SCHWABFUNDS-REGISTERED TRADEMARK-
SCHWAB
VALUE ADVANTAGE
MONEY FUND-REGISTERED TRADEMARK-
Semiannual Report
June 30, 1999
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND-REGISTERED TRADEMARK-
We're pleased to bring you this semiannual report for the Schwab Value Advantage
Money Fund-Investor Shares (the fund) for the six-month period ended June 30,
1999. During the reporting period, the fund continued to provide investors with
high current yields while offering the liquidity and stability traditionally
associated with money market funds.
Schwab's Value Advantage Investments-Registered Trademark-, which include the
fund as well as three tax-advantaged alternatives, are designed to provide
higher yields than Sweep Investments-TM-. This is because Value Advantage
Investments have higher minimum initial and ongoing balance requirements than
Sweep Investments. These requirements, along with policies designed to
discourage frequent transactions, can help minimize fund expenses--which in turn
can mean higher returns for investors. Please remember that unlike Sweep
Investments, Value Advantage Investments cannot be linked to your Schwab account
to serve as your primary sweep fund. For more information on Schwab money funds,
see page 3.
Please remember that an investment in the fund is neither insured nor guaranteed
by the Federal Deposit Insurance Corporation or any other government agency and,
although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund.
CONTENTS
- ----------------------------------------------------
A Message from the Chairman 1
- ----------------------------------------------------
What Money Fund Investors Should Know 2
- ----------------------------------------------------
Market Overview 5
- ----------------------------------------------------
Portfolio Management 8
- ----------------------------------------------------
Fund Performance and Portfolio
Composition 9
- ----------------------------------------------------
Fund Discussion 10
- ----------------------------------------------------
Glossary of Terms 11
- ----------------------------------------------------
Portfolio Highlights 12
- ----------------------------------------------------
Financial Statements and Notes 13
- ----------------------------------------------------
<PAGE>
A MESSAGE FROM THE CHAIRMAN
Dear Shareholder,
[PHOTO]
During the past several years, the benefits of investing have been readily
apparent, while the risks have been somewhat less obvious. Over the past six
months, however, investors have witnessed sharp drops and big recoveries,
sometimes within the same day. After enjoying favorable market conditions for
years, investors have had to adjust to significant economic and political
developments, both here and abroad, that have contributed to rapid sentiment
swings and market turbulence. These developments have been accentuated by the
lingering expectation that stock prices are long overdue for a correction
according to several traditional, widely followed indicators. In spite of the
recent volatility, however, the markets continue to flourish, boosted by low
inflation, solid economic growth, low interest rates, a strong dollar and an
influx of money from investors.
All these trends serve to remind us that although the market's extreme ups and
downs can be harrowing, they are a natural part of market dynamics. That's why
we think it's a good time to reaffirm one of our primary investment principles:
Regardless of short-term market trends, our philosophy has always been that
REGULAR INVESTING is the best strategy over the long run. On the following
pages, we've provided guidelines to help insure that you can reach your goals by
establishing--or maintaining--an ongoing investment program.
The support of investors like you has helped Charles Schwab Investment
Management, Inc.-Registered Trademark- (CSIM) become one of the largest and
fastest growing mutual fund families in the nation. CSIM now manages more than
$94 billion in assets on behalf of approximately 3.9 million SchwabFunds
shareholders. We offer a broad spectrum of 39 mutual funds for investors with
varying financial situations and goals.
Thank you for your investment in SchwabFunds. We continue to do everything we
can to warrant the trust you have placed in us.
Please contact us toll free at 800-435-4000 with your questions or comments. As
always, we look forward to serving your investment needs.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
June 30, 1999
YEAR 2000 ISSUES
One issue with the potential to disrupt fund operations and affect
performance is the inability of some computers to recognize the year 2000.
The investment adviser is taking steps to enable its systems to handle this
issue. The investment adviser also is seeking assurances that its service
providers and business partners are taking similiar steps as well. However,
it is impossible to know in advance exactly how this issue will affect fund
adminstration, fund performance or securities markets in general.
1
<PAGE>
WHAT MONEY FUND INVESTORS SHOULD KNOW
WHY ASSET ALLOCATION MATTERS
As most investors know, one of the most compelling reasons to invest in a mutual
fund is diversification. By allocating your assets across many different
securities, a fund helps to reduce the risk that you might otherwise encounter
by owning just a few stocks or bonds.
Don't forget, however, that diversification across your portfolio is just as
important as diversification within one of the mutual funds you own. As you
probably know, stocks historically have offered much higher returns over the
long-term than other asset classes, such as bonds or cash, but those returns
have come at the price of higher volatility. To help mitigate some of that risk,
many investors often include at least some bonds and cash in their portfolio.
CHOOSING A MONEY MARKET FUND
Some investors may believe that there is no good reason to shop around for a
money market fund. This may be partially due to the fact that 20 years ago,
practically the only feature that differentiated one money market fund from
another was whether it allowed investors to write checks against it. Today,
investors can choose from a wide variety of options and features offered by the
more than 1,000 money market funds currently available.(1)
You can help assure that you've chosen the right money market fund by
considering the role it will play in your investment portfolio. Here are some
factors to consider when making or reviewing your money market fund choice.
EXPENSES: Because expenses are one of the key determining factors in a money
market fund's performance, investors are wise to seek out funds with low
operating expense ratios. Also, beware of those that have temporary expense
waivers that waive expenses to zero, because expenses can't stay at zero
forever, and fees will undoubtedly eventually rise.
Also consider 12b-1 fees, which some money market funds include in their expense
ratios to pay for marketing costs. These fees can reduce yield, in some cases by
a full percentage point. When comparing money market fund choices, you may want
to avoid funds that carry these unnecessary fees.
YIELDS: Look for competitive yields, but don't stop there. Many institutions
advertise their money market funds on the basis of yield.(2) Although getting a
competitive yield is important, other features, such as convenient access to
your investment, also are important considerations. Furthermore, stretching for
an additional 10 or 20 basis points in yield (0.10% to 0.20%) may not be worth
the time, effort or added risk. For example, a $10,000 investment in a money
fund that yields 0.10% more amounts to only an additional $10 over a one-year
period.
SWEEP FEATURES: If you're looking for a convenient way to link your money market
fund with your account, consider an account that has a "sweep" feature. Accounts
with this feature automatically "sweep" uninvested cash into the fund you select
as your primary money fund. The upshot: It keeps cash working. In addition,
shares of your fund will be redeemed automatically to cover investment purchases
and other debits in your account. This convenience may be well worth the small
additional cost.
LARGER CASH BALANCES: You may earn higher yields for larger cash balances. If
you don't need frequent access to the money in your money market fund, consider
one designed to pay higher yields for larger cash balances. These funds
typically have higher minimum balance requirements and transaction policies
designed to minimize fund operating expenses, and may be able to post higher
yields, all else being equal.
TAXES: Don't forget to consider your tax situation. If you're in a high
tax-bracket, investing in tax-free or municipal money market funds may help take
a bite out of your tax bill. And, if you live in a state with a high personal
state income tax, you may be best served by choosing a state-specific tax-free
fund that provides income free from federal, state and, in some cases, local
income taxes.(3)
(1) An investment in a money market fund is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency
and, although money funds seek to preserve the value of your investment at
$1 per share, it is possible to lose money by investing in a money fund.
(2) Yields may vary.
(3) This may not be true for investors subject to the federal alternative
minimum tax (AMT); consult your tax advisor.
2
<PAGE>
SCHWAB MONEY FUNDS
Schwab offers two types of money funds--Sweep Investments-TM- and Value
Advantage Investments.-Registered Trademark- Both include funds that offer
taxable and tax-free income. Depending on the role that cash and cash-equivalent
investments play in your investment plan, either or both may have a place in
your investment plan.
SWEEP INVESTMENTS are designed for your day-to-day cash needs. These shares can
be linked to your Schwab account to serve as a primary sweep money fund. That
means uninvested cash in your Schwab brokerage account is automatically swept in
and out of the fund, based on transactions in your account and the terms and
conditions of your account agreement.
VALUE ADVANTAGE INVESTMENTS are designed for your larger cash balances that
don't require frequent access. Value Advantage Investments have higher minimum
initial and ongoing balance requirements than Sweep Investments. These
requirements, along with policies designed to discourage frequent transactions,
can help minimize fund expenses--which in turn can mean higher returns for
investors. Please remember that Value Advantage Investments cannot be linked to
your Schwab account to serve as your primary sweep fund.
Schwab currently offers a variety of money funds. If you are selecting from
among them, you should consider your attitude toward risk and return, as well as
your income tax bracket.
SCHWAB TAXABLE MONEY FUNDS
SCHWAB MONEY MARKET FUND A high-quality money fund for investors interested in
the potential for high money market yields.
SCHWAB GOVERNMENT MONEY FUND Designed for investors who want current money
market yields along with the added margin of safety provided by a portfolio of
U.S. government securities and repurchase agreements.
SCHWAB U.S. TREASURY MONEY FUND Of all the money funds offered by Schwab, this
one seeks to provide the highest degree of safety. The fund invests exclusively
in U.S. Treasury securities and other investments that are backed by the full
faith and credit of the U.S. government. What's more, income from the fund is
generally free from state and local income tax.
SCHWAB VALUE ADVANTAGE MONEY FUND-REGISTERED TRADEMARK- A high-quality money
fund designed for investors interested in the potential for higher money market
yields.
SCHWAB MUNICIPAL MONEY FUNDS
SCHWAB MUNICIPAL MONEY FUND A high-quality municipal money fund that seeks to
provide income that is free from federal income tax.
SCHWAB STATE-SPECIFIC MUNICIPAL MONEY FUNDS Each of these funds is designed for
taxpayers of a particular state and seeks to provide income that is exempt from
federal, state and, in some cases, local income taxes. The Schwab Florida
Municipal Money Fund also seeks to have its shares exempt from the Florida
Intangible Tax.
- Schwab California Municipal Money Fund
- Schwab Florida Municipal Money Fund
- Schwab New Jersey Municipal Money Fund
- Schwab New York Municipal Money Fund
- Schwab Pennsylvania Municipal Money Fund
3
<PAGE>
WHAT MONEY FUND INVESTORS SHOULD KNOW (continued)
The table below presents the various money fund choices available at Schwab.
<TABLE>
<CAPTION>
SWEEP VALUE ADVANTAGE
TAXABLE MONEY FUNDS INVESTMENTS-TM- INVESTMENTS-REGISTERED TRADEMARK-
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Schwab Money Market Fund -
- -------------------------------------------------------------------------------------------------------
Schwab Government Money Fund -
- -------------------------------------------------------------------------------------------------------
Schwab U.S. Treasury Money Fund -
- -------------------------------------------------------------------------------------------------------
Schwab Value Advantage Money Fund--Investor Shares -
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY FUNDS
<S> <C> <C>
- ------------------------------------------------------------------------------
Schwab Municipal Money Fund - -
- ------------------------------------------------------------------------------
Schwab California Municipal Money Fund - -
- ------------------------------------------------------------------------------
Schwab Florida Municipal Money Fund -
- ------------------------------------------------------------------------------
Schwab New Jersey Municipal Money Fund -
- ------------------------------------------------------------------------------
Schwab New York Municipal Money Fund - -
- ------------------------------------------------------------------------------
Schwab Pennsylvania Municipal Money Fund -
- ------------------------------------------------------------------------------
</TABLE>
If you would like more information on any of these funds, please call us toll
free at 800-435-4000 and request a free prospectus that contains more
information, including fees and expenses. Please read the prospectus before
investing.
