EXHIBIT INDEX
EXHIBIT A:
Attachment to item 77B:
Accountants report on internal control
EXHIBIT B:
Attachment to item 77C: Submission of matters to a vote of
Security holders.
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EXHIBIT A:
Report of Independent Accountants
To the Board of Trustees and Shareholders of
Schwab Investments
In planning and performing our audit of the financial statements
of Schwab Short/Intermediate Tax-Free Bond Fund, Schwab Long-Term
Tax-Free Bond Fund, Schwab California Short/Intermediate Tax-Free
Bond Fund, Schwab California Long-Term Tax-Free Bond Fund, Schwab
Short-Term Bond Market Index Fund, Schwab Total Bond Market Index
Fund, and Schwab YieldPlus Fund (seven of the portfolios
constituting Schwab Investments, hereafter referred to as the
"Funds") for the period ended August 31, 2000, we considered
their internal control, including control activities for
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on internal control.
The management of the Funds is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding
of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to
the risk that controls may become inadequate because of changes
in conditions or that the effectiveness of their design and
operation may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a
condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing
their assigned functions. However, we noted no matters involving
internal control and its operation, including controls for
safeguarding securities, that we consider to be material
weaknesses as defined above as of August 31, 2000.
This report is intended solely for the information and use of the
Board of Trustees, management and the Securities and Exchange
Commission and is not intended to be and should not be used by
anyone other than these specified parties.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
October 2, 2000
EXHIBIT B:
Proxy Voting Results
(unaudited)
Shareholders of the funds covered in this report approved all proposals
described in the most recent Schwab Funds proxy solicitation. A special
meeting of the shareholders of Schwab Investments was
held on June 1, 2000. The number of votes necessary
to conduct the meeting and approve each proposal was obtained. The
results of the votes of shareholders are listed below by proposal.
FOR WITHHELD
PROPOSAL 1
ELECTION OF TRUSTEES
Charles R. Schwab 164,731,678 19,977,396
Mariann Byerwalter 164,731,678 19,977,396
Jeremiah H. Chafkin 164,731,678 19,977,396
Donald F. Dorward 164,731,678 19,977,396
William A. Hasler 164,731,678 19,977,396
Robert G. Holmes 164,731,678 19,977,396
Steven L. Scheid 164,731,678 19,977,396
Gerald B. Smith 164,731,678 19,977,396
Donald R. Stephens 164,731,678 19,977,396
Michael W. Wilsey 164,731,678 19,977,396
FOR AGAINST ABSTAINED(1)
PROPOSAL 2C1
TO APPROVE CHANGES TO RESTRICTIONS REGARDING BORROWING.
Schwab California Long-Term
Tax-Free Bond Fund 7,341,208 300,707 238,318
Schwab Long-Term
Tax-Free Bond Fund 3,400,219 360,579 121,620
Schwab Short/Intermediate
Tax-Free Bond Fund 3,635,697 94,634 518,193
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,363,922 186,412 1,128,413
PROPOSAL 2C2
TO APPROVE CHANGES TO RESTRICTIONS REGARDING LENDING.
Schwab California Long-Term
Tax-Free Bond Fund 7,320,238 331,912 228,083
Schwab Long-Term
Tax-Free Bond Fund 3,401,013 361,471 119,935
Schwab Short/Intermediate
Tax-Free Bond Fund 3,638,105 95,922 514,497
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,364,599 187,633 1,126,515
PROPOSAL 2C3
TO APPROVE CHANGES TO RESTRICTIONS REGARDING SENIOR SECURITIES.
Schwab California Long-Term
Tax-Free Bond Fund 7,329,147 294,221 256,865
Schwab Long-Term
Tax-Free Bond Fund 3,394,759 364,273 123,387
Schwab Short/Intermediate
Tax-Free Bond Fund 3,615,852 116,389 516,283
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,368,941 179,903 1,129,903
PROPOSAL 2D
TO APPROVE CHANGES TO RESTRICTIONS REGARDING DIVERSIFICATION.
