are keenly aware of this, and continue to work for the best interests of our shareholders. In recent months, money market funds have faced a very challenging environment. With interest rates on short-term investments falling in connection with the Fed's actions, some investors have expressed concerns about the potential for fund yields to fall to zero or even lower. I can assure you that we at SchwabFunds will continue to monitor the yields in all our money market funds. In consultation with fund trustees, we will take appropriate measures to maintain competitive yields. One thing we won't do in pursuit of yields is compromise our high standards for investment credit quality. We'll also continue to follow our time-tested management procedures and controls. In other words, we won't take short cuts that may jeopardize our long-term commitment to our investors. Thank you for choosing SchwabFunds. We're here to help you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab Government Cash Reserves 2 [PHOTO OF KAREN WIGGAN] KAREN WIGGAN, a portfolio manager, has been responsible for day-to-day management of the fund since 1999. She joined the firm in 1987 and has worked in fixed-income portfolio management since 1991. The Investment Environment and the Fund THE U.S. ECONOMY REMAINED IN A HOLDING PATTERN DURING THE SIX MONTHS OF THE REPORT PERIOD. Concerned by geopolitical uncertainties, businesses put off making major decisions about capital spending and hiring, even after the major combat phase of the war in Iraq was over. Economic indicators reported during the period were mixed, providing little incentive for businesses to pursue expansion plans. ALREADY AT THEIR LOWEST LEVEL IN DECADES, INTEREST RATES FELL FURTHER AS THE REPORT PERIOD PROGRESSED. During the first months of 2003, a major factor in the decline of rates was anticipation of the war in Iraq. Toward the end of the period, deflation fears came to the forefront, leading to expectations that the Federal Reserve (the Fed) would cut interest rates. These expectations were confirmed on June 25, when the Fed, seeking to provide yet further economic stimulus, cut the Fed funds rate by 0.25%. FALLING INTEREST RATES PUSHED MONEY FUND YIELDS TO NEW LOWS (see next page for fund yield information). Among agency discount note securities, the decline in rates was somewhat mitigated by a very high level of issuance, in part a result of the continued rapid pace of home refinancings. THE FUND BENEFITED FROM THE DECISION TO CONTINUE PURCHASES OF FREDDIE MAC SECURITIES. Although some of this issuer's accounting practices were called into question during the report period, our analysis indicated that the creditworthiness of its securities was not in doubt. The views expressed here are those of fund management only. 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 Government Cash Reserves 3 Management's Discussion continued Performance and Fund Facts as of 6/30/03 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, and that past performance is not an indication of future results. ------------------------------------------------------------------- SEVEN-DAY YIELD 1 0.05% ------------------------------------------------------------------- SEVEN-DAY EFFECTIVE YIELD 0.05% ------------------------------------------------------------------- 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 20 days ------------------------------------------------------------------- CREDIT QUALITY OF HOLDINGS 2 % 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 $1 per share, it is possible to lose money by investing in a money fund. 1 A portion of the fund's expenses was reduced during the reporting period. Without this reduction, the fund's seven-day yield would have been -0.15%. Please refer to the Statement of Operations on page 9 for additional information on expense waivers. 2 Portfolio holdings may have changed since the report date. Schwab Government Cash Reserves 4 SCHWAB GOVERNMENT CASH RESERVES Financial Statements Schwab Government Cash Reserves FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 4/1/98 1- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ----------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ----------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 2 0.01 0.03 0.05 0.04 0.03 ------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 2 (0.01) (0.03) (0.05) (0.04) (0.03) ------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ------------------------------------------------------------------------- Total return (%) 0.05 3 0.68 3.08 5.33 4.28 3.46 3 RATIOS/SUPPLEMENTAL DATA (%) ----------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 1.24 4 1.25 1.25 1.13 5 0.95 0.95 4 Ratio of gross operating expenses to average net assets 1.45 4 1.41 1.50 1.46 5 1.09 1.72 4 Ratio of net investment income to average net assets 0.11 4 0.67 2.99 5.24 4.34 4.41 4 Net assets, end of period ($ x 1,000,000) 628 639 562 412 198 25
* Unaudited. 1 Commencement of operations. 2 Per-share amount was less than $0.01. 3 Not annualized. 4 Annualized. Also, please refer to the Statement of Operations on page 9 for additional information on expense waivers. 5 The ratios of net and gross operating expenses would have been 1.14% and 1.47%, respectively, if certain non-routine expenses (proxy fees) had been included. See financial notes. 5 SCHWAB GOVERNMENT CASH RESERVES PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbol below to designate certain characteristics: = Delayed-delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. government agency coupon notes and U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($x1,000) ($x1,000) --------------------------------------------------------------- 52.0% U.S. GOVERNMENT SECURITIES 330,509 330,509 48.0% OTHER INVESTMENTS 304,673 304,673 --------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 635,182 635,182
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) U.S. GOVERNMENT SECURITIES 52.0% of investments -------------------------------------------------------------------------- DISCOUNT NOTES 49.4% -------------------------------------------------------------------------- FANNIE MAE 0.95%, 07/01/03 95,000 95,000 1.17%, 07/01/03 1,300 1,300 1.17%, 07/02/03 8,434 8,434 1.20%, 07/09/03 5,010 5,009 1.13%, 07/11/03 8,000 7,997 1.21%, 07/16/03 10,000 9,995 1.20%, 07/23/03 10,000 9,993 1.77%, 07/25/03 5,000 4,994 1.23%, 07/30/03 3,754 3,750 1.23%, 08/06/03 4,000 3,995 1.20%, 08/14/03 4,167 4,161 1.84%, 08/22/03 1,109 1,106 1.06%, 09/03/03 10,650 10,630 0.90%, 09/10/03 9,845 9,828 1.75%, 09/19/03 3,000 2,989 1.77%, 09/19/03 3,000 2,988 = 0.94%, 10/01/03 7,042 7,025 1.31%, 11/14/03 5,000 4,976 1.57%, 11/14/03 2,000 1,988 FEDERAL FARM CREDIT BANK 1.29%, 09/26/03 3,911 3,899 FEDERAL HOME LOAN BANK 1.20%, 07/01/03 2,011 2,011 1.17%, 07/02/03 2,200 2,200 1.18%, 07/02/03 10,000 10,000 1.17%, 07/09/03 1,500 1,500 1.39%, 07/21/03 1,593 1,592 FREDDIE MAC 1.17%, 07/10/03 1,000 1,000 1.20%, 07/10/03 7,195 7,192 1.22%, 07/10/03 5,773 5,771 1.20%, 07/15/03 1,500 1,499 1.20%, 07/17/03 8,000 7,996 1.96%, 07/17/03 5,000 4,996 2.02%, 07/17/03 2,000 1,998 1.77%, 07/30/03 10,000 9,986 1.00%, 08/11/03 4,000 3,995 1.00%, 08/14/03 3,020 3,016 1.28%, 08/14/03 2,115 2,112 1.35%, 08/14/03 1,300 1,298 1.80%, 08/14/03 1,250 1,247 1.00%, 08/21/03 2,000 1,997 1.00%, 09/08/03 1,600 1,597 0.96%, 09/17/03 10,805 10,783 1.20%, 09/17/03 1,071 1,068 1.44%, 09/22/03 2,000 1,993 0.90%, 09/25/03 8,765 8,746 1.81%, 09/29/03 3,000 2,987 1.77%, 10/09/03 2,000 1,990 0.92%, 10/20/03 1,200 1,197 1.48%, 10/27/03 6,131 6,102 1.33%, 11/14/03 5,000 4,975 1.39%, 12/04/03 1,000 994 -------- 313,895
See financial notes. 6 SCHWAB GOVERNMENT CASH RESERVES
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) COUPON NOTES 2.6% -------------------------------------------------------------------------- FANNIE MAE 4.75%, 11/14/03 2,832 2,866 5.80%, 12/10/03 1,000 1,019 FEDERAL HOME LOAN BANK 5.13%, 09/15/03 3,000 3,020 3.13%, 11/14/03 3,000 3,018 FREDDIE MAC 5.75%, 07/15/03 6,680 6,691 -------- 16,614
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) OTHER INVESTMENTS 48.0% of investments -------------------------------------------------------------------------- REPURCHASE AGREEMENTS 48.0% -------------------------------------------------------------------------- BANK OF AMERICA SECURITIES, L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $69,360 1.32%, issued 06/30/03, due 07/01/03 68,002 68,000 BEAR STEARNS & CO., INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $69,363 1.32%, issued 06/30/03, due 07/01/03 68,002 68,000 CREDIT SUISSE FIRST BOSTON L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $75,150 1.20%, issued 05/02/03, due 07/01/03 10,020 10,000 1.32%, issued 06/30/03, due 07/01/03 63,675 63,673 LEHMAN BROTHERS, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $10,200 1.22%, issued 04/14/03, due 07/07/03 10,028 10,000 UBS FINANCIAL SERVICES, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $86,700 1.07%, issued 06/19/03, due 07/03/03 85,035 85,000 -------- 304,673
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 7 SCHWAB GOVERNMENT CASH RESERVES Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS -------------------------------------------------------------------------------- Investments, at market value $330,509 a Repurchase agreements, at market value 304,673 a Interest receivable 339 Prepaid expenses + 221 ------------ TOTAL ASSETS 635,742 LIABILITIES -------------------------------------------------------------------------------- Payables: Dividends to shareholders 12 Investments bought 7,025 Transfer agent and shareholder service fees 22 Transaction service fees 377 Accrued expenses + 63 ------------ TOTAL LIABILITIES 7,499 NET ASSETS -------------------------------------------------------------------------------- TOTAL ASSETS 635,742 TOTAL LIABILITIES - 7,499 ------------ NET ASSETS $628,243 NET ASSETS BY SOURCE Capital received from investors 628,266 Net realized capital losses (23) NET ASSET VALUE (NAV) SHARES NET ASSETS + OUTSTANDING = NAV $628,243 628,266 $1.00
a The amortized cost for the fund's securities was $635,182. FEDERAL TAX DATA ------------------------------------------------ COST BASIS OF PORTFOLIO $635,183 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2007 $1
See financial notes. 8 SCHWAB GOVERNMENT CASH RESERVES Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME -------------------------------------------------------------------------------- Interest $ 4,360 NET REALIZED GAINS AND LOSSES -------------------------------------------------------------------------------- Net realized loss on investments sold (22) EXPENSES -------------------------------------------------------------------------------- Investment adviser and administrator fees 1,227 a Transfer agent and shareholder service fees 1,453 b Transaction service fees 1,775 c Trustees' fees 15 d Custodian and portfolio accounting fees 31 Professional fees 11 Registration fees 97 Shareholder reports 51 Other expenses + 4 ------------ Total expenses 4,664 Expense reduction - 647 e ------------ NET EXPENSES 4,017 INCREASE IN NET ASSETS FROM OPERATIONS -------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 4,360 NET EXPENSES - 4,017 ------------ NET INVESTMENT INCOME 343 NET REALIZED LOSSES + (22) ------------ INCREASE IN NET ASSETS FROM OPERATIONS $ 321
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.25% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For transaction services, Schwab receives a fee based on the number and type of transactions provided. d For the fund's independent trustees only. e This reduction consisted of two components. A reduction of $629, which reduced the fund's annualized operating expense ratio (OER) by 0.20%, was made by the investment adviser (CSIM) to reflect a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual OER of this fund through at least April 30, 2004, to 1.25% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. Also, CSIM voluntarily waived an additional $18 of the fund's expenses, which reduced the fund's annualized OER by an additional 0.01%. The combination of these two waivers resulted in a net annualized OER for the period of 1.24%. See financial notes. 9 SCHWAB GOVERNMENT CASH RESERVES Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS -------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 343 $ 3,885 Net realized losses + (22) -- ---------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 321 3,885 DISTRIBUTIONS PAID -------------------------------------------------------------------------------- Dividends from net investment income 343 3,885 a TRANSACTIONS IN FUND SHARES b -------------------------------------------------------------------------------- Shares sold 3,046,662 5,847,747 Shares reinvested 318 3,716 Shares redeemed + (3,058,203) (5,773,588) ---------------------------------- NET TRANSACTIONS IN FUND SHARES (11,223) 77,875 NET ASSETS -------------------------------------------------------------------------------- Beginning of period 639,488 561,613 Total increase or decrease + (11,245) 77,875 c ---------------------------------- END OF PERIOD $ 628,243 $ 639,488