WE MAKE IT EASY TO INVEST
We try to make it easy and convenient to invest in
SchwabFunds-Registered Trademark-. With Schwab MoneyLink-Registered Trademark-,
Schwab's electronic transfer service, you can have money automatically
transferred into your Schwab account on a regular basis. You also can invest in
person at any of our more than 300 nationwide branches, through our Web site at
WWW.SCHWAB.COM and through our automated touch-tone telephone service,
TeleBroker-Registered Trademark-, by calling 800-272-4922.
KEEPING YOU INFORMED
One of our top priorities at Charles Schwab is to keep you informed about your
investments and potential opportunities in the marketplace. A wealth of
current information about our investment philosophy and funds, as well as the
market and economic environment, can be found at our Web site:
WWW.SCHWAB.COM/SCHWABFUNDS
4
<PAGE>
MARKET OVERVIEW
U.S. ECONOMIC GROWTH
The U.S. economy, as measured by gross domestic product (GDP), continued its
remarkable expansion as indicated by the 3.3% real growth rate for the first six
months of 1999.
The second quarter growth rate of 2.3% marks the 33rd consecutive quarter of
positive growth--the longest peacetime expansion ever. Strong consumer spending,
coupled with record domestic stock market levels and its associated wealth
effect, continued to provide momentum for this historic expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REAL GROSS DOMESTIC PRODUCT
QUARTERLY PERCENTAGE CHANGE
(ANNUALIZED RATE)
Real GDP
<S> <C>
Q1 1990 3.9%
Q2 1990 1.2%
Q3 1990 -1.9%
Q4 1990 -4.0%
Q1 1991 -2.1%
Q2 1991 1.8%
Q3 1991 1.0%
Q4 1991 1.0%
Q1 1992 4.7%
Q2 1992 2.5%
Q3 1992 3.0%
Q4 1992 4.3%
Q1 1993 0.1%
Q2 1993 2.0%
Q3 1993 2.1%
Q4 1993 5.3%
Q1 1994 3.0%
Q2 1994 4.7%
Q3 1994 1.8%
Q4 1994 3.6%
Q1 1995 1.7%
Q2 1995 0.4%
Q3 1995 3.3%
Q4 1995 2.8%
Q1 1996 3.3%
Q2 1996 6.1%
Q3 1996 2.1%
Q4 1996 4.2%
Q1 1997 4.2%
Q2 1997 4.0%
Q3 1997 4.2%
Q4 1997 3.0%
Q1 1998 5.5%
Q2 1998 1.8%
Q3 1998 3.7%
Q4 1998 6.0%
Q1 1999 4.3%
Q2 1999 2.3%
Source: BLOOMBERG L.P.
</TABLE>
The consensus of most economists is that the U.S. economy appears poised for
continued growth, but at a more moderate pace than the 4.3% rate experienced
during 1998. High levels of consumer confidence and spending, low interest
rates, rising real wages and strong gains in stock prices have been the
principal factors fueling this lengthy expansion.
Last year's concerns over the impact of international economic problems have
been displaced by concerns about imbalances in the domestic economy, namely the
surging current account (trade) deficit, record high stock valuations and the
negative savings rate. Going forward, consumers' behavior in response to
continued stock market volatility may also be a key determinant of whether the
economy continues on its current course or softens throughout the remainder of
1999.
UNEMPLOYMENT
Labor markets continue to be extremely tight in many areas of the country. After
declining to 4.2% in May-- the lowest level in 28 years--the U.S. unemployment
rate stood at 4.3% in June. While the pace of growth in the labor force slowed
during the first six months of 1999 there continues to be concern that wage and
benefits increases may begin to put more pressure on labor costs (refer to
Employment Cost Index on the following page).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. UNEMPLOYMENT RATE
<S> <C>
Jan-90 5.4%
Feb-90 5.3%
Mar-90 5.2%
Apr-90 5.4%
May-90 5.4%
Jun-90 5.2%
Jul-90 5.5%
Aug-90 5.7%
Sep-90 5.9%
Oct-90 5.9%
Nov-90 6.2%
Dec-90 6.3%
Jan-91 6.4%
Feb-91 6.6%
Mar-91 6.8%
Apr-91 6.7%
May-91 6.9%
Jun-91 6.9%
Jul-91 6.8%
Aug-91 6.9%
Sep-91 6.9%
Oct-91 7.0%
Nov-91 7.0%
Dec-91 7.3%
Jan-92 7.3%
Feb-92 7.4%
Mar-92 7.4%
Apr-92 7.4%
May-92 7.6%
Jun-92 7.8%
Jul-92 7.7%
Aug-92 7.6%
Sep-92 7.6%
Oct-92 7.3%
Nov-92 7.4%
Dec-92 7.4%
Jan-93 7.3%
Feb-93 7.1%
Mar-93 7.0%
Apr-93 7.1%
May-93 7.1%
Jun-93 7.0%
Jul-93 6.9%
Aug-93 6.8%
Sep-93 6.7%
Oct-93 6.8%
Nov-93 6.6%
Dec-93 6.5%
Jan-94 6.6%
Feb-94 6.6%
Mar-94 6.5%
Apr-94 6.4%
May-94 6.0%
Jun-94 6.1%
Jul-94 6.1%
Aug-94 6.1%
Sep-94 5.9%
Oct-94 5.8%
Nov-94 5.6%
Dec-94 5.4%
Jan-95 5.6%
Feb-95 5.4%
Mar-95 5.4%
Apr-95 5.7%
May-95 5.6%
Jun-95 5.6%
Jul-95 5.7%
Aug-95 5.7%
Sep-95 5.7%
Oct-95 5.6%
Nov-95 5.6%
Dec-95 5.6%
Jan-96 5.7%
Feb-96 5.5%
Mar-96 5.5%
Apr-96 5.5%
May-96 5.5%
Jun-96 5.3%
Jul-96 5.5%
Aug-96 5.2%
Sep-96 5.2%
Oct-96 5.3%
Nov-96 5.4%
Dec-96 5.3%
Jan-97 5.3%
Feb-97 5.3%
Mar-97 5.2%
Apr-97 5.0%
May-97 4.8%
Jun-97 5.0%
Jul-97 4.9%
Aug-97 4.9%
Sep-97 4.9%
Oct-97 4.8%
Nov-97 4.6%
Dec-97 4.7%
Jan-98 4.7%
Feb-98 4.6%
Mar-98 4.7%
Apr-98 4.3%
May-98 4.3%
Jun-98 4.5%
Jul-98 4.5%
Aug-98 4.5%
Sep-98 4.6%
Oct-98 4.6%
Nov-98 4.4%
Dec-98 4.3%
Jan-99 4.3%
Feb-99 4.4%
Mar-99 4.2%
Apr-99 4.3%
May-99 4.2%
Jun-99 4.3%
Source: BLOOMBERG L.P.
</TABLE>
5
<PAGE>
MARKET OVERVIEW (continued)
INFLATION
Price inflation continued to remain well contained during the first six months
of 1999. The Consumer Price Index rose just 2.0% for the year ended June 30,
1999 while its core rate (which excludes the more volatile food and energy
components) rose just 2.1%. The GDP price deflator, the broadest measure of
inflation, showed prices rising at an annual rate of 2.1% during the second
quarter. The Employment Cost Index, which measures inflation in wages, salaries
and benefits, was also well contained, increasing just 3.2% for the year ended
June 1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MEASURES OF INFLATION
Quarterly Employment Cost Index Monthly Consumer Price Index
<S> <C> <C>
Jan-90 5.5% 5.2%
Feb-90 5.5% 5.3%
Mar-90 5.5% 5.2%
Apr-90 5.4% 4.7%
May-90 5.4% 4.4%
Jun-90 5.4% 4.7%
Jul-90 5.2% 4.8%
Aug-90 5.2% 5.6%
Sep-90 5.2% 6.2%
Oct-90 4.9% 6.3%
Nov-90 4.9% 6.3%
Dec-90 4.9% 6.1%
Jan-91 4.6% 5.7%
Feb-91 4.6% 5.3%
Mar-91 4.6% 4.9%
Apr-91 4.6% 4.9%
May-91 4.6% 5.0%
Jun-91 4.6% 4.7%
Jul-91 4.3% 4.4%
Aug-91 4.3% 3.8%
Sep-91 4.3% 3.4%
Oct-91 4.3% 2.9%
Nov-91 4.3% 3.0%
Dec-91 4.3% 3.1%
Jan-92 4.0% 2.6%
Feb-92 4.0% 2.8%
Mar-92 4.0% 3.2%
Apr-92 3.6% 3.2%
May-92 3.6% 3.0%
Jun-92 3.6% 3.1%
Jul-92 3.5% 3.2%
Aug-92 3.5% 3.1%
Sep-92 3.5% 3.0%
Oct-92 3.5% 3.2%
Nov-92 3.5% 3.0%
Dec-92 3.5% 2.9%
Jan-93 3.5% 3.3%
Feb-93 3.5% 3.2%
Mar-93 3.5% 3.1%
Apr-93 3.6% 3.2%
May-93 3.6% 3.2%
Jun-93 3.6% 3.0%
Jul-93 3.6% 2.8%
Aug-93 3.6% 2.8%
Sep-93 3.6% 2.7%
Oct-93 3.5% 2.8%
Nov-93 3.5% 2.7%
Dec-93 3.5% 2.7%
Jan-94 3.2% 2.5%
Feb-94 3.2% 2.5%
Mar-94 3.2% 2.5%
Apr-94 3.2% 2.4%
May-94 3.2% 2.3%
Jun-94 3.2% 2.5%
Jul-94 3.2% 2.8%
Aug-94 3.2% 2.9%
Sep-94 3.2% 3.0%
Oct-94 3.0% 2.6%
Nov-94 3.0% 2.7%
Dec-94 3.0% 2.7%
Jan-95 2.9% 2.8%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 2.9% 3.1%
May-95 2.9% 3.2%
Jun-95 2.9% 3.0%
Jul-95 2.7% 2.8%
Aug-95 2.7% 2.6%
Sep-95 2.7% 2.5%
Oct-95 2.7% 2.8%
Nov-95 2.7% 2.6%
Dec-95 2.7% 2.5%
Jan-96 2.8% 2.7%
Feb-96 2.8% 2.7%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.9% 2.8%
Jul-96 2.8% 3.0%
Aug-96 2.8% 2.9%
Sep-96 2.8% 3.0%
Oct-96 2.9% 3.0%
Nov-96 2.9% 3.3%
Dec-96 2.9% 3.3%
Jan-97 2.9% 3.0%
Feb-97 2.9% 3.0%
Mar-97 2.9% 2.8%
Apr-97 2.8% 2.5%
May-97 2.8% 2.2%
Jun-97 2.8% 2.3%
Jul-97 3.0% 2.2%
Aug-97 3.0% 2.2%
Sep-97 3.0% 2.2%
Oct-97 3.3% 2.1%
Nov-97 3.3% 1.8%
Dec-97 3.3% 1.7%
Jan-98 3.3% 1.6%
Feb-98 3.3% 1.4%
Mar-98 3.3% 1.4%
Apr-98 3.5% 1.4%
May-98 3.5% 1.7%
Jun-98 3.5% 1.7%
Jul-98 3.7% 1.7%
Aug-98 3.7% 1.6%
Sep-98 3.7% 1.5%
Oct-98 3.4% 1.5%
Nov-98 3.4% 1.5%
Dec-98 3.4% 1.6%
Jan-99 3.0% 1.7%
Feb-99 3.0% 1.6%
Mar-99 3.0% 1.7%
Apr-99 3.2% 2.3%
May-99 3.2% 2.1%
Jun-99 3.2% 2.0%
Source: BLOOMBERG L.P. AND BUREAU OF LABOR STATISTICS
</TABLE>
Although there is little evidence of acceleration in core inflation, the Federal
Reserve has expressed concern that should labor markets continue to tighten,
increases in wages may outpace productivity growth. In that environment,
productivity growth becomes particularly critical, as it enables companies to
pay higher wages without raising prices. Non-farm productivity grew 2.2% in 1998
and has grown at a very strong 2.4% annualized rate for the first half of 1999,
continuing a healthy trend that began in 1996.
