-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EObmFvejgx+h7sUw2lHen0vRyqzBTGEgoKBVyXf+rRr7OBYl3+45M/XQRGLQksxF 36PihbPAV4rCAEAnNEUDWQ== 0000950149-96-001379.txt : 19960904 0000950149-96-001379.hdr.sgml : 19960904 ACCESSION NUMBER: 0000950149-96-001379 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960903 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES FAMILY OF FUNDS CENTRAL INDEX KEY: 0000857156 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05954 FILM NUMBER: 96625236 BUSINESS ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156277000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 N-30D 1 SCHWAB VALUE ADVANTAGE MONEY FUND 1 SCHWABFUNDS(R) SCHWAB VALUE ADVANTAGE MONEY FUND(R) SEMI-ANNUAL REPORT JUNE 30, 1996 [Photo of the Schwab Building, San Francisco, California] 2 Dear Shareholder, [Photo of I'd like to take this opportunity to share some thoughts on Charles mutual fund investing and tell you how we're working to expand R. Schwab] our services to keep pace with your changing needs. First, however, I want to extend a personal welcome to the many thousands of new shareholders who've joined the SchwabFunds Family(R) in the past six months. With your support, we've become one of the largest and fastest-growing organizations in the mutual fund industry. Today, Charles Schwab Investment Management, Inc. serves over 1.8 million shareholders with total assets under management in excess of $38 billion. In six years, SchwabFunds(R) has grown from just a few funds to a mutual fund complex offering retail investors 21 funds covering a broad range of financial markets and investing approaches. NEW INVESTING STRATEGIES. Over the past year, we've introduced five new funds, each built on specific, time-tested strategies. The Schwab Asset Director(R) Funds help you diversify your portfolio through asset allocation, the Schwab S&P 500 Fund seeks to track U.S. stock market performance through indexing, and the Schwab Analytics Fund(TM) uses advanced quantitative methods to identify attractive investment opportunities. Along with our other offerings, these new funds give you powerful tools you can use to help construct a custom investment portfolio that matches your individual goals. And, of course, they also allow you to tap into the combined investing expertise of our highly experienced team of professional portfolio managers. TIME-TESTED INVESTING STRATEGIES THAT OFFER YOU AN EXPANDING RANGE OF OPPORTUNITIES ENHANCING SHAREHOLDER COMMUNICATIONS. Our commitment to shareholders goes beyond simply offering you new investment opportunities. We also want to help you become a more-informed mutual fund investor by providing the in-depth information you need to help manage your portfolio more effectively. Toward that end, we've changed the format of this report to make it more accessible and informative. If you'd like more information on any of the funds in the SchwabFunds Family, call 1-800-2 NO-LOAD (1-800-266-5623). Our representatives will be happy to provide you with a free prospectus, which contains more complete information on fund risks, charges and expenses. Please read it carefully before investing. Thank you for placing your trust in us. We value your confidence in our efforts to date, and we'll continue working hard to offer you an even broader range of strategic investment opportunities in the future. /s/ Charles R. Schwab Charles R. Schwab Cover: The Schwab Building, San Francisco, California 3
TABLE OF CONTENTS OVERVIEW .............................................................. 1 SCHWAB VALUE ADVANTAGE MONEY FUND(R) SUMMARY........................... 2 QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM ............................ 5 GLOSSARY OF TERMS ..................................................... 9 PORTFOLIO SUMMARY ..................................................... 10 FINANCIAL STATEMENTS AND NOTES ........................................ 11
OVERVIEW We're pleased to report on the performance of your investment in the Schwab Value Advantage Money Fund for the six-month reporting period ended June 30, 1996. During the reporting period, the Schwab Value Advantage Money Fund provided you with higher than average money market fund yields on your larger cash balances, combined with capital stability and liquidity. 1 4 SCHWAB VALUE ADVANTAGE MONEY FUND(R) SUMMARY PERFORMANCE REVIEW The table below presents the Fund's 7-day average yields at the end of the reporting period. Of course, money market yields fluctuate, and past performance is no guarantee of future results. ================================================================================ 7-DAY AVERAGE YIELDS 1 (as of 6/30/96)
Simple Compound - -------------------------------------------------------------------------------- Schwab Value Advantage Money Fund 5.07% 5.20% - --------------------------------------------------------------------------------
The Fund seeks to maintain a stable $1 share price to protect your principal. As with all money funds, however, there can be no assurance that the Fund will be able to maintain a $1 net asset value per share. It is also important to understand that your investment is not insured or guaranteed by the U.S. government. YOUR YIELD ADVANTAGE The Schwab Value Advantage Money Fund gives you the opportunity to earn higher yields than most money market funds. It is specifically designed for cash reserves that you do not need to access regularly. The Fund's 7-day simple yield consistently outperformed the average 7-day simple yield for its category during the six-month reporting period, as the chart at the right illustrates. 1 A portion of the Fund's fees were waived or reimbursed during the reporting period. Without the waivers or reimbursements, the 7-day simple yield would have been 4.77% and the 7-day compound yield would have been 4.88% at June 30, 1996. 2 5 SCHWAB VALUE ADVANTAGE MONEY FUND'S(R) YIELD CONSISTENTLY OUTPERFORMED ITS CATEGORY AVERAGE* THROUGHOUT THE FIRST SIX MONTHS OF 1996 [The following is a line graph showing the Schwab Value Advantage Money Fund's yield consistently outperformed its average throughout the first six months of 1996.] Schwab Value IBC Financial Advantage Data's Money Money Fund Fund Average - -------------------------------------------------------------- 1/2/96 5.46% 5.12% 1/9/96 5.40% 5.09% 1/16/96 5.37% 5.03% 1/23/96 5.33% 5.01% 1/30/96 5.30% 4.97% 2/6/96 5.25% 4.88% 2/13/96 5.19% 4.82% 2/20/96 5.13% 4.78% 2/27/96 5.08% 4.74% 3/5/96 5.07% 4.74% 3/12/96 5.05% 4.67% 3/19/96 5.04% 4.70% 3/26/96 5.02% 4.68% 4/2/96 5.03% 4.70% 4/9/96 5.03% 4.68% 4/16/96 5.03% 4.70% 4/23/96 5.01% 4.67% 4/30/96 5.01% 4.68% 5/7/96 5.02% 4.67% 5/14/96 5.03% 4.67% 5/21/96 5.03% 4.67% 5/28/96 5.03% 4.67% 6/4/96 5.03% 4.69% 6/11/96 5.05% 4.68% 6/18/96 5.06% 4.69% 6/25/96 5.05% 4.71%
- - Schwab Value Advantage Money Fund - IBC Financial Data's Money Fund Average *First Tier Taxable Money Funds Source: IBC Financial Data, Inc.'s MONEY FUND REPORT, 1996. Average 7-day current yield of the funds in IBC Financial Data, Inc.'s First Tier category of the Taxable Money Funds for each week in the first six months of 1996. Weekly number of funds in the category ranged from 266 to 273. PORTFOLIO COMPOSITION The chart on the following page illustrates the composition of the Fund's portfolio as of the June 30, 1996 report date. In addition, you'll find a complete listing of the securities in the Fund's portfolio on June 30, 1996 later in this report. The Schwab Value Advantage Money Fund invests in bank certificates of deposit, time deposits, bankers' acceptances, high-quality commercial paper and notes, and other high-quality corporate obligations, as well as repurchase agreements, U.S. Treasury securities, and other obligations of the U.S. and Canadian governments, their agencies, and instrumentalities. 3 6 SCHWAB VALUE ADVANTAGE MONEY FUND(R) PORTFOLIO COMPOSITION -- JUNE 30, 1996 [The following is a pie chart showing the Schwab Value Advantage Money Fund Portfolio Composition as of June 30, 1996.] Commercial Paper Variable Rate Notes 65% 7% Certificates of Deposit Other 22% 4% Bank Notes 2% GROWTH IN FUND ASSETS AND SHAREHOLDERS The table below illustrates the growth in the Schwab Value Advantage Money Fund's total net assets and number of shareholders during the six-month reporting period.
