<PAGE>
SchwabFunds
SCHWAB
MUNICIPAL
MONEY FUNDS
- - SCHWAB MUNICIPAL MONEY FUND
- - SCHWAB CALIFORNIA
MUNICIPAL MONEY FUND
- - SCHWAB NEW YORK
MUNICIPAL MONEY FUND
Annual Report
December 31, 1997
<PAGE>
[Photo]
Dear Shareholder,
With the support of investors like you, SchwabFunds-Registered
Trademark- continues to be among the largest and fastest-growing
mutual fund families in the nation. Charles Schwab Investment
Management, Inc. (CSIM) now manages over $56 billion in assets for
nearly 3 million SchwabFunds shareholders and offers 31 funds
spanning a spectrum of financial markets and investing styles.
MAINTAINING A LONG-TERM PERSPECTIVE
The recent volatility in both domestic and international markets reminds us
that investments can move in both directions, down as well as up, especially
in the short term. For this reason, it is extremely important that you
develop and stick with a long-term investment plan that is appropriate for
your personal goals, time horizon and tolerance for risk. While it's a good
idea to periodically review your portfolio, I would encourage you to avoid
making changes merely in response to short-term market movements.
If you have any questions about your own investment plan or need help getting
started, contact your local Schwab branch to set up a free consultation with
one of our representatives. Additionally, I encourage you to visit our Web
site at WWW.SCHWAB.COM/SCHWABFUNDS, where you'll find online resources and
tools to help you evaluate or develop your investment plan.
NEW INVESTMENT OPPORTUNITIES
As a strong proponent of indexing as an investment strategy, we've expanded
our indexing offering to include bond index funds. SchwabFunds is happy to
introduce the Short-Term Bond Market Index Fund and the Total Bond Market
Index Fund.(1) Each Fund is broad-based and diversified and seeks to track an
index representing a broad spectrum of the bond market. These Funds are
straightforward choices for your bond holdings and can represent the core
component of your bond portfolio.
In addition, we introduced two new municipal money funds in early February.
The Schwab New Jersey Municipal Money Fund and the Schwab Pennsylvania
Municipal Money Fund are designed to offer taxpayers in those states
opportunities for additional tax savings.(2)
For a free prospectus on the Schwab Bond Index Funds, the Schwab New Jersey
Municipal Money Fund, the Schwab Pennsylvania Municipal Money Fund or any
other SchwabFund, please call us toll-free at 1-800-435-4000. The prospectus
contains more information, including fees and expenses. Please be sure to
read the prospectus before investing.
Thank you for placing your trust in SchwabFunds. We will continue to explore
new strategies to help meet your investment needs and to provide you with
timely information on SchwabFunds.
/s/ Charles R. Schwab
Charles R. Schwab
(1) Formerly the Schwab Short/Intermediate Government Bond Fund and the Schwab
Long-Term Government Bond Fund, respectively.
(2) Income may be subject to the alternative minimum tax (AMT).
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
A Word from SchwabFunds-Registered Trademark-............... 2
Schwab Municipal Money Fund................................. 3
Schwab California Municipal Money Fund...................... 5
Schwab New York Municipal Money Fund........................ 7
The Portfolio Management Team............................... 9
Market Overview............................................. 10
Questions to the Portfolio Management Team.................. 15
Glossary of Terms........................................... 19
Portfolio Summaries......................................... 20
Financial Statements and Notes.............................. 23
</TABLE>
1
<PAGE>
A WORD FROM SCHWABFUNDS-REGISTERED TRADEMARK-
We're pleased to report on the performance of the three Schwab Municipal
Money Funds listed below (the Funds) for the year ended December 31, 1997:
- Schwab Municipal Money Fund
- Schwab California Municipal Money Fund
- Schwab New York Municipal Money Fund
During the reporting period, the Funds continued to provide current
tax-exempt income combined with capital stability and liquidity.(1) The
following pages contain additional information on the Funds' performances during
the reporting period and on their portfolios. Please remember that while the
Funds seek to maintain a stable $1.00 share price to protect your principal, as
with all money funds, there can be no assurance that the Funds will be able to
maintain a $1.00 net asset value per share. It also is important to understand
that your investment in the Funds is not insured or guaranteed by the U.S.
Government.
Each Fund has two classes of shares, Sweep Shares and Value Advantage
Shares-TM-, which are both presented in this annual report. These two classes
were designed for different purposes as explained in the following paragraphs.
Depending on your cash needs and investment profile, either or both classes of
the Funds may have a place in your investment plan.
(1) Income from all of the Funds may be subject to alternative minimum tax (AMT)
and income from the Schwab Municipal Money Fund may be subject to state and
local income taxes.
SWEEP SHARES
Sweep Shares are designed for frequent access--such as your short-term daily
cash needs. They can be linked to your Schwab account and contain a feature that
automatically "sweeps" your uninvested cash balances into the Sweep Shares class
of the fund you designate, according to the terms and conditions of your
account. Likewise, your Sweep Shares balances can also be used to settle trades
and automatically cover other day-to-day transactions, such as margin calls.
VALUE ADVANTAGE SHARES
Value Advantage Shares are designed to be longer-term money market
investment vehicles for cash balances that do not require frequent access, and
may help fill the cash equivalent sector in your asset allocation plan. There
are higher minimum investment and balance requirements and other transaction
restrictions associated with an investment in Value Advantage Shares that do not
apply to Sweep Shares. Also, unlike the Sweep Shares, the Value Advantage Shares
are not designed to automatically cover negative balances in your Schwab
account. These policies can help to lower costs and provide higher yields.
If you would like more information on either the Sweep Shares or the Value
Advantage Shares of the Funds, or on other Schwab Money Funds, please call our
toll-free number, 1-800-435-4000, and request a free prospectus which contains
more information, including fees and expenses. Be sure to read the prospectus
carefully before investing.
2
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
PERFORMANCE REVIEW
The table below presents 7-day yields as of the end of the reporting period
for both the Sweep Shares and Value Advantage Shares-TM-. Please remember that
money market fund yields fluctuate and past performance is no guarantee of
future results.
YIELD SUMMARY AS OF 12/31/97(2)
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares
<S> <C> <C>
- -----------------------------------------------------------------------------------------
7-Day Yield 3.37% 3.58%
- -----------------------------------------------------------------------------------------
7-Day Effective Yield 3.43% 3.65%
- -----------------------------------------------------------------------------------------
7-Day Taxable Equivalent Effective Yield(3) 5.68% 6.03%
- -----------------------------------------------------------------------------------------
</TABLE>
THE OPPORTUNITY FOR HIGHER AFTER-TAX YIELDS
If you're in a high tax bracket, the federal tax-exempt income which may be
paid by the Schwab Municipal Money Fund can provide you with higher yields than
those of taxable money funds on a taxable equivalent basis.(4) In fact, as shown
below, compared with the average 5.20% 7-day effective yield for first-tier
taxable money funds, the Sweep Shares and the Value Advantage Shares offered a
yield advantage of 0.51% and 0.86%, respectively, on a taxable equivalent
basis.(5)
YIELDS AS OF 12/30/97
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares
<S> <C> <C>
- -----------------------------------------------------------------------------------------
7-Day Taxable Equivalent Effective Yield(3) 5.71% 6.06%
- -----------------------------------------------------------------------------------------
</TABLE>
(2) A portion of the Fund's expenses were reduced during the reporting period.
Without these reductions, as of 12/31/97, the 7-day, 7-day effective and
7-day taxable equivalent effective yields for the Sweep Shares would have
been, respectively: 3.14%, 3.19% and 5.28%. For the Value Advantage Shares,
as of 12/31/97, the 7-day, 7-day effective and 7-day taxable equivalent
effective yields would have been, respectively: 3.34%, 3.40% and 5.63%.
(3) Taxable equivalent effective yield assumes a 1997 maximum federal regular
income tax rate of 39.60%.
(4) Income may be subject to state and local taxes and AMT.
(5) Source: IBC Financial Data, Inc.'s weekly average 7-day effective yield for
the 286 funds in the first-tier category of taxable money funds, as of
12/30/97. Past performance is no guarantee of future results. A portion of
the Fund's expenses were reduced during the reporting period. Without these
reductions, as of 12/30/97, the 7-day taxable equivalent effective yields
for the Sweep Shares and the Value Advantage Shares would have been 5.31%
and 5.65%, respectively.
3
<PAGE>
SCHWAB MUNICIPAL MONEY FUND (continued)
PORTFOLIO COMPOSITION
The Fund invests in a diversified portfolio of high-quality, short-term
municipal securities issued by or on behalf of states, territories, and
possessions of the United States and their political subdivisions, agencies, and
instrumentalities. The chart below illustrates the composition of the Fund's
portfolio as of December 31, 1997 and is not indicative of holdings after that
date. A complete listing of the securities in the Fund's portfolio as of
December 31, 1997 is provided in the Schedule of Investments later in this
report.
SCHWAB MUNICIPAL MONEY FUND
Portfolio Composition as of December 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Variable Rate Obligations 64%
Tax-Exempt Commercial Paper 9%
Anticipation Notes 10%
Tender Option Bonds 4%
Revenue Bonds 3%
Mandatory & Optional Put Bonds 8%
Other 2%
</TABLE>
4
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
PERFORMANCE REVIEW
The table below presents 7-day yields as of the end of the reporting period
for both the Sweep Shares and Value Advantage Shares-TM-. Please remember that
money market fund yields fluctuate and past performance is no guarantee of
future results.
YIELD SUMMARY AS OF 12/31/97(6)
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares
<S> <C> <C>
- -----------------------------------------------------------------------------------------
7-Day Yield 3.18% 3.38%
- -----------------------------------------------------------------------------------------
7-Day Effective Yield 3.23% 3.44%
- -----------------------------------------------------------------------------------------
7-Day Taxable Equivalent Effective Yield(7) 5.90% 6.26%
- -----------------------------------------------------------------------------------------
</TABLE>
THE OPPORTUNITY FOR HIGHER AFTER-TAX YIELDS
If you're in a high tax bracket, the double tax-exempt income which may be
paid by the Schwab California Municipal Money Fund can provide you with higher
yields than those of taxable money funds on a taxable equivalent basis.(8) In
fact, as shown below, compared with the average 5.20% 7-day effective yield for
first-tier taxable money funds, the Sweep Shares and the Value Advantage Shares
offered a yield advantage of 0.73% and 1.10%, respectively, on a taxable
equivalent basis.(9)
YIELDS AS OF 12/30/97
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares
<S> <C> <C>
- -----------------------------------------------------------------------------------------
7-Day Taxable Equivalent Effective Yield(7) 5.93% 6.30%
- -----------------------------------------------------------------------------------------
</TABLE>
(6) A portion of the Fund's expenses were reduced during the reporting period.
Without these reductions, as of 12/31/97, the 7-day, 7-day effective and
7-day taxable equivalent effective yields for the Sweep Shares would have
been, respectively: 2.93%, 2.97% and 5.42%. For the Value Advantage Shares,
as of 12/31/97, the 7-day, 7-day effective and 7-day taxable equivalent
effective yields would have been, respectively: 3.13%, 3.18% and 5.81%.
(7) Taxable equivalent effective yield assumes a 1997 maximum combined federal
regular income tax and California state personal income tax rate of 45.22%.
(8) Income may be subject to AMT.
(9) Source: IBC Financial Data, Inc.'s weekly average 7-day effective yield for
the 286 funds in the first-tier category of taxable money funds, as of
12/30/97. Past performance is no guarantee of future results. A portion of
the Fund's expenses were reduced during the reporting period. Without these
reductions, as of 12/30/97, the 7-day taxable equivalent effective yields
for the Sweep Shares and the Value Advantage Shares would have been 5.46%
and 5.84%, respectively.
5
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND (continued)
PORTFOLIO COMPOSITION
The Fund invests in a portfolio of high-quality, short-term municipal
securities issued by the state of California, its agencies and
instrumentalities. The chart below illustrates the composition of the Fund's
portfolio as of December 31, 1997 and is not indicative of holdings after that
date. A complete listing of the securities in the Fund's portfolio as of
December 31, 1997 is provided in the Schedule of Investments later in this
report.
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
Portfolio Composition as of December 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Variable Rate Obligations 59%
Tax-Exempt Commercial Paper 20%
Anticipation Notes 16%
Other 3%
General Obligations 2%
</TABLE>
6
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND
PERFORMANCE REVIEW
The table below presents 7-day yields as of the end of the reporting period
for both the Sweep Shares and Value Advantage Shares-TM-. Please remember that
money market fund yields fluctuate and past performance is no guarantee of
future results.
YIELD SUMMARY AS OF 12/31/97(10)
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
7-Day Yield 3.23% 3.47%
- ---------------------------------------------------------------------------------------------
7-Day Effective Yield 3.28% 3.53%
- ---------------------------------------------------------------------------------------------
7-Day Taxable Equivalent Effective Yield(11) 6.12% 6.59%
- ---------------------------------------------------------------------------------------------
</TABLE>
THE OPPORTUNITY FOR HIGHER AFTER-TAX YIELDS
If you're in a high tax bracket, the triple tax-exempt income which may be
paid by the Schwab New York Municipal Money Fund can provide you with higher
yields than those of taxable money funds on a taxable equivalent basis.(12) In
fact, as shown below, compared with the average 5.20% 7-day effective yield for
first-tier taxable money funds, the Sweep Shares and the Value Advantage Shares
offered a yield advantage of 0.98% and 1.43%, respectively, on a taxable
equivalent basis.(13)
YIELDS AS OF 12/30/97
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
7-Day Taxable Equivalent Effective Yield(11) 6.18% 6.63%
- ---------------------------------------------------------------------------------------------
</TABLE>
(10) A portion of the Fund's expenses were reduced during the reporting period.
Without these reductions, as of 12/31/97, the 7-day, 7-day effective and
7-day taxable equivalent effective yields for the Sweep Shares would have
been, respectively: 2.93%, 2.97% and 5.54%. For the Value Advantage Shares,
as of 12/31/97, the 7-day, 7-day effective and 7-day taxable equivalent
effective yields would have been, respectively: 3.11%, 3.16% and 5.90%.
(11) Taxable equivalent effective yield assumes a 1997 maximum combined federal
regular income tax and New York state and New York City personal income tax
rate of 46.43%.
(12) Income may be subject to AMT.
(13) Source: IBC Financial Data, Inc.'s weekly average 7-day effective yield for
the 286 funds in the first-tier category of taxable money funds, as of
12/30/97. Past performance is no guarantee of future results. A portion of
the Fund's expenses were reduced during the reporting period. Without these
reductions, as of 12/30/97, the 7-day taxable equivalent effective yields
for the Sweep Shares and the Value Advantage Shares would have been 5.58%
and 5.95%, respectively.
7
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND (continued)
PORTFOLIO COMPOSITION
The Fund invests in a portfolio of high-quality, short-term municipal
securities issued by the state of New York, its agencies and instrumentalities.
The chart below illustrates the composition of the Fund's portfolio as of
December 31, 1997 and is not indicative of holdings after that date. A complete
listing of the securities in the Fund's portfolio as of December 31, 1997 is
provided in the Schedule of Investments later in this report.
SCHWAB NEW YORK MUNICIPAL MONEY FUND
Portfolio Composition as of December 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Variable Rate Obligations 56%
Tax-Exempt Commercial Paper 13%
Anticipation Notes 21%
Other 4%
Variable Rate Tender Option Bonds 3%
Revenue Bonds 3%
</TABLE>
8
<PAGE>
THE PORTFOLIO MANAGEMENT TEAM
STEPHEN B. WARD--Senior Vice President and Chief Investment Officer--has
overall responsibility for the management of the Funds' portfolios. Steve joined
Charles Schwab Investment Management, Inc. (CSIM) as Vice President and
Portfolio Manager in April 1991 and was promoted to his current position in
August 1993. Prior to joining CSIM, Steve was Vice President and Portfolio
Manager at Federated Investors.
WALTER BEVERIDGE--Portfolio Manager-- has managed the Schwab Municipal Money
Fund since its inception in 1992 when he joined CSIM; the Schwab California
Municipal Money Fund since its inception in 1992 until December 1997; and the
Schwab New York Municipal Money Fund from its inception in 1995 until December
1997. During 1998, Walter also will be responsible for the management of the
Schwab Pennsylvania Municipal Money Fund. Prior to joining CSIM, Walter was
Portfolio Manager for the Benham Group.
CHARLES SOULIS--Portfolio Manager-- began managing the Schwab California
Municipal Money Fund and the Schwab New York Municipal Money Fund in December
1997. Prior to joining CSIM, Charles was Portfolio Manager for Wells Capital
Management. During 1998, Charles also will be responsible for management of the
Schwab New Jersey Municipal Money Fund.
THE FOLLOWING MARKET OVERVIEW AND ANSWERS TO QUESTIONS ARE PROVIDED BY THE
PORTFOLIO MANAGEMENT TEAM. A GLOSSARY OF TERMS IS PROVIDED FOR YOUR REFERENCE ON
PAGE 19.
9
<PAGE>
MARKET OVERVIEW
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QUARTERLY GDP GROWTH RATE
<S> <C>
Q1 1990 3.9%
Q2 1990 1.2%
Q3 1990 -1.9%
Q4 1990 -4.0%
Q1 1991 -2.1%
Q2 1991 1.8%
Q3 1991 1.0%
Q4 1991 1.0%
Q1 1992 4.7%
Q2 1992 2.5%
Q3 1992 3.0%
Q4 1992 4.3%
Q1 1993 0.1%
Q2 1993 2.0%
Q3 1993 2.1%
Q4 1993 5.3%
Q1 1994 3.0%
Q2 1994 4.7%
Q3 1994 1.8%
Q4 1994 3.6%
Q1 1995 0.9%
Q2 1995 0.3%
Q3 1995 3.0%
Q4 1995 2.2%
Q1 1996 1.8%
Q2 1996 6.0%
Q3 1996 1.0%
Q4 1996 4.3%
Q1 1997 4.9%
Q2 1997 3.3%
Q3 1997 3.1%
Q4 1997 4.3%
Source: Bloomberg L.P.
</TABLE>
- - The real GDP growth rate was 3.2% for 1996 and 3.8% for 1997--healthy rates of
growth for the economy, well in excess of the Federal Reserve's projected
non-inflationary growth rate of 2.2%.
- - The direct impact of the economic problems of Pacific Rim countries on 1998
U.S. GDP growth is anticipated to be relatively minor. Estimates range from a
reduction of 0.25% (as estimated by the Federal Reserve's Chairman Alan
Greenspan) to 1%. At the time of this writing, the economy appears poised for
continued growth, further extending the current economic expansion that began
in 1991.
- - Prior to the fourth quarter onset of the "Asian Flu," the strength of the
economy and tight labor markets continued to lead to speculation of a
potential acceleration in both wage and price inflation and whether a more
restrictive Federal Reserve policy was imminent.
Throughout most of the reporting period, the Federal Reserve was "on alert"
for signs of accelerating inflation, whether caused by tight labor markets or
consumer spending fueled by a strong stock market. With the onset of the
economic problems in Pacific Rim countries and their potential impact on the
U.S. economy, sentiment has shifted--there is no clear consensus whether the
Federal Reserve's next move will be to raise or lower short-term rates.
10
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. UNEMPLOYMENT RATE
<S> <C>
Jan-90 5.4%
Feb-90 5.3%
Mar-90 5.2%
Apr-90 5.4%
May-90 5.4%
Jun-90 5.2%
Jul-90 5.5%
Aug-90 5.7%
Sep-90 5.9%
Oct-90 5.9%
Nov-90 6.2%
Dec-90 6.3%
Jan-91 6.4%
Feb-91 6.6%
Mar-91 6.8%
Apr-91 6.7%
May-91 6.9%
Jun-91 6.9%
Jul-91 6.8%
Aug-91 6.9%
Sep-91 6.9%
Oct-91 7.0%
Nov-91 7.0%
Dec-91 7.3%
Jan-92 7.3%
Feb-92 7.4%
Mar-92 7.4%
Apr-92 7.4%
May-92 7.6%
Jun-92 7.8%
Jul-92 7.7%
Aug-92 7.6%
Sep-92 7.6%
Oct-92 7.3%
Nov-92 7.4%
Dec-92 7.4%
Jan-93 7.3%
Feb-93 7.1%
Mar-93 7.0%
Apr-93 7.1%
May-93 7.1%
Jun-93 7.0%
Jul-93 6.9%
Aug-93 6.8%
Sep-93 6.7%
Oct-93 6.8%
Nov-93 6.6%
Dec-93 6.5%
Jan-94 6.7%
Feb-94 6.6%
Mar-94 6.5%
Apr-94 6.4%
May-94 6.0%
Jun-94 6.1%
Jul-94 6.1%
Aug-94 6.1%
Sep-94 5.9%
Oct-94 5.8%
Nov-94 5.6%
Dec-94 5.4%
Jan-95 5.6%
Feb-95 5.5%
Mar-95 5.4%
Apr-95 5.7%
May-95 5.6%
Jun-95 5.6%
Jul-95 5.7%
Aug-95 5.7%
Sep-95 5.7%
Oct-95 5.5%
Nov-95 5.6%
Dec-95 5.6%
Jan-96 5.7%
Feb-96 5.5%
Mar-96 5.5%
Apr-96 5.5%
May-96 5.5%
Jun-96 5.3%
Jul-96 5.4%
Aug-96 5.2%
Sep-96 5.2%
Oct-96 5.2%
Nov-96 5.3%
Dec-96 5.3%
Jan-97 5.4%
Feb-97 5.3%
Mar-97 5.2%
Apr-97 4.9%
May-97 4.8%
Jun-97 5.0%
Jul-97 4.8%
Aug-97 4.9%
Sep-97 4.9%
Oct-97 4.7%
Nov-97 4.6%
Dec-97 4.7%
Source: Bloomberg L.P.
</TABLE>
- - Job growth has remained robust and the unemployment rate reached a new low for
this decade during the reporting period. In fact, the monthly fourth quarter
rates of 4.7%, 4.6% and 4.7% for October, November and December, respectively,
represent the lowest unemployment rates in 24 years.
- - Although inflation has been well contained, the combination of a tight labor
market (as evidenced by low unemployment rates) and strong economic growth
typically leads to inflationary pressures on wages and, ultimately, prices. In
this environment, productivity growth becomes particularly important. Strong
productivity gains, such as we experienced in the second and third quarters,
allow manufacturers to keep a lid on prices in the face of rising wages
without trimming profit margins.
11
<PAGE>
MARKET OVERVIEW (continued)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MEASURES OF INFLATION
<S> <C> <C>
Monthly Consumer Price Index Quarterly Employment Cost Index
Jan-90 5.2% 5.3%
Feb-90 5.3% 5.3%
Mar-90 5.2% 5.3%
Apr-90 4.7% 5.4%
May-90 4.4% 5.4%
Jun-90 4.7% 5.4%
Jul-90 4.8% 5.1%
Aug-90 5.6% 5.1%
Sep-90 6.2% 5.1%
Oct-90 6.3% 4.8%
Nov-90 6.3% 4.8%
Dec-90 6.1% 4.8%
Jan-91 5.7% 4.6%
Feb-91 5.3% 4.6%
Mar-91 4.9% 4.6%
Apr-91 4.9% 4.5%
May-91 5.0% 4.5%
Jun-91 4.7% 4.5%
Jul-91 4.4% 4.3%
Aug-91 3.8% 4.3%
Sep-91 3.4% 4.3%
Oct-91 2.9% 4.2%
Nov-91 3.0% 4.2%
Dec-91 3.1% 4.2%
Jan-92 2.6% 4.1%
Feb-92 2.8% 4.1%
Mar-92 3.2% 4.1%
Apr-92 3.2% 3.5%
May-92 3.0% 3.5%
Jun-92 3.1% 3.5%
Jul-92 3.2% 3.4%
Aug-92 3.1% 3.4%
Sep-92 3.0% 3.4%
Oct-92 3.2% 3.5%
Nov-92 3.0% 3.5%
Dec-92 2.9% 3.5%
Jan-93 3.3% 3.4%
Feb-93 3.2% 3.4%
Mar-93 3.1% 3.4%
Apr-93 3.2% 3.6%
May-93 3.2% 3.6%
Jun-93 3.0% 3.6%
Jul-93 2.8% 3.6%
Aug-93 2.8% 3.6%
Sep-93 2.7% 3.6%
Oct-93 2.8% 3.4%
Nov-93 2.7% 3.4%
Dec-93 2.7% 3.4%
Jan-94 2.5% 3.2%
Feb-94 2.5% 3.2%
Mar-94 2.5% 3.2%
Apr-94 2.4% 3.1%
May-94 2.3% 3.1%
Jun-94 2.5% 3.1%
Jul-94 2.8% 3.1%
Aug-94 2.9% 3.1%
Sep-94 3.0% 3.1%
Oct-94 2.6% 3.0%
Nov-94 2.7% 3.0%
Dec-94 2.7% 3.0%
Jan-95 2.8% 3.0%
Feb-95 2.9% 3.0%
Mar-95 2.9% 3.0%
Apr-95 3.1% 3.0%
May-95 3.2% 3.0%
Jun-95 3.0% 3.0%
Jul-95 2.8% 2.8%
Aug-95 2.6% 2.8%
Sep-95 2.5% 2.8%
Oct-95 2.8% 2.8%
Nov-95 2.6% 2.8%
Dec-95 2.5% 2.8%
Jan-96 2.7% 2.9%
Feb-96 2.7% 2.9%
Mar-96 2.8% 2.9%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.8% 2.9%
Jul-96 3.0% 2.9%
Aug-96 2.9% 2.9%
Sep-96 3.0% 2.9%
Oct-96 3.0% 3.0%
Nov-96 3.3% 3.0%
Dec-96 3.3% 3.0%
Jan-97 3.0% 2.8%
Feb-97 3.0% 2.8%
Mar-97 2.8% 2.8%
Apr-97 2.5% 2.8%
May-97 2.2% 2.8%
Jun-97 2.3% 2.8%
Jul-97 2.2% 3.0%
Aug-97 2.2% 3.0%
Sep-97 2.2% 3.0%
Oct-97 2.1% 3.2%
Nov-97 1.8% 3.2%
Dec-97 1.7% 3.2%
</TABLE>
- - Both the Employment Cost Index and Consumer Price Index (CPI) remained in
check throughout 1997, reflecting continued low levels of inflation.
- - The CPI rose 1.7% during 1997--the lowest rate of increase since 1986. Its
core rate (which excludes the more volatile food and energy components) rose
2.2%--the lowest rate of increase since 1965.
- - Even though current levels of inflation are very low, the Federal Reserve
indicated throughout most of the reporting period that the economy remains in
the zone where inflation risks are increasing, and that it is poised to act
preemptively by raising interest rates if necessary. The Federal Reserve did
take action earlier this year in March, increasing the Federal Funds Rate by
0.25% to 5.50%. At the end of the reporting period, however, sentiment was
mixed regarding the direction and timing of the Federal Reserve's next action.
12
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YIELDS ON 90-DAY COMMERCIAL PAPER
AND 3-MONTH TREASURY BILLS FOR THE
PERIOD 1/2/97 - 12/31/97
<S> <C> <C>
3 Month Treasury Bill 90 Day Commercial Paper
1/2/97 5.18% 5.30%
1/3/97 5.16% 5.29%
1/6/97 5.17% 5.32%
1/7/97 5.15% 5.32%
1/8/97 5.15% 5.29%
1/9/97 5.12% 5.30%
1/10/97 5.16% 5.30%
1/13/97 5.17% 5.34%
1/14/97 5.16% 5.29%
1/15/97 5.14% 5.31%
1/16/97 5.16% 5.29%
1/17/97 5.15% 5.30%
1/20/97 5.15% 5.30%
1/21/97 5.15% 5.29%
1/22/97 5.16% 5.30%
1/23/97 5.16% 5.27%
1/24/97 5.16% 5.32%
1/27/97 5.19% 5.32%
1/28/97 5.19% 5.32%
1/29/97 5.17% 5.31%
1/30/97 5.17% 5.28%
1/31/97 5.15% 5.30%
2/3/97 5.11% 5.30%
2/4/97 5.13% 5.28%
2/5/97 5.12% 5.28%
2/6/97 5.13% 5.30%
2/7/97 5.12% 5.27%
2/10/97 5.13% 5.26%
2/11/97 5.14% 5.29%
2/12/97 5.14% 5.29%
2/13/97 5.12% 5.27%
2/14/97 5.08% 5.26%
2/17/97 5.09% 5.26%
2/18/97 5.09% 5.25%
2/19/97 5.10% 5.25%
2/20/97 5.08% 5.26%
2/21/97 5.09% 5.20%
2/24/97 5.11% 5.22%
2/25/97 5.15% 5.24%
2/26/97 5.18% 5.23%
2/27/97 5.20% 5.38%
2/28/97 5.22% 5.35%
3/3/97 5.23% 5.37%
3/4/97 5.23% 5.29%
3/5/97 5.19% 5.30%
3/6/97 5.21% 5.29%
3/7/97 5.21% 5.29%
3/10/97 5.19% 5.29%
3/11/97 5.17% 5.30%
3/12/97 5.19% 5.30%
3/13/97 5.23% 5.30%
3/14/97 5.23% 5.32%
3/17/97 5.25% 5.34%
3/18/97 5.29% 5.37%
3/19/97 5.29% 5.38%
3/20/97 5.34% 5.39%
3/21/97 5.40% 5.50%
3/24/97 5.38% 5.50%
3/25/97 5.39% 5.52%
3/26/97 5.34% 5.53%
3/27/97 5.37% 5.54%
3/28/97 5.37% 5.54%
3/31/97 5.32% 5.55%
4/1/97 5.30% 5.53%
4/2/97 5.29% 5.58%
4/3/97 5.25% 5.55%
4/4/97 5.27% 5.54%
4/7/97 5.27% 5.61%
4/8/97 5.23% 5.59%
4/9/97 5.22% 5.58%
4/10/97 5.29% 5.53%
4/11/97 5.28% 5.52%
4/14/97 5.29% 5.58%
4/15/97 5.29% 5.56%
4/16/97 5.29% 5.58%
4/17/97 5.29% 5.58%
4/18/97 5.28% 5.57%
4/21/97 5.26% 5.60%
4/22/97 5.32% 5.60%
4/23/97 5.34% 5.62%
4/24/97 5.30% 5.57%
4/25/97 5.31% 5.54%
4/28/97 5.30% 5.61%
4/29/97 5.26% 5.56%
4/30/97 5.23% 5.57%
5/1/97 5.21% 5.60%
5/2/97 5.22% 5.57%
5/5/97 5.11% 5.60%
5/6/97 5.17% 5.56%
5/7/97 5.22% 5.59%
5/8/97 5.21% 5.63%
5/9/97 5.16% 5.55%
5/12/97 5.15% 5.59%
5/13/97 5.20% 5.57%
5/14/97 5.16% 5.57%
5/15/97 5.11% 5.58%
5/16/97 5.18% 5.58%
5/19/97 5.30% 5.56%
5/20/97 5.20% 5.59%
5/21/97 5.12% 5.59%
5/22/97 5.17% 5.59%
5/23/97 5.16% 5.54%
5/26/97 5.16% 5.54%
5/27/97 5.11% 5.56%
5/28/97 5.13% 5.53%
5/29/97 5.01% 5.57%
5/30/97 4.94% 5.54%
6/2/97 4.84% 5.59%
6/3/97 5.07% 5.57%
6/4/97 5.07% 5.56%
6/5/97 5.11% 5.52%
6/6/97 5.04% 5.54%
6/9/97 5.03% 5.54%
6/10/97 5.03% 5.53%
6/11/97 4.96% 5.55%
6/12/97 4.95% 5.52%
6/13/97 4.96% 5.53%
6/16/97 4.97% 5.54%
6/17/97 5.04% 5.54%
6/18/97 5.07% 5.54%
6/19/97 5.07% 5.52%
6/20/97 5.06% 5.53%
6/23/97 5.15% 5.54%
6/24/97 5.18% 5.54%
6/25/97 5.10% 5.52%
6/26/97 5.12% 5.51%
6/27/97 5.14% 5.53%
6/30/97 5.17% 5.56%
7/1/97 5.23% 5.52%
7/2/97 5.22% 5.56%
7/3/97 5.14% 5.52%
7/4/97 5.13% 5.52%
7/7/97 5.07% 5.52%
7/8/97 5.11% 5.51%
7/9/97 5.10% 5.49%
7/10/97 5.15% 5.47%
7/11/97 5.13% 5.49%
7/14/97 5.14% 5.50%
7/15/97 5.19% 5.50%
7/16/97 5.18% 5.50%
7/17/97 5.21% 5.48%
7/18/97 5.24% 5.47%
7/21/97 5.27% 5.48%
7/22/97 5.23% 5.50%
7/23/97 5.19% 5.44%
7/24/97 5.21% 5.45%
7/25/97 5.22% 5.47%
7/28/97 5.23% 5.48%
7/29/97 5.24% 5.45%
7/30/97 5.23% 5.47%
7/31/97 5.23% 5.45%
8/1/97 5.27% 5.48%
8/4/97 5.26% 5.48%
8/5/97 5.29% 5.47%
8/6/97 5.29% 5.48%
8/7/97 5.30% 5.46%
8/8/97 5.28% 5.49%
8/11/97 5.29% 5.48%
8/12/97 5.32% 5.51%
8/13/97 5.31% 5.49%
8/14/97 5.33% 5.49%
8/15/97 5.24% 5.49%
8/18/97 5.27% 5.50%
8/19/97 5.22% 5.48%
8/20/97 5.23% 5.49%
8/21/97 5.24% 5.49%
8/22/97 5.23% 5.45%
8/25/97 5.28% 5.46%
8/26/97 5.27% 5.50%
8/27/97 5.28% 5.49%
8/28/97 5.21% 5.46%
8/29/97 5.22% 5.48%
9/1/97 5.22% 5.48%
9/2/97 5.19% 5.52%
9/3/97 5.13% 5.48%
9/4/97 5.14% 5.51%
9/5/97 5.15% 5.50%
9/8/97 5.14% 5.49%
9/9/97 5.12% 5.50%
9/10/97 5.09% 5.48%
9/11/97 5.13% 5.47%
9/12/97 5.09% 5.48%
9/15/97 5.13% 5.49%
9/16/97 5.08% 5.49%
9/17/97 5.09% 5.48%
9/18/97 5.08% 5.48%
9/19/97 5.04% 5.45%
9/22/97 5.02% 5.48%
9/23/97 4.98% 5.49%
9/24/97 4.92% 5.45%
9/25/97 4.91% 5.46%
9/26/97 4.98% 5.48%
9/29/97 4.99% 5.50%
9/30/97 5.10% 5.48%
10/1/97 5.10% 5.46%
10/2/97 5.06% 5.49%
10/3/97 5.01% 5.47%
10/6/97 4.97% 5.47%
10/7/97 5.05% 5.46%
10/8/97 5.09% 5.47%
10/9/97 5.11% 5.48%
10/10/97 5.12% 5.50%
10/13/97 5.12% 5.50%
10/14/97 5.07% 5.49%
10/15/97 5.04% 5.51%
10/16/97 5.06% 5.48%
10/17/97 5.04% 5.54%
10/20/97 5.03% 5.54%
10/21/97 5.10% 5.54%
10/22/97 5.15% 5.52%
10/23/97 5.12% 5.54%
10/24/97 5.13% 5.54%
10/27/97 5.03% 5.55%
10/28/97 5.26% 5.49%
10/29/97 5.14% 5.54%
10/30/97 5.14% 5.53%
10/31/97 5.20% 5.56%
11/3/97 5.23% 5.54%
11/4/97 5.25% 5.53%
11/5/97 5.24% 5.54%
11/6/97 5.31% 5.53%
11/7/97 5.29% 5.55%
11/10/97 5.33% 5.54%
11/11/97 5.31% 5.54%
11/12/97 5.26% 5.62%
11/13/97 5.26% 5.59%
11/14/97 5.25% 5.67%
11/17/97 5.30% 5.63%
11/18/97 5.29% 5.62%
11/19/97 5.27% 5.61%
11/20/97 5.27% 5.64%
11/21/97 5.24% 5.61%
11/24/97 5.27% 5.63%
11/25/97 5.29% 5.65%
11/26/97 5.21% 5.63%
11/27/97 5.22% 5.63%
11/28/97 5.20% 5.63%
12/1/97 5.23% 5.64%
12/2/97 5.25% 5.67%
12/3/97 5.23% 5.67%
12/4/97 5.25% 5.67%
12/5/97 5.31% 5.69%
12/8/97 5.32% 5.67%
12/9/97 5.23% 5.72%
12/10/97 5.18% 5.69%
12/11/97 5.17% 5.68%
12/12/97 5.17% 5.68%
12/15/97 5.22% 5.70%
12/16/97 5.20% 5.69%
12/17/97 5.24% 5.66%
12/18/97 5.23% 5.64%
12/19/97 5.38% 5.62%
12/22/97 5.43% 5.67%
12/23/97 5.47% 5.64%
12/24/97 5.37% 5.69%
12/25/97 5.37% 5.69%
12/26/97 5.33% 5.67%
12/29/97 5.39% 5.65%
12/30/97 5.38% 5.65%
12/31/97 5.37% 5.57%
Source: Bloomberg L.P.
