<PAGE> 1
[SCHWABFUNDS LOGO](R)
SCHWAB INSTITUTIONAL
ADVANTAGE MONEY FUND(TM)
SEMI-ANNUAL REPORT
JUNE 30, 1995
-------------------------
<PAGE> 2
SCHWABFUNDS(R)
DEAR SHAREHOLDER,
I'm pleased to report to you on the performance of the Schwab Institutional
Advantage Money Fund(TM) for the six-month period ended June 30, 1995. During
the first half of this year, the Fund continued to provide you with current
income consistent with preservation of capital.
Investor response to the Schwab Institutional Advantage Money Fund has been
positive. During the six-month reporting period, the Schwab Institutional
Advantage Money Fund's net assets increased 32% to more than $79.3 million.
PERFORMANCE REVIEW
The table below presents 7-day average yields for the Schwab Institutional
Advantage Money Fund at the end of the reporting period. Bear in mind that, as
with all money market funds, past performance is no guarantee of future results.
Also note that although the Fund seeks to maintain a stable $1.00 share price,
money market funds are neither insured nor guaranteed by the U.S. Government and
there can be no assurance that the Fund will be able to maintain a stable net
asset value.
================================================================================
7-DAY AVERAGE YIELDS
(As of 6/30/95)
<TABLE>
<CAPTION>
Current Compound
--------------------------------------------------------------------------------
<S> <C> <C>
Schwab Institutional Advantage Money Fund 5.54% 5.70%
================================================================================
</TABLE>
Enclosed you will find a complete listing of the Fund's holdings as of June 30,
1995.
We appreciate your trust in SchwabFunds, and look forward to continuing to
help you achieve your financial goals in the future.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
Chairman
The Charles Schwab Family of Funds
<PAGE> 3
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
PORTFOLIO SUMMARY
(Unaudited)
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ASSET GROWTH
<TABLE>
<CAPTION>
Total Total Percentage
Net Assets Net Assets Growth Over
as of 6/30/95 as of 12/31/94 Reporting
(000s) (000s) Period
--------------------------------------------------------------------------------
<S> <C> <C>
$79,329 $60,088 32%
--------------------------------------------------------------------------------
</TABLE>
AVERAGE YIELDS FOR THE PERIODS ENDED ON
JUNE 30, 1995
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
--------------------------------------------------------------------------------
<S> <C> <C>
5.54% 5.64% 5.06%
--------------------------------------------------------------------------------
</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 9/30/94 12/31/94 3/31/95 6/30/95
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0 - 15 Days 17.6% 23.4% 12.6% 13.7%
16 - 30 Days 21.1% 14.8% 26.8% 16.0%
31 - 60 Days 29.9% 40.7% 30.1% 30.2%
61 - 90 Days 18.9% 13.0% 28.4% 19.9%
91 - 120 Days 0.0% 8.1% 2.1% 3.7%
Over 120 Days 12.5% 0.0% 0.0% 16.5%
Weighted Average 49 Days 39 Days 44 Days 60 Days
--------------------------------------------------------------------------------
</TABLE>
PORTFOLIO QUALITY
<TABLE>
<CAPTION>
Percent of
SEC Tier Net Assets
Rating 6/30/95
--------------------------------
<S> <C>
Tier 1 100.0%
Tier 2 0.0%
--------------------------------
</TABLE>
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SchwabFunds(R) 1
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
Schedule of Investments (in thousands)
June 30, 1995
(Unaudited)
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<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS--84.9%(a)
ASSET BACKED SECURITIES--9.8%
Apreco, Inc.
6.04%, 08/08/95 $2,000 $1,987
Broadway Capital Corp.
6.07%, 08/09/95 1,700 1,689
Budget Funding Corp.
6.07%, 08/03/95 2,000 1,989
Ranger Funding Corp.
6.14%, 07/26/95 1,178 1,173
WCP Funding Inc.