6/30/96 12/31/95 Change - -------------------------------------------------------------------------------- Total Net Assets (000s) $8,457,330 $6,923,890 +22% - -------------------------------------------------------------------------------- Shareholder Accounts 79,729 67,109 +19% - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- MAKING THE MOST OF YOUR INVESTMENT The Schwab Value Advantage Money Fund is designed to offer you higher yields than most money market funds. By requiring higher account balances and limiting shareholder transactions, the Fund's operating expenses are minimized in order to maximize your returns. To help achieve this goal, the Fund is not designed to transfer cash balances to settle trades or cover Schwab One(R) checks, margin calls, or insufficient funds in your Schwab brokerage or Schwab One account. If you need to access your money regularly for these purposes, you may wish to keep some funds in one of our Schwab Money Funds-Sweep Investments(TM) and invest for your longer-term cash needs in the Schwab Value Advantage Money Fund. - -------------------------------------------------------------------------------- 4 7 QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM OF CHARLES SCHWAB INVESTMENT MANAGEMENT, INC. Stephen B. Ward: Senior Vice President and Chief Investment Officer Linda Klingman: Portfolio Manager Q. WHAT HAS BEEN THE ECONOMIC CLIMATE DURING THE FIRST SIX MONTHS OF 1996? A. At the beginning of the reporting period, market participants were primarily concerned about the likelihood of an economic recession. However, as the six-month reporting period progressed, the economic climate changed, and by June 30, 1996, concern was focused on excessive growth and its potential impact on future inflation. Following the first quarter of 1996, many economic observers were surprised by both the size of the increase in the Real Gross Domestic Product (GDP) growth rate and the strength of the labor market. The Real GDP growth rate was 2.0% for the first quarter in 1996 and 4.2% for the second quarter, based on the advance estimate. The average monthly increase in payroll employment jumped from 185,000 in 1995 to 232,000 during the first six months of 1996. The June hourly wage increase was the largest recorded in history. These developments have led most market observers to anticipate that the Federal Reserve (the Fed) may increase the federal funds rate in the near term. The economy continues to exhibit signs of strong economic growth as evidenced by strong growth in jobs, retail sales, auto sales, and strong construction spending despite higher mortgage rates. Although inflation has remained relatively low, as evidenced by the 2.8% Consumer Price Index (CPI) increase on a year-over-year basis as of June 1996, there remains a concern that the economy is performing at or near its employment and manufacturing capacity. As a result, the Fed is expected to remain diligent in its effort to prevent future increases in inflation. 5 8 Q. HOW HAVE THIS YEAR'S ECONOMIC EVENTS AFFECTED SHORT-TERM INTEREST RATES? A. Short-term interest rates continued their year long decline during the first six weeks of 1996. As shown on the graph below, the 90-day commercial paper rate fell from 5.50% on January 2 to 5.12% on February 16. This short-lived decline in interest rates reflected continuing doubts about the strength of the economy, as well as the Fed's announcement of a 0.25% reduction in the federal funds rate following its Open Market Committee meeting in late January. Since mid-February, evidence of increased productivity and strength in the labor market has led to an upward trend in short-term interest rates. By June 28, the last business day of the period, the 90-day commercial paper rate was 5.52%. Many economists believe that sustained GDP growth and potential inflationary pressures will lead the Fed to increase the federal funds rate, and current market rates incorporate this expectation. SHORT-TERM INTEREST RATES IN THE FIRST HALF OF 1996 [The following is a line graph showing the Short-Term Interest Rates in the First Half of 1996 Yields for 90-Day Commercial Paper.] YIELDS 90-Day Commercial Paper January 2, 1996 - June 28, 1996 1/2/96 5.50% 1/3/96 5.51% 1/4/96 5.49% 1/5/96 5.46% 1/8/96 5.48% 1/9/96 5.47% 1/10/96 5.45% 1/11/96 5.44% 1/12/96 5.43% 1/15/96 5.43% 1/16/96 5.42% 1/17/96 5.41% 1/18/96 5.39% 1/19/96 5.38% 1/22/96 5.37% 1/23/96 5.36% 1/24/96 5.35% 1/25/96 5.34% 1/26/96 5.34% 1/29/96 5.32% 1/30/96 5.31% 1/31/96 5.27% 2/1/96 5.21% 2/2/96 5.17% 2/5/96 5.17% 2/6/96 5.16% 2/7/96 5.16% 2/8/96 5.15% 2/9/96 5.14% 2/12/96 5.13% 2/13/96 5.13% 2/14/96 5.12% 2/15/96 5.12% 2/16/96 5.12% 2/20/96 5.14% 2/21/96 5.16% 2/22/96 5.14% 2/23/96 5.13% 2/26/96 5.14% 2/27/96 5.16% 2/28/96 5.16% 2/29/96 5.19% 3/1/96 5.19% 3/4/96 5.17% 3/5/96 5.18% 3/6/96 5.19% 3/7/96 5.19% 3/8/96 5.31% 3/11/96 5.31% 3/12/96 5.32% 3/13/96 5.34% 3/14/96 5.34% 3/15/96 5.34% 3/18/96 5.36% 3/19/96 5.36% 3/20/96 5.36% 3/21/96 5.35% 3/22/96 5.35% 3/25/96 5.37% 3/26/96 5.36% 3/27/96 5.37% 3/28/96 5.39% 3/29/96 5.38% 4/1/96 5.36% 4/2/96 5.36% 4/3/96 5.36% 4/4/96 5.36% 4/5/96 5.36% 4/8/96 5.40% 4/9/96 5.41% 4/10/96 5.41% 4/11/96 5.41% 4/12/96 5.41% 4/15/96 5.41% 4/16/96 5.40% 4/17/96 5.39% 4/18/96 5.39% 4/19/96 5.38% 4/22/96 5.38% 4/23/96 5.38% 4/24/96 5.38% 4/25/96 5.38% 4/26/96 5.38% 4/29/96 5.38% 4/30/96 5.39% 5/1/96 5.40% 5/2/96 5.41% 5/3/96 5.41% 5/6/96 5.41% 5/7/96 5.41% 5/8/96 5.41% 5/9/96 5.40% 5/10/96 5.39% 5/13/96 5.38% 5/14/96 5.38% 5/15/96 5.38% 5/16/96 5.38% 5/17/96 5.38% 5/20/96 5.38% 5/21/96 5.37% 5/22/96 5.37% 5/23/96 5.37% 5/24/96 5.37% 5/27/96 5.37% 5/28/96 5.37% 5/29/96 5.37% 5/30/96 5.39% 5/31/96 5.40% 6/3/96 5.43% 6/4/96 5.42% 6/5/96 5.42% 6/6/96 5.41% 6/7/96 5.50% 6/10/96 5.51% 6/11/96 5.50% 6/12/96 5.49% 6/13/96 5.49% 6/14/96 5.49% 6/17/96 5.50% 6/18/96 5.50% 6/19/96 5.50% 6/20/96 5.50% 6/21/96 5.50% 6/24/96 5.51% 6/25/96 5.50% 6/26/96 5.50% 6/27/96 5.51% 6/28/96 5.52%