</TABLE>
- - Commercial paper rates experienced a moderate increase in the second quarter
(following the March Federal Funds Rate hike) and again in the fourth quarter.
Throughout most of the reporting period, however, rates remained relatively
stable, as illustrated by the 90-day commercial paper yields in the above
chart. More notably, the spread between commercial paper and U.S. Treasury
bill yields widened significantly during the second quarter and continued to
exhibit volatility during the remainder of the reporting period.
- - Initially, the widening of the spread between U.S. Treasury bill and
commercial paper yields, which made U.S. Treasury bills relatively less
attractive than commercial paper, resulted from a reduced supply of U.S.
Treasury bills. This reduction in supply was caused by unexpectedly large
federal tax receipts collected in April, which led to lower government
financing needs. In other words, the spread widening was the result of supply
and demand conditions in the U.S. Treasury bill market, not the result of
credit concerns in the commercial paper market.
- - During September, the spread again widened. This time, however, it was
primarily a result of what is typically referred to as a "flight to quality."
Investors, concerned about the volatility in the foreign equity markets,
sought refuge in U.S. Treasury securities, thereby driving down their yields
relative to those of commercial paper.
13
<PAGE>
MARKET OVERVIEW (continued)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
90-DAY MUNICIPAL COMMERCIAL PAPER
FOR THE PERIOD 1/7/97 - 12/30/97
<S> <C>
1/7/97 3.25%
1/14/97 3.45%
1/21/97 3.45%
1/28/97 3.55%
2/4/97 3.40%
2/11/97 3.45%
2/18/97 3.35%
2/25/97 3.40%
3/4/97 3.35%
3/11/97 3.30%
3/18/97 3.40%
3/25/97 3.50%
4/1/97 3.45%
4/8/97 3.65%
4/15/97 3.60%
4/22/97 3.70%
4/29/97 3.70%
5/6/97 3.65%
5/13/97 3.75%
5/20/97 3.70%
5/27/97 3.70%
6/3/97 3.65%
6/10/97 3.70%
6/17/97 3.75%
6/24/97 3.70%
7/1/97 3.60%
7/8/97 3.60%
7/16/97 3.65%
7/23/97 3.65%
7/30/97 3.65%
8/6/97 3.60%
8/13/97 3.60%
8/20/97 3.60%
8/27/97 3.65%
9/3/97 3.70%
9/10/97 3.80%
9/17/97 3.80%
9/24/97 3.80%
10/1/97 3.65%
10/8/97 3.65%
10/15/97 3.75%
10/22/97 3.75%
10/29/97 3.75%
11/5/97 3.70%
11/12/97 3.75%
11/19/97 3.75%
11/26/97 3.80%
12/3/97 3.60%
12/10/97 3.60%
12/17/97 3.75%
12/23/97 3.75%
12/30/97 3.75%
Source: Lehman Brothers, Inc.
</TABLE>
- - Municipal commercial paper yields increased slightly during the weeks
following the Federal Funds Rate hike in March but then remained relatively
stable throughout the remainder of the reporting period, as illustrated in the
above chart. In fact, municipal commercial paper yields exhibited a pattern
similar to that of taxable commercial paper yields during the reporting
period, as shown in the chart on page 13.
14
<PAGE>
QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM
Q HOW HAS THE PORTFOLIO MANAGEMENT TEAM ADJUSTED THE FUNDS' PORTFOLIOS TO
RESPOND TO CHANGES IN INTEREST RATES?
A We managed the dollar-weighted average maturity (DWAM) for all three Funds'
portfolios to capitalize on the seasonal cycles typical of short-term municipal
securities markets. Anticipating lower rates for demand notes issued in early
1998, we extended the maturities of the Funds' portfolios at the end of the
reporting period, locking in higher rates and insulating the Funds from the
lower rates typical of demand notes issued in January. Throughout much of the
reporting period, all three Funds maintained a DWAM that was comparable to those
of other funds with similar investment objectives.
During the reporting period we took several opportunities to extend the DWAM
of the Funds for other reasons:
1) Our expectation that the Federal Reserve would not raise the Federal
Funds Rate any further after the 0.25% increase on March 25, 1997.
2) A plentiful supply of municipal money market instruments during note
season (in June). This period is usually followed by a decline in rates as the
supply of municipal securities dwindles.
The following table shows the DWAM for each of the three Funds at the
beginning, middle and end of the reporting period:
<TABLE>
<CAPTION>
Schwab Schwab
Schwab California New York
Municipal Municipal Municipal
Money Fund Money Fund Money Fund
------------ ------------ ------------
<S> <C> <C> <C>
12/31/96 50 Days 47 Days 51 Days
6/30/97 64 Days 53 Days 52 Days
12/31/97 48 Days 51 Days 63 Days
</TABLE>
Q WHAT IMPACT HAVE THE ECONOMIC PROBLEMS IN THE PACIFIC RIM HAD ON THE
MANAGEMENT OF THE FUNDS' PORTFOLIOS?
A Beginning in the fourth quarter of 1997, many Asian countries experienced
economic problems and severe currency devaluations--collectively referred to as
the "Asian Flu." Although it is a serious global problem, and will no doubt have
a credit impact on issuers of securities in those countries and their economies,
it has not had a significant effect on issuers of what typically are considered
money market-eligible securities. Nevertheless, we continue, as always, to
carefully monitor the creditworthiness of any issuers of securities considered
for investment in the Schwab Municipal Money Funds.
As we have discussed in previous reports, all three Schwab Municipal Money
Funds frequently own municipal securities that are insured or backed by a letter
of credit issued by a first-tier financial institution, which may be
foreign-based. These arrangements are referred to as "credit enhancements"
because they provide incremental levels of creditworthiness.
During the reporting period, all three Schwab Municipal Money Funds did, as
a precaution, reduce their exposure to Japanese issuers of credit enhancements.
The
15
<PAGE>
QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM (continued)
following table shows the Funds' holdings of securities with Japanese credit
enhancements as of December 31, 1997 (expressed as a percentage of each Fund's
net assets). As part of our regular credit review process, we continually
monitor the credit quality of both the enhancement providers and the issuers of
the Funds' portfolio securities.
<TABLE>
<CAPTION>
12/31/97
------------
<S> <C>
Schwab Municipal Money Fund 0.90%
Schwab California Municipal Money Fund 4.49%
Schwab New York Municipal Money Fund 2.90%
</TABLE>
There has been a great deal of speculation as to what impact the "Asian Flu"
will have on U.S. economic growth, future inflation, and Federal Reserve policy.
U.S. manufacturers of goods exported to Pacific Rim countries may be affected.
At this time, the range of projections for the potential reduction in 1998 GDP
growth is generally between 0.25% and 1% while expectations for 1998 earnings
growth of the S&P 500 have been pared back from between 10% and 14% to forecasts
between 5.5% and 10%. Expectations that the Federal Reserve will raise
short-term rates have shifted to expectations that it may instead actually lower
short-term rates.
Q WHAT IS YOUR VIEW OF THE ECONOMIC CLIMATE IN CALIFORNIA?
A California appears to be embarking on its fifth year of economic recovery. As
noted in the Governor's Budget Highlights, 1997 was the best year in this decade
for the state's economy, with employment growth exceeding 3%, personal income up
by more than 7%, and a seven-year low in the unemployment rate. Looking forward,
it is anticipated that California could see continued moderate growth across
most industry sectors, with some, such as those heavily dependent on exporting
goods and services to Asia, growing at a much slower pace. As noted in the
Governor's 1998-99 Budget Proposal, the effect on California of the economic
weakness in Asia may be somewhat offset by strong export growth to Mexico and
increasing exports to Europe.
The state's continued economic improvement has allowed for an accumulation
of budget reserves and an easing of some of the spending restrictions imposed
during the last recession. For the 1997-98 budget year, the Governor projects
budget reserves of more than 1% of total expenditures. However, as in prior
years, budget adjustments may be necessary to keep spending in line with
revenues. Lawmakers will continue to address the challenge of balancing mandated
spending requirements for education and public safety against the need for
maintaining and upgrading public infrastructure. Therefore, the state's
financial position may be somewhat static over the next 12 months.
We are satisfied that the California securities held by the Fund represent
minimal credit risk and we will, as always, continue to monitor the state's
economic situation closely. California's current credit ratings are A1 from
Moody's Investor Service, A+ from Standard & Poor's Corporation and AA- from
Fitch IBCA, Inc., three well-known rating agencies.
16
<PAGE>
Q WHAT IS YOUR VIEW OF THE ECONOMIC CLIMATE IN NEW YORK?
A A diverse economic base and the central role New York City continues to play
in international finance, tourism and other service-related businesses support
New York State's satisfactory credit quality. Although the state entered the
1990 recession earlier than others, its recovery has been slower and less
robust. For the 1997-98 fiscal year the state predicts a 1.4% increase in
employment, which marks the highest level of job growth since 1988, the year
prior to the last recession. Economic growth may continue to be constrained by
ongoing structural changes in the economy, such as corporate downsizing or
relocation and cutbacks in defense spending.
In spite of reported budgetary surpluses in 1993, 1994 and 1996, New York
still faces the challenge of resolving persistent general fund imbalances. In
early August 1997, after the longest delay in the state's history, Governor
George Pataki and the legislature agreed on a 1998 budget that will result in
slightly higher New York state spending than in 1997. The success of this budget
will depend largely on the state's ability to achieve projected economic growth
levels and implement its budget strategies in a smooth and timely fashion.
Continued major delays in adoption of the budget and other administrative
roadblocks, however, might make it difficult for the state to implement many of
the new policies. Therefore, while the state may see higher revenues over the
next 12 months, it may not be able to make a significant improvement in its
general fund reserves.
We are satisfied that the New York securities held by the Fund represent
minimal credit risk and we will continue to monitor the state's economic
situation closely. New York's current credit ratings are A2 from Moody's
Investor Service, A from Standard & Poor's Corporation and A+ from Fitch IBCA,
Inc., three well-known rating agencies.
Q WHAT FACTORS SHOULD I CONSIDER WHEN SELECTING MONEY FUNDS AT SCHWAB?
A Schwab offers two types of money funds, Sweep Investments-TM- and Value
Advantage Investments-Registered Trademark-, both of which offer taxable and
tax-advantaged alternatives. Depending on your investment objectives and risk
tolerance, either or both types of funds may have a place in your investment
plan. The Schwab Municipal Money Funds, which are included in this report, offer
both alternatives to investors.
Sweep Investments can be linked to your Schwab account to help keep your
money invested and working for you. These Funds automatically invest or "sweep"
uninvested cash balances from your Schwab account into the sweep money fund you
select, according to the terms and conditions of your account. Sweep Investments
are available to settle trades and cover other day-to-day transactions. It's a
smart, convenient way to manage your short-term cash.
Value Advantage Investments offer the advantage of higher yields to
investors with larger cash balances that don't require frequent access and may
help fulfill the cash equivalent sector of your asset allocation
17
<PAGE>
QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM (continued)
plan. With higher minimum investment and account balance requirements and other
transaction restrictions designed to minimize operating expenses, Value
Advantage Investments can offer the potential of higher yields to investors. It
also is important to note that, unlike Sweep Investments, the Value Advantage
Investments are not designed to automatically cover negative balances in your
Schwab account.
In addition to the Schwab Municipal Money Funds, we offer the Schwab Value
Advantage Money Fund and three taxable sweep money funds as follows:
- - SCHWAB MONEY MARKET FUND invests in money market securities, including high-
quality commercial paper and certificates of deposit.
- - SCHWAB GOVERNMENT MONEY FUND invests exclusively in obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities, and
repurchase agreements.
- - SCHWAB U.S. TREASURY MONEY FUND invests exclusively in U.S. Treasury notes,
bills or other direct obligations of the U.S. Government, and pays income free
from state and local taxes in the vast majority of states.
If you would like more information on any of the Schwab Money Funds, please
call our toll-free number, 1-800-435-4000, and request a free prospectus which
contains more information, including fees and expenses. Please be sure to read
the prospectus carefully before investing.
18
<PAGE>
GLOSSARY OF TERMS
COMMERCIAL PAPER--Short-term, interest-paying obligations issued by banks,
corporations and other borrowers.
CREDIT ENHANCEMENTS--A bank letter of credit, purchase agreement, insurance,
line of credit or other instrument that provides an additional level of
financial support for debt securities to supplement the creditworthiness of the
issuer.
DOLLAR-WEIGHTED AVERAGE MATURITY (DWAM)--A measure of the average maturity
of a mutual fund's entire portfolio, weighted by the value of its individual
holdings.
FEDERAL FUNDS RATE--A key interest rate charged by banks when lending money
to other banks overnight.
FEDERAL RESERVE--The central bank of the United States that establishes
policies on bank reserves and regulations, determines the discount rate and
tightens or loosens the availability of credit.
FIRST-TIER SECURITY--A security rated in the highest credit rating category.
MATURITY--The length of time remaining until the issuer of a debt security
must repay the principal amount.
REAL GDP--The national Gross Domestic Product (GDP)--the total value of all
goods and services produced in the United States over a specific period of time
and adjusted for the rate of inflation to allow meaningful year-to-year
comparisons.
YIELD--The actual income earned on an investment over a stated period of
time and annualized (assumed to be generated over a one-year period). An
EFFECTIVE YIELD assumes that the income earned is reinvested.
ALTERNATIVE MINIMUM TAX (AMT)--A tax on income in addition to regular income
taxes designed to ensure that very wealthy individuals and corporations pay at
least some income tax each year.
TAXABLE EQUIVALENT YIELD--The return you would have to realize on a fully
taxable investment in order to equal a specified tax-exempt yield; this
hypothetical yield varies according to your income tax bracket.
19
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
ASSET GROWTH
<TABLE>
<CAPTION>
Total Total Percentage
Net Assets Net Assets Growth Over
as of 12/31/97 as of 12/31/96 Reporting
(000s) (000s) Period
<S> <C> <C>
- -----------------------------------------------------
$5,509,070 $4,476,999 23%
- -----------------------------------------------------
</TABLE>
AVERAGE YIELDS FOR THE YEAR ENDED DECEMBER 31, 1997*
SWEEP SHARES
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
<S> <C> <C>
- ----------------------------------------------------
3.37% 3.17% 3.06%
- ----------------------------------------------------
</TABLE>
VALUE ADVANTAGE SHARES-TM-
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
<S> <C> <C>
- ----------------------------------------------------
3.58% 3.38% 3.27%
- ----------------------------------------------------
</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 3/31/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
0 - 15 Days 71.5% 68.5% 73.3% 69.6%
16 - 30 Days 2.0 3.5 1.7 0.0
31 - 60 Days 9.7 4.0 2.3 7.4
61 - 90 Days 3.7 5.3 4.3 4.2
91 - 120 Days 3.6 0.2 0.6 0.7
Over 120 Days 9.5 18.5 17.8 18.1
Weighted Average 37 Days 64 Days 53 Days 48 Days
- ---------------------------------------------------------------------
</TABLE>
*A portion of the Fund's expenses were reduced during the periods. Had these
expenses not been reduced, yields would have been lower.
- --------------------------------------------------------------------------------
20
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
ASSET GROWTH
<TABLE>
<CAPTION>
Total Total Percentage
Net Assets Net Assets Growth Over
as of 12/31/97 as of 12/31/96 Reporting
(000s) (000s) Period
<S> <C> <C>
- -----------------------------------------------------
$3,091,337 $2,323,598 33%
- -----------------------------------------------------
</TABLE>
AVERAGE YIELDS FOR THE YEAR ENDED DECEMBER 31, 1997*
SWEEP SHARES
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
<S> <C> <C>
- ----------------------------------------------------
3.18% 3.00% 2.91%
- ----------------------------------------------------
</TABLE>
VALUE ADVANTAGE SHARES-TM-
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
<S> <C> <C>
- ----------------------------------------------------
3.38% 3.20% 3.11%
- ----------------------------------------------------
</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 3/31/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
0 - 15 Days 74.2% 69.7% 69.6% 61.9%
16 - 30 Days 0.0 1.9 4.7 0.2
31 - 60 Days 7.0 9.8 4.3 14.1
61 - 90 Days 5.0 5.5 5.9 4.1
91 - 120 Days 7.3 1.0 0.8 0.3
Over 120 Days 6.5 12.1 14.7 19.4
Weighted Average 31 Days 53 Days 53 Days 51 Days
- ---------------------------------------------------------------------
</TABLE>
*A portion of the Fund's expenses were reduced during the periods. Had these
expenses not been reduced, yields would have been lower.
- --------------------------------------------------------------------------------
21
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
ASSET GROWTH
<TABLE>
<CAPTION>
Total Total Percentage
Net Assets Net Assets Growth Over
as of 12/31/97 as of 12/31/96 Reporting
(000s) (000s) Period
<S> <C> <C>
- ----------------------------------------------------
$482,758 $337,295 43%
- ----------------------------------------------------
</TABLE>
AVERAGE YIELDS FOR THE YEAR ENDED DECEMBER 31, 1997*
SWEEP SHARES
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
<S> <C> <C>
- ----------------------------------------------------
3.23% 3.05% 2.92%
- ----------------------------------------------------
</TABLE>
VALUE ADVANTAGE SHARES-TM-
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
<S> <C> <C>
- ----------------------------------------------------
3.47% 3.29% 3.16%
- ----------------------------------------------------
</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 3/31/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
0 - 15 Days 63.8% 69.9% 71.0% 61.0%
16 - 30 Days 2.7 1.5 5.2 0.0
31 - 60 Days 6.5 6.6 4.5 11.5
61 - 90 Days 4.9 1.2 2.6 1.9
91 - 120 Days 6.7 2.0 1.2 3.3
Over 120 Days 15.4 18.8 15.5 22.3
Weighted Average 50 Days 52 Days 50 Days 63 Days
- ---------------------------------------------------------------------
</TABLE>
*A portion of the Fund's expenses were reduced during the periods. Had these
expenses not been reduced, yields would have been lower.
- --------------------------------------------------------------------------------
22
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
VARIABLE RATE OBLIGATIONS--64.6%(a)
ALABAMA--1.5%
Birmingham, Alabama Unlimited General Obligation Refunding Bonds
Series 1995 / (First Alabama Bank LOC)
4.15%, 01/07/98 $ 4,000 $ 4,000
Birmingham, Alabama Variable Rate General Obligation Bonds Series
1992A / (Regions Bank LOC)
3.75%, 01/07/98 5,600 5,600
Citronelle, Alabama Industrial Development Board Pollution
Control Revenue Refunding Bonds (AKZO Chemicals, Inc. Project) /
(Wachovia Bank LOC)
4.20%, 01/07/98 1,100 1,100
Decatur, Alabama Industrial Development Board Solid Waste
Disposal Revenue Bonds (Trico Steel Project) Series 1997 /
(Chase Manhattan LOC)
3.80%, 01/07/98 5,700 5,700
Dothan, Alabama Industrial Development Board Industrial Revenue
Bonds (Baxley Blowpipe Project) / (Regions Bank LOC)
4.30%, 01/07/98 900 900
Fort Payne, Alabama Industrial Development Base Tax Exempt
Adjustable Mode Industrial Development Revenue Bonds (Charleston
Hosiery Project) Series 1997 / (Wachovia Bank LOC)
4.30%, 01/07/98 2,000 2,000
McIntoch, Alabama Industrial Development Board Solid Waste Bonds
(Ciba-Geigy Corp. Project) / (Union Bank of Switzerland LOC)
3.70%, 01/07/98 24,500 24,500
Mobile County, Alabama Industrial Development Board Pollution
Control Revenue Refunding Bonds (Ultraform Co. Project) Series
1995A / (Bayerische Landesbank Girozentrale LOC)
4.20%, 01/07/98 7,480 7,480
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Mobile County, Alabama Industrial Development Board Revenue Bonds
(Ultraform Co. Project) Series B / (Bayerische Landesbank
Girozentrale LOC)
4.20%, 01/07/98 $ 1,000 $ 1,000
Mobile, Alabama Development Pollution Control Revenue Bonds
(Alabama Power Project B)
4.20%, 01/07/98 10,000 10,000
Mobile, Alabama Industrial Development Board Pollution Control
Revenue Bonds (Alabama Power Co. Project) Series 1993C
4.20%, 01/07/98 12,000 12,000
Montgomery, Alabama Special Care Facility Financing Authority
Revenue Bonds (Baptist Medical Center VHA) Series 1985C / (AMBAC
Insurance & FNB Chicago SBPA)
3.70%, 01/07/98 2,000 2,000
Opelika, Alabama Industrial Development Board Revenue Bonds
(Power Guard Project) Series 1994 / (SouthTrust Bank of Alabama
LOC)
4.50%, 01/07/98 2,595 2,595
Scottsboro, Alabama General Obligation Bonds / (Regions Bank LOC)
4.20%, 01/07/98 5,000 5,000
----------
83,875
----------
ALASKA--0.2%
Alaska Industrial Development & Export Authority (Revolving Fund)
Series 1996B / (Bank of America LOC)
3.70%, 01/07/98 12,600 12,600
----------
ARIZONA--1.6%
Arizona Educational Loan Marketing Corp. Education Loan Revenue
Bonds Series A / (MBIA Insurance & State Street Bank & Trust
SBPA)
3.80%, 01/07/98 12,605 12,605
</TABLE>
- --------------------------------------------------------------------------------
23
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Arizona Health Facilities Authority Hospital System Revenue Bonds
(Northern Arizona Health Care ) Series 1996B / (MBIA Insurance)
4.10%, 01/07/98 $16,650 $ 16,650
Arizona Health Facilities Authority Revenue Adjustable Rate Notes
(Arizona Volunteer Hospital Federation) Series 1985A / (FGIC
Insurance)
4.10%, 01/07/98 3,170 3,170
Arizona Health Facilities Authority Revenue Adjustable Rate Notes
(Arizona Volunteer Hospital Federation) Series 1985B / (FGIC
Insurance)
4.10%, 01/07/98 7,840 7,840
Arizona Health Facilities Revenue Bonds (Samcor Project) 1986
Loan Pool / (FGIC Insurance & Chase Manhattan SPA)
4.10%, 01/07/98 11,840 11,840
Phoenix, Arizona Civic Improvement Excise Tax Revenue Bonds
(Airport Improvements) / (Landesbank Hessen-Thuringen
Girozentrale LOC)
3.80%, 01/07/98 1,000 1,000
Phoenix, Arizona Industrial Development Authority Multi-Family
Housing Revenue Bonds (Crossroads Apartments ) Series 1997A /
(FNMA LOC)
3.85%, 01/07/98 6,000 6,000
Phoenix, Arizona Industrial Development Authority Vaw America
Inc. / (Nationsbank NA South LOC)
4.15%, 01/07/98 3,000 3,000
Pima County, Arizona Industrial Development Authority
Multi-Family Housing Revenue Bonds (Housing Surgauro Crest
Apartments ) Series 1995A / (FNMA LOC)
4.20%, 01/07/98 6,000 6,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Yavapai County, Arizona Industrial Development Authority Revenue
Bonds (First Health Care Corp. Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 $ 4,230 $ 4,230
Yavapai County, Arizona Industrial Development Revenue Bonds
(Yavapia Regional Medical Center) / (Credit Local de France SBPA
& FSA Insurance)
4.10%, 01/07/98 12,600 12,600
Yuma County, Arizona Industrial Development Authority Adjustable
Rate Revenue Bonds (Meadowcraft, Inc. Project) Series 1997 /
(NationsBank N.A. LOC)
4.40%, 01/01/98 1,000 1,000
Yuma County, Arizona Industrial Development Authority
Multi-Family Housing Revenue Bonds (El Encanto Apartments)
Series A / (Citibank LOC)
3.95%, 01/07/98 2,915 2,915
----------
88,850
----------
ARKANSAS--0.5%
Independence County, Arkansas Industrial Development Revenue
Bonds (Ideal Baking Project) / (NationsBank South N.A. LOC)
4.40%, 01/07/98 7,000 7,000
Independence County, Arkansas Industrial Development Revenue
Bonds (Townsends of Arkansas, Inc. Project) / (Rabobank
Nederland N.V. SPA)
4.25%, 01/07/98 9,000 9,000
North Little Rock, Arkansas Health Facilities Board Revenue Bonds
(Baptist Health) Series 1996B / (MBIA Insurance & Credit Suisse
SPA)
4.20%, 01/07/98 12,000 12,000
</TABLE>
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Warren Park, Arkansas Solid Waste Disposal Revenue Bonds
(Potlatch Corp. Project) / (Credit Suisse LOC)
3.90%, 01/07/98 $ 1,000 $ 1,000
----------
29,000
----------
CALIFORNIA--0.5%
California Health Facilities Financing Authority Revenue Bonds
(Catholic Health Care) Series 1996B / (MBIA Insurance & Rabobank
Nederland N.V. SBPA)
3.90%, 01/07/98 500 500
California Health Facilities Financing Authority Revenue Bonds
(Scripps Memorial Hospital) Series 1991A / (MBIA Insurance &
Morgan Guaranty Trust Co.--New York SBPA)
3.80%, 01/07/98 800 800
California Higher Education Loan Authority Student Loan Refunding
Bonds Series E1 / (SLMA LOC)
3.75%, 01/07/98 5,000 5,000
California Pollution Control Financing Authority Pollution
Control Refunding Revenue Bonds (Pacific Gas & Electric Company)
Series 1996C / (Bank of America LOC)
4.90%, 01/01/98 1,300 1,300
California Pollution Control Financing Authority Resource
Recovery Revenue Bonds (OMS Equity of Stanislaus) / (Swiss Bank
LOC)
5.05%, 01/01/98 1,700 1,700
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986A
4.20%, 01/01/98 1,600 1,600
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986C
4.20%, 01/01/98 2,400 2,400
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986D
4.20%, 01/01/98 $ 100 $ 100
California State Economic Development Financing Authority
Industrial Development Revenue Bonds (Serra Microchassis
Project)
4.90%, 01/01/98 600 600
California Statewide Community Development Authority Certificates
of Participation (California Retired Officers) / (Dresdner Bank
LOC)
4.85%, 01/01/98 700 700
California Statewide Community Development Authority Revenue
Bonds Certificates of Participation (Sutter Health Obligations
Group) / (AMBAC Insurance & Industrial Bank of Japan SBPA)
5.10%, 01/01/98 1,900 1,900
Irvine Ranch Water District Consolidated Revenue Refunding Bonds
Series 1985A-3 / (Landesbank Hessen-Thuringen Girozentrale LOC)
5.00%, 01/01/98 200 200
Los Angeles County, California Housing Authority Multi-Family
Housing Revenue Bonds (Sand Canyon Villas Project) Series 1989A
/ (Industrial Bank of Japan LOC)
4.50%, 01/07/98 5,000 5,000
Orange County, California Sanitation District Certificates of
Participation (Districts 1, 2, 3, 6, 7 & 11) Series 1992C /
(FGIC Insurance & FGIC SPA)
4.75%, 01/01/98 3,700 3,700
Orange County, California Sanitation District Certificates of
Participation (Sanitation Districts 1, 2, 3, 5, 6, 7 & 11)
Series 1992 / (AMBAC Insurance & Barclays Bank SBPA)
3.85%, 01/07/98 1,000 1,000
</TABLE>
- --------------------------------------------------------------------------------
25
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Orange County, California Sanitation District Certificates of
Participation (Sanitation Districts 1, 2, 3, 5, 6, 7 & 11)
Series 1992B / (AMBAC Insurance)
5.00%, 01/01/98 $ 2,100 $ 2,100
----------
28,600
----------
COLORADO--4.3%
Adams County, Colorado Industrial Development Revenue Bonds (City
View Park Project) Series 1985 / (Barclays Bank LOC)
3.70%, 01/07/98 5,200 5,200
Arapahoe County, Colorado Industrial Development Revenue
Refunding Bonds (Denver Jet Center Project) Series 1997 / (U.S.