6.11%, 07/19/95 1,000 997
------
7,835
------
AUTOMOTIVE--4.5%
Ford Motor Credit Co.
6.01%, 07/24/95 1,000 996
General Motors Acceptance Corp.
6.31%, 07/18/95 1,600 1,595
6.09%, 08/24/95 1,000 991
------
3,582
------
BANKING--CANADA--2.5%
Bank of Nova Scotia
6.02%, 08/11/95 2,000 1,986
------
BANKING--DOMESTIC BANK HOLDING COMPANY--7.5%
Chemical Banking Corp.
5.94%, 09/13/95 3,000 2,964
NationsBank Corp.
6.15%, 08/17/95 2,000 1,984
6.29%, 10/10/95 1,000 983
------
5,931
------
</TABLE>
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SchwabFunds(R) 2
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
Schedule of Investments (in thousands)
June 30, 1995
(Unaudited)
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<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
BANKING--FRANCE--3.7%
Indosuez N.A. Inc.
6.04%, 08/16/95 $3,000 $2,977
------
BANKING--GERMANY--4.0%
Commerzbank U.S. Finance Inc.
5.82%, 12/14/95 3,300 3,214
------
BANKING--JAPAN--1.9%
DIC Americas, Inc. / (Mitsubishi Bank LOC)
6.06%, 08/14/95 1,500 1,489
------
BANKING--SPAIN--3.7%
Central Hispano N.A. Capital Corp.
5.96%, 09/05/95 3,000 2,968
------
BANKING--UNITED KINGDOM--6.2%
Abbey National N.A. Corp.
6.29%, 09/20/95 1,000 986
Banco Nacional de Mexico S.A. / (Barclays Bank
PLC LOC)
5.89%, 09/07/95 3,000 2,967
Cheltenham & Gloucester Building Society
6.09%, 07/25/95 1,000 996
------
4,949
------
COMPUTER AND OFFICE EQUIPMENT--3.6%
Xerox Corp.
6.11%, 07/05/95 2,857 2,855
------
FINANCE (CONSUMER)--3.8%
American Express Credit Corp.
6.11%, 07/17/95 2,000 1,995
6.09%, 07/28/95 1,000 996
------
2,991
------
</TABLE>
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SchwabFunds(R) 3
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
Schedule of Investments (in thousands)
June 30, 1995
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
FINANCE (COMMERCIAL)--5.0%
CIT Group Holdings, Inc.
6.07%, 08/10/95 $2,000 $1,987
General Electric Capital Corp.
6.31%, 10/10/95 2,000 1,966
------
3,953
------
FOOD PROCESSING--5.0%
American Home Food Products Inc.
6.18%, 07/13/95 1,000 998
Philip Morris Companies Inc.
6.10%, 07/03/95 3,000 2,999
------
3,997
------
MINING AND MINERAL RESOURCES--1.2%
BHP Finance (U.S.A.), Inc.
6.06%, 07/31/95 1,000 995
------
MORTGAGE BANKING--3.8%
Fleet Mortgage Group, Inc.
6.12%, 07/21/95 3,000 2,990
------
PHARMACEUTICALS--2.5%
Warner-Lambert Company
6.04%, 08/21/95 2,000 1,983
------
SECURITIES BROKERAGE-DEALER--16.2%
BT Securities Corp.
5.99%, 09/18/95 1,000 987
6.00%, 09/20/95 2,000 1,973
Goldman Sachs Group, L.P.
5.88%, 11/17/95 2,000 1,956
5.85%, 11/20/95 2,000 1,955
Lehman Brothers Holdings Inc.
6.30%, 07/03/95 2,060 2,059
Nomura Holdings America, Inc.
5.96%, 09/07/95 3,000 2,967
</TABLE>
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SchwabFunds(R) 4
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
Schedule of Investments (in thousands)
June 30, 1995
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
Paine Webber Group Inc.
