<PAGE> 1
SCHWABFUNDS(R)
SCHWAB
VALUE ADVANTAGE
MONEY FUND(R)
SEMI-ANNUAL REPORT
JUNE 30, 1996
[Photo of the Schwab Building, San Francisco, California]
<PAGE> 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
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
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
</TABLE>
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
<PAGE> 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.
<TABLE>
================================================================================
7-DAY AVERAGE YIELDS 1
(as of 6/30/96)
<CAPTION>
Simple Compound
- --------------------------------------------------------------------------------
<S> <C> <C>
Schwab Value Advantage Money Fund 5.07% 5.20%
- --------------------------------------------------------------------------------
</TABLE>
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
<PAGE> 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.]
<TABLE>
Schwab Value IBC Financial
Advantage Data's Money
Money Fund Fund Average
<S> <C> <C>
- --------------------------------------------------------------
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%
</TABLE>
- - 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
<PAGE> 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.
<TABLE>
<CAPTION>
6/30/96 12/31/95 Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Net Assets (000s) $8,457,330 $6,923,890 +22%
- --------------------------------------------------------------------------------
Shareholder Accounts 79,729 67,109 +19%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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
<PAGE> 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
<PAGE> 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.]
<TABLE>
YIELDS
90-Day Commercial Paper
January 2, 1996 - June 28, 1996
<S> <C>
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%
</TABLE>
- - 90-Day Commercial Paper
Source: Bloomberg L.P.
6
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 12
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
PORTFOLIO SUMMARY (Unaudited)
ASSET GROWTH
<TABLE>
<CAPTION>
Total Total Percentage
Net Assets Net Assets Growth Over
as of 6/30/96 as of 12/31/95 Reporting
(000s) (000s) Period
- ---------------------------------------------------
<S> <C> <C>
$8,457,330 $6,923,890 22%
- ---------------------------------------------------
</TABLE>
AVERAGE YIELDS FOR THE PERIODS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
- ---------------------------------------------------
<S> <C> <C>
5.07% 5.03% 5.33%
- ---------------------------------------------------
</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 9/30/95 12/31/95 3/31/96 6/30/96
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
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
- -----------------------------------------------------------------
</TABLE>
PORTFOLIO QUALITY
<TABLE>
<CAPTION>
Percent of
SEC Tier Net Assets
Rating 6/30/96
<S> <C>
- ------------------------
Tier 1 100.0%
Tier 2 0.0
- ------------------------
</TABLE>
10
<PAGE> 13
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
</TABLE>
11
<PAGE> 14
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
</TABLE>
12
<PAGE> 15
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
---------
</TABLE>
13
<PAGE> 16
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
-------
</TABLE>
14
<PAGE> 17
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
-------
</TABLE>
15
<PAGE> 18
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
-------
</TABLE>
16
<PAGE> 19
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
</TABLE>
17
<PAGE> 20
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
---------
</TABLE>
18
<PAGE> 21
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
</TABLE>
19
<PAGE> 22
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
-------
</TABLE>
20
<PAGE> 23
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
-------
</TABLE>
21
<PAGE> 24
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
-------
</TABLE>
22
<PAGE> 25
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
-------- ----------
<S> <C> <C>
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
---------
</TABLE>
23
<PAGE> 26
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Maturity Value
-------- ----------
<S> <C> <C>
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
==========
</TABLE>
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
<PAGE> 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.
<TABLE>
<CAPTION>
Abbreviations
----------------------------------------------------------
<S> <C>
FNMA Federal National Mortgage Association
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance Corporation
RECOP Remarketed Certificates of Participation
</TABLE>
See accompanying Notes to Financial Statements.
25
<PAGE> 28
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (in thousands)
June 30, 1996 (Unaudited)
<TABLE>
<S> <C>
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
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 29
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (in thousands)
Six months ended June 30, 1996 (Unaudited)
<TABLE>
<S> <C>
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
========
</TABLE>
See accompanying Notes to Financial Statements.
27
<PAGE> 30
SCHWAB VALUE ADVANTAGE MONEY FUND(R)
- ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Six months
ended Year
June 30, ended
1996 December 31,
(Unaudited) 1995
----------- -----------
<S> <C> <C>
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
========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
28
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
Six months
ended Period
June 30, ended
1996 /----Year ended December 31,----/ December 31,
(Unaudited) 1995 1994 1993 1992(1)
----------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
- ---------------------
operations
----------
Net investment income .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*
</TABLE>
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
<PAGE> 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.
<PAGE> 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.
