SCHWABFUNDS-REGISTERED TRADEMARK-
SCHWAB
MONEY FUNDS
/ / SCHWAB MONEY MARKET FUND
/ / SCHWAB GOVERNMENT MONEY FUND
/ / SCHWAB U.S. TREASURY MONEY FUND
ANNUAL REPORT
AND
AN IMPORTANT NOTICE REGARDING
DELIVERY OF SHAREHOLDER
DOCUMENTS
Annual Report
December 31, 1999
<PAGE>
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission has adopted a rule permitting mutual
funds to deliver only one copy of shareholder documents, including prospectuses
and shareholder reports to fund investors with multiple accounts at the same
residential or post office box address. This practice is commonly called
"householding" and is intended to eliminate duplicate mailings of shareholder
documents.
As permitted by the rule, Schwab may begin indefinitely householding
prospectuses and shareholder reports for SchwabFunds.-Registered Trademark-
ADDITIONAL COPIES OF SHAREHOLDER DOCUMENTS
ALL SCHWABFUNDS PROSPECTUSES AND SHAREHOLDER REPORTS ARE AVAILABLE FREE OF
CHARGE, AND MAY BE REQUESTED AT ANY TIME BY CALLING SCHWAB AS INDICATED BELOW.
SCHWABFUNDS PROSPECTUSES ARE ALSO AVAILABLE ON OUR WEB SITE AT WWW.SCHWAB.COM.
If you would otherwise fall under our householding policy, but for any reason
prefer to receive multiple SchwabFunds prospectuses and shareholder reports,
please contact:
- - SCHWAB SIGNATURE SERVICES-TM- CLIENTS: Schwab Signature Services.
- - INVESTMENT MANAGER CLIENTS: Schwab at 1-800-515-2157, or your investment
manager.
- - ALL OTHER CLIENTS: Schwab at 1-800-435-4000.
Your instructions that householding not apply to your accounts holding
SchwabFunds will be effective within 30 days of receipt by Schwab.
<PAGE>
SCHWABFUNDS-REGISTERED TRADEMARK-
SCHWAB
MONEY FUNDS
/ / SCHWAB MONEY MARKET FUND
/ / SCHWAB GOVERNMENT MONEY FUND
/ / SCHWAB U.S. TREASURY MONEY FUND
Annual Report
December 31, 1999
<PAGE>
SCHWAB MONEY FUNDS
We're pleased to bring you this annual report for the following funds (the
funds) for the one-year period ended December 31, 1999:
- Schwab Money Market Fund
- Schwab Government Money Fund
- Schwab U.S. Treasury Money Fund
During the reporting period, the funds continued to provide competitive money
market returns, combined with stability of capital and liquidity.
The funds presented in this report are Sweep Investments-TM- that are designed
for your cash balances requiring frequent access. The funds can be conveniently
linked to your Schwab account to serve as a primary sweep money fund. For your
larger cash balances that do not require frequent access, you may wish to
consider the Schwab Value Advantage Investments.-Registered Trademark- You'll
find more information on Schwab's money funds on page 3 of this report.
Please remember that an investment in the funds is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency and although the funds seek to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
funds.
CONTENTS
<TABLE>
<S> <C>
- ---------------------------------------------
A Message from the Chairman 1
- ---------------------------------------------
What Money Fund Investors Should Know 2
- ---------------------------------------------
Market Overview 5
- ---------------------------------------------
Portfolio Management 8
- ---------------------------------------------
Schwab Money Market Fund 9
- ---------------------------------------------
Schwab Government Money Fund 10
- ---------------------------------------------
Schwab U.S. Treasury Money Fund 11
- ---------------------------------------------
Fund Discussion 12
- ---------------------------------------------
Glossary of Terms 13
- ---------------------------------------------
Portfolio Highlights 14
- ---------------------------------------------
Financial Statements and Notes 16
- ---------------------------------------------
</TABLE>
<PAGE>
A MESSAGE FROM THE CHAIRMAN
[PHOTO]
Dear Shareholder,
As we begin a new year, I'd like to take this opportunity to reflect on last
year's milestones at Charles Schwab Investment Management, Inc. (CSIM), the
investment adviser for the SchwabFunds-Registered Trademark- Family.
First of all, SchwabFunds assets topped the $100 billion mark in September. With
the support of investors like you, SchwabFunds continue to be among the largest
and fastest growing fund families in the nation.
Secondly, we added two new products to our SchwabFunds offering in 1999:
- - SCHWAB TOTAL STOCK MARKET INDEX FUND-TM- seeks to track the total return of
the entire U.S. stock market, as measured by the Wilshire 5000 Total Market
Index, the broadest measure of U.S. stock market performance. In one single,
low-cost investment, fund investors can benefit from exposure to U.S.
companies of all types and sizes.
- - SCHWAB YIELDPLUS FUND-TM- The fund seeks high current income with minimal
changes in share price. It is designed to provide the potential for higher
yields than a money fund and lower risk than a longer-term bond fund through a
management strategy designed to minimize price fluctuation. Intended for your
long-term (over one-year) cash needs, the fund seeks to increase the overall
yield potential of the cash portion of your portfolio.
For more information on either of these funds, please call 1-800-435-4000 and
request a free prospectus. The prospectus contains more information on fund fees
and expenses. Please read it carefully before investing.
I encourage you to take a moment to read this annual report as it is designed to
provide timely information about your SchwabFunds investments. You will find
information on each fund's total returns and performance, as well as commentary
on market conditions provided by the portfolio management team. In the section
"What Money Fund Investors Should Know," we've also provided guidelines that can
help you reach your goals by establishing--or maintaining--an ongoing investment
program.
As a leader in online brokerage, we recognize the value of the web as a means of
communicating timely, relevant information to investors. Regular updates on all
of the SchwabFunds, including performance data, are available on our Web site at
www.schwab.com/schwabfunds. We encourage you to take advantage of this valuable
resource which can help you keep track of your funds' performance.
At Schwab our philosophy has always been that a combination of regular investing
and diversification is the best strategy over the long term. By investing in
SchwabFunds, you've already taken an important step in building a portfolio that
can help you meet your future goals. Thank you for your investment in
SchwabFunds.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
December 31, 1999
1
<PAGE>
WHAT MONEY FUND INVESTORS SHOULD KNOW
WHY ASSET ALLOCATION MATTERS
As most investors know, one of the most compelling reasons to invest in a mutual
fund is diversification. By allocating your assets across many different
securities, a fund helps to reduce the risk that you might otherwise encounter
by owning just a few stocks or bonds.
Don't forget, however, that diversification across your portfolio is just as
important as diversification within one of the mutual funds you own. As you
probably know, stocks historically have offered much higher returns over the
long-term than other asset classes, such as bonds or cash, but those returns
have come at the price of higher volatility. To help mitigate some of that risk,
many investors often include at least some bonds, money market securities or
funds, and cash in their portfolio.
CHOOSING A MONEY MARKET FUND
Some investors may believe that there is no good reason to shop around for a
money market fund. This may be partially due to the fact that 20 years ago,
practically the only feature that differentiated one money market fund from
another was whether it allowed investors to write checks against it. Today,
investors can choose from a wide variety of options and features offered by the
more than 1,000 money market funds currently available.(1)
You can help assure that you've chosen the right money market fund by
considering the role it will play in your investment portfolio. Here are some
factors to consider when making or reviewing your money market fund choice.
EXPENSES: Because expenses are one of the key determining factors in a money
market fund's performance, investors are wise to seek out funds with low
operating expense ratios. Also, beware of those that have temporary expense
waivers that waive expenses to zero, because expenses can't stay at zero
forever, and fees will undoubtedly eventually rise.
Also consider 12b-1 fees, which some money market funds include in their expense
ratios to pay for marketing costs. These fees can reduce yield, in some cases by
a full percentage point. When comparing money market fund choices, you may want
to avoid funds that carry these unnecessary fees.
YIELDS: Look for competitive yields, but don't stop there. Many institutions
advertise their money market funds on the basis of yield.(2) Although getting a
competitive yield is important, other features, such as convenient access to
your investment, also are important considerations. Furthermore, stretching for
an additional 10 or 20 basis points in yield (0.10% to 0.20%) may not be worth
the time, effort or added risk. For example, a $10,000 investment in a money
fund that yields 0.10% more amounts to only an additional $10 over a one-year
period.
SWEEP FEATURES: If you're looking for a convenient way to link your money market
fund with your brokerage account, consider an account that has a "sweep"
feature. Accounts with this feature automatically "sweep" uninvested cash into
the fund you select as your primary money fund. The upshot: It keeps cash
working. In addition, shares of your fund will be redeemed automatically to
cover investment purchases and other debits in your account. This convenience
may be well worth the small additional cost.
LARGER CASH BALANCES: You may earn higher yields for larger cash balances. If
you don't need frequent access to the money in your money market fund, consider
one designed to pay higher yields for larger cash balances. These funds
typically have higher minimum balance requirements and transaction policies
designed to minimize fund operating expenses, and may be able to post higher
yields, all else being equal.
TAXES: Don't forget to consider your tax situation. If you're in a high tax
bracket, investing in tax-free or municipal money market funds may help take a
bite out of your tax bill.(3) And, if you live in a state with a high personal
state income tax, you may be best served by choosing a state-specific tax-free
fund that provides income free from federal, state and, in some cases, local
income taxes.(3)
(1) An investment in a money market fund is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation (FDIC) or any other government
agency and, although money funds seek to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in a
money fund.
(2) Yields may vary.
(3) This may not be true for investors subject to the federal alternative
minimum tax (AMT); consult your tax advisor.
2
<PAGE>
SCHWAB MONEY FUNDS
Schwab offers two types of money funds--Sweep Investments-TM- and Value
Advantage Investments.-Registered Trademark- Both include funds that offer
taxable and tax-free income. Depending on the role that cash and cash-equivalent
investments play in your investment plan, either or both may have a place in
your investment portfolio.
SWEEP INVESTMENTS are designed for your cash balances requiring frequent access.
These funds can be linked to your Schwab account to serve as a primary sweep
money fund. That means uninvested cash in your Schwab brokerage account is
automatically swept in and out of the fund, based on transactions in your
account and the terms and conditions of your account agreement.
VALUE ADVANTAGE INVESTMENTS are designed for your larger cash balances that
don't require frequent access. Value Advantage Investments have higher minimum
initial and ongoing balance requirements than Sweep Investments. These
requirements, along with policies designed to discourage frequent transactions,
can help minimize fund expenses--which in turn can mean higher returns for
investors. Please remember that Value Advantage Investments cannot be linked to
your Schwab account to serve as your primary sweep fund.
Schwab currently offers a variety of money funds. If you are selecting from
among them, you should consider your attitude toward risk and return, as well as
your income tax bracket.
SCHWAB TAXABLE MONEY FUNDS
SCHWAB MONEY MARKET FUND A high-quality money fund for investors interested in
the potential for high money market yields.
SCHWAB GOVERNMENT MONEY FUND Designed for investors who want current money
market yields along with the added margin of safety provided by a portfolio of
U.S. government securities and repurchase agreements.
SCHWAB U.S. TREASURY MONEY FUND Of all the money funds offered by Schwab, this
one seeks to provide the highest degree of safety. The fund invests exclusively
in U.S. Treasury securities and other investments that are backed by the full
faith and credit of the U.S. government. What's more, income from the fund is
generally free from state and local income tax.
SCHWAB VALUE ADVANTAGE MONEY FUND-REGISTERED TRADEMARK- A high-quality money
fund designed for investors interested in the potential for higher money market
yields.
SCHWAB MUNICIPAL MONEY FUNDS
SCHWAB MUNICIPAL MONEY FUND A high-quality municipal money fund that seeks to
provide income that is free from federal income tax.*
SCHWAB STATE-SPECIFIC MUNICIPAL MONEY FUNDS Each of these funds is designed for
taxpayers of a particular state and seeks to provide income that is exempt from
federal, state and, in some cases, local income taxes.(*) The Schwab Florida
Municipal Money Fund also seeks to have its shares exempt from the Florida
Intangible Tax.
- Schwab California Municipal Money Fund
- Schwab Florida Municipal Money Fund
- Schwab New Jersey Municipal Money Fund
- Schwab New York Municipal Money Fund
- Schwab Pennsylvania Municipal Money Fund
* Income from all of the Schwab Municipal Money Funds may be subject to the
Federal Alternative Minimum Tax (AMT).
3
<PAGE>
WHAT MONEY FUND INVESTORS SHOULD KNOW (continued)
The table below presents the various money fund choices available at Schwab.
<TABLE>
<CAPTION>
VALUE ADVANTAGE
TAXABLE MONEY FUNDS SWEEP INVESTMENTS-TM- INVESTMENTS-REGISTERED TRADEMARK-
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Schwab Money Market Fund -
- ------------------------------------------------------------------------------------------------------------
Schwab Government Money Fund -
- ------------------------------------------------------------------------------------------------------------
Schwab U.S. Treasury Money Fund -
- ------------------------------------------------------------------------------------------------------------
Schwab Value Advantage Money Fund--Investor Shares -
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY FUNDS
<S> <C> <C>
- ---------------------------------------------------------------------------
Schwab Municipal Money Fund - -
- ---------------------------------------------------------------------------
Schwab California Municipal Money Fund - -
- ---------------------------------------------------------------------------
Schwab Florida Municipal Money Fund -
- ---------------------------------------------------------------------------
Schwab New Jersey Municipal Money Fund -
- ---------------------------------------------------------------------------
Schwab New York Municipal Money Fund - -
- ---------------------------------------------------------------------------
Schwab Pennsylvania Municipal Money Fund -
- ---------------------------------------------------------------------------
</TABLE>
If you would like more information on any of these funds, please call us toll
free at 800-435-4000 and request a free prospectus that contains more
information, including fees and expenses. Please read the prospectus before
investing.
WE MAKE IT EASY TO INVEST
We make it easy and convenient to invest in SchwabFunds.-Registered Trademark-
With Schwab MoneyLink,-Registered Trademark- Schwab's electronic transfer
service, you can have money automatically transferred into your Schwab account
on a regular basis. You also can invest in person at any of our more than 340
nationwide branches, through our Web site at www.schwab.com and through our
automated touch-tone telephone service, TeleBroker,-Registered Trademark- by
calling 800-272-4922.