- - 90-Day Commercial Paper Source: Bloomberg L.P. 6 9 Q. HOW HAS THE PORTFOLIO MANAGEMENT TEAM ADJUSTED THE FUND'S PORTFOLIO TO RESPOND TO CHANGES IN THE INTEREST RATE ENVIRONMENT? A. During the most recent reporting period, the Fund's portfolio management team adjusted the Fund's dollar-weighted average maturity in an effort to capitalize on opportunities to buy money market instruments resulting from market fluctuations. Specifically, periodic uncertainties about the future direction of the economy led the market to overreact to reports of economic growth indicators, such as recent strong employment figures. The resulting increases in short-term rates presented us with opportunities to moderately extend the Fund's maturity and lock in higher yields at different points throughout the six-month period. The weighted average maturity of the Fund was 58 days at the beginning of the reporting period and 58 days at the close of the period. Q. WHAT STANDARDS DOES THE PORTFOLIO MANAGEMENT TEAM USE IN SELECTING SECURITIES FOR THE PORTFOLIO? A. Money market funds are required by law to hold high-quality securities in their portfolios. For the Schwab Value Advantage Money Fund(R), we have continued to take the additional step of only investing in what are referred to as First Tier securities. In general, a First Tier security is a security that provides certain maturity limits and carries the highest credit rating from the required number of Nationally Recognized Statistical Rating Organizations (NRSROs); if unrated, it must be deemed to be of comparable quality according to guidelines approved by the Board of Trustees of The Charles Schwab Family of Funds. Certain securities owned by the Fund are insured or are backed by a letter of credit issued by a First Tier financial institution. These arrangements are frequently referred to as "credit enhancements" because they provide incremental levels of creditworthiness in addition to the underlying strength of the primary issuer. Insurance companies and financial institutions providing credit enhancements are reviewed by Charles Schwab Investment Management as a regular part of our thorough credit review procedures for all portfolio securities and issuers. 7 10 Q. HOW DOES THE SCHWAB VALUE ADVANTAGE MONEY FUND(R) ACHIEVE SUCH A COMPETITIVE YIELD WHILE MAINTAINING A HIGH-QUALITY INVESTMENT PORTFOLIO? A. The Schwab Value Advantage Money Fund is able to maintain higher than average money market fund yields primarily because of its relatively low operating expenses. The Fund is able to achieve low operating expense levels because it requires higher initial and ongoing balances than most other money funds. Since the cost of servicing an account is relatively unaffected by the size of the account, funds which require high balances are able to achieve lower expense levels on a per share basis. Also, unlike many other money market funds, and most other Schwab Money Funds, the Value Advantage Money Fund does not offer the "sweep" feature which allows automatic daily or weekly investment of free cash balances held in a shareholder's Schwab account. The "sweep" feature adds to the expense of operating a mutual fund. The Value Advantage Money Fund's lower operating expenses translate directly into higher yields for investors. 8 11 GLOSSARY OF TERMS COMMERCIAL PAPER Short-term, interest-paying obligations with maturities ranging up to 270 days, issued by banks, corporations, and other borrowers. CREDIT ENHANCEMENTS A bank letter of credit, purchase agreement, insurance, or line of credit that provides an additional level of creditworthiness for debt securities to supplement the financial strength of the issuer. DOLLAR-WEIGHTED AVERAGE MATURITY A measure of the average maturity of a mutual fund's entire portfolio, weighted by the value of its individual holdings. FEDERAL FUNDS RATE A key interest rate charged by banks when lending money to other banks overnight. FEDERAL RESERVE The central bank of the United States that establishes policies on bank reserves and regulations, determines the discount rate, and tightens or loosens the availability of credit. FIRST TIER SECURITY A security that matures within certain recognized limits and carries the top credit rating from the requisite number of NRSROs, or if unrated, is of equivalent credit quality. HIGH-QUALITY SECURITY A security ranked in the highest two rating categories by an NRSRO, or if unrated, is of equivalent credit quality. MATURITY The length of time before which the issuer of a debt security must repay the principal amount. NRSRO A Nationally Recognized Statistical Rating Organization, such as Standard & Poor's or Moody's Investor Services, which evaluates and rates the credit quality of securities. YIELD The rate of return, usually dividend or interest payments, on an investment, expressed as a percentage of market price. 9 12 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ PORTFOLIO SUMMARY (Unaudited) ASSET GROWTH
Total Total Percentage Net Assets Net Assets Growth Over as of 6/30/96 as of 12/31/95 Reporting (000s) (000s) Period - --------------------------------------------------- $8,457,330 $6,923,890 22% - ---------------------------------------------------
AVERAGE YIELDS FOR THE PERIODS ENDED JUNE 30, 1996
Last Last Last Seven Days Three Months Twelve Months - --------------------------------------------------- 5.07% 5.03% 5.33% - ---------------------------------------------------
MATURITY SCHEDULE PERCENT OF TOTAL INVESTMENTS
Maturity Range 9/30/95 12/31/95 3/31/96 6/30/96 - ----------------------------------------------------------------- 0 - 15 Days 20.1% 17.5% 26.9% 20.1% 16 - 30 Days 19.6 19.0 17.4 21.4 31 - 60 Days 28.7 30.2 24.5 32.2 61 - 90 Days 20.0 11.9 16.2 10.7 91 - 120 Days 4.1 5.6 6.7 4.2 Over 120 Days 7.5 15.8 8.3 11.4 Weighted Average 53 Days 59 Days 57 Days 58 Days - -----------------------------------------------------------------
PORTFOLIO QUALITY
Percent of SEC Tier Net Assets Rating 6/30/96 - ------------------------ Tier 1 100.0% Tier 2 0.0 - ------------------------