6.12%, 07/27/95 $1,000 $ 995
-------
12,892
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $67,587) 67,587
-------
BANK NOTES--3.8%
BANKING--DOMESTIC--3.8%
PNC Bank, N.A.
6.09%, 11/08/95 3,000 3,001
-------
TOTAL BANK NOTES
(Cost $3,001) 3,001
-------
CERTIFICATES OF DEPOSIT--11.3%
BANKING--CANADA--1.2%
Canadian Imperial Bank of Commerce
6.03%, 08/15/95 1,000 1,000
-------
BANKING--DOMESTIC--3.8%
Chemical Bank
5.74%, 12/08/95 3,000 3,000
-------
BANKING--JAPAN--6.3%
Sanwa Bank, Ltd.
6.05%, 07/05/95 1,000 1,000
6.03%, 07/06/95 1,000 1,000
Sumitomo Bank, Ltd.
6.03%, 08/02/95 1,000 1,000
</TABLE>
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SchwabFunds(R) 5
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
Schedule of Investments (in thousands)
June 30, 1995
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
CERTIFICATES OF DEPOSIT (CONTINUED)
Sumitomo Bank, Ltd.
6.04%, 08/14/95 $2,000 $ 2,000
-------
5,000
-------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $9,000) 9,000
-------
TOTAL INVESTMENTS--100.0%
(Cost $79,588) $79,588
=======
</TABLE>
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SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
Schedule of Investments (in thousands)
June 30, 1995
(Unaudited)
--------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS.
--------------------------------------------------------------------------------
Yields shown are effective yields at the time of purchase. 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
Institutional Advantage Money Fund. Any resale by the Fund must be in an exempt
transaction, normally to a qualified institutional buyer. At June 30, 1995, the
aggregate value of private placement securities held by the Fund was $3,860,000,
which represented 4.87% of net assets. All of these private placement
investments were 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.
Abbreviations
-------------
LOC Letter of Credit
See accompanying Notes to Financial Statements.
<PAGE> 10
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
STATEMENT OF ASSETS AND LIABILITIES (in thousands)
June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost: $79,588) $79,588
Cash 37
Interest receivable 66
Receivable for fund shares sold 3
Deferred organization costs 40
Prepaid expenses 11
-------
Total assets 79,745
-------
LIABILITIES
Payable for:
Dividends 48
Fund shares redeemed 256
Investment advisory and administration fee 17
Transfer agency and shareholder service fees 8
Deferred organization costs 57
Other 30
-------
Total liabilities 416
-------
Net assets applicable to outstanding shares $79,329
=======
NET ASSETS CONSIST OF:
Capital paid in $79,329
Accumulated net realized gain (loss) on investments sold ---
-------
$79,329
=======
THE PRICING OF SHARES
Outstanding shares, $0.00001 par value (unlimited shares authorized) 79,329
Net asset value, offering and redemption price per share $1.00
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 11
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
STATEMENT OF OPERATIONS (in thousands)
For the six months ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Interest income $2,238
------
Expenses:
Investment advisory and administration fee 167
Transfer agency and shareholder service fees 91
Custodian fees 29
Registration fees 22
Professional fees 10
Shareholder reports 3
Amortization of deferred organization costs 6
Insurance and other expenses 3
------
331
Less expenses reduced (131)
------
Total expenses incurred by Fund 200
------
Net investment income 2,038
Net realized gain (loss) on investments sold ---
------
Increase in net assets resulting from operations $2,038
======
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 12
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
STATEMENT OF CHANGES IN NET ASSETS (in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
January 4, 1994
For the six (commencement
months ended of operations) to
June 30, 1995 December 31,
(Unaudited) 1994
------------- -----------------
<S> <C> <C>
Operations:
Net investment income $ 2,038 $ 1,928
Net realized gain (loss) on investments sold -- --
-------- ---------
Increase in net assets resulting from operations 2,038 1,928
-------- ---------
Dividends to shareholders from net investment income (2,038) (1,928)
-------- ---------
Capital Share Transactions (dollar amounts and number
of shares are the same):
Proceeds from shares sold 117,607 240,455