ASSET CLASS PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ASSET CLASS TOTAL RETURN PERFORMANCE
TOTAL RETURN PERFORMANCE
GROWTH OF A HYPOTHETICAL $1 INVESTMENT
MSCE-EAFE RUSSELL 2000 LEHMAN AGGREGATE
INDEX S&P 500 INDEX INDEX BOND INDEX
<S> <C> <C> <C> <C>
Dec-98 $1.00 $1.00 $1.00 $1.00
Jan-99 1.00 1.04 1.01 1.01
Feb-99 0.97 1.01 0.93 0.99
Mar-99 1.01 1.05 0.95 0.99
Apr-99 1.05 1.09 1.03 1.00
May-99 1.00 1.06 1.04 0.99
Jun-99 1.04 1.12 1.09 0.99
Compiled by Charles Schwab & Co., Inc.
</TABLE>
Large-cap domestic stocks, as represented by the S&P 500-Registered Trademark-
Index, continued to be the strongest performing asset class, achieving a total
return of 12.4% for the six-month period ended June 30, 1999. Within the S&P
500, value stocks displaced growth stocks as the strongest performing style for
the period. Small-cap stocks, as represented by the Russell
2000-Registered Trademark- Index, produced a 9.3% return for the six-month
reporting period.
Assisted by the rebound in Asian markets, international stocks, as represented
by the MSCI-EAFE-Registered Trademark- Index, produced a 4.0% total return for
the six-month reporting period.
6
<PAGE>
Fixed income returns were generally weak for the reporting period, reflecting
the moderate rise in intermediate- and long-term interest rates. Bonds, as
represented by the Lehman Brothers Aggregate Bond Index, had a negative return
of 1.4% for the six-month reporting period.
TREASURY BOND YIELDS
Following a trend that began in October 1998, both long-term and
intermediate-term yields continued to climb during the reporting period. Scaled
back concerns about the impact of international economic problems and the
continued strong growth of the domestic economy were the primary drivers of this
upward trend in yields.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
30-YEAR AND FIVE-YEAR TREASURY BOND YIELDS
30-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
01/01/99 5.10% 4.54%
01/04/99 5.15% 4.56%
01/05/99 5.21% 4.62%
01/06/99 5.16% 4.57%
01/07/99 5.22% 4.63%
01/08/99 5.27% 4.73%
01/11/99 5.31% 4.79%
01/12/99 5.22% 4.67%
01/13/99 5.13% 4.56%
01/14/99 5.06% 4.46%
01/15/99 5.11% 4.55%
01/18/99 5.12% 4.55%
01/19/99 5.15% 4.61%
01/20/99 5.17% 4.64%
01/21/99 5.13% 4.56%
01/22/99 5.08% 4.52%
01/25/99 5.12% 4.55%
01/26/99 5.13% 4.58%
01/27/99 5.13% 4.55%
01/28/99 5.11% 4.56%
01/29/99 5.09% 4.55%
02/01/99 5.18% 4.64%
02/02/99 5.24% 4.70%
02/03/99 5.25% 4.73%
02/04/99 5.29% 4.79%
02/05/99 5.35% 4.86%
02/08/99 5.34% 4.84%
02/09/99 5.30% 4.80%
02/10/99 5.37% 4.82%
02/11/99 5.37% 4.84%
02/12/99 5.42% 4.96%
02/15/99 5.43% 4.98%
02/16/99 5.34% 4.94%
02/17/99 5.31% 4.90%
02/18/99 5.38% 4.97%
02/19/99 5.39% 4.99%
02/22/99 5.36% 4.94%
02/23/99 5.43% 5.04%
02/24/99 5.51% 5.12%
02/25/99 5.65% 5.29%
02/26/99 5.58% 5.22%
03/01/99 5.67% 5.31%
03/02/99 5.61% 5.23%
03/03/99 5.70% 5.29%
03/04/99 5.70% 5.31%
03/05/99 5.60% 5.22%
03/08/99 5.59% 5.19%
03/09/99 5.53% 5.10%
03/10/99 5.55% 5.12%
03/11/99 5.56% 5.12%
03/12/99 5.53% 5.06%
03/15/99 5.52% 5.06%
03/16/99 5.48% 5.02%
03/17/99 5.51% 5.04%
03/18/99 5.49% 5.01%
03/19/99 5.56% 5.08%
03/22/99 5.57% 5.12%
03/23/99 5.54% 5.05%
03/24/99 5.53% 5.06%
03/25/99 5.59% 5.10%
03/26/99 5.59% 5.08%
03/29/99 5.64% 5.13%
03/30/99 5.58% 5.05%
03/31/99 5.63% 5.10%
04/01/99 5.67% 5.14%
04/02/99 5.60% 5.05%
04/05/99 5.59% 5.05%
04/06/99 5.52% 4.99%
04/07/99 5.50% 5.01%
04/08/99 5.44% 4.94%
04/09/99 5.46% 4.96%
04/12/99 5.45% 4.96%
04/13/99 5.49% 5.00%
04/14/99 5.51% 5.03%
04/15/99 5.53% 5.06%
04/16/99 5.57% 5.11%
04/19/99 5.52% 5.03%
04/20/99 5.51% 5.03%
04/21/99 5.52% 5.08%
04/22/99 5.60% 5.13%
04/23/99 5.60% 5.14%
04/26/99 5.58% 5.11%
04/27/99 5.54% 5.10%
04/28/99 5.58% 5.14%
04/29/99 5.53% 5.08%
04/30/99 5.66% 5.21%
05/03/99 5.66% 5.21%
05/04/99 5.71% 5.26%
05/05/99 5.71% 5.25%
05/06/99 5.79% 5.36%
05/07/99 5.81% 5.37%
05/10/99 5.79% 5.36%
05/11/99 5.83% 5.41%
05/12/99 5.83% 5.37%
05/13/99 5.75% 5.29%
05/14/99 5.92% 5.50%
05/17/99 5.89% 5.50%
05/18/99 5.89% 5.56%
05/19/99 5.80% 5.53%
05/20/99 5.83% 5.53%
05/21/99 5.75% 5.43%
05/24/99 5.76% 5.42%
05/25/99 5.75% 5.41%
05/26/99 5.80% 5.51%
05/27/99 5.85% 5.59%
05/28/99 5.83% 5.58%
05/31/99 5.83% 5.58%
06/01/99 5.92% 5.72%
06/02/99 5.93% 5.72%
06/03/99 5.96% 5.74%
06/04/99 5.96% 5.73%
06/07/99 5.97% 5.71%
06/08/99 5.99% 5.73%
06/09/99 6.03% 5.80%
06/10/99 6.06% 5.85%
06/11/99 6.16% 5.91%
06/14/99 6.10% 5.87%
06/15/99 6.11% 5.86%
06/16/99 6.07% 5.80%
06/17/99 5.96% 5.66%
06/18/99 5.97% 5.73%
06/21/99 6.02% 5.79%
06/22/99 6.06% 5.82%
06/23/99 6.15% 5.91%
06/24/99 6.16% 5.90%
06/25/99 6.15% 5.89%
06/28/99 6.09% 5.83%
06/29/99 6.07% 5.81%
06/30/99 5.96% 5.64%
Source: BLOOMBERG L.P.