10 13 - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- CORPORATE OBLIGATIONS--65.0%(a) ASSET BACKED SECURITIES--19.6% Alamo Funding, LP 5.46%, 08/13/96 $30,000 $29,806 Alpha Finance Corp. 5.36%, 08/15/96 6,500 6,457 Apreco, Inc. 5.37%, 07/29/96 10,000 9,959 5.39%, 08/13/96 18,000 17,886 5.36%, 08/23/96 8,600 8,533 Asset Securitization Cooperative Corp. 5.37%, 08/15/96 30,000 29,801 5.50%, 09/30/96 14,000 13,808 Beta Finance, Inc. 5.40%, 07/12/96 20,500 20,467 5.39%, 07/12/96 9,000 8,985 5.43%, 07/15/96 66,000 65,863 5.35%, 08/19/96 10,000 10,006 5.40%, 09/17/96 7,000 6,920 5.80%, 04/15/97 35,000 35,000 CXC, Inc. 5.38%, 07/11/96 20,000 19,971 5.36%, 07/12/96 30,000 29,952 5.37%, 07/16/96 25,000 24,945 5.42%, 07/23/96 50,000 49,837 5.50%, 09/09/96 17,000 16,821 5.50%, 09/17/96 15,000 14,824 5.50%, 09/18/96 36,100 35,671 5.49%, 09/23/96 50,000 49,369 5.50%, 09/24/96 34,000 33,565 Corporate Receivables Corp. 5.33%, 07/08/96 35,200 35,164 5.38%, 07/11/96 30,000 29,956 5.36%, 07/12/96 5,000 4,992 5.35%, 07/17/96 30,000 29,929 5.37%, 07/18/96 36,100 36,010 5.36%, 07/18/96 33,000 32,918 5.38%, 07/30/96 10,000 9,957 5.35%, 08/02/96 22,000 21,897 5.50%, 09/16/96 19,600 19,373 5.50%, 09/17/96 10,000 9,883 5.53%, 10/04/96 4,650 4,583 Dakota Certificates Program of Citibank Credit Card Master Trust I 5.40%, 08/05/96 40,000 39,793
11 14 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- ESC Securitization, Inc. 5.50%, 09/19/96 $18,000 $17,783 5.50%, 09/26/96 42,000 41,450 5.52%, 10/01/96 30,000 29,583 Enterprise Funding Corp. 5.42%, 07/01/96 30,000 30,000 5.40%, 07/16/96 5,881 5,868 5.40%, 07/25/96 8,000 7,971 5.38%, 08/01/96 15,160 15,091 5.40%, 08/08/96 25,000 24,859 5.01%, 08/13/96 10,251 10,191 5.37%, 08/14/96 24,543 24,384 5.37%, 08/15/96 31,209 31,002 5.38%, 08/16/96 4,955 4,921 5.43%, 09/09/96 10,000 9,896 5.51%, 09/12/96 28,845 28,527 5.50%, 09/17/96 25,033 24,738 5.53%, 10/01/96 23,166 22,843 Eureka Securitization, Inc. 5.37%, 07/01/96 7,000 7,000 5.40%, 08/09/96 25,000 24,855 5.47%, 08/15/96 10,000 9,932 5.53%, 09/10/96 30,000 29,678 5.52%, 09/12/96 40,000 39,559 First Deposit Master Trust Series 1993-3 5.40%, 07/18/96 15,000 14,962 5.43%, 07/19/96 8,000 7,979 5.47%, 08/12/96 10,000 9,937 National Fleet Funding 5.44%, 08/15/96 25,000 24,831 Ranger Funding Corp. 5.37%, 07/01/96 14,000 14,000 5.40%, 07/16/96 5,000 4,989 5.40%, 07/17/96 15,000 14,964 5.52%, 09/09/96 18,000 17,810 5.50%, 09/19/96 25,000 24,698 Receivables Capital Corp. 5.36%, 07/01/96 46,810 46,810 5.38%, 07/02/96 19,555 19,552 5.34%, 07/09/96 9,623 9,612 5.45%, 07/19/96 10,290 10,262 5.45%, 07/22/96 13,986 13,942 5.39%, 08/08/96 5,066 5,038 5.37%, 08/14/96 9,059 9,000 5.45%, 08/16/96 39,988 39,712 5.50%, 09/13/96 20,000 19,777
12 15 - ------------------------------------------------------------------------------
Par Value -------- ---------- Stellar Capital Corp. 5.50%, 07/09/96 $17,920 $ 17,898 WCP Funding, Inc. 5.45%, 08/15/96 10,000 9,933 5.46%, 08/21/96 35,000 34,732 5.50%, 09/24/96 10,000 9,872 Windmill Funding 5.37%, 07/01/96 15,201 15,201 --------- 1,648,543 --------- AUTOMOTIVE PARTS AND ACCESSORIES--0.2% Eaton Corp. 5.40%, 07/22/96 15,000 14,953 --------- AUTOMOTIVE--6.3% Ford Credit Europe PLC 5.38%, 07/19/96 10,000 9,973 5.36%, 07/22/96 45,000 44,861 5.36%, 07/25/96 14,000 13,951 5.35%, 07/31/96 25,000 24,890 5.35%, 08/01/96 23,000 22,895 Ford Motor Credit 5.36%, 07/12/96 20,000 19,968 5.36%, 07/19/96 72,000 71,810 5.36%, 07/22/96 30,000 29,907 5.36%, 07/23/96 50,000 49,838 General Motors Acceptance Corp. 5.41%, 07/30/96 29,000 28,875 5.49%, 08/12/96 32,000 31,799 5.43%, 08/27/96 52,000 51,561 5.47%, 09/11/96 29,000 28,689 5.69%, 12/04/96 42,000 40,994 5.74%, 12/20/96 20,000 19,467 Renault Credit International SA Banque 5.53%, 09/19/96 10,000 9,879 5.53%, 09/20/96 20,000 19,755 5.54%, 09/27/96 13,000 12,826 --------- 531,938 --------- BANKING--AUSTRALIA--1.2% ANZ (Delaware), Inc. 5.37%, 08/13/96 50,000 49,684 Westpac Capital Corp. 5.41%, 10/01/96 51,000 50,313 --------- 99,997 ---------
13 16 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- BANKING--BELGIUM--2.3% Cregem North America, Inc. 5.37%, 07/02/96 $12,000 $ 11,998 5.37%, 07/03/96 20,000 19,994 5.36%, 07/19/96 30,000 29,921 5.36%, 07/26/96 25,000 24,908 5.39%, 08/01/96 18,000 17,918 Generale Bank, Inc. 5.32%, 07/03/96 20,000 19,994 5.24%, 07/17/96 35,000 34,921 5.07%, 08/22/96 25,000 24,822 5.39%, 09/03/96 8,000 7,925 ------- 192,401 ------- BANKING--CANADA--0.5% Toronto-Dominion Holdings 5.51%, 07/10/96 39,000 38,948 ------- BANKING--DENMARK--0.2% Unifunding Inc. 5.40%, 07/10/96 18,000 17,976 ------- BANKING--DOMESTIC--5.0% Bankers Trust New York Corp. 5.37%, 07/03/96 14,000 13,996 5.48%, 10/30/96 50,000 49,104 5.53%, 11/06/96 14,000 13,732 5.70%, 12/18/96 8,000 7,791 5.70%, 12/20/96 88,000 85,667 Chase Manhattan Corp. 5.38%, 08/21/96 50,000 49,625 5.38%, 08/22/96 24,000 23,816 5.51%, 10/08/96 30,000 29,552 5.50%, 11/01/96 50,000 49,086 Fleet Financial Group, Inc. 5.41%, 08/02/96 80,000 79,621 Vehicle Services of America/(NationsBank of Texas LOC) 5.48%, 08/19/96 17,300 17,172 ------- 419,162 ------- BANKING--GERMANY--0.4% Banco Boavista S.A./(Bayerische Vereinsbank LOC) 5.37%, 07/22/96 5,000 4,985 5.44%, 09/03/96 5,000 4,953 5.51%, 09/09/96 5,000 4,947 5.45%, 09/09/96 9,000 8,907 5.39%, 09/10/96 10,000 9,896 ------- 33,688 -------
14 17 - ------------------------------------------------------------------------------
Par Value -------- ---------- BANKING--ITALY--0.2% Cariplo Finance, Inc. 5.36%, 08/22/96 $25,000 $ 24,809 ------- BANKING--JAPAN--0.9% Deerfield Capital Corp./(Sumitomo Bank LOC) 5.51%, 07/17/96 7,000 6,983 5.50%, 07/17/96 27,550 27,483 5.51%, 07/18/96 27,000 26,930 Ridge Capital II/(Dai-Ichi Kangyo Bank LOC) 5.51%, 07/26/96 10,600 10,560 ------- 71,956 ------- BANKING--SPAIN--0.3% BEX America Finance, Inc. 5.38%, 07/09/96 24,000 23,972 ------- BANKING--SWEDEN--1.9% Svenska Handelsbanken, Inc. 5.36%, 07/24/96 50,000 49,831 5.38%, 07/29/96 60,000 59,752 5.36%, 08/16/96 50,000 49,662 ------- 159,245 ------- BANKING--UNITED KINGDOM--1.8% Abbey National Treasury Services PLC 5.19%, 03/03/97 25,000 24,985 Banco Nacional de Mexico S.A./ (Barclays Bank LOC) 5.42%, 07/10/96 10,000 9,987 5.36%, 07/24/96 20,000 19,932 5.40%, 08/29/96 20,000 19,825 Cheltenham & Gloucester PLC 5.38%, 08/09/96 50,000 49,713 Yorkshire Building Society 5.35%, 07/11/96 25,000 24,964 ------- 149,406 ------- COMPUTER AND OFFICE EQUIPMENT--0.2% CSC Enterprises 5.39%, 07/23/96 29,000 28,906 -------