Bank N.A. LOC)
4.00%, 01/07/98 1,000 1,000
Central City, Colorado Multi-Family Housing Revenue Bonds (Gold
Mountain Apartment Project) / (PNC Bank N.A. LOC)
4.40%, 01/07/98 8,250 8,250
Colorado Health Facilities Authority Revenue Bonds (North
Colorado Medical Center) / (MBIA Insurance & Credit Suisse SPA)
4.10%, 01/07/98 3,400 3,400
Colorado Student Loan Revenue Bonds Series 1997D / (SLMA LOC)
3.75%, 01/07/98 1,200 1,200
Colorado Student Obligation Bond Authority Student Loan Revenue
Bonds (Colorado University) Series 1989A / (SLMA LOC)
3.75%, 01/07/98 10,300 10,300
Colorado Student Obligation Bond Authority Student Loan Revenue
Bonds (Colorado University) Series 1990A / (SLMA LOC)
3.75%, 01/07/98 23,355 23,355
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Colorado Student Obligation Bond Authority Student Loan Revenue
Bonds (Colorado University) Series 1993B / (SLMA LOC)
3.75%, 01/07/98 $10,700 $ 10,700
Denver City and County Airport System Revenue Bonds (Robinson
Dairy Project) / (Wells Fargo Bank LOC)
4.20%, 01/07/98 4,435 4,435
Denver, Colorado City & County Airport System Revenue Bonds
Series 1992D / (Morgan Guaranty Trust Co.--New York LOC)
4.35%, 01/07/98 48,900 48,900
Denver, Colorado City & County Airport System Revenue Bonds
Series 1992E / (Bank of Tokyo-Mitsubishi Ltd. LOC)
4.70%, 01/07/98 30,000 30,000
Denver, Colorado City & County Airport System Revenue Bonds
Series 1992F / (Bank of Montreal LOC)
4.35%, 01/07/98 16,000 16,000
Denver, Colorado City & County Airport System Revenue Bonds
Series 1992G / (Credit Local de France LOC)
4.35%, 01/07/98 20,000 20,000
Denver, Colorado City & County Airport System Revenue Bonds
Series 1997B / (Westdeutsche Landesbank LOC)
4.00%, 01/07/98 1,700 1,700
Denver, Colorado City & County Airport System Revenue Bonds
Series 1997C / (Credit Local de France LOC)
3.95%, 01/07/98 35,000 35,000
El Paso County, Colorado Adjustable Rate Revenue Bonds (Colorado
Springs World Arena) / (Bank One LOC)
4.15%, 01/07/98 15,000 15,000
</TABLE>
- --------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Smith Creek, Colorado Metropolitan District Revenue Bonds
Series 1997 / (NationsBank of Texas N.A. LOC)
4.20%, 01/07/98 $ 2,250 $ 2,250
Westminster, Colorado Economic Development Authority Tax
Increment Revenue Bonds (Westminster Plaza Urban Renewal
Project) / (Union Bank of California LOC)
4.25%, 01/07/98 2,100 2,100
----------
238,790
----------
CONNECTICUT--0.4%
Connecticut Development Authority Pollution Control Revenue Bonds
Connecticut Light & Power Series 1985 / (AMBAC Insurance &
Societe Generale LOC)
4.05%, 01/07/98 16,200 16,200
Connecticut Development Authority Pollution Control Revenue Bonds
Connecticut Light & Power Series 1993B / (Union Bank of
Switzerland LOC)
3.65%, 01/07/98 6,900 6,900
----------
23,100
----------
DELAWARE--0.8%
Delaware Economic Development Authority Revenue Bonds (Hospital
Billing and Collection Project) Series C / (MBIA Insurance &
Morgan Stanley SBPA)
4.00%, 01/07/98 25,000 25,000
Delaware Economic Development Authority Revenue Bonds (Hospital
Billing and Collection Service) Series 1985A / (MBIA Insurance)
3.65%, 01/07/98 20,000 20,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Sussex County, Delaware Revenue Bonds (Baywood LLC Project)
Series A / (Wilmington Trust Company LOC)
4.20%, 01/07/98 $ 2,400 $ 2,400
----------
47,400
----------
DISTRICT OF COLUMBIA--0.1%
District of Columbia Revenue Bonds Adjustable Convertible
Extendable Securities (Georgetown University) Series 1988D /
(Bayerische Landesbank Girozentrale LOC)
3.80%, 01/07/98 4,200 4,200
----------
FLORIDA--1.8%
Dade County, Florida Industrial Development Authority Revenue
Bonds (Michael-Ann Russell Jewish Community Center Project)
Series 1997 / (Suntrust Bank N.A. LOC)
4.20%, 01/07/98 5,000 5,000
Florida Capital Financing Authority Revenue Bonds (Capital
Project Loan Program Project) Series 1997A
4.15%, 01/07/98 38,000 38,000
Florida Housing Finance Agency Housing Revenue Bonds (Ashley Lake
Park II) Series 1989J / (Barclays Bank PLC LOC)
3.95%, 01/07/98 6,000 6,000
Florida Housing Finance Agency Variable Rate Housing Revenue
Bonds (Tiffany Club Project) Series 1996P / (Nationsbank LOC)
3.80%, 01/07/98 2,875 2,875
Manatee County, Florida Industrial Development Revenue Bonds
(Trielectron Industries Project) Series 1997A / (First Union
Bank of North Carolina LOC)
4.30%, 01/07/98 2,000 2,000
</TABLE>
- --------------------------------------------------------------------------------
27
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Orange County, Florida Housing Finance Authority Multi-Family
Housing Revenue Bonds (Rio Vista Project) / (First Union Bank of
North Carolina LOC)
4.20%, 01/07/98 $ 3,775 $ 3,775
Palm Beach County, Florida Health Facilities Authority Revenue
Refunding Bonds (Joseph L. Morse Geriatric Center) / (Sun Bank
LOC)
3.90%, 01/07/98 12,155 12,155
Palm Beach County, Florida Housing Finance Authority Multi-Family
Housing Revenue Bonds (Crystal II Project) / (Citibank LOC)
3.80%, 01/07/98 1,750 1,750
Pasco County, Florida School Board Certificates of Participation
/ (AMBAC Insurance & Bayerische Landesbank Girozentrale SPA)
4.05%, 01/07/98 27,870 27,870
Tampa, Florida Health Care Facilities Revenue Bonds (Lifelink
Foundation Inc., Project) / (Suntrust Bank Atlanta LOC)
4.20%, 01/07/98 3,500 3,500
----------
102,925
----------
GEORGIA--5.1%
Athens, Clarke, Jackson & Morgan Counties, Georgia Industrial
Development Bonds (Mayfield Dairy) / (Wachovia Bank LOC)
4.20%, 01/07/98 4,500 4,500
Bartow County, Georgia Industrial Development Revenue Bonds
(Matthew Contracting Project) / (Nationsbank N.A. LOC)
4.35%, 01/07/98 5,600 5,600
Burke County, Georgia Development Authority Pollution Control
Revenue Bonds (Oglethorpe Power Corp. Project) Series 1993A /
(Canadian Imperial Bank of Commerce & FGIC Insurance)
3.65%, 01/07/98 30,600 30,600
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Cherokee County, Georgia Development Authority Revenue Industrial
Development (Universal Alloy) / (Wachovia Bank LOC)
4.20%, 01/07/98 $ 5,500 $ 5,500
Cobb County, Georgia Housing Finance Authority Multi-Family
Housing Revenue Bonds (Walton Green Project) / (Wachovia Bank
LOC)
4.20%, 01/07/98 13,500 13,500
Cobb County, Georgia Housing Finance Authority Multi-Family
Housing Revenue Bonds (Williamstown Apartment Project) /
(Wachovia Bank LOC)
4.10%, 01/07/98 2,000 2,000
Decatur County, Georgia Industrial Development Revenue Bonds
(Alabama Farmers Corp) / (Nationsbank N.A. LOC)
3.90%, 01/07/98 2,900 2,900
Dekalb County, Georgia Development Authority Industrial
Development Revenue Bonds (Park North Business Center Project) /
(Wachovia Bank LOC)
4.20%, 01/07/98 5,140 5,140
Dekalb County, Georgia Development Authority Industrial
Development Revenue Bonds (Siemens Energy, Inc. Project) /
(Siemens AG Guaranty)
4.25%, 01/07/98 3,750 3,750
Dekalb County, Georgia Development Authority Industrial
Development Revenue Bonds (Truman Properties Ltd. Liability
Corp. Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 3,000 3,000
Dekalb County, Georgia Development Authority Revenue Bonds
(American Cancer Society) / (Trust Company Bank LOC)
3.95%, 01/07/98 7,475 7,475
</TABLE>
- --------------------------------------------------------------------------------
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Dekalb County, Georgia Housing Authority Multi-Family Housing
Revenue Bonds (Wood Hills Apartment Project) / (Bank of Montreal
LOC)
3.75%, 01/07/98 $ 5,250 $ 5,250
Douglas County, Georgia Development Authority Industrial
Development Revenue Refunding Bonds (Mima Inc. Project) /
(Wachovia Bank LOC)
4.30%, 01/07/98 4,300 4,300
Fayette County, Georgia Industrial Development Revenue Bonds
(Norman W Paschell Company Project) / (Suntrust Bank Atlanta
LOC)
4.35%, 01/07/98 1,200 1,200
Fulton County, Georgia Development Authority Revenue Bonds
(Atlanta International School Project) / (Suntrust Bank Atlanta
LOC)
4.20%, 01/07/98 3,000 3,000
Fulton County, Georgia Development Authority Revenue Bonds
(Woodruff Arts Center) / (Wachovia Bank LOC)
4.20%, 01/07/98 22,500 22,500
Georgia Municipal Gas Authority Revenue Bonds (Gas Portfolio II
Project) Series B
3.65%, 01/07/98 2,000 2,000
Georgia Municipal Gas Authority Revenue Bonds (Gas Portfolio II
Project) Series C / (Multiple Credit Enhancements)
3.65%, 01/07/98 40,000 40,000
Hart County, Georgia Industrial Building Authority Revenue Bonds
(Dundee Mills Project) / (Suntrust Bank Atlanta LOC)
4.05%, 01/07/98 2,000 2,000
Jefferson County, Georgia Development Authority Industrial
Development Revenue Bonds (Grove River Mills) Series 1997 /
(Wachovia Bank LOC)
4.20%, 01/07/98 3,500 3,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Laurens County, Georgia Development Authority Solid Waste
Disposal Revenue Bonds (Southeast Paper Co. Project) / (Wachovia
Bank LOC)
4.20%, 01/07/98 $25,000 $ 25,000
Laurens County, Georgia Development Authority Solid Waste
Disposal Revenue Bonds (Southeast Paper Co. Manufacturing
Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 25,000 25,000
Richmond County, Georgia Industrial Development Authority Revenue
Bonds (BOK Group Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 5,000 5,000
Rockmart, Georgia Development Authority Industrial Development
Revenue Bonds (CW Matthews Contracting) / (Wachovia Bank LOC)
4.20%, 01/07/98 1,000 1,000
Roswell, Georgia Housing Authority Multi-Family Housing Revenue
Bonds (Gables Realty Wood Crossing Project) / (Wachovia Bank
LOC)
4.20%, 01/07/98 11,650 11,650
Savannah, Georgia Economic Development Authority Revenue (Home
Depot Project)
Series 1995B / (Trust Company Bank LOC)
4.25%, 01/07/98 5,000 5,000
Savannah, Georgia Economic Development Authority Revenue Bonds
(Kaolin Inc.Project) / (Nationsbank South N.A.LOC)
4.35%, 01/07/98 11,000 11,000
Savannah, Georgia Housing Authority Adjustable Rate Multi-Family
Housing Revenue Bonds (Chatham Gardens Project) Series 1997 /
(Sun Trust Bank Atlanta LOC)
4.30%, 01/07/98 2,995 2,995
</TABLE>
- --------------------------------------------------------------------------------
29
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Smyrna, Georgia Housing Authority Multi-Family Housing Revenue
Bonds (Walton Park LP) / (Wachovia Bank LOC)
4.20%, 01/07/98 $ 8,000 $ 8,000
Smyrna, Georgia Housing Authority Multi-Family Housing Revenue
Bonds (Walton Park Phase 2 Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 13,500 13,500
Summerville, Georgia Development Authority Revenue Bonds (Image
Ind's Project) Series 1997 / (First Union National Bank LOC)
4.35%, 01/01/98 9,000 9,000
Villa Rica, Georgia Industrial Development Revenue Bonds (Lowes
Home Centers, Inc.
Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 500 500
Worth County, Georgia Industrial Development Authority Revenue
Refunding Bonds (Seabrook Project) Series 1996B / (Sun Bank LOC)
4.30%, 01/07/98 1,400 1,400
----------
286,760
----------
HAWAII--0.5%
Hawaii Department of Budget & Finance Special Purpose Mortgage
Revenue Bonds (Adventist Health System West) / (Union Bank of
California LOC)
3.65%, 01/07/98 7,600 7,600
Hawaii Student Loan Revenue Bonds (Secondary Market Services
Corp.) Series 1995-II / (National Westminster Bank PLC LOC)
3.75%, 01/07/98 8,100 8,100
Honolulu, Hawaii City & County Multi-Family Housing Revenue Bonds
(HaleKua Gardens Project) Series A / (Bank of Tokyo-Mitsubishi
Ltd. LOC)
4.30%, 01/07/98 4,984 4,984
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Honolulu, Hawaii City & County Multi-Family Housing Revenue Bonds
(Iolani Regents Project) Series 1990A / (Bank of Hawaii LOC)
4.20%, 01/07/98 $ 9,150 $ 9,150
----------
29,834
----------
IDAHO--0.4%
Custer County, Idaho Industrial Development Corp. Solid Waste
Disposal Revenue Bonds (Hecla Mining Company Project) /
(Nationsbank N.A. South LOC)
4.40%, 01/07/98 4,500 4,500
Idaho Student Loan Revenue Bonds Series A / (First Security Bank
of Utah N.A. LOC)
3.65%, 01/07/98 16,000 16,000
----------
20,500
----------
ILLINOIS--7.4%
Aurora, Kane, & Dupage Counties, Illinois Industrial Development
Revenue Bonds (North American Plastics Corporation) / (First of
America Bank Illinois N.A. LOC)
4.30%, 01/07/98 5,400 5,400
Bartlett, Illinois Multi-Family Housing Revenue Bonds (Bartlett
Square Apartments) Series 1995A / (LaSalle National Bank LOC)
4.20%, 01/07/98 2,100 2,100
Batavia, Illinois Development Revenue Bonds (American Industrial
Technologies) / (Northern Trust LOC)
4.35%, 01/07/98 2,200 2,200
Carol Stream, Illinois Multi-Family Housing Revenue Refunding
Bonds (St. Charles Square) / (FNMA LOC)
4.10%, 01/07/98 4,415 4,415
</TABLE>
- --------------------------------------------------------------------------------
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Centralia, Illinois Industrial Development Authority Revenue
Bonds (Consolidated Foods Corp. / Hollywood Brands, Inc.
Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 $ 4,500 $ 4,500
Chicago, Illinois Industrial Development Revenue Bonds (Morse
Automotive) Series 1995 / (American National Bank & Trust Co.
LOC)
4.34%, 01/07/98 2,600 2,600
Chicago, Illinois O'Hare International Airport Revenue Bonds
(Adjustable Convertible Extendable Securities General Airport
Second Lien) Series B-1 / (Bayerische Landesbank Girozentrale
LOC)
3.95%, 01/07/98 26,100 26,100
Chicago, Illinois O'Hare International Airport Revenue Bonds
(Adjustable Convertible Extendable Securities General Airport
Second Lien) Series B-2 / (Bayerische Landesbank Girozentrale
LOC)
3.95%, 01/07/98 9,600 9,600
Chicago, Illinois O'Hare International Airport Revenue Bonds
(General Airport Second Lien) Series 1994C / (Societe Generale
Bank LOC)
3.75%, 01/07/98 11,900 11,900
Elmhurst, Illinois Industrial Development Revenue Bond (ELM
Machining Corp. Project) / (American National Bank & Trust Co.
LOC)
4.33%, 01/07/98 3,500 3,500
Illinois Development Authority Industrial Development Bonds
(Camcraft, Inc. Project) / (American National Bank & Trust Co.
LOC)
4.20%, 01/07/98 1,000 1,000
Illinois Development Authority Revenue Bonds (Cloverhill Pastry)
/ (American National Bank & Trust Co. LOC)
4.20%, 01/07/98 6,260 6,260
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Illinois Development Finance Authority Adjustable Rate Bonds
(Profile Plastics Project) Series 1994 / (American National Bank
& Trust Co. LOC)
4.20%, 01/07/98 $ 2,665 $ 2,665
Illinois Development Finance Authority Hospital Revenue Bonds
(Palos Community Hospital) Series 1994-1 / (Credit Suisse LOC)
3.95%, 01/07/98 33,700 33,700
Illinois Development Finance Authority Hospital Revenue Bonds
(Palos Community Hospital) Series 1994-2 / (Credit Suisse LOC)
3.95%, 01/07/98 13,900 13,900
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Catholic Charities) / (Allied Irish Banks PLC
LOC)
4.05%, 01/07/98 2,655 2,655
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Chicago Corrugated Box Company) Series 6 /
(American National Bank & Trust Co. LOC)
4.38%, 01/07/98 1,350 1,350
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Knead Dough Baking Co.) / (Bank of America LOC)
4.15%, 01/07/98 7,610 7,610
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Perkin Paperboard Co. LP) Series 1994 / (Northern
Trust LOC)
4.25%, 01/07/98 5,500 5,500
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Plano Molding Project) / (Northern Trust LOC)
4.25%, 01/07/98 1,950 1,950
</TABLE>
- --------------------------------------------------------------------------------
31
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Presbyterian Home Lake) Series 1996A / (LaSalle
National Bank LOC)
4.00%, 01/07/98 $46,800 $ 46,797
Illinois Development Finance Authority Industrial Development
Revenue Bonds (Radiological Society Project) Series 1997 /
(American National Bank & Trust Company LOC)
4.19%, 01/07/98 4,900 4,900
Illinois Development Finance Authority Industrial Development
Revenue Bonds (River Graphics Corp. Project) Series 1996 /
(American National Bank & Trust Company LOC)
4.38%, 01/07/98 3,200 3,200
Illinois Development Finance Authority Industrial Development
Revenue Bonds (SMF, Inc. Project) Series A / (First of America
LOC)
4.30%, 01/07/98 2,215 2,215
Illinois Development Finance Authority Residential Rental Revenue
Bonds (F.C. Harris Pavillion Project) Series 1994 / (FNMA
Collateral Investment Agreement)
4.25%, 01/07/98 27,510 27,510
Illinois Development Finance Authority Residential Rental Revenue
Bonds (River Oak Project) / (Swiss Bank LOC)
3.80%, 01/07/98 32,000 32,000
Illinois Development Finance Authority Revenue Bonds (Catholic
Charities Housing Project) Series 1993A / (Allied Irish Banks
PLC LOC)
3.95%, 01/07/98 10,060 10,060
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Illinois Development Finance Authority Revenue Bonds (Chicago
Academy of Science Project) / (American National Bank & Trust
Co. LOC)
4.10%, 01/07/98 $ 4,915 $ 4,915
Illinois Development Finance Authority Revenue Bonds (St.
Ignatius College Prep) / (Northern Trust LOC)
4.00%, 01/07/98 2,200 2,200
Illinois Development Finance Authority Revenue Bonds (Variable
Rest Haven Illiana Christian) / (FHLB LOC)
4.00%, 01/07/98 16,030 16,030
Illinois Development Finance Authority Revenue Bonds (Village Oak
Park Residence) / (First Star Bank LOC)
4.10%, 01/07/98 2,260 2,260
Illinois Educational Facility Authority Revenue Bonds (Chicago
Historical Society) / (Bank of Tokyo-Mitsubishi Ltd. LOC)
3.80%, 01/07/98 8,200 8,200
Illinois Educational Facility Authority Revenue Bonds (Chicago
Zoological Society Brookfield Zoo) Series B / (Chemical Bank
LOC)
4.00%, 01/07/98 2,600 2,600
Illinois Educational Facility Authority Revenue Bonds
(Northwestern University) / (FNB Chicago LOC)
3.85%, 01/07/98 22,200 22,200
Illinois Health Facility Authority Revenue Bonds (Bensenville
Home Society) Series 1989A / (American National Bank & Trust Co.
LOC)
3.70%, 01/07/98 2,400 2,400
Illinois Health Facility Authority Revenue Bonds (Ingalls
Memorial Hospital) Series 1985C / (LaSalle National Bank LOC)
3.75%, 01/07/98 1,100 1,100
</TABLE>
- --------------------------------------------------------------------------------
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Illinois Health Facility Authority Revenue Bonds (Washington &
Jane Smith Home) Series 1991 / (Comerica Bank LOC)
3.85%, 01/07/98 $ 2,800 $ 2,800
Illinois Housing Development Authority Multi-Family Housing
Revenue Bonds (Camelot Project) Series 1997 / (FNB Chicago &
MBIA Insurance)
4.00%, 01/07/98 14,170 14,170
Illinois Student Assistance Commission Student Loan Revenue Bonds
Series 1996A / (Bank of America LOC)
3.75%, 01/07/98 8,400 8,400
Kane County, Illinois Revenue Bonds (Glenwood School For Boys) /
(Harris Trust & Savings Bank LOC)
3.80%, 01/07/98 9,000 9,000
Lombard, Illinois Industrial Development Revenue Refunding Bonds
(B & H Partnership Project) / (Comerica Bank LOC)
4.53%, 01/07/98 1,850 1,850
McHenry County, Illinois Industrial Development Authority Revenue
Refunding Bonds (Dean Foods Co. Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 2,675 2,675
New Lenox, Illinois Industrial Development Revenue Bonds (Panduit
Corp. Project) / (Commerzbank AG LOC)
3.90%, 01/07/98 4,400 4,400
Richton Park, Illinois Industrial Development Revenue Bonds
(Avatar Corp. Project) / (American National Bank & Trust Co.
LOC)
4.15%, 01/07/98 2,000 2,000
Rockford, Illinois Industrial Development Revenue Bonds
(Industrial Welding Supply, Inc. Project) / (American National
Bank & Trust Co. LOC)
4.38%, 01/07/98 2,000 2,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Tinley Park, Illinois Industrial Development Authority Revenue
Bonds (Beverly Manufacturing Company Project) Series 1997A /
(Nationsbank South N.A. LOC)
4.35%, 01/01/98 $ 2,640 $ 2,640
Upper Illinois River Valley Development Authority Variable Rate
Bonds (Exolon Esk Co.) / (Chase Manhattan LOC)
4.30%, 01/07/98 4,405 4,405
Wheeling, Illinois Manufacturing Refunding Revenue Bonds
(Woodland Creek II) Series 1990 / (FSA Insurance)
4.20%, 01/07/98 17,655 17,655
Woodstock, Illinois Multi-Family Housing Revenue Bonds (Prairie
Trail) Series 1996A / (LaSalle National Bank LOC)
4.35%, 01/07/98 3,425 3,425
Woodstock, Illinois Multi-Family Revenue Bonds (Prairie View
Limited) / (American National Bank & Trust Company LOC)
4.35%, 01/07/98 2,035 2,035
Yorkville, Illinois Industrial Development Revenue Bonds (F.E.
Wheaton & Co. Inc. Project) Series 1996 / (American National
Bank & Trust Co. LOC)
4.38%, 01/07/98 1,600 1,600
----------
416,547
----------
INDIANA--0.8%
City of Gary, Indiana Economic Development Authority Revenue
Refunding Bonds (Tinplate Partnership Project ) Series 1997A /
(LaSalle National Bank LOC)
4.25%, 01/07/98 3,500 3,500
Crawfordsville, Indiana Industrial Development Revenue Bonds
(National Service Industries, Inc. Project) / (Wachovia Bank
LOC)
4.00%, 01/07/98 4,000 4,000
</TABLE>
- --------------------------------------------------------------------------------
33
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Gary, Indiana Economic Development Authority Revenue Refunding
Bonds (Miller Partners Home Improvement Project ) Series 1996A /
(Royal Bank of Scotland PLC LOC)
4.20%, 01/07/98 $20,540 $ 20,540
Hammond, Indiana Economic Development Revenue Bonds (Lear Seating
Corp. Project) Series 1994 / (Chemical Bank LOC)
4.15%, 01/07/98 8,700 8,700
Indianapolis, Indiana Economic Development Authority Revenue
Bonds (Herff-Jones, Inc. Project) / (Wachovia Bank LOC)
4.35%, 01/07/98 4,100 4,100
St. Joseph College, Indiana Economic Development Revenue Bonds
Series 1997B / (FHLB LOC)
4.30%, 01/07/98 3,675 3,675
----------
44,515
----------
IOWA--0.7%
Iowa Higher Education Loan Authority Revenue Bonds (Adjustable
Convertible Extendable Securities Education Loan Private College
Facility) / (MBIA Insurance)
3.70%, 01/07/98 6,600 6,600
Iowa State Financing Authority Solid Waste Disposal Revenue Bonds
(Cedar River Paper Project) Series 1995A
5.10%, 01/01/98 1,600 1,600
Iowa State Financing Authority Solid Waste Disposal Revenue Bonds
(Daily Cedar River Paper) / (Swiss Bank LOC)
5.10%, 01/01/98 2,500 2,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Iowa Student Loan Liquidity Corp. Student Loan Revenue Bonds
Series B / (AMBAC Insurance & Norwest Bank N.A. LOC)
3.75%, 01/07/98 $28,000 $ 28,000
----------
38,700
----------
KANSAS--0.2%
Kansas City, Kansas Industrial Revenue Bonds (Owen Industries,
Inc. Project) Series 1987 / (Sanwa Bank LOC)
3.95%, 01/07/98 1,200 1,200
Kansas State Development Finance Authority Multi-Family Housing
Revenue Bonds (1st Kansas Project) Series 1995A / (Boatmen's
First National Bank of Kansas City LOC)
4.30%, 01/07/98 2,000 2,000
Kansas State Development Finance Authority Multi-Family Housing
Revenue Bonds (1st Kansas Project) Series 1995C-2 / (Boatmen's
First National Bank of Kansas City LOC)
4.30%, 01/07/98 650 650
Olathe, Kansas Industrial Development Revenue Bonds (Garmin
International Inc. Project) Series 1995 / (Boatmen's First
National Bank of Kansas City LOC)
4.30%, 01/07/98 1,700 1,700
Wichita, Kansas Airport Facilities Revenue Bonds (Flightsafety
International, Inc.) / (Wachovia Bank LOC)
4.30%, 01/07/98 3,000 3,000
Wichita, Kansas Airport Facility Refunding Revenue Bonds (Cessna
Service Center Project) / (Westdeutsche Landesbank LOC)
4.25%, 01/07/98 3,750 3,750
----------
12,300
----------
</TABLE>
- --------------------------------------------------------------------------------
34
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
KENTUCKY--1.6%
Henderson County, Kentucky Solid Waste Disposal Revenue Bonds
(Hudson Foods, Inc. Project) / (Rabobank Nederland N.V. LOC)
3.75%, 01/07/98 $10,300 $ 10,300
Jefferson County, Kentucky Sports Stadium Revenue Adjusting Bonds
(University of Louisville Athletic Department) / (Bank One
Kentucky, N.A. LOC)
4.15%, 01/07/98 10,000 10,000
Kentucky Higher Education Student Loan Corp. Insured Student Loan
Revenue Bonds Series 1991E / (AMBAC Insurance & Credit Suisse
LOC)
3.70%, 01/07/98 5,000 5,000
Kentucky Higher Education Student Loan Corp. Revenue Bonds Series
1996A / (MBIA Insurance & Landesbank Hessen--Thuringen
Girozentrale SPA)
3.70%, 01/07/98 17,000 17,000
Lebanon, Kentucky Industrial Development Revenue Bonds (Wallace
Computer Services, Inc.) / (Wachovia Bank LOC)
3.95%, 01/07/98 5,000 5,000
Mayfield, Kentucky Multi-City Lease Revenue Bonds / (PNC Bank
N.A. LOC)
3.90%, 01/07/98 18,000 18,000
Maysville, Kentucky Industrial Building Revenue Bonds (Green
Tokai Building) / (Bank of America LOC)
4.25%, 01/07/98 5,740 5,740
Murray, Kentucky Industrial Development Authority Revenue
Refunding Bonds (Dean Foods Co.) / (Wachovia Bank LOC)
4.30%, 01/07/98 6,000 6,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Owensboro, Kentucky Limited Obligation Revenue Bonds (Dart
Polymers, Inc. Project) Series 1985A / (National Westminster
Bank PLC LOC)
4.10%, 01/07/98 $ 1,900 $ 1,900
Richmond, Kentucky Industrial Building Revenue Bonds (Mikron
Project) / (Bank of America LOC)
4.10%, 01/07/98 9,500 9,500
Wilson County, Kentucky Industrial Development Board Revenue
Bonds (Perma Pipe Project) / (Harris Trust & Savings Bank LOC)
4.45%, 01/07/98 3,150 3,150
----------
91,590
----------
LOUISIANA--0.8%
De Soto Parish, Louisiana Pollution Control Financing Authority
Revenue Refunding Bonds (Central Louisiana Electric Co.) Series
1991A / (Swiss Bank LOC)
3.60%, 01/07/98 400 400
Louisiana Public Facility Authority Hospital Revenue Bonds
(Willis Knighton Medical Project) / (AMBAC Insurance & Mellon
Bank SBPA)
3.70%, 01/07/98 17,670 17,670
Louisiana Public Finance Authority Hospital Revenue Bonds (Willis
Knighton Medical Center Project) Series 1997 / (AMBAC Insurance)
3.65%, 01/07/98 15,000 15,000
New Orleans, Louisiana Aviation Board Revenue Bonds (Passenger
Facility Charge Projects) / (Banque Paribas & Canadian Imperial
Bank of Commerce LOC)
4.00%, 01/07/98 5,100 5,100
South Louisiana, Port Commission Revenue Bonds (Holnam Project) /
(ABN-Amro Bank N.V. LOC)
3.95%, 01/07/98 7,500 7,500
----------
45,670
----------
</TABLE>
- --------------------------------------------------------------------------------
35
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
MAINE--1.1%
Maine Education Loan Marketing Corp. Student Loan Revenue Bonds
Series 1997A-1 / (AMBAC Insurance)
3.75%, 01/07/98 $ 5,700 $ 5,700
Maine Education Loan Marketing Corp. Student Loan Revenue Bonds
Series 1997A-2 / (AMBAC Insurance)
3.75%, 01/07/98 25,500 25,500
Maine Regional Waste System Solid Waste Recovery Bonds Series
1990K / (Midland Bank LOC)
3.75%, 01/07/98 17,550 17,550
Maine Regional Waste System Solid Waste Resource Recovery Revenue
Bonds Series 1993-M / (Midland Bank LOC)
3.75%, 01/07/98 4,075 4,075
Maine Regional Waste System Solid Waste Resource Recovery Revenue
Bonds Series 1995O / (Midland Bank LOC)
3.75%, 01/07/98 5,000 5,000
Maine State Housing Authority Multi-Family Revenue Bonds (Park
Village Apartments Project) / (General Electric Capital Corp.
LOC)
3.80%, 01/07/98 6,000 6,000
----------
63,825
----------
MARYLAND--0.9%
Howard County, Maryland Multi-Family Housing Revenue Bonds
(Avalon Meadows Project) / (FNMA LOC)
3.60%, 01/07/98 4,900 4,900
Maryland State Health & Higher Education Facility Authority
Pooled Revenue Bonds (Kennedy Krieger) Series 1993D / (FNB
Maryland LOC)
3.85%, 01/07/98 2,000 2,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Maryland State Health & Higher Education Facility Authority
Pooled Revenue Bonds (Pooled Loan Program) Series A / (FNB
Chicago LOC)
3.70%, 01/07/98 $ 9,700 $ 9,700
Maryland State Health & Higher Education Facility Authority
Pooled Revenue Bonds (Pooled Loan Program) Series 1985B / (FNB
Chicago LOC)
3.75%, 01/07/98 16,100 16,100
Montgomery County, Maryland Housing Opportunity Commission
Housing Revenue Bonds (Draper Lane) Series 1991I / (FGIC
Insurance & Barclays Bank PLC SPA)
3.95%, 01/07/98 16,600 16,600
----------
49,300
----------
MASSACHUSETTS--0.1%
Massachusetts State Health and Education Facilities Authority
Revenue Bonds (Williams College Project) Series E
3.60%, 01/07/98 7,193 7,193
Massachusetts State Industrial Finance Agency Resource Recovery
Authority Revenue Bonds (Ogden Haverhill Project) Series 1992A /
(Union Bank of Switzerland LOC)
3.50%, 01/07/98 500 500
----------
7,693
----------
MICHIGAN--1.3%
Grand Rapids, Michigan Economic Development Corp. Revenue
Refunding Bonds (Amway Hotel Corp. Project) Series 1991A / (ABN-
Amro Bank N.V. LOC)
3.80%, 01/07/98 8,000 8,000
Michigan State Hospital Finance Authority Revenue Bonds (Martin
Luther Memorial Home Inc.) / (Bank One Indiana, N.A. LOC)
4.00%, 01/07/98 8,520 8,520
</TABLE>
- --------------------------------------------------------------------------------
36
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Michigan State Strategic Fund Ltd. Obligation Revenue Bonds (Dean
Foods Co. Project) / (Wachovia Bank LOC)
4.30%, 01/07/98 $ 3,500 $ 3,500
Michigan State Strategic Fund Ltd. Obligation Revenue Bonds (EPI
Printers Inc. Project) / (Comerica Bank LOC)
4.30%, 01/07/98 5,200 5,200
Michigan State Strategic Fund Ltd. Obligation Revenue Bonds (John
Widdicomb Company Project)
4.35%, 01/07/98 2,915 2,915
Michigan State Strategic Fund Ltd. Obligation Variable Rate
Revenue Bonds Manufacturers Project Series 1991 / (Comerica Bank
LOC)
4.35%, 01/07/98 1,885 1,885
Michigan State Strategic Fund Ltd. Obligation Variable Rate
Revenue Bonds (Autocam Corp. Project) / (Comerica Bank LOC)
4.10%, 01/07/98 2,500 2,500
Wayne Charter County, Michigan Airport Revenue Bonds (Detroit
Metropolitan County ) Series 1996A / (Bayerische Landesbank
Girozentrale LOC)
3.75%, 01/07/98 6,500 6,500
Wayne Charter County, Michigan Airport Revenue Bonds Series B /
(Bayerische Landesbank Girozentrale LOC)
3.75%, 01/07/98 31,810 31,810
----------
70,830
----------
MINNESOTA--0.7%
Bloomington, Minnesota Port Authority Special Tax Revenue Bonds
(Mall of America Project) Series 1996B / (FSA Insurance & Credit
Local de France SBPA)
4.20%, 01/07/98 6,500 6,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Bloomington, Minnesota Port Authority Tax Increment Revenue
Refunding Bonds (Mall of America) Series 1995A / (Credit Local
de France SBPA & FSA Insurance)
4.20%, 01/07/98 $ 6,000 $ 6,000
Dakota County, Minnesota Housing & Redevelopment Authority
Multi-Family Mortgage Revenue Bonds / (Northwestern Mutual
Guaranty)
4.20%, 01/07/98 13,955 13,955
Hennepin County, Minnesota Unlimited General Obligation Bonds
Series 1995C
4.10%, 01/07/98 2,400 2,400
Hennepin County, Minnesota Unlimited General Obligation Bonds
Series 1996C
4.25%, 01/07/98 5,350 5,350
Minnesota Agriculture & Economic Development Revenue Bonds
(Evangelical Lutheran Project) / (Rabobank Nederland N.V. LOC)
4.20%, 01/07/98 5,500 5,500
----------
39,705
----------
MISSISSIPPI--0.2%
Canton, Mississippi Industrial Development Revenue Bonds (McCarty
Farms Inc. Project) / (Suntrust Bank Atlanta LOC)
4.30%, 01/07/98 2,000 2,000
Jackson County, Mississippi Pollution Control Revenue Bonds
(Chevron, U.S.A. Inc. Project)
5.00%, 01/01/98 1,000 1,000
Mississippi Business Financial Corp. Industrial Development
Revenue Bonds (Omega Motion) Series 1996 / (Wachovia Bank LOC)
4.30%, 01/07/98 6,800 6,800
----------
9,800
----------
</TABLE>
- --------------------------------------------------------------------------------
37
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
MISSOURI--1.0%
Independence, Missouri Industrial Development Authority Revenue
Bonds (Resthaven Project) / (Credit Local De France LOC)
4.00%, 01/07/98 $ 8,850 $ 8,850
Mexico, Missouri Industrial Development Authority Revenue Bonds
(ADP Midwest Manufacturing Co. Project) Series 1995 / (Royal
Bank of Scotland PLC LOC)
3.90%, 01/07/98 7,000 7,000
Missouri Higher Education Loan Authority Student Loan Revenue
Bonds Series 1988A / (National Westminster Bank PLC LOC)
3.75%, 01/07/98 19,900 19,900
Missouri State Development Board Revenue Bonds (Milbank
Manufacturing Co. Project) / (Boatmen's First National Bank of
Kansas City LOC)
4.30%, 01/07/98 3,000 3,000
Missouri State Development Finance Board Industrial Development
Revenue Bonds (H.R. Williams Mill Supply Project) Series 1995 /
(Union Bank of Switzerland LOC)
3.85%, 01/07/98 3,100 3,100
St. Charles, Missouri Industrial Development Authority Revenue
Bonds (Land Development Co. Project) / (Commerce Bank of St.