</TABLE>
SHORT-TERM INTEREST RATE ENVIRONMENT
Short-term interest rates increased marginally, but remained within a narrow
range throughout most of the reporting period. Until the April CPI report
release, the economy had demonstrated continued signs of growth with no
significant evidence of accelerating inflation or indications of potential
Federal Reserve action. After April's unexpectedly high CPI report, the Federal
Reserve adopted a "tightening" bias in May, and then, in June, announced a 0.25%
increase in the Federal Funds Rate and a return to a "neutral" bias. The Federal
Reserve has expressed concern that a potential buildup of inflationary
imbalances could undermine the favorable performance of the economy.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1999 YIELDS ON 90-DAY COMMERCIAL PAPER
AND THREE-MONTH TREASURY BILLS
THREE-MONTH 90-DAY
TREASURY BILL COMMERCIAL PAPER
<S> <C> <C>
01/04/99 4.47% 4.80%
01/05/99 4.49% 4.80%
01/06/99 4.45% 4.75%
01/07/99 4.43% 4.79%
01/08/99 4.47% 4.78%
01/11/99 4.50% 4.80%
01/12/99 4.48% 4.79%
01/13/99 4.42% 4.80%
01/14/99 4.42% 4.79%
01/15/99 4.43% 4.78%
01/19/99 4.38% 4.77%
01/20/99 4.37% 4.76%
01/21/99 4.28% 4.76%
01/22/99 4.34% 4.75%
01/25/99 4.42% 4.74%
01/26/99 4.47% 4.75%
01/27/99 4.42% 4.75%
01/28/99 4.49% 4.75%
01/29/99 4.45% 4.74%
02/01/99 4.52% 4.75%
02/02/99 4.53% 4.76%
02/03/99 4.48% 4.75%
02/04/99 4.47% 4.76%
02/05/99 4.49% 4.76%
02/08/99 4.50% 4.78%
02/09/99 4.51% 4.79%
02/10/99 4.46% 4.78%
02/11/99 4.51% 4.78%
02/12/99 4.52% 4.79%
02/16/99 4.51% 4.80%
02/17/99 4.52% 4.79%
02/18/99 4.54% 4.81%
02/19/99 4.56% 4.80%
02/22/99 4.60% 4.79%
02/23/99 4.66% 4.81%
02/24/99 4.65% 4.81%
02/25/99 4.63% 4.81%
02/26/99 4.67% 4.82%
03/01/99 4.69% 4.83%
03/02/99 4.64% 4.83%
03/03/99 4.59% 4.83%
03/04/99 4.60% 4.82%
03/05/99 4.60% 4.84%
03/08/99 4.61% 4.82%
03/09/99 4.58% 4.80%
03/10/99 4.58% 4.81%
03/11/99 4.59% 4.82%
03/12/99 4.59% 4.81%
03/15/99 4.58% 4.81%
03/16/99 4.53% 4.81%
03/17/99 4.51% 4.80%
03/18/99 4.49% 4.81%
03/19/99 4.49% 4.81%
03/22/99 4.50% 4.82%
03/23/99 4.48% 4.81%
03/24/99 4.48% 4.81%
03/25/99 4.50% 4.80%
03/26/99 4.49% 4.81%
03/29/99 4.49% 4.80%
03/30/99 4.47% 4.82%
03/31/99 4.48% 4.82%
04/01/99 4.41% 4.80%
04/02/99 4.39% 4.84%
04/05/99 4.39% 4.81%
04/06/99 4.39% 4.82%
04/07/99 4.41% 4.80%
04/08/99 4.39% 4.80%
04/09/99 4.35% 4.79%
04/12/99 4.32% 4.79%
04/13/99 4.27% 4.79%
04/14/99 4.28% 4.80%
04/15/99 4.32% 4.80%
04/16/99 4.31% 4.77%
04/19/99 4.32% 4.79%
04/20/99 4.38% 4.78%
04/21/99 4.34% 4.80%
04/22/99 4.38% 4.78%
04/23/99 4.41% 4.76%
04/26/99 4.45% 4.77%
04/27/99 4.48% 4.73%
04/28/99 4.36% 4.78%
04/29/99 4.50% 4.79%
04/30/99 4.54% 4.78%
05/03/99 4.58% 4.78%
05/04/99 4.60% 4.79%
05/05/99 4.59% 4.80%
05/06/99 4.60% 4.79%
05/07/99 4.60% 4.79%
05/10/99 4.58% 4.78%
05/11/99 4.58% 4.79%
05/12/99 4.58% 4.79%
05/13/99 4.57% 4.79%
05/14/99 4.65% 4.80%
05/17/99 4.64% 4.83%
05/18/99 4.65% 4.81%
05/19/99 4.60% 4.85%
05/20/99 4.59% 4.83%
05/21/99 4.58% 4.84%
05/24/99 4.61% 4.84%
05/25/99 4.64% 4.83%
05/26/99 4.63% 4.83%
05/27/99 4.63% 4.85%
05/28/99 4.64% 4.86%
06/01/99 4.66% 4.86%
06/02/99 4.73% 4.86%
06/03/99 4.61% 4.89%
06/04/99 4.54% 4.86%
06/07/99 4.50% 4.91%
06/08/99 4.61% 4.89%
06/09/99 4.59% 4.90%
06/10/99 4.68% 4.90%
06/11/99 4.73% 4.91%
06/14/99 4.66% 5.00%
06/15/99 4.72% 5.00%
06/16/99 4.64% 5.01%
06/17/99 4.62% 4.99%
06/18/99 4.65% 5.00%
06/21/99 4.67% 5.00%
06/22/99 4.74% 5.01%
06/23/99 4.72% 5.03%
06/24/99 4.72% 5.03%
06/25/99 4.79% 5.06%
06/28/99 4.79% 5.13%
06/29/99 4.82% 5.12%
06/30/99 4.78% 5.17%
Source: BLOOMBERG L.P.
</TABLE>
NOTE: THIS MARKET OVERVIEW HAS BEEN PROVIDED BY THE PORTFOLIO MANAGEMENT
TEAM.
7
<PAGE>
PORTFOLIO MANAGEMENT
THE PORTFOLIO MANAGEMENT TEAM
STEPHEN B. WARD--senior vice president and chief investment officer, has overall
responsibility for the management of the fund's portfolio. Steve joined Charles
Schwab Investment Management, Inc. (CSIM) as vice president and portfolio
manager in April 1991 and was promoted to his current position in August 1993.
Prior to joining CSIM, Steve was vice president and portfolio manager at
Federated Investors.
LINDA KLINGMAN--vice president and senior portfolio manager, has managed the
Schwab Value Advantage Money Fund since its inception in 1992. Linda joined CSIM
in 1990 and was promoted to her current position in August 1996. Prior to
joining CSIM, Linda was senior money market trader with AIM Management.
8
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND-REGISTERED TRADEMARK-
YIELD SUMMARY AS OF 6/30/99(1)
- --------------------------------------------------------------------
Seven-Day Yield 4.65%
- --------------------------------------------------------------------
Seven-Day Effective Yield 4.76%
- --------------------------------------------------------------------
Please remember that money market fund yields fluctuate and that past
performance is no guarantee of future results.
YIELD ADVANTAGE
The Schwab Value Advantage Money Fund offers the potential to earn higher yields
than many other money market funds. The fund is designed for cash reserves that
do not require frequent access and, as such, has minimum balance and transaction
requirements designed to keep operating expenses low. These lower expenses
generally mean higher yields for fund shareholders.
The chart at right presents weekly seven-day effective yields for the fund and
for the average taxable money fund and shows that the fund consistently
outperformed the average taxable money fund during the reporting period.
PORTFOLIO COMPOSITION
The Schwab Value Advantage Money Fund invests in highly-quality short-term money
market investments issued by U.S. and foreign issuers, such as commercial paper,
including asset-backed commercial paper, certificates of deposit, variable- and
floating-rate debt securities, bank notes, and repurchase agreements. The chart
at right illustrates the composition of the fund's portfolio as of June 30,1999
and is not indicative of its holdings after that date. A complete list of the
securities in the fund's portfolio as of June 30, 1999 is provided in the
Schedule of Investments later in this report.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SEVEN-DAY EFFECTIVE YIELDS: 1/1/99 THROUGH 6/30/99(2)
SCHWAB VALUE ADVANTAGE IBC FINANCIAL DATA INC.'S
MONEY FUND MONEY FUND AVERAGE
<S> <C> <C>
1/5/1999 5.08 4.66
1/12/1999 5.04 4.57
1/19/1999 5.02 4.54
1/26/1999 4.99 4.46
2/2/1999 4.95 4.44
2/9/1999 4.88 4.41
2/16/1999 4.85 4.37
2/23/1999 4.81 4.35
3/2/1999 4.79 4.36
3/9/1999 4.78 4.34
3/16/1999 4.77 4.33
3/23/1999 4.74 4.31
3/30/1999 4.73 4.32
4/6/1999 4.73 4.35
4/13/1999 4.73 4.30
4/20/1999 4.72 4.30
4/27/1999 4.71 4.29
5/4/1999 4.72 4.31
5/11/1999 4.72 4.28
5/18/1999 4.72 4.27
5/25/1999 4.71 4.27
6/1/1999 4.72 4.31
6/8/1999 4.73 4.30
6/15/1999 4.74 4.31
6/22/1999 4.74 4.31
6/29/1999 4.76 4.36
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION AS A PERCENTAGE
OF FUND INVESTMENTS
AS OF 6/30/99
<S> <C>
Bank Notes 4.0%
Commercial Paper and Other Corporate Obligations 68.1%
Certificates of Deposit 20.9%
Variable Rate Obligations 7.0%
</TABLE>
(1) A portion of the fund's expenses was reduced during the reporting period.
Without this reduction, as of 6/30/99, the seven-day and the seven-day
effective yields for the fund would have been 4.46% and 4.56%, respectively.
(2) Source: IBC Financial Data, Inc. Average seven-day effective yield of funds
in the first-tier category of taxable money funds for each week ended
6/29/99. The weekly number of funds in the category ranged from 286 to 299.
9
<PAGE>
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
Q. CAN YOU DESCRIBE THE SHORT-TERM INTEREST
RATE ENVIRONMENT DURING THE SIX-MONTH
REPORTING PERIOD?
A. Short-term interest rates increased marginally, but remained within a narrow
range throughout most of the reporting period. The economy demonstrated
continued signs of growth, in part due to the accommodating financial conditions
resulting from the three Federal Funds Rate cuts in late 1998.
Until the April CPI report release, there had been no significant evidence of
accelerating inflation or any indication of potential Federal Reserve action.
Following the unexpectedly high April CPI report, the Federal Reserve adopted a
"tightening" bias in May and then, in June, announced a 0.25% increase in the
Federal Funds Rate and a return to a "neutral" bias. These developments caused
short-term rates to edge upward towards the end of the reporting period. The
Federal Reserve has expressed concern that a potential buildup of inflationary
imbalances could undermine the favorable performance of the economy. Although
not universally anticipated, many market observers expect there will be at least
one additional 0.25% increase in the Federal Funds Rate by year-end.
Q. HOW HAS THE PORTFOLIO MANAGEMENT TEAM ADJUSTED THE FUND'S PORTFOLIO TO
RESPOND TO CHANGES IN INTEREST RATES?
A. During the reporting period our overall strategy for the fund was consistent
with our long-term strategy, which is to maintain a dollar-weighted average
maturity (DWAM) slightly longer than those of other funds with similar
investment objectives. This strategy had a beneficial impact on the fund's
yields throughout most of the period.
During the first quarter of 1999, based on our expectation that short-term rates
would remain relatively stable, we looked for opportunities to buy securities
with longer-dated maturities when they were available at attractive prices. In
May, as the Federal Reserve bias changed from neutral to restrictive, we
deviated from this strategy somewhat by concentrating the portfolio in
shorter-term securities while still buying higher yielding securities on a
selective basis when opportunities arose.
Q. THE SCHEDULE OF INVESTMENTS SHOWS THAT AN ISSUER HAD NOT MADE TIMELY
REPAYMENT OF ITS OBLIGATIONS TO THE FUND WHEN DUE--HOW HAS THIS AFFECTED THE
FUND?
A. As of August 18, 1999, the fund had approximately 1% of its net assets
invested in Funding Agreements issued by General American Life Insurance Co. On
August 10, 1999, General American Life did not make timely repayment on its
outstanding Funding Agreement with the fund. On August 18, 1999, the fund
received partial repayment in the amount of 10% of its investment with General
American Life in exchange for agreeing to extend the date for repayment of the
remainder of the investment thirty days. The relatively small percentage of the
fund that is invested in Funding Agreements issued by General American Life has
not caused the net asset value of the fund to drop below $1.00 per share under
money market fund share valuation rules. We continue to monitor the situation
closely to determine whether any additional actions or precautionary measures
become necessary.
10
<PAGE>
GLOSSARY OF TERMS
COMMERCIAL PAPER--Short-term obligations issued by banks, corporations and other
borrowers.