a The tax-basis components of distributions paid for the prior period were: Ordinary income $3,885 Long-term capital gains $ -- b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 10 SCHWAB GOVERNMENT CASH RESERVES Financial Notes unaudited Business Structure of the Fund THE FUND DISCUSSED IN THIS REPORT IS A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS(TM), A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. The company is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the fund in this report and its trust. THE 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 trust may issue as many shares as necessary. Fund Operations Most of the fund's investments are described in sections earlier in this report. However, there are certain other investments and policies that may affect the fund's financials. The most significant of these are described below. Other policies concerning the fund's business operations also are described here. THE FUND DECLARES DIVIDENDS EVERY DAY IT IS OPEN FOR BUSINESS. These dividends, which are equal to the 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. THE FUND MAY BUY SECURITIES ON A DELAYED-DELIVERY BASIS. In these transactions, the 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. THE FUND MAY ENTER INTO REPURCHASE AGREEMENTS. In a repurchase agreement, the 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 agreement 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. THE FUND PAYS FEES FOR VARIOUS SERVICES. Through its trust, the fund has agreements with Charles Schwab Investment Management, Inc. (CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent, shareholder services and transaction services. THE TRUST AND ITS FUNDS This list shows all of the funds included in The Charles Schwab Family of Funds. The fund discussed in this report 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(R) Schwab Municipal Money Fund Schwab California Municipal Money Fund Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) Schwab Government Cash Reserves 11 SCHWAB GOVERNMENT CASH RESERVES Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the fund that may limit the total expenses charged. The rates and limitations for these fees are described in the fund's Statement of Operations. TRUSTEES MAY INCLUDE PEOPLE WHO ARE OFFICERS AND/OR DIRECTORS OF THE INVESTMENT ADVISER OR SCHWAB. Federal securities law limits the percentage of such "interested persons" who may serve on a trust's board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in the fund's Statement of Operations. THE FUND MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING AFFILIATES. The fund may make direct transactions with certain other SchwabFunds(R) 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. 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. UNDER THE FUND'S ORGANIZATIONAL DOCUMENTS, ITS OFFICERS AND TRUSTEES ARE INDEMNIFIED AGAINST CERTAIN LIABILITY ARISING OUT OF THE PERFORMANCE OF THEIR DUTIES TO THE FUNDS. 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. Accounting Policies The following are the main policies the fund uses in preparing its financial statements. THE FUND VALUES ITS SECURITIES AT AMORTIZED COST, which approximates market value. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. INTEREST INCOME is recorded as it accrues. If the fund bought a debt instrument at a discount (that is, for less than its face value) or a premium (more than its 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. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. EXPENSES that are specific to the fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their net assets. THE FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, the fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE 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. 12 Glossary Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. 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 Securities that are backed by various assets, which may include loans, accounts receivable or investments of an entity, such as a bank or credit card company. These securities are obligations that the issuer intends to repay using the assets backing them (once collected or liquidated). Therefore, repayment depends largely on the cash flows generated by the assets backing the securities. 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." 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 SECURITY A security that is 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. 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 TOB Tender option bond TOBP Tender option bond partnership TRAN Tax and revenue anticipation note VRD Variable-rate demand Schwab Government Cash Reserves 13 CREDIT RATINGS Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Moody's Investor Service, Standard & Poor's and Fitch, Inc., 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. 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 Generally, 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, corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, banker's acceptances, notes and time deposits. 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. 144A SECURITY A security exempt from a registration requirement pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, to qualified institutional buyers, as defined in Rule 144A. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. REVENUE ANTICIPATION NOTES Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc. 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 an annual rate and calculated as a percentage of the investment's market value. Schwab Government Cash Reserves 14 NOTES NOTES Contact Schwab SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any SchwabFund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments(TM) may not be purchased directly over the Internet. 2 Orders placed in person or through a telephone representative may be subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab Small-Cap Equity Fund(TM) Schwab Hedged Equity Fund(TM) Schwab Dividend Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S. MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.3 Choose from taxable or tax-advantaged alternatives. Many can be linked to your Schwab account to "sweep" cash balances automatically when you're between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments(R). 3 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) 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. (C)2003 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG13607-06 Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) SEMIANNUAL REPORT June 30, 2003 [CHARLES SCHWAB LOGO] In This Report Management's Discussion .............................................. 2 Fund yield figures and portfolio statistics, plus a discussion of factors that affected fund performance during the report period. Financial Statements Portfolio holdings and fund financials. Schwab Institutional Advantage Money Fund(R) ................... 5 Ticker Symbol: SWIXX Schwab Retirement Money Fund(R) ................................ 15 Ticker Symbol: SWRXX Financial Notes ...................................................... 24 Glossary ............................................................. 26 [PHOTO OF CHARLES SCHWAB] Charles R. Schwab Chairman From the Chairman Without question, these are challenging times for America's investors. For money fund shareholders, one of the main concerns has been decline of short-term interest rates, since money fund yields are a reflection of those rates. Given the choice, I'm sure most of us would prefer that yields were higher. At the same time, I believe that a look at the larger picture reveals that the current low interest rate environment has a beneficial side that shouldn't be ignored. For example, Americans have recently had the opportunity to borrow money at the most attractive rates in decades, whether for buying a home, refinancing or realizing a life-long goal like starting a business. More importantly, the Federal Reserve's monetary policy, along with fiscal policies enacted by Congress and the President, should provide a powerful stimulus to economic recovery. That, too, is something that would benefit all Americans. Here at Schwab, we are actively exploring ways to help investors meet their financial objectives. At SchwabFunds(R), these efforts are being led by the new president of SchwabFunds, Randall Merk. Randy brings a wealth of experience to the job, and we welcome his leadership, vision and wisdom. On behalf of SchwabFunds, I'd like to thank you for investing with us. Your continued trust and support mean a great deal. In turn, it's our mission to help you meet your financial goals. Sincerely, /s/ Charles R. Schwab Management's Discussion for the six months ended June 30, 2003 [PHOTO OF RANDALL W. MERK] RANDALL W. MERK is President and CEO of Charles Schwab Investment Management, Inc. and is president of each of the funds covered in this report. He joined the firm in August of 2002, bringing with him 24 years of experience in the asset management industry. Dear Shareholder: As one of the newer members of the SchwabFunds(R) team, I've been struck by the talent and integrity of the people here, and especially with their dedication to understanding the concerns of investors. That dedication is particularly important right now. Times of uncertainty about the economy and world events demand diligence from investment professionals. At SchwabFunds, we are keenly aware of this, and continue to work for the best interests of our shareholders. In recent months, money market funds have faced a very challenging environment. With interest rates on short-term investments falling in connection with the Fed's actions, some investors have expressed concerns about the potential for fund yields to fall to zero or even lower. I can assure you that we at SchwabFunds will continue to monitor the yields in all our money market funds. In consultation with fund trustees, we will take appropriate measures to maintain competitive yields. One thing we won't do in pursuit of yields is compromise our high standards for investment credit quality. We'll also continue to follow our time-tested management procedures and controls. In other words, we won't take short cuts that may jeopardize our long-term commitment to our investors. Thank you for choosing SchwabFunds. We're here to help you reach your financial goals. If there is something more that we can do to help, I hope you'll let us know. Sincerely, /s/ Randall W. Merk Schwab Institutional Advantage Money Fund(R) and Schwab Retirement Money Fund(R) 2 [PHOTO OF MIKE NEITZKE & LINDA KLINGMAN] LINDA KLINGMAN, a vice president of the investment advisor and senior portfolio manager, has overall responsibility for the management of the funds. She joined the firm in 1990 and has managed money market funds since 1988. MIKE NEITZKE, a portfolio manager, has day-to-day responsibility for management of the funds. Prior to joining the firm in March 2001, he worked for more than 15 years in the financial industry as a portfolio manager. The Investment Environment and the Funds THE U.S. ECONOMY REMAINED IN A HOLDING PATTERN DURING THE SIX MONTHS OF THE REPORT PERIOD. Concerned by geopolitical uncertainties, businesses put off making major decisions about capital spending and hiring, even after the major combat phase of the war in Iraq was over. Economic indicators reported during the period were mixed, providing little incentive for businesses to pursue expansion plans. ALREADY AT THEIR LOWEST LEVEL IN DECADES, INTEREST RATES FELL FURTHER AS THE REPORT PERIOD PROGRESSED. During the first months of 2003, a major factor in the decline of rates was anticipation of the war in Iraq. Toward the end of the period, deflation fears came to the forefront, leading to expectations that the Federal Reserve (the Fed) would cut interest rates. These expectations were confirmed on June 25, when the Fed, seeking to provide yet further economic stimulus, cut the Fed funds rate by 0.25%. FALLING INTEREST RATES PUSHED MONEY FUND YIELDS TO NEW LOWS (see next page for fund yield information). We sought to lessen the effects of falling rates on the funds by maintaining comparatively long weighted average maturities. Although the funds' yields did decline, we were successful in slowing that decline, and in keeping the yields higher than they otherwise would have been. The funds also benefited from the decision to purchase Freddie Mac securities. Although some of this issuer's accounting practices were called into question during the report period, our analysis indicated that the creditworthiness of its securities was not in doubt. We increased our holdings in government and agency securities during the report period. Typically, these securities offer lower yields than bank CDs and commercial paper because of their higher creditworthiness. However, during the report period yields in the corporate and government markets converged. We took advantage of this opportunity to buy higher credit quality securities with little or no sacrifice in yield. The views expressed here are those of fund management only. 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 Institutional Advantage Money Fund(R) and Schwab Retirement Money Fund(R) 3 Management's Discussion continued Performance and Fund Facts as of 6/30/03 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, and that past performance is not an indication of future results.