Louis LOC)
4.35%, 01/07/98 3,550 3,550
St. Clair, Missouri Industrial Development Authority Revenue
Bonds (Private Dynaquip) / (Nationsbank N.A. LOC)
4.30%, 01/01/98 2,300 2,300
St. Joseph, Missouri Industrial Development Revenue Bonds (Altec
Industries Inc. Project) / (Wachovia Bank LOC)
4.00%, 01/07/98 4,000 4,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
St. Louis, Missouri Industrial Development Authority Revenue
Bonds (Kessler Container Project) / (Nationsbank N.A. LOC)
4.35%, 01/01/98 $ 2,500 $ 2,500
Washington, Missouri Industrial Development Authority Revenue
Bonds (Pauwels Transformer Project) / (Generale Bank LOC)
4.50%, 01/07/98 3,800 3,800
----------
58,000
----------
MONTANA--0.2%
Montana State Health Facility Authority Revenue Bonds (Health
Care Pooled Loan Program) Series 1985A / (FGIC Insurance &
Norwest Bank of Minnesota N.A. LOC)
4.10%, 01/07/98 13,695 13,695
----------
NEBRASKA--0.8%
Dodge County, Nebraska Industrial Development Revenue Bonds
(Oilgear Project) / (Marshall & Ilsley Bank LOC)
4.35%, 01/07/98 2,000 2,000
Nebraska Higher Education Loan Program Revenue Bonds (Student
Loan Project) Series 1988C / (SLMA LOC)
3.75%, 01/07/98 31,150 31,150
Stanton County, Nebraska Industrial Development Revenue Bonds
Series 1996
3.80%, 01/07/98 10,500 10,500
----------
43,650
----------
NEVADA--0.1%
Clark County, Nevada Airport Improvement Revenue Bonds System
Subordinate Lien Series 1995A--2 / (Union Bank of Switzerland
LOC)
3.95%, 01/07/98 1,330 1,330
</TABLE>
- --------------------------------------------------------------------------------
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Nevada Housing Division Multi-Family Housing Revenue Bonds Series
1989A / (FNMA LOC)
3.70%, 01/07/98 $ 4,000 $ 4,000
----------
5,330
----------
NEW HAMPSHIRE--0.2%
New Hampshire Higher Education & Health Facilities Authority
Revenue Bonds (VHA New England, Inc.) Series 1985B / (AMBAC
Insurance & FNB Chicago SBPA)
3.70%, 01/07/98 1,000 1,000
New Hampshire State Business Finance Authority Pollution Control
Revenue Bonds (Public Services New Hampshire Project) Series
1992D / (Barclays Bank PLC LOC)
3.80%, 01/07/98 1,000 1,000
New Hampshire State Housing Finance Authority Multi-Family
Housing Revenue Bonds (Fairways Project) Series 1994-1 /
(General Electric Capital Corp. LOC)
3.95%, 01/07/98 7,000 7,000
----------
9,000
----------
NEW JERSEY--0.5%
New Jersey Economic Development Authority Revenue Bonds (Hoffman
Laroche Inc. Project) Series 1993 / (Bayerische Landesbank
Girozentrale LOC)
4.10%, 01/07/98 400 400
New Jersey Economic Development Authority Thermal Energy
Facilities Revenue Bonds (Thermal Energy Ltd. Partnership I
Project) Series 1997 / (FNB Chicago LOC)
3.55%, 01/07/98 12,900 12,900
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New Jersey Sports and Exposition Authority Revenue Bonds Series
1992C / (Barclays Bank LOC)
3.80%, 01/07/98 $ 7,000 $ 7,000
New Jersey State Turnpike Authority Revenue Bonds Series 1991D /
(FGIC Insurance & Societe Generale LOC)
3.45%, 01/07/98 3,000 3,000
Union City, New Jersey Industrial Pollution Control Financing
Authority Pollution Control Revenue Bonds (Exxon Project)
4.70%, 01/01/98 3,000 3,000
----------
26,300
----------
NEW MEXICO--1.5%
Albuquerque, New Mexico Airport Revenue Bonds Subordinated Lien
Series 1996A / (Bayerische Landesbank Girozentrale LOC)
3.75%, 01/07/98 20,600 20,600
Albuquerque, New Mexico Gross Receipts Tax General Obligation
Bonds / (Canadian Imperial Bank of Commerce LOC)
3.70%, 01/07/98 2,000 2,000
Albuquerque, New Mexico Variable Rate Demand Note (Karsten
Project A) / (Bank One Milwaukee LOC)
4.30%, 01/07/98 1,930 1,930
Albuquerque, New Mexico Variable Rate Demand Note (Karsten
Project B) / (Bank One Milwaukee LOC)
4.30%, 01/07/98 780 780
Belen, New Mexico Industrial Development Revenue Bonds (Solo Cup,
Inc. Project) / (Wachovia Bank LOC)
4.30%, 01/07/98 3,250 3,250
</TABLE>
- --------------------------------------------------------------------------------
39
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New Mexico State Highway Commercial Revenue Subordinated Lien
Bonds Series 1996 / (FSA Insurance & Canadian Imperial Bank of
Commerce SPA)
3.70%, 01/07/98 $57,400 $ 57,400
----------
85,960
----------
NEW YORK--2.3%
Albany, New York Industrial Development Agency Revenue Refunding
Bonds (United Cerebral Palsy Association Project) / (Key Bank
N.A. LOC)
3.85%, 01/07/98 13,200 13,200
Albany-Dougherty County, New York Hospital Authority Revenue
Bonds (Phoebe Putney Memorial Hospital) Series 1996 / (AMBAC
Insurance)
3.75%, 01/07/98 11,400 11,400
New York City, New York General Obligation Bonds Series 1993
Subseries A-8 / (Morgan Guaranty Trust Co.--New York LOC)
5.10%, 01/01/98 15 15
New York City, New York Health & Hospital Corp. Health System
Revenue Bonds Series 1997A / (Morgan Guaranty Trust Co--New York
LOC)
3.50%, 01/07/98 3,700 3,700
New York City, New York Housing Development Corp. Multi-Family
Housing Mortgage Revenue Bonds (Parkgate Tower Project) /
(Citibank LOC)
3.60%, 01/07/98 770 770
New York City, New York Industrial Development Agency Revenue
Bonds (Brooklyn Navy Yard Co.) Series 1995A / (Bank of America
LOC)
4.25%, 01/07/98 5,600 5,600
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York City, New York Industrial Development Agency Revenue
Bonds (Brooklyn Navy Yard Co.) Series 1995B / (Bank of America
LOC)
4.35%, 01/07/98 $ 3,000 $ 3,000
New York City, New York Industrial Development Authority Special
Facility Revenue Bonds (Korean Airlines Co. Project) Series
1997A / (Bankers Trust LOC)
3.60%, 01/07/98 11,800 11,800
New York City, New York Industrial Development Special Facility
Revenue Bonds (Korean Airlines Co. Project) Series 1997C /
(Bankers Trust LOC)
3.60%, 01/07/98 9,400 9,400
New York City, New York Industrial Development Special Facility
Revenue Bonds (Korean Airlines Co. Project) Series 1997B /
(Bankers Trust LOC)
3.65%, 01/07/98 9,100 9,100
New York State Energy Research & Development Authority Pollution
Control Revenue Refunding Bonds (Orange & Rockland Utilities,
Inc. Project) Series 1994A / (FGIC Insurance & Societe Generale
SBPA)
3.55%, 01/07/98 4,100 4,100
New York State Housing Finance Agency Multi-Family Housing
Revenue Bonds (Tribeca Park Housing Project) Series 1997A /
(Bayerische Hypotheken Und Wechsel Bank LOC)
4.10%, 12/31/97 8,700 8,700
New York State Housing Finance Agency Revenue Bonds (West 50
Street Project) Series 1997A / (Fleet Bank of New York LOC)
3.60%, 01/07/98 28,100 28,100
</TABLE>
- --------------------------------------------------------------------------------
40
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York State Local Government Assistance Corp. Revenue Bonds
Series 1994B / (Credit Suisse & Swiss Bank LOC)
3.50%, 01/07/98 $ 1,000 $ 1,000
New York State Local Government Assistance Corp. Revenue Bonds
Series 1995B / (Bank of Nova Scotia LOC)
3.55%, 01/07/98 6,800 6,800
Port Authority of New York and New Jersey Special Obligation
Revenue Bonds (Versatile Structure Obligation-6 project) / (Bank
of Nova Scotia LOC)
5.10%, 01/01/98 10,000 10,000
Yonkers, New York Industrial Development Agency Civic Facilities
Revenue Bonds (Consumers Union Facility Project) Series 1994 /
(AMBAC Insurance & Credit Local de France SBPA)
3.50%, 01/07/98 500 500
----------
127,185
----------
NORTH CAROLINA--0.1%
Guilford County, North Carolina Industrial Facilities & Pollution
Control Financing Authority Revenue Bonds (Culp Inc. Project) /
(Wachovia Bank LOC)
4.25%, 01/07/98 3,825 3,825
Guilford County, North Carolina Industrial Facilities & Pollution
Control Financing Authority Revenue Bonds (Camco Manufacturing
Project) Series 1996 / (Wachovia Bank LOC)
4.25%, 01/07/98 2,700 2,700
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Union County, North Carolina Industrial Facilities & Pollution
Control Financing Authority Revenue Bonds (Rock-Tenn Converting
County Project) / (Suntrust Bank Atlanta LOC)
4.30%, 01/07/98 $ 1,750 $ 1,750
----------
8,275
----------
NORTH DAKOTA--0.4%
Mercer County, North Dakota National Rural Utility Pollution
Control Revenue Bonds (Basin Electric Power Cooperative Antelope
Project) Series 1984C / (N.R.U.--C.F.C. Guaranty LOC)
3.85%, 01/07/98 7,800 7,800
Richland County, North Dakota Industrial Development Revenue
Bonds (Minn-Dak Farmers Co-op) Series 1986B / (Norwest Bank LOC)
4.50%, 01/07/98 1,000 1,000
Richland County, North Dakota Solid Waste Disposal Revenue Bonds
(Minn-Dak Farmers Co-op) Series 1996A / (Norwest Bank LOC)
4.50%, 01/07/98 11,000 11,000
----------
19,800
----------
OHIO--0.7%
Cleveland, Ohio Airport System Revenue Bonds Series 1997D /
(Toronto-Dominion Bank LOC)
3.75%, 01/07/98 13,530 13,530
Columbus, Ohio Electric System Revenue Bonds Series 1984 / (Union
Bank of Switzerland LOC)
3.70%, 01/07/98 6,380 6,380
Ohio Air Quality Development Authority Revenue Bonds (JMG
Funding, LP) Series 1994A / (Societe Generale LOC)
3.90%, 01/07/98 2,900 2,900
</TABLE>
- --------------------------------------------------------------------------------
41
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Ohio Air Quality Development Authority Revenue Bonds (Limited
Partnership Project) Series 1994B / (Societe Generale LOC)
3.65%, 01/07/98 $14,400 $ 14,400
Ohio Housing Finance Agency Multi-Family Housing Revenue Bonds
(Kenwood Congregate Retirement Community) Series 1985 / (Morgan
Guaranty Trust Co.--New York LOC)
3.80%, 01/07/98 2,000 2,000
----------
39,210
----------
OKLAHOMA--0.7%
Garfield County, Oklahoma Industrial Development Adjusting
Revenue Bonds (Bank of Commerce Group Inc. Project) / (Wachovia
Bank LOC)
4.20%, 01/07/98 7,265 7,265
Muldrow, Oklahoma Public Works Authority Industrial Development
Revenue Bonds (Oklahoma Foods Project) / (Rabobank Nederland
N.V. LOC)
3.90%, 01/07/98 8,500 8,500
Oklahoma Development Financing Authority Revenue Bonds (Shawnee
Funding Ltd.) / (Bank of Nova Scotia LOC)
4.30%, 01/07/98 4,000 4,000
Oklahoma State Student Loan Authority Revenue Bonds Series A /
(MBIA Insurance & SLMA LOC)
3.75%, 01/07/98 2,000 2,000
Oklahoma State Student Loan Authority Revenue Bonds Student Loan
Series 1996A / (MBIA Insurance & SLMA LOC)
3.75%, 01/07/98 18,000 18,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Tulsa, Oklahoma Industrial Development Authority Revenue Bonds
(Thomas & Betts Project) Series 1991 / (Wachovia Bank LOC)
4.30%, 01/07/98 $ 700 $ 700
----------
40,465
----------
OREGON--0.4%
Oregon State Economic Development Commission Economic &
Industrial Development Revenue Bonds / (Wachovia Bank LOC)
4.20%, 01/07/98 4,100 4,100
Oregon State General Obligation Notes Series 1973H / (Bank of
Tokyo LOC)
3.65%, 01/07/98 9,900 9,900
Port of Portland, Oregon Industrial Development Revenue Bonds
(Schnitzer Steel Project) / (Comerica Bank LOC)
3.65%, 01/07/98 5,000 5,000
Port of Portland, Oregon Special Obligation Revenue Bonds
(Portland Bulk Terminals Ltd. Liability Corp. Project) /
(Canadian Imperial Bank of Commerce LOC)
4.25%, 01/07/98 5,000 5,000
----------
24,000
----------
PENNSYLVANIA--5.8%
Allegheny County, Pennsylvania Industrial Development Authority
Economic Development Revenue Bonds (Sauereisen Project) /
(Mellon LOC)
4.10%, 01/07/98 1,600 1,600
Bucks County, Pennsylvania Industrial Development Authority
Variable Rate Demand Notes (Klearfold Project) / (Mellon LOC)
4.20%, 01/07/98 3,000 3,000
</TABLE>
- --------------------------------------------------------------------------------
42
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Bucks County, Pennsylvania St. Mary Hospital Authority Variable
Rate Demand Obligation (Catholic Healthcare Project) Series
1997B
3.60%, 01/07/98 $10,000 $ 10,000
Chester County, Pennsylvania Industrial Development Authority
Revenue Bonds (Devault Manufacturing Facilities Project) /
(Corestates Bank N.A. LOC)
4.11%, 01/07/98 2,600 2,600
Dauphin County, Pennsylvania General Authority Revenue Bonds (All
Health Pooled Financing Program) / (Credit Suisse First Boston &
FSA LOC)
3.75%, 01/07/98 30,000 30,000
Emmaus, Pennsylvania General Authority Revenue Bonds / (FSA
Insurance & Credit Suisse SPA)
4.00%, 01/07/98 15,560 15,560
Montgomery County, Pennsylvania Industrial Development Authority
Revenue Bonds (Seton Medical Supply Co. Project) / (First Union
National Bank LOC)
3.65%, 01/07/98 5,500 5,500
Montgomery County, Pennsylvania Redevelopment Authority Multi-
Family Housing Revenue Refunding Bonds (Glenmore Association
Project) Series A / (FNMA LOC)
4.10%, 01/07/98 3,950 3,950
Northampton County, Pennsylvania Industrial Development Authority
Revenue Bonds (Binney and Smith-B) / (FNB Chicago LOC)
4.11%, 01/07/98 1,000 1,000
Northampton County, Pennsylvania Industrial Development Authority
Revenue Bonds (Binney and Smith-A) / (FNB Chicago LOC)
4.11%, 01/07/98 3,250 3,250
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Pennsylvania Economic Development Finance Authority Exempt
Facility Revenue Bonds (National Gypsum Co.) Series 1997B /
(NCNB LOC)
3.60%, 01/07/98 $ 5,000 $ 5,000
Pennsylvania Economic Development Finance Authority Exempt
Facility Revenue Bonds (National Gypsum Co., Shipping Port
Project) Series 1997A / (NCNB LOC)
3.75%, 01/07/98 10,000 10,000
Pennsylvania Energy Development Authority (Clarion Corp.-Piney
Creek Project Apartments) Series 1986C / (Swiss Bank LOC)
3.75%, 01/07/98 1,155 1,155
Pennsylvania Energy Development Authority Energy Development
Revenue Bonds (B & W Ebensberg Project) Series 1986 / (Swiss
Bank LOC)
3.75%, 01/07/98 9,475 9,475
Pennsylvania Higher Education Assistance Agency Student Loan
Revenue Bonds Series 1988A / (SLMA LOC)
3.75%, 01/07/98 15,100 15,100
Pennsylvania Higher Education Assistance Agency Student Loan
Revenue Bonds Series 1988B / (SLMA LOC)
3.75%, 01/07/98 55,000 55,000
Pennsylvania Higher Education Assistance Agency Student Loan
Revenue Bonds Series 1988C / (SLMA LOC)
3.75%, 01/07/98 42,100 42,100
Pennsylvania Higher Education Assistance Agency Student Loan
Revenue Bonds Series 1994A / (SLMA LOC)
3.75%, 01/07/98 9,000 9,000
</TABLE>
- --------------------------------------------------------------------------------
43
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Pennsylvania Higher Education Assistance Agency Student Loan
Revenue Bonds Series 1995A / (SLMA LOC)
3.75%, 01/07/98 $ 2,000 $ 2,000
Pennsylvania Higher Education Assistance Agency Student Loan
Revenue Bonds Series 1997A / (SLMA LOC)
3.95%, 01/07/98 21,000 21,000
Pennsylvania State Higher Education Facilities Revenue Bonds
(University of Pennsylvania Health Services Project) Series C /
(Credit Suisse First Boston LOC)
3.60%, 01/07/98 40,700 40,700
Sayre, Pennsylvania Health Care Facilities Authority Revenue
Bonds (VHA Capital Finance Revenue) Series 1985F / (AMBAC
Insurance & FNB Chicago SBPA)
3.65%, 01/07/98 4,100 4,100
York, Pennsylvania General Authority Pooled Financing Revenue
Bonds Series 1996 / (First Union Bank of North Carolina LOC)
4.20%, 01/07/98 29,825 29,825
----------
320,915
----------
RHODE ISLAND--0.6%
Rhode Island State Student Loan Authority Higher Education
Revenue Bonds Series 1995-1 / (National Westminster Bank PLC
LOC)
3.80%, 01/07/98 12,300 12,300
Rhode Island State Student Loan Authority Higher Education
Revenue Bonds Series 1996-2 / (National Westminster Bank PLC
LOC)
3.80%, 01/07/98 5,000 5,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Rhode Island State Student Loan Authority Higher Education
Revenue Bonds Series 1996-3 / (National Westminster Bank PLC
LOC)
3.80%, 01/07/98 $15,400 $ 15,400
----------
32,700
----------
SOUTH CAROLINA--0.4%
Dorchester County, South Carolina Pollution Control Revenue Bonds
(BOC Group Inc.) / (Wachovia Bank LOC)
4.20%, 01/07/98 2,000 2,000
Greenville, South Carolina County and City Industrial Development
Revenue Bonds (Stevens Aviation Technology Services Project) /
(First Union National Bank LOC)
4.30%, 01/07/98 3,000 3,000
South Carolina Economic Development Authority Hospital Facility
Revenue Bonds (Sanders Brothers Construction) / (Wachovia Bank
LOC)
4.30%, 01/07/98 3,150 3,150
South Carolina Jobs Economic Development Authority Economic
Development Revenue Bonds (Thomas and Betts Corp. Project) /
(Wachovia Bank, N.A. LOC)
4.30%, 01/07/98 2,100 2,100
South Carolina Jobs Economic Development Authority Industrial
Development Revenue Bonds (Electric City Printing Project) /
(Wachovia Bank of North Carolina LOC)
4.30%, 01/07/98 3,000 3,000
South Carolina State Port Authority Revenue Bonds (Junior Lien) /
(South Carolina National Bank LOC)
3.95%, 01/07/98 3,300 3,300
</TABLE>
- --------------------------------------------------------------------------------
44
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Spartanburg County, South Carolina Industrial Development
Authority Revenue Bonds (Bemis, Inc.) / (Wachovia Bank LOC)
4.15%, 01/07/98 $ 4,750 $ 4,750
----------
21,300
----------
SOUTH DAKOTA--0.3%
South Dakota State Health & Educational Facilities Authority
Revenue Bonds (McKenna Hospital) Series 1994 / (MBIA Insurance &
Banque Paribas SBPA)
4.20%, 01/07/98 15,930 15,930
----------
TENNESSEE--3.1%
Chattanooga Industrial Development Board Industrial Development
Revenue Bonds (National Print Group Inc. Project) / (Suntrust
Bank Nashville N.A. LOC)
4.35%, 01/07/98 2,600 2,600
Chattanooga, Tennessee Health Education & Housing Facility Board
Revenue Bonds (Baylor School Project) / (Sun Bank LOC)
4.20%, 01/07/98 1,700 1,700
Franklin County, Tennessee Industrial Development Board
Industrial Development Revenue Bonds (Hi-Tech Porject) Series
1997 / (Regions Bank LOC)
3.95%, 01/07/98 7,000 7,000
Jackson County, Tennessee Industrial Development Board Solid
Waste Facilities Revenue Bonds (Ameristeel Corp.) / (NationsBank
N.A. LOC)
4.35%, 01/01/98 5,000 5,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Knox County, Tennessee Health Education & Housing Facilities
Revenue Bonds (Web School Knoxville Project) / (Suntrust Bank
Nashville N.A. LOC)
4.20%, 01/07/98 $ 5,000 $ 5,000
Metropolitan Government of Nashville Davidson County, Tennessee
Industrial Development Revenue Bonds (Bind Technologies Inc.) /
(NationsBank of Tennessee, N.A. LOC)
4.40%, 01/07/98 3,750 3,750
Metropolitan Nashville & Davidson County, Tennessee Health &
Education Facility Board Revenue Bonds Series A / (FGIC
Insurance & Barclays Bank PLC LOC)
3.70%, 01/07/98 1,200 1,200
Metropolitan Nashville & Davidson County, Tennessee Industrial
Development Multi-Family Housing Revenue Bonds (Arbor Crest)
Series 1985B / (Wachovia Bank LOC)
4.20%, 01/07/98 4,000 4,000
Metropolitan Nashville & Davidson County, Tennessee Industrial
Development Multi-Family Housing Revenue Bonds (Arbor Knoll)
Series 1985A / (Wachovia Bank LOC)
4.20%, 01/07/98 1,000 1,000
Montgomery County, Tennessee Public Building Authority Pooled
Revenue Bonds Financing County Loans / (NationsBank LOC)
4.20%, 01/07/98 28,400 28,400
Montgomery County, Tennessee Public Building Authority Pooled
Financing Revenue Bonds (County Loan Project) / (NationsBank
South N.A. LOC)
4.20%, 01/07/98 36,000 36,000
</TABLE>
- --------------------------------------------------------------------------------
45
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Sevier County, Tennessee Public Building Authority Local
Government Public Bonds Series G / (AMBAC Insurance &
Kredietbank, N.V. SPA)
4.15%, 01/07/98 $ 7,000 $ 7,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1995C-1 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.10%, 01/07/98 4,000 4,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1995C-2 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 4,395 4,395
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1995C-3 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 10,000 10,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1995E-3 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 3,000 3,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996D-1 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 3,430 3,430
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996E-1 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 6,835 6,835
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996E-4 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 $ 3,000 $ 3,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996E-5 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 1,750 1,750
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996F1 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 9,000 9,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996F2 / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 9,000 9,000
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series II-C / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 1,100 1,100
Sevier County, Tennessee Public Building Authority Local
Government Public Improvement Bonds Series 1996A / (AMBAC
Insurance & Kredietbank, N.V. SPA)
4.15%, 01/07/98 7,000 7,000
</TABLE>
- --------------------------------------------------------------------------------
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Volunteer State Variable Rate Student Loan Funding Bonds Series
1987 / (Hong Kong Shang Hai Bank LOC)
3.90%, 01/07/98 $10,600 $ 10,600
----------
175,760
----------
TEXAS--5.6%
Amarillo, Texas Health Facilities Corp. Revenue Refunding Bonds /
(Rabobank Nederland N.V. LOC)
3.90%, 01/07/98 3,155 3,155
Amarillo, Texas Health Facility Corp. Hospital Revenue Bonds
(High Plains Baptist Hospital) Series 1985 / (Banque Paribas
LOC)
3.90%, 01/07/98 3,100 3,100
Bexar County, Texas Health Facilities Development Corp. Revenue
Bonds (Chandler Memorial Home Project) Series 1995 / (Bank One
LOC)
4.15%, 01/07/98 5,170 5,170
Brazos River Authority, Texas Pollution Control Revenue Refunding
Bonds (Utilities Electric-B Project)/(Union Bank of Switzerland
LOC)
4.60%, 01/01/98 2,500 2,500
Brazos River, Texas Higher Education Authority Revenue Bonds
Series 1993B-1 / (SLMA LOC)
3.75%, 01/07/98 30,300 30,300
Brownsville County Texas Industrial Development Corp. Revenue
Refunding Bonds (Rich Seapak Corp. Project) / (Suntrust Bank
Atlanta LOC)
4.30%, 01/07/98 1,250 1,250
Capital Health Facilities Development Corp. Revenue Bonds (Island
on Lake Travis Ltd. Project) / (Credit Suisse First Boston LOC)
4.15%, 01/07/98 8,500 8,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Central Waco, Texas Development Corp. Industrial Development
Revenue Bonds (H.E. Butt Grocery) / (Texas Commerce Bank, N.A.
LOC)
3.70%, 01/07/98 $ 3,650 $ 3,650
Collin County, Texas Housing Finance Corp. Multi-Family Housing
Revenue Bonds (Huntington Apartments Project) / (Fleet Bank,
N.A. LOC)
4.10%, 01/07/98 6,150 6,150
Euless, Texas Industrial Development Authority Revenue Bonds
(Ferguson Enterprises, Inc. Project) / (Wachovia Bank LOC)
4.20%, 01/07/98 4,850 4,850
Grand Prairie, Texas Industrial Development Authority Industrial
Development Revenue Bonds (NTA Leasing Co. Project) Series 1994
/ (Texas Commerce Bank, N.A. LOC)
3.85%, 01/07/98 2,140 2,140
Hays, Texas Memorial Health Facilities Development Corp. Hospital
Revenue Bonds (AHS / Sunbelt Central Texas Medical Center
Project) Series 1990A / (Swiss Bank LOC)
4.25%, 01/07/98 8,500 8,500
Hays, Texas Memorial Health Facilities Development Corp. Hospital
Revenue Bonds (AHS / Sunbelt Central Texas Medical Center
Project) Series 1990B / (Swiss Bank LOC)
4.25%, 01/07/98 15,300 15,300
Lavaca-Navidad River Authority, Texas Water Supply System
Contract Revenue Bonds (Formosa Plastics Corp. Project) /
(Canadian Imperial Bank of Commerce LOC)
3.95%, 01/07/98 13,600 13,600
</TABLE>
- --------------------------------------------------------------------------------
47
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Lower Neches Valley Authority, Texas Industrial Development Corp.
Pollution Control Revenue Bonds (Mobil Corp. Neches River
Treatment Project)
3.70%, 01/07/98 $12,000 $ 12,000
North Texas Higher Education Authority Income Tax Student Loan
Revenue Refunding Bonds Series 1996B / (AMBAC Insurance & SLMA
SBPA)
3.75%, 01/07/98 4,000 4,000
North Texas Higher Education Authority Income Tax Student Loan
Revenue Refunding Bonds Series 1996D / (AMBAC Insurance & SLMA
SBPA)
3.75%, 01/07/98 4,000 4,000
North Texas Higher Education Authority Student Loan Revenue
Refunding Bonds Series 1987A / (Credit Communal de Belgique LOC)
3.75%, 01/07/98 86,750 86,750
Panhandle Plains, Texas Higher Education Authority Student Loan
Revenue Bonds Series 1992A-1 / (SLMA LOC)
3.75%, 01/07/98 2,400 2,400
Panhandle Plains, Texas Higher Education Authority Student Loan
Revenue Bonds Series 1993A / (SLMA LOC)
3.75%, 01/07/98 13,300 13,300
Panhandle Plains, Texas Higher Education Authority Student Loan
Revenue Bonds Series 1997X / (SLMA LOC)
3.75%, 01/07/98 14,000 14,000
Panhandle Plains, Texas Higher Education Authority Student Loan
Revenue Bonds Series 1991A / (SLMA LOC)
3.75%, 01/07/98 7,400 7,400
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Panhandle Plains, Texas Higher Education Authority Student Loan
Revenue Bonds Series 1992A / (SLMA LOC)
3.75%, 01/07/98 $10,500 $ 10,500
Panhandle Plains, Texas Higher Education Authority Student Loan
Revenue Bonds Series 1995A / (SLMA LOC)
3.75%, 01/07/98 13,000 13,000
Robertson County, Texas Industrial Development Corp. Industrial
Development Revenue Bonds (Sanderson Farms Project) Series 1995
/ (Harris Trust & Savings Bank LOC)
3.90%, 01/07/98 4,300 4,300
Silsbee, Texas Health Facilities Development Revenue Bonds
(Silsbee Doctor's Hospital) / (HEI Guaranty & Citibank LOC)
3.70%, 01/07/98 6,000 6,000
South Texas Higher Education Authority Student Loan Revenue Bonds
Series 1997Z / (MBIA Insurance & SLMA SBPA)
4.00%, 01/07/98 7,000 7,000
Texas Health Facilities Development Corp. Adjustable Convertible
Extendable Securities Revenue Bonds (North Texas Pooled Health)
Series 1985B / (Banque Paribas LOC)
3.90%, 01/07/98 19,000 19,000
Trinity River Authority, Texas Pollution Control Revenue Bonds
(Lafarge Corp. Project) / (Banque Nationale de Paris LOC)
4.40%, 01/07/98 3,100 3,100
----------
314,915
----------
UTAH--0.8%
Salt Lake City, Utah Airport Revenue Bonds Series 1994A / (Credit
Suisse LOC)
3.75%, 01/07/98 4,300 4,300
</TABLE>
- --------------------------------------------------------------------------------
48
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Salt Lake City, Utah Airport Revenue Bonds Series 1996A / (Union
Bank of Switzerland LOC)
4.20%, 01/07/98 $ 2,000 $ 2,000
Utah State Board of Regents Student Loan Revenue Bonds Series
1995L / (AMBAC Insurance & Barclays Bank PLC LOC)
3.75%, 01/07/98 3,000 3,000
Utah State Board of Regents Student Loan Revenue Bonds Series
1997R / (AMBAC Insurance & Barclays Bank PLC LOC)
3.75%, 01/07/98 34,255 34,255
----------
43,555
----------
VERMONT--0.1%
Vermont Education & Health Buildings Financing Agency (VHA New
England) Series 1985G / (AMBAC Insurance & FNB Chicago SBPA)
3.70%, 01/07/98 4,240 4,240
----------
VIRGINIA--0.2%
Chesterfield County, Virginia Industrial Development Authority
Industrial Development Revenue Bonds (Erni Components Inc.
Project) / (First Union National Bank LOC)
4.30%, 01/07/98 3,000 3,000
King George County, Virginia Industrial Development Authority
Solid Waste Disposal Facility (Garnet of Virginia Project)
Series 1996 / (Morgan Guaranty Trust--New York LOC)
4.15%, 01/07/98 3,700 3,700
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Lynchburg, Virginia Industrial Development Authority Hospital
Facility Revenue Bonds (First Mortgage VHA Mid-Atlantic States,
Inc.) Series 1985B / (AMBAC Insurance & Mellon Bank SBPA)
3.70%, 01/07/98 $ 400 $ 400
Lynchburg, Virginia Industrial Development Authority Hospital
Facility Revenue Bonds (First Mortgage VHA Mid-Atlantic States,
Inc.) Series 1985C / (AMBAC Insurance & Mellon Bank SBPA)
3.70%, 01/07/98 600 600
Lynchburg, Virginia Industrial Development Authority Hospital
Facility Revenue Bonds (First Mortgate VHA Mid-Atlantic States,
Inc.) Series 1985A / (AMBAC Insurance & Mellon Bank SBPA)
3.70%, 01/07/98 500 500
Staunton, Virginia Industrial Development Authority Industrial
Development Revenue Bonds (Diebold Inc. Staunton Project) Series
1997 / (Bank One, Akron LOC)
4.25%, 01/07/98 2,500 2,500
Virginia Small Business Finance Authority Industrial Development
Revenue Bonds (Dong Sung America) / (First Union National Bank
of North Carolina LOC)
3.80%, 01/07/98 2,380 2,380
----------
13,080
----------
WASHINGTON--4.1%
Everett, Washington Industrial Development Revenue Bonds
(Partners Trust / Synsor Project)/ (Bank of America LOC)
4.10%, 01/07/98 5,300 5,300
</TABLE>
- --------------------------------------------------------------------------------
49
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
King County, Washington Economic Enterprise Corp. Revenue Bonds
(Sunrise Project) Series 1997 / (Bank of America NT & SA LOC)
4.00%, 01/07/98 $ 4,100 $ 4,100
King County, Washington Housing Authority Variable Rate Multi-
Family Housing Revenue Bonds (Auburn County Apartments) / (U.S.