CREDIT ENHANCEMENTS--A bank letter of credit, purchase agreement, insurance,
line of credit or other instrument that provides an additional level of
financial strength for debt securities to supplement the creditworthiness of the
issuer.
DOLLAR-WEIGHTED AVERAGE MATURITY (DWAM)--A measure of the average maturity of a
mutual fund's entire portfolio, weighted by the values of its individual
holdings.
FEDERAL FUNDS RATE--A key interest rate charged by banks when lending money to
other banks overnight.
FEDERAL RESERVE--The central bank of the United States, which establishes
policies on bank reserves and regulations, determines the discount rate and the
Federal Funds Rate, and tightens or loosens the availability of credit.
FIRST-TIER SECURITY--Generally, a security rated in the highest credit-rating
category by a requisite number of nationally recognized statistical rating
organizations, such as Moody's, Standard & Poor's-Registered Trademark-, Duff or
Fitch.
MATURITY--The length of time remaining until the issuer of a debt security must
repay the principal amount.
REAL GDP--The national gross domestic product (GDP) is the total value of all
goods and services produced in the United States over a specific period of time
adjusted for the rate of inflation to allow meaningful year-to-year comparisons.
YIELD--The actual annualized income earned on an investment over a stated period
of time (assumed to be generated over a one-year period). An EFFECTIVE YIELD
assumes that the income earned is reinvested.
11
<PAGE>
PORTFOLIO HIGHLIGHTS
AVERAGE YIELDS FOR THE PERIOD ENDED 6/30/99(1)
- ------------------------------------------------
Last seven days 4.65%
- ------------------------------------------------
Last three months 4.62%
- ------------------------------------------------
Last 12 months 4.92%
- ------------------------------------------------
MATURITY SCHEDULE: PERCENTAGE OF TOTAL INVESTMENTS
MATURITY RANGE 3/31/99 6/30/99
- -----------------------------------------------------------
0-15 days 15.4% 21.2%
- -----------------------------------------------------------
16-30 days 11.6% 14.5%
- -----------------------------------------------------------
31-60 days 22.5% 24.8%
- -----------------------------------------------------------
61-90 days 22.3% 24.1%
- -----------------------------------------------------------
91-120 days 16.9% 1.7%
- -----------------------------------------------------------
More than 120 days 11.3% 13.7%
- -----------------------------------------------------------
Weighted average 72 days 68 days
- -----------------------------------------------------------
PORTFOLIO QUALITY
PERCENTAGE OF TOTAL INVESTMENTS:
SEC TIER RATING 6/30/99
- ---------------------------------------------------------------------------
Tier 1 100.0%
- ---------------------------------------------------------------------------
(1) A portion of the Fund's expenses was reduced during the periods. Had these
expenses not been reduced, yields would have been lower.
12
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1999 (unaudited)
Par Value
-------- ---------
COMMERCIAL PAPER AND OTHER CORPORATE
OBLIGATIONS -- 68.2% (a)
AUTOMOBILE RECEIVABLES -- 0.2% (f)
New Center Asset Trust Plus
4.90%, 08/13/99 $ 30,000 $ 29,827
5.03%, 09/17/99 26,000 25,720
---------
55,547
---------
AUTOMOTIVE -- 1.4%
Daimler Chrysler N.A. Holdings
4.96%, 08/03/99 30,000 29,865
4.90%, 08/13/99 50,000 49,711
4.89%, 08/16/99 50,000 49,692
4.90%, 08/17/99 21,000 20,867
4.94%, 08/24/99 50,000 49,635
4.93%, 08/25/99 50,000 49,628
Hertz Corp.
5.18%, 09/23/99 100,000 98,808
---------
348,206
---------
BANKING - AUSTRALIA -- 0.2%
ANZ (Delaware), Inc.
4.88%, 08/12/99 50,000 49,720
---------
BANKING - BELGIUM -- 2.9%
BBL North America
4.88%, 07/07/99 40,000 39,968
4.89%, 07/12/99 30,000 29,956
4.89%, 07/13/99 40,000 39,936
4.88%, 07/14/99 23,000 22,960
4.89%, 08/11/99 63,000 62,653
5.04%, 09/09/99 54,000 53,478
Cregem North America, Inc.
4.92%, 07/08/99 150,000 149,859
4.88%, 07/16/99 50,000 49,900
Generale Bank, Inc.
4.87%, 07/19/99 82,000 81,805
4.89%, 08/11/99 25,000 24,863
4.93%, 08/11/99 41,000 40,775
4.89%, 08/12/99 25,000 24,859
4.93%, 08/12/99 50,000 49,719
4.95%, 10/27/99 25,000 24,605
4.96%, 11/05/99 50,000 49,146
---------
744,482
---------
Par Value
-------- ---------
BANKING - CANADA -- 1.6%
Bank of Nova Scotia
4.90%, 07/13/99 $ 50,000 $ 49,920
4.87%, 08/02/99 50,000 49,789
4.89%, 08/03/99 105,000 104,535
4.87%, 08/04/99 100,000 99,551
5.01%, 09/02/99 50,000 49,567
5.03%, 09/09/99 56,000 55,459
---------
408,821
---------
BANKING - DENMARK -- 0.3%
Unifunding, Inc.
4.89%, 08/04/99 14,000 13,937
4.96%, 08/30/99 50,000 49,592
---------
63,529
---------
BANKING - DOMESTIC -- 3.3%
BankAmerica Corp.
4.91%, 08/05/99 90,000 89,581
Citibank Capital Markets Assets, L.L.C. (e)
4.89%, 08/13/99 40,000 39,769
4.95%, 08/20/99 44,050 43,751
4.95%, 08/23/99 28,000 27,799
5.17%, 09/21/99 50,000 49,419
5.17%, 09/22/99 50,000 49,412
5.17%, 09/23/99 51,394 50,783
Enterprise Funding Corp. (e)
4.95%, 08/13/99 11,130 11,065
5.24%, 09/08/99 27,978 27,700
First Chicago Financial Corp.
4.88%, 08/13/99 25,000 24,856
Forrestal Funding Master Trust (e)
5.04%, 09/08/99 25,000 24,761
5.05%, 09/09/99 25,000 24,758
Intrepid Funding Master Trust (e)
4.92%, 07/09/99 56,000 55,940
4.95%, 07/28/99 50,861 50,675
4.91%, 08/27/99 26,000 25,801
4.95%, 10/20/99 65,000 64,031
Kitty Hawk Funding Corp. (e)
5.00%, 08/06/99 28,765 28,622
4.98%, 08/16/99 96,730 96,130
5.12%, 09/07/99 50,000 49,522
---------
834,375
---------
13
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
SCHEDULE OF INVESTMENTS (in thousands) (continued)
June 30, 1999 (unaudited)
Par Value
-------- ---------
BANKING - FINLAND -- 0.2%
Merita North America, Inc.
5.30%, 12/21/99 $ 50,000 $ 48,760
---------
BANKING - FRANCE -- 0.1%
Societe Generale North America
4.93%, 07/08/99 25,000 24,976
---------
BANKING - GERMANY -- 3.7%
Bavaria TRR Corp. (e)
4.90%, 07/19/99 37,000 36,910
4.90%, 08/12/99 19,750 19,638
4.90%, 08/13/99 52,000 51,699
4.93%, 08/17/99 34,000 33,784
5.01%, 09/02/99 15,000 14,870
Comision Federal de Electricidad (e)
4.93%, 07/26/99 50,000 49,832
4.88%, 08/05/99 25,000 24,884
Deutsche Bank Financial, Inc.
4.88%, 08/27/99 50,000 49,620
5.02%, 09/13/99 100,000 98,983
5.02%, 09/14/99 100,000 98,969
5.02%, 09/15/99 100,000 98,955
5.20%, 12/01/99 200,000 195,691
Dresdner U.S. Finance, Inc.
5.04%, 09/16/99 50,000 49,468
Giro US Funding Corp. (e)
5.08%, 07/23/99 48,000 47,852
5.01%, 09/08/99 44,562 44,144
5.17%, 09/23/99 13,000 12,845
5.24%, 10/05/99 20,000 19,725
---------
947,869
---------
BANKING - NETHERLANDS -- 3.6%
Atlantis One Funding Corp. (e)
4.93%, 07/21/99 50,000 49,865
4.90%, 08/11/99 71,000 70,609
4.90%, 08/13/99 14,000 13,919
4.90%, 08/18/99 40,000 39,742
4.90%, 08/19/99 41,000 40,730
4.94%, 08/23/99 38,000 37,728
4.97%, 08/24/99 44,000 43,679
4.90%, 08/25/99 49,000 48,639
4.90%, 08/26/99 82,360 81,742
4.97%, 08/26/99 168,000 166,728
4.98%, 08/27/99 61,000 60,532
4.90%, 09/01/99 21,000 20,826
Par Value
-------- ---------
4.97%, 09/01/99 $ 73,000 $ 72,384
4.98%, 09/01/99 79,748 79,074
4.98%, 09/14/99 17,000 16,826
4.99%, 09/16/99 15,000 14,842
5.27%, 09/21/99 44,000 43,479
---------
901,344
---------
BANKING - NORWAY -- 0.6%
Christiania Capital Corp.
4.94%, 07/06/99 75,000 74,949
4.90%, 08/10/99 13,000 12,930
4.92%, 08/12/99 10,000 9,944
Den Norske Bank
5.00%, 07/01/99 50,000 50,000
---------
147,823
---------
BANKING - SWEDEN -- 2.1%
AB Spintab
4.90%, 07/07/99 50,000 49,960
4.88%, 07/15/99 25,000 24,954
4.92%, 07/22/99 10,000 9,972
4.93%, 07/26/99 26,000 25,913
4.92%, 07/27/99 45,000 44,842
4.95%, 08/13/99 40,000 39,769
5.05%, 09/10/99 7,000 6,932
5.00%, 09/30/99 56,000 55,311
Nordbanken of North America, Inc.
4.95%, 08/10/99 30,500 30,336
4.88%, 08/19/99 24,000 23,843
Svenska Handelsbanken, Inc.
4.89%, 07/22/99 50,000 49,861
Swedbank, Inc.
4.90%, 07/06/99 50,000 49,966
4.92%, 08/09/99 50,000 49,738
4.93%, 09/15/99 10,000 9,898
4.95%, 10/21/99 50,000 49,249
---------
520,544
---------
BANKING - SWITZERLAND -- 1.7%
Credit Suisse First Boston, Inc.
4.97%, 09/07/99 60,000 59,445
UBS Finance (Delaware) Inc.
4.92%, 07/08/99 35,000 34,967
4.99%, 12/14/99 135,000 131,987
5.01%, 12/20/99 110,000 107,446
5.03%, 12/22/99 100,000 97,641
---------
431,486
---------
14
<PAGE>
Par Value
-------- --------
BANKING - UNITED KINGDOM -- 2.5%
Abbey National North American Corp.