KEEPING YOU INFORMED
One of our top priorities at Charles Schwab is to keep you informed about your
investments and potential opportunities in the marketplace. A wealth of
current information about our investment philosophy and funds, as well as the
market and economic environment, can be found at our Web site:
www.schwab.com/schwabfunds
4
<PAGE>
MARKET OVERVIEW
U.S. ECONOMIC GROWTH
The U.S. economy, as measured by real (inflation adjusted) growth in gross
domestic product (GDP), continued its lengthy expansion with a strong growth
rate of 4.0%--the third consecutive year at 4% or higher. This rate is
considered by many economists to be in excess of what the economy can absorb
without experiencing inflationary pressures. High levels of consumer spending
and business capital investment, as well as rising real wages and strong gains
in stock prices, have been the principal factors continuing this lengthy
expansion.
The Commerce Department, after revising the GDP benchmark data for the past four
decades, has reported stronger growth, higher personal savings and lower
inflation than were previously calculated for the 1990s.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REAL GROSS DOMESTIC PRODUCT
QUARTERLY PERCENTAGE CHANGE (ANNUALIZED RATE)
<S> <C>
Q1 1990 5.0%
Q2 1990 1.0%
Q3 1990 -0.6%
Q4 1990 -3.0%
Q1 1991 -1.7%
Q2 1991 2.6%
Q3 1991 1.3%
Q4 1991 2.5%
Q1 1992 4.3%
Q2 1992 4.0%
Q3 1992 3.1%
Q4 1992 5.2%
Q1 1993 -0.7%
Q2 1993 2.1%
Q3 1993 1.5%
Q4 1993 6.0%
Q1 1994 3.6%
Q2 1994 5.7%
Q3 1994 2.2%
Q4 1994 5.1%
Q1 1995 1.5%
Q2 1995 0.8%
Q3 1995 3.2%
Q4 1995 3.3%
Q1 1996 2.9%
Q2 1996 6.9%
Q3 1996 2.2%
Q4 1996 4.9%
Q1 1997 4.9%
Q2 1997 5.1%
Q3 1997 4.0%
Q4 1997 3.1%
Q1 1998 6.7%
Q2 1998 2.1%
Q3 1998 3.8%
Q4 1998 5.9%
Q1 1999 3.7%
Q2 1999 1.9%
Q3 1999 5.7%
Q4 1999 5.8%
Source: BLOOMBERG L.P.
</TABLE>
Concerns in 1998 over the impact of international economic problems were
displaced in 1999 by concerns over imbalances in the domestic economy, namely
the surging current account (trade) deficit, record high stock valuations and
the low savings rate.
Looking ahead, the availability of increasingly scarce labor resources and the
behavior of domestic consumers in response to continued stock market volatility
may be key determinants of whether the economy continues on its current course
or softens throughout 2000. The consensus of most economists is that the U.S.
economy appears poised for continued growth, but at a more moderate pace than
the last four years.
UNEMPLOYMENT
December's unemployment rate of 4.1% was the lowest in 29 years. Labor markets
continue to be extremely tight in many areas of the country. Growth in the labor
force has slowed, and there continues to be concern that wage and benefits
increases may begin to put more pressure on labor costs (refer to Employment
Cost Index on the next 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 6.8%
Feb-94 6.6%
Mar-94 6.5%
Apr-94 6.4%
May-94 6.1%
Jun-94 6.1%
Jul-94 6.3%
Aug-94 6.0%
Sep-94 5.8%
Oct-94 5.8%
Nov-94 5.6%
Dec-94 5.5%
Jan-95 5.6%
Feb-95 5.4%
Mar-95 5.3%
Apr-95 5.8%
May-95 5.8%
Jun-95 5.6%
Jul-95 5.6%
Aug-95 5.7%
Sep-95 5.6%
Oct-95 5.5%
Nov-95 5.7%
Dec-95 5.6%
Jan-96 5.6%
Feb-96 5.5%
Mar-96 5.6%
Apr-96 5.5%
May-96 5.6%
Jun-96 5.3%
Jul-96 5.5%
Aug-96 5.1%
Sep-96 5.2%
Oct-96 5.2%
Nov-96 5.3%
Dec-96 5.4%
Jan-97 5.3%
Feb-97 5.3%
Mar-97 5.1%
Apr-97 5.0%
May-97 4.7%
Jun-97 5.0%
Jul-97 4.7%
Aug-97 4.9%
Sep-97 4.7%
Oct-97 4.7%
Nov-97 4.6%
Dec-97 4.7%
Jan-98 4.5%
Feb-98 4.6%
Mar-98 4.6%
Apr-98 4.3%
May-98 4.3%
Jun-98 4.5%
Jul-98 4.5%
Aug-98 4.5%
Sep-98 4.5%
Oct-98 4.5%
Nov-98 4.4%
Dec-98 4.3%
Jan-99 4.3%
Feb-99 4.4%
Mar-99 4.2%
Apr-99 4.3%
May-99 4.2%
Jun-99 4.3%
Jul-99 4.3%
Aug-99 4.2%
Sep-99 4.2%
Oct-99 4.1%
Nov-99 4.1%
Dec-99 4.1%
SOURCE: BLOOMBERG L.P.
</TABLE>
5
<PAGE>
MARKET OVERVIEW (continued)
INFLATION
Price inflation continued to remain well contained. The Consumer Price Index
(CPI) rose a modest 2.7% during 1999. Its core rate (which excludes the more
volatile food and energy components) rose just 1.9%. The GDP price deflator, the
broadest measure of inflation, indicated prices rising at an annual rate of 1.5%
for 1999. The Employment Cost Index, which measures inflation in wages, salaries
and benefits, was also well contained, increasing just 3.4% for the year.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MEASURES OF INFLATION MONTHLY EMPLOYMENT MONTHLY CONSUMER
COST INDEX PRICE INDEX
<S> <C> <C>
Jan-90 5.5% 5.2%
Feb-90 5.5% 5.3%
Mar-90 5.5% 5.2%
Apr-90 5.4% 4.7%
May-90 5.4% 4.4%
Jun-90 5.4% 4.7%
Jul-90 5.2% 4.8%
Aug-90 5.2% 5.6%
Sep-90 5.2% 6.2%
Oct-90 4.9% 6.3%
Nov-90 4.9% 6.3%
Dec-90 4.9% 6.1%
Jan-91 4.6% 5.7%
Feb-91 4.6% 5.3%
Mar-91 4.6% 4.9%
Apr-91 4.6% 4.9%
May-91 4.6% 5.0%
Jun-91 4.6% 4.7%
Jul-91 4.3% 4.4%
Aug-91 4.3% 3.8%
Sep-91 4.3% 3.4%
Oct-91 4.3% 2.9%
Nov-91 4.3% 3.0%
Dec-91 4.3% 3.1%
Jan-92 4.0% 2.6%
Feb-92 4.0% 2.8%
Mar-92 4.0% 3.2%
Apr-92 3.6% 3.2%
May-92 3.6% 3.0%
Jun-92 3.6% 3.1%
Jul-92 3.5% 3.2%
Aug-92 3.5% 3.1%
Sep-92 3.5% 3.0%
Oct-92 3.5% 3.2%
Nov-92 3.5% 3.0%
Dec-92 3.5% 2.9%
Jan-93 3.5% 3.3%
Feb-93 3.5% 3.2%
Mar-93 3.5% 3.1%
Apr-93 3.6% 3.2%
May-93 3.6% 3.2%
Jun-93 3.6% 3.0%
Jul-93 3.6% 2.8%
Aug-93 3.6% 2.8%
Sep-93 3.6% 2.7%
Oct-93 3.5% 2.8%
Nov-93 3.5% 2.7%
Dec-93 3.5% 2.7%
Jan-94 3.2% 2.5%
Feb-94 3.2% 2.5%
Mar-94 3.2% 2.5%
Apr-94 3.2% 2.4%
May-94 3.2% 2.3%
Jun-94 3.2% 2.5%
Jul-94 3.2% 2.8%
Aug-94 3.2% 2.9%
Sep-94 3.2% 3.0%
Oct-94 3.0% 2.6%
Nov-94 3.0% 2.7%
Dec-94 3.0% 2.7%
Jan-95 2.9% 2.8%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 2.9% 3.1%
May-95 2.9% 3.2%
Jun-95 2.9% 3.0%
Jul-95 2.7% 2.8%
Aug-95 2.7% 2.6%
Sep-95 2.7% 2.5%
Oct-95 2.7% 2.8%
Nov-95 2.7% 2.6%
Dec-95 2.7% 2.5%
Jan-96 2.8% 2.7%
Feb-96 2.8% 2.7%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.9% 2.8%
Jul-96 2.8% 3.0%
Aug-96 2.8% 2.9%
Sep-96 2.8% 3.0%
Oct-96 2.9% 3.0%
Nov-96 2.9% 3.3%
Dec-96 2.9% 3.3%
Jan-97 2.9% 3.0%
Feb-97 2.9% 3.0%
Mar-97 2.9% 2.8%
Apr-97 2.8% 2.5%
May-97 2.8% 2.2%
Jun-97 2.8% 2.3%
Jul-97 3.0% 2.2%
Aug-97 3.0% 2.2%
Sep-97 3.0% 2.2%
Oct-97 3.3% 2.1%
Nov-97 3.3% 1.8%
Dec-97 3.3% 1.7%
Jan-98 3.3% 1.6%
Feb-98 3.3% 1.4%
Mar-98 3.3% 1.4%
Apr-98 3.5% 1.4%
May-98 3.5% 1.7%
Jun-98 3.5% 1.7%
Jul-98 3.7% 1.7%
Aug-98 3.7% 1.6%
Sep-98 3.7% 1.5%
Oct-98 3.4% 1.5%
Nov-98 3.4% 1.5%
Dec-98 3.4% 1.6%
Jan-99 3.0% 1.7%
Feb-99 3.0% 1.6%
Mar-99 3.0% 1.7%
Apr-99 3.2% 2.3%
May-99 3.2% 2.1%
Jun-99 3.2% 2.0%
Jul-99 3.1% 2.1%
Aug-99 3.1% 2.3%
Sep-99 3.1% 2.6%
Oct-99 3.4% 2.6%
Nov-99 3.4% 2.6%
Dec-99 3.4% 2.7%
SOURCE: BLOOMBERG L.P. AND BUREAU OF LABOR STATISTICS
</TABLE>
Although there is little evidence of accelerating core inflation, the Federal
Reserve (Fed) has expressed concern that if labor markets continue to tighten,
increases in wages could outpace productivity growth. In such an environment,
productivity growth becomes particularly critical, as it enables companies to
pay higher wages without raising prices. Non-farm productivity grew 2.8% in 1998
and at 2.9% during 1999, continuing a healthy trend that began in 1996.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN PERFORMANCE MSCE-EAFE INDEX S&P 500 INDEX RUSSELL 2000 INDEX LEHMAN AGGREGATE BOND INDEX
GROWTH OF A HYPOTHETICAL $1 INVESTMENT
<S> <C> <C> <C> <C>
Dec-98 $1.0000 $1.0000 $1.0000 $1.0000
Jan-99 $0.9970 $1.0418 $1.0133 $1.0071
Feb-99 $0.9733 $1.0094 $0.9312 $0.9895
Mar-99 $1.0139 $1.0498 $0.9457 $0.9949
Apr-99 $1.0549 $1.0904 $1.0305 $0.9981
May-99 $1.0006 $1.0647 $1.0455 $0.9893
Jun-99 $1.0396 $1.1238 $1.0928 $0.9862
Jul-99 $1.0705 $1.0887 $1.0628 $0.9820
Aug-99 $1.0710 $1.0833 $1.0235 $0.9815
Sep-99 $1.0818 $1.0536 $1.0237 $0.9929
Oct-99 $1.1224 $1.1203 $1.0279 $0.9966
Nov-99 $1.1614 $1.1430 $1.0893 $0.9965
Dec-99 $1.2656 $1.2104 $1.2126 $0.9917
</TABLE>
COMPILED BY CHARLES SCHWAB & CO., INC.
For the first time since 1994, international stocks outperformed domestic
large-cap stocks. Assisted by the rebound in Asian markets, international
stocks, as represented by the MSCI EAFE Index, achieved a total return of 26.96%
for 1999 versus 21.04% for the S&P 500 Index. Within the S&P 500, growth stocks
in general, and technology growth stocks in particular, continued to be the
strongest performing style for the period. Small-cap stocks, as represented by
the Russell 2000 Index, also experienced a positive return of 21.26% for the
year.
Reflecting the rise in intermediate and long-term interest rates, fixed income
returns were generally weak for the period. Bond returns, as represented by the
Lehman Brothers Aggregate Bond Index, were (0.82)% for the year.
6
<PAGE>
TREASURY BOND YIELDS
Continuing a trend which began in October 1998, both long-term and
intermediate-term rates continued to climb upward during the reporting period.
The primary drivers of this upward trend were scaled back concerns about the
impact of international economic problems and continued strong growth of the
domestic economy, which shows no immediate signs of slowing.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
30-YEAR AND FIVE-YEAR TREASURY BOND YIELDS
30-YEAR TREASURY BOND YIELD FIVE-YEAR TREASURY NOTE YIELD
<S> <C> <C>
1/1/99 5.10% 4.54%
1/8/99 5.27% 4.73%
1/15/99 5.11% 4.55%
1/22/99 5.08% 4.52%
1/29/99 5.09% 4.55%
2/5/99 5.35% 4.86%
2/12/99 5.42% 4.96%
2/19/99 5.39% 4.99%
2/26/99 5.58% 5.22%
3/5/99 5.60% 5.22%
3/12/99 5.53% 5.06%
3/19/99 5.56% 5.08%
3/26/99 5.59% 5.08%
4/2/99 5.46% 4.96%
4/9/99 5.46% 4.96%
4/16/99 5.57% 5.11%
4/23/99 5.60% 5.14%
4/30/99 5.66% 5.21%
5/7/99 5.81% 5.37%
5/14/99 5.92% 5.50%
5/21/99 5.75% 5.43%
5/28/99 5.83% 5.58%
6/4/99 5.96% 5.73%
6/11/99 6.16% 5.91%
6/18/99 5.97% 5.73%
6/25/99 6.15% 5.89%
7/2/99 6.00% 5.69%
7/9/99 6.00% 5.69%
7/16/99 5.88% 5.55%
7/23/99 6.03% 5.69%
7/30/99 6.10% 5.79%
8/6/99 6.18% 5.91%
8/13/99 6.10% 5.86%
8/20/99 5.99% 5.77%
8/27/99 5.98% 5.77%
9/3/99 6.02% 5.77%
9/10/99 6.04% 5.78%
9/17/99 6.06% 5.75%
9/24/99 5.97% 5.66%
10/1/99 6.13% 5.86%
10/8/99 6.20% 5.95%
10/15/99 6.26% 5.97%
10/22/99 6.35% 6.10%
10/29/99 6.16% 5.95%
11/5/99 6.06% 5.86%
11/12/99 6.04% 5.86%
11/19/99 6.16% 5.99%
11/26/99 6.23% 6.05%
12/3/99 6.25% 6.07%
12/10/99 6.17% 5.98%
12/17/99 6.37% 6.19%
12/24/99 6.49% 6.31%
12/31/99 6.48% 6.34%
SOURCE: BLOOMBERG L.P.