INSTITUTIONAL ADVANTAGE RETIREMENT MONEY FUND(R) MONEY FUND(R) -------------------------------------------------------------------------------- SEVEN-DAY YIELD 0.69% 1 0.54% -------------------------------------------------------------------------------- SEVEN-DAY EFFECTIVE YIELD 0.69% 0.54% --------------------------------------------------------------------------------
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).
INSTITUTIONAL ADVANTAGE RETIREMENT MONEY FUND MONEY FUND -------------------------------------------------------------------------------- WEIGHTED AVERAGE MATURITY 60 days 58 days -------------------------------------------------------------------------------- CREDIT QUALITY OF HOLDINGS 2 % of portfolio 100% Tier 1 100% 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 $1 per share, it is possible to lose money by investing in a money fund. 1 A portion of the fund's expenses was reduced during the reporting period. Without this reduction, the fund's seven-day yield would have been 0.56%. 2 Portfolio holdings may have changed since the report date. Schwab Institutional Advantage Money Fund and Schwab Retirement Money Fund 4 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) Financial Statements Schwab Institutional Advantage Money Fund(R) FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 PER-SHARE DATA ($) ------------------------------------------------------------------------------------------------------------------------------------ Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 -------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.04 0.06 0.05 0.05 -------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.04) (0.06) (0.05) (0.05) -------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 -------------------------------------------------------------------------- Total return (%) 0.43 2 1.48 3.96 6.12 4.90 5.26 RATIOS/SUPPLEMENTAL DATA (%) ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net operating expenses to average net assets 0.50 3 0.50 0.50 0.50 4 0.50 0.50 Ratio of gross operating expenses to average net assets 0.63 3 0.63 0.66 0.68 4 0.71 0.79 Ratio of net investment income to average net assets 0.87 3 1.46 3.83 5.96 4.84 5.12 Net assets, end of period ($ x 1,000,000) 891 907 797 647 604 369
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have been 0.51% and 0.69%, respectively, if certain non-routine (proxy fees) had been included. See financial notes. 5 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: * Asset-backed security + Credit-enhanced security o Illiquid restricted security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. government agency coupon notes and U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($ x 1,000) ($ x 1,000) -------------------------------------------------------------------------------- 79.4% FIXED-RATE OBLIGATIONS 714,761 714,761 9.7% U.S. GOVERNMENT SECURITIES 86,723 86,723 5.1% VARIABLE-RATE OBLIGATIONS 45,874 45,874 5.8% OTHER INVESTMENTS 52,518 52,518 -------------------------------------------------------------------------------- 100.0% TOTAL INVESTMENTS 899,876 899,876
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) FIXED-RATE OBLIGATIONS 79.4% of investments ------------------------------------------------------------------------- COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS 43.1% ------------------------------------------------------------------------- AB SPINTAB 1.22%, 07/14/03 2,000 1,999 0.94%, 10/27/03 3,000 2,991 ALLIANCE & LEICESTER, PLC, 144A 0.99%, 09/17/03 2,000 1,996 * AMSTEL FUNDING CORP., 144A 1.21%, 08/19/03 1,000 998 *+ AMSTERDAM FUNDING CORP., 144A 1.23%, 07/24/03 5,000 4,996 1.23%, 08/07/03 1,000 999 0.95%, 09/25/03 6,000 5,986 + ANZ (DELAWARE), INC 1.19%, 08/22/03 3,000 2,995 *+ APRECO, INC., 144A 1.23%, 08/15/03 1,000 998 *+ AQUINAS FUNDING, L.L.C., 144A 1.23%, 08/20/03 4,000 3,993 ASAP FUNDING, LTD., 144A 1.01%, 09/12/03 4,000 3,992 *+ ATLANTIS ONE FUNDING CORP., 144A 1.24%, 07/02/03 2,000 2,000 1.21%, 07/09/03 1,070 1,070 1.26%, 07/25/03 1,135 1,134 1.26%, 07/28/03 3,000 2,997 1.23%, 08/14/03 2,008 2,005 1.11%, 09/16/03 5,000 4,988 1.19%, 09/16/03 1,000 997 0.91%, 12/16/03 1,000 996 0.90%, 12/18/03 5,000 4,979 BANK OF IRELAND 1.20%, 08/20/03 4,000 3,993 BANK OF AMERICA CORP 1.25%, 07/18/03 4,000 3,998 BEAR STEARNS COMPANIES, INC 1.25%, 07/25/03 1,000 999 0.91%, 09/26/03 4,000 3,991 *+ BETA FINANCE, INC., 144A 1.26%, 07/25/03 4,000 3,997 1.24%, 08/14/03 1,000 998 1.21%, 08/28/03 1,000 998 + BNP PARIBAS FINANCE, INC 0.90%, 12/30/03 4,000 3,982 + CBA (DELAWARE) FINANCE, INC 1.18%, 08/21/03 5,000 4,992 * CC (USA), INC., 144A 1.23%, 08/15/03 4,000 3,994
See financial notes. 6 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) CITICORP 1.25%, 07/21/03 2,000 1,999 CITIGROUP GLOBAL MARKETS HOLDINGS, INC. 1.22%, 07/15/03 2,000 1,999 1.22%, 08/12/03 11,000 10,984 *+ CLIPPER RECEIVABLES CORP. 1.25%, 07/11/03 4,000 3,999 1.27%, 07/25/03 1,000 999 * CONCORD MINUTEMEN CAPITAL CO., L.L.C., 144A Series A 1.22%, 07/02/03 3,000 3,000 1.25%, 07/07/03 1,000 1,000 1.24%, 08/08/03 3,000 2,996 *+ CRC FUNDING L.L.C., 144A 1.00%, 09/12/03 3,000 2,994 + CREDIT LYONNAIS N.A., INC. 1.00%, 09/15/03 2,000 1,996 * DAKOTA CP NOTES OF CITIBANK CREDIT CARD ISSUANCE TRUST, 144A 1.22%, 07/01/03 2,000 2,000 1.22%, 07/29/03 2,000 1,998 1.09%, 09/09/03 1,000 998 + DANSKE CORP. 1.22%, 07/14/03 4,000 3,998 1.25%, 07/14/03 2,100 2,099 1.22%, 08/13/03 3,000 2,996 1.20%, 08/20/03 1,000 998 1.19%, 08/22/03 1,000 998 1.24%, 10/27/03 2,000 1,992 DEN NORSKE BANK ASA 1.21%, 08/14/03 1,000 999 + DEXIA DELAWARE, L.L.C. 0.89%, 09/25/03 5,000 4,989 * DORADA FINANCE, INC., 144A 1.23%, 07/07/03 2,000 2,000 1.24%, 07/10/03 1,000 1,000 1.27%, 07/11/03 1,000 1,000 1.26%, 07/18/03 3,000 2,998 1.23%, 07/30/03 1,000 999 * DORADA FINANCE, INC., 144A 1.96%, 09/16/03 2,000 2,000 *+ EDISON ASSET SECURITIZATION CORP., L.L.C., 144A 1.31%, 07/08/03 7,000 6,998 1.24%, 08/05/03 1,978 1,976 1.23%, 08/11/03 3,000 2,996 1.20%, 08/22/03 1,000 998 0.93%, 09/23/03 5,000 4,989 1.03%, 10/09/03 1,000 997 1.10%, 11/10/03 2,000 1,992 *+ FAIRWAY FINANCE CORP., 144A 1.00%, 09/12/03 4,000 3,992 + FORTIS FUNDING, L.L.C., 144A 1.27%, 07/21/03 1,000 999 + GE CAPITAL INTERNATIONAL FUNDING, INC., 144A 1.22%, 07/11/03 1,000 1,000 1.19%, 08/25/03 6,000 5,989 1.20%, 08/26/03 1,000 998 1.21%, 08/28/03 4,000 3,992 0.90%, 12/23/03 4,000 3,982 GE FINANCIAL ASSURANCE HOLDINGS, INC., 144A 0.94%, 09/16/03 3,000 2,994 GENERAL ELECTRIC CAPITAL CORP. 1.23%, 07/16/03 1,000 999 1.26%, 09/04/03 10,000 9,977 1.29%, 09/23/03 4,000 3,988 1.11%, 12/03/03 3,000 2,986 GENERAL ELECTRIC CAPITAL SERVICES 1.25%, 07/24/03 3,000 2,998 1.25%, 07/25/03 10,000 9,992 GENERAL ELECTRIC CO. 1.25%, 07/22/03 4,000 3,997 1.25%, 07/24/03 2,000 1,998 *+ GIRO FUNDING U.S. CORP., 144A 1.23%, 08/11/03 3,000 2,996 1.23%, 08/13/03 5,000 4,993 1.02%, 09/12/03 1,000 998 0.94%, 09/24/03 1,000 998 *+o GREENWICH FUNDING CORP., 144A 1.23%, 08/21/03 3,000 2,995 *+ HATTERAS FUNDING CORP., 144A 1.25%, 07/02/03 2,411 2,411 + HBOS TREASURY SERVICES, PLC 1.25%, 07/28/03 4,000 3,996 0.97%, 09/16/03 3,000 2,994 1.10%, 11/19/03 2,000 1,991 + ING (U.S.) FUNDING, L.L.C. 1.21%, 07/07/03 3,000 2,999 1.23%, 07/11/03 2,000 1,999 1.30%, 07/18/03 2,000 1,999