Bank N.A. LOC)
4.00%, 01/07/98 3,500 3,500
Metropolitan Washington District of Columbia Airports Authority
System Revenue Refunding Bonds Series 1997C / (Union Bank of
Switzerland LOC)
3.65%, 01/07/98 40,000 40,000
Pierce County, Washington Economic Development Bonds (McFarland
Cascade Project) / (U.S. Bank of Washington LOC)
4.40%, 01/07/98 2,000 2,000
Pierce County, Washington Economic Development Corp. Revenue
Bonds (Flex-A-Lite Consolidated Project) / (Bank of America LOC)
4.10%, 01/07/98 3,000 3,000
Pierce County, Washington Economic Development Corp. Revenue
bonds (K & M Holdings II Project) Series 1997 / (Wells Fargo
Bank LOC)
4.15%, 01/07/98 1,820 1,820
Port Moses Lake, Washington Public Corp. Revenue Bonds (Moses
Lake Industrial Project) Series 1995 / (Bank of America LOC)
4.10%, 01/07/98 3,000 3,000
Port Moses Lake, Washington Public Corp. Revenue Bonds (National
Frozen Foods Corporation) / (Bank of America NT & SA LOC)
4.10%, 01/07/98 7,500 7,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Port of Seattle, Washington Subordinate Lien Revenue Bonds Series
1997 / (Canadian Imperial Bank of Commerce LOC)
3.85%, 01/07/98 $81,530 $ 81,530
Seattle, Washington Housing Authority Revenue Bonds (CASA
Pacifica Apartments Project) Series 1997 / (Bank of America NT &
SA LOC)
4.00%, 01/07/98 3,350 3,350
Seattle, Washington Housing Authority Revenue Bonds (Holly Park
Project) / (Bank of America NT & SA LOC)
4.00%, 01/07/98 9,000 9,000
Spokane County, Washington Industrial Development Corp. Metal
Sales Manufacturing Corp. / (Star Bank LOC)
4.25%, 01/07/98 2,835 2,835
Washington Health Care Facilities Authority Revenue Bonds (Yakima
Valley Farm Workers Clinic) Series 1997DN / (Bank of America NT
& SA LOC)
4.20%, 01/07/98 3,900 3,900
Washington State Development Authority Revenue Bonds (Hunter
Douglas Project) Series 1997A / (ABN-Amro Bank N.V. LOC)
4.30%, 01/07/98 3,500 3,500
Washington State Economic Development Finance Authority
Industrial Development Revenue Bonds (Tonkin Building) Series
1997A / (U.S. Bank of Washington LOC)
4.40%, 01/07/98 1,000 1,000
Washington State Health Care Facilities Authority Revenue
Refunding Bonds (Sisters of
St. Joseph of Peace) Series 1993 / (MBIA Insurance & U.S. Bank
of Washington SBPA)
4.15%, 01/07/98 12,400 12,400
</TABLE>
- --------------------------------------------------------------------------------
50
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Washington State Housing Finance Authority Multi-Family Housing
Revenue Bonds (Merrill Gardens Project) Series 1997A / (U.S.
Bank of Washington LOC)
4.30%, 01/07/98 $ 2,000 $ 2,000
Washington State Housing Finance Commission Multi-Family Housing
Mortgage Revenue Bonds (Meridian Court Apartments) Series 1996 /
(Bank of America LOC)
4.00%, 01/07/98 8,000 8,000
Washington State Housing Finance Commission Multi-Family Housing
Mortgage Revenue Bonds (Canyon Lake II) Series 1993A / (U.S.
Bank of Washington LOC)
4.35%, 01/07/98 4,565 4,565
Washington State Housing Finance Commission Multi-Family Housing
Mortgage Revenue Bonds (Lake Washington Apartments) Series
1996DN / (Bank of America LOC)
4.25%, 01/07/98 8,750 8,750
Yakama, Washington Confederated Tribes and Bands Variable Rate
Demand Obligation (Yakama Forests Products Project) / (Bank of
America NT & SA LOC)
4.10%, 01/07/98 8,300 8,300
Yakima County, Washington Public Corp. Revenue Bonds (Hi Country
Foods Project) / (Bank of America LOC)
4.10%, 01/07/98 6,800 6,800
Yakima County, Washington Public Corp. Revenue Bonds (Printing
Press Project) / (Bank of America LOC)
4.10%, 01/07/98 3,000 3,000
----------
229,150
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
WEST VIRGINIA--0.3%
Marion County West Virginia Solid Waste Disposal Facilities
Revenue Bonds (Grant Town Project) Series D / (National
Westminster Bank PLC LOC)
3.75%, 01/07/98 $ 4,300 $ 4,300
Marion County, West Virginia County Commission Solid Waste
Disposal Facility Revenue Bonds (Grant Town Project) Series B /
(National Westminster Bank PLC LOC)
3.75%, 01/07/98 11,000 11,000
West Virginia State Hospital Finance Authority Hospital Revenue
Bonds (St. Joseph's Hospital Project) Series 1987 / (Bank of
Tokyo-Mitsubishi Ltd. LOC)
3.75%, 01/07/98 2,000 2,000
----------
17,300
----------
WISCONSIN--0.9%
Carlton, Wisconsin Pollution Control Revenue Bonds (Power & Light
Project)
3.80%, 01/07/98 5,800 5,800
Chilton, Wisconsin Industrial Development Revenue Bonds (Kaytee
Products, Inc. Project) Series 1995 / (Bank One Milwaukee LOC)
4.25%, 01/07/98 1,485 1,485
Colburn, Wisconsin Industrial Development Revenue Bonds
(Heartland Farms Project) Series 1994 / (Marshall & Ilsley Bank
LOC)
4.35%, 01/07/98 6,900 6,900
Fairwater, Wisconsin Industrial Development Revenue Bonds (Dean
Foods Co. Project) Series 1990 / (Wachovia Bank LOC)
4.20%, 01/07/98 1,450 1,450
</TABLE>
- --------------------------------------------------------------------------------
51
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Grafton, Wisconsin Industrial Development Revenue Bonds
(Milwaukee Sign Co. Project) / (Marshall & Ilsley Bank LOC)
4.35%, 01/07/98 $ 1,975 $ 1,975
Kenosha, Wisconsin Industrial Development Revenue Bonds (Asyst
Tech. Ltd. Liability Corp. Project) / (LaSalle National Bank
LOC)
4.10%, 01/07/98 5,000 5,000
Lac Du Flambeau Band of Lake Superior, Wisconsin Chippewa Indians
Special Obligation Bonds (Simpson Electric Co. Project) Series
1985 / (Barclays Bank PLC LOC)
3.70%, 01/07/98 4,400 4,400
Milwaukee, Wisconsin Redevelopment Authority Industrial
Development Revenue Bonds (Field Container Corp. LP) Series 1994
/ (Northern Trust LOC)
4.25%, 01/07/98 5,000 5,000
Prentice, Wisconsin Industrial Development Refunding Revenue
Bonds (Blount, Inc.) Series 1992 / (Morgan Guaranty Trust Co.--
New York LOC)
4.15%, 01/07/98 1,688 1,688
Rhinelander, Wisconsin Industrial Development Adjustable Rate
Revenue Bonds (Lake Shore Inc. Project) / (Australia & New
Zealand Bank Group LOC)
4.40%, 01/07/98 2,290 2,290
Wisconsin Housing & Economic Development Authority Variable Rate
Revenue Bonds (Ultratec Inc. Project ) Series 7 / (Marshall &
Ilsley Bank LOC)
4.35%, 01/01/98 3,240 3,240
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Wisconsin State Health & Education Facilities Authority Revenue
Bonds (Sinai Samaritan) Series 1994A / (Marshall & Ilsley Bank
LOC)
4.05%, 01/07/98 $12,950 $ 12,950
----------
52,178
----------
WYOMING--0.0%
Unita County, Wyoming Pollution Control Financing Authority
Pollution Control Revenue Bonds (Chevron USA, Inc. Project)
Series 1992
5.00%, 01/01/98 300 300
----------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $3,629,102) 3,629,102
----------
TAX-EXEMPT COMMERCIAL PAPER--9.3%(b)
ARIZONA--1.6%
Maricopa County, Arizona Pollution Control Revenue Authority
Revenue Refunding Bonds (Southern California Palo Alto Verde
Project) Series 1985B
3.75%, 03/11/98 7,250 7,250
Maricopa County, Arizona Pollution Control Revenue Authority
Revenue Refunding Bonds (Southern California Palo Alto Verde
Project) Series 1985C
3.75%, 02/10/98 4,000 4,000
3.75%, 02/12/98 16,250 16,250
Maricopa County, Arizona Pollution Control Revenue Authority
Revenue Refunding Bonds (Southern California Palo Alto Verde
Project) Series 1985G
3.75%, 02/12/98 16,900 16,900
Maricopa County, Arizona Pollution Control Revenue Refunding
Bonds (Southern California Edison Palo Alto Verde Project)
Series 1985D
3.75%, 03/13/98 7,550 7,550
</TABLE>
- --------------------------------------------------------------------------------
52
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Maricopa County, Arizona Pollution Control Revenue Refunding
Bonds (Southern California Edison Palo Alto Verde Project)
Series 1985E
3.75%, 03/13/98 $12,030 $ 12,030
Salt River Project, Arizona Agricultural Improvement Program /
(Multiple Credit Enhancements LOC)
3.75%, 03/13/98 15,400 15,400
Salt River Project, Arizona Agricultural Improvement Program /
(Multiple Credit Enhancements)
3.80%, 02/25/98 10,000 10,000
----------
89,380
----------
FLORIDA--0.0%
Orange County, Florida Commercial Paper Notes Series A /
(Nationsbank N.A. LOC)
3.65%, 03/11/98 2,750 2,750
----------
KANSAS--0.2%
Burlington, Kansas Pollution Control Revenue Refunding Bonds
(Kansas Power & Light Co. Project) Series 1987A /
(Toronto-Dominion Bank LOC)
3.75%, 02/12/98 6,100 6,100
Burlington, Kansas Pollution Control Revenue Refunding Bonds
(Kansas Power & Light Co. Project) Series 1987B / (Deutsche Bank
LOC)
3.75%, 02/18/98 2,000 2,000
3.75%, 03/11/98 1,200 1,200
----------
9,300
----------
KENTUCKY--0.3%
Trimble County, Kentucky Pollution Control Revenue Bonds
(Louisville G&E Project) Series 1997A
3.85%, 02/13/98 15,000 15,000
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
LOUISIANA--1.5%
Louisiana Adjustable Tender General Obligation Refunding Bonds
Series 1991A / (Credit Local De France LOC)
3.75%, 02/12/98 $10,150 $ 10,150
3.70%, 02/18/98 13,950 13,950
Louisiana State Pollution Control Revenue Refunding Bonds (St.
James Parish/ Texaco Project) Series 1988B
3.70%, 01/14/98 61,030 61,030
----------
85,130
----------
MICHIGAN--1.4%
Michigan State Building Authority Commercial Paper Notes Series 1
/ (Canadian Imperial Bank of Commerce LOC)
3.75%, 03/02/98 80,000 80,000
----------
MINNESOTA--0.7%
Rochester, Minnesota Health Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center) Series 1988E / (Credit Suisse
SBPA)
3.75%, 03/11/98 9,100 9,100
Rochester, Minnesota Health Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center) Series 1988F / (Credit Suisse
SBPA)
3.75%, 02/10/98 1,800 1,800
3.75%, 03/11/98 6,600 6,600
Rochester, Minnesota Health Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center) Series 1992A
3.75%, 02/18/98 3,500 3,500
3.75%, 03/11/98 2,000 2,000
Rochester, Minnesota Health Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center) Series 1992B
3.75%, 03/11/98 3,100 3,100
</TABLE>
- --------------------------------------------------------------------------------
53
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Rochester, Minnesota Health Care Facilities Revenue Bonds (Mayo
Foundation/Mayo Medical Center) Series 1992C
3.75%, 02/18/98 $ 8,600 $ 8,600
3.75%, 03/11/98 4,800 4,800
----------
39,500
----------
NEW YORK--0.2%
New York City, New York Muni Assistance Corp. Tax-Exempt
Commercial Paper Notes Series 1997K-3 / (Landesbank
Hessen-Thuringen Girozentrale LOC)
3.70%, 02/25/98 1,000 1,000
New York State Power Authority Tax-Exempt Commercial Paper Notes
Series 2 / (Multiple Credit Enhancements)
3.70%, 02/10/98 10,000 10,000
----------
11,000
----------
NORTH CAROLINA--1.8%
North Carolina Eastern Municipal Power Agency Power System
Revenue Bonds / (Multiple Credit Enhancements)
3.75%, 02/10/98 45,435 45,435
3.75%, 02/18/98 15,000 15,000
3.75%, 02/18/98 2,000 2,000
3.70%, 02/19/98 4,200 4,200
3.80%, 02/25/98 2,075 2,075
North Carolina Eastern Municipal Power Agency Tax-Exempt
Commercial Paper Notes / (Canadian Imperial Bank of Commerce
LOC)
3.70%, 02/18/98 32,500 32,500
----------
101,210
----------
TEXAS--1.5%
Lower Colorado River Authority Tax-Exempt Commercial Paper Notes
Series D / (Morgan Guaranty Trust Co--New York SBPA LOC)
3.75%, 02/02/98 8,000 8,000
3.75%, 02/02/98 7,000 7,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Texas Municipal Power Agency / (Multiple Credit Enhancements)
3.75%, 02/27/98 $27,675 $ 27,675
3.70%, 02/27/98 30,000 30,000
Texas State Tax and Revenue Anticipation Commercial Paper Notes
Series 1997B
3.75%, 01/15/98 3,300 3,300
3.75%, 03/06/98 10,000 10,000
----------
85,975
----------
WYOMING--0.1%
Lincoln County, Wyoming Pollution Control Revenue Refunding Bonds
(Pacificorp Project) / (Union Bank of Switzerland LOC)
3.80%, 02/25/98 3,400 3,400
----------
TOTAL TAX-EXEMPT COMMERCIAL PAPER (Cost $522,645)
522,645
----------
MANDATORY PUT BONDS--6.9%(b)
COLORADO--0.1%
Douglas County, Colorado Multi-Family Housing Revenue Bonds
(Parker Hilltop Apartments Project) Series 1997 / (FGIC Capital
Markets LOC)
4.00%, 09/01/98 8,015 8,015
----------
FLORIDA--0.1%
Orange County, Florida Industrial Development Authority Revenue
Bonds (General Accident Insurance Co. of America Project)
3.80%, 06/01/98 3,500 3,500
Pinnellas County, Florida Housing Finance Authority Single Family
Revenue Bonds (Multi-Residence/ Multi-County Project) Series
1997B / (Deutsche Bank LOC)
3.80%, 02/01/98 2,835 2,835
----------
6,335
----------
</TABLE>
- --------------------------------------------------------------------------------
54
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
GEORGIA--0.2%
Fulton County, Georgia Housing Authority Single & Multi-Family
Housing Revenue Bonds Series 1996B / (GNMA LOC)
3.85%, 03/01/98 $ 9,000 $ 9,005
----------
HAWAII--0.1%
Hawaii State Housing Finance & Development Corp. Multi-Family
Housing Revenue Bonds (Nani Mauna Loa Project) Series 1995A /
(Citibank LOC)
4.00%, 01/02/98 3,900 3,900
----------
ILLINOIS--0.1%
Illinois Development Financing Authority Revenue Bonds
3.85%, 03/01/98 6,800 6,800
----------
NEW JERSEY--0.1%
New Jersey Economic Development Authority Revenue Bonds (Newark
Recycling Center Project)
3.95%, 12/15/98 7,500 7,500
----------
NEW MEXICO--0.0%
Sandoval County, New Mexico Multi-Family Housing Revenue Bonds
(Meadowlank Apartment Project) Series 1997A / (FGIC Capital
Markets Services LOC)
3.90%, 08/01/98 1,500 1,500
----------
OHIO--0.7%
Ohio Housing Finance Authority Residential Mortgage Revenue Bonds
Series A-2 / (AIG Matched Funding Corp. LOC)
3.65%, 03/02/98 40,000 40,000
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
OREGON--0.1%
Oregon State Veteran Affairs General Obligation Bonds
4.04%, 02/02/98 $ 4,000 $ 4,000
----------
PENNSYLVANIA--0.1%
Philadelphia Water & Waste Water Revenue Bonds Series 1997B
3.82%, 08/05/98 4,000 4,000
----------
RHODE ISLAND--0.3%
Rhode Island Student Loan Authority Revenue Put Bonds Series
1996-1 / (National Westminster Bank PLC LOC)
3.95%, 06/01/98 19,000 19,000
----------
TENNESSEE--0.9%
Metropolitan Nashville & Davidson County, Tennessee Industrial
Development Board Revenue Bonds (General Accident Insurance)
Series 1986
3.95%, 05/01/98 5,700 5,700
Tennessee Housing Development Agency Home Ownership Program
Series 1997-1 (Escrowed to Maturity with Government Securities)
3.75%, 02/19/98 12,385 12,385
Tennessee Housing Development Agency Home Ownership Program
Series 1997-2
3.99%, 06/04/98 28,500 28,501
----------
46,586
----------
TEXAS--2.7%
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1992A / (SLMA LOC)
3.90%, 09/01/98 32,500 32,500
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1992B / (SLMA LOC)
4.00%, 07/01/98 14,000 14,000
</TABLE>
- --------------------------------------------------------------------------------
55
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1993A / (SLMA LOC)
4.10%, 05/01/98 $48,150 $ 48,150
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1993B / (SLMA LOC)
4.10%, 05/01/98 40,000 40,000
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1993B-2 / (SLMA LOC)
4.05%, 06/01/98 6,500 6,500
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1996A / (SLMA LOC)
3.57%, 03/01/98 7,000 7,000
----------
148,150
----------
VIRGINIA--0.5%
Virginia State Housing Development Authority Commonwealth
Mortgage Bonds Series B Subseries B
3.88%, 06/10/98 29,700 29,700
----------
WASHINGTON--0.2%
Washington State Housing Finance Commission Alternative Minimum
Tax Bonds (Single Family Program) Series 1991A-S / (FGIC
Insurance)
3.94%, 04/01/98 3,655 3,655
Washington State Housing Finance Committee Variable Rate Single
Family Program Series 5A-S / (Bayerische Landesbank Girozentrale
LOC)
3.90%, 12/15/98 7,800 7,800
----------
11,455
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
WISCONSIN--0.7%
Wisconsin Housing & Economic Development Authority Home Ownership
Alternative Minimum Tax Home Ownership Revenue Bonds Series
1996G / (Bayerische Landesbank Girozentrale LOC)
4.05%, 06/01/98 $41,000 $ 41,013
----------
TOTAL MANDATORY PUT BONDS
(Cost $386,959) 386,959
----------
TAX AND REVENUE ANTICIPATION
NOTES--6.1%(B)
CALIFORNIA--1.8%
Alameda County, California Tax & Revenue Anticipation Notes
3.90%, 07/22/98 25,000 25,080
California School Cash Reserve Program Authority Pooled Tax &
Revenue Anticipation Notes / (AMBAC Insurance)
3.85%, 07/02/98 38,285 38,449
3.80%, 07/02/98 12,000 12,052
3.74%, 07/02/98 4,090 4,109
San Bernardino County, California Tax & Revenue Anticipation
Notes
3.85%, 06/30/98 20,000 20,062
----------
99,752
----------
DISTRICT OF COLUMBIA--0.5%
District of Columbia Tax and Revenue Anticipation Notes Series B
/ (Multiple Credit Enhancements)
3.87%, 09/30/98 30,000 30,135
----------
</TABLE>
- --------------------------------------------------------------------------------
56
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
IOWA--0.8%
Iowa State School Cash Anticipation Program (Iowa Corp. Waste
Certificates) Series 1997A / (FSA Insurance)
3.80%, 06/26/98 $37,000 $ 37,120
3.75%, 06/26/98 7,000 7,024
----------
44,144
----------
NEW MEXICO--2.0%
New Mexico State Tax and Revenue Anticipation Notes Series 1997A
3.84%, 06/30/98 115,000 115,368
----------
PUERTO RICO--1.0%
Puerto Rico Commonwealth Tax & Revenue Anticipation Notes Series
1
3.75%, 07/30/98 53,355 53,580
----------
TOTAL TAX AND REVENUE
ANTICIPATION NOTES
(Cost $342,979) 342,979
----------
REVENUE BONDS--2.8%(B)
DELAWARE--0.1%
Delaware Transportation Authority System Revenue Bonds / (AMBAC
Insurance)
3.85%, 07/01/98 3,645 3,656
----------
FLORIDA--0.0%
Village Center Community Development District Florida
Recreational Revenue Refunding Bonds Series 1998A / (MBIA
Insurance)
3.75%, 11/01/98 1,910 1,914
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
ILLINOIS--0.2%
Illinois Development Finance Authority Revenue Refunding Bonds
(Environmental WMX, Inc.) / (MBIA Insurance)
3.85%, 02/01/98 $ 8,500 $ 8,505
----------
IOWA--0.0%
Iowa Finance Authority Health Care Facilities Revenue Bonds
(Genesis Medical Center) / (MBIA Insurance)
3.84%, 07/01/98 375 377
Iowa Finance Authority Health Care Facilities Revenue Refunding
Bonds (Nebraska Methodist Health System Project) / (MBIA
Insurance)
3.90%, 11/01/98 510 512
----------
889
----------
LOUISIANA--0.0%
Baton Rouge, Louisiana Sales and Use Tax Public Improvement
Revenue Bonds / (FGIC Insurance)
3.85%, 08/01/98 1,370 1,402
----------
MARYLAND--0.1%
Maryland State Community Development Administration Department of
Housing and Community Development Revenue Bonds
3.84%, 04/01/98 2,740 2,740
----------
MICHIGAN--0.1%
Royal Oak, Michigan Hospital Finance Authority Hospital Revenue
Bonds (William Beaumont Hospital Project) Series C / (Escrowed
to Maturity with Government Securities)
3.82%, 01/01/99 3,000 3,161
3.82%, 01/01/99 2,500 2,631
----------
5,792
----------
</TABLE>
- --------------------------------------------------------------------------------
57
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
NEBRASKA--0.0%
Nebraska Investment Finance Authority Health Care Facilities
Revenue Refunding Bonds (Nebraska Methodist Health System
Project) / (MBIA Insurance)
3.91%, 11/01/98 $ 1,475 $ 1,479
----------
NEW HAMPSHIRE--0.0%
New Hampshire Municipal Bond Bank Revenue Bonds Series 1995A /
(AMBAC Insurance)
3.80%, 08/15/98 2,500 2,522
----------
NEW JERSEY--0.3%
New Jersey Health Care Facilities Financing Authority Refunding
Revenue Bonds (Atlantic City Medical Center) Series B /
(Escrowed to Maturity with Government Securities)
4.01%, 02/01/98 17,325 17,638
New Jersey Transportation Fund Transportation System Revenue
Bonds Series A / (Escrowed to Maturity with Government
Securities)
2.88%, 06/15/98 1,000 1,008
----------
18,646
----------
NEW MEXICO--0.5%
New Mexico State Severance Tax Revenue Bonds Series 1996A
3.80%, 07/01/98 4,800 4,836
New Mexico State Severance Tax Revenue Refunding Bonds Series
1997A
3.90%, 07/01/98 22,178 22,241
----------
27,077
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
NORTH CAROLINA--0.1%
North Carolina Municipal Power Agency #1 Catawba Electric Revenue
Refunding Bonds / (FGIC Insurance)
3.85%, 01/01/99 $ 2,885 $ 2,920
----------
OREGON--0.3%
Oregon State Housing and Community Services Department Mortgage
Revenue Bonds (Single Family Mortgage Program) Series 1997K
3.88%, 12/03/98 18,950 18,950
----------
PENNSYLVANIA--0.3%
Allegheny County, Pennsylvania Airport Revenue Refunding Bonds
(Pittsburgh International Airport Project) Series 1997A / (MBIA
Insurance)
3.81%, 01/01/99 5,200 5,259
Pennsylvania Housing Financing Authority Single Family Mortgage
Revenue Bonds Series 49
4.00%, 10/01/98 300 301
Pennsylvania State Higher Education Facilities Authority Revenue
Bonds (Allegheny General Hospital Project) Series A
4.00%, 09/01/98 1,000 1,015
Pennsylvania State Industrial Development Authority Revenue Bonds
(Economic Development Project) / (AMBAC Insurance)
3.79%, 07/01/98 1,230 1,234
3.82%, 01/01/99 3,000 3,063
Pennsylvania Turnpike Revenue Bonds Series O / (FGIC Insurance)
3.78%, 12/01/98 2,000 2,017
Philadelphia Water & Sewer Refunding Revenue Bonds / (MBIA
Insurance)
3.83%, 10/01/98 1,000 1,022
</TABLE>
- --------------------------------------------------------------------------------
58
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Philadelphia, Pennsylvania Airport Revenue Refunding Bonds
(Philadelphia Airport System Project) Series 1997A / (FGIC
Insurance)
3.77%, 06/15/98 $ 4,000 $ 4,022
Pittsburgh and Allegheny County, Pennsylvania Revenue Refunding
Bonds series 1991A / (AMBAC Insurance)
3.80%, 07/15/98 500 505
----------
18,438
----------
SOUTH CAROLINA--0.1%
Piedmont South Carolina Municipal Power Agency Electric Revenue
Bonds Series 1985B / (FGIC Insurance)
3.80%, 01/01/99 2,570 2,620
----------
SOUTH DAKOTA--0.3%
South Dakota Housing Development Authority Homeowners Mortgage
Bonds Series 1997C
3.85%, 03/26/98 9,180 9,180
South Dakota Housing Development Authority Homeownership Mortgage
Bonds Series 1997D / (Escrowed to Maturity with Government
Securities)
3.85%, 03/26/98 5,815 5,815
----------
14,995
----------
TEXAS--0.0%
Houston Housing Financial Corp. Single Family Mortgage Revenue
Refunding Bonds Series 1993A / (FSA LOC)
3.33%, 06/01/98 1,140 1,143
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
VIRGINIA--0.0%
Virginia College Building Authority Educational Facilities
Revenue Bonds (Equipment Leasing Program) Series 1995
3.80%, 08/01/98 $ 2,000 $ 2,014
----------
WASHINGTON--0.5%
Grays Harbor County, Washington Public Utility #001 Electric
Revenue Refunding Bonds / (AMBAC Insurance)
3.83%, 01/01/99 1,030 1,037
Washington Public Power Supply System Revenue Refunding Bonds
(Nuclear Project #2) Series 1997A
3.90%, 07/01/98 14,005 14,045
Washington Public Power Supply System Revenue Refunding Bonds
(Nuclear Project #2) Series B
3.90%, 07/01/98 2,275 2,282
Washington State Public Power Supply System Revenue Refunding
Bonds (Nuclear Project #2) Series A
4.00%, 07/01/98 3,000 3,009
----------
20,373
----------
TOTAL REVENUE BONDS
(Cost $156,075) 156,075
----------
BOND ANTICIPATION NOTES--2.3%(b)
IOWA--0.0%
Coralville, Iowa Bond Anticipation Notes Series 1997D
4.05%, 05/01/98 1,700 1,702
----------
NEW JERSEY--1.7%
Atlantic City, New Jersey Bond Anticipation Notes
3.89%, 08/27/98 11,350 11,376
Bordentown County, New Jersey Bond Anticipation Notes
3.75%, 01/15/98 2,645 2,646
</TABLE>
- --------------------------------------------------------------------------------
59
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Bridgeton, New Jersey Bond Anticipation Notes
3.90%, 09/11/98 $ 2,234 $ 2,239
Delanco Township, New Jersey Bond Anticipation Notes
3.90%, 12/09/98 900 901
East Brunswick Township, New Jersey General Obligation Bond
Anticipation Notes
3.90%, 04/15/98 13,735 13,753
Fairfield Township, New Jersey Bond Anticipation Notes
3.65%, 03/24/98 2,700 2,702
Lacey Township, New Jersey Bond Anticipation Notes
3.80%, 04/30/98 570 571
Monroe Township, New Jersey Middlesex County Bonds Anticipation
Notes Series 1997-1998
4.00%, 07/30/98 2,220 2,225
North Bergen Township, New Jersey Board of Education Promissory
Notes Series 1997-1998
3.75%, 03/13/98 2,410 2,411
Princeton, New Jersey Borough Bonds Anticipation Notes
3.75%, 08/07/98 4,082 4,094
Rahway Township, New Jersey Bond Anticipation Notes
3.80%, 12/23/98 3,195 3,208
Roxbury Township, New Jersey Bond Anticipation Notes Series
1997-1998
3.65%, 02/13/98 13,984 13,990
South Orange Village Township, New Jersey Bond Anticipation Notes
3.83%, 05/01/98 4,892 4,894
Stafford Township, New Jersey Bond Anticipation Notes
3.80%, 05/15/98 2,100 2,102
Trenton, New Jersey Bond Anticipation Notes
3.85%, 03/11/98 12,270 12,278
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Vernon Township, New Jersey School District Bond Anticipation
Notes
3.85%, 12/04/98 $ 5,000 $ 5,018
Vineland, New Jersey Bonds Anticipation Notes Series 1997-1998
3.82%, 08/14/98 3,955 3,965
West Deptford Township, New Jersey Bond Anticipation Notes
3.80%, 06/23/98 2,000 2,002
----------
90,375
----------
OHIO--0.1%
Ottawa Hills, Ohio Local School District Bonds Anticipation Notes
3.80%, 08/05/98 5,000 5,013
----------
WISCONSIN--0.5%
Lake Geneva, Wisconsin Joint School District #01 Bond
Anticipation Notes
3.87%, 10/30/98 10,000 10,010
Lake Geneve Genoa City, Wisconsin Unified High School District
Bond Anticipation Notes
3.87%, 10/30/98 10,000 10,011
Manitowoc, Wisconsin Public School District Bond Anticipation
Notes
3.89%, 10/01/98 10,000 10,008
----------
30,029
----------
TOTAL BOND ANTICIPATION NOTES
(Cost $127,119) 127,119
----------
VARIABLE RATE TENDER OPTION
BONDS--2.2%(a)(c)
FLORIDA--0.3%
Florida State General Obligation Tender Option Bond Partnership
(BTP-247) / (Bankers Trust Tender Option)
4.28%, 01/09/98 9,885 9,885
</TABLE>
- --------------------------------------------------------------------------------
60
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Florida State General Obligation Tender Option Bond Partnership
(BTP-248) / (Bankers Trust Tender Option)
4.25%, 01/09/98 $ 9,300 $ 9,300
----------
19,185
----------
HAWAII--0.4%
Hawaii State Housing Finance & Development Corp.Tender Option
Bond Partnership / (Bank of America LOC)
4.25%, 01/09/98 24,995 24,995
----------
ILLINOIS--0.2%
Chicago, Illinois Metropolitan Water Reclamation District Greater
Chicago General Obligation Tender Option Bond Partnership (Cook
County) (BTP-71) / (Automatic Data Processing, Inc. Tender
Option)
4.35%, 01/09/98 9,870 9,870
----------
MINNESOTA--0.1%
Minnesota State Various Purpose General Obligation Sports Health
Club Tax Tender Option Bond Partnership (BTP-65) / (Automatic
Data Processing, Inc. Tender Option & Escrowed to Maturity with
Government Securities)
4.10%, 01/09/98 4,455 4,455
----------
MISSISSIPPI--0.2%
Mississippi Home Corp. Single Family Variable Rate Certificates
Series 1997G / (Bank of America LOC)
4.25%, 01/09/98 12,495 12,495
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
NEW YORK--0.6%
New York City, New York General Obligation Tender Option Bonds
Partnership (Corestates Merlot Program) Series 1997C /
(Corestates Bank N.A. & MBIA Insurance)
4.20%, 01/09/98 $28,825 $ 28,825
----------
PENNSYLVANIA--0.2%
Philadelphia, Pennsylvania Water and Waste Water Revenue Tender
Option Partnership Series 1993 (PT-151) / (Capital Guaranty
Insurance Co. & Bayerische Hypotheken LOC)
4.25%, 01/09/98 9,670 9,670
Southeast Pennsylvania Transportation Authority Special Revenue
Tender Option Bond Partnership (PA-314) / (FGIC Insurance &
Merrill Lynch Capital Services LOC)
4.25%, 01/09/98 2,700 2,700
----------
12,370
----------
WASHINGTON--0.1%
King County, Washington Unlimited Tax General Obligation Tender
Option Bond Partnership Series 1993C (BTP-56) / (Automatic Data
Processing, Inc. Tender Option)
4.17%, 01/09/98 6,365 6,365
----------
WISCONSIN--0.1%
Wisconsin State Public Improvement General Obligation Tender
Option Bond Partnership (BTP-62) / (Automatic Data Processing,
Inc. Tender Option & Escrowed to Maturity with Government
Securities)
4.09%, 01/09/98 4,500 4,500
----------
</TABLE>
- --------------------------------------------------------------------------------
61
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
TOTAL VARIABLE RATE TENDER OPTION BONDS
(Cost $123,060) $ 123,060
----------
OPTIONAL PUT BONDS--1.8%(B)
CALIFORNIA--0.2%
California Higher Education Loan Authority Student Loan Revenue
Bonds Series 1995E-5 / (SLMA LOC)
3.95%, 06/01/98 $10,000 10,000
----------
MISSOURI--0.7%
Missouri State Environmental Improvement & Energy Resources
Authority Pollution Control Revenue Bonds (Union Electric Co.)