</TABLE>
SHORT-TERM INTEREST RATE ENVIRONMENT
Short-term interest rates increased approximately 1% during 1999. Until the
April CPI report, the economy demonstrated continued signs of growth with no
significant evidence of accelerating inflation or indications that the Fed would
move to change short-term rates. Following the unexpectedly high April CPI
report, the Fed adopted a "tightening" bias in May, followed by a 0.25% increase
in the Federal Funds Rate at the June meeting.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1999 YIELDS ON 90-DAY COMMERCIAL PAPER
AND THREE-MONTH TREASURY BILLS
THREE-MONTH TREASURY BILL 90-DAY COMMERCIAL PAPER
<S> <C> <C>
1/1/1999 4.46% 4.78%
1/8/1999 4.48% 4.75%
1/15/1999 4.43% 4.76%
1/22/1999 4.34% 4.76%
1/29/1999 4.45% 4.75%
2/5/1999 4.49% 4.76%
2/12/1999 4.52% 4.78%
2/19/1999 4.56% 4.80%
2/26/1999 4.67% 4.81%
3/5/1999 4.60% 4.83%
3/12/1999 4.59% 4.81%
3/19/1999 4.49% 4.81%
3/26/1999 4.49% 4.81%
4/2/1999 4.39% 4.82%
4/9/1999 4.35% 4.80%
4/16/1999 4.31% 4.79%
4/23/1999 4.41% 4.78%
4/30/1999 4.54% 4.77%
5/7/1999 4.60% 4.79%
5/14/1999 4.65% 4.79%
5/21/1999 4.58% 4.83%
5/28/1999 4.64% 4.84%
6/4/1999 4.54% 4.87%
6/11/1999 4.73% 4.90%
6/18/1999 4.65% 5.00%
6/25/1999 4.79% 5.03%
7/2/1999 4.67% 5.13%
7/9/1999 4.68% 5.11%
7/16/1999 4.66% 5.10%
7/23/1999 4.66% 5.11%
7/30/1999 4.75% 5.12%
8/6/1999 4.80% 5.18%
8/13/1999 4.71% 5.24%
8/20/1999 4.83% 5.27%
8/27/1999 4.99% 5.30%
9/3/1999 4.91% 5.31%
9/10/1999 4.73% 5.31%
9/17/1999 4.65% 5.33%
9/24/1999 4.78% 5.33%
10/1/1999 4.86% 5.30%
10/8/1999 4.79% 5.90%
10/15/1999 5.05% 5.87%
10/22/1999 5.05% 5.96%
10/29/1999 5.09% 5.90%
11/5/1999 5.12% 5.88%
11/12/1999 5.22% 5.78%
11/19/1999 5.22% 5.79%
11/26/1999 5.29% 5.78%
12/3/1999 5.25% 5.83%
12/10/1999 5.28% 5.84%
12/17/1999 5.44% 5.89%
12/24/1999 5.45% 6.00%
12/31/1999 5.33% 5.78%
SOURCE: BLOOMBERG L.P.
</TABLE>
Throughout the remainder of the year, the Fed continued to express concern about
the potential for a buildup of inflationary imbalances that could undermine the
favorable performance of the economy. The Fed raised the Federal Funds Rate by
0.25% two additional times in August and November. The target Federal Funds Rate
was 5.50% at the end of the reporting period and there was a widespread
expectation by most economists that the Fed may adopt further rate increases
during 2000.
This market overview has been provided by the portfolio management team.
7
<PAGE>
PORTFOLIO MANAGEMENT
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.
LINDA KLINGMAN--vice president and senior portfolio manager, has managed the
Schwab Money Market Fund since April of 1991. Linda joined CSIM in 1990 and was
promoted to her current position in August 1996. Prior to joining CSIM, Linda
was senior money market trader with AIM Management.
KAREN WIGGAN--portfolio manager, has managed the Schwab Government Money Fund
and the Schwab U.S. Treasury Fund since March 1999. Karen joined Schwab in 1986,
CSIM in 1991, and was promoted to her current position in March 1999.
8
<PAGE>
SCHWAB MONEY MARKET FUND
YIELD SUMMARY AS OF 12/31/99(1)
<TABLE>
<S> <C>
- --------------------------------------------------------------------
Seven-Day Yield 5.31%
- --------------------------------------------------------------------
Seven-Day Effective Yield 5.45%
- --------------------------------------------------------------------
</TABLE>
Please remember that money market fund yields fluctuate and that past
performance is no guarantee of future results.
(1) A portion of the fund's expenses was reduced during the reporting period.
Without this reduction, as of 12/31/99, the seven-day and seven-day
effective yields for the fund would have been 5.21% and 5.35%, respectively.
PORTFOLIO COMPOSITION
The Schwab Money Market Fund invests in high-quality short-term money market
investments issued by U.S. and foreign issuers, such as commercial paper,
including asset-backed commercial paper, certificates of deposit, variable and
floating-rate debt securities, bank notes and repurchase agreements. The chart
to the right illustrates the composition of the fund's portfolio as of
December 31, 1999 and is not indicative of its holdings after that date. A
complete list of the securities in the fund's portfolio as of December 31, 1999
is provided in the Schedule of Investments later in this report.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION AS A PERCENTAGE
OF FUND INVESTMENTS
as of 12/31/99
<S> <C>
Commercial Paper and other Corporate Obligations 66.1%
Certificates of Deposit 22.4%
Variable Rate Obligations 9.2%
Bank Notes 1.1%
Repurchase Agreements 1.2%
</TABLE>
9
<PAGE>
SCHWAB GOVERNMENT MONEY FUND
YIELD SUMMARY AS OF 12/31/99(1)
<TABLE>
<S> <C>
- --------------------------------------------------------------------
Seven-Day Yield 4.88%
- --------------------------------------------------------------------
Seven-Day Effective Yield 5.00%
- --------------------------------------------------------------------
</TABLE>
Please remember that money market fund yields fluctuate and that past
performance is no guarantee of future results.
(1) A portion of the fund's expenses was reduced during the reporting period.
Without this reduction, as of 12/31/99, the seven-day and seven-day
effective yields for the fund would have been 4.81% and 4.93%, respectively.
PORTFOLIO COMPOSITION
The Schwab Government Money Fund invests in U.S. government securities such as
U.S. Treasury bills, notes and bonds and other obligations that are issued or
guaranteed by the U.S. government, its agencies or instrumentalities including
Fannie Maes, Freddie Macs and Sallie Maes, and repurchase agreements for these
securities. The chart to the right illustrates the composition of the fund's
portfolio as of December 31, 1999 and is not indicative of its holdings after
that date. A complete list of the securities in the fund's portfolio as of
December 31, 1999 is provided in the Schedule of Investments later in
this report.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION AS A PERCENTAGE
OF FUND INVESTMENTS
as of 12/31/99
<S> <C>
U.S. Government Securities 79.3%
Repurchase Agreements 18.7%
Variable Rate Obligations 2.0%
</TABLE>
10
<PAGE>
SCHWAB U.S. TREASURY MONEY FUND
YIELD SUMMARY AS OF 12/31/99(1)
<TABLE>
<S> <C>
- --------------------------------------------------------------------
Seven-Day Yield 4.63%
- --------------------------------------------------------------------
Seven-Day Effective Yield 4.74%
- --------------------------------------------------------------------
</TABLE>
Please remember that money market fund yields fluctuate and that past
performance is no guarantee of future results.
(1) A portion of the fund's expenses was reduced during the reporting period.
Without this reduction, as of 12/31/99, the seven-day and seven-day
effective yields for the fund would have been 4.44% and 4.54%, respectively.
PORTFOLIO COMPOSITION
The Schwab U.S. Treasury Money Fund invests exclusively in securities backed by
the full faith and credit of the U.S. government, such as U.S. Treasury notes,
bills and bonds. The chart to the right illustrates the composition of the
fund's portfolio as of December 31, 1999 and is not indicative of its holdings
after that date. A complete list of the securities in the fund's portfolio as of
December 31, 1999 is provided in the Schedule of Investments later in
this report.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION AS A PERCENTAGE
OF FUND INVESTMENTS
as of 12/31/99
<S> <C>
U.S. Government Securities 100%
</TABLE>
11
<PAGE>
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
Q. CAN YOU DESCRIBE THE SHORT-TERM INTEREST
RATE ENVIRONMENT DURING THE ONE-YEAR
REPORTING PERIOD?
A. Short-term interest rates remained relatively stable during the first half of
the reporting period as the economy demonstrated continued signs of growth.
However, the April Consumer Price Index (CPI) report, which was unexpectedly
high, renewed inflation fears and increased the possibility of potential action
by the Federal Reserve (Fed). In May, the Fed gave its first indication that
they were concerned about building inflationary pressure by adopting a
"tightening" bias, causing short-term rates to edge upward toward the end of the
first half of the reporting period.
The Fed maintained its vigilant stance as the economy continued to grow at a
robust pace and the labor markets remained very tight. Concerned that
inflationary imbalances could undermine the favorable performance of the
economy, the Fed took steps to slow growth by raising short-term interest rates
by 0.25% on June 30th. This rate increase was followed by two additional
increases, each 0.25%, in August and November, which left the Federal Funds Rate
at 5.50% as of the end of the reporting period.
During much of the year there was a great deal of concern about the potential
effect of Y2K on short-term interest rates. These concerns were largely
controlled by the Fed's willingness to provide liquidity and the positive
reports about Y2K preparations. As a result there was very little pressure on
short-term rates as the reporting period ended.
Q. HOW HAS THE PORTFOLIO MANAGEMENT TEAM ADJUSTED THE FUNDS' PORTFOLIOS IN
RESPONSE TO CHANGES IN INTEREST RATES?
A. During the reporting period our overall strategy for the funds was consistent
with our long-term strategy, which is to maintain a dollar-weighted average
maturity (DWAM) slightly longer than those of other funds with similar
investment objectives. This strategy had a beneficial impact on the fund's
yields throughout most of the period.
During the first quarter of 1999, based on our expectation that short-term rates
would remain relatively stable, we looked for opportunities to buy securities
with longer-dated maturities when they were available at attractive prices.
Beginning in May, the Fed took a more restrictive stance and we deviated from
this strategy somewhat by focusing on shorter-term securities while looking for
opportunities to purchase higher-yielding securities with longer maturities on a
selective basis.
12
<PAGE>
GLOSSARY OF TERMS
COMMERCIAL PAPER--Short-term 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 strength 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 values 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, which establishes
policies on bank reserves and regulations, determines the discount rate and the
Federal Funds Rate, and tightens or loosens the availability of credit.
FIRST-TIER SECURITY--Generally, a security rated in the highest credit-rating
category by a requisite number of nationally recognized statistical rating
organizations, such as Moody's, Standard & Poor's-Registered Trademark-, Duff or
Fitch.
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) is the total value of all
goods and services produced in the United States over a specific period of time
adjusted for the rate of inflation to allow meaningful year-to-year comparisons.
YIELD--The actual annualized income earned on an investment over a stated period
of time (assumed to be generated over a one-year period). An EFFECTIVE YIELD
assumes that the income earned is reinvested.
13
<PAGE>
PORTFOLIO HIGHLIGHTS
SCHWAB MONEY MARKET FUND
AVERAGE YIELDS FOR THE PERIOD ENDED 12/31/99(1)
<TABLE>
<S> <C>
- -------------------------------------------
Last seven days 5.31%
- -------------------------------------------
Last three months 4.99%
- -------------------------------------------
Last 12 months 4.54%
- -------------------------------------------
</TABLE>
MATURITY SCHEDULE: PERCENTAGE OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
MATURITY RANGE 3/31/99 6/30/99 9/30/99 12/31/99
<S> <C> <C> <C> <C>
- -------------------------------------------------------------
0-15 days 12.0% 17.1% 22.0% 11.4%
- -------------------------------------------------------------
16-30 days 12.8% 16.2% 16.3% 12.6%
- -------------------------------------------------------------
31-60 days 22.4% 26.9% 20.1% 29.6%
- -------------------------------------------------------------
61-90 days 22.4% 24.8% 16.5% 25.4%
- -------------------------------------------------------------
91-120 days 17.9% 2.4% 7.4% 7.7%
- -------------------------------------------------------------
More than 120 days 12.5% 12.6% 17.7% 13.3%
- -------------------------------------------------------------
Weighted average 73 days 68 days 67 days 70 days
- -------------------------------------------------------------
</TABLE>
PORTFOLIO QUALITY
<TABLE>
<CAPTION>
SEC TIER RATING PERCENTAGE OF TOTAL INVESTMENTS: 12/31/99
<S> <C>
- -----------------------------------------------------------------------------------
Tier 1 100.0%
- -----------------------------------------------------------------------------------
</TABLE>
SCHWAB GOVERNMENT MONEY FUND
AVERAGE YIELDS FOR THE PERIOD ENDED 12/31/99(1)
<TABLE>
<S> <C>
- -------------------------------------------
Last seven days 4.88%
- -------------------------------------------
Last three months 4.74%
- -------------------------------------------
Last 12 months 4.41%
- -------------------------------------------
</TABLE>
MATURITY SCHEDULE: PERCENTAGE OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
MATURITY RANGE 3/31/99 6/30/99 9/30/99 12/31/99
<S> <C> <C> <C> <C>
- -------------------------------------------------------------
0-15 days 37.2% 32.2% 44.8% 21.6%
- -------------------------------------------------------------
16-30 days 0.2% 0.8% 1.3% 15.6%
- -------------------------------------------------------------
31-60 days 13.5% 35.1% 17.4% 28.8%
- -------------------------------------------------------------
61-90 days 14.1% 12.2% 5.3% 11.2%
- -------------------------------------------------------------
91-120 days 7.3% 2.3% 10.7% 6.7%
- -------------------------------------------------------------
More than 120 days 27.7% 17.4% 20.5% 16.1%
- -------------------------------------------------------------
Weighted average 76 days 69 days 61 days 61 days
- -------------------------------------------------------------
</TABLE>
(1) A portion of the fund's expenses was reduced during these periods. Without
this reduction, yields would have been lower.