4.94%, 07/02/99 $ 40,000 $ 39,995
4.90%, 08/02/99 100,000 99,575
Abbey National Treasury Services PLC
5.20%, 05/04/00 92,000 91,947
Banco Nacional de Comercio Exterior
S.N.C. (e)
4.89%, 07/19/99 34,105 34,023
4.88%, 07/21/99 33,000 32,912
Banco Nacional de Mexico S.A. (e)
4.90%, 08/20/99 41,000 40,725
4.89%, 08/24/99 10,000 9,928
Repeat Offering Securitization Entity,
Inc. (e)
4.89%, 07/20/99 48,448 48,326
4.90%, 07/21/99 56,107 55,958
4.89%, 07/28/99 63,125 62,896
5.01%, 08/31/99 67,556 66,989
5.02%, 08/31/99 55,000 54,539
---------
637,813
---------
BEVERAGES -- 0.1%
Coca Cola Enterprises
5.12%, 09/17/99 25,000 24,726
---------
CREDIT CARD RECEIVABLES -- 1.9% (f)
Dakota Certificates Program SCCMT-1
5.08%, 07/26/99 100,000 99,649
5.09%, 08/03/99 50,000 49,768
4.89%, 08/06/99 50,000 49,759
4.89%, 08/10/99 100,000 99,463
4.96%, 08/19/99 25,000 24,833
5.17%, 09/24/99 53,000 52,362
Delaware Funding Corp.
5.04%, 09/09/99 75,000 74,275
Providian Master Trust Series 1993-3
4.91%, 07/16/99 34,000 33,931
---------
484,040
---------
DIVERSIFIED FINANCIAL ASSETS -- 23.6% (f)
Ace Overseas Corp.
4.89%, 07/14/99 49,000 48,915
4.89%, 08/02/99 25,000 24,894
4.91%, 08/16/99 45,000 44,722
5.05%, 08/17/99 21,000 20,865
Par Value
-------- ---------
Amsterdam Funding Corp.
5.08%, 07/23/99 $ 50,000 $ 49,845
5.02%, 09/01/99 25,000 24,787
5.10%, 09/13/99 50,000 49,482
5.12%, 09/16/99 25,000 24,730
5.12%, 09/17/99 25,140 24,865
Bavaria Universal Funding Corp.
5.08%, 07/15/99 100,000 99,803
4.89%, 07/26/99 50,000 49,832
4.96%, 08/20/99 10,000 9,932
5.18%, 09/22/99 13,000 12,847
5.00%, 09/27/99 15,000 14,821
5.30%, 09/27/99 36,000 35,540
4.95%, 10/22/99 9,300 9,159
Beta Finance, Inc.
4.98%, 07/01/99 50,000 50,000
4.90%, 07/20/99 80,000 79,798
4.93%, 08/18/99 10,000 9,935
4.95%, 08/23/99 81,000 80,417
4.95%, 10/22/99 18,000 17,727
5.25%, 05/11/00 75,000 75,000
5.55%, 06/09/00 45,000 44,996
CC (USA), Inc.
4.95%, 07/08/99 25,000 24,977
4.90%, 07/21/99 106,000 105,718
4.93%, 08/18/99 59,000 58,617
5.05%, 08/27/99 10,000 9,922
5.05%, 08/30/99 32,000 31,738
5.03%, 09/08/99 50,000 49,524
5.30%, 09/28/99 23,000 22,703
5.13%, 01/11/00 50,000 50,000
Concord Minutemen Capital Co., LLC
Series A
4.93%, 07/09/99 78,897 78,812
4.95%, 08/20/99 45,000 44,694
4.98%, 08/20/99 102,000 101,311
5.10%, 08/20/99 37,968 37,702
4.98%, 09/15/99 50,821 50,295
4.98%, 09/16/99 50,828 50,295
4.94%, 09/20/99 18,000 17,804
5.27%, 11/08/99 72,000 70,657
Dorada Finance, Inc .
5.03%, 09/15/99 50,000 49,476
5.13%, 09/20/99 70,000 69,203
Eureka Securitization, Inc.
4.90%, 07/14/99 50,000 49,912
15
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
SCHEDULE OF INVESTMENTS (in thousands) (continued)
June 30, 1999 (unaudited)
Par Value
-------- ---------
Greenwich Funding Corp.
4.90%, 07/30/99 $ 84,039 $ 83,711
4.93%, 08/16/99 24,000 23,851
5.01%, 08/31/99 27,000 26,774
Greyhawk Funding, LLC
4.89%, 07/20/99 15,000 14,962
4.95%, 08/25/99 100,000 99,254
4.95%, 08/26/99 30,000 29,772
4.90%, 08/30/99 60,000 59,518
4.91%, 09/07/99 110,000 108,996
4.91%, 09/08/99 65,000 64,398
5.09%, 09/15/99 47,000 46,502
International Securitization Corp.
5.08%, 07/19/99 20,000 19,949
5.08%, 07/21/99 30,000 29,916
4.89%, 08/12/99 95,000 94,465
4.99%, 08/31/99 100,000 99,166
5.10%, 09/10/99 21,625 21,410
5.09%, 09/13/99 59,000 58,391
5.29%, 09/21/99 19,290 19,061
5.25%, 09/24/99 70,033 69,176
5.10%, 10/04/99 26,000 25,656
4.95%, 10/27/99 25,000 24,604
Lexington Parker Capital Corp.
4.96%, 07/14/99 173,733 173,430
4.92%, 07/15/99 22,115 22,073
4.88%, 07/20/99 75,000 74,812
4.87%, 07/22/99 200,000 199,445
4.87%, 07/23/99 85,000 84,753
4.88%, 07/23/99 19,867 19,809
4.98%, 08/20/99 36,000 35,757
5.06%, 09/02/99 100,000 99,137
5.05%, 09/03/99 30,000 29,737
5.06%, 09/03/99 63,000 62,448
Market Street Funding Corp.
5.08%, 07/16/99 115,354 115,111
Mont Blanc Capital Corp.
4.90%, 07/12/99 87,000 86,871
5.08%, 07/19/99 50,000 49,873
Moriarty LLC
4.90%, 08/06/99 71,000 70,656
4.90%, 08/16/99 20,000 19,876
4.94%, 08/24/99 139,000 137,985
5.07%, 09/09/99 14,000 13,864
5.10%, 09/15/99 50,000 49,469
5.18%, 09/20/99 10,000 9,885
5.18%, 09/21/99 25,000 24,709
Par Value
-------- ---------
5.18%, 09/22/99 $ 28,000 $ 27,670
5.18%, 09/24/99 95,000 93,854
Quincy Capital Corp.
4.90%, 07/13/99 72,077 71,960
4.95%, 08/05/99 49,427 49,192
5.03%, 09/08/99 112,892 111,817
5.12%, 09/10/99 25,000 24,751
Sigma Finance, Inc.
4.94%, 07/15/99 111,000 110,790
4.90%, 07/26/99 43,000 42,857
4.90%, 07/30/99 7,000 6,973
4.92%, 08/05/99 73,000 72,659
4.90%, 08/10/99 27,000 26,855
4.92%, 08/11/99 10,000 9,945
4.96%, 08/11/99 29,000 28,840
5.02%, 08/25/99 20,000 19,850
5.05%, 08/25/99 18,000 17,864
4.94%, 08/27/99 27,000 26,792
5.00%, 08/31/99 45,000 44,628
5.06%, 08/31/99 24,000 23,799
5.09%, 09/08/99 49,000 48,528
5.06%, 09/10/99 50,000 49,514
5.07%, 09/10/99 25,000 24,753
5.03%, 09/15/99 45,000 44,529
5.00%, 09/21/99 14,130 13,973
5.13%, 09/21/99 50,000 49,424
5.13%, 09/22/99 47,000 46,452
5.18%, 09/22/99 18,000 17,788
5.00%, 09/23/99 14,000 13,841
5.00%, 09/27/99 15,000 14,821
5.30%, 09/30/99 12,000 11,841
4.95%, 10/12/99 58,000 57,198
4.95%, 10/14/99 62,000 61,127
4.95%, 10/21/99 25,000 24,624
5.01%, 11/17/99 6,000 5,887
Stellar Funding Group, Inc.
5.18%, 09/14/99 20,459 20,241
Trident Capital Finance, Inc.
4.98%, 09/14/99 166,000 164,304
5.04%, 09/17/99 206,300 204,078
---------
5,959,523
---------
ELECTRICAL & ELECTRONICS -- 0.3%
General Electric Co.
4.91%, 07/27/99 75,000 74,738
---------
16
<PAGE>
Par Value
-------- ----------
FINANCE - COMMERCIAL -- 5.1%
General Electric Capital Corp.
5.63%, 07/01/99 $338,556 $ 338,556
4.91%, 07/20/99 100,000 99,745
4.91%, 07/27/99 150,000 149,477
4.91%, 07/28/99 57,000 56,794
4.91%, 07/29/99 125,000 124,530
4.91%, 08/03/99 80,000 79,646
4.91%, 08/04/99 165,000 164,247
4.90%, 08/09/99 117,000 116,389
General Electric Capital Services
4.91%, 07/19/99 50,000 49,879
Heller Financial, Inc.
5.00%, 07/16/99 24,000 23,951
5.00%, 07/29/99 50,000 49,808
5.01%, 08/12/99 30,000 29,827
----------
1,282,849
----------
FINANCE - CONSUMER -- 1.6%
Associates Corp. of North America
4.91%, 07/27/99 50,000 49,825
5.33%, 12/16/99 25,000 24,394
Associates First Capital BV
4.90%, 08/18/99 14,000 13,910
4.88%, 08/24/99 37,000 36,734
4.97%, 09/02/99 40,000 39,657
Associates First Capital Corp.
4.91%, 07/19/99 20,000 19,952
5.04%, 09/15/99 45,000 44,528
5.12%, 09/20/99 84,000 83,045
5.12%, 09/22/99 100,000 98,836
----------
410,881
----------
LIFE & HEALTH INSURANCE -- 0.3%
Prudential Funding Corp.
4.88%, 08/04/99 74,000 73,663
----------
MULTILINE INSURANCE -- 0.1%
General Electric Financial
Assurance Holdings, Inc.
4.92%, 07/27/99 25,000 24,913
----------
SAVINGS & LOAN -- 0.1%
Bank of America FSB
4.89%, 08/25/99 35,000 34,742
----------
Par Value
-------- ----------
SECURITIES BROKERAGE - DEALER -- 3.5%
Bear Stearns Companies, Inc.
4.93%, 07/14/99 $ 20,000 $ 19,965
5.10%, 09/17/99 65,000 64,292
Goldman Sachs Group, LP
4.90%, 09/03/99 196,000 194,320
JP Morgan & Co.
5.19%, 09/22/99 21,000 20,752
4.98%, 09/23/99 160,000 158,171
5.46%, 01/21/00 100,000 97,005
Lehman Brothers Holdings, Inc.
5.08%, 09/08/99 95,000 94,088
Salomon Smith Barney Holdings, Inc.