15 18 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- FINANCE--COMMERCIAL--8.5% CIT Group Holdings, Inc. 5.35%, 07/15/96 $14,700 $ 14,670 5.36%, 07/24/96 34,000 33,885 5.36%, 07/25/96 50,000 49,824 5.33%, 07/31/96 50,000 49,780 5.41%, 08/09/96 50,000 49,711 5.43%, 08/15/96 57,000 56,617 5.45%, 08/22/96 34,000 33,735 General Electric Capital Corp. 5.38%, 07/01/96 50,000 50,000 5.38%, 07/03/96 27,000 26,992 5.03%, 07/18/96 27,000 26,937 5.37%, 08/19/96 70,000 69,496 5.37%, 08/20/96 39,000 38,713 5.48%, 09/16/96 9,800 9,687 General Electric Capital Services 5.48%, 10/02/96 25,000 24,651 Heller Financial Inc. 5.52%, 07/09/96 23,000 22,972 5.52%, 07/10/96 23,000 22,969 5.51%, 07/17/96 22,000 21,947 5.51%, 07/18/96 25,000 24,936 5.48%, 07/30/96 12,000 11,948 USL Capital Corp. 5.40%, 07/09/96 30,000 29,964 5.33%, 07/10/96 8,000 7,989 5.40%, 07/19/96 22,425 22,365 5.40%, 07/22/96 12,690 12,650 ------- 712,438 ------- FINANCE--CONSUMER--2.7% Associates Corp. of North America 5.37%, 07/08/96 21,000 20,978 5.45%, 08/23/96 21,000 20,833 5.46%, 08/26/96 18,000 17,849 5.49%, 09/24/96 40,000 39,489 5.49%, 09/25/96 50,000 49,354 5.50%, 09/27/96 32,000 31,576 5.50%, 10/02/96 12,000 11,832 Sears Roebuck Acceptance Corp. 5.45%, 07/10/96 31,000 30,958 5.40%, 07/30/96 6,000 5,974 ------- 228,843 ------- MINING AND MINERAL RESOURCES--0.1% BHP Finance (U.S.A.), Inc. 5.37%, 07/19/96 9,404 9,379 -------
16 19 - ------------------------------------------------------------------------------
Par Value -------- ---------- MORTGAGE BANKING--1.2% Countrywide Home Loans, Inc. 5.35%, 07/09/96 $15,000 $ 14,982 5.35%, 07/11/96 18,000 17,973 5.41%, 07/26/96 35,000 34,870 5.50%, 09/10/96 34,500 34,131 ------- 101,956 ------- PAPER AND WOOD PRODUCTS--0.2% Rexam PLC 5.45%, 08/23/96 18,000 17,857 ------- PHARMACEUTICALS--0.3% Glaxo Wellcome PLC 5.36%, 08/27/96 7,000 6,941 Whitehall Robins Co. 5.37%, 07/29/96 23,000 22,905 ------- 29,846 ------- SECURITIES BROKERAGE-DEALER--9.9% BT Securities Corp. 5.40%, 08/02/96 10,000 9,953 5.38%, 08/14/96 10,000 9,935 5.70%, 12/17/96 13,000 12,662 Bear Stearns Companies, Inc. 5.36%, 07/26/96 21,000 20,923 Goldman Sachs Group, LP 5.38%, 07/23/96 42,000 41,863 5.38%, 07/24/96 42,000 41,857 5.39%, 08/12/96 25,000 24,845 5.39%, 08/13/96 50,000 49,682 5.39%, 08/16/96 50,000 49,659 5.35%, 08/21/96 20,000 19,850 5.35%, 08/23/96 37,000 36,712 Lehman Brothers Holdings, Inc. 5.41%, 07/26/96 10,000 9,963 5.42%, 07/31/96 50,000 49,777 5.44%, 08/02/96 9,000 8,957 5.46%, 09/05/96 29,000 28,714 5.50%, 10/28/96 23,000 22,593 5.66%, 12/02/96 25,000 24,412 5.64%, 12/05/96 53,000 51,733 5.73%, 12/09/96 30,000 29,253 Morgan Stanley Group, Inc. 5.39%, 07/15/96 30,000 29,938 5.39%, 07/16/96 50,000 49,889 5.39%, 07/25/96 33,000 32,882 5.38%, 07/30/96 44,000 43,812
17 20 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- Nomura Holdings America, Inc. 5.36%, 07/15/96 $14,000 $ 13,971 5.39%, 07/29/96 7,000 6,971 5.41%, 08/28/96 20,000 19,828 PaineWebber Group, Inc. 5.43%, 07/02/96 24,000 23,996 5.51%, 08/26/96 15,000 14,873 Salomon, Inc. 5.65%, 07/01/96 2,020 2,020 5.62%, 08/14/96 20,000 19,865 5.62%, 08/23/96 30,000 29,755 --------- 831,143 --------- STUDENT LOANS--0.6% Student Loan Corp. 5.36%, 08/21/96 50,000 49,625 --------- TOBACCO--0.5% Philip Morris Capital Corp. 5.36%, 07/15/96 20,295 20,253 Philip Morris Companies, Inc. 5.38%, 08/07/96 20,000 19,891 --------- 40,144 --------- TOTAL CORPORATE OBLIGATIONS (Cost $5,477,131) 5,477,131 --------- VARIABLE RATE OBLIGATIONS--7.2%(b) ASSET BACKED SECURITIES--2.4% Beta Finance, Inc. 5.47%, 07/15/96 50,000 49,997 5.45%, 07/15/96 50,000 49,985 Corporate Asset Funding Corp. 5.38%, 07/10/96 50,000 49,995 5.49%, 07/31/96 40,000 39,995 --------- 189,972 --------- BANKING--DOMESTIC--0.8% Bankers Trust New York Corp. 5.75%, 07/01/96 45,000 45,000 Huntington National Bank 5.51%, 07/01/96 20,000 20,000 Keystone Health Resources Corp. Variable Rate Taxable Demand Notes Series 1993/ (PNC Bank LOC) 5.50%, 07/07/96 3,400 3,400 --------- 68,400 ---------
18 21 - ------------------------------------------------------------------------------
Par Value -------- ---------- BANKING--GERMANY--0.1% General Obligation Refunding Bonds of the County of Hudson (State of New Jersey) (Variable Rate Demand Obligations) Taxable Series 1995/ (Landesbank Hessen-Thuringen Girozentrale LOC) 5.60%, 07/07/96 $10,000 $10,000 ------ BANKING--JAPAN--0.4% County of Riverside 1990 Taxable Variable Rate Certificates of Participation (Monterey Avenue Project)/ (Sanwa Bank LOC) 5.65%, 07/07/96 8,100 8,100 Missouri Economic Development Export & Infrastructure Board Adjustable Rate Taxable Securities (Biocraft Laboratories, Inc. Project) Series 1989/ (Bank of Tokyo-Mitsubishi LOC) 5.70%, 07/07/96 22,000 22,000 New York City Industrial Development Agency Industrial Development Revenue Bonds (G.A.F. Seelig, Inc. Project) Series 1993/(Industrial Bank of Japan & Schroder Bank & Trust LOC) 5.90%, 07/07/96 2,225 2,225 Town of Islip Industrial Development Agency 1992 Taxable Adjustable Rate Industrial Development Revenue Bonds (Nussdorf Associates/Quality King Distributors, Inc. Facility)/(Bank of Tokyo-Mitsubishi LOC) 5.72%, 07/07/96 1,560 1,560 ------ 33,885 ------ BANKING--UNITED KINGDOM--0.3% New Jersey Economic Development Authority Variable Rate Title IX Loan Portfolio Securitization Bonds/ (National Westminster Bank LOC) 5.48%, 07/01/96 26,400 26,400 ------ INSURANCE--0.1% Commonwealth Life Insurance Co. 5.58%, 07/01/96 10,000 10,000 ------ MONOLINE INSURANCE--0.1% Baptist Health Systems of South Florida, Inc. Taxable Variable Rate Direct Note Obligations Series 1995A/ (MBIA Insurance) 5.60%, 07/07/96 6,600 6,600 Baptist Health Systems of South Florida, Inc. Taxable Variable Rate Direct Note Obligations Series 1995B/ (MBIA Insurance) 5.60%, 07/07/96 4,500 4,500
19 22 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- New Orleans Aviation Board Taxable Refunding Bonds Series 1993A/(MBIA Insurance) 5.66%, 07/07/96 $ 700 $ 700 ------- 11,800 ------- SECURITIES BROKERAGE-DEALER--3.0% Bear Stearns Companies, Inc. 5.49%, 07/05/96 75,000 75,000 5.51%, 07/08/96 50,000 50,000 5.50%, 07/08/96 60,000 60,000 5.53%, 08/01/96 50,000 50,000 Lehman Brothers Holdings, Inc. 5.49%, 07/30/96 20,000 20,000 ------- 255,000 ------- TOTAL VARIABLE RATE OBLIGATIONS (Cost $605,457) 605,457 ------- AGENCY OBLIGATIONS--0.6% COUPON NOTES--0.6% Federal National Mortgage Assoc. 5.62%, 07/02/96 24,000 24,000 5.91%, 08/19/96 30,000 30,010 ------- TOTAL AGENCY OBLIGATIONS (Cost $54,010) 54,010 ------- BANK NOTES--2.4% BANKING--CANADA--0.8% Harris Trust & Savings Bank 5.59%, 03/26/97 45,000 44,971 6.10%, 06/17/97 25,000 24,986 ------- 69,957 ------- BANKING--DOMESTIC--1.6% FCC National Bank 5.48%, 10/07/96 123,000 123,000 PNC Bank, N.A. 5.42%, 09/18/96 7,000 7,001 ------- 130,001 ------- TOTAL BANK NOTES (Cost $199,958) 199,958 ------- CERTIFICATES OF DEPOSIT--21.8% BANKING--BELGIUM--0.2% Generale Bank S.A. 5.25%, 07/25/96 20,000 20,000 -------