See financial notes. 7 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) *+ INTREPID FUNDING MASTER TRUST, 144A 1.07%, 07/31/03 1,032 1,031 IRISH LIFE & PERMANENT, PLC, 144A 0.95%, 09/17/03 1,600 1,597 J.P. MORGAN CHASE & CO. 1.22%, 08/18/03 7,000 6,989 *+ JUPITER SECURITIZATION CORP., 144A 1.07%, 07/25/03 1,000 999 *+ K2 (USA), L.L.C. 1.28%, 07/10/03 3,000 2,999 1.19%, 10/20/03 1,000 996 KBC FINANCIAL PRODUCTS INTERNATIONAL, LTD., 144A 1.22%, 07/08/03 2,000 2,000 *+ KITTY HAWK FUNDING CORP., 144A 0.95%, 09/22/03 10,000 9,978 + LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, 144A 1.21%, 08/15/03 1,000 998 1.22%, 08/15/03 5,000 4,992 * LEXINGTON PARKER CAPITAL CO., L.L.C., 144A 1.23%, 07/10/03 1,000 1,000 1.28%, 07/25/03 2,000 1,998 1.23%, 09/02/03 2,000 1,996 LLOYDS TSB BANK, PLC 1.18%, 08/20/03 6,000 5,990 MORGAN STANLEY 1.20%, 08/26/03 15,000 14,972 * NEWCASTLE CERTIFICATES PROGRAM, 144A Series 2000A 1.26%, 07/15/03 1,000 1,000 0.94%, 09/25/03 4,000 3,991 + NORDEA N.A., INC. 1.20%, 07/07/03 3,000 2,999 0.99%, 09/22/03 1,000 998 *+ OLD LINE FUNDING CORP., 144A 1.08%, 07/24/03 2,000 1,999 + SANTANDER CENTRAL HISPANO FINANCE (DELAWARE), INC. 1.10%, 09/09/03 5,000 4,989 * SIGMA FINANCE, INC., 144A 1.23%, 07/07/03 2,000 2,000 1.27%, 07/14/03 2,000 1,999 0.97%, 09/08/03 2,000 1,996 0.98%, 09/15/03 7,000 6,986 + SOCIETE GENERALE N.A., INC. 1.20%, 07/01/03 3,000 3,000 1.20%, 07/02/03 1,000 1,000 1.23%, 07/10/03 5,000 4,998 1.22%, 07/15/03 2,000 1,999 1.03%, 09/10/03 1,000 998 + SVENSKA HANDELSBANKEN, INC. 1.22%, 08/15/03 1,000 998 *+ THUNDER BAY FUNDING, INC., 144A 1.25%, 07/25/03 1,000 999 *+ TULIP FUNDING CORP., 144A 1.07%, 07/31/03 6,000 5,995 *+ VARIABLE FUNDING CAPITAL CORP., 144A 1.21%, 08/25/03 10,000 9,982 1.01%, 09/10/03 3,000 2,994 *+ WINDMILL FUNDING CORP., 144A 1.21%, 07/10/03 3,000 2,999 ------- 387,729 CERTIFICATES OF DEPOSIT 33.3% ----------------------------------------------------------------------------- AMERICAN EXPRESS CENTURION BANK 0.92%, 09/22/03 5,000 5,000 BANK OF MONTREAL 1.21%, 07/09/03 5,000 5,000 BANK OF NEW YORK 1.29%, 08/18/03 5,000 5,000 BANK OF NOVA SCOTIA 1.21%, 07/08/03 2,000 2,000 1.18%, 08/25/03 3,000 3,000 BARCLAYS BANK, PLC 1.26%, 07/28/03 10,000 10,000 1.06%, 08/12/03 1,000 1,000 1.19%, 08/28/03 2,000 2,000 1.03%, 09/10/03 5,000 5,001 1.60%, 11/25/03 4,000 4,000 BAYERISCHE LANDESBANK GIROZENTRALE 1.22%, 08/18/03 2,000 2,000 1.27%, 09/02/03 3,000 3,000 1.30%, 03/26/04 3,000 3,000 BNP PARIBAS 1.25%, 07/21/03 3,000 3,000 1.25%, 07/23/03 6,000 6,000 1.09%, 11/10/03 7,000 7,000 0.90%, 12/30/03 10,000 10,000
See financial notes. 8 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) CANADIAN IMPERIAL BANK OF COMMERCE 1.24%, 07/15/03 5,000 5,000 CHASE MANHATTAN BANK (USA), N.A. 1.27%, 07/23/03 9,000 9,000 1.23%, 08/11/03 1,000 1,000 CITIBANK, N.A. 1.25%, 07/28/03 5,000 5,000 1.23%, 08/06/03 5,000 5,000 1.23%, 08/07/03 5,000 5,000 1.11%, 09/10/03 2,000 2,000 0.95%, 09/24/03 8,000 8,000 0.93%, 09/25/03 3,000 3,000 CREDIT AGRICOLE INDOSUEZ 1.30%, 07/17/03 5,000 5,000 CREDIT LYONNAIS S.A. 1.00%, 09/17/03 2,000 2,000 CREDIT SUISSE FIRST BOSTON 1.30%, 07/16/03 7,000 7,000 DEPFA BANK, PLC 0.98%, 09/18/03 3,000 3,000 0.92%, 12/23/03 2,000 2,000 DEUTSCHE BANK, AG 1.31%, 07/01/03 10,000 10,000 1.32%, 07/09/03 1,000 1,000 1.21%, 07/16/03 5,000 5,000 1.19%, 08/27/03 1,000 1,000 1.10%, 09/09/03 10,000 10,000 0.90%, 09/25/03 8,000 8,000 FORENINGSSPARBANKEN, AB (SWEDBANK) 1.25%, 07/31/03 1,000 1,000 0.90%, 11/25/03 3,000 3,000 FORTIS BANK 1.23%, 07/09/03 5,000 5,000 1.27%, 09/03/03 3,000 3,000 + HBOS TREASURY SERVICES, PLC 1.20%, 08/26/03 4,000 4,000 ING BANK, N.V. 1.31%, 07/14/03 4,000 4,000 1.23%, 08/08/03 5,000 5,000 1.22%, 08/13/03 5,000 5,000 LANDESBANK BADEN WURTTEMBERG 1.20%, 07/03/03 4,000 4,000 1.20%, 08/22/03 1,000 1,000 LANDESBANK HESSEN-THURINGEN GIROZENTRALE 1.27%, 08/29/03 5,000 5,000 1.85%, 10/17/03 4,000 4,000 0.91%, 12/12/03 1,000 1,001 NATEXIS BANQUES POPULAIRES 1.20%, 08/29/03 3,000 3,000 NATIONAL CITY BANK, CLEVELAND 1.20%, 07/07/03 5,000 5,000 NORDDEUTSCHE LANDESBANK GIROZENTRALE 1.25%, 07/18/03 3,000 3,000 1.18%, 08/25/03 2,000 2,000 0.90%, 12/29/03 1,000 1,000 1.49%, 12/29/03 2,000 2,000 NORDEA BANK FINLAND, PLC 1.22%, 08/15/03 6,000 6,000 ROYAL BANK OF SCOTLAND, PLC 1.19%, 09/17/03 10,000 10,030 SAN PAOLO IMI, SPA 1.30%, 07/17/03 2,000 2,000 SOCIETE GENERALE 1.25%, 07/18/03 5,000 5,000 1.25%, 10/16/03 2,000 2,000 SOUTHTRUST BANK 1.05%, 12/19/03 1,000 1,000 STATE STREET BANK & TRUST CO., N.A. 1.10%, 12/04/03 4,000 4,000 TORONTO DOMINION BANK 1.20%, 11/13/03 2,000 2,000 UBS, AG 1.59%, 12/16/03 5,000 5,000 UNICREDITO ITALIANO SPA 1.22%, 07/03/03 2,000 2,000 1.25%, 07/16/03 2,000 2,000 1.28%, 07/17/03 3,000 3,000 1.31%, 07/17/03 1,000 1,000 0.96%, 09/15/03 3,000 3,000 0.98%, 09/19/03 1,000 1,000 WESTLB AG 1.35%, 07/08/03 4,000 4,000 1.93%, 09/18/03 5,000 5,000 1.26%, 04/02/04 2,000 2,000 1.34%, 04/14/04 1,000 1,000 WILMINGTON TRUST CO. 1.20%, 09/15/03 5,000 5,000 --------- 300,032
See financial notes. 9 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) PROMISSORY NOTES 2.0% ----------------------------------------------------------------------------- o THE GOLDMAN SACHS GROUP, INC. 1.29%, 07/15/03 5,000 5,000 1.36%, 08/05/03 1,000 1,000 1.35%, 09/08/03 2,000 2,000 1.26%, 09/22/03 1,000 1,000 1.31%, 10/24/03 1,000 1,000 1.26%, 12/05/03 4,000 4,000 1.12%, 12/11/03 3,000 3,000 1.02%, 12/18/03 1,000 1,000 --------- 18,000 BANK NOTES 1.0% ----------------------------------------------------------------------------- BANK ONE, N.A. 1.29%, 07/10/03 4,000 4,000 STANDARD FEDERAL BANK, N.A. 1.25%, 07/21/03 2,000 2,000 1.19%, 08/26/03 1,000 1,000 1.20%, 09/05/03 2,000 2,000 --------- 9,000
U.S. GOVERNMENT SECURITIES 9.7% of investments ----------------------------------------------------------------------------- DISCOUNT NOTES 9.7% ----------------------------------------------------------------------------- FANNIE MAE 1.18%, 08/27/03 10,000 9,981 1.09%, 11/26/03 6,000 5,974 1.06%, 12/03/03 4,840 4,818 1.06%, 12/12/03 5,000 4,976 1.06%, 12/16/03 7,516 7,479 0.90%, 12/17/03 5,000 4,979 1.22%, 03/05/04 4,700 4,661 FREDDIE MAC 1.10%, 09/11/03 12,000 11,974 1.00%, 09/30/03 2,000 1,995 1.04%, 10/20/03 10,000 9,968 1.09%, 10/24/03 5,000 4,982 0.99%, 11/17/03 3,000 2,989 1.00%, 12/04/03 10,000 9,957 0.96%, 12/31/03 2,000 1,990 --------- 86,723
VARIABLE-RATE OBLIGATIONS 5.1% of investments ------------------------------------------------------------------------------- * BETA FINANCE, INC., 144A 1.15%, 07/15/03 10,000 10,000 + BMC SPECIAL CARE FACILITIES FINANCING AUTHORITY OF THE CITY OF MONTGOMERY, ALABAMA Taxable RB (Montgomery Baptist Outreach Services Corp. Project) Series 1997A 1.15%, 07/07/03 8,600 8,600 Taxable RB (Montgomery Baptist Outreach Services Corp. Project) Series 1997B 1.15%, 07/07/03 2,200 2,200 + CITY OF NEW BRITAIN, CONNECTICUT GO, 144A 1.12%, 07/07/03 4,900 4,900 + LOANSTAR ASSETS PARTNERS II, L.P., 144A 1.03%, 07/07/03 5,000 5,000 + NEW YORK CITY IDA Taxable Industrial Revenue Refunding Bond (Allway Tools, Inc. Project) Series 1997 1.20%, 07/07/03 175 175 + PALM SPRINGS, CALIFORNIA COP (Downtown Parking Project) Series 2002A 1.20%, 07/07/03 7,000 7,000 * SIGMA FINANCE, INC., 144A 1.28%, 07/07/03 5,000 4,999 1.30%, 07/07/03 1,000 1,000 1.14%, 07/15/03 2,000 2,000 --------- 45,874
See financial notes. 10 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R)
MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) OTHER INVESTMENTS 5.8% of investments ----------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS 5.8% ----------------------------------------------------------------------------------------- CREDIT SUISSE FIRST BOSTON L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $49,490 1.32%, issued 06/30/03, due 07/01/03 48,519 48,518 LEHMAN BROTHERS, INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $4,081 1.20%, issued 04/07/03, due 07/07/03 4,012 4,000 --------- 52,518
-------------------------------------------------------------------------------- END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 11 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV. ASSETS --------------------------------------------------------------------------------- Investments, at market value $ 899,876 a Receivables: Fund shares sold 2,061 Interest 1,388 Prepaid expenses + 40 ------------- TOTAL ASSETS 903,365 LIABILITIES --------------------------------------------------------------------------------- Payables: Fund shares redeemed 10,591 Dividends to shareholders 244 Investments bought 1,000 Investment adviser and administrator fees 19 Transfer agent and shareholder service fees 16 Accrued expenses + 49 ------------- TOTAL LIABILITIES 11,919 NET ASSETS --------------------------------------------------------------------------------- TOTAL ASSETS 903,365 TOTAL LIABILITIES - 11,919 ------------- NET ASSETS $ 891,446 NET ASSETS BY SOURCE Capital received from investors 891,447 Net realized capital losses (1) NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $891,446 891,504 $1.00
a Includes illiquid restricted securities worth $20,995, or 2.33% of the fund's investments. The amortized cost for the fund's securities was $899,876. FEDERAL TAX DATA ------------------------------------------------ COST BASIS OF PORTFOLIO $899,876 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2004 $1
See financial notes. 12 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME --------------------------------------------------------------------------------- Interest $6,160 EXPENSES --------------------------------------------------------------------------------- Investment adviser and administrator fees 1,713 a Transfer agent and shareholder service fees 992 b Trustees' fees 16 c Custodian and portfolio accounting fees 51 Professional fees 10 Registration fees 30 Shareholder reports 9 Other expenses + 6 ---------- Total expenses 2,827 Expense reduction - 574 d ---------- NET EXPENSES 2,253 INCREASE IN NET ASSETS FROM OPERATIONS --------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 6,160 NET EXPENSES - 2,253 ---------- NET INVESTMENT INCOME 3,907 ---------- INCREASE IN NET ASSETS FROM OPERATIONS $3,907
a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.17% of the fund's assets. c For the fund's independent trustees only. d This reduction was made by the investment adviser (CSIM). It reflects a guarantee by CSIM and the transfer agent and shareholder service agent (Schwab) to limit the annual operating expenses of this fund through at least April 30, 2004, to 0.50% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 13 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(R) Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS ------------------------------------------------------------------------------------------------------- 1/1/03-6/30/03 1/1/02-12/31/02 Net investment income $ 3,907 $ 12,097 ------------------------------------- INCREASE IN NET ASSETS FROM OPERATIONS 3,907 12,097 DISTRIBUTIONS PAID ------------------------------------------------------------------------------------------------------- Dividends from net investment income 3,907 12,097 a TRANSACTIONS IN FUND SHARES b ------------------------------------------------------------------------------------------------------- Shares sold 344,079 810,966 Shares reinvested 3,636 12,003 Shares redeemed + (363,130) (712,969) ------------------------------------- NET TRANSACTIONS IN FUND SHARES (15,415) 110,000 NET ASSETS ------------------------------------------------------------------------------------------------------- Beginning of period 906,861 796,861 Total increase or decrease + (15,415) 110,000 c ------------------------------------- END OF PERIOD $891,446 $ 906,861
a The tax-basis components of distributions paid for the prior period were: Ordinary income $12,097 Long-term capital gains $ --
b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 14 SCHWAB RETIREMENT MONEY FUND(R) Financial Statements Schwab Retirement Money Fund(R) FINANCIAL HIGHLIGHTS
1/1/03- 1/1/02- 1/1/01- 1/1/00- 1/1/99- 1/1/98- 6/30/03* 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ---------------------------------------------------------------------------------------------------------------------------- PER-SHARE DATA ($) ---------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 ---------------------------------------------------------------------------- Income from investment operations: Net investment income 0.00 1 0.01 0.04 0.06 0.05 0.05 ---------------------------------------------------------------------------- Less distributions: Dividends from net investment income (0.00) 1 (0.01) (0.04) (0.06) (0.05) (0.05) ---------------------------------------------------------------------------- Net asset value at end of period 1.00 1.00 1.00 1.00 1.00 1.00 ---------------------------------------------------------------------------- Total return (%) 0.35 2 1.30 3.75 5.90 4.68 5.03 RATIOS/SUPPLEMENTAL DATA (%) ---------------------------------------------------------------------------------------------------------------------------- Ratio of net operating expenses to average net assets 0.66 3 0.68 0.70 0.71 4 0.72 0.73 Ratio of gross operating expenses to average net assets 0.66 3 0.68 0.70 0.71 4 0.74 0.80 Ratio of net investment income to average net assets 0.70 3 1.28 3.61 5.77 4.62 4.88 Net assets, end of period ($ x 1,000,000) 596 566 515 399 322 225
* Unaudited. 1 Per-share amount was less than $0.01. 2 Not annualized. 3 Annualized. 4 The ratios of net and gross operating expenses would have both been 0.72% if certain non-routine expenses (proxy fees) had been included. See financial notes. 15 SCHWAB RETIREMENT MONEY FUND(R) PORTFOLIO HOLDINGS as of June 30, 2003; unaudited. This section shows all the securities in the fund's portfolio and their market value, as of the report date. We use the symbols below to designate certain characteristics: * Asset-backed security + Credit-enhanced security o Illiquid restricted security = Delayed delivery security For fixed-rate obligations, the rate shown is the effective yield at the time of purchase, except for U.S. government agency coupon notes and U.S. Treasury notes, for which the rate shown is the interest rate (the rate established when the obligation was issued). For variable-rate obligations, the rate shown is the rate as of the report date. For variable-rate obligations with scheduled maturities greater than 397 days, the maturity shown is the later of the next interest rate change date or demand date. For variable-rate obligations with scheduled maturities less than 397 days, the maturity shown is the earlier of the next interest rate change date or demand date. For variable-rate obligations without demand features, the maturity shown is the next interest rate change date.