4.89%, 08/19/99 165,000 163,917
4.89%, 08/20/99 78,000 77,478
-----------
889,988
-----------
TRADE RECEIVABLES -- 7.2% (f)
Apreco, Inc.
4.88%, 07/14/99 29,350 29,299
5.18%, 08/03/99 50,000 49,764
4.90%, 08/09/99 33,100 32,926
5.18%, 08/09/99 25,000 24,861
4.99%, 08/13/99 90,000 89,469
5.17%, 09/21/99 10,000 9,884
Barton Capital Corp.
4.91%, 07/08/99 45,000 44,957
4.89%, 07/09/99 40,000 39,957
4.90%, 07/13/99 46,532 46,456
4.92%, 07/19/99 11,169 11,142
4.89%, 08/10/99 25,000 24,866
5.00%, 08/16/99 7,921 7,871
5.03%, 09/02/99 17,231 17,081
Clipper Receivables Corp.
4.89%, 07/13/99 28,000 27,955
5.02%, 09/13/99 43,000 42,562
Corporate Receivables Corp.
5.10%, 08/11/99 75,000 74,568
CXC, Inc.
4.90%, 07/15/99 20,000 19,962
5.11%, 08/06/99 20,000 19,899
4.89%, 08/10/99 18,000 17,903
4.95%, 08/27/99 100,000 99,226
4.95%, 08/30/99 50,000 49,593
17
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
SCHEDULE OF INVESTMENTS (in thousands) (continued)
June 30, 1999 (unaudited)
Par Value
-------- -----------
Edison Asset Securitization Corp.,
L.L.C.
4.94%, 07/09/99 $ 34,950 $ 34,912
4.88%, 07/15/99 50,000 49,907
4.93%, 07/26/99 20,697 20,627
4.87%, 07/29/99 34,272 34,145
5.02%, 09/13/99 42,972 42,535
5.17%, 09/21/99 45,000 44,477
Monte Rosa Capital Corp.
5.08%, 07/26/99 19,136 19,069
5.18%, 08/04/99 90,000 89,562
Park Avenue Receivables Corp.
5.08%, 07/23/99 11,771 11,735
5.11%, 08/10/99 114,177 113,534
5.15%, 08/23/99 72,018 71,477
5.30%, 09/01/99 57,000 56,485
5.35%, 09/01/99 37,958 37,612
5.35%, 09/02/99 22,000 21,796
Receivables Capital Corp.
4.90%, 07/13/99 14,719 14,695
Sheffield Receivables Corp.
5.08%, 07/20/99 50,000 49,867
5.08%, 07/23/99 50,000 49,845
4.95%, 08/17/99 6,300 6,260
4.95%, 08/19/99 46,600 46,290
5.09%, 09/10/99 46,450 45,990
WCP Funding, Inc.
4.93%, 08/27/99 25,000 24,807
Windmill Funding Corp.
4.95%, 08/26/99 12,600 12,504
5.13%, 09/22/99 25,000 24,708
Wood Street Funding Corp.
4.90%, 07/13/99 20,813 20,779
4.89%, 07/16/99 75,000 74,849
5.11%, 08/10/99 24,950 24,809
-----------
1,823,477
-----------
TOTAL COMMERCIAL PAPER AND OTHER
CORPORATE OBLIGATIONS
(Cost $17,248,835) 17,248,835
-----------
CERTIFICATES OF DEPOSIT -- 20.9%
BANKING - AUSTRALIA -- 0.2%
Australia & New Zealand Bank Group
4.90%, 07/07/99 50,000 50,000
-----------
Par Value
-------- -----------
BANKING - BELGIUM -- 2.5%
Credit Communal de Belgique
5.70%, 07/07/99 $ 95,000 $ 94,999
5.71%, 07/09/99 28,000 28,000
5.71%, 07/15/99 100,000 99,998
4.95%, 08/16/99 50,000 50,000
4.95%, 08/17/99 25,000 25,000
5.02%, 09/08/99 22,000 22,000
5.20%, 04/06/00 100,000 99,963
5.10%, 04/13/00 100,000 99,962
5.13%, 04/17/00 100,000 99,962
-----------
619,884
-----------
BANKING - CANADA -- 5.6%
Bank of Montreal
5.13%, 04/17/00 50,000 49,984
5.20%, 04/17/00 40,000 39,962
Bank of Nova Scotia
4.89%, 07/27/99 50,000 50,022
Canadian Imperial Bank of Commerce
5.05%, 02/07/00 45,000 44,989
5.35%, 03/03/00 25,000 24,987
5.20%, 04/04/00 100,000 99,965
5.10%, 04/12/00 87,000 86,986
5.45%, 06/01/00 45,000 44,980
National Bank of Canada
5.74%, 07/20/99 50,000 49,998
4.88%, 08/18/99 50,000 50,001
4.90%, 09/07/99 55,000 55,000
4.90%, 09/10/99 99,000 99,004
Royal Bank of Canada
5.71%, 07/12/99 190,000 189,997
4.94%, 08/23/99 25,000 25,022
5.06%, 02/08/00 25,000 24,996
5.75%, 07/03/00 (c) 52,500 52,475
Toronto-Dominion Bank
4.94%, 07/08/99 51,000 51,006
5.70%, 07/08/99 75,000 74,999
4.94%, 07/26/99 25,000 25,011
4.90%, 08/17/99 25,000 25,021
5.02%, 09/08/99 49,000 49,000
5.10%, 02/10/00 50,000 49,987
5.15%, 02/18/00 100,000 99,981
5.20%, 04/03/00 50,000 49,982
-----------
1,413,355
-----------
18
<PAGE>
Par Value
-------- ---------
BANKING - DOMESTIC -- 3.3%
BankBoston N.A.
5.09%, 09/14/99 $ 50,000 $ 49,999
Bankers Trust Co.
4.94%, 07/02/99 160,000 160,000
Chase Manhattan Bank (USA), N.A.
4.90%, 08/03/99 46,000 46,000
Morgan Guaranty Trust Co.
4.89%, 07/21/99 106,000 106,000
4.89%, 07/22/99 100,000 100,000
4.89%, 07/23/99 100,000 100,000
Southtrust Bank N.A.
5.03%, 09/13/99 100,000 100,000
US Bank N.A.
4.98%, 09/21/99 40,000 40,000
4.98%, 11/03/99 25,000 25,000
5.30%, 12/14/99 25,000 25,000
Wilmington Trust Co.
5.73%, 07/13/99 50,000 50,000
4.98%, 09/16/99 35,000 35,000
---------
836,999
---------
BANKING - FINLAND -- 0.5%
Merita Bank Ltd.
5.03%, 09/14/99 91,000 91,000
5.30%, 12/17/99 35,000 35,000
---------
126,000
---------
BANKING - FRANCE -- 1.7%
Banque Nationale de Paris
4.92%, 07/16/99 25,000 25,000
5.21%, 12/08/99 25,000 25,000
Credit Agricole Indosuez
4.90%, 08/05/99 50,000 50,000
4.95%, 08/31/99 70,000 70,000
4.95%, 10/12/99 15,000 14,999
Societe Generale
4.90%, 07/12/99 150,000 150,000
4.88%, 08/09/99 100,000 100,000
---------
434,999
---------
BANKING - GERMANY -- 1.3%
Deutsche Bank AG
4.90%, 08/02/99 100,000 99,998
Landesbank Hessen-Thurgingen
Girozentrale
5.20%, 04/26/00 50,000 49,968
Par Value
-------- ---------
Westdeutsche Landesbank
Girozentrale
4.88%, 08/17/99 $100,000 $ 100,000
4.88%, 08/18/99 70,000 70,000
---------
319,966
---------
BANKING - NETHERLANDS -- 0.2%
ABN-AMRO Bank N.V.
5.20%, 12/21/99 45,000 44,903
---------
BANKING - NORWAY -- 1.4%
Christiania Bank
4.89%, 07/13/99 75,000 75,000
4.89%, 07/14/99 100,000 100,000
4.89%, 08/03/99 25,000 25,000
Den Norske Bank
4.89%, 08/17/99 100,000 100,001
4.94%, 08/25/99 50,000 50,000
---------
350,001
---------
BANKING - SWEDEN -- 0.1%
ForeningsSparbanken AB
5.20%, 12/02/99 25,000 25,000
---------
BANKING - SWITZERLAND -- 2.8%
UBS AG
5.70%, 07/09/99 100,000 99,999
4.88%, 08/20/99 25,000 25,018
5.05%, 01/13/00 100,000 100,010
5.11%, 01/13/00 50,000 49,992
5.20%, 02/28/00 100,000 99,974
5.35%, 03/01/00 25,000 24,990
5.10%, 04/12/00 71,000 70,989
5.26%, 05/10/00 100,000 99,958
5.40%, 05/31/00 50,000 49,980
5.45%, 06/01/00 50,000 49,980
5.70%, 06/27/00 25,000 24,990
5.80%, 07/05/00 (c) 25,000 24,990
---------
720,870
---------
BANKING - UNITED KINGDOM -- 1.3%
Bank of Scotland
4.89%, 08/16/99 50,000 50,000
Barclays Bank PLC
5.04%, 01/12/00 100,000 99,985
5.35%, 05/22/00 40,000 40,000
5.66%, 06/14/00 25,000 24,988
19
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
SCHEDULE OF INVESTMENTS (in thousands) (continued)
June 30, 1999 (unaudited)
Par Value
-------- ----------
National Westminster Bank
5.71%, 07/16/99 $100,000 $ 99,998
5.06%, 01/10/00 24,500 24,490
----------
339,461
----------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $5,281,438) 5,281,438
----------
VARIABLE RATE OBLIGATIONS -- 7.0% (b)
BANKING - DOMESTIC -- 0.5% (e)
Active Living of Glenview, L.L.C. Senior
Floating Rate Note Series 1998 (a)
5.38%, 07/07/99 11,000 11,000
BMC Special Care Facilities Financing
Authority of the City of Montgomery,
Alabama Taxable RB (Montgomery
Baptist Outreach Services Corp.
Project) Series 1997A
5.11%, 07/07/99 8,600 8,600
Columbus, Georgia Development
Authority Taxable RB (Jay Leasing,
Inc. Project) Series 1997
5.11%, 07/07/99 7,400 7,400
Fillmore Public Financing Authority
VRD Tax Allocation Bond (Fillmore
Redevelopment Agency Central City
Redevelopment Project Area)
Series 1998A
5.09%, 07/07/99 10,120 10,120
Keystone Health Resources Corp. VR
Taxable DN Series 1993 (a)
5.15%, 07/07/99 3,200 3,200
MoviePlex Realty Leasing, L.L.C.
Adjustable Rate Tender Securities
(Carmike Cinemas Inc.)