14
<PAGE>
SCHWAB U.S. TREASURY MONEY FUND
AVERAGE YIELDS FOR THE PERIOD ENDED 12/31/99(1)
<TABLE>
<S> <C>
- -------------------------------------------
Last seven days 4.63%
- -------------------------------------------
Last three months 4.22%
- -------------------------------------------
Last 12 months 4.55%
- -------------------------------------------
</TABLE>
MATURITY SCHEDULE: PERCENTAGE OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
MATURITY RANGE 3/31/99 6/30/99 9/30/99 12/31/99
<S> <C> <C> <C> <C>
- -------------------------------------------------------------
0-15 days 0.0% 0.0% 5.9% 8.6%
- -------------------------------------------------------------
16-30 days 31.9% 0.0% 0.0% 10.3%
- -------------------------------------------------------------
31-60 days 18.4% 31.6% 32.3% 37.0%
- -------------------------------------------------------------
61-90 days 12.1% 18.4% 23.4% 4.2%
- -------------------------------------------------------------
91-120 days 7.1% 19.0% 2.5% 2.4%
- -------------------------------------------------------------
More than 120 days 30.5% 31.0% 35.9% 37.5%
- -------------------------------------------------------------
Weighted average 76 days 83 days 85 days 83 days
- -------------------------------------------------------------
</TABLE>
(1) A portion of the fund's expenses was reduced during these periods. Without
this reduction, yields would have been lower.
15
<PAGE>
SCHWAB MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1999
Par Value
-------- ----------
COMMERCIAL PAPER AND OTHER CORPORATE
OBLIGATIONS -- 65.8%
AUTOMOBILE RECEIVABLES -- 0.5% (f)
New Center Asset Trust Plus
6.15%, 03/15/00 $150,000 $ 148,131
6.15%, 03/16/00 50,000 49,369
-----------
197,500
-----------
AUTOMOTIVE -- 0.6%
Ford Motor Credit Co.
6.23%, 03/09/00 140,000 138,374
General Motors Acceptance Corp.
5.97%, 02/09/00 77,000 76,509
-----------
214,883
-----------
BANKING - AUSTRALIA -- 0.8%
Commonwealth Bank of Australia
5.97%, 02/29/00 225,000 222,832
Westpac Capital Corp.
6.05%, 04/06/00 51,852 51,037
-----------
273,869
-----------
BANKING - BELGIUM -- 1.8% (a)
BBL North America
6.02%, 03/03/00 150,000 148,469
6.12%, 03/20/00 28,000 27,630
6.02%, 06/06/00 75,000 73,090
Fortis Funding L.L.C.
6.09%, 02/29/00 33,000 32,678
6.05%, 05/03/00 150,000 146,989
5.90%, 05/16/00 50,000 48,917
5.93%, 05/17/00 128,000 125,194
6.02%, 05/30/00 50,000 48,781
-----------
651,748
-----------
BANKING - CANADA -- 0.3%
Bank of Nova Scotia
6.02%, 03/06/00 100,000 98,930
-----------
BANKING - DENMARK -- 0.5%
Den Danske Corp.
6.03%, 01/13/00 25,000 24,950
6.04%, 06/15/00 72,000 70,055
Unifunding, Inc.
6.02%, 03/09/00 90,000 88,992
-----------
183,997
-----------
Par Value
-------- ----------
BANKING - DOMESTIC -- 5.5%
Bank One Corp.
6.00%, 05/08/00 $ 30,000 $ 29,379
5.93%, 05/18/00 50,000 48,898
5.95%, 05/18/00 50,000 48,893
5.95%, 05/19/00 50,000 48,885
6.02%, 06/06/00 107,000 104,275
Citibank Capital Markets Assets, L.L.C. (a)(e)
5.97%, 02/17/00 90,000 89,320
6.00%, 02/29/00 20,000 19,808
Citicorp
5.96%, 02/02/00 20,000 19,897
5.92%, 02/03/00 50,000 49,736
5.92%, 02/04/00 50,000 49,728
6.31%, 02/17/00 75,000 74,389
6.28%, 02/28/00 50,000 49,501
Enterprise Funding Corp. (a)(e)
5.61%, 01/19/00 55,000 54,850
6.79%, 01/31/00 12,583 12,512
6.14%, 02/02/00 8,000 7,957
6.50%, 02/03/00 11,594 11,525
6.35%, 02/10/00 13,631 13,536
6.32%, 02/24/00 11,631 11,522
Forrestal Funding Master Trust (a)(e)
6.00%, 02/03/00 20,000 19,892
5.96%, 02/09/00 50,000 49,686
5.97%, 02/23/00 50,000 49,574
5.98%, 03/10/00 98,000 96,897
6.02%, 03/13/00 84,000 83,017
6.04%, 03/23/00 74,000 73,006
5.95%, 04/24/00 50,000 49,082
Intrepid Funding Master Trust (a)(e)
5.97%, 02/03/00 20,000 19,892
5.96%, 03/09/00 48,545 48,008
5.96%, 03/23/00 50,000 49,335
5.98%, 03/24/00 100,000 98,650
5.95%, 05/09/00 86,519 84,724
5.96%, 05/11/00 84,660 82,875
Kitty Hawk Funding Corp. (a)(e)
6.02%, 01/10/00 20,212 20,182
6.99%, 01/14/00 50,372 50,245
6.21%, 01/18/00 30,145 30,058
6.79%, 01/25/00 29,955 29,820
6.04%, 01/28/00 20,929 20,835
5.99%, 02/15/00 43,000 42,688
6.32%, 02/24/00 14,131 13,999
6.10%, 03/13/00 76,157 75,242
16
<PAGE>
Par Value
-------- ----------
6.18%, 03/15/00 $ 38,175 $ 37,696
6.03%, 06/01/00 87,000 84,849
Vehicle Services of America (e)
6.51%, 02/10/00 16,350 16,233
-----------
1,971,096
-----------
BANKING - GERMANY -- 1.5% (e)
Bavaria TRR Corp. (a)
5.90%, 01/27/00 27,000 26,888
6.13%, 03/28/00 149,000 146,854
6.13%, 03/31/00 64,000 63,046
Comision Federal de Electricidad
6.00%, 03/27/00 78,000 76,916
Giro US Funding Corp. (a)
6.04%, 01/03/00 15,000 14,995
6.07%, 01/10/00 30,000 29,955
6.53%, 01/21/00 84,000 83,697
6.03%, 02/04/00 50,000 49,721
6.10%, 02/10/00 20,000 19,867
6.22%, 03/24/00 15,093 14,880
-----------
526,819
-----------
BANKING - NETHERLANDS -- 4.7%
ABN-AMRO North America Finance Inc.
5.96%, 02/29/00 85,000 84,182
Atlantis One Funding Corp. (e)
5.66%, 01/26/00 14,000 13,947
6.02%, 01/26/00 225,000 224,078
6.01%, 01/28/00 46,079 45,875
6.02%, 01/28/00 76,033 75,697
6.03%, 01/28/00 82,247 81,883
5.78%, 02/04/00 20,000 19,894
5.60%, 02/07/00 25,865 25,721
5.93%, 02/08/00 100,000 99,391
5.90%, 02/10/00 13,000 12,917
5.93%, 02/10/00 47,766 47,460
5.96%, 02/10/00 9,924 9,860
5.67%, 02/11/00 101,860 101,222
5.95%, 02/16/00 149,184 148,080
6.02%, 02/16/00 10,000 9,925
5.97%, 02/22/00 102,498 101,641
5.94%, 02/23/00 139,032 137,851
5.97%, 02/23/00 125,000 123,935
5.97%, 02/25/00 49,872 49,431
6.10%, 03/23/00 12,000 11,838
Internationale Nederlanden
(U.S.) Funding Corp.
6.07%, 03/30/00 140,000 137,953
6.00%, 04/20/00 40,000 39,286
Par Value
-------- ----------
Tulip Funding Corp. (a) (e)
6.11%, 01/07/00 $ 27,330 $ 27,302
6.93%, 01/11/00 26,398 26,347
6.06%, 01/21/00 50,000 49,833
-----------
1,705,549
-----------
BANKING - NORWAY -- 0.3%
Christiania Capital Corp. (a)
6.08%, 02/04/00 17,000 16,904
6.06%, 03/08/00 50,000 49,444
Den Norske Bank
6.35%, 01/27/00 45,000 44,795
-----------
111,143
-----------
BANKING - SPAIN -- 0.4%
Santander Finance (Delaware), Inc.
6.16%, 03/29/00 150,000 147,776
-----------
BANKING - SWEDEN -- 1.5%
AB Spintab
6.08%, 02/08/00 69,000 68,566
6.00%, 02/29/00 43,000 42,583
6.06%, 03/01/00 10,000 9,901
6.00%, 03/02/00 100,000 98,998
6.04%, 03/07/00 43,000 42,531
6.17%, 03/27/00 55,000 54,201
6.10%, 06/15/00 87,000 84,625
Forenings Sparbanken AB (Swedbank)
6.17%, 03/27/00 100,000 98,548
Svenska Handelsbanken, Inc.
6.82%, 01/13/00 50,000 49,887
-----------
549,840
-----------
BANKING - SWITZERLAND -- 0.4% (a)
Credit Suisse First Boston, Inc.
5.60%, 01/24/00 50,000 49,826
5.92%, 02/24/00 40,000 39,655
5.92%, 02/25/00 60,000 59,473
-----------
148,954
-----------
BANKING - UNITED KINGDOM -- 1.4%
Abbey National Treasury Services PLC
5.20%, 05/04/00 95,000 94,978
5.40%, 05/11/00 50,000 49,968
5.76%, 07/28/00 250,000 249,930
17
<PAGE>
SCHWAB MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (in thousands) (continued)
December 31, 1999
Par Value
-------- ----------
Repeat Offering Securitization
Entity, Inc. (a)(e)
6.23%, 01/24/00 $ 10,666 $ 10,624
6.24%, 01/28/00 48,000 47,779
6.02%, 02/28/00 45,000 44,570
-----------
497,849
-----------
CREDIT CARD RECEIVABLES -- 0.8% (a)(f)
Montauk Funding Corp.
7.04%, 01/18/00 6,000 5,980
6.00%, 02/16/00 48,000 47,637
6.13%, 02/25/00 12,000 11,889
6.07%, 03/01/00 100,000 99,002
6.23%, 03/01/00 18,000 17,816
6.07%, 03/02/00 50,000 49,493
6.07%, 03/03/00 50,000 49,484
Providian Master Trust Series 1993-3
6.08%, 02/07/00 12,229 12,154
-----------
293,455
-----------
DIVERSIFIED FINANCIAL ASSETS -- 16.6% (a)(f)
Amsterdam Funding Corp.
6.05%, 01/04/00 12,650 12,644
6.06%, 01/04/00 15,000 14,992
6.08%, 01/04/00 25,000 24,988
6.01%, 01/05/00 25,000 24,983
6.07%, 01/06/00 47,000 46,961
6.15%, 01/07/00 10,000 9,990
6.05%, 01/10/00 13,000 12,980
6.02%, 01/11/00 23,500 23,461
6.00%, 01/12/00 50,000 49,910
6.06%, 01/12/00 4,200 4,192
6.44%, 01/13/00 8,000 7,983
5.93%, 01/21/00 25,000 24,920
6.03%, 02/02/00 59,000 58,690
Bavaria Universal Funding
5.91%, 01/20/00 11,000 10,967
5.90%, 01/28/00 15,000 14,935
Beta Finance, Inc.
6.04%, 02/01/00 15,000 14,924
5.78%, 02/11/00 31,000 30,802
6.00%, 03/08/00 25,000 24,729
6.00%, 03/28/00 90,000 88,736
6.00%, 04/14/00 55,000 54,078
6.07%, 04/14/00 20,000 19,660
6.00%, 04/17/00 85,000 83,535
6.10%, 04/28/00 46,300 45,405
Par Value
-------- ----------
5.25%, 05/11/00 $ 75,000 $ 75,000
5.55%, 06/09/00 50,000 49,998
CC (USA), Inc.
5.99%, 02/07/00 95,000 94,430
5.78%, 02/11/00 10,000 9,936
5.99%, 03/03/00 80,000 79,199
6.00%, 03/14/00 115,000 113,642
6.01%, 04/25/00 50,000 49,074
Concord Minutemen Capital Co., L.L.C.
Series A
5.66%, 01/21/00 14,000 13,957
5.91%, 01/21/00 31,000 30,901
6.25%, 01/27/00 70,000 69,689
6.24%, 02/04/00 12,000 11,930
5.98%, 02/09/00 44,000 43,723
5.94%, 02/15/00 17,000 16,877
5.99%, 02/18/00 9,000 8,930
6.13%, 02/18/00 27,000 26,784
6.11%, 03/16/00 50,000 49,380
6.13%, 03/16/00 10,000 9,875
6.06%, 03/17/00 15,351 15,159
6.11%, 03/17/00 100,000 98,744
6.01%, 04/14/00 26,706 26,255
Delaware Funding Corp.
6.00%, 02/22/00 33,123 32,843
6.00%, 02/24/00 42,338 41,966
Dorada Finance, Inc.
5.91%, 02/15/00 32,000 31,771
6.02%, 02/15/00 18,000 17,868
6.11%, 02/15/00 6,200 6,153
6.00%, 04/14/00 19,000 18,681
Greenwich Funding Corp.