Net asset value of shares issued in reinvestment of dividends 918 397
Less payments for shares redeemed (99,284) (180,764)
-------- ---------
Increase in net assets from capital share transactions 19,241 60,088
-------- ---------
Total increase in net assets 19,241 60,088
Net Assets:
Beginning of period 60,088 --
-------- ---------
End of period $ 79,329 $ 60,088
======== =========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 13
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
NOTES TO FINANCIAL STATEMENTS
For the six months ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
The Schwab Institutional Advantage Money Fund (the "Fund") is a series of The
Charles Schwab Family of Funds (the "Trust"), an open-end, management investment
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,
the Schwab Government Money Fund, the Schwab U.S. Treasury Money Fund, the
Schwab Tax-Exempt Money Fund, the Schwab California Tax-Exempt Money Fund, the
Schwab New York Tax-Exempt Money Fund, the Schwab Value Advantage Money Fund(R)
and the Schwab Retirement Money Fund(TM). The assets of each series are
segregated and accounted for separately.
The Schwab Institutional Advantage Money Fund invests primarily in a diversified
portfolio of short-term obligations of major banks and corporations.
2. SIGNIFICANT ACCOUNTING POLICIES
Security valuation - Investments are stated at amortized cost which approximates
market value.
Security transactions and interest income - Security transactions, in the
accompanying financial statements, 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.
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, 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.
<PAGE> 14
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
NOTES TO FINANCIAL STATEMENTS
For the six months ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
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
$167,000 for the six months ended June 30, 1995, 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. For the six
months ended June 30, 1995, the Fund incurred transfer agency and shareholder
service fees of $91,000, before Schwab reduced its fees (see Note 4).
Officers and trustees - Certain officers and trustees of the Trust are also
officers or directors of the Investment Manager and/or Schwab. During the six
months ended June 30, 1995, 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 did not incur fees 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, 1995, the total of such fees reduced by the Investment
Manager and Schwab was $72,000 and $59,000, respectively.
<PAGE> 15
SchwabFunds(R)
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SCHWAB INSTITUTIONAL ADVANTAGE MONEY FUND(TM)
NOTES TO FINANCIAL STATEMENTS
For the six months ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities for the six months
ended June 30, 1995, aggregated (in thousands) $679,648 and $660,965,
respectively.
6. FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the period
January 4, 1994
For the six (commencement
months ended of operations) to
June 30, 1995 December 31,
(Unaudited) 1994
------------- -----------------
<S> <C> <C>
Net asset value at beginning of period $1.00 $1.00
Income from Investment Operations
Net investment income .03 .04
Net realized and unrealized gain (loss) on investments -- --
------- -------
Total from investment operations .03 .04
Less Distributions
Dividends from net investment income (.03) (.04)
Distributions from realized gain on investments -- --
------- -------
Total distributions (.03) (.04)
------- -------
Net asset value at end of period $1.00 $1.00
======= =======
Total return (%) 2.81 3.86
Ratios/Supplemental Data
Net assets, end of period (000s) $79,329 $60,088
Ratio of expenses to average net assets (%) .55* .55*
Ratio of net investment income to average net assets (%) 5.61* 4.04*
</TABLE>
The Investment Manager and Schwab have reduced a portion of their fees in order
to limit the Fund's ratio of operating expenses to average net assets. Had these
fees not been reduced, the ratio of expenses to average net assets for the
periods ended June 30, 1995 and December 31, 1994 would have been .91%* and
.92%*, respectively, and the ratio of net investment income to average net
assets would have been 5.25%* and 3.67%*, respectively.
* Annualized
<PAGE> 16
SCHWABFUNDS FAMILY(TM) [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.
TF3637 (8/95) CRS 3855