COST MARKET VALUE HOLDINGS BY CATEGORY ($ x 1,000) ($ x 1,000) ------------------------------------------------------------------------ 79.3% FIXED-RATE OBLIGATIONS 481,874 481,874 9.1% U.S. GOVERNMENT SECURITIES 55,343 55,343 4.6% VARIABLE-RATE OBLIGATIONS 27,899 27,899 7.0% OTHER 42,254 42,254 INVESTMENTS ------------------------------------------------------------------------ 100.0% TOTAL 607,370 607,370 INVESTMENTS
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) FIXED-RATE OBLIGATIONS 79.3% of investments ------------------------------------------------------------------------- COMMERCIAL PAPER & OTHER CORPORATE OBLIGATIONS 41.3% ------------------------------------------------------------------------- AB SPINTAB 1.23%, 08/11/03 3,000 2,996 0.94%, 10/27/03 2,000 1,994 ALLIANCE & LEICESTER, PLC, 144A 1.26%, 07/10/03 1,500 1,500 * AMSTERDAM FUNDING CORP., 144A 1.23%, 07/10/03 3,000 2,999 1.20%, 09/02/03 2,000 1,996 + ANZ (DELAWARE), INC. 1.20%, 07/30/03 3,800 3,796 *+ AQUINAS FUNDING, L.L.C., 144A 1.23%, 08/20/03 2,500 2,496 ASAP FUNDING, LTD., 144A 1.28%, 07/17/03 1,000 999 1.01%, 09/12/03 2,000 1,996 *+ ASSET SECURITIZATION COOPERATIVE CORP., 144A 1.22%, 08/12/03 5,000 4,993 1.06%, 08/13/03 1,000 999 1.21%, 08/22/03 2,000 1,997 *+ ATLANTIS ONE FUNDING CORP., 144A 1.26%, 07/25/03 1,000 999 1.23%, 08/14/03 2,000 1,997 0.91%, 11/13/03 4,000 3,986 BANK OF IRELAND 1.20%, 08/20/03 2,000 1,997 BANK OF AMERICA CORP. 1.25%, 07/18/03 2,000 1,999 BEAR STEARNS COMPANIES, INC. 1.21%, 07/10/03 1,000 1,000 0.91%, 09/26/03 3,000 2,993 *+ BETA FINANCE, INC., 144A 1.08%, 08/04/03 4,000 3,996 1.24%, 08/14/03 1,000 998 + BNP PARIBAS FINANCE, INC. 1.20%, 08/29/03 3,000 2,994 + CBA (DELAWARE) FINANCE, INC. 1.21%, 07/10/03 3,000 2,999 1.18%, 08/21/03 3,000 2,995 * CC (USA), INC., 144A 1.23%, 07/10/03 1,000 1,000 1.23%, 08/15/03 3,000 2,995 CITICORP 1.25%, 07/24/03 3,000 2,998 CITIGROUP GLOBAL MARKETS HOLDINGS, INC. 1.22%, 07/10/03 1,000 1,000 1.27%, 07/30/03 1,000 999
See financial notes 16 SCHWAB RETIREMENT MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) 1.23%, 08/14/03 2,000 1,997 1.19%, 08/20/03 5,000 4,992 * CONCORD MINUTEMEN CAPITAL CO., L.L.C., 144A Series A 1.24%, 07/02/03 2,000 2,000 1.27%, 07/18/03 3,000 2,998 *+ CRC FUNDING, L.L.C., 144A 1.17%, 09/09/03 2,000 1,995 + CREDIT LYONNAIS N.A., INC. 1.00%, 09/15/03 2,000 1,996 * CXC, L.L.C., 144A 0.93%, 12/15/03 4,000 3,983 * DAKOTA CP NOTES OF CITIBANK CREDIT CARD ISSUANCE TRUST, 144A 1.23%, 07/02/03 1,000 1,000 + DANSKE CORP. 1.23%, 08/13/03 1,000 999 0.96%, 09/18/03 1,000 998 1.24%, 10/27/03 5,000 4,980 DEN NORSKE BANK ASA 1.26%, 09/04/03 2,000 1,995 + DEXIA DELAWARE, L.L.C. 0.89%, 09/25/03 5,000 4,989 * DORADA FINANCE, INC., 144A 1.25%, 07/18/03 3,000 2,998 *+ EDISON ASSET SECURITIZATION CORP., L.L.C., 144A 1.31%, 07/08/03 8,000 7,998 1.23%, 08/13/03 1,000 999 1.20%, 08/22/03 3,000 2,995 1.20%, 11/10/03 3,000 2,987 FORENINGSSPARBANKEN AB (SWEDBANK) 1.26%, 07/07/03 1,000 1,000 *+ GALAXY FUNDING, INC., 144A 1.21%, 08/26/03 4,000 3,992 + GE CAPITAL INTERNATIONAL FUNDING, INC., 144A 1.19%, 08/25/03 8,000 7,985 1.18%, 09/23/03 6,000 5,983 0.92%, 12/18/03 1,000 996 GENERAL ELECTRIC CAPITAL CORP. 1.23%, 07/16/03 2,000 1,999 1.20%, 08/21/03 1,000 998 1.11%, 12/03/03 1,000 995 GENERAL ELECTRIC CAPITAL SERVICES 1.25%, 07/24/03 6,000 5,995 GENERAL ELECTRIC CO. 1.25%, 07/22/03 5,000 4,996 *+ GIRO FUNDING U.S. CORP., 144A 1.23%, 08/13/03 5,000 4,993 1.21%, 08/15/03 1,000 998 *+o GREENWICH FUNDING CORP., 144A 0.95%, 09/12/03 3,000 2,994 *+ HATTERAS FUNDING CORP., 144A 1.26%, 07/14/03 1,155 1,154 1.26%, 08/11/03 1,000 999 1.19%, 09/22/03 1,000 997 + HBOS TREASURY SERVICES, PLC 1.22%, 08/05/03 5,000 4,994 0.97%, 09/16/03 2,000 1,996 1.10%, 11/19/03 1,000 996 + ING (U.S.) FUNDING, L.L.C. 1.30%, 07/18/03 2,000 1,999 1.04%, 12/10/03 3,000 2,986 J.P. MORGAN CHASE & CO. 1.25%, 07/23/03 3,000 2,998 *+ JUPITER SECURITIZATION CORP., 144A 1.25%, 07/14/03 1,000 1,000 1.20%, 09/02/03 3,000 2,994 *+ K2 (USA), L.L.C. 1.28%, 07/10/03 2,000 1,999 1.25%, 07/25/03 1,000 999 1.28%, 09/02/03 1,000 998 KBC FINANCIAL PRODUCTS INTERNATIONAL, LTD., 144A 1.22%, 07/08/03 1,000 1,000 + LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, 144A 1.21%, 08/15/03 1,000 998 1.22%, 08/15/03 2,000 1,997 1.35%, 04/15/04 1,000 989 * LEXINGTON PARKER CAPITAL CO., L.L.C., 144A 1.32%, 07/14/03 5,000 4,998 +* MONT BLANC CAPITAL CORP., 144A 1.23%, 07/03/03 1,000 1,000 1.10%, 07/28/03 1,000 999 MORGAN STANLEY 1.23%, 07/23/03 5,000 4,996 1.20%, 08/26/03 1,000 998
See financial notes. 17 SCHWAB RETIREMENT MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) * NEWCASTLE CERTIFICATES PROGRAM, 144A Series 2000A 1.24%, 07/08/03 1,000 1,000 0.94%, 09/25/03 3,000 2,993 + NORDEA N.A., INC. 1.20%, 07/07/03 3,000 2,999 + SANTANDER CENTRAL HISPANO FINANCE (DELAWARE), INC. 1.21%, 09/02/03 4,000 3,992 * SIGMA FINANCE, INC., 144A 1.25%, 07/14/03 1,000 1,000 1.31%, 07/15/03 2,000 1,999 1.27%, 07/16/03 5,000 4,997 1.24%, 08/05/03 1,000 999 + SOCIETE GENERALE N.A., INC. 1.20%, 07/02/03 2,000 2,000 1.22%, 07/15/03 3,000 2,999 1.03%, 09/10/03 3,000 2,994 *+ STELLAR FUNDING GROUP, INC., 144A 1.25%, 07/09/03 1,504 1,504 *+ THUNDER BAY FUNDING, INC., 144A 1.26%, 07/21/03 1,000 999 1.21%, 08/20/03 2,000 1,997 *+ TULIP FUNDING CORP., 144A 1.07%, 07/31/03 3,000 2,997 1.24%, 09/30/03 1,792 1,786 *+ WINDMILL FUNDING CORP., 144A 1.21%, 07/10/03 3,000 2,999 1.21%, 08/15/03 2,000 1,997 -------- 250,864 CERTIFICATES OF DEPOSIT 35.5% ------------------------------------------------------------------------ AMERICAN EXPRESS CENTURION BANK 0.92%, 09/22/03 5,000 5,000 BANK OF MONTREAL 1.21%, 07/09/03 5,000 5,000 BANK OF NEW YORK 1.29%, 08/18/03 4,000 4,000 BANK OF NOVA SCOTIA 1.21%, 07/08/03 7,000 7,000 BARCLAYS BANK, PLC 1.25%, 07/16/03 2,000 2,000 1.25%, 07/28/03 5,000 5,000 1.26%, 07/28/03 2,000 2,000 1.20%, 08/04/03 2,000 2,000 1.60%, 11/25/03 2,000 2,000 1.10%, 04/19/04 3,000 3,006 BAYERISCHE LANDESBANK GIROZENTRALE 1.19%, 08/29/03 2,000 2,000 1.27%, 09/02/03 4,000 4,000 1.30%, 03/26/04 2,000 2,000 BNP PARIBAS 1.25%, 07/21/03 2,000 2,000 1.25%, 07/23/03 6,000 6,000 1.09%, 11/10/03 2,000 2,000 1.03%, 12/09/03 3,000 3,001 0.90%, 12/30/03 4,000 4,000 CANADIAN IMPERIAL BANK OF COMMERCE 1.24%, 07/15/03 5,000 5,000 CHASE MANHATTAN BANK (USA), N.A. 1.27%, 07/22/03 1,000 1,000 1.23%, 08/11/03 1,000 1,000 CITIBANK, N.A 1.25%, 07/28/03 5,000 5,000 1.23%, 08/06/03 5,000 5,000 1.23%, 08/07/03 5,000 5,000 0.95%, 09/24/03 1,000 1,000 CREDIT AGRICOLE INDOSUEZ 1.30%, 07/17/03 1,000 1,000 CREDIT LYONNAIS S.A. 1.00%, 09/17/03 2,000 2,000 CREDIT SUISSE FIRST BOSTON 1.30%, 07/16/03 4,000 4,000 DEN NORSKE BANK ASA 1.15%, 09/08/03 3,000 3,000 DEPFA BANK, PLC 0.98%, 09/18/03 3,000 3,000 0.92%, 12/23/03 2,000 2,000 DEUTSCHE BANK, AG 1.31%, 07/01/03 5,000 5,000 1.32%, 07/09/03 5,000 5,000 1.21%, 07/16/03 2,000 2,000 1.10%, 09/09/03 7,000 7,000 0.90%, 09/25/03 4,000 4,000 FORENINGSSPARBANKEN, AB (SWEDBANK) 0.90%, 11/25/03 4,000 4,000 FORTIS BANK 1.23%, 07/09/03 4,000 4,000 1.27%, 09/03/03 2,000 2,000
See financial notes. 18 SCHWAB RETIREMENT MONEY FUND(R)