6.03%, 01/13/00 16,012 15,980
6.21%, 01/18/00 15,000 14,957
6.23%, 01/19/00 72,704 72,481
6.05%, 01/20/00 35,000 34,889
6.25%, 01/24/00 97,413 97,030
6.31%, 02/16/00 41,700 41,367
6.37%, 02/23/00 20,232 20,044
6.09%, 03/15/00 74,000 73,087
Greyhawk Funding, L.L.C.
6.00%, 01/25/00 40,000 39,842
6.36%, 02/16/00 125,000 123,994
6.23%, 03/02/00 65,000 64,323
6.07%, 03/08/00 25,000 24,722
6.07%, 03/09/00 50,000 49,435
6.08%, 03/09/00 116,000 114,688
18
<PAGE>
Par Value
-------- ----------
International Securitization Corp.
6.09%, 01/13/00 $ 23,000 $ 22,954
6.20%, 01/18/00 26,000 25,925
6.25%, 01/19/00 6,000 5,982
6.05%, 01/21/00 28,000 27,907
6.00%, 01/25/00 19,040 18,965
6.25%, 01/25/00 32,000 31,869
6.00%, 01/27/00 21,260 21,170
6.05%, 01/31/00 19,725 19,627
6.00%, 02/01/00 82,000 81,585
6.10%, 02/02/00 28,000 27,851
6.19%, 02/03/00 8,000 7,955
6.02%, 02/07/00 25,000 24,849
6.21%, 02/07/00 6,600 6,559
6.01%, 02/11/00 21,000 20,860
6.02%, 02/11/00 20,000 19,866
6.09%, 02/25/00 13,332 13,211
6.23%, 03/07/00 60,810 60,124
6.00%, 03/09/00 10,000 9,890
6.16%, 04/24/00 38,000 37,280
Lexington Parker Capital Corp.
5.66%, 01/25/00 40,000 39,853
5.60%, 02/08/00 95,000 94,455
5.98%, 02/09/00 38,000 37,761
5.99%, 02/11/00 99,000 98,343
5.99%, 02/15/00 24,000 23,825
5.98%, 02/16/00 30,000 29,777
6.04%, 03/02/00 89,000 88,103
6.25%, 03/02/00 51,462 50,924
6.25%, 03/03/00 6,982 6,908
6.06%, 04/07/00 22,000 21,648
Market Street Funding Corp.
6.36%, 01/07/00 44,000 43,954
6.00%, 01/12/00 45,909 45,826
6.01%, 02/09/00 65,000 64,587
6.02%, 02/11/00 116,000 115,223
6.15%, 02/25/00 24,000 23,779
6.00%, 03/10/00 20,000 19,777
Mont Blanc Capital Corp.
6.00%, 01/11/00 30,654 30,604
6.00%, 01/21/00 36,151 36,033
Moriarty L.L.C.
6.78%, 01/10/00 30,000 29,949
6.21%, 01/21/00 16,000 15,946
6.25%, 01/24/00 10,000 9,961
5.97%, 02/15/00 50,000 49,632
5.97%, 02/17/00 34,000 33,739
6.07%, 03/10/00 55,000 54,370
Par Value
-------- ----------
6.09%, 03/10/00 $ 34,000 $ 33,609
6.11%, 03/20/00 43,000 42,433
Quincy Capital Corp.
6.13%, 02/07/00 63,000 62,611
5.95%, 02/15/00 35,000 34,744
Sigma Finance, Inc.
5.61%, 01/18/00 29,000 28,925
5.99%, 01/28/00 37,000 36,836
6.01%, 02/02/00 80,225 79,801
6.18%, 02/15/00 17,435 17,303
6.02%, 03/01/00 75,000 74,259
6.05%, 03/06/00 50,000 49,462
6.06%, 03/06/00 75,000 74,191
6.05%, 03/08/00 70,000 69,224
6.06%, 03/08/00 60,000 59,333
6.06%, 03/20/00 75,000 74,020
6.06%, 03/22/00 20,000 19,732
5.95%, 03/28/00 67,000 66,057
6.00%, 04/07/00 25,000 24,608
6.08%, 04/10/00 50,000 49,181
6.11%, 04/14/00 110,000 108,119
6.10%, 04/17/00 75,000 73,680
6.11%, 04/25/00 75,000 73,582
6.12%, 04/25/00 25,000 24,526
6.15%, 04/25/00 25,000 24,524
5.93%, 05/15/00 37,000 36,201
5.93%, 05/30/00 50,000 48,803
5.95%, 05/30/00 50,000 48,799
6.31%, 11/01/00 50,000 50,000
Stellar Funding Group, Inc.
6.54%, 01/13/00 7,000 6,985
6.01%, 01/19/00 13,000 12,962
6.06%, 02/04/00 10,300 10,242
6.16%, 02/18/00 10,000 9,919
5.99%, 02/22/00 20,643 20,470
6.01%, 02/22/00 20,604 20,430
6.18%, 02/25/00 9,500 9,412
6.16%, 04/27/00 14,000 13,728
Variable Funding Capital Corp.
5.91%, 01/06/00 75,000 74,940
6.53%, 01/07/00 20,000 19,978
6.79%, 01/25/00 38,918 38,743
5.85%, 02/16/00 75,000 74,444
5.94%, 02/18/00 100,000 99,219
6.18%, 03/17/00 121,173 119,615
-----------
5,999,125
-----------
19
<PAGE>
SCHWAB MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (in thousands) (continued)
December 31, 1999
Par Value
-------- ----------
FINANCE - COMMERCIAL -- 6.5%
CIT Group Holdings, Inc.
5.96%, 02/15/00 $ 50,000 $ 49,633
Concord Minutemen Capital Co.,
L.L.C. Series B (a)
5.78%, 02/09/00 65,000 64,605
6.04%, 02/16/00 110,500 109,660
6.05%, 02/17/00 35,864 35,585
General Electric Capital Corp.
5.97%, 02/07/00 25,000 24,849
5.97%, 02/08/00 50,000 49,690
5.97%, 02/09/00 100,000 99,363
5.97%, 02/11/00 100,000 99,330
5.93%, 02/28/00 150,000 148,594
6.02%, 03/07/00 200,000 197,826
6.02%, 03/08/00 100,000 98,896
6.05%, 03/08/00 115,000 113,733
6.17%, 03/08/00 27,000 26,694
6.10%, 03/16/00 200,000 197,521
General Electric Capital International
Funding, Inc. (a)
5.95%, 03/03/00 30,000 29,698
6.12%, 03/14/00 77,608 76,668
6.12%, 03/16/00 150,000 148,134
6.10%, 03/17/00 87,900 86,796
5.90%, 05/19/00 40,000 39,115
General Electric Capital Services
6.10%, 02/18/00 250,000 248,007
6.03%, 02/22/00 50,000 49,572
6.10%, 02/22/00 50,000 49,568
6.10%, 02/23/00 50,000 49,560
6.17%, 03/07/00 41,000 40,542
6.15%, 03/10/00 25,000 24,709
6.05%, 03/14/00 90,000 88,920
Heller Financial, Inc.
6.30%, 01/18/00 24,000 23,930
6.13%, 03/03/00 50,000 49,481
6.15%, 03/13/00 26,000 25,685
-----------
2,346,364
-----------
FINANCE - CONSUMER -- 0.5%
Associates First Capital B.V.
5.95%, 02/17/00 22,000 21,832
6.04%, 03/02/00 25,000 24,748
5.96%, 03/06/00 50,000 49,472
6.15%, 03/20/00 75,000 74,002
-----------
170,054
-----------
Par Value
-------- ----------
MULTILINE INSURANCE -- 0.1%
General Electric Financial
Assurance Holdings, Inc.
6.11%, 03/17/00 $ 42,740 $ 42,202
-----------
SECURITIES BROKERAGE - DEALER -- 8.5%
Bear Stearns Companies, Inc.
6.00%, 01/24/00 55,000 54,794
5.95%, 02/03/00 50,000 49,735
6.11%, 02/09/00 145,000 144,061
6.11%, 02/10/00 97,000 96,356
Goldman Sachs Group
5.84%, 02/10/00 50,000 49,685
6.08%, 02/23/00 32,000 31,717
6.09%, 02/23/00 200,000 198,245
6.08%, 02/24/00 32,000 31,712
6.09%, 02/24/00 125,000 123,883
6.08%, 02/25/00 31,000 30,716
6.10%, 02/25/00 134,000 132,780
6.23%, 03/29/00 11,000 10,835
6.25%, 04/27/00 50,000 49,005
6.00%, 08/07/00 95,000 94,998
JP Morgan & Co.
5.46%, 01/21/00 200,000 199,413
5.92%, 02/17/00 144,000 142,905
6.00%, 03/10/00 99,000 97,880
5.90%, 05/17/00 12,000 11,738
Lehman Brothers Holdings, Inc.
6.32%, 04/03/00 100,000 98,396
Merrill Lynch & Co., Inc.
6.03%, 03/15/00 250,000 246,953
6.02%, 06/12/00 100,000 97,360
Morgan Stanley Dean Witter
Discover & Co.
5.61%, 01/19/00 320,000 319,128
6.12%, 02/04/00 100,000 99,432
6.11%, 02/07/00 50,000 49,691
6.11%, 02/08/00 100,000 99,366
6.14%, 03/13/00 18,000 17,782
PaineWebber Group, Inc.
6.33%, 02/01/00 78,000 77,578
Salomon Smith Barney Holdings, Inc.
5.78%, 02/10/00 114,000 113,289
6.02%, 03/06/00 40,000 39,571
6.02%, 03/07/00 250,000 247,280
-----------
3,056,284
-----------
20
<PAGE>
Par Value
-------- ----------
TRADE RECEIVABLES -- 12.6% (a)(f)
Apreco, Inc.
6.93%, 01/14/00 $ 50,000 $ 49,875
6.03%, 01/25/00 32,000 31,873
6.10%, 02/07/00 9,000 8,945
6.10%, 02/24/00 40,000 39,639
6.28%, 02/24/00 34,472 34,151
Asset Securitization Cooperative Corp.
6.02%, 02/24/00 200,000 198,236
Barton Capital Corp.
6.73%, 01/05/00 67,404 67,354
6.43%, 01/11/00 50,262 50,173
6.44%, 01/13/00 11,053 11,029
6.35%, 02/03/00 112,267 111,619
5.99%, 02/11/00 13,111 13,024
6.26%, 03/06/00 41,755 41,289
6.07%, 03/07/00 19,713 19,497
6.07%, 03/10/00 48,682 48,124
6.03%, 03/28/00 12,502 12,325
Corporate Asset Funding Corp.
6.10%, 02/10/00 79,000 78,475
5.94%, 02/15/00 50,000 49,634
6.23%, 03/01/00 75,000 74,231
Corporate Receivables Corp.
6.03%, 01/25/00 130,000 129,483
6.13%, 02/02/00 100,000 99,465
6.13%, 02/03/00 90,000 89,503
6.15%, 02/15/00 70,000 69,472
CXC, Inc.
6.10%, 02/10/00 100,000 99,336
5.97%, 02/14/00 65,000 64,532
5.99%, 02/18/00 163,000 161,718
Edison Asset Securitization Corp., L.L.C.
6.23%, 03/09/00 50,000 49,419
Eureka Securitization, Inc.
6.62%, 01/31/00 20,000 19,890
6.13%, 02/08/00 18,000 17,886
5.99%, 02/15/00 25,000 24,816
Falcon Asset Securitization Corp.
6.72%, 01/05/00 13,037 13,027
6.82%, 01/06/00 95,544 95,454
7.02%, 01/06/00 57,000 56,945
6.92%, 01/07/00 50,000 49,943
6.07%, 01/10/00 67,605 67,503
6.83%, 01/10/00 75,385 75,257
6.43%, 01/14/00 76,000 75,824
6.04%, 01/21/00 90,000 89,701
6.04%, 01/24/00 75,000 74,714
Par Value
-------- ----------
6.04%, 01/25/00 $ 70,575 $ 70,294
5.98%, 02/18/00 18,000 17,859
6.32%, 02/18/00 20,250 20,081
Monte Rosa Capital Corp.
6.03%, 01/18/00 50,216 50,075
6.00%, 01/28/00 115,000 114,494
6.01%, 01/28/00 50,000 49,780
6.01%, 02/10/00 15,000 14,902
6.13%, 02/17/00 12,000 11,906
5.99%, 02/24/00 31,064 30,790
6.17%, 02/25/00 24,000 23,778
6.12%, 03/13/00 35,000 34,578
6.15%, 03/22/00 20,338 20,061
Preferred Receivables Funding Corp.
6.93%, 01/14/00 85,465 85,252
6.14%, 02/02/00 50,000 49,732
6.01%, 05/25/00 11,000 10,742
Receivables Capital Corp.
6.13%, 01/27/00 120,102 119,580
6.13%, 02/08/00 130,400 129,572
6.15%, 02/11/00 9,212 9,149
6.02%, 02/15/00 108,151 107,355
Sheffield Receivables Corp.
6.20%, 01/25/00 37,000 36,850
6.21%, 01/26/00 81,000 80,657
6.19%, 01/27/00 50,000 49,781
6.02%, 02/01/00 95,000 94,518
6.11%, 02/17/00 20,000 19,843
6.14%, 02/25/00 12,000 11,890
WCP Funding, Inc.
6.10%, 02/03/00 45,000 44,753
6.05%, 02/10/00 12,899 12,814
6.10%, 02/17/00 64,000 63,501
6.12%, 02/25/00 25,000 24,771
Windmill Funding
6.24%, 01/04/00 50,000 49,974
6.73%, 01/05/00 42,854 42,822
6.06%, 01/06/00 50,000 49,958
6.08%, 01/06/00 27,400 27,377
6.25%, 01/06/00 25,000 24,979
6.01%, 01/10/00 9,924 9,909
6.00%, 01/12/00 21,500 21,461
6.21%, 01/12/00 20,671 20,632
5.93%, 01/14/00 45,000 44,906
6.04%, 01/18/00 25,000 24,929
21
<PAGE>
SCHWAB MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (in thousands) (continued)
December 31, 1999
Par Value
-------- ----------
6.20%, 01/18/00 $ 48,500 $ 48,360
6.10%, 02/04/00 75,000 74,576
6.12%, 02/04/00 25,000 24,858
6.13%, 02/04/00 25,000 24,858
6.03%, 02/09/00 50,000 49,680
6.13%, 02/17/00 75,000 74,412
6.03%, 02/18/00 50,000 49,607
6.13%, 02/22/00 75,000 74,350
6.32%, 02/24/00 25,000 24,766
Wood Street Funding Corp.