Series 1985A / (Swiss Bank LOC)
3.95%, 06/01/98 41,890 41,890
----------
NEW HAMPSHIRE--0.1%
New Hampshire Higher Education & Health Facilities Authority
Revenue Bonds (Dartmouth College) Series 1985A-G
3.95%, 06/01/98 5,000 5,000
----------
TEXAS--0.8%
Grapevine, Texas Industrial Development Corp. Airport Revenue
Bonds (Singer County Project) / (Bank of Montreal LOC)
3.90%, 04/01/98 18,975 18,975
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1992B / (SLMA LOC)
3.95%, 09/01/98 6,000 6,000
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1993B
3.90%, 02/01/98 11,000 11,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Greater East Texas Higher Education Authority Student Loan
Revenue Bonds Series 1995B / (SLMA LOC)
4.00%, 07/01/98 $10,000 $ 10,000
----------
45,975
----------
TOTAL OPTIONAL PUT BONDS
(Cost $102,865) 102,865
----------
FIXED RATE TENDER OPTION
BONDS--1.3%(b)(e)
CONNECTICUT--0.1%
Connecticut State General Obligation General Purpose Tender
Option Bond Partnership Series 1991A (BTP-151) / (Bankers Trust
Tender Option)
3.70%, 01/14/98 7,365 7,365
----------
GEORGIA--0.3%
Georgia State Public Improvement General Obligation Tender Option
Bond Partnership Series 1993B & 1993C (BTP-135) / (Bankers Trust
Tender Option)
3.75%, 01/14/98 3,865 3,865
Georgia State Public Improvement General Obligation Tender Option
Bond Partnership Series 1993B & 1993C (BTP-140) / (Bankers Trust
Tender Option)
3.75%, 01/14/98 4,575 4,575
Georgia State Public Improvement General Obligation Tender Option
Bond Partnership Series 1994B (BTP-148) / (Bankers Trust Tender
Option & Escrowed to Maturity with Government Securities)
3.75%, 01/14/98 7,100 7,100
----------
15,540
----------
</TABLE>
- --------------------------------------------------------------------------------
62
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
SOUTH CAROLINA--0.1%
South Carolina State Capital Improvement Revenue Refunding Tender
Option Bond Partnership Series 1992B (BTP-147) / (Bankers Trust
Tender Option)
3.75%, 01/14/98 $ 5,370 $ 5,370
----------
TEXAS--0.7%
Regents of the University of Texas Permanent University Fund
Revenue Tender Option Bond Partnership Series 1992A (BTP-143) /
(Escrowed to Maturity with Government Securities, Permanent
University Fund Guaranty & Bankers Trust Tender Option)
3.75%, 01/14/98 10,685 10,685
Texas State Public Finance Authority General Obligation Tender
Option Bond Partnership Series 1994A (BTP-127) / (Bankers Trust
Tender Option)
3.75%, 01/14/98 14,980 14,980
Texas State Public Financing Authority General Obligation Tender
Option Bond Partnership Series 1993B (BTP-116) / (Bankers Trust
Tender Option)
3.75%, 01/14/98 10,170 10,170
----------
35,835
----------
WASHINGTON--0.1%
Washington State Public Power Supply System Nuclear Project #2
Revenue Refunding Tender Option Bond Partnership Series 1993B
(BTP-137) / (Bankers Trust Tender Option)
3.75%, 01/14/98 6,685 6,685
----------
TOTAL FIXED RATE TENDER OPTION BONDS
(Cost $70,795) 70,795
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
REVENUE ANTICIPATION NOTES--1.2%(B)
CALIFORNIA--0.2%
California State Revenue Anticipation Notes Series 1997 - 1998
3.63%, 06/30/98 $ 400 $ 402
3.62%, 06/30/98 10,000 10,040
----------
10,442
----------
MASSACHUSETTS--0.3%
Massachusetts Bay Transit Authority Revenue Anticipation Notes
Series 1997A
3.82%, 02/27/98 14,000 14,007
3.75%, 02/27/98 4,700 4,703
----------
18,710
----------
NEW YORK--0.7%
New York City, New York Revenue Anticipation Notes / (Multiple
Credit Enhancements)
3.73%, 06/30/98 19,500 19,571
3.60%, 06/30/98 20,000 20,083
----------
39,654
----------
TOTAL REVENUE ANTICIPATION NOTES
(Cost $68,806) 68,806
----------
TAX ANTICIPATION NOTES--0.8%(B)
NEW JERSEY--0.4%
Fort Lee, New Jersey Tax Anticipation Notes
3.90%, 02/02/98 6,500 6,502
Trenton, New Jersey School District Notes
3.90%, 10/01/98 3,149 3,157
Trenton, New Jersey Tax Anticipation Notes
3.90%, 10/01/98 15,700 15,739
----------
25,398
----------
</TABLE>
- --------------------------------------------------------------------------------
63
<PAGE>
SCHWAB MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
NEW YORK--0.4%
Suffolk County, New York Tax Anticipation Notes Series 1998I /
(Multiple Credit Enhancements)(d)
3.64%, 08/13/98 $20,000 $ 20,074
----------
TOTAL TAX ANTICIPATION NOTES
(Cost $45,472) 45,472
----------
GENERAL OBLIGATION BONDS--0.7%(B)
ARIZONA--0.1%
Maricopa County, Arizona School District 210 General Obligation
Bonds Series 1995B
3.85%, 07/01/98 3,500 3,570
----------
CONNECTICUT--0.0%
Connecticut State General Obligation Bonds
3.78%, 12/15/98 1,500 1,517
----------
GEORGIA--0.0%
Fulton County, Georgia Revenue Refunding Bonds
3.83%, 01/01/99 2,160 2,170
----------
ILLINOIS--0.1%
Bolingbrook Park District, Illinois General Obligation Bonds /
(MBIA Insurance)
3.80%, 01/01/99 1,650 1,653
Chicago Park, Illinois District General Obligation Refunding
Bonds / (FGIC Insurance)
3.83%, 01/01/99 2,000 2,032
Chicago. Illinois General Obligation Bonds Series 1995B / (FGIC
Insurance)
3.90%, 01/01/98 1,595 1,595
----------
5,280
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
MARYLAND--0.0%
Anne Arundel County, Maryland General Obligation Bonds
3.55%, 09/01/98 $ 2,110 $ 2,123
MASSACHUSETTS--0.0%
Massachusetts General Obligation Bonds / (FGIC Insurance)
3.75%, 06/01/98 1,000 1,005
----------
NEVADA--0.0%
Clark County, Nevada General Obligation Bonds / (FGIC Insurance)
3.90%, 06/01/98 2,460 2,481
----------
NEW JERSEY--0.1%
Hamilton Township, New Jersey General Obligation Bonds / (MBIA
Insurance)
3.75%, 08/01/98 1,500 1,507
----------
New Jersey General Obligation Bonds
3.90%, 01/15/99 1,000 1,025
----------
New Jersey Unlimited General Obligation Bonds
3.82%, 01/01/99 1,000 1,012
----------
3,544
----------
NEW MEXICO--0.1%
Albuquerque, New Mexico General Obligation Bonds Series 1992B(d)
3.65%, 07/01/98 4,000 4,020
----------
OKLAHOMA--0.0%
Tulsa, Oklahoma General Obligation Refunding Bonds Series 1992B
3.70%, 12/01/98 2,390 2,434
----------
PENNSYLVANIA--0.2%
Allegheny County, Georgia Unlimited General Obligation Bonds
Series C-43 / (MBIA Insurance)
3.74%, 09/15/98 600 604
</TABLE>
- --------------------------------------------------------------------------------
64
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Philadelphia, Pennsylvania School District Refunding General
Obligation Bonds Series 1993A / (MBIA Insurance)
3.82%, 07/01/98 $ 5,000 $ 5,016
----------
5,620
----------
TENNESSEE--0.0%
Shelby County, Tennessee General Obligation Revenue Refunding
Bonds Series A
4.00%, 08/01/98 655 660
----------
TEXAS--0.1%
Texas State General Obligation Bonds
3.77%, 10/01/98 3,000 3,092
Travis County, Texas Limited Tax Certificate of Obligation Bonds
3.63%, 03/01/98 1,300 1,303
----------
4,395
----------
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
WASHINGTON--0.0%
Thurston County, Washington General Obligation Refunding Bonds /
(MBIA Insurance)
3.70%, 08/01/98 $ 2,260 $ 2,273
----------
TOTAL GENERAL OBLIGATION BONDS
(Cost $41,092) 41,092
----------
CERTIFICATES OF PARTICIPATION--0.0%(b)
GEORGIA--0.0%
Atlanta, Georgia Certificates of Participation (Atlanta Pretrial
Detention Center Project) / (MBIA Insurance)
3.70%, 12/01/98 1,630 1,649
----------
TOTAL CERTIFICATES OF PARTICIPATION
(Cost $1,649) 1,649
----------
TOTAL INVESTMENTS--100%
(Cost $5,618,618) $5,618,618
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
VARIABLE RATE OBLIGATIONS--59.4%(a)
ABAG Financing Authority for Non-Profit Organization Certificates
of Participation (Bentley School) / (Banque Nationale de Paris
LOC)
3.85%, 01/07/98 $ 4,000 $ 4,000
ABAG Financing Authority for Non-Profit Organization Certificates
of Participation (Lucile Salter Packard Project) / (AMBAC
Insurance & Bayerische Landesbank SBPA)
3.35%, 01/07/98 6,050 6,050
ABAG Financing Authority Variable Rate Multi Family Housing
Revenue Bonds (Mountain View Apartments) Series 1997A /
(Comerica Bank LOC)
4.10%, 01/07/98 1,750 1,750
Alameda County, California Industrial Development Authority
Industrial Revenue Bonds (Aitchison Family Project) Series 1993A
/ (Wells Fargo Bank LOC)
3.70%, 01/07/98 2,840 2,840
Alameda County, California Industrial Development Authority
Industrial Revenue Bonds (Scientific Technology Project) Series
1994A / (Banque Nationale de Paris LOC)
3.70%, 01/07/98 3,000 3,000
Alameda-Contra Costa, California School Financial Authority
Certificates of Participation Capital Improvement Finance
Project / (Canadian Imperial Bank of Commerce LOC)
3.90%, 01/07/98 850 850
Anaheim, California Certificates of Participation (Anaheim
Memorial Hospital Assoc. Project) / (AMBAC Insurance & ABN-Amro
SPA)
3.35%, 01/07/98 1,070 1,070
Anaheim, California Certificates of Participation (Police
Facility Financing Project) / (AMBAC Insurance & Industrial Bank
of Japan SPA)
3.35%, 01/07/98 750 750
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Anaheim, California Housing Authority Multi-Family Housing
Revenue Bonds (Casa Grande Apartments) Series 1997A / (FNMA LOC)
4.15%, 01/07/98 $ 3,795 $ 3,795
Anaheim, California Housing Authority Multi-Family Housing
Revenue Bonds (Heritage Village Apartments Project) Series 1992A
/ (Multiple Credit Enhancements)
3.80%, 01/07/98 3,385 3,385
Anaheim, California Housing Authority Multi-Family Housing
Revenue Bonds (Port Trinidad Apartments) Series 1997C / (FNMA
LOC)
4.15%, 01/07/98 2,140 2,140
Auburn, California Unified School District Certificates of
Participation
3.85%, 01/07/98 10,750 10,750
Big Bear Lake, California Industrial Development Revenue
Certificates of Participation (Southwest Gas Corp. Project)
Series A / (Union Bank of Switzerland LOC)
3.40%, 01/07/98 27,800 27,800
California Alternative Energy Source Financing Authority GE
Capital Corp. Arroyo Series 1993B
3.40%, 01/07/98 4,860 4,860
California Department of Water Resources / (Corestates Bank N.A.
LOC)
4.10%, 06/01/98 21,915 21,915
California Economic Development Financing Authority Industrial
Development Revenue Bonds (Calco Project) / (Wells Fargo Bank
LOC)
4.10%, 01/07/98 1,100 1,100
California Health Facilities Financing Authority Catholic Health
Care / (Multiple Credit Enhancements)
3.35%, 01/07/98 20,700 20,700
</TABLE>
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66
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Health Facilities Financing Authority Revenue Bonds
(Adventist Health System--Sutter Health) Series 1991A /
(Toronto-Dominion Bank LOC)
3.80%, 01/07/98 $ 9,800 $ 9,800
California Health Facilities Financing Authority Revenue Bonds
(Catholic Health Care) Series 1995C / (MBIA Insurance & Rabobank
Nederland N.V. SPA)
3.90%, 01/07/98 16,500 16,500
California Health Facilities Financing Authority Revenue Bonds
(Catholic Health Care) Series 1996B / (MBIA Insurance & Rabobank
Nederland N.V. SBPA)
3.90%, 01/07/98 12,500 12,500
California Health Facilities Financing Authority Revenue Bonds
(Catholic Health Care) Series 1996D / (MBIA Insurance & Rabobank
Nederland N.V. SBPA LOC)
3.90%, 01/07/98 2,400 2,400
California Health Facilities Financing Authority Revenue Bonds
(Catholic Healthcare) Series 1988B / (MBIA Insurance & Morgan
Guaranty Trust Co.--New York SBPA)
3.90%, 01/07/98 8,900 8,900
California Health Facilities Financing Authority Revenue Bonds
(Children's Hospital Project) Series 1991 / (MBIA Insurance &
Swiss Bank SBPA)
3.85%, 01/07/98 6,400 6,400
California Health Facilities Financing Authority Revenue Bonds
(Kaiser Permanente Medical Center) Series 1993A
3.45%, 01/07/98 8,200 8,200
California Health Facilities Financing Authority Revenue Bonds
(Kaiser Permanente Medical Center) Series 1993B
3.45%, 01/07/98 1,600 1,600
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Health Facilities Financing Authority Revenue Bonds
(Scripps Memorial Hospital) Series 1985B / (MBIA Insurance &
Morgan Guaranty Trust Co.--New York SBPA)
3.80%, 01/07/98 $15,120 $ 15,120
California Health Facilities Financing Authority Revenue Bonds
(Scripps Memorial Hospital) Series 1991A / (MBIA Insurance &
Morgan Guaranty Trust Co.--New York SBPA)
3.80%, 01/07/98 11,180 11,180
California Health Facilities Financing Authority Revenue Bonds
(St. Francis Hospital) Series 1995E / (MBIA Insurance & Rabobank
Nederland N.V. SBPA)
3.90%, 01/07/98 4,800 4,800
California Health Facilities Financing Authority Revenue Bonds
(St. Francis Hospital) Series 1995F / (MBIA Insurance & Rabobank
Nederland N.V. SBPA)
3.90%, 01/07/98 30,000 30,000
California Housing Finance Authority Revenue Bonds (Multi-Family
Housing III) Series 1997B / (Multiple Credit Enhancements)
3.65%, 01/07/98 14,600 14,600
California Pollution Control Finance Authority Solid Waste
Disposal / (Union Bank of California LOC)
3.50%, 01/07/98 9,520 9,520
California Pollution Control Financing Authority Pollution
Control Refunding Revenue Bonds (Pacific Gas & Electric Company)
Series 1996C / (Bank of America LOC)
4.90%, 01/01/98 6,200 6,200
California Pollution Control Financing Authority Pollution
Control Revenue Bonds (Shell Oil Corporation) Series 1991A
4.90%, 01/01/98 100 100
</TABLE>
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67
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Pollution Control Financing Authority Pollution
Control Revenue Bonds (Shell Oil Project) Series A
4.90%, 01/01/98 $ 800 $ 800
California Pollution Control Financing Authority Resource
Recovery Revenue Bonds (Arco Project) Series 1994A
5.00%, 01/01/98 1,900 1,900
California Pollution Control Financing Authority Resource
Recovery Revenue Bonds (OMS Equity of Stanislaus) / (Swiss Bank
LOC)
5.05%, 01/01/98 2,945 2,945
California Pollution Control Financing Authority Resource
Recovery Revenue Bonds (Sanger Project) Series 1990A / (Credit
Suisse LOC)
3.40%, 01/07/98 2,800 2,800
California Pollution Control Financing Authority Revenue Bonds
(Green Team of San Jose Project) / (Wells Fargo Bank LOC)
3.50%, 01/07/98 5,000 5,000
California Pollution Control Financing Authority Revenue Bonds
(Pacific Gas & Electric Company, Project) / (Swiss Bank LOC)
3.45%, 01/07/98 112,100 112,100
California Pollution Control Financing Authority Revenue Bonds
(Pacific Gas & Electric Company, Project) Series 1996B /
(Rabobank Nederland N.V. LOC)
3.55%, 01/07/98 110,500 110,500
California Pollution Control Financing Authority Revenue Bonds
(Reynolds Metals Co. Project) Series 1985 / (National
Westminster Bank PLC LOC)
3.45%, 01/07/98 1,300 1,300
California Pollution Control Financing Authority Revenue Bonds
(Southdown, Inc. Project) Series B / (Societe Generale LOC)
3.80%, 01/07/98 3,900 3,900
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986A
4.20%, 01/01/98 $ 1,100 $ 1,100
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986B
3.90%, 01/01/98 1,300 1,300
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986C
4.20%, 01/01/98 8,400 8,400
California Pollution Control Financing Authority Revenue Bonds
(Southern California Edison) Series 1986D
4.20%, 01/01/98 1,400 1,400
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Athens Disposal Co. Project) Series
1995A / (Wells Fargo Bank LOC)
3.50%, 01/07/98 9,900 9,900
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Burrtec Waste Industries Project) Series
1995A / (Union Bank LOC)
3.50%, 01/07/98 3,010 3,010
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Colmac Energy Project) Series 1990A /
(Swiss Bank LOC)
3.40%, 01/07/98 12,900 12,900
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Colmac Energy Project) Series 1990B /
(Swiss Bank LOC)
3.40%, 01/07/98 17,915 17,915
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Colmac Energy Project) Series 1990C /
(Swiss Bank LOC)
3.40%, 01/07/98 2,490 2,490
</TABLE>
- --------------------------------------------------------------------------------
68
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Contra Costa Services) Series 1995A /
(Bank of America LOC)
3.45%, 01/07/98 $ 4,200 $ 4,200
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Edco Disposal Corp. Project) Series
1996A / (Wells Fargo Bank LOC)
3.50%, 01/07/98 9,900 9,900
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Shell Oil Company Martinez) Series 1996B
/ (Shell Corp. Guaranty)
3.40%, 01/07/98 42,800 42,800
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Shell Oil Company Project) Series 1994B
4.90%, 01/01/98 6,000 6,000
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Solag Disposal Project) Series 1997A /
(Wells Fargo Bank LOC)
3.50%, 01/07/98 4,000 4,000
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Talco Plastics) Series 1997A / (Wells
Fargo Bank LOC)
4.00%, 01/07/98 4,300 4,300
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Taormina Industries Project) Series
1994B / (Sanwa Bank LOC)
4.00%, 01/07/98 12,000 12,000
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Taormina Industries Project) Series
1996A / (Sanwa Bank LOC)
4.00%, 01/07/98 6,850 6,850
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Various California Waste Recovery)
Series 1996A / (Wells Fargo Bank LOC)
3.50%, 01/07/98 $ 1,815 $ 1,815
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (West Valley Project) Series 1997A /
(Union Bank of California LOC)
3.50%, 01/07/98 9,500 9,500
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Western Waste Industrial) Series 1994A /
(Union Bank of California LOC)
4.30%, 01/07/98 6,000 6,000
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds / (Union Bank of California LOC)
3.50%, 01/07/98 2,150 2,150
California State Economic Development Financial Authority Revenue
Bonds (Costa Macoroni Project) / (Wells Fargo Bank LOC)
4.10%, 01/07/98 3,710 3,710
California State Economic Development Financing Authority
Industrial Development Revenue Bonds (Gaiser Tool Project) /
(Bank of America LOC)
3.70%, 01/07/98 3,385 3,385
California State Economic Development Financing Authority
Industrial Development Revenue Bonds (Serra Microchassis
Project)
4.90%, 01/01/98 500 500
California State Economic Development Financing Authority
Industrial Development Revenue Bonds (Serra Mission Project)
Series 1997A / (Dresdner Bank AG LOC)
4.90%, 01/01/98 2,900 2,900
</TABLE>
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69
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California State Economic Development Financing Authority Revenue
Bonds (Boyd Furniture) / (Chase Manhattan LOC)
4.00%, 01/07/98 $ 8,000 $ 8,000
California State Economic Development Financing Authority Revenue
Bonds (Bucks Center for Aging Project) / (California State
Teachers Retirement & Canadian Imperial Bank of Commerce LOC)
3.35%, 01/07/98 42,500 42,500
California State Economic Development Financing Authority Revenue
Bonds (Killion Industry's Project) / (Union Bank of California
LOC)
4.00%, 01/07/98 6,500 6,500
California Statewide Communities Development Corp. Industrial
Development Revenue Bonds (Drip in Irrigation Co.) / (Bank of
America NT & SA LOC)
3.80%, 01/07/98 3,600 3,600
California Statewide Community Development Assoc. Multi-Family
Housing Revenue Bonds (Kimberly Woods Project) Series 1995B /
(FNMA Collateral Agreement)
3.50%, 01/07/98 11,400 11,400
California Statewide Community Development Authority Apartment
Development Revenue Bonds Series 1995A-3 / (FNMA Collateral
Agreement)
3.45%, 01/07/98 45,460 45,460
California Statewide Community Development Authority Industrial
Development Revenue Bonds Series 1997B (Biocol Investments LP) /
(Union Bank LOC)
4.05%, 01/07/98 1,500 1,500
California Statewide Community Development Authority Multi-Family
Housing (Plaza Club Apartments) Series 1997A / (Comerica Bank
LOC)
3.95%, 01/07/98 8,900 8,900
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Statewide Community Development Authority Revenue
Bonds Certificates of Participation (Kaiser Foundation
Hospitals)
3.45%, 01/07/98 $12,200 $ 12,200
California Statewide Community Development Authority Revenue
Refunding Bonds Certificates of Participation (St. Joseph Health
System)
3.30%, 01/01/98 18,950 18,950
California Statewide Community Development Authority Series
1995-A7 / (FNMA Collateral Agreement)
4.50%, 01/07/98 2,000 2,000
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (13th I Associates Project) / (Union
Bank LOC)
4.00%, 01/07/98 5,315 5,315
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Aerostar Properties Project) / (Union
Bank of California LOC)
3.85%, 01/07/98 4,645 4,645
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Agricultural Products, Inc. Project)
/ (Union Bank of California LOC)
4.05%, 01/07/98 1,400 1,400
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Arm Inc. Project) Series 1994A /
(Bank of Tokyo-Mitsubishi Ltd. LOC)
4.05%, 01/07/98 1,050 1,050
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Cowden Metal Stamping) / (Union Bank
of California LOC)
4.05%, 01/07/98 2,165 2,165
</TABLE>
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70
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (D.V. Industries) Series 1994A / (Bank
of Tokyo-Mitsubishi Ltd. LOC)
4.05%, 01/07/98 $ 1,315 $ 1,315
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Flambeau Airmold Project) / (Norwest
Bank Minnesota N.A. LOC)
3.80%, 01/07/98 2,850 2,850
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Industrial Dynamics, Co. Project) /
(Union Bank of California LOC)
4.05%, 01/07/98 4,650 4,650
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Pacific Handy Cutter Products
Project) / (Union Bank of California LOC)
4.05%, 01/07/98 900 900
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Packaging Innovation Project) Series
1994A / (Bank of Tokyo-Mitsubishi Ltd. LOC)
4.05%, 01/07/98 2,875 2,875
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (The Diamond Foods Project) Series
1991 / (Union Bank of California LOC)
4.05%, 01/07/98 1,415 1,415
California Statewide Community Development Corp. Industrial
Development Revenue Bonds (Z-Nix Co. Inc. Project) / (Union Bank
of California LOC)
4.05%, 01/07/98 760 760
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Statewide Community Development Corp. Industrial
Development Revenue Bonds / (California State Teachers
Retirement System LOC)
3.80%, 01/07/98 $ 1,000 $ 1,000
California Statewide Multi-Family Housing Authority Revenue Bonds
(Woodsong Apartments) Series 1997B / (FNMA LOC)
4.15%, 01/07/98 3,427 3,427
California Statewide Multi-Family Housing Authority Variable
Security (Sunrise of Moraga) Series 1997G / (Heller Financial
Inc. LOC)
4.05%, 01/07/98 2,400 2,400
Carlsbad, California Multi-Family Housing Revenue Refunding Bonds
Certificates of Participation (La Costa Apartment Project)
Series 1993A / (Bank of America LOC)
3.90%, 01/07/98 11,720 11,720
Concord, California Multi-Family Housing Mortgage Revenue Bonds
(Bel Air Apartments Project) Series 1986A / (Bank of America
LOC)
3.80%, 01/07/98 3,000 3,000
Concord, California Multi-Family Housing Revenue Bonds (Cal Hill
Apartments) Series 1989A / (U.S. Bank of Washington LOC)
3.75%, 01/07/98 2,600 2,600
Contra Costa County, California Multi-Family Housing Mortgage
Revenue Bonds (El Cerrito Project) Series A / (Bank of America
LOC)
3.80%, 01/07/98 980 980
Duarte, California Redevelopment Agency Certificates of
Participation (Johnson Duarte Partners Project) Series 1984B /
(Bank of America LOC)
3.90%, 01/07/98 1,600 1,600
</TABLE>
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71
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Duarte, California Redevelopment Agency Certificates of
Participation (Piken Duarte Partners Project) Series 1984A /
(Bank of America LOC)
3.90%, 01/07/98 $ 4,250 $ 4,250
Eastern California Municipal Water District Water & Sewer Revenue
Certificates of Participation Series 1993B / (FGIC Insurance &
Industrial Bank of Japan SPA)
3.85%, 01/07/98 15,700 15,700
El Cajon, California Multi-Family Housing Revenue Bonds (Pinewood
Apartments) / (FHLB LOC)
4.00%, 01/07/98 1,450 1,450
Encinitas, California Multi-Family Housing Revenue Refunding
Bonds (Torrey Pines Project) Series A / (Bank of America LOC)
3.65%, 01/07/98 8,100 8,100
Foothill, California Eastern Transportation Corridor Agency Toll
Road Revenue Bonds Series 1995B / (Morgan Guaranty Trust
Co.--New York LOC)
3.85%, 01/07/98 7,200 7,200
Foothill, California Eastern Transportation Corridor Agency Toll
Road Revenue Bonds Series 1995C / (Credit Suisse LOC)
3.35%, 01/07/98 1,500 1,500
Foothill, California Eastern Transportation Corridor Agency Toll
Road Revenue Bonds Series 1995D / (Industrial Bank of Japan LOC)
4.15%, 01/07/98 10,000 10,000
Fremont, California Multi-Family Housing Revenue Refunding
Certificates of Participation (Amber Court Apartments Project)
Series 1990A / (Bank of Tokyo-Mitsubishi Ltd. LOC)
3.60%, 01/07/98 10,000 10,000
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Fresno, California Industrial Development Authority Variable
Security (Keiser Corporation) / (Comerica Bank LOC)
4.00%, 01/07/98 $ 2,295 $ 2,295
Fresno, California Multi-Family Housing Variable Rate Revenue
Refunding Bonds (Heron Pointe Apartments) Series 1996A / (First
Interstate Bank of California LOC)
3.65%, 01/07/98 10,300 10,300
Glenn, California Industrial Development Authority Revenue Bonds
(Land O' Lakes Project) / (Sanwa Bank LOC)
4.60%, 01/07/98 1,900 1,900
Grand Terrace, California Community Redevelopment Agency
Multi-Family Housing Revenue Bonds (Mount Vernon Villas Project)
Series 1985A / (Industrial Bank of Japan LOC)
4.20%, 01/07/98 8,485 8,485
Independence City, California Lease Finance Authority Revenue
Bonds (Pooled Project) Series 1988 / (National Westminster Bank
PLC LOC)
3.40%, 01/07/98 540 540
Indio, California Multi-Family Redevelopment Bonds Refunding
Housing Mortgages (Carreon Apartments ) Series 1996A / (Redlands
Bank & FHLB LOC)
3.90%, 01/07/98 3,950 3,950
Irvine Ranch Water District Capital Improvement Revenue Bonds
Series 1986 / (Toronto-Dominion Bank LOC)
5.00%, 01/01/98 200 200
Irvine Ranch Water District Consolidated Revenue Refunding Bonds
(Districts 102, 103, 105 & 106) / (Commerzbank AG LOC)
5.00%, 01/01/98 190 190
</TABLE>
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72
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Irvine Ranch, California Public Facilities & Infrastructure
Authority Lease Revenue Capital Improvement Bonds Series 1987 /
(National Westminster Bank PLC LOC)
3.80%, 01/07/98 $ 1,600 $ 1,600
Irvine Ranch, California Water District Consolidated District
Numbers 140, 240, 105, 250 / (Bank of America LOC)
5.00%, 01/01/98 1,000 1,000
Irvine Ranch, California Water District Consolidated Revenue
Refunding Bonds Series 1993A / (Bank of America LOC)
4.85%, 01/01/98 400 400
Irvine Ranch-Orange County, California Water District General
Obligation Bonds (Districts 105, 140, 240, 250) Series 1985B /
(Bank of America LOC)
5.00%, 01/01/98 1,500 1,500
Irvine, California Improvement Bond Act 1915 Revenue Bonds
(Assessment District) / (Canadian Imperial Bank of Commerce LOC)
3.55%, 01/07/98 2,000 2,000
Irvine, California Improvement Bonds Act 1915 / (Societe Generale
LOC)
5.00%, 01/01/98 14,800 14,800
Kern County, California Certificates of Participation (Kern
Public Facilities Project) Series 1986C / (Union Bank of
Switzerland LOC)
3.35%, 01/07/98 11,200 11,200
Kern County, California Certificates of Participation (Kern
Public Facilities Project) Series A / (Union Bank of Switzerland
LOC)
3.35%, 01/07/98 5,200 5,200
Lancaster, California Redevelopment Agency Multi-Family Revenue
Bonds (Woodcreek Garden Apartments Project) Series 1985J / (Bank
of Tokyo-Mitsubishi Ltd. LOC)
4.05%, 01/07/98 9,800 9,800
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Livermore, California Certificates of Participation (Reverse
Osmosis Project / (National Westminster Bank PLC LOC)
4.00%, 01/01/98 $ 1,900 $ 1,900
Livermore, California Multi-Family Housing Revenue Refunding
Bonds (Arbors Apartment Project) Series 1991A / (Bank of Tokyo-
Mitsubishi Ltd. LOC)
4.30%, 01/07/98 9,005 9,005
Livermore, California Multi-Family Housing Revenue Refunding
Bonds (Diablo Vista Apartments Project) Series 1990A / (Union
Bank LOC)
3.80%, 01/07/98 6,950 6,950
Los Angeles County, California Certificates of Participation
Adjustable Convertible Extendable Securities (Los Angeles County
Museum of Art Project) Series 1985A / (Bank of America LOC)
3.50%, 01/07/98 3,300 3,300
Los Angeles County, California Certificates of Participation
Adjustable Convertible Extendable Securities (Los Angeles County
Museum of Art Project) Series 1985B / (Bank of America LOC)
3.50%, 01/07/98 3,500 3,500
Los Angeles County, California Housing Authority Multi-Family
Housing Revenue Bonds (Sand Canyon Villas Project) Series 1989A
/ (Industrial Bank of Japan LOC)
4.50%, 01/07/98 5,800 5,800
Los Angeles County, California Metropolitan Transportation
Authority Proposition C Second Senior Sales Tax Revenue
Refunding Bonds Series A / (MBIA Insurance & Credit Local De
France SBPA)
3.70%, 01/07/98 38,750 38,750
</TABLE>
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73
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Los Angeles County, California Multi-Family Housing Revenue Bonds
(Lucas Studios Project) Series 1991D / (Bank of America LOC)
4.10%, 01/07/98 $ 3,000 $ 3,000
Los Angeles County, California Multi-Family Mortgage Revenue
Refunding Bonds (Casden Community Complex) Series 1991C / (FHLB
LOC)
3.45%, 01/07/98 3,200 3,200
Los Angeles County, California Multi-Family Mortgage Revenue
Refunding Bonds (Valencia Village Project) Series 1984C /
(Industrial Bank of Japan LOC)
4.50%, 01/07/98 900 900
Los Angeles County, California Pension Revenue Refunding Bonds
Series 1996A / (AMBAC Insurance & Natwest Bank N.A. SBPA)
3.35%, 01/07/98 34,000 34,000
Los Angeles County, California Pension Revenue Refunding Bonds
Series 1996C / (Bank of Nova Scotia LOC)
3.35%, 01/07/98 1,200 1,200
Los Angeles County, California Transportation Commission Sales
Tax Revenue Refunding Bonds Series 1992A / (FGIC Insurance &
Bayerische Landesbank SBPA)
3.35%, 01/07/98 12,100 12,100
Los Angeles, California Community Redevelopment Agency
Certificates of Participation (Baldwin Hills Public Parking
Project) Series B / (Wells Fargo Bank LOC)
3.70%, 01/07/98 27,300 27,300
Los Angeles, California Community Redevelopment Agency
Certificates of Participation (Broadway Springs Center Project)
Series 1987 / (Bank of America LOC)
3.40%, 01/07/98 10,200 10,200
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Los Angeles, California Community Redevelopment Community Agency
Housing Revenue Bonds / (Barclays Bank PLC LOC)
4.00%, 01/07/98 $26,900 $ 26,900
Los Angeles, California Department Water and Power Electric Plant
Revenue Bonds Series 1 / (Multiple Credit Enhancements LOC)
4.10%, 06/19/98 19,995 19,995
Los Angeles, California Multi-Family Housing Revenue Bonds
(Beverly Park Apartments) / (Chase Manhattan LOC)
4.00%, 01/07/98 15,100 15,100
Los Angeles, United School District Variable Rate Certificate of
Participation (Belmont Learning Complex) Series 1997A /
(Commerzbank AG LOC)
3.60%, 01/01/98 22,000 22,000
Madera, California Public Financing Lease Revenue Municipal Golf
Course Revenue Refinancing Authority / (Union Bank of California
LOC)
4.30%, 01/07/98 1,950 1,950
Metropolitan Water District of Southern California Revenue
Refunding Bonds Series 1996A / (ABN-Amro Bank N.V. SBPA)
3.85%, 01/07/98 3,100 3,100
Modesto, California High School District & Modesto City School
District Certificates of Participation (Capital Facilities
Project) Series 1991 / (Bank of Tokyo-Mitsubishi Ltd. LOC)
3.50%, 01/07/98 4,775 4,775
Moorpark, California Multi-Family Housing Revenue Refunding Bonds
(Le Club Apartments Project) Series A / (Citibank LOC)
3.90%, 01/07/98 6,000 6,000
</TABLE>
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74
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
MSR Public Power Agency Subordinate Lien (San Juan Project)
Series 1997D / (MBIA Insurance & National Westminster Bank PLC
LOC)
3.85%, 01/07/98 $ 1,500 $ 1,500
Northern California Power Agency Public Power Refunding Revenue
Bonds (Geothermal Project 3A) / (AMBAC Insurance & Bank of Nova
Scotia LOC)
3.35%, 01/07/98 1,450 1,450
Orange County, California Apartment Development Revenue Bonds
Series 1985U / (Chase Manhattan LOC)
3.40%, 01/07/98 9,300 9,300
Orange County, California Apartment Development Revenue Bonds
Series 1985V / (MetLife Guaranty & Bank of America LOC)
3.95%, 01/07/98 15,150 15,150
Orange County, California Apartment Development Revenue Refunding
Bonds (Jess L. Frost Project) Series 1985B / (Wells Fargo Bank
LOC)
3.35%, 01/07/98 8,200 8,200
Orange County, California Apartment Development Revenue Refunding
Bonds (The Lakes Project #185) Series 1991A / (Citibank LOC)
4.00%, 01/07/98 32,050 32,050
Orange County, California Certificates of Participation (Florence
Crittenton Services Project) Series 1990 / (Swiss Bank LOC)
3.45%, 01/07/98 6,500 6,500
Orange County, California Sanitation District Certificates of
Participation (Districts 1, 2, 3, 6, 7 & 11) Series 1992C /
(FGIC Insurance & FGIC SPA)
4.75%, 01/01/98 1,600 1,600
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Orange County, California Sanitation District Certificates of
Participation (Sanitation Districts 1, 2, 3, 5, 6, 7 & 11)
Series 1992 / (AMBAC Insurance & Barclays Bank SBPA)
3.85%, 01/07/98 $24,970 $ 24,970
Orange County, California Water District Improvement Bond Act
1915 Revenue Bonds (Irvine Coast Assessment District) Number
88-1 / (Kredietbank, N.V. & Societe Generale LOC)
4.80%, 01/01/98 5,302 5,302
Panama Buena Vista, California Unified School District
Certificates of Participation (1994 Capital Improvement
Financing Project) / (Union Bank of California LOC)
4.35%, 01/07/98 4,000 4,000
Petaluma, California Community Multi-Family Housing Authority
(Oakmont at Petaluma) / (U.S. Bank N.A. LOC)
4.05%, 01/07/98 1,100 1,100
Pleasant Hill, California Multi-Family Housing Revenue Bonds
(Brookside Apartments Project) / (FNMA LOC)
3.35%, 01/07/98 5,400 5,400
Redlands, California Certificates of Participation (Water
Treatment Facilities Project) / (FGIC Insurance & FGIC SPA)
3.40%, 01/07/98 6,575 6,575
Riverside County, California Certificates of Participation
(Riverside County Public Facility Project) Series 1985C /
(Norwest Bank & CommerceBank LOC)
4.00%, 01/07/98 10,000 10,000
Riverside County, California Community Facilities District #88-4
(Winchester Ranch) / (Kredietbank, N.V. LOC)
3.40%, 01/07/98 16,300 16,300
</TABLE>
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75
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Riverside County, California Housing Authority Multi-Family
Housing Revenue Bonds (Briarwood Apartment Project) Series 1985C
/ (FHLB LOC)
3.35%, 01/07/98 $ 4,500 $ 4,500
Riverside County, California Industrial Development Authority
Revenue Bonds (Calmold Inc Project) / (Union Bank of California
LOC)
3.65%, 01/07/98 2,900 2,900
Riverside County, California Industrial Development Revenue Bonds
(Cryogenic Project) Series 1989B-1 / (Rabobank Nederland N.V.