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) + HBOS TREASURY SERVICES, PLC 1.20%, 08/26/03 1,000 1,000 ING BANK, N.V. 1.21%, 07/03/03 4,000 4,000 1.31%, 07/14/03 2,000 2,000 1.25%, 07/31/03 2,000 2,000 1.23%, 08/08/03 2,000 2,000 LANDESBANK BADEN WURTTEMBERG 1.85%, 10/17/03 2,000 2,000 0.91%, 12/12/03 4,000 4,002 LANDESBANK HESSEN-THURINGEN GIROZENTRALE 1.27%, 08/29/03 4,000 4,000 1.30%, 02/03/04 1,000 1,000 NATEXIS BANQUES POPULAIRES 1.20%, 08/29/03 4,000 4,000 NATIONAL CITY BANK, CLEVELAND 1.20%, 07/07/03 5,000 5,000 NORDDEUTSCHE LANDESBANK GIROZENTRALE 1.25%, 07/18/03 3,000 3,000 1.49%, 12/29/03 2,000 2,000 NORDEA BANK FINLAND, PLC 1.22%, 08/15/03 1,000 1,000 1.20%, 09/02/03 3,000 3,000 RABOBANK NEDERLAND 0.95%, 12/03/03 1,000 1,001 ROYAL BANK OF CANADA 1.61%, 11/25/03 3,000 3,000 ROYAL BANK OF SCOTLAND, PLC 1.20%, 07/01/03 4,000 4,000 SOCIETE GENERALE 1.30%, 07/15/03 2,000 2,000 1.25%, 10/16/03 1,000 1,000 STATE STREET BANK & TRUST CO., N.A. 1.19%, 08/26/03 1,000 1,000 1.10%, 12/04/03 2,000 2,000 TORONTO DOMINION BANK 1.25%, 07/07/03 6,000 6,000 UBS, AG 1.59%, 12/16/03 2,000 2,000 UNICREDITO ITALIANO SPA 1.31%, 07/17/03 5,000 5,000 1.26%, 07/22/03 1,000 1,000 0.96%, 09/15/03 2,000 2,000 WESTLB AG 1.35%, 07/08/03 2,000 2,000 1.93%, 09/18/03 3,000 3,000 1.26%, 04/02/04 3,000 3,000 WILMINGTON TRUST CO. 1.28%, 07/22/03 1,000 1,000 1.20%, 09/15/03 4,000 4,000 -------- 216,010 PROMISSORY NOTES 2.0% ------------------------------------------------------------------------ o THE GOLDMAN SACHS GROUP, INC. 1.36%, 08/05/03 2,000 2,000 1.35%, 09/08/03 1,000 1,000 1.26%, 09/22/03 4,000 4,000 1.26%, 12/05/03 1,000 1,000 1.01%, 12/23/03 4,000 4,000 -------- 12,000 BANK NOTES 0.5% ------------------------------------------------------------------------ STANDARD FEDERAL BANK, N.A. 1.19%, 08/26/03 2,000 2,000 1.20%, 09/05/03 1,000 1,000 -------- 3,000 U.S. Government Securities 9.1% of investments ------------------------------------------------------------------------ DISCOUNT NOTES 9.1% ------------------------------------------------------------------------ FANNIE MAE 1.18%, 08/27/03 10,000 9,981 = 0.94%, 10/01/03 5,000 4,988 1.09%, 11/26/03 6,000 5,974 0.90%, 12/17/03 5,000 4,979 FREDDIE MAC 1.10%, 09/11/03 4,000 3,991 1.09%, 10/24/03 5,000 4,983 0.99%, 11/17/03 2,000 1,992 1.00%, 12/04/03 5,000 4,978 1.06%, 12/04/03 9,539 9,496 0.96%, 12/31/03 4,000 3,981 -------- 55,343
See financial notes. 19 SCHWAB RETIREMENT MONEY FUND(R) PORTFOLIO HOLDINGS continued
ISSUER FACE VALUE MKT. VALUE RATE, MATURITY DATE ($ x 1,000) ($ x 1,000) VARIABLE-RATE OBLIGATION 4.6% of investments ------------------------------------------------------------------------ * BETA FINANCE, INC., 144A 1.15%, 07/15/03 5,000 5,000 + CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY Solid Waste Disposable RB (Burr Properties Project) Series 1998B 1.80%, 07/07/03 1,835 1,835 + COLUMBUS, GEORGIA DEVELOPMENT AUTHORITY Taxable RB (Jay Leasing, Inc. Project) Series 1997 1.12%, 07/07/03 1,985 1,985 + EAGLE COUNTY, COLORADO TAXABLE HOUSING FACILITIES RB (BC Housing, L.L.C. Project) Series 1997B 1.20%, 07/07/03 1,500 1,500 LP PINEWOOD SPV 1.02%, 07/07/03 10,000 10,000 * SIGMA FINANCE, INC., 144A 1.30%, 07/07/03 2,000 2,000 1.14%, 07/15/03 3,000 2,999 + TRAP ROCK INDUSTRIES, INC. RB Series 1997, 144A 1.04%, 07/07/03 1,540 1,540 + VILLAGE OF STURTEVANT, WISCONSIN IDRB (Andis Co. Project) Series 1996B 1.28%, 07/07/03 1,040 1,040 ------ 27,899 MATURITY VALUE MKT. VALUE SECURITY ($ x 1,000) ($ x 1,000) OTHER INVESTMENTS 7.0% of investments ------------------------------------------------------------------------ REPURCHASE AGREEMENTS 7.0% ------------------------------------------------------------------------ BEAR STEARNS & CO., INC. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $6,122 1.29%, issued 01/15/03, due 07/07/03 6,037 6,000 CREDIT SUISSE FIRST BOSTON L.L.C. Tri-Party Repurchase Agreement Collateralized by U.S. Government Securities with a value of $36,981 1.32%, issued 06/30/03, due 07/01/03 36,255 36,254 ------- 42,254
END OF PORTFOLIO HOLDINGS. For totals, please see the first page of holdings for this fund. See financial notes. 20 SCHWAB RETIREMENT MONEY FUND(R) Statement of ASSETS AND LIABILITIES As of June 30, 2003; unaudited. All numbers x 1,000 except NAV.
ASSETS ----------------------------------------------------------------------- Investments, at market value $ 607,370 a Receivables: Fund shares sold 1,148 Interest 835 Prepaid expenses + 27 -------------- TOTAL ASSETS 609,380 LIABILITIES ----------------------------------------------------------------------- Payables: Fund shares redeemed 5,115 Dividends to shareholders 127 Investments bought 8,002 Investment adviser and administrator fees 19 Transfer agent and shareholder service fees 12 Accrued expenses + 53 -------------- TOTAL LIABILITIES 13,328 NET ASSETS ----------------------------------------------------------------------- TOTAL ASSETS 609,380 TOTAL LIABILITIES - 13,328 -------------- NET ASSETS $ 596,052 NET ASSETS BY SOURCE Capital received from investors 596,053 Net realized capital losses (1) NET ASSET VALUE (NAV) SHARES NET ASSETS / OUTSTANDING = NAV $596,052 596,110 $1.00
a Includes illiquid restricted securities worth $14,994, or 2.47% of the fund's investments. The amortized cost for the fund's securities was $607,370. FEDERAL TAX DATA ------------------------------------------------------- COST BASIS OF PORTFOLIO $607,370 AS OF DECEMBER 31, 2002: UNUSED CAPITAL LOSSES: Expires 12/31 of: Loss amount: 2004 $1
See financial notes. 21 SCHWAB RETIREMENT MONEY FUND(R) Statement of OPERATIONS For January 1, 2003 through June 30, 2003; unaudited. All numbers x 1,000. INVESTMENT INCOME ----------------------------------------------------------------------- Interest $ 4,057 EXPENSES ----------------------------------------------------------------------- Investment adviser and administrator fees 1,131 a Transfer agent and shareholder service fees 744 b Trustees' fees 16 c Custodian and portfolio accounting fees 38 Professional fees 11 Registration fees 14 Shareholder reports 18 Other expenses + 4 -------------- TOTAL EXPENSES 1,976 d INCREASE IN NET ASSETS FROM OPERATIONS ----------------------------------------------------------------------- TOTAL INVESTMENT INCOME 4,057 TOTAL EXPENSES - 1,976 -------------- NET INVESTMENT INCOME 2,081 -------------- INCREASE IN NET ASSETS FROM OPERATIONS $2,081 a Calculated on a graduated basis as a percentage of average daily net assets: 0.38% of the first $1 billion, 0.35% over $1 billion, 0.32% over $10 billion, 0.30% over $20 billion and 0.27% over $40 billion. b Calculated as a percentage of average daily net assets: for transfer agent services, 0.05% of the fund's assets; for shareholder services, 0.20% of the fund's assets. c For the fund's independent trustees only. d The investment adviser (CSIM) and the transfer agent and shareholder service agent (Schwab) guarantee to limit the annual operating expenses of this fund through at least April 30, 2004, to 0.73% of average daily net assets. This limit doesn't include interest, taxes and certain non-routine expenses. See financial notes. 22 SCHWAB RETIREMENT MONEY FUND(R) Statements of CHANGES IN NET ASSETS For the current and prior report periods. All numbers x 1,000. Figures for the current period are unaudited.