6.02%, 02/01/00 9,787 9,737
6.19%, 02/01/00 12,073 12,010
6.00%, 02/17/00 19,214 19,066
-----------
4,575,966
-----------
TOTAL COMMERCIAL PAPER AND OTHER
CORPORATE OBLIGATIONS
(Cost $23,763,403) 23,763,403
-----------
CERTIFICATES OF DEPOSIT -- 22.4%
BANKING - AUSTRALIA -- 0.8%
National Australia Bank, Ltd.
6.00%, 03/01/00 200,000 200,002
6.02%, 06/14/00 100,000 100,002
-----------
300,004
-----------
BANKING - BELGIUM -- 1.8%
Banque Bruxelles Lambert
5.92%, 02/04/00 100,000 100,014
Credit Communal de Belgique
6.27%, 01/03/00 75,000 75,000
6.02%, 03/02/00 175,000 175,000
5.20%, 04/06/00 100,000 99,987
5.10%, 04/13/00 100,000 99,986
5.13%, 04/17/00 100,000 99,985
-----------
649,972
-----------
BANKING - CANADA -- 3.1%
Bank of Montreal
5.13%, 04/17/00 50,000 49,994
5.20%, 04/17/00 45,000 44,984
Bank of Nova Scotia
6.27%, 01/03/00 50,000 50,000
5.92%, 02/01/00 20,000 20,002
6.00%, 02/01/00 70,000 70,000
6.00%, 02/28/00 50,000 50,000
6.02%, 06/23/00 20,000 20,012
Par Value
-------- ----------
Canadian Imperial Bank of Commerce
5.05%, 01/27/00 $ 75,000 $ 74,999
5.20%, 02/25/00 100,000 99,996
5.35%, 03/03/00 25,000 24,997
5.20%, 04/04/00 100,000 99,988
5.10%, 04/12/00 88,000 87,995
5.45%, 06/01/00 45,000 44,991
National Bank of Canada
6.05%, 06/23/00 65,000 65,000
Royal Bank of Canada
5.05%, 02/04/00 100,000 99,997
5.06%, 02/08/00 75,000 74,998
Toronto Dominion Bank
5.15%, 02/14/00 100,000 99,987
5.20%, 04/05/00 50,000 49,994
-----------
1,127,934
-----------
BANKING - DENMARK -- 0.2%
Den Danske Bank
6.02%, 03/14/00 50,000 50,000
-----------
BANKING - DOMESTIC -- 1.7%
American Express Centurion Bank
6.20%, 03/21/00 59,000 59,000
6.00%, 03/30/00 170,000 170,000
First Tennessee Bank NA
5.85%, 02/28/00 50,000 50,000
Southtrust Bank NA
5.95%, 02/16/00 38,000 38,000
Union Bank of California
6.03%, 02/14/00 153,000 153,000
Wilmington Trust Co.
6.12%, 04/20/00 50,000 49,999
6.12%, 04/26/00 50,000 50,000
5.95%, 05/08/00 48,000 48,000
-----------
617,999
-----------
BANKING - FINLAND -- 0.3%
Merita Bank Ltd.
5.96%, 02/22/00 100,000 100,005
-----------
BANKING - FRANCE -- 1.9%
Banque Nationale de Paris
6.00%, 03/03/00 36,000 36,001
6.02%, 03/06/00 100,000 100,000
6.00%, 06/02/00 50,000 50,000
22
<PAGE>
Par Value
-------- ----------
Societe Generale
5.85%, 03/30/00 $200,000 $ 200,000
5.85%, 03/31/00 50,000 50,000
5.85%, 04/03/00 141,000 141,000
5.93%, 04/03/00 100,000 100,000
-----------
677,001
-----------
BANKING - GERMANY -- 5.9%
Bayerische HypoVereinsbank AG
6.02%, 03/03/00 200,000 200,000
Bayerische Landesbank Girozentrale
6.02%, 03/07/00 44,000 44,000
6.00%, 06/02/00 25,000 25,000
6.02%, 06/07/00 50,000 50,004
6.02%, 06/13/00 25,000 25,001
6.14%, 10/02/00 25,000 24,956
Deutsche Bank AG
6.02%, 01/14/00 125,000 125,000
5.80%, 04/04/00 150,000 150,000
6.00%, 06/02/00 145,000 145,000
6.26%, 10/18/00 100,000 99,954
6.21%, 11/29/00 100,000 99,939
Landesbank Hessen-Thuringen
Girozentrale
5.20%, 04/26/00 50,000 49,988
Norddeutsche Landesbank Girozentrale
6.01%, 01/14/00 50,000 50,000
5.92%, 02/14/00 35,000 35,004
5.96%, 02/28/00 40,000 39,984
Westdeutsche Landesbank Girozentrale
5.95%, 02/01/00 11,000 11,000
6.00%, 03/01/00 100,000 100,000
6.15%, 03/21/00 236,000 236,000
6.16%, 03/23/00 128,000 128,000
6.18%, 03/29/00 350,000 350,000
6.18%, 03/31/00 131,000 131,000
6.03%, 06/06/00 13,000 13,000
-----------
2,132,830
-----------
BANKING - NETHERLANDS -- 0.4%
ING Bank NV
5.93%, 02/15/00 100,000 100,000
6.00%, 06/21/00 31,000 31,006
-----------
131,006
-----------
Par Value
-------- ----------
BANKING - NORWAY -- 0.6%
Christiania Bank
6.14%, 02/02/00 $ 50,000 $ 50,000
5.95%, 02/25/00 10,000 9,985
5.96%, 02/25/00 75,000 75,001
5.97%, 02/28/00 30,000 30,000
Den Norske Bank
6.01%, 03/01/00 50,000 50,001
-----------
214,987
-----------
BANKING - SWEDEN -- 0.1%
Svenska Handelsbanken
6.00%, 03/02/00 50,000 50,000
-----------
BANKING - SWITZERLAND -- 2.8%
Credit Suisse First Boston
6.15%, 07/03/00 50,000 49,847
UBS AG
5.11%, 01/13/00 50,000 49,999
5.35%, 03/01/00 25,000 24,998
5.10%, 04/12/00 71,000 70,996
5.26%, 05/10/00 100,000 99,983
5.40%, 05/31/00 50,000 49,991
5.45%, 06/01/00 50,000 49,991
5.65%, 06/26/00 100,000 99,975
5.75%, 06/26/00 25,000 24,982
5.70%, 06/27/00 75,000 74,986
5.80%, 07/05/00 75,000 74,984
6.15%, 11/20/00 250,000 249,845
6.30%, 12/11/00 100,000 99,923
-----------
1,020,500
-----------
BANKING - UNITED KINGDOM -- 2.8%
Abbey National Treasury Services PLC
6.02%, 03/13/00 250,000 250,000
Bank of Scotland Treasury Services
5.94%, 03/31/00 90,000 90,002
6.02%, 06/07/00 100,000 100,002
6.02%, 06/08/00 150,000 150,003
6.02%, 06/12/00 125,000 125,000
Barclays Bank PLC
5.04%, 01/12/00 100,000 99,999
5.66%, 06/14/00 25,000 24,995
5.85%, 08/01/00 115,000 115,000
23
<PAGE>
SCHWAB MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (in thousands) (continued)
December 31, 1999
Par Value
-------- ----------
National Westminster Bank PLC
5.09%, 02/09/00 $ 50,000 $ 49,999
-----------
1,005,000
-----------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $8,077,238) 8,077,238
-----------
VARIABLE RATE OBLIGATIONS -- 9.2% (b)
AUTOMOTIVE -- 0.3%
Ford Motor Credit
6.10%, 02/18/00 95,000 94,950
-----------
BANKING - DOMESTIC -- 0.3%
6700 Cherry Avenue Partners Demand
Bond Series 1993 (e)
6.44%, 01/07/00 9,300 9,300
Baptist Health Systems of South Florida,
Inc. Taxable Direct Note Obligations
Series 1995A
6.40%, 01/07/00 12,555 12,555
Baptist Health Systems of South Florida,
Inc. Taxable Direct Note Obligations
Series 1995B
6.40%, 01/07/00 19,000 19,000
Fleet Boston Financial Corp.
6.18%, 03/27/00 10,000 10,006
Lowndes Corp., Georgia Taxable Demand
Bond Series 1997 (a)(e)
6.75%, 01/07/00 8,650 8,650
MoviePlex Realty Leasing, L.L.C.
Adjustable Rate Tender Securities
(Carmike Cinemas, Inc.)
Series 1997A1 (e)
6.46%, 01/07/00 35,125 35,125
MoviePlex Realty Leasing, L.L.C.
Adjustable Rate Tender Securities
(Carmike Cinemas, Inc.)
Series 1997A2 (e)
6.46%, 01/07/00 12,325 12,325
MoviePlex Realty Leasing, L.L.C.
Adjustable Rate Tender Securities
(Carmike Cinemas, Inc.)
Series 1997A3 (e)
6.46%, 01/07/00 12,325 12,325
-----------
119,286
-----------
Par Value
-------- ----------
BANKING - FINLAND -- 0.1%
Merita Bank Ltd.
6.66%, 01/20/00 $ 45,000 $ 45,000
-----------
BANKING - FRANCE -- 0.1% (e)
New Jersey Economic Development
Authority Adjustable Rate Money
Market Securities (GE Aerospace
Camden Development Project) Series A
6.46%, 01/07/00 14,875 14,875
New Jersey Economic Development
Authority Adjustable Rate Money
Market Securities (GE Aerospace
Camden Development Project)
Series B
6.46%, 01/07/00 10,000 10,000
-----------
24,875
-----------
BANKING - GERMANY -- 1.1%
Deutsche Bank AG
6.59%, 01/18/00 185,000 185,000
Dresdner Bank AG
6.44%, 01/24/00 200,000 199,961
Liquid Asset Backed Securities
Series 1998-1 (a)
6.48%, 01/07/00 18,016 18,015
-----------
402,976
-----------
BANKING - NETHERLANDS -- 0.1% (e)
New Jersey Economic Development
Authority Adjustable Rate Lease
Revenue Taxable Bonds (Barnes & Noble,
Inc. Distribution & Freight Consolidation
Center Project) Series 1995A
6.43%, 01/07/00 19,150 19,150
New Jersey Economic Development
Authority Adjustable Rate Lease
Revenue Taxable Bonds (Barnes & Noble,
Inc. Distribution & Freight Consolidation
Center Project) Series B
6.43%, 01/07/00 10,000 10,000
-----------
29,150
-----------
CREDIT CARD RECEIVABLES -- 0.1% (a) (f)
Short Term Repackaged Asset Trust
Series 1998 E
6.56%, 01/18/00 50,000 50,000
-----------
24
<PAGE>
DIVERSIFIED FINANCIAL ASSETS -- 1.0% (a)
Sigma Finance, Inc.
6.24%, 03/15/00 $ 50,000 $ 49,997
6.24%, 03/22/00 20,000 19,999
Trident Capital Finance, Inc.
6.60%, 01/03/00 285,000 285,000
-----------
354,996
-----------
EDUCATION -- 0.1%
Development Authority of Dekalb County
Taxable Rate RB (Emory University
Project) Series 1995B
6.50%, 01/07/00 30,950 30,950
-----------
ELECTRICAL & ELECTRONICS -- 0.1% (a)
CFM International, Inc.
6.53%, 01/07/00 40,000 40,000
-----------
LIFE & HEALTH INSURANCE -- 1.1% (d)
General Electric Life & Annuity
Assurance Co.
6.53%, 01/30/00 150,000 150,000
Monumental Life Insurance Co.
5.78%, 01/01/00 100,000 100,000
Pacific Life Insurance Co.
6.53%, 01/01/00 100,000 100,000
United of Omaha Life Insurance Co.
6.16%, 01/01/00 60,000 60,000
-----------
410,000
-----------
MONOLINE INSURANCE -- 0.1% (e)
Dade County, Florida Expressway
Authority Toll System RB Series 1996
6.25%, 01/07/00 30,790 30,790
The Community Redevelopment Agency
of the City of Los Angeles, California
(Bunker Hill Project ) Subordinate Tax
Allocation Refunding Bonds Series 1997A
6.60%, 01/07/00 10,000 10,000
-----------
40,790
-----------
SECURITIES BROKERAGE-DEALER -- 3.0%
JP Morgan & Co. , Inc.
6.55%, 01/28/00 200,000 200,000
Lehman Commercial Paper, Inc.
Series 99-2 (d)
6.73%, 01/03/00 400,000 400,000
Par Value
-------- ----------
Morgan Stanley Dean Witter
Discover & Co.
6.52%, 01/10/00 $100,000 $ 100,000
6.51%, 01/11/00 100,000 100,000
6.51%, 01/14/00 145,000 145,000
6.52%, 01/24/00 125,000 125,000
-----------
1,070,000
-----------
TRADE RECEIVABLES -- 1.7% (a)(f)
Asset Securitization Cooperative Corp.