LOC)
3.90%, 01/07/98 4,100 4,100
Riverside County, California Multi-Family Housing Revenue Bonds
(Ambergate Apartments) Series 1992A / (Union Bank of California
LOC)
4.15%, 01/07/98 3,000 3,000
Sacramento County, California Certificates of Participation
(Administration Center & Court House Project) / (Union Bank of
Switzerland LOC)
3.80%, 01/07/98 18,400 18,400
Sacramento County, California Housing Authority Multi-Family
Housing Revenue Bonds Series 1997A (Chesapeake Commons) / (Bank
One LOC)
4.00%, 01/07/98 20,000 20,000
Salinas, California Apartment Development Multi-Family Housing
Revenue Bonds (Mariner Villa Project) Series 1985B / (Bank of
America LOC)
3.65%, 01/07/98 2,725 2,725
San Bernardino County, California Certificates of Participation
(Glen Helen Blockbuster Pavilion Project) Series 1994C / (Bank
of Tokyo-Mitsubishi Ltd. LOC)
4.15%, 01/07/98 6,990 6,990
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
San Bernardino County, California Housing Authority Multi-Family
Housing (Mountclair Heritage) Series 1993A / (FHLB & California
Federal Bank LOC)
4.05%, 01/07/98 $ 4,620 $ 4,620
San Bernardino County, California Housing Authority Multi-Family
Housing (Rialto Heritage) Series 1993A / (FHLB LOC)
4.05%, 01/01/98 4,330 4,330
San Bernardino County, California Multi-Family Housing Revenue
Bonds (Western Properties Project IV) Series 1985 / (Bank of
America LOC)
3.65%, 01/07/98 4,100 4,100
San Diego, California Housing Authority Multi-Family Housing
Revenue Bonds (La Cima) Series 1985K / (Citibank LOC)
3.90%, 01/07/98 4,005 4,005
San Francisco, California City & County Housing Authority Multi-
Family Housing Revenue Bonds (737 Post Project) Series 1985D /
(Banque Nationale de Paris LOC)
3.65%, 01/07/98 16,800 16,800
San Francisco, California City & County Redevelopment Agency
Multi-Family Housing Revenue Bonds (Fillmore Center Project)
Series A-1 / (Citibank LOC)
3.35%, 01/07/98 26,500 26,500
San Francisco, California City & County Redevelopment Agency
Multi-Family Housing Revenue Bonds (Fillmore Center Project)
Series A-2 / (Citibank LOC)
3.40%, 01/07/98 3,750 3,750
San Francisco, California City & County Redevelopment Agency
Multi-Family Housing Revenue Bonds (Rincon Center Apartments)
Series 1985B / (Citibank LOC)
3.35%, 01/07/98 8,805 8,805
</TABLE>
- --------------------------------------------------------------------------------
76
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
San Jose, California Multi-Family Housing Revenue Authority
(Almeden Lake Apartments) Series 1997A / (Bank of America LOC)
3.60%, 01/07/98 $ 6,500 $ 6,500
San Jose, California Multi-Family Housing Revenue Bonds (Sienna
At Renaissance) Series 1996A / (Bank One Arizona LOC)
3.60%, 01/07/98 10,500 10,500
San Jose, California Redevelopment Agency Merged Area
Redevelopment Project Revenue Bonds / (Morgan Guaranty Trust
Co.--New York LOC)
3.40%, 01/07/98 5,000 5,000
San Jose, California Redevelopment Agency Merged Area
Redevelopment Project Series 96A / (Morgan Guaranty Trust
Co.--New York LOC)
3.50%, 01/07/98 10,600 10,600
San Lorenzo, California Unified School District Certificates of
Participation (Capital Improvement Financing Project) / (Banque
Nationale de Paris LOC)
4.15%, 01/07/98 17,000 17,000
Santa Ana, California Unified School District Certificates of
Participation (Land Acquisition Project) / (Banque Nationale
Paris LOC)
3.35%, 01/07/98 4,400 4,400
Santa Clara County, California Hospital Facility Authority
Revenue Bonds (El Camino Hospital District-Valley Medical Center
Project) Series 1985B / (National Westminster Bank PLC LOC)
3.50%, 01/07/98 7,800 7,800
Santa Clara County, California Multi-Family Housing Refunding
Revenue Bonds (Brairwood Apartments) Series 1996B / (FNMA LOC)
3.95%, 01/07/98 7,800 7,800
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Santa Clara County, California Multi-Family Housing Revenue Bonds
(Grove Garden Apartments) Series 1997A / (FNMA LOC)
3.95%, 01/07/98 $14,000 $ 14,000
Santa Clara, California Electric Revenue Bonds Series 1985A /
(National Westminster Bank PLC LOC)
3.40%, 01/07/98 12,300 12,300
Santa Clara, California Electric Revenue Bonds Series 1985B /
(National Westminster Bank PLC LOC)
3.40%, 01/07/98 11,200 11,200
Santa Clara, California Electric Revenue Bonds Series 1985C /
(National Westminster Bank PLC LOC)
3.40%, 01/07/98 8,100 8,100
Santa Cruz County, California Housing Authority Multi-Family
Housing Revenue Bonds (Paloma Del Mar Apartments Project) Series
1992A / (Bank of Tokyo-Mitsubishi Ltd. LOC)
4.05%, 01/07/98 7,700 7,700
Santa Fe Springs, California Industrial Development Authority
Revenue Bonds / (Wells Fargo Bank LOC)
3.85%, 01/30/98 4,000 4,000
Santa Rosa, California Multi-Family Housing Revenue Bonds (Quail
Run Apartments) Series 1997A / (U.S. Bank of Washington LOC)
4.05%, 01/07/98 3,000 3,000
South San Francisco, California Multi-Family Revenue Bonds
(Magnolia Plaza Apartments Project) Series A / (Wells Fargo Bank
LOC)
3.40%, 01/07/98 4,500 4,500
</TABLE>
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77
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Southern California Public Power Authority Refunding Revenue
Bonds (Palos Verdes Project) Series 1996B / (AMBAC Insurance &
Morgan Guaranty Trust Co.--New York LOC)
3.35%, 01/07/98 $ 1,800 $ 1,800
Southern California Public Power Authority Refunding Revenue
Bonds Series C / (AMBAC Insurance & Morgan Guaranty LOC)
3.35%, 01/07/98 1,050 1,050
Southern California Public Power Authority Revenue Bonds
(Southern Transmission Project) Series 1991 / (AMBAC Insurance &
Swiss Bank LOC)
3.35%, 01/07/98 13,900 13,900
Southern California Public Power Authority Revenue Refunding
Bonds (Southdown Transmission Project) Series 1996B / (FSA
Insurance & Morgan Guaranty Trust Co.--New York SPA)
3.35%, 01/07/98 37,500 37,500
Turlock, California Irrigation District Certificates of
Participation (Transmission Project, Municipal Utilities--Water
& Sewer) Series 1996A / (Societe Generale LOC)
3.50%, 01/07/98 2,200 2,200
Union City, California Multi-Family Housing Revenue Bonds
(Greenhaven Apartments) Series 1997A / (FNMA LOC)
3.95%, 01/07/98 10,975 10,975
Victor Valley, California Community College District Certificates
of Participation / (Multiple Credit Enhancements)
4.00%, 01/07/98 42,450 42,450
West Sacramento California Special Tax Revenue Bonds / (Wells
Fargo Bank LOC)
4.00%, 01/07/98 3,500 3,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
West Sacramento, California Special Class Tax Community
Facilities District #6 / (Union Bank of California LOC)
3.95%, 01/07/98 $ 4,250 $ 4,250
Westminster, California Redevelopment Agency Tax Allocation
Community Redevelopment Project / (AMBAC Insurance & ABN-Amro
SPA)
3.85%, 01/07/98 7,250 7,250
----------
TOTAL VARIABLE RATE
OBLIGATIONS (Cost $1,850,004) 1,850,004
----------
TAX-EXEMPT COMMERCIAL PAPER--20.4%(b)
Anaheim, California Tax-Exempt Commercial Paper / (Multiple
Credit Enhancements)
3.60%, 01/14/98 9,950 9,950
California Pollution Control Financing Authority Pollution
Control Revenue Bonds (California Edition) Series 1996D / (Union
Bank of Switzerland LOC)
3.65%, 02/25/98 17,000 17,000
California Pollution Control Financing Authority Pollution
Control Revenue Bonds (Southern California Edison) Series 1985A
3.55%, 02/05/98 12,000 12,000
3.55%, 02/17/98 6,500 6,500
3.55%, 03/11/98 4,900 4,900
California Pollution Control Financing Authority Pollution
Control Revenue Bonds (Southern California Edison) Series 1985B
3.55%, 02/17/98 2,200 2,200
3.55%, 03/11/98 2,100 2,100
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Calsan Inc. Project) Series 1996A /
(Wells Fargo Bank LOC)
3.50%, 01/07/98 12,000 12,000
</TABLE>
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78
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
California Pollution Control Financing Authority Solid Waste
Disposal Revenue Bonds (Thermal Energy Development) Series 1988A
/ (National Westminster Bank PLC LOC)
3.70%, 02/10/98 $24,700 $ 24,700
East Bay Municipal Utility District Tax-Exempt Commercial Paper /
(Westdeutsche Landesbank LOC)
3.80%, 01/16/98 2,000 2,000
3.65%, 02/09/98 10,000 10,000
3.60%, 02/09/98 500 500
3.75%, 02/18/98 3,500 3,500
3.60%, 02/18/98 30,850 30,850
3.65%, 03/06/98 16,700 16,700
Long Beach, California Harbor Tax-Exempt Commercial Paper /
(Multiple Credit Enhancements LOC)
3.70%, 02/15/98 32,100 32,100
3.65%, 03/11/98 4,500 4,500
Los Angeles County Capital Asset Leasing Corp Lease Revenue Tax-
Exempt Commercial Paper / (Multiple Credit Enhancements)
3.70%, 02/10/98 15,000 15,000
Los Angeles, California Wastewater System Commercial Paper
Revenue Notes / (Morgan Guaranty Trust Co.--New York SBPA LOC)
3.75%, 02/12/98 34,500 34,500
Metropolitan Water District of Southern California Tax-Exempt
Commercial Paper Program
3.60%, 02/25/98 10,000 10,000
Orange County, California Local Transportation Authority Sales
Tax Revenue Commercial Paper Notes / (Union Bank of Switzerland
LOC)
3.65%, 03/05/98 51,000 51,000
Riverside County, California Public Financing Authority Revenue
Bonds / (Westdeutsche Landesbank LOC)
3.55%, 02/17/98 28,537 28,537
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
San Diego Company Teeter Obligation Tax-Exempt Commercial Paper
Notes Series B / (Industrial Bank of Japan LOC)
4.70%, 01/05/98 $28,450 $ 28,450
San Diego County Teeter Obligation Tax-Exempt Commercial Paper
Series B / (Industrial Bank of Japan LOC)
3.75%, 01/14/98 24,813 24,813
San Joaquin County Transportation Authority Revenue Bonds /
(Westdeutsche Landesbank LOC)
3.65%, 01/15/98 3,000 3,000
State of California Commercial Paper / (Multiple Credit
Enhancement)
3.60%, 02/25/98 13,000 13,000
State of California Commercial Paper / (Multiple Credit
Enhancements)
3.55%, 02/11/98 10,000 10,000
3.50%, 02/19/98 15,475 15,475
3.65%, 03/05/98 18,800 18,800
3.70%, 03/09/98 18,500 18,500
State of California General Obligation Tax-Exempt Commercial
Paper Notes / (Multiple Credit Enhancements)
3.50%, 02/10/98 60,000 60,000
3.65%, 03/09/98 10,900 10,900
University of California Board of Regents Tax-Exempt Commercial
Paper Notes / (Multiple Credit Enhancements)
3.50%, 02/09/98 19,000 19,000
3.55%, 02/11/98 27,000 27,000
3.55%, 02/19/98 35,555 35,555
University of California Board of Regents Tax-Exempt Commercial
Paper Notes Series 1996A / (Multiple Credit Enhancements)
3.55%, 02/11/98 20,000 20,000
----------
TOTAL TAX-EXEMPT
COMMERCIAL PAPER
(Cost $635,030) 635,030
----------
</TABLE>
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79
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
TAX AND REVENUE ANTICIPATION
NOTES--12.9%(b)
Acalanes, California Unified High School District Tax & Revenue
Anticipation Notes
3.79%, 06/30/98 $ 6,000 $ 6,020
Alameda County, California Tax & Revenue Anticipation Notes
3.90%, 07/22/98 25,000 25,080
California School Cash Reserve Program Authority Pooled Tax &
Revenue Anticipation Notes / (AMBAC Insurance)
3.85%, 07/02/98 50,000 50,216
3.81%, 07/02/98 20,000 20,086
3.76%, 07/02/98 8,100 8,136
California Statewide Community Development Authority Tax &
Revenue Anticipation Notes Series A / (FSA Insurance)
3.80%, 06/30/98 102,000 102,339
Contra Costa County, California Tax & Revenue Anticipation Notes
Series A
3.77%, 07/01/98 2,425 2,433
Desert Sands, California Unified School District Tax & Revenue
Anticipation Notes
3.80%, 07/07/98 9,200 9,202
Hunting Beach, California Tax & Revenue Anticipation Notes
3.83%, 09/30/98 18,325 18,413
Los Angeles City, California Tax & Revenue Anticipation Notes
Series 1997--1998
3.89%, 06/30/98 15,000 15,043
Orange County, California Fire Authority Tax & Revenue
Anticipation Notes Series 1997-- 1998
3.90%, 09/17/98 4,500 4,511
Pleasanton, California Unified School District Tax & Revenue
Anticipation Notes
3.79%, 06/30/98 5,300 5,318
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Puerto Rico Commonwealth Tax & Revenue Anticipation Notes Series
1
3.75%, 07/30/98 $35,000 $ 35,148
Sacramento County California Tax & Revenue Anticipation Notes
Series 1997--1998
3.84%, 09/30/98 2,500 2,512
San Bernardino County, California Tax & Revenue Anticipation
Notes
3.85%, 06/30/98 50,000 50,154
3.77%, 06/30/98 7,000 7,023
San Diego County, California Tax & Revenue Anticipation Notes
Series 1997--1998 (Multiple Credit Enhancements)
3.76%, 09/30/98 3,000 3,016
San Francisco, California Unified School District Tax and Revenue
Anticipation Notes
3.87%, 10/30/98 2,000 2,010
Sunnyvale, California Tax & Revenue Anticipation Notes
3.80%, 06/30/98 5,000 5,017
Sutter County, California Office of Education Tax & Revenue
Anticipation Notes
3.83%, 10/29/98 7,120 7,158
Ventura County, California Tax & Revenue Anticipation Notes
3.85%, 06/30/98 12,000 12,023
West Contra Costa County, California Unified School District Tax
& Revenue Anticipation Notes
3.85%, 06/30/98 10,000 10,019
----------
TOTAL TAX AND REVENUE
ANTICIPATION NOTES
(Cost $400,877) 400,877
----------
REVENUE ANTICIPATION NOTES--2.6%(b)
California State Revenue Anticipation Notes Series 1997-1998
3.83%, 06/30/98 50,000 50,160
3.70%, 06/30/98 1,000 1,004
3.61%, 06/30/98 30,000 30,122
----------
TOTAL REVENUE
ANTICIPATION NOTES
(Cost $81,286) 81,286
----------
</TABLE>
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80
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
GENERAL OBLIGATION BONDS--1.6%(b)
California State General Obligation Bonds Series 1996
3.92%, 06/01/98 $13,430 $ 13,704
California State General Obligation Bonds Series 97
3.76%, 10/01/98 36,570 36,766
----------
TOTAL GENERAL OBLIGATION
BONDS (Cost $50,470) 50,470
----------
REVENUE BONDS--1.3%(b)
Metropolitan Water District of Southern California Revenue Bonds
Series 1997A
3.78%, 07/01/98 7,440 7,448
Modesto California Irrigation District Series A / (MBIA
Insurance)
3.58%, 10/01/98 4,305 4,320
Norco Real Estate Development Authority / (Escrowed in U.S.
Treasuries)
3.88%, 03/01/98 5,175 5,312
3.76%, 03/01/98 5,870 6,027
Orange County, California Apartment Revenue Bonds / (MBIA
Insurance)
3.88%, 07/01/98 1,500 1,508
Orange County, California Transportation Authority Sales Tax
Revenue Bonds
3.70%, 02/15/98 1,105 1,107
Puerto Rico Commonwealth Aqueduct & Sewer / (Escrowed in U.S.
Treasuries)
3.75%, 07/01/98 10,150 10,553
Sacramento, California Municipal Utilities District Electric
Revenue Bonds Series V / (Escrowed to Maturity with Government
Securities)
3.80%, 08/15/98 2,000 2,044
Sacramento, California Municipal Utility District Electric
Revenue Bonds Series 1988V / (Escrowed Inc. U.S. Treasuries)
3.75%, 08/15/98 2,000 2,089
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Santa Rosa, California Waste Water Project A / (FGIC Insurance)
3.54%, 09/01/98 $ 1,065 $ 1,066
----------
TOTAL REVENUE BONDS
(Cost $41,474) 41,474
----------
FIXED RATE TENDER OPTION
BONDS--1.2%(b)(e)
California State Department of Water Resources Revenue Bonds
(Central Valley Project) Series J3 Tender Option Bond
Partnership (BTP-141) / (Bankers Trust Tender Option)
3.70%, 01/14/98 5,155 5,155
Los Angeles County, California Transportation Commission Sales
Tax Revenue Bonds Tender Option Bond Partnership (BTP-146) /
(Bankers Trust Tender Option & Escrowed to Maturity with
Government Securities)
3.70%, 01/14/98 23,078 23,078
Metropolitan Water District of Southern California General
Obligation Revenue Refunding Bonds Series 1993A-1 & 1993A-2
Tender Option Bond Partnership (BTP-115) / (Bankers Trust Tender
Option)
3.70%, 01/14/98 10,145 10,145
----------
TOTAL FIXED RATE TENDER
OPTION BONDS (Cost $38,378) 38,378
----------
MANDATORY PUT BONDS--0.3%(b)
California Health Facilities Financing Authority Single Family
Mortgage Revenue Bonds / (Morgan Guaranty Trust Co.--New York
LOC)
3.70%, 04/01/98 8,610 8,610
----------
TOTAL MANDATORY PUT BONDS (Cost $8,610)
8,610
----------
</TABLE>
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81
<PAGE>
SCHWAB CALIFORNIA MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
VARIABLE RATE TENDER OPTION
BONDS--0.3%(a)(c)
Los Angeles, California Department of Water & Power Electric
Plant Revenue Refunding Bonds Series 1994 Tender Option Bond
Partnership (BTP-68) / (Automatic Data Processing, Inc. Tender
Option)
4.30%, 01/07/98 $ 5,195 $ 5,195
Metropolitan Water District of Southern California Revenue Bonds
Tender Option Bond Partnership (JPM-32B) / (Morgan Guaranty
Trust Tender Option)
4.05%, 01/07/98 3,000 3,000
----------
TOTAL VARIABLE RATE TENDER
OPTION BONDS (Cost $8,195) 8,195
----------
TOTAL INVESTMENTS--100%
(Cost $3,114,324) $3,114,324
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
- --------------------------------------------------------------------------------
82
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
VARIABLE RATE OBLIGATIONS--56.6%(a)
Albany, New York Industrial Development Agency Adjustable Rate
Revenue Bonds (Newkirk Products, Inc.) Series 1995A / (Fleet
Bank of New York LOC)
4.25%, 01/07/98 $ 1,000 $ 1,000
Babylon, New York Industrial Development Authority Revenue Bonds
(General Microwave) / (National Westminster Bank PLC LOC)
3.60%, 01/07/98 1,100 1,100
Cortland County, New York Industrial Development Agency Revenue
Bonds (General Signal Corp. Project) Series 1983 / (Wachovia
Bank LOC)
4.00%, 01/07/98 1,750 1,750
Erie County, New York Water Authority Water Revenue Bonds Series
1993B / (National Australia Bank LOC)
3.55%, 01/07/98 3,500 3,500
Franklin County, New York Industrial Development Agency Revenue
Bonds (Kes Chateaugay LP Project) Series A / (Bank of
Tokyo-Mitsubishi Ltd. LOC)
4.25%, 01/07/98 14,300 14,300
Monroe County, New York Industrial Development Agency Revenue
Bonds (ENBI Corp. Lease Rent Project) Series 1988 / (ABN-Amro
Bank N.V. LOC)
3.55%, 01/07/98 2,000 2,000
New York City Housing Development Corp Series A-2 / (Bayerische
Hypotheken Und Wechsel Bank LOC)
4.10%, 01/01/98 14,000 14,000
New York City Industrial Development Authority Revenue Bonds
(Allway Tools Incorporated Project) / (Citibank LOC)
4.15%, 01/07/98 1,970 1,970
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York City, New York Cultural Trust Resource Revenue
Adjustable Bonds (Solomon R. Guggenheim Project) Series 1990B /
(Swiss Bank LOC)
4.75%, 01/07/98 $ 500 $ 500
New York City, New York General Obligation Bonds Series 1993A9 /
(Morgan Guaranty Trust Co.--New York LOC)
3.70%, 01/01/98 1,000 1,000
New York City, New York General Obligation Bonds Series 1994B
Subseries B2 / (Bank Austria Aktiengesellschaft SBPA & MBIA
Insurance)
5.10%, 01/01/98 600 600
New York City, New York General Obligation Bonds Series 1995B
Subseries B-10 / (Union Bank of Switzerland LOC)
3.50%, 01/07/98 4,600 4,600
New York City, New York General Obligation Bonds Series 1995B
Subseries B-8 / (Bayerische Landesbank Girozentrale LOC)
3.50%, 01/07/98 7,400 7,400
New York City, New York Health & Hospital Corp. Health System
Revenue Bonds Series 1997A / (Morgan Guaranty Trust Co--New York
LOC)
3.50%, 01/01/98 2,000 2,000
New York City, New York Health & Hospital Corp. Health System
Revenue Bonds Series 1997C / (Toronto-Dominion Bank LOC)
3.55%, 01/07/98 6,000 6,000
New York City, New York Housing Development Corp. Multi-Family
Housing Mortgage Revenue Bonds (Columbus Gardens Project) Series
1993A / (Citibank LOC)
4.05%, 01/07/98 3,165 3,165
</TABLE>
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83
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York City, New York Housing Development Corp. Multi-Family
Housing Mortgage Revenue Bonds (Parkgate Tower Project) /
(Citibank LOC)
3.60%, 01/07/98 $17,470 $ 17,470
New York City, New York Industrial Development Agency Floating
Rate Revenue Bonds (White Plains Auto) / (Societe Generale LOC)
3.65%, 01/07/98 200 200
New York City, New York Industrial Development Agency Revenue
Bonds (Brooklyn Navy Yard Co.) Series 1995A / (Bank of America
LOC)
4.25%, 01/07/98 14,600 14,600
New York City, New York Industrial Development Agency Revenue
Bonds (Brooklyn Navy Yard Co.) Series 1995B / (Bank of America
LOC)
4.35%, 01/07/98 7,300 7,300
New York City, New York Industrial Development Authority Special
Facility Revenue Bonds (Korean Airlines Co. Project) Series
1997A / (Bankers Trust LOC)
3.60%, 01/07/98 20,900 20,900
New York City, New York Multi-Family Rental Housing Revenue Bonds
(Tribeca Tower Project) Series 1997A / (FNMA LOC)
3.55%, 12/31/97 9,000 9,000
New York City, New York Municipal Water Finance Authority Water &
Sewer System Revenue Bonds Series 1992C / (FGIC Insurance & FGIC
SPA)
5.10%, 01/01/98 680 680
New York City, New York Municipal Water Finance Authority Water &
Sewer System Revenue Bonds Series 1994C / (FGIC Insurance & FGIC
SBPA)
5.10%, 01/02/98 900 900
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York City, New York Municipal Water Finance Authority Water &
Sewer System Revenue Bonds Series 1995A / (FGIC Insurance)
4.15%, 01/01/98 $ 1,000 $ 1,000
New York State Dormatory Authority Revenue Bonds (New York
Foundling Charitable) / (Allied Irish Bank PLC LOC)
3.60%, 01/07/98 1,000 1,000
New York State Dormitory Authority Revenue Bonds (Masonic Hall
Asylum) / (AMBAC Insurance & Credit Local de France SBPA)
3.55%, 01/07/98 3,600 3,600
New York State Dormitory Authority Revenue Bonds (New York Public
Library) Series 1992B / (Canadian Imperial Bank of Commerce LOC)
3.50%, 01/07/98 1,500 1,500
New York State Energy Research & Development Authority Electric
Facilities Adjustable Rate Revenue Bonds (Long Island Lighting
Co. Project) Series 1993A / (Toronto-Dominion Bank LOC)
3.85%, 01/07/98 3,000 3,000
New York State Energy Research & Development Authority Electric
Facilities Adjustable Rate Revenue Bonds (Long Island Lighting
Co. Project) Series 1993B / (Toronto-Dominion Bank LOC)
3.85%, 01/07/98 6,000 6,000
New York State Energy Research & Development Authority Electric
Facilities Adjustable Rate Revenue Bonds (Long Island Lighting
Co. Project) Series 1994A / (Union Bank of Switzerland LOC)
3.80%, 01/07/98 5,000 5,000
</TABLE>
- --------------------------------------------------------------------------------
84
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York State Energy Research & Development Authority Pollution
Control Revenue Bonds (Central Hudson Gas & Electric Corp.