20 23 - ------------------------------------------------------------------------------
Par Value -------- ---------- BANKING--CANADA--0.9% Bank of Nova Scotia 5.03%, 07/08/96 $31,000 $ 31,000 Canadian Imperial Bank of Commerce 5.38%, 08/29/96 43,000 43,000 ------- 74,000 ------- BANKING--DOMESTIC--2.0% Bankers Trust Co. 5.36%, 08/21/96 50,000 50,000 Chase Manhattan Bank U.S.A. 5.39%, 08/08/96 45,000 45,000 MBNA America Bank N.A. 5.50%, 07/11/96 23,000 23,000 5.45%, 07/24/96 25,000 25,000 5.56%, 09/25/96 27,000 27,000 ------- 170,000 ------- BANKING--FRANCE--4.1% Banque Nationale de Paris 5.35%, 07/08/96 25,000 25,000 5.26%, 07/12/96 15,000 15,000 5.25%, 07/22/96 30,000 30,000 5.25%, 07/25/96 25,000 25,000 5.05%, 08/22/96 25,000 25,000 5.42%, 09/16/96 5,000 5,001 Societe Generale 5.35%, 07/12/96 20,000 20,000 5.15%, 08/23/96 25,000 24,996 5.54%, 03/14/97 25,000 25,002 5.65%, 03/31/97 25,000 24,987 5.60%, 04/03/97 50,000 50,004 5.90%, 05/30/97 25,000 24,993 6.09%, 06/10/97 25,000 24,993 6.11%, 06/13/97 25,000 24,995 ------- 344,971 ------- BANKING--GERMANY--1.7% Bayerische Hypotheken und Wechsel Bank 5.35%, 08/07/96 35,000 35,001 Bayerische Landesbank Girozentrale 4.94%, 01/13/97 43,000 43,060 Bayerische Vereinsbank AG 5.34%, 07/05/96 50,000 50,000 Dresdner Bank AG 5.75%, 07/05/96 15,000 15,000 ------- 143,061 -------
21 24 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Par Value -------- ---------- BANKING--ITALY--0.2% Cariplo SPA 5.36%, 08/22/96 $ 15,000 $ 15,000 ------- BANKING--JAPAN--9.8% Bank of Tokyo-Mitsubishi, Ltd. 5.56%, 08/06/96 10,000 9,999 5.59%, 09/23/96 25,000 25,000 Dai-Ichi Kangyo Bank, Ltd. 5.46%, 07/26/96 50,000 50,000 5.47%, 08/06/96 21,000 21,000 5.50%, 08/07/96 49,000 49,000 5.50%, 08/12/96 50,000 50,001 5.59%, 09/26/96 25,000 25,001 5.64%, 09/30/96 25,000 24,999 Industrial Bank of Japan, Ltd. 5.53%, 07/08/96 25,000 25,000 5.53%, 07/11/96 24,000 24,000 5.47%, 07/16/96 24,000 24,000 5.47%, 07/22/96 23,000 23,000 5.50%, 08/01/96 25,000 25,000 5.50%, 08/06/96 105,000 105,000 5.50%, 08/07/96 48,000 48,000 5.60%, 09/11/96 36,000 36,000 Sanwa Bank, Ltd. 5.50%, 07/15/96 13,000 13,000 Sumitomo Bank, Ltd. 5.50%, 07/03/96 10,000 10,000 5.56%, 07/09/96 49,000 49,000 5.50%, 07/17/96 22,000 22,000 5.53%, 08/05/96 65,000 64,998 5.52%, 08/05/96 20,000 19,999 5.50%, 08/08/96 55,000 55,001 5.47%, 08/19/96 30,000 30,000 ------- 828,998 ------- BANKING--NETHERLANDS--1.1% ABN-AMRO Bank N.V. 5.02%, 08/20/96 14,000 14,000 4.95%, 02/14/97 50,000 49,981 Rabobank Nederland N.V. 5.95%, 07/25/96 25,000 25,000 ------- 88,981 ------- BANKING--SWEDEN--0.3% Svenska Handelsbanken 5.35%, 08/20/96 25,000 25,001 -------
22 25 - ------------------------------------------------------------------------------
Par Value -------- ---------- BANKING--UNITED KINGDOM--1.5% Abbey National PLC 5.34%, 07/16/96 $50,000 $ 50,000 5.13%, 02/20/97 50,000 50,003 5.08%, 02/26/97 25,000 25,002 --------- 125,005 --------- TOTAL CERTIFICATES OF DEPOSIT (Cost $1,835,017) 1,835,017 --------- MUNICIPAL TAXABLE BONDS--0.8% BANKING--FRANCE--0.7% City of New York General Obligation Bonds Fiscal 1996 Series A-2/(Societe Generale LOC) 5.39%, 08/20/96 38,000 38,000 City of New York General Obligation Bonds Fiscal 1996 Series F/(Societe Generale LOC) 5.39%, 08/20/96 5,500 5,500 City of New York General Obligation Bonds Fiscal 1996 Series F-8/(Societe Generale LOC) 5.39%, 08/20/96 14,000 14,000 --------- 57,500 --------- BANKING--JAPAN--0.1% Oklahoma Industrial Finance Authority Taxable General Obligation Industrial Finance Bonds Series P/ (Bank of Tokyo-Mitsubishi LOC) 5.63%, 08/01/96 9,750 9,750 --------- TOTAL MUNICIPAL TAXABLE BONDS (Cost $67,250) 67,250 --------- REMARKETED CERTIFICATES--0.3% ASSET BACKED SECURITIES--0.3% Black & Decker RECOP Trust 5.40%, 08/08/96 9,000 9,000 Circuit City RECOP Trust 5.53%, 09/18/96 15,850 15,850 --------- TOTAL REMARKETED CERTIFICATES (Cost $24,850) 24,850 --------- U.S. TREASURY OBLIGATIONS--1.2% U.S. Treasury Notes 7.50%, 01/31/97 50,000 50,722 6.63%, 03/31/97 50,000 50,508 --------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $101,230) 101,230 ---------
23 26 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ SCHEDULE OF INVESTMENTS (in thousands) June 30, 1996 (Unaudited)
Maturity Value -------- ---------- REPURCHASE AGREEMENT--0.7% Salomon Brothers, Inc. 5.53%, Issue Date 06/28/96; Due 07/01/96; Collateralized By: FNMA: $23,092 Par; 9.00%, Due 05/01/25 FNMA: $50,000 Par; 9.00%, Due 10/01/24 U.S. Treasury Bonds: $2,435 Par; 14.00%, Due 11/15/11 $55,025 $ 55,000 --------- TOTAL REPURCHASE AGREEMENT (Cost $55,000) 55,000 --------- TOTAL INVESTMENTS--100.0% (Cost $8,419,903) $8,419,903 ==========
NOTES TO SCHEDULE OF INVESTMENTS. Yields shown are effective yields at the time of purchase, except for variable rate securities which are described below and Treasury and Agency 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) Certain securities purchased by the Fund are private placement securities exempt from registration by Section 4(2) of the Securities Act of 1933. These securities generally are sold to institutional investors, such as the Schwab Value Advantage Money Fund. Any resale by the Fund must be in an exempt transaction, normally to a qualified institutional buyer. At June 30, 1996, the aggregate value of private placement securities held by the Fund was $1,909,969,000 which represented 22.58% of net assets. Of this total, $1,879,969,000 or 22.23% of net assets, was determined by the Investment Manager to be liquid in accordance with a resolution adopted by the Board of Trustees relating to Rule 144A, promulgated under the Securities Act of 1933. 24 27 - ------------------------------------------------------------------------------ NOTES TO SCHEDULE OF INVESTMENTS (Continued) June 30, 1996 (Unaudited) (b) Variable rate securities. Interest rates vary periodically based on current market rates. Rates shown are the effective rates on June 30, 1996. Dates shown represent the latter of the demand date or next interest rate change date, which is considered the maturity date for financial reporting purposes. For variable rate securities without demand features, the next interest reset date is shown.