Schwab Short-Term Bond
Market Index Fund 12,076,627 215,556 293,611
Schwab Total Bond
Market Index Fund 43,012,207 266,284 222,033
PROPOSAL 2F
TO APPROVE CHANGES TO RESTRICTIONS REGARDING RESTRICTED OR ILLIQUID
SECURITIES.
Schwab California
Long-Term Tax-Free
Bond Fund 7,284,228 366,784 229,221
Schwab Long-Term
Tax-Free Bond Fund 3,392,667 366,736 123,016
Schwab Short/Intermediate
Tax-Free Bond Fund 3,569,410 164,617 514,497
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,376,349 173,844 1,128,554
PROPOSAL 2H
TO APPROVE CHANGES TO RESTRICTIONS REGARDING OWNERSHIP OF SECURITIES.
Schwab California Long-Term
Tax-Free Bond Fund 7,367,548 284,471 228,214
Schwab Long-Term
Tax-Free Bond Fund 3,391,634 366,052 124,733
Schwab Short/Intermediate
Tax-Free Bond Fund 3,606,993 125,677 515,854
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,374,312 177,069 1,127,366
PROPOSAL 2I
TO APPROVE CHANGES TO RESTRICTIONS REGARDING INDUSTRY CONCENTRATION.
Schwab California
Long-Term Tax-Free
Bond Fund 7,350,596 289,029 240,608
Schwab Long-Term
Tax-Free Bond Fund 3,397,741 359,718 124,960
Schwab Short/Intermediate
Tax-Free Bond Fund 3,633,612 99,002 515,910
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,397,494 152,201 1,129,052
PROPOSAL 2J
TO APPROVE CHANGES TO RESTRICTIONS REGARDING COMMODITIES, FUTURES,
AND REAL ESTATE.
Schwab California
Long-Term Tax-Free
Bond Fund 7,321,972 327,834 230,427
Schwab Long-Term
Tax-Free Bond Fund 3,401,076 361,481 119,862
Schwab Short/Intermediate
Tax-Free Bond Fund 3,599,294 134,964 514,266
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,364,097 186,763 1,127,887
PROPOSAL 2K
TO APPROVE CHANGES TO RESTRICTIONS REGARDING UNDERWRITING OF SECURITIES.
Schwab California
Long-Term Tax-Free
Bond Fund 7,317,187 327,259 235,787
Schwab Long-Term
Tax-Free Bond Fund 3,404,685 358,071 119,662
Schwab Short/Intermediate
Tax-Free Bond Fund 3,637,166 96,723 514,635
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,342,417 207,790 1,128,540
PROPOSAL 2L
TO APPROVE CHANGES TO RESTRICTIONS REGARDING CONTROL OF AN ISSUER.
Schwab Short-Term Bond
Market Index Fund 12,083,817 202,207 299,770
Schwab California
Long-Term Tax-Free
Bond Fund 7,333,693 310,908 235,632
Schwab Long-Term
Tax-Free Bond Fund 3,407,157 354,678 120,584
Schwab Short/Intermediate
Tax-Free Bond Fund 3,665,541 67,343 515,640
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,381,509 168,186 1,129,052
Schwab Total Bond
Market Index Fund 43,019,456 253,513 227,555
PROPOSAL 2N
TO APPROVE CHANGES TO RESTRICTIONS REGARDING NON-DIVERSIFICATION.
Schwab California
Long-Term Tax-Free
Bond Fund 7,326,481 318,596 235,156
Schwab Long-Term
Tax-Free Bond Fund 3,408,717 351,483 122,219
Schwab Short/Intermediate
Tax-Free Bond Fund 3,659,908 72,595 516,021
Schwab California
Short/Intermediate
Tax-Free Bond Fund 4,389,688 164,505 1,124,554
(1) Includes broker non-votes.