OPERATIONS -------------------------------------------------------------------------------- 1/1/03 - 6/30/03 1/1/02 - 12/31/02 Net investment income $ 2,081 $ 6,849 INCREASE IN NET ASSETS FROM ------------------------------------- OPERATIONS 2,081 6,849 DISTRIBUTIONS PAID -------------------------------------------------------------------------------- Dividends from net investment income 2,081 6,849 a TRANSACTIONS IN FUND SHARES b -------------------------------------------------------------------------------- Shares sold 227,104 449,315 Shares reinvested 1,929 6,808 Shares redeemed + (198,913) (405,628) -------------------------------------- NET TRANSACTIONS IN FUND SHARES 30,120 50,495 NET ASSETS -------------------------------------------------------------------------------- Beginning of period 565,932 515,437 Total increase + 30,120 50,495 c -------------------------------------- END OF PERIOD $ 596,052 $ 565,932
a The tax-basis components of distributions paid for the prior period were:
Ordinary income $ 6,849 Long-term capital gains $ --
b Because all transactions in this section took place at $1.00 per share, figures for share quantities are the same as for dollars. c Represents the changes in net assets from operations plus the changes in value of transactions in fund shares, minus distributions paid. See financial notes. 23 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND AND SCHWAB RETIREMENT MONEY FUND Financial Notes unaudited Business Structure of the Funds EACH OF THE FUNDS DISCUSSED IN THIS REPORT IS A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS((TM), A NO-LOAD, OPEN-END MANAGEMENT INVESTMENT COMPANY. The company is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended. The sidebar shows the funds in this report and their trust. THE FUNDS OFFER ONE SHARE CLASS. For these funds, 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 trust may issue as many shares as necessary. Fund Operations Most of the funds' investments are described in the fund-by-fund sections earlier in this report. However, there are certain other investments and policies that may affect a fund's financials. The most significant of these are described below. Other policies concerning the funds' business operations also are described here. THE FUNDS DECLARE DIVIDENDS EVERY DAY THEY ARE OPEN FOR BUSINESS. These dividends, which are 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. 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. 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, 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. THE FUNDS PAY FEES FOR VARIOUS SERVICES. Through their trust, the funds have agreements with Charles Schwab Investment Management, Inc. (CSIM) to provide investment advisory and administrative services and with Charles Schwab & Co., Inc. (Schwab) to provide transfer agent and shareholder services. THE TRUST AND ITS FUNDS This list shows all of the funds included in The Charles Schwab Family of Funds. The funds discussed in this report 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(R) Schwab Municipal Money Fund Schwab California Municipal Money Fund Schwab New York Municipal Money Fund Schwab New Jersey Municipal Money Fund Schwab Pennsylvania Municipal Money Fund Schwab Florida Municipal Money Fund Schwab Massachusetts Municipal Money Fund Schwab Institutional Advantage Money Fund(R) Schwab Retirement Money Fund(R) Schwab Government Cash Reserves 24 SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND AND SCHWAB RETIREMENT MONEY FUND Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements with the funds that may limit the total expenses charged. The rates and limitations for these fees vary from fund to fund, and are described in each fund's Statement of Operations. TRUSTEES MAY INCLUDE PEOPLE WHO ARE OFFICERS AND/OR DIRECTORS OF THE INVESTMENT ADVISER OR SCHWAB. Federal securities law limits the percentage of such "interested persons" who may serve on a trust's board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their service as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund's Statement of Operations. THE FUNDS MAY ENGAGE IN CERTAIN TRANSACTIONS INVOLVING AFFILIATES. The funds may make direct transactions with certain other SchwabFunds(R) 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. THE FUNDS INTEND TO MEET FEDERAL INCOME AND EXCISE TAX REQUIREMENTS FOR REGULATED INVESTMENT COMPANIES. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains (if any) to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax. UNDER THE FUNDS' ORGANIZATIONAL DOCUMENTS, ITS OFFICERS AND TRUSTEES ARE INDEMNIFIED AGAINST CERTAIN LIABILITY 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. ACCOUNTING POLICIES The following are the main policies the funds use in preparing their financial statements. THE FUNDS VALUE THEIR SECURITIES AT AMORTIZED COST, which approximates market value. SECURITY TRANSACTIONS are recorded as of the date the order to buy or sell the security is executed. INTEREST INCOME is recorded as it accrues. If a fund bought a debt instrument at a discount (that is, for less than its 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. REALIZED GAINS AND LOSSES from security transactions are based on the identified costs of the securities involved. EXPENSES that are specific to a fund are charged directly to that fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their net assets. EACH FUND MAINTAINS ITS OWN ACCOUNT FOR PURPOSES OF HOLDING ASSETS AND ACCOUNTING, and is considered a separate entity for tax purposes. Within its account, each fund also keeps certain assets in segregated accounts, as may be required by securities law. THE ACCOUNTING POLICIES DESCRIBED ABOVE 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. 25 Glossary Words and phrases that appear in financial reports often have specific meanings that are different from their everyday meanings. The glossary below tells you what is meant by the following terms when they are used in this report. 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 Securities that are backed by various assets, which may include loans, accounts receivable or investments of an entity, such as a bank or credit card company. These securities are obligations that the issuer intends to repay using the assets backing them (once collected or liquidated). Therefore, repayment depends largely on the cash flows generated by the assets backing the securities. 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." 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 SECURITY A security that is 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. 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 TOB Tender option bond TOBP Tender option bond partnership TRAN Tax and revenue anticipation note VRD Variable-rate demand Schwab Institutional Advantage Money Fund(R) and Schwab Retirement Money Fund(R) 26 CREDIT RATINGS Debt issuers, including corporations, states and municipalities, may arrange with a recognized independent rating organization, such as Moody's Investor Service, Standard & Poor's and Fitch, Inc., 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. 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 Generally, 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, corporations and financial institutions (such as banks). Money market securities include commercial paper, promissory notes, certificates of deposit, banker's acceptances, notes and time deposits. 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. 144A SECURITY A security exempt from a registration requirement pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, to qualified institutional buyers, as defined in Rule 144A. OUTSTANDING SHARES, SHARES OUTSTANDING When speaking of a company or mutual fund, indicates all shares currently held by investors. REVENUE ANTICIPATION NOTES Obligations that are issued in expectation of the receipt of revenue, such as income taxes, property taxes, etc. 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 an annual rate and calculated as a percentage of the investment's market value. Schwab Institutional Advantage Money Fund(R) and Schwab Retirement Money Fund(R) 27 NOTES CONTACT SCHWAB SchwabFunds(R) offers you a complete family of mutual funds, each one based on a time-tested investment approach and using disciplined, clearly defined management strategies. Actively managed funds include multi-manager stock funds, a fund that uses long-short strategies, and a range of taxable and tax-free bond funds. Index funds include large-cap, small-cap and international stock funds. The list at right shows all currently available SchwabFunds. Whether you're an experienced investor or just starting out, SchwabFunds can help you achieve your financial goals. Please call 1-800-435-4000 for a free prospectus and brochure for any SchwabFund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus. METHODS FOR PLACING ORDERS The following information outlines how Schwab investors can place orders. If you are investing through a third-party investment provider, methods for placing orders may be different. INTERNET 1 www.schwab.com SCHWAB BY PHONE(TM) 2 Use our automated voice service or speak to a representative. Call 1-800-435-4000, day or night (for TDD service, call 1-800-345-2550). TELEBROKER(R) Automated touch-tone phone service at 1-800-272-4922. MAIL Write to SchwabFunds at: P.O. Box 3812 Englewood, CO 80155-3812 When selling or exchanging shares, be sure to include the signatures of at least one of the persons whose name is on the account. 1 Shares of Sweep Investments(TM) may not be purchased directly over the Internet. 2 Orders placed in person or through a telephone representative may be subject to a service fee payable to Schwab. THE SCHWABFUNDS FAMILY STOCK FUNDS Schwab S&P 500 Fund Schwab 1000 Fund(R) Schwab Small-Cap Index Fund(R) Schwab Total Stock Market Index Fund(R) Schwab International Index Fund(R) Schwab Core Equity Fund(TM) Schwab Small-Cap Equity Fund(TM) Schwab Hedged Equity Fund(TM) Schwab Dividend Equity Fund(TM) Schwab Focus Funds Communications Focus Fund Financial Services Focus Fund Health Care Focus Fund Technology Focus Fund Schwab MarketMasters Funds(TM) Schwab U.S. MarketMasters Fund(TM) Schwab Small-Cap MarketMasters Fund(TM) Schwab International MarketMasters Fund(TM) Schwab Balanced MarketMasters Fund(TM) ASSET ALLOCATION FUNDS Schwab MarketTrack Portfolios(R) Schwab All Equity Portfolio Schwab Growth Portfolio Schwab Balanced Portfolio Schwab Conservative Portfolio BOND FUNDS Schwab YieldPlus Fund(R) Schwab Short-Term Bond Market Fund Schwab Total Bond Market Fund Schwab GNMA Fund Schwab Short/Intermediate Tax-Free Bond Fund Schwab Long-Term Tax-Free Bond Fund Schwab California Short/Intermediate Tax-Free Bond Fund Schwab California Long-Term Tax-Free Bond Fund SCHWAB MONEY FUNDS Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity.(3) Choose from taxable or tax-advantaged alternatives. Many can be linked to your Schwab account to "sweep" cash balances automatically when you're between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments(R). 3 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. [CHARLES SCHWAB LOGO] INVESTMENT ADVISER Charles Schwab Investment Management, Inc. 101 Montgomery Street, San Francisco, CA 94104 DISTRIBUTOR SchwabFunds(R) 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. (C) 2003 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE. Printed on recycled paper. REG13605-06 Item 2: Code of Ethics - Not applicable to this semi-annual report. Item 3: Audit Committee Financial Expert - Not applicable to this semi-annual report. Item 4: Principal Accountant Fees and Services - Not applicable to this semi-annual report. Item 5: Not applicable. Item 6: Reserved. Item 7: Not applicable. Item 8: Reserved. Item 9: 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 Chief Financial Officer, Tai-Chin Tung, 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 Registrant's last fiscal half-year, 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 10: Exhibits attached hereto. 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: September 2, 2003 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: September 2, 2003 By: /s/ Tai-Chin Tung _________________________ Tai-Chin Tung Chief Financial Officer Date: August 18, 2003