Abbreviations ---------------------------------------------------------- FNMA Federal National Mortgage Association LOC Letter of Credit MBIA Municipal Bond Investors Assurance Corporation RECOP Remarketed Certificates of Participation
See accompanying Notes to Financial Statements. 25 28 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ STATEMENT OF ASSETS AND LIABILITIES (in thousands) June 30, 1996 (Unaudited) ASSETS Investments, at value (Cost: $8,419,903) $8,419,903 Interest receivable 33,942 Receivable for Fund shares sold 55,367 Deferred organization costs 18 Prepaid expenses 274 ---------- Total assets 8,509,504 ---------- LIABILITIES Payable for: Dividends 15,186 Fund shares redeemed 35,847 Investment advisory and administration fee 603 Transfer agency and shareholder service fees 46 Other 492 ---------- Total liabilities 52,174 ---------- Net assets applicable to outstanding shares $8,457,330 ========== NET ASSETS CONSIST OF: Capital paid in $8,457,461 Accumulated net realized loss on investments sold (131) ---------- $8,457,330 ========== PRICING OF SHARES Outstanding shares, $0.00001 par value (unlimited shares authorized) 8,457,461 Net asset value, offering and redemption price per share $1.00
See accompanying Notes to Financial Statements. 26 29 - ------------------------------------------------------------------------------ STATEMENT OF OPERATIONS (in thousands) Six months ended June 30, 1996 (Unaudited) Interest income $216,687 -------- Expenses: Investment advisory and administration fee 16,555 Transfer agency and shareholder service fees 9,818 Custodian fees 304 Registration fees 802 Professional fees 60 Shareholder reports 56 Trustees' fees 18 Amortization of deferred organization costs 11 Insurance and other expenses 58 -------- 27,682 Less expenses reduced (11,973) -------- Total expenses incurred by Fund 15,709 -------- Net investment income 200,978 Net realized gain on investments sold -- -------- Increase in net assets resulting from operations $200,978 ========
See accompanying Notes to Financial Statements. 27 30 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ STATEMENT OF CHANGES IN NET ASSETS (in thousands)
Six months ended Year June 30, ended 1996 December 31, (Unaudited) 1995 ----------- ----------- Operations: Net investment income $ 200,978 $ 310,965 Net realized gain (loss) on investments sold -- (5) ---------- ----------- Increase in net assets resulting from operations 200,978 310,960 ---------- ----------- Dividends to shareholders from net investment income (200,978) (310,965) ---------- ----------- Capital share transactions (at $1.00 per share): Proceeds from shares sold 6,643,843 10,404,416 Net asset value of shares issued in reinvestment of dividends 218,887 262,426 Less payments for shares redeemed (5,329,290) (7,474,576) ---------- ----------- Increase in net assets from capital share transactions 1,533,440 3,192,266 ---------- ----------- Total increase in net assets 1,533,440 3,192,261 Net assets: Beginning of period 6,923,890 3,731,629 ---------- ----------- End of period $ 8,457,330 $ 6,923,890 ========== ===========
See accompanying Notes to Financial Statements. 28 31 - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS Six months ended June 30, 1996 (Unaudited) 1. DESCRIPTION OF THE FUND The Schwab Value Advantage Money Fund (the "Fund") is a series of The Charles Schwab Family of Funds (the "Trust"), a no-load, open-end investment management company organized as a Massachusetts business trust on October 20, 1989 and registered under the Investment Company Act of 1940, as amended. In addition to the Fund, the Trust also offers -- the Schwab Money Market Fund, Schwab Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Tax-Exempt Money Fund (Sweep and Value Advantage Shares), Schwab California Tax-Exempt Money Fund (Sweep and Value Advantage Shares), Schwab New York Tax-Exempt Money Fund (Sweep and Value Advantage Shares), Schwab Institutional Advantage Money Fund(R) and Schwab Retirement Money Fund(R). The assets of each series are segregated and accounted for separately. The Schwab Value Advantage Money Fund invests primarily in a diversified portfolio of short-term obligations of major banks and corporations. 2. SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies are in conformity with generally accepted accounting principles for investment companies. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Security valuation -- Investments are stated at amortized cost which approximates market value. Security transactions and interest income -- Security transactions are accounted for on a trade date basis (date the order to buy or sell is executed). Interest income is recorded on the accrual basis 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. 29 32 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS Six months ended June 30, 1996 (Unaudited) Repurchase agreements -- Repurchase agreements are fully collateralized by U.S. Treasury or government agency securities. All collateral is held by the Fund's custodian and is monitored daily to ensure that its market value at least equals the repurchase price under the agreement. Dividends to shareholders -- The Fund declares a daily dividend, equal to its net investment income for that day, payable monthly. Deferred organization costs -- Costs incurred in connection with the organization of the Fund and its initial registration with the Securities and Exchange Commission and with various states are amortized on a straight-line basis over a five-year period from the Fund's commencement of operations. Expenses -- Expenses arising in connection with the Fund are charged directly to the Fund. Expenses common to all series of the Trust are allocated to each series in proportion to their relative net assets. Federal income taxes -- It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income and realized net capital gains, if any, to shareholders. Therefore, no federal income tax provision is required. The Fund is considered a separate entity for tax purposes. 