6.52%, 01/10/00 200,000 200,000
6.59%, 01/31/00 100,000 100,000
6.16%, 03/17/00 100,000 100,000
Ciesco LP
6.48%, 01/18/00 200,000 199,963
-----------
599,963
-----------
TOTAL VARIABLE RATE
OBLIGATIONS
(Cost $3,312,936) 3,312,936
-----------
BANK NOTES -- 1.1%
Bank of America NA
5.93%, 04/18/00 165,000 165,000
European American Bank
5.61%, 06/12/00 25,000 24,995
LaSalle National Bank
5.30%, 05/15/00 50,000 49,991
5.76%, 07/21/00 49,000 48,975
5.76%, 07/24/00 100,000 99,922
-----------
TOTAL BANK NOTES
(Cost $388,883) 388,883
-----------
Maturity Value
---------------
REPURCHASE AGREEMENTS -- 1.1% (c)
Credit Suisse First Boston Tri-Party
Repurchase Agreement Collateralized
by U.S. Government Securities
5.00% Issue 07/06/99
Due 01/03/00 60,681 60,656
5.00% Issue 07/30/99
Due 01/03/99 88,604 88,567
5.00% Issue 12/03/99
Due 01/03/00 100,042 100,000
5.00% Issue 12/06/99
Due 01/03/00 50,798 50,777
25
<PAGE>
SCHWAB MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (in thousands) (continued)
December 31, 1999
Maturity Value Value
--------------- ----------
5.00% Issue 12/31/99
Due 01/03/00 $ 20,100 $ 20,091
Salomon Smith Barney Inc. Tri-Party
Repurchase Agreement Collateralized
by U.S. Government Securities
4.55% Issue 12/15/99
Due 01/03/00 100,038 100,000
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost $420,091) 420,091
-----------
TOTAL INVESTMENTS -- 99.6%
(Cost $35,962,551) 35,962,551
-----------
OTHER ASSETS AND LIABILITIES -- 0.4%
Other assets 150,454
Liabilities (14,269)
-----------
136,185
-----------
TOTAL NET ASSETS-- 100.0% $36,098,736
===========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
26
<PAGE>
SCHWAB GOVERNMENT MONEY FUND
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1999
Par Value
-------- ----------
U.S. GOVERNMENT SECURITIES -- 79.1%
COUPON NOTES -- 12.2%
Federal Home Loan Bank
4.93%, 01/19/00 $50,000 $ 50,002
4.95%, 01/21/00 20,000 20,001
4.95%, 02/17/00 20,000 19,997
5.16%, 03/08/00 25,000 25,002
5.02%, 05/12/00 25,000 24,986
Federal National Mortgage Association
4.82%, 01/28/00 25,000 24,979
6.10%, 02/10/00 20,000 20,004
5.02%, 04/26/00 25,000 24,911
5.23%, 06/07/00 20,000 19,993
5.90%, 12/01/00 11,355 11,323
5.92%, 12/07/00 20,000 19,966
Student Loan Marketing Association
4.93%, 02/08/00 50,000 50,000
----------
311,164
----------
DISCOUNT NOTES -- 66.9%
Federal Home Loan Bank
5.53%, 02/02/00 14,850 14,779
5.55%, 02/04/00 20,000 19,896
5.85%, 02/18/00 10,000 9,923
5.69%, 02/23/00 12,700 12,595
5.61%, 02/25/00 26,000 25,781
5.68%, 02/25/00 51,620 51,178
5.71%, 03/31/00 7,045 6,947
5.76%, 04/24/00 25,000 24,557
5.63%, 05/10/00 45,000 44,110
5.77%, 05/17/00 9,000 8,807
Federal Home Loan Mortgage
Corporation
5.37%, 01/05/00 25,000 24,985
5.31%, 01/19/00 24,000 23,938
5.66%, 01/19/00 17,898 17,848
5.65%, 01/20/00 19,080 19,024
5.33%, 01/27/00 24,785 24,692
5.34%, 01/27/00 20,000 19,925
5.35%, 01/27/00 30,000 29,887
5.60%, 02/01/00 30,000 29,858
5.64%, 02/02/00 49,000 48,760
5.61%, 02/03/00 13,955 13,885
5.64%, 02/04/00 20,000 19,896
5.63%, 02/07/00 39,000 38,781
5.68%, 02/11/00 8,000 7,949
5.69%, 02/11/00 3,950 3,925
Par Value
-------- ----------
5.70%, 02/18/00 $13,070 $ 12,972
5.62%, 02/24/00 34,511 34,228
5.86%, 03/07/00 18,300 18,106
5.59%, 03/09/00 39,000 38,595
5.68%, 03/09/00 29,000 28,697
5.76%, 03/09/00 29,555 29,238
5.73%, 03/16/00 30,830 30,469
5.73%, 03/23/00 10,000 9,873
5.72%, 03/28/00 12,000 11,836
5.55%, 06/13/00 30,000 29,280
5.73%, 06/29/00 20,000 19,447
5.70%, 07/28/00 40,000 38,748
Federal National Mortgage Association
5.59%, 01/18/00 30,000 29,922
5.62%, 01/18/00 20,625 20,571
5.67%, 01/18/00 24,765 24,700
5.48%, 01/20/00 18,000 17,949
5.34%, 01/21/00 14,000 13,960
5.68%, 01/21/00 19,000 18,941
5.38%, 01/24/00 20,000 19,933
5.39%, 01/24/00 15,605 15,553
5.62%, 01/28/00 2,717 2,706
5.54%, 02/02/00 11,687 11,631
5.55%, 02/02/00 22,859 22,749
5.63%, 02/02/00 2,235 2,224
5.63%, 02/03/00 27,660 27,519
5.56%, 02/07/00 26,400 26,251
5.56%, 02/09/00 3,965 3,941
5.66%, 02/10/00 21,035 20,904
5.67%, 02/14/00 25,000 24,831
5.62%, 02/15/00 40,000 39,724
5.69%, 02/17/00 32,045 31,810
5.66%, 02/24/00 40,000 39,669
5.68%, 02/24/00 20,000 19,832
5.69%, 02/24/00 15,210 15,082
5.66%, 02/25/00 10,669 10,579
5.75%, 03/09/00 8,000 7,914
5.60%, 03/10/00 18,000 17,810
5.92%, 03/16/00 30,000 29,635
5.95%, 03/23/00 37,000 36,506
5.73%, 04/06/00 26,825 26,423
5.76%, 04/17/00 30,000 29,501
5.75%, 04/20/00 30,025 29,512
5.77%, 04/24/00 27,355 26,870
5.76%, 04/25/00 2,215 2,175
5.67%, 05/03/00 14,505 14,232
5.75%, 05/03/00 20,000 19,618
5.63%, 05/11/00 20,000 19,601
27
<PAGE>
SCHWAB GOVERNMENT MONEY FUND
SCHEDULE OF INVESTMENTS (in thousands) (continued)
December 31, 1999
Par Value
-------- ----------
5.78%, 05/17/00 $ 7,055 $ 6,904
5.35%, 05/18/00 23,120 22,669
5.70%, 05/18/00 15,000 14,681
5.79%, 05/25/00 30,000 29,320
5.93%, 06/01/00 8,769 8,555
5.91%, 06/29/00 22,000 21,369
5.87%, 09/01/00 35,000 33,667
----------
1,701,358
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Cost $2,012,522) 2,012,522
----------
VARIABLE RATE OBLIGATIONS -- 2.0% (b)
Student Loan Marketing Association
6.11%, 01/07/00 50,000 50,000
----------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $50,000) 50,000
----------
Maturity Value
---------------
REPURCHASE AGREEMENTS -- 18.6% (c)
Credit Suisse First Boston Corp.
Tri-Party Repurchase Agreement
Collateralized by U.S.
Government Securities
5.00% Issue 12/31/99
Due 01/03/00 45,079 45,060
Lehman Brothers, Inc. Tri-Party
Repurchase Agreement
Collateralized by U.S.
Government Securities
5.56% Issue 11/08/99
Due 01/07/00 42,898 42,504
Morgan Stanley Dean Witter & Co.
Tri-Party Repurchase
Agreement Collateralized by
U.S. Government Securities
5.68% Issue 11/16/99
Due 01/07/00 51,924 51,501
5.72% Issue 12/13/99
Due 01/12/00 18,423 18,335
Maturity Value Value
--------------- ----------
Salomon Smith Barney, Inc.
Tri-Party Repurchase
Agreement Collateralized by
U.S. Government Securities
5.55% Issue 10/04/99
Due 01/04/00 $35,496 $ 35,000
5.55% Issue 10/05/99
Due 01/06/00 22,669 22,348
5.58% Issue 11/01/99
Due 01/07/00 39,936 39,526
5.58% Issue 11/04/99
Due 01/07/00 18,121 17,943
5.60% Issue 11/15/99
Due 01/07/00 39,290 38,968
5.63% Issue 11/18/99
Due 01/07/00 45,584 45,231
5.70% Issue 12/10/99
Due 01/07/00 35,155 35,000
5.72% Issue 11/17/99
Due 01/07/00 23,431 23,243
5.90% Issue 12/16/99
Due 01/07/00 16,058 16,000
5.90% Issue 12/17/99
Due 01/07/00 15,052 15,000
5.90% Issue 12/20/99
Due 01/13/00 29,045 28,932
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $474,591) 474,591
----------
TOTAL INVESTMENTS -- 99.7%
(Cost $2,537,113) 2,537,113
----------
OTHER ASSETS AND LIABILITIES -- 0.3%
Other assets 8,976
Liabilities (947)
----------
8,029
----------
TOTAL NET ASSETS-- 100.0% $2,545,142
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
28
<PAGE>
SCHWAB U.S. TREASURY MONEY FUND
SCHEDULE OF INVESTMENTS (in thousands)
December 31, 1999
Par Value
-------- ----------
U.S. GOVERNMENT SECURITIES -- 98.8%
U.S. TREASURY OBLIGATIONS -- 98.8%
U.S. Treasury Bills
4.77%, 01/13/00 $ 1,095 $ 1,093
4.95%, 01/13/00 18,945 18,914
5.17%, 01/13/00 7,760 7,747
5.18%, 01/13/00 9,315 9,299
5.34%, 01/13/00 25,000 24,956
5.37%, 01/13/00 75,000 74,867
5.44%, 01/13/00 15,085 15,058
5.46%, 01/13/00 6,060 6,049
5.04%, 01/20/00 530 529
5.21%, 01/20/00 5,520 5,505
5.23%, 01/20/00 100,000 99,727
5.25%, 01/20/00 52,630 52,486
5.00%, 01/27/00 26,000 25,907
5.02%, 01/27/00 30,780 30,670
5.03%, 01/27/00 50,000 49,821
5.15%, 02/03/00 3,740 3,722
5.00%, 02/17/00 40,000 39,742
5.25%, 02/24/00 40,135 39,823
5.16%, 03/02/00 6,370 6,315
5.15%, 03/23/00 8,965 8,861
5.35%, 03/23/00 11,690 11,549
5.41%, 03/23/00 22,000 21,732
5.45%, 03/23/00 50,000 49,387
5.19%, 03/30/00 10,000 9,873
5.29%, 05/04/00 37,000 36,339
5.65%, 05/18/00 11,230 10,992
5.58%, 05/25/00 50,000 48,902
5.69%, 06/22/00 50,000 48,670
U.S. Treasury Notes
6.38%, 01/15/00 61,275 61,300
5.38%, 01/31/00 87,360 87,371
7.75%, 01/31/00 79,225 79,386
5.88%, 02/15/00 261,175 261,400
8.50%, 02/15/00 26,105 26,210
5.50%, 02/29/00 114,830 114,885
7.13%, 02/29/00 294,660 295,568
5.50%, 03/31/00 50,000 50,021
6.88%, 03/31/00 11,665 11,708
5.63%, 04/30/00 193,715 193,764
6.75%, 04/30/00 143,200 143,725
6.38%, 05/15/00 171,435 171,988
Par Value
-------- ----------
5.50%, 05/31/00 $ 94,935 $ 94,862
6.25%, 05/31/00 78,470 78,642
5.88%, 06/30/00 12,000 12,012
5.38%, 07/31/00 25,000 24,992
6.13%, 07/31/00 57,520 57,687
6.00%, 08/15/00 14,160 14,199
5.13%, 08/31/00 22,610 22,542
----------
TOTAL U.S. GOVERNMENT SECURITIES
(Cost $2,560,797) 2,560,797
----------
TOTAL INVESTMENTS -- 98.8%
(Cost $2,560,797) 2,560,797
----------
OTHER ASSETS AND LIABILITIES -- 1.2%
Other assets 31,776
Liabilities (825)
----------
30,951
----------
TOTAL NET ASSETS-- 100.0% $2,591,748
==========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
29
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
December 31, 1999
(All dollar amounts are in thousands unless otherwise noted)
Yields shown are effective yields at the time of purchase, except for variable
rate obligations, which are described below, and U.S. government coupon notes
and U.S. Treasury notes, which reflect the coupon rate of the security. Yields
for each type of security are stated according to the market convention for that
security type. For each security, cost (for financial reporting and federal
income tax purposes) and carrying value are the same.
(a) These securities can be resold to qualified institutional buyers within
seven business days. Such securities are deemed liquid in accordance with
procedures adopted by the Board of Trustees. At December 31, 1999, the
aggregate value of such securities held by the Schwab Money Market Fund
was $15,485,122, which represented 42.90% of net assets.
(b) Variable rate obligations have interest rates that vary periodically based
on current market rates. Rates shown are the effective rates as of the
report date. Dates shown for securities with scheduled maturities within
397 days or less, represent the earlier of the demand date or next
interest rate change date. Dates shown for securities with scheduled
maturities greater than 397 days, represent the later of the demand date
or next interest rate change date. For variable rate obligations without
demand features, the next interest reset date is shown. All dates shown
are considered the maturity date for financial reporting purposes.
(c) Repurchase agreements due dates are considered the maturity date.
Repurchase agreements with due dates later than seven days from issue
dates may be subject to seven day putable demand features for liquidity
purposes.
(d) These securities have legal or contractual restrictions on resale. Such
securities are deemed illiquid in accordance with procedures adopted by
the Board of Trustees. At December 31, 1999, the aggregate value of such
securities held by Schwab Money Market Fund were $810,000, which
represented 2.24% of the net assets.
(e) Security has one or more third party credit enhancements.