Project) Series 1985A / (Morgan Guaranty Trust Co.--New York
LOC)
4.00%, 01/07/98 $10,000 $ 10,000
New York State Energy Research & Development Authority Pollution
Control Revenue Refunding Bonds (New York Electric & Gas) /
(Union Bank of Switzerland LOC)
5.00%, 01/01/98 800 800
New York State Energy Research & Development Authority Pollution
Control Revenue Refunding Bonds (Niagara Mohawk Power) Series
1985A / (Toronto-Dominion Bank LOC)
4.50%, 01/01/98 1,700 1,700
New York State Energy Research & Development Authority Pollution
Control Revenue Refunding Bonds (Orange & Rockland Utilities,
Inc. Project) Series 1994A / (FGIC Insurance & Societe Generale
SBPA)
3.55%, 01/07/98 11,300 11,300
New York State Energy Research and Development Authority
Pollution Control Revenue Bonds (Rochester Gas and Electric
Corp.) / (MBIA Insurance)
3.55%, 12/31/97 1,800 1,800
New York State Environmental Facility Corp. Adjustable Rate
Tender Resource Recovery Revenue Bonds (OFS Equity of Huntington
Inc. Project) / (Union Bank of Switzerland LOC)
5.20%, 01/07/98 1,500 1,500
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York State Housing Finance Agency Multi-Family Housing
Revenue Bonds (Tribeca Park Housing Project) Series 1997A /
(Bayerische Hypotheken Und Wechsel Bank LOC)
3.90%, 01/07/98 $ 6,300 $ 6,300
New York State Housing Finance Agency Revenue Bonds (East 84th
Street Project) Series 1995A / (Fleet Bank of New York LOC)
3.60%, 01/07/98 3,700 3,700
New York State Housing Finance Agency Revenue Bonds (Mount Sinai
School of Medicine) Series 1984A / (Sanwa Bank LOC)
3.90%, 01/07/98 9,200 9,200
New York State Housing Finance Agency Revenue Bonds (Normandie
Court II) Series 1987A / (Bankers Trust Co. LOC)
4.00%, 01/07/98 5,800 5,800
New York State Housing Finance Agency Revenue Bonds (Union Square
South Housing) / (Bayerische Hypotheken Und Wechsel Bank LOC)
3.55%, 01/07/98 18,000 18,000
New York State Housing Finance Agency Revenue Bonds (West 50
Street Project) Series 1997A / (Fleet Bank of New York LOC)
3.60%, 01/07/98 10,400 10,400
New York State Local Government Assistance Corp. Revenue Bonds
Series 1993A / (Union Bank of Switzerland & Credit Suisse LOC)
3.50%, 01/07/98 4,300 4,300
New York State Local Government Assistance Corp. Revenue Bonds
Series 1994B / (Credit Suisse & Swiss Bank LOC)
3.50%, 01/07/98 400 400
New York State Local Government Assistance Corp. Revenue Bonds
Series 1995B / (Bank of Nova Scotia LOC)
3.55%, 01/07/98 4,800 4,800
</TABLE>
- --------------------------------------------------------------------------------
85
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York State Local Government Assistance Corp. Revenue Bonds
Series 1995G / (National Westminster Bank PLC LOC)
3.55%, 01/07/98 $ 5,400 $ 5,400
New York State Medical Care Facilities Financing Agency Revenue
Pooled Equipment Loan Program Series 1 / (Chemical Bank LOC)
3.70%, 01/07/98 2,200 2,200
Niagara County, New York Industrial Development Agency Revenue
Bonds (Allegheny Ludlum Steel Co.) Series 1984 / (PNC Bank LOC)
4.10%, 01/07/98 3,500 3,500
Niagara Falls, New York Bridge Commission Revenue Bonds Series
1993A / (FGIC Insurance & Credit Local de France SPA)
3.55%, 01/07/98 6,400 6,400
Schenectady, New York Industrial Development Agency Revenue Bonds
(Fortitech Holding Corp. Project) Series A / (Fleet Bank of New
York LOC)
4.25%, 01/07/98 1,400 1,400
St. Lawrence County, New York Industrial Development Agency
Environmental Improvement Revenue Bonds (Reynolds Metals
Project) Series 1995 / (Royal Bank of Canada LOC)
3.75%, 01/07/98 4,000 4,000
Suffolk County Water Authority Variable Rate Ban Series 1997 /
(Bank of Nova Scotia LOC)
4.05%, 01/07/98 5,000 5,000
Town of Islip, New York Industrial Development Revenue Magnum
Realty (Creative Bath Products) / (Chemical Bank LOC)
3.55%, 01/07/98 3,320 3,320
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Triborough Bridge & Tunnel Authority, New York Special Obligation
Bridge Revenue Bonds Series 1994 / (FGIC Insurance & FGIC SPA)
3.55%, 01/07/98 $ 2,900 $ 2,900
Yonkers, New York Industrial Development Agency Civic Facilities
Revenue Bonds (Consumers Union Facility Project) Series 1989 /
(Industrial Bank of Japan LOC)
3.50%, 01/07/98 1,500 1,500
Yonkers, New York Industrial Development Agency Civic Facilities
Revenue Bonds (Consumers Union Facility Project) Series 1991 /
(Industrial Bank of Japan LOC)
3.50%, 01/07/98 700 700
Yonkers, New York Industrial Development Agency Civic Facilities
Revenue Bonds (Consumers Union Facility Project) Series 1994 /
(AMBAC Insurance & Credit Local de France SBPA)
3.50%, 01/07/98 1,900 1,900
----------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $285,255) 285,255
----------
TAX-EXEMPT COMMERCIAL PAPER--13.0%(b)
Monroe County, New York Unlimited Tax Public Improvement General
Obligation Bonds / (Bank of Nova Scotia LOC)
3.65%, 03/10/98 4,500 4,500
New York City General Obligation Bonds Fiscal Series 1994H (FSA
LOC & State Street SPA)
3.75%, 02/10/98 1,500 1,500
New York City, New York Muni Assistance Corp. Tax-Exempt
Commercial Paper Notes Series 1997K-3 / (Landesbank
Hessen-Thuringen Girozentrale LOC)
3.70%, 02/25/98 16,800 16,800
</TABLE>
- --------------------------------------------------------------------------------
86
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
New York City, New York Municipal Water Finance Authority
Commercial Paper / (Credit Suisse LOC)
3.80%, 04/07/98 $10,000 $ 10,000
New York State Environmental Quality 86 Variable Rate General
Obligation Bonds Series 1997A / (Bayerische Landesbank &
Landesbank Hessen-Thurigen Girozentrale LOC)
3.70%, 03/05/98 5,000 5,000
New York State Environmental Quality Assurance Bonds /
(Bayerische Landesbank & Landesbank Hessen-Thuringen
Girozentrale LOC)
3.65%, 02/12/98 7,400 7,400
New York State Power Authority Tax-Exempt Commercial Paper Notes
3.80%, 02/12/98 5,000 5,000
New York State Power Authority Tax-Exempt Commercial Paper Notes
Series 2 / (Multiple Credit Enhancements)
3.70%, 02/10/98 15,000 15,000
----------
TOTAL TAX-EXEMPT COMMERCIAL PAPER (Cost $65,200)
65,200
----------
TAX ANTICIPATION NOTES--11.8%(b)
Central Islip, New York Unified School District Tax Anticipation
Notes
3.90%, 06/30/98 17,000 17,048
Nassau County, New York Tax Anticipation Note Series B
3.78%, 08/31/98 10,000 10,030
Patchogue-Medford, New York Unified School District Tax
Anticipation Notes
3.80%, 06/25/98 5,000 5,010
Suffolk County, New York Tax Anticipation Notes Series 1998I /
(Multiple Credit Enhancements)(d)
3.64%, 08/13/98 20,000 20,075
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
Western Islip, New York Union Free School District Tax
Anticipation Notes
3.87%, 06/30/98 $ 7,000 $ 7,011
----------
TOTAL TAX ANTICIPATION NOTES (Cost $59,174)
59,174
----------
BOND ANTICIPATION NOTES--8.1%(b)
Byram Hills, New York Central School District Bond Anticipation
Notes
3.75%, 05/08/98 2,500 2,504
Campbell-Savona, New York Consolidated Bond Anticipation Notes
Series 1997-98
3.95%, 09/03/98 9,000 9,017
Colonie, New York Bond Anticipation Notes Series B
3.75%, 04/17/98 2,052 2,055
East Hampton Township, New York Bond Anticipation Notes Series
1997B
3.96%, 04/16/98 4,519 4,526
Islip, New York Bond Anticipation Notes Series 1997-1998
3.85%, 07/24/98 5,350 5,362
Niagara-Wheatfield, New York Central School District Bond
Anticipation Notes
3.80%, 12/30/98 5,000 5,022
Queensbury, New York Unified School District (Warren County) Bond
Anticipation Notes
3.85%, 08/07/98 8,000 8,018
Union-Endicott County, New York School District Bond Anticipation
Notes
3.80%, 12/29/98 4,300 4,318
----------
TOTAL BOND ANTICIPATION NOTES
(Cost $40,822) 40,822
----------
</TABLE>
- --------------------------------------------------------------------------------
87
<PAGE>
SCHWAB NEW YORK MUNICIPAL MONEY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
VARIABLE RATE TENDER OPTION BONDS-- 3.0%(a)(c)
New York City, New York General Obligation Tender Option Bonds
Partnership (Corestates Merlot Program) Series 1997C /
(Corestates Bank N.A. & MBIA Insurance)
3.70%, 01/09/98 $15,000 $ 15,000
----------
TOTAL VARIABLE RATE TENDER OPTION BONDS (Cost $15,000)
15,000
----------
REVENUE BONDS--2.5%(b)
New York City, New York General Obligation Bonds Series 1994B-B7
/ (AMBAC Insurance & Escrowed to Maturity with Government
Securities)
5.10%, 01/01/98 1,100 1,100
New York State Environmental Facilities Corporation Pollution
Control Center State Water New York State Muni Water
3.19%, 06/15/98 6,270 6,299
New York State Thruway Authority General Revenue Bonds Series
1997D
3.85%, 01/01/98 5,180 5,180
----------
TOTAL REVENUE BONDS (Cost $12,579) 12,579
----------
OPTIONAL PUT BONDS--2.4%(b)
New York State Energy Research & Development Agency Pollution
Control Revenue Bonds (Long Island Lighting Co. Project) Series
1985B / (Deutsche Bank LOC)
3.60%, 03/01/98 12,000 12,000
----------
TOTAL OPTIONAL PUT BONDS (Cost $12,000)
12,000
----------
</TABLE>
<TABLE>
<CAPTION>
Par Value
------- ----------
<S> <C> <C>
GENERAL OBLIGATION BONDS--1.6%(b)
Long Beach County, New York School District General Obligation
Bonds / (FGIC Insurance)
3.84%, 11/15/98 $ 430 $ 432
Montgomery County, New York General Obligation Bonds / (FGIC
Insurance)
3.89%, 06/15/98 400 402
Nassau County, New York General Improvement Revenue Bonds Series
1995Q / (FGIC Insurance)
3.37%, 08/01/98 3,990 4,018
Phelps-Clifton Springs, New York Consolidated School District
General Obligation Revenue Bonds / (AMBAC Insurance & Escrowed
to Maturity with Government Securities)
3.78%, 06/15/98 1,025 1,033
Spencerport County, New York School District General Obligation
Bond / (FSA LOC)
3.84%, 11/15/98 545 550
Suffolk County Public Improvement Revenue Bonds Series 1996D /
(FGIC Insurance)
3.57%, 08/01/98 1,425 1,434
----------
TOTAL GENERAL OBLIGATION BONDS
(Cost $7,869) 7,869
----------
TAX AND REVENUE ANTICIPATION NOTES-- 1.0%(b)
Puerto Rico Commonwealth Tax & Revenue Anticipation Notes Series
1
3.76%, 07/30/98 5,000 5,021
----------
TOTAL TAX AND REVENUE ANTICIPATION NOTES (Cost $5,021)
5,021
----------
TOTAL INVESTMENTS--100%
(Cost $502,920) $ 502,920
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
- --------------------------------------------------------------------------------
88
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
Year ended December 31, 1997
For each security, cost (for financial reporting and federal income tax
purposes) and carrying value are the same.
(a) Variable rate securities. Interest rates vary periodically based on current
market rates. Rates shown are the effective rates as of the report date.
Dates shown represent the latter of the demand date or next interest rate
change date, which is considered the maturity date for financial reporting
purposes. For variable rate securities without demand features, the next
interest reset date is shown.
(b) Interest rates represent effective yield to put or call date at time of
purchase.
(c) Certain securities purchased by the Fund are private placement securities
exempt from registration by Section 4(2) of the Securities Act of 1933.
These securities generally are issued to institutional investors, such as
the Schwab Municipal Money Fund, Schwab California Municipal Money Fund,
and Schwab New York Municipal Money Fund. Any resale by the Fund must be in
an exempt transaction, normally to a qualified institutional buyer. At
December 31, 1997, the aggregate values of private placement securities
held by the Schwab Municipal Money Fund, Schwab California Municipal Money
Fund, and Schwab New York Municipal Money Fund were $123,060,000,
$8,195,000 and $15,000,000, respectively, which represented 2.23%, 0.27%
and 3.11%, respectively, of the net assets of each Fund. All of these
private placement investments were determined by the Investment Manager to
be liquid in accordance with procedures adopted by the Board of Trustees.
(d) Security traded on a delayed-delivery basis. Payment and delivery is
scheduled for a future time, generally within two weeks of entering into
the transaction. The transaction is subject to market fluctuation and to
the risk that the value may be more or less than the purchase price when
the transaction was initiated. The Fund has set aside sufficient investment
securities as collateral for securities purchased on a delayed-delivery
basis.
(e) Certain securities cannot be resold to the general public without prior
registration under the Securities Act of 1933. If the security is
subsequently registered and resold, the issuers would typically bear the
expense of all registrations at no cost to the fund. At December 31, 1997,
the aggregate value of the restricted securities held by Schwab Municipal
Money Fund and Schwab California Municipal Money Fund were $70,795,000 and
$38,378,000, respectively, which represented 1.29% and 1.24%, respectively,
of the net assets of each Fund. All of these restricted investments were
determined by the Investment Manager to be illiquid in accordance with
procedures adopted by the Board of Trustees.
- --------------------------------------------------------------------------------
89
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Abbreviations
- -------------
<S> <C>
FGIC Financial Guaranty Insurance Company
FHLB Federal Home Loan Bank
FNMA Federal National Mortgage Association
FNB First National Bank
FSA Financial Security Assurance
GNMA Government National Mortgage Association
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance Corporation
NCNB North Carolina NationsBank
N.R.U.-C.F.C. National Rural Utilities Cooperative Financing Corporation
SBPA Standby Purchase Agreement
SLMA Student Loan Marketing Association
SPA Securities Purchase Agreement
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
90
<PAGE>
- ------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
December 31, 1997
<TABLE>
<CAPTION>
Schwab Schwab
Schwab California New York
Municipal Municipal Municipal
Money Money Money
Fund Fund Fund
---------- ---------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at value (Cost: $5,618,618 $3,114,324 and $502,920,
respectively) $5,618,618 $3,114,324 $ 502,920
Cash 77 214 114
Receivables:
Interest 35,177 20,363 3,016
Investments sold 2,564 -- --
Fund shares sold 25,049 7,194 269
Deferred organization costs -- -- 12
Prepaid expenses 270 26 14
---------- ---------- -----------
Total assets 5,681,755 3,142,121 506,345
---------- ---------- -----------
LIABILITIES
Payables:
Dividends 21,131 11,407 1,796
Investments purchased 146,228 30,551 20,073
Fund shares redeemed 4,057 8,185 1,589
Investment advisory fees 263 138 20
Transfer agency and shareholder service fees 551 293 46
Other liabilities 455 210 63
---------- ---------- -----------
Total liabilities 172,685 50,784 23,587
---------- ---------- -----------
Net assets applicable to outstanding shares $5,509,070 $3,091,337 $ 482,758
---------- ---------- -----------
---------- ---------- -----------
NET ASSETS CONSIST OF:
Paid-in-capital $5,511,910 $3,092,113 $ 482,772
Accumulated net realized loss on investments sold (2,840) (776) (14)
---------- ---------- -----------
$5,509,070 $3,091,337 $ 482,758
---------- ---------- -----------
---------- ---------- -----------
PRICING OF SHARES
$0.00001 par value (unlimited shares authorized)
Outstanding Sweep Shares 4,426,564 2,155,276 357,233
Outstanding Value Advantage Shares-TM- 1,085,346 936,837 125,539
---------- ---------- -----------
5,511,910 3,092,113 482,772
Net asset value, offering and redemption price per each
Sweep and Value Advantage Share-TM- $1.00 $1.00 $1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
91
<PAGE>
- ------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (in thousands)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Schwab Schwab
Schwab California New York
Municipal Municipal Municipal
Money Money Money
Fund Fund Fund
----------- ----------- -----------
<S> <C> <C> <C>
Interest income $ 183,178 $ 95,236 $ 14,760
----------- ----------- -----------
Expenses:
Investment advisory and administration fees 20,308 11,372 1,867
Transfer agency and shareholder service fees:
Sweep Shares 18,463 8,702 1,401
Value Advantage Shares-TM- 1,998 1,835 237
Custodian fees 490 347 199
Registration fees 396 117 103
Professional fees 75 28 16
Shareholder reports 328 197 52
Trustees' fees 24 18 13
Amortization of deferred organization costs -- -- 5
Insurance and other expenses 615 257 70
----------- ----------- -----------
42,697 22,873 3,963
Less: expenses reduced and absorbed (see Note 4) (11,459) (6,774) (1,333)
----------- ----------- -----------
Total expenses incurred by Fund 31,238 16,099 2,630
----------- ----------- -----------
Net investment income 151,940 79,137 12,130
Net realized gain (loss) on investments sold (515) (44) 1
----------- ----------- -----------
Increase in net assets resulting from operations $ 151,425 $ 79,093 $ 12,131
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
92
<PAGE>
- ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Schwab Municipal Schwab California Municipal Schwab New York Municipal
Money Fund Money Fund Money Fund
---------------------------- ---------------------------- ----------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
---------------------------- ---------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 151,940 $ 116,741 $ 79,137 $ 55,047 $ 12,130 $ 7,339
Net realized gain (loss)
on investments sold (515) (477) (44) (68) 1 (9)
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets
resulting from
operations 151,425 116,264 79,093 54,979 12,131 7,330
------------- ------------- ------------- ------------- ------------- -------------
Dividends to shareholders
from net investment
income:
Sweep Shares (125,666) (104,911) (56,234) (45,951) (9,121) (6,338)
Value Advantage
Shares-TM- (26,274) (11,830) (22,903) (9,096) (3,009) (1,001)
------------- ------------- ------------- ------------- ------------- -------------
Total dividends to
shareholders (151,940) (116,741) (79,137) (55,047) (12,130) (7,339)
------------- ------------- ------------- ------------- ------------- -------------
Capital share transactions
(at $1.00 per share):
Proceeds from shares
sold 17,267,233 13,705,095 8,685,116 6,230,933 1,365,492 979,381
Net asset value of
shares issued in
reinvestment of
dividends 143,585 112,199 74,380 52,112 11,240 6,854
Less payments for shares
redeemed (16,378,232) (12,904,337) (7,991,713) (5,645,082) (1,231,270) (868,937)
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets
from capital share
transactions 1,032,586 912,957 767,783 637,963 145,462 117,298
------------- ------------- ------------- ------------- ------------- -------------
Total increase in net
assets 1,032,071 912,480 767,739 637,895 145,463 117,289
Net assets:
Beginning of period 4,476,999 3,564,519 2,323,598 1,685,703 337,295 220,006
------------- ------------- ------------- ------------- ------------- -------------
End of period $ 5,509,070 $ 4,476,999 $ 3,091,337 $ 2,323,598 $ 482,758 $ 337,295
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
93
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Schwab Municipal Money Fund
Sweep Shares
------------------------------------------------------------------
Year ended December 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.02 0.02
Net realized and unrealized gain (loss) on investments -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.03 0.03 0.03 0.02 0.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03) (0.02) (0.02)
---------- ---------- ---------- ---------- ----------
Total distributions (0.03) (0.03) (0.03) (0.02) (0.02)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (not annualized) 3.11% 2.92% 3.30% 2.32% 1.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) $4,423,841 $3,868,919 $3,403,837 $3,015,951 $2,423,317
Ratio of expenses to average net assets+ 0.66%++ 0.66% 0.66% 0.65% 0.63%
Ratio of net investment income to average net assets+ 3.06% 2.89% 3.25% 2.31% 1.92%
</TABLE>
- ---------------
+ The information contained in the above table is based on actual expenses for
the periods, after giving effect to the portion of expenses reduced and
absorbed by the Investment Manager and Schwab. Had these expenses not been
reduced and absorbed, the Fund's expense and net investment income ratios
would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of expenses to average net assets 0.90% 0.90% 0.91% 0.91% 0.93%
Ratio of net investment income to average net assets 2.83% 2.65% 3.00% 2.05% 1.62%
</TABLE>
++ This expense ratio excludes interest expenses, extraordinary expenses and
taxes. Had these expenses been included, the expense ratio would have been
0.67%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
94
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Schwab Municipal Money Fund
Value Advantage Shares-TM-
--------------------------------------
Year ended Period ended
December 31, December 31,
---------------------- ------------
1997 1996 1995(1)
---------- -------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
---------- -------- ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.02
Net realized and unrealized gain (loss) on investments -- -- --
---------- -------- ------------
Total from investment operations 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.02)
---------- -------- ------------
Total distributions (0.03) (0.03) (0.02)
---------- -------- ------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
---------- -------- ------------
---------- -------- ------------
TOTAL RETURN (not annualized) 3.32% 3.14% 1.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) $1,085,229 $608,080 $160,682
Ratio of expenses to average net assets+ 0.45%++ 0.45% 0.45%*
Ratio of net investment income to average net assets+ 3.29% 3.10% 3.50%*
</TABLE>
- ---------------
+ The information contained in the above table is based on actual expenses for
the periods, after giving effect to the portion of expenses reduced and
absorbed by the Investment Manager and Schwab. Had these expenses not been
reduced and absorbed, the Fund's expense and net investment income ratios
would have been:
<TABLE>
<S> <C> <C> <C>
Ratio of expenses to average net assets 0.72% 0.75% 0.95%*
Ratio of net investment income to average net assets 3.03% 2.80% 3.00%*
</TABLE>
++ This expense ratio excludes interest expenses, extraordinary expenses and
taxes. Had these expenses been included, the expense ratio would have been
0.46%.
(1) Period from July 7, 1995 (commencement of operations) to December 31, 1995.
* Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
95
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Schwab California Municipal Money Fund
Sweep Shares
------------------------------------------------------------------
Year ended December 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.02 0.02
Net realized and unrealized gain (loss) on investments -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.03 0.03 0.03 0.02 0.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03) (0.02) (0.02)
---------- ---------- ---------- ---------- ----------
Total distributions (0.03) (0.03) (0.03) (0.02) (0.02)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (not annualized) 2.95% 2.80% 3.20% 2.26% 1.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) $2,154,522 $1,816,112 $1,577,695 $1,293,883 $1,062,042
Ratio of expenses to average net assets+ 0.65%++ 0.65% 0.65% 0.64% 0.63%
Ratio of net investment income to average net assets+ 2.91% 2.77% 3.15% 2.25% 1.89%
</TABLE>
- ---------------
+ The information contained in the above table is based on actual expenses for
the periods, after giving effect to the portion of expenses reduced and
absorbed by the Investment Manager and Schwab. Had these expenses not been
reduced and absorbed, the Fund's expense and net investment income ratios
would have been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of expenses to average net assets 0.91% 0.92% 0.94% 0.94% 0.96%
Ratio of net investment income to average net assets 2.66% 2.50% 2.86% 1.95% 1.56%
</TABLE>
++ This expense ratio excludes interest expenses, extraordinary expenses and
taxes. Had these expenses been included, the expense ratio would have been
0.66%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
96
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Schwab California Municipal Money
Fund
Value Advantage Shares-TM-
------------------------------------
Year ended December
31, Period ended
-------------------- December 31,
1997 1996 1995(1)
-------- -------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.01
Net realized and unrealized gain (loss) on investments -- -- --
-------- -------- ------------
Total from investment operations 0.03 0.03 0.01
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.01)
-------- -------- ------------
Total distributions (0.03) (0.03) (0.01)
-------- -------- ------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
-------- -------- ------------
-------- -------- ------------
TOTAL RETURN (not annualized) 3.15% 3.01% 0.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) $936,815 $507,486 $108,008
Ratio of expenses to average net assets+ 0.45%++ 0.45% 0.45%*
Ratio of net investment income to average net assets+ 3.12% 2.98% 3.48%*
</TABLE>
- ---------------
+ The information contained in the above table is based on actual expenses for
the periods, after giving effect to the portion of expenses reduced and
absorbed by the Investment Manager and Schwab. Had these expenses not been
reduced and absorbed, the Fund's expense and net investment income ratios
would have been:
<TABLE>
<S> <C> <C> <C>
Ratio of expenses to average net assets 0.72% 0.77% 1.04%*
Ratio of net investment income to average net assets 2.86% 2.66% 2.89%*
</TABLE>
++ This expense ratio excludes interest expenses, extraordinary expenses and
taxes. Had these expenses been included, the expense ratio would have been
0.46%.
(1) Period from October 3, 1995 (commencement of operations) to December 31,
1995.
* Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
97
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Schwab New York Municipal Money Fund
Sweep Shares
------------------------------------
Year ended December
31, Period ended
-------------------- December 31,
1997 1996 1995(1)
-------- -------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03
Net realized and unrealized gain (loss) on investments -- -- --
-------- -------- ------------
Total from investment operations 0.03 0.03 0.03
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03)
-------- -------- ------------
Total distributions (0.03) (0.03) (0.03)
-------- -------- ------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
-------- -------- ------------
-------- -------- ------------
TOTAL RETURN (not annualized) 2.96% 2.74% 2.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) $357,221 $270,612 $204,863
Ratio of expenses to average net assets+ 0.69%++ 0.69% 0.63%*
Ratio of net investment income to average net assets+ 2.93% 2.71% 3.20%*
</TABLE>
- ---------------
+ The information contained in the above table is based on actual expenses for
the periods, after giving effect to the portion of expenses reduced and
absorbed by the Investment Manager and Schwab. Had these expenses not been
reduced and absorbed, the Fund's expense and net investment income ratios
would have been:
<TABLE>
<S> <C> <C> <C>
Ratio of expenses to average net assets 1.02% 1.04% 1.04%*
Ratio of net investment income to average net assets 2.62% 2.36% 2.79%*
</TABLE>
++ This expense ratio excludes interest expenses, extraordinary expenses and
taxes. Had these expenses been included, the expense ratio would have been
0.70%.
(1) Period from February 27, 1995 (commencement of operations) to December 31,
1995.
* Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
98
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Schwab New York Municipal Money
Fund
Value Advantage Shares-TM-
-----------------------------------
Year ended December
31, Period ended
------------------- December 31,
1997 1996 1995(1)
-------- ------- ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
-------- ------- ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.02
Net realized and unrealized gain (loss) on investments -- -- --
-------- ------- ------------
Total from investment operations 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment Income (0.03) (0.03) (0.02)
-------- ------- ------------
Total distributions (0.03) (0.03) (0.02)
-------- ------- ------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
-------- ------- ------------
-------- ------- ------------
TOTAL RETURN (not annualized) 3.21% 2.99% 1.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s) $125,537 $66,683 $15,143
Ratio of expenses to average net assets+ 0.45%++ 0.45% 0.45%*
Ratio of net investment income to average net assets+ 3.18% 2.98% 3.42%*
</TABLE>
- ---------------
+ The information contained in the above table is based on actual expenses for
the periods, after giving effect to the portion of expenses reduced and
absorbed by the Investment Manager and Schwab. Had these expenses not been
reduced and absorbed, the Fund's expense and net investment income ratios
would have been:
<TABLE>
<S> <C> <C> <C>
Ratio of expenses to average net assets 0.85% 1.01% 1.81%*
Ratio of net investment income to average net assets 2.80% 2.42% 2.06%*
</TABLE>
++ This expense ratio excludes interest expenses, extraordinary expenses and
taxes. Had these expenses been included, the expense ratio would have been
0.46%.
(1) Period from July 7, 1995 (commencement of operations) to December 31, 1995.
* Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
99
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Year ended December 31, 1997
1. DESCRIPTION OF THE FUND
The Schwab Municipal Money Fund, Schwab California Municipal Money Fund and
Schwab New York Municipal Money Fund (the "Funds"), are series of The Charles
Schwab Family of Funds (the "Trust"), a no-load, open-end investment management
company organized as a Massachusetts business trust on October 20, 1989 and
registered under the Investment Company Act of 1940, as amended.
The Funds offer multiple classes of shares--the Sweep Shares and the Value
Advantage Shares-TM-. Both classes represent interests in the same portfolio of
investments of the respective Fund and are substantially the same in all
respects, except that the classes are subject to different transfer agency and
shareholder service fees (see Note 3), investment minimums and certain other
expenses.
In addition to the three Funds described above, the Trust also offers--Schwab
Money Market Fund, Schwab Government Money Fund, Schwab U.S. Treasury Money
Fund, Schwab Value Advantage Money Fund-Registered Trademark-, Schwab
Institutional Advantage Money Fund-Registered Trademark-, Schwab Retirement
Money Fund-Registered Trademark- and Schwab Government Cash Reserves. (The
Schwab Government Cash Reserves was effective on October 20, 1997. However, the
Fund has not commenced operations.) The assets of each series are segregated and
accounted for separately.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
SECURITY VALUATION--Investments are stated at amortized cost which approximates
market value.
SECURITY TRANSACTIONS, INTEREST INCOME AND REALIZED GAINS (LOSSES)--Security
transactions are accounted for on a trade date basis (date the order to buy or
sell is executed). Interest income is accrued daily and includes amortization of
premium on investments. Realized gains and losses from security transactions are
determined on an identified cost basis. Income and realized gains (losses) are
allocated daily to each class of shares of a Fund based on the value of settled
shares outstanding of each respective class.
- --------------------------------------------------------------------------------
100
<PAGE>
- --------------------------------------------------------------------------------
DEFERRED ORGANIZATION COSTS--Costs incurred in connection with the organization
of the Funds are amortized on a straight-line basis over a five-year period from
each Funds' commencement of operations.
DIVIDENDS TO SHAREHOLDERS--Each Fund declares a daily dividend, equal to its net
investment income for that day, payable monthly. Dividends paid by a Fund with
respect to each class of shares are calculated in the same manner, at the same
time, and will be in the same amount except for the effect of expenses that may
be applied differently, as described below.
EXPENSES--Expenses arising in connection with a Fund are charged directly to
that Fund. Expenses common to all series of the Trust are generally allocated to
each series in proportion to their relative net assets. Expenses attributable to
both classes of shares of a Fund are allocated daily to each class of that Fund
based on the value of settled shares outstanding of each respective class.
Transfer agency, shareholder service fees and certain other expenses which are
class specific are calculated daily at the class level.
FEDERAL INCOME TAXES--It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income and realized net capital gains, if
any, to shareholders. Therefore, no federal income tax provision is required.
Each Fund is considered a separate entity for tax purposes.
All distributions paid by the Schwab Municipal Money Fund, Schwab California
Municipal Money Fund, and Schwab New York Municipal Money Fund for the year
ended December 31, 1997 qualify as exempt interest dividends for federal tax
purposes.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS--The Trust has investment
advisory and administration agreements with Charles Schwab Investment
Management, Inc. (the "Investment Manager"). For advisory services and
facilities furnished, each Fund pays an annual fee, payable monthly, of 0.46% of
the first $1 billion of average daily net assets, 0.41% of the next $1 billion
and 0.40% of such assets in excess of $2 billion. The Investment Manager has
reduced a portion of its fee for the year ended December 31, 1997 (see Note 4).
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS--The Trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of 0.45% and 0.25% of each Fund's average daily net
assets of the Sweep Shares and Value Advantage Shares, respectively. Schwab has
reduced a portion of its fee for the year ended December 31, 1997 (see Note 4).
- --------------------------------------------------------------------------------
101
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
OFFICERS AND TRUSTEES--Certain officers and trustees of the Trust are also
officers and/or directors of the Investment Manager and/or Schwab. During the
year ended December 31, 1997, the Trust made no direct payments to its officers
or trustees who are "interested persons" within the meaning of the Investment
Company Act of 1940, as amended. The Schwab Municipal Money Fund, Schwab
California Municipal Money Fund and Schwab New York Municipal Money Fund
incurred fees aggregating $55,000, related to the Trust's unaffiliated trustees.
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT MANAGER AND SCHWAB
The Investment Manager and Schwab guarantee that, through at least April 30,
1998, total operating expenses of each class of shares will not exceed the
percentages of the average daily net assets of that class shares, after waivers
and reimbursement, as shown below. For purposes of this guarantee, operating
expenses do not include interest expenses, extraordinary expenses, and taxes.
<TABLE>
<CAPTION>
Sweep Value Advantage
Shares Shares-TM-
<S> <C> <C>
- -----------------------------------------------------------------------------
Schwab Municipal Money Fund 0.66% 0.45%
- -----------------------------------------------------------------------------
Schwab California Municipal Money Fund 0.65% 0.45%
- -----------------------------------------------------------------------------
Schwab New York Municipal Money Fund 0.69% 0.45%
- -----------------------------------------------------------------------------
</TABLE>
For the year ended December 31, 1997, the total of such fees reduced by the
Investment Manager were $10,977,000, 6,548,000 and $1,192,000 for the Schwab
Municipal Money Fund, Schwab California Municipal Money Fund and Schwab New York
Municipal Money Fund, respectively, and the total of such fees reduced by Schwab
were $482,000, $226,000 and $141,000 for the Schwab Municipal Money Fund, Schwab
California Municipal Money Fund and Schwab New York Municipal Money Fund,
respectively.
- --------------------------------------------------------------------------------
102
<PAGE>
- --------------------------------------------------------------------------------
5. CAPITAL SHARE TRANSACTIONS
Each Fund offers two classes of shares: Sweep Shares and Value Advantage
Shares-TM-. Shares of each class represent interests in the same portfolio of
investments of the Fund. Transactions in capital shares were as follows, (in
thousands):
<TABLE>
<CAPTION>
Schwab Municipal Schwab California Schwab New York
Money Fund Municipal Money Fund Municipal Money Fund
------------------------------ -------------------------- -------------------------
Year ended December 31, Year ended December 31, Year ended December 31,
------------------------------ -------------------------- -------------------------
1997 1996 1997 1996 1997 1996
-------------- -------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from shares sold:
Sweep Shares $ 15,493,142 $ 12,710,212 $ 7,203,514 $ 5,448,674 $ 1,167,590 $ 868,824
Value Advantage
Shares-TM- 1,774,091 994,883 1,481,602 782,259 197,902 110,557
-------------- -------------- ------------ ------------ ------------ -----------
Total 17,267,233 13,705,095 8,685,116 6,230,933 1,365,492 979,381
-------------- -------------- ------------ ------------ ------------ -----------
Net asset value of shares
issued in reinvestment of
dividends:
Sweep Shares 120,622 102,508 53,926 44,907 8,549 6,081
Value Advantage
Shares-TM- 22,963 9,691 20,454 7,205 2,691 773
-------------- -------------- ------------ ------------ ------------ -----------
Total 143,585 112,199 74,380 52,112 11,240 6,854
-------------- -------------- ------------ ------------ ------------ -----------
Less payments for shares
redeemed:
Sweep Shares (15,058,403) (12,347,201) (6,918,999) (5,255,105) (1,089,531) (809,149)
Value Advantage
Shares-TM- (1,319,829) (557,136) (1,072,714) (389,977) (141,739) (59,788)
-------------- -------------- ------------ ------------ ------------ -----------
Total (16,378,232) (12,904,337) (7,991,713) (5,645,082) (1,231,270) (868,937)
-------------- -------------- ------------ ------------ ------------ -----------
Total increase in net
assets from capital
share transactions $ 1,032,586 $ 912,957 $ 767,783 $ 637,963 $ 145,462 $ 117,298
-------------- -------------- ------------ ------------ ------------ -----------
-------------- -------------- ------------ ------------ ------------ -----------
</TABLE>
- --------------------------------------------------------------------------------
103
<PAGE>
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Schwab Municipal Money Fund,
Schwab California Municipal Money Fund,
and Schwab New York Municipal Money Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Schwab Municipal Money Fund, Schwab
California Municipal Money Fund, and Schwab New York Municipal Money Fund (three
series constituting part of The Charles Schwab Family of Funds, hereafter
referred to as the "Trust") at December 31, 1997, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1997 by correspondence with the
custodian and brokers, and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
San Francisco, California
January 30, 1998
- --------------------------------------------------------------------------------
104
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
SCHWABFUNDS FAMILY-Registered Trademark-
The SchwabFunds Family includes a variety of funds to help meet your
investment needs. You can diversify your portfolio in a single step with our
asset allocation funds. Or you can customize your portfolio with a
combination of our stock funds as well as our taxable and tax-advantaged bond
and money funds.
SCHWAB ASSET ALLOCATION FUNDS
Schwab Asset Director-Registered Trademark--High Growth Fund
Schwab Asset Director--Balanced Growth Fund
Schwab Asset Director--Conservative Growth Fund
Schwab OneSource Portfolios--Growth Allocation
Schwab OneSource Portfolio--Balanced Allocation
SCHWAB STOCK FUNDS
Schwab 1000 Fund-Registered Trademark-
Schwab S&P 500 Fund
Schwab Analytics Fund-Registered Trademark-
Schwab Small-Cap Index Fund-Registered Trademark-
Schwab OneSource Portfolios--Small Company
Schwab International Index Fund-Registered Trademark-
Schwab OneSource Portfolios--International
SCHWAB BOND FUNDS
Schwab Bond Index Funds--Total and Short-Term Bond Market Index
Funds-Registered Trademark-
Schwab Tax-Free Bond Funds--Long-Term and Short/Intermediate
Schwab California Tax-Free Bond Funds--Long-Term and Short/Intermediate
SCHWAB MONEY FUNDS
Schwab offers an array of money funds that seek high current income with
safety and liquidity.(1) 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.-Registered Trademark-
Please call 1-800-435-4000 for a free prospectus and brochure for any of the
SchwabFunds.-Registered Trademark-
EACH PROSPECTUS PROVIDES MORE COMPLETE INFORMATION, INCLUDING FEES AND
EXPENSES.
PLEASE READ IT CAREFULLY BEFORE INVESTING.
This report must be preceded or accompanied by a current prospectus.
(1) Formerly known as the Schwab Government Bond Funds--Long-Term and
Short/Intermediate.
(2) Investments in money market funds are neither insured nor guaranteed by the
U.S. government, and there is no assurance that the funds will be able to
maintain a stable share price of $1.
<PAGE>
SCHWABFUNDS ==============
F A M I L Y -Registered Trademark- BULK RATE
U.S. POSTAGE
101 Montgomery Street PAID
San Francisco, California 94104 CHARLES SCHWAB
==============
INVESTMENT ADVISOR
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
101 Montgomery Street, San Francisco, CA 94104
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
- -C- 1996 Charles Schwab & Co., Inc. All rights reserved.
Member SPCNYSE.
Printed on recycled paper. CRS 20176 (0098-1082) TF5457(2/98)
FOLD