3. TRANSACTIONS WITH AFFILIATES Investment advisory and administration agreements -- The Trust has investment advisory and administration agreements with Charles Schwab Investment Management, Inc. (the "Investment Manager"). For advisory services and facilities furnished, the Fund pays an annual fee, payable monthly, of .46% of the first $2 billion of average daily net assets, .45% of such assets over $2 billion, and .40% of such assets in excess of $3 billion. Under these agreements, the Fund incurred investment advisory and administration fees of $16,555,000 for the six months ended June 30, 1996, before the Investment Manager reduced its fee (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 .25% of average daily net assets. In addition, Schwab receives a fee of $5.00 for redemptions in 30 33 - ------------------------------------------------------------------------------ amounts less than $5,000 and may impose a $5.00 fee for monthly balances below the minimum required. For the six months ended June 30, 1996, the Fund incurred transfer agency and shareholder service fees of $9,818,000 before Schwab reduced its fees (see Note 4). Officers and trustees -- Certain officers and trustees of the Trust are also officers and/or directors of the Investment Manager and/or Schwab. During the six months ended June 30, 1996, the Trust made no direct payments to its officers or trustees who are "interested persons" within the meaning of the Investment Company Act of 1940, as amended. The Fund incurred fees of $18,000 related to the Trust's unaffiliated trustees. 4. EXPENSES REDUCED BY THE INVESTMENT MANAGER AND SCHWAB The Investment Manager and Schwab reduced a portion of their fees in order to limit the Fund's ratio of operating expenses to average net assets. For the six months ended June 30, 1996, the total of such fees reduced by the Investment Manager and Schwab was $2,809,000 and $9,164,000, respectively. 5. INVESTMENT TRANSACTIONS Purchases, sales and maturities of investment securities for the six months ended June 30, 1996, aggregated (in thousands) $15,671,835 and $14,208,074, respectively. 31 34 SCHWAB VALUE ADVANTAGE MONEY FUND(R) - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS Six months ended June 30, 1996 (Unaudited) 6. FINANCIAL HIGHLIGHTS Per share income and capital changes for a share outstanding throughout the period:
Six months ended Period June 30, ended 1996 /----Year ended December 31,----/ December 31, (Unaudited) 1995 1994 1993 1992(1) ----------- ---------- ---------- --------- ------------ Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment - --------------------- operations ---------- Net investment income .03 .06 .04 .03 .02 Net realized and unrealized gain (loss) on investments -- -- -- -- -- ---------- ---------- ---------- -------- -------- Total from investment operations .03 .06 .04 .03 .02 Less distributions - ------------------ Dividends from net investment income (.03 ) (.06) (.04) (.03) (.02) Distributions from realized gains on investments -- -- -- -- -- ---------- ---------- ---------- -------- -------- Total distributions (.03 ) (.06) (.04) (.03) (.02) ---------- ---------- ---------- -------- -------- Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========== ========== ======== ======== Total return (%) 2.58 5.80 4.09 3.02 2.33 - -------------- Ratios/Supplemental data - ---------------------- Net assets, end of period (000s) $8,457,330 $6,923,890 $3,731,629 $729,356 $319,024 Ratio of expenses to average net assets (%) .40* .40 .40 .39 .29* Ratio of net investment income to average net assets (%) 5.12* 5.63 4.40 2.97 3.27*
The Investment Manager and Schwab have reduced a portion of their fees and absorbed certain expenses in order to limit the Fund's ratio of operating expenses to average net assets. Had these fees and expenses not been reduced and absorbed, the ratio of expenses to average net assets for the periods ended June 30, 1996, December 31, 1995, 1994, 1993 and 1992 would have been .71%*, .72%, .79%, .82% and .94%*, respectively, and the ratio of net investment income to average net assets would have been 4.81%*, 5.31%, 4.01%, 2.54% and 2.62%*, respectively. - --------------- (1) For the period April 30, 1992 (commencement of operations) to December 31, 1992. * Annualized 32 35 SCHWABFUNDS FAMILY(R) The SchwabFunds Family includes a variety of funds to help meet your investment needs. You can diversify your portfolio with one investment in any of our three asset allocation funds, or choose from several equity markets with our equity funds. You can also select from different maturities with our bond fund choices, and take advantage of an array of money market funds. SCHWAB ASSET ALLOCATION FUNDS Schwab Asset Director(R)--High Growth Fund Schwab Asset Director--Balanced Growth Fund Schwab Asset Director--Conservative Growth Fund SCHWAB EQUITY FUNDS Schwab 1000 Fund(R) Schwab International Index Fund(TM) Schwab Small-Cap Index Fund(R) Schwab S&P 500 Fund Schwab Analytics Fund(TM) SCHWAB BOND FUNDS Schwab Government Bond Funds--Long-Term and Short/Intermediate Schwab Tax-Free Bond Funds--Long-Term and Short/Intermediate Schwab California Tax-Free Bond Funds--Long-Term and Short/Intermediate SCHWAB MONEY MARKET FUNDS Schwab offers an array of money market funds that seek high current income with safety and liquidity. Choose from taxable or tax-exempt 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(TM). 1 Please call 1-800-2 NO-LOAD for a free prospectus and brochure for any of the SchwabFunds(R). Each prospectus provides more complete information, including charges and expenses. Please read it carefully before investing. This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. 1. Investments in money market funds are neither insured nor guaranteed by the U.S. government, and there is no assurance that the Funds will be able to maintain a stable share price of $1. 36 ============== [SCHWABFUNDS FAMILY(R) LOGO] BULK RATE U.S. POSTAGE 101 Montgomery Street PAID San Francisco, CA 94104 CHARLES SCHWAB ============== 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)1996 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE TF4220R(8/96) CRS 6795 Printed on recycled paper. -----END PRIVACY-ENHANCED MESSAGE-----