(f) Asset-backed securities are securities backed by underlying assets and
categorized by industry.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
December 31, 1999
<TABLE>
<CAPTION>
Schwab Schwab Schwab
Money Government U.S. Treasury
Market Money Money
Fund Fund Fund
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Investments, at value (Cost: $35,962,551, $2,537,113 and
$2,560,797, respectively) $35,962,551 $2,537,113 $2,560,797
Cash -- -- 3
Interest receivables 148,580 8,775 31,620
Prepaid expenses 1,874 201 153
----------- ---------- ----------
Total assets 36,113,005 2,546,089 2,592,573
----------- ---------- ----------
LIABILITIES
Payables:
Dividends 7,019 392 324
Investment advisory and administration fees 1,849 138 85
Transfer agency and shareholder service fees 3,092 218 217
Other liabilities 2,309 199 199
----------- ---------- ----------
Total liabilities 14,269 947 825
----------- ---------- ----------
Net assets applicable to outstanding shares $36,098,736 $2,545,142 $2,591,748
=========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $36,098,905 $2,546,128 $2,592,794
Accumulated net realized loss on investments sold (169) (986) (1,046)
----------- ---------- ----------
$36,098,736 $2,545,142 $2,591,748
=========== ========== ==========
PRICING OF SHARES
Outstanding shares, $0.00001 par value (unlimited shares
authorized) 36,099,437 2,546,231 2,592,858
Net asset value, offering and redemption price per share $1.00 $1.00 $1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
STATEMENTS OF OPERATIONS (in thousands)
For the year ended December 31, 1999
<TABLE>
<CAPTION>
Schwab Schwab Schwab
Money Government U.S. Treasury
Market Money Money
Fund Fund Fund
---------- ------------ -----------
<S> <C> <C> <C>
Interest income $1,696,377 $121,530 $110,447
---------- -------- --------
Expenses:
Investment advisory and administration fees 108,106 9,027 8,788
Transfer agency and shareholder service fees 143,775 10,571 10,291
Custodian and portfolio accounting fees 2,004 282 278
Registration fees 2,931 96 183
Professional fees 187 25 35
Shareholder reports 2,713 48 45
Trustees' fees 62 7 12
Other expenses 229 17 23
---------- -------- --------
260,007 20,073 19,655
Less: expenses reduced (see Note 4) (20,382) (2,455) (4,790)
---------- -------- --------
Net expenses incurred by fund 239,625 17,618 14,865
---------- -------- --------
Net investment income 1,456,752 103,912 95,582
Net realized gain (loss) on investments sold 2 (169) (243)
---------- -------- --------
Increase in net assets resulting from operations $1,456,754 $103,743 $ 95,339
========== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended December 31,
<TABLE>
<CAPTION>
Schwab Schwab Schwab
Money Market Fund Government Money Fund U.S. Treasury Money Fund
---------------------------- ------------------------ -------------------------
1999 1998 1999 1998 1999 1998
------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 1,456,752 $ 1,178,889 $ 103,912 $ 100,463 $ 95,582 $ 86,803
Net realized gain (loss) on
investments sold 2 (45) (169) (118) (243) (385)
------------- ------------ ----------- ----------- ----------- -----------
Increase in net assets
resulting from operations 1,456,754 1,178,844 103,743 100,345 95,339 86,418
------------- ------------ ----------- ----------- ----------- -----------
Dividends to shareholders from
net investment income
(see Note 2): (1,456,752) (1,179,212) (103,912) (100,585) (95,582) (86,867)
------------- ------------ ----------- ----------- ----------- -----------
Capital share transactions (at $1.00 per share):
Proceeds from shares sold 138,436,982 92,667,344 7,964,015 6,438,084 7,589,276 6,122,502
Net asset value of shares
issued in reinvestment
of dividends 1,575,675 1,130,306 114,148 98,437 104,530 84,289
Payments for shares
redeemed (131,353,391) (87,779,251) (7,740,303) (6,310,756) (7,232,645) (5,840,957)
------------- ------------ ----------- ----------- ----------- -----------
Increase in net assets from
capital share transactions 8,659,266 6,018,399 337,860 225,765 461,161 365,834
------------- ------------ ----------- ----------- ----------- -----------
Total increase in net assets 8,659,268 6,018,031 337,691 225,525 460,918 365,385
Net assets:
Beginning of period 27,439,468 21,421,437 2,207,451 1,981,926 2,130,830 1,765,445
------------- ------------ ----------- ----------- ----------- -----------
End of period $ 36,098,736 $ 27,439,468 $ 2,545,142 $ 2,207,451 $ 2,591,748 $ 2,130,830
============= ============ =========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Schwab Money Market Fund
YEAR ENDED 12/31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------
From investment operations:
Net investment income 0.05 0.05 0.05 0.05 0.05
----------------------------------------------------------------
Total from investment operations 0.05 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------
Total return (%) 4.64 4.99 5.04 4.91 5.41
RATIOS/SUPPLEMENTAL DATA (%)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.75 0.75 0.75 0.75 0.75
Reductions reflected in above expense ratio 0.09 0.11 0.12 0.14 0.15
Ratio of net investment income to average net assets 4.56 4.87 4.93 4.80 5.27
Net assets, end of period ($ X 1,000) 36,098,736 27,439,468 21,421,437 18,083,671 14,010,387
</TABLE>
<TABLE>
<CAPTION>
Schwab Government Money Fund
YEAR ENDED 12/31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------
From investment operations:
Net investment income 0.04 0.05 0.05 0.05 0.05
----------------------------------------------------------------
Total from investment operations 0.04 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
Total distributions (0.04) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------
Total return (%) 4.50 4.88 4.95 4.83 5.34
RATIOS/SUPPLEMENTAL DATA (%)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.75 0.75 0.75 0.75 0.75
Reductions reflected in above expense ratio 0.10 0.17 0.17 0.17 0.17
Ratio of net investment income to average net assets 4.42 4.76 4.84 4.73 5.21
Net assets, end of period ($ X 1,000) 2,545,142 2,207,451 1,981,926 1,986,862 1,884,569
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Schwab U.S. Treasury Money Fund
YEAR ENDED 12/31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------
From investment operations:
Net investment income 0.04 0.05 0.05 0.05 0.05
----------------------------------------------------------------
Total from investment operations 0.04 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
Total distributions (0.04) (0.05) (0.05) (0.05) (0.05)
----------------------------------------------------------------
NET ASSET VALUE AT END OF PERIOD 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------
Total return (%) 4.25 4.69 4.85 4.77 5.25
RATIOS/SUPPLEMENTAL DATA (%)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.65 0.65 0.65 0.65 0.65
Reductions reflected in above expense ratio 0.21 0.26 0.28 0.29 0.31
Ratio of net investment income to average net assets 4.18 4.58 4.75 4.67 5.11
Net assets, end of period ($ X 1,000) 2,591,748 2,130,830 1,765,445 1,421,672 1,193,689
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1999
(All dollar amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Schwab Money Market Fund, Schwab Government Money Fund and Schwab U.S.
Treasury Money Fund (the "funds") are series of The Charles Schwab Family of
Funds (the "Trust"), an open-end investment management company organized as a
Massachusetts business trust on October 20, 1989 and registered under the
Investment Company Act of 1940 (the "Act"), as amended.
In addition to the three funds described above, the Trust also offers the Schwab
Municipal Money Fund, Schwab California Municipal Money Fund, Schwab New York
Municipal Money Fund, Schwab New Jersey Municipal Money Fund, Schwab
Pennsylvania Municipal Money Fund, Schwab Florida Municipal Money Fund, Schwab
Value Advantage Money Fund,(REGISTRATION MARK) Schwab Institutional Advantage
Money Fund,(REGISTRATION MARK) Schwab Retirement Money Fund,(REGISTRATION MARK)
and Schwab Government Cash Reserves. 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. 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 and accretion of discount on investments. Realized gains and losses from
security transactions are determined on an identified cost basis.
REPURCHASE AGREEMENTS -- Repurchase agreements are fully collateralized by U.S.
government securities. All collateral is held by the funds' custodian, except in
the case of a tri-party agreement, under which the collateral is held by an
agent bank. The collateral is monitored daily to ensure that its market value at
least equals the repurchase price under the agreement.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each fund declares a daily
dividend, equal to its net investment income for that day, payable monthly. Net
realized capital gains, if any, are normally distributed annually.
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.
36
<PAGE>
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 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 federal income tax purposes.
On December 31, 1999, the Schwab Money Market Fund had expired capital loss
carryforwards of $209.
As of December 31, 1999, the unused capital loss carryforwards, for federal
income tax purposes with expiration dates, were as follows:
Schwab Schwab Schwab
Money Government U.S. Treasury
Market Fund Money Fund Money Fund
----------- ---------- ------------
Expiring in:
- ------------
12/31/01 $-- $ 53 $ 28
12/31/02 2 74 23
12/31/03 118 161 49
12/31/04 -- 162 113
12/31/05 -- 226 137
12/31/06 -- 119 89
12/31/07 49 189 575
---- ---- ----
Total capital loss carryforwards $169 $984 $1,014
==== ==== ======
For federal income tax purposes, capital gains realized after October 31, may be
deferred and treated as occuring on the first day of the following fiscal year.
For the current fiscal year, the Schwab Government Money Fund and the Schwab
U.S. Treasury Money Fund have elected to defer such losses of $3 and $5,
respectively.
RECLASSIFICATIONS -- Generally accepted accounting principles require that
certain components of net assets be reclassified to reflect permanent
differences between financial and tax reporting. Accordingly, permanent book/tax
differences of $209 for the Schwab Money Market Fund were reclassified from
accumulated realized capital loss to paid-in capital. These reclassifications
have no effect on net assets or net asset values per share.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS -- The funds have investment
advisory and administration agreements with Charles Schwab Investment
Management, Inc. (the "investment adviser"). For advisory services and
facilities furnished, each fund pays an annual fee, payable monthly, of 0.38% on
the first $1 billion of average daily net assets, 0.35% on such assets in excess
of $1 billion to $10 billion, 0.32% on such assets in excess of $10 billion to
$20 billion, and 0.30% on such assets in excess of $20 billion. Prior to April
30, 1999 the Schwab Money Market Fund paid an annual fee, payable monthly, of
0.46% on the first $1 billion of average daily net assets, 0.45% on the next $2
billion, 0.40% on the next $7 billion, 0.37% on the next $10
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
billion, and 0.34% on such net assets in excess of $20 billion. Prior to April
30, 1999, the Schwab Government Money Fund and Schwab Treasury Money Fund each
paid an annual fee, payable monthly, of 0.46% on the first $1 billion of each
fund's average daily net assets, 0.41% on the next $1 billion, and 0.40% on such
assets in excess of $2 billion. The investment adviser has reduced a portion of
its fee for the year ended December 31, 1999 (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 0.25% of each fund's average daily net assets
for transfer agency services and 0.20% of such net assets for shareholder
services.
OFFICERS AND TRUSTEES -- Certain officers and trustees of the Trust are also
officers and/or directors of the investment adviser and/or Schwab. During the
year ended December 31, 1999, the Trust made no direct payments to its officers
or trustees who are "interested persons" within the meaning of the Act, as
amended. The funds incurred fees aggregating $81 related to the Trust's
unaffiliated trustees.
INTERFUND TRANSACTIONS -- During the year ended December 31, 1999, the Schwab
U.S. Treasury Fund engaged in purchase and sale transactions with funds that
have a common investment adviser, common trustees, and common officers.These
transactions, made at current market value pursuant to Rule 17a-7 under the Act,
as amended, aggregated $36,016 for the Schwab U.S. Treasury Money Fund.
4. EXPENSES REDUCED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that, through at least April 30,
2000, the Schwab Money Market Fund, Schwab Government Money Fund and Schwab U.S.
Treasury Money Funds' total operating expenses will not exceed 0.75%, 0.75% and
0.65%, respectively, of each fund's average daily net assets, after reductions.
For the purpose of this guarantee, operating expenses do not include interest
expenses, extraordinary expenses and taxes.
For the year ended December 31, 1999, the total of such fees reduced by the
investment adviser were $20,382, $2,455 and $4,790 for the Schwab Money Market
Fund, Schwab Government Money Fund and Schwab U.S. Treasury Money Fund,
respectively.
38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of:
Schwab Money Market Fund,
Schwab Government Money Fund, and
Schwab U.S. Treasury 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 presentfairly, in all
material respects, the financial position of Schwab Money Market Fund, Schwab
Government Money Fund and Schwab U.S. Treasury Money Fund (three of the
portfolios constituting The Charles Schwab Family of Funds, hereafter referred
to as the "Funds") at December 31, 1999, the results of each of their operations
for the year then ended, the changes in each of their net assets for each of the
two years in the period then ended and the financial highlights for each of the
five years in period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, 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, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
February 4, 2000
39
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE>
THE 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 market
funds.
Please call 800-435-4000 for a free prospectus and brochure for any of these
SchwabFunds.-Registered Trademark-
This report must be preceded or accompanied by a current prospectus.
METHODS FOR PLACING ORDERS
The information below outlines how Schwab brokerage account investors can place
orders. If you are investing through a third-party investment provider, methods
for placing orders may be different.
PHONE
Call 800-435-4000, day or night (for TDD service, call 800-345-2550).
INTERNET
www.schwab.com/schwabfunds
MAIL
Write to SchwabFunds at:
P. O. Box 7575, San Francisco, CA 94120-7575
When selling or exchanging shares, be sure to include the signatures of at least
one of the persons whose name is on the account.
IN PERSON
Visit the nearest Charles Schwab office.
SCHWAB ASSET ALLOCATION FUNDS
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab MarketManager Growth Portfolio
Schwab MarketManager Balanced Portfolio
SCHWAB STOCK FUNDS
Schwab S&P 500-Registered Trademark- Fund
Schwab 1000 Fund-Registered Trademark-
Schwab Analytics Fund-Registered Trademark-
Schwab Small-Cap Index Fund-Registered Trademark-
Schwab MarketManager Small Cap Portfolio
Schwab International Index Fund-Registered Trademark-
Schwab MarketManager International Portfolio
Schwab Total Stock Market Index Fund-TM-
SCHWAB BOND FUNDS
Schwab YieldPlus Fund-TM-
Schwab Total Bond Market Index Fund
Schwab Short-Term Bond Market Index Fund
Schwab Long-Term Tax-Free Bond Fund
Schwab Short/Intermediate Tax-Free Bond Fund
Schwab California Long-Term Tax-Free Bond Fund
Schwab California Short/Intermediate
Tax-Free Bond Fund
SCHWAB MONEY FUNDS
Schwab offers an array of money funds that seek high current income consistent
with stability of capital 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-
(1)Investments in money funds are neither insured nor guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or any other government agency and,
although money funds seek to preserve the value of your investment at $1 per
share, it is possible to lose money.
<PAGE>
[LOGO]
INVESTMENT ADVISER
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-2000 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. MKT3857-2 (2/00)