Series 1997B1
5.08%, 07/07/99 7,625 7,625
New Jersey Economic Development
Authority Adjustable Rate Title IX
Loan Portfolio Securitization Bonds
Series 1995
5.05%, 07/06/99 14,700 14,700
Strategic Money Market Trust
1998A (a)
5.26%, 09/16/99 50,000 50,000
Par Value
-------- ----------
Town of Islip IDA 1992 Taxable
Adjustable Rate IDRB (Nussdorf
Associates/Quality King Distributors,
Inc. Facility) (a)
5.36%, 07/07/99 $ 5,870 $ 5,870
----------
118,515
----------
BANKING - SWITZERLAND -- 0.4% (a) (d)
Structured Products Asset Return
Certificates Series 1999-4
5.14%, 07/23/99 100 100,000
----------
BANKING - UNITED KINGDOM & GERMANY -- 0.3% (e)
City of Santa Rosa VRD Wastewater
Series 1998A
5.20%, 07/07/99 18,000 18,000
County of Riverside 1990 Taxable COP
(Monterey Avenue Project)
5.25%, 07/07/99 7,900 7,900
Restructured Assets Certificates with
Enhanced Returns Notes
Series 1998 MM-8-5 (a)
4.93%, 07/02/99 50,000 50,000
----------
75,900
----------
CREDIT CARD RECEIVABLES -- 0.2% (a) (f)
Short Term Repackaged Asset Trust
Series 1998E
5.02%, 07/19/99 40,000 40,000
----------
DIVERSIFIED FINANCIAL ASSETS -- 0.0% (a) (f)
Short Term Repackaged Asset
Trust Series 1999C
5.02%, 07/13/99 12,400 12,400
----------
ELECTRICAL & ELECTRONICS -- 0.2% (a) (e)
New Jersey Economic Development
Authority Taxable Economic
Development Bonds (MSNBC CNBC
Project) Series 1997A
4.92%, 07/01/99 42,900 42,900
----------
HEALTH CARE -- 0.1%
Catholic Health Initiatives Series 1997C
5.20%, 07/07/99 35,900 35,900
----------
20
<PAGE>
Par Value
-------- -----------
LIFE & HEALTH INSURANCE -- 3.2% (a)
First Allmerica Financial Life
Insurance Co. (d)
5.00%, 07/01/99 $ 50,000 $ 50,000
General American Life Insurance Co. (g)
5.12%, 07/01/99 300,000 300,000
Jackson National Life Insurance Co. (d)
5.01%, 07/01/99 40,000 40,000
John Hancock Mutual Life
Insurance Co. (d)
4.95%, 07/01/99 50,000 50,000
Monumental Life Insurance Co. (d)
5.13%, 07/01/99 210,000 210,000
Transamerica Life Insurance &
Annuity Co.
4.93%, 07/01/99 75,000 75,000
The Travelers Insurance Co. (d)
4.93%, 07/01/99 75,000 75,000
-----------
800,000
-----------
MONOLINE INSURANCE -- 0.2%
Baptist Health Systems of South Florida,
Inc. Taxable Direct Note Obligation
Series 1995A (e)
5.20%, 07/07/99 6,375 6,375
Baptist Health Systems of South Florida,
Inc. Taxable Direct Note Obligation
Series 1995B (e)
5.20%, 07/07/99 4,500 4,500
City of New Britain, Connecticut GO
Pension Bonds
5.01%, 07/07/99 40,000 40,000
Special Care Facilities Financing
Authority of The City of Daphne
(Presbyterian Retirement Corp., Inc.)
Series 1998B (e)
5.11%, 07/07/99 6,850 6,850
-----------
57,725
-----------
MORTGAGE BACKED SECURITIES -- 0.1% (f)
Bishops Gate Residential Mortgage
Trust Class A1
5.13%, 07/01/99 40,000 40,000
-----------
Par Value
-------- -----------
SECURITIES BROKERAGE - DEALER -- 1.8%
Asset-Backed Securities Investment
Trust, Series 1997E (a)(e)
4.99%, 07/15/99 $ 20,000 $ 20,000
J.P. Morgan Securities, Inc. (a)
4.93%, 07/01/99 100,000 100,000
Lehman Commercial Paper, Inc. (d)
5.17%, 07/01/99 64,500 64,500
5.18%, 07/01/99 71,500 71,500
5.20%, 07/06/99 95,000 95,000
5.20%, 07/12/99 33,000 33,000
5.25%, 07/19/99 9,000 9,000
5.31%, 07/26/99 50,000 50,000
5.42%, 07/29/99 20,000 20,000
-----------
463,000
-----------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $1,786,340) 1,786,340
-----------
BANK NOTES -- 4.0%
BANKING - DOMESTIC -- 4.0%
European American Bank
5.61%, 06/12/00 25,000 24,990
FCC National Bank
4.90%, 08/23/99 58,000 58,000
5.02%, 09/16/99 190,000 190,000
Lasalle National Bank
5.15%, 04/10/00 75,000 74,983
5.30%, 05/15/00 50,000 49,978
NationsBank N.A.
4.94%, 07/06/99 200,000 200,000
4.94%, 07/07/99 190,000 190,000
4.95%, 11/04/99 100,000 100,000
4.95%, 11/09/99 100,000 100,000
4.95%, 11/10/99 20,000 20,000
-----------
TOTAL BANK NOTES
(Cost $1,007,951) 1,007,951
-----------
TOTAL INVESTMENTS -- 100.1%
(Cost $25,324,564) 25,324,564
-----------
OTHER ASSETS AND LIABILITIES-- (0.1%)
Other assets 232,893
Liabilities (262,884)
-----------
(29,991)
-----------
TOTAL NET ASSETS-- 100.0% $25,294,573
===========
SEE ACCOMPANYING NOTES TO SCHEDULE OF INVESTMENTS AND NOTES TO FINANCIAL
STATEMENTS.
21
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
June 30, 1999 (unaudited)
(All dollar amounts are in thousands unless otherwise noted.)
Yields shown are effective yields at the time of purchase, except for variable
rate obligations, which are described below and U.S. government coupon notes and
U.S. Treasury notes, which reflect the coupon rate of the security. Yields for
each type of security are stated according to the market convention for that
security type. For each security, cost (for financial reporting and federal
income tax purposes) and carrying value are the same.
(a) 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 issued 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, 1999, the aggregate value of private placement securities held by the
fund was $11,927,102 which represented 47.15% of net assets. Of this total,
$11,059,102 or 43.72% of net assets, was determined by the investment
adviser to be liquid in accordance with procedures adopted by the Board of
Trustees.
(b) Variable rate obligations -- Interest rates vary periodically based on
current market rates. Rates shown are the effective rates as of the report
date. Dates shown for securities with scheduled maturities within 397 days
or less represent the earlier of the demand date or next interest rate
change date. Dates shown for securities with scheduled maturities greater
than 397 days represent the later of the demand date or next interest rate
change date. For variable rate obligations without demand features, the
next interest reset date is shown. All dates shown are considered the
maturity date for financial reporting purposes.
(c) Security traded on a delayed-delivery basis. Payment and delivery is
scheduled for a future time, generally within two weeks of entering into
the transactions. The transaction is subject to market fluctuation and to
the risk that the value may be more or less than the purchase price when
the transaction was initiated. The fund has set aside sufficient investment
securities as collateral for securities purchased on a delayed-delivery
basis.
(d) Security cannot be resold to the general public without prior registration
under the Securities Act of 1933. If the security is subsequently
registered and resold, the issuers would typically bear the expense of all
registrations at no cost to the fund. At June 30, 1999, the aggregate value
of the restricted securities held by Schwab Value Advantage Fund was
$868,000 which represented 3.43% of the net assets of the fund. All of
these restricted investments were determined by the investment adviser to
be illiquid in accordance with procedures adopted by the Board of Trustees.
(e) Security has one or more third party credit enhancements.
(f) Asset-backed securities -- backed by underlying assets and categorized by
industry.
(g) On August 10, 1999, General American Life Insurance Co. did not make timely
repayment of its obligation to the fund when due.
PORTFOLIO ABBREVIATIONS
COP Certificates of Participation
DN Demand Note
GO General Obligation
IDA Industrial Development Authority
IDRB Industrial Development Revenue Bond
RB Revenue Bond
VR Variable Rate
VRD Variable Rate Demand
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
STATEMENT OF ASSETS AND LIABILITIES (in thousands)
June 30, 1999 (unaudited)
ASSETS
Investments, at value (Cost: $25,324,564) $25,324,564
Receivables:
Interest 128,665
Fund shares sold 103,551
Prepaid expenses 677
-----------
Total assets 25,557,457
-----------
LIABILITIES
Payables:
Dividends 48,305
Investments purchased 77,480
Fund shares redeemed 133,372
Investment advisory and administration fees 671
Transfer agency and shareholder service fees 1,215
Other liabilities 1,841
-----------
Total liabilities 262,884
-----------
Net assets applicable to outstanding shares $25,294,573
===========
NET ASSETS CONSIST OF
Paid-in capital $25,294,698
Accumulated net realized loss on investments sold (125)
-----------
$25,294,573
===========
PRICING OF SHARES
Outstanding shares, $0.00001 par value
(unlimited shares authorized) 25,294,807
Net asset value, offering and redemption price per share $1.00
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
STATEMENT OF OPERATIONS (in thousands)
For the six months ended June 30, 1999 (unaudited)
Interest income $620,594
--------
Expenses:
Investment advisory and administration fees 44,539
Transfer agency and shareholder service fees 30,517
Custodian and portfolio accounting fees 789
Registration fees 1,143
Professional fees 61
Shareholder reports 73
Trustees' fees 23
Insurance and other expenses 51
--------
77,196
Less: expenses reduced (see Note 4) (28,369)
--------
Total expenses incurred by fund 48,827
--------
Net investment income 571,767
--------
Increase in net assets resulting from operations $571,767
========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Six months Year
ended ended
June 30, 1999 December 31,
(unaudited) 1998
-------------- ------------
<S> <C> <C>
Operations:
Net investment income $ 571,767 $ 947,847
------------ ------------
Increase in net assets resulting from operations 571,767 947,847
------------ ------------
Dividends to shareholders from net investment income (see Note 2): (571,767) (947,956)
------------ ------------
Capital share transactions (at $1.00 per share):
Proceeds from shares sold 19,765,550 31,568,338
Net asset value of shares issued in reinvestment of dividends 622,010 849,749
Less payments for shares redeemed (17,288,799) 23,884,351)
------------ ------------
Increase in net assets from capital share transactions 3,098,761 8,533,736
------------ ------------
Total increase in net assets 3,098,761 8,533,627
Net assets:
Beginning of period 22,195,812 13,662,185
------------ ------------
End of period $ 25,294,573 $ 22,195,812
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
SCHWAB VALUE ADVANTAGE MONEY FUND(REGISTRATION MARK)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1999 1 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------- ----------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ---------- ----------
From investment operations:
Net investment income 0.02 0.05 0.05 0.05 0.06 0.04
----------- ----------- ----------- ----------- ---------- ----------
Total from investment operations 0.02 0.05 0.05 0.05 0.06 0.04
Less distributions:
Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.06) (0.04)
----------- ----------- ----------- ----------- ---------- ----------
Total distributions (0.02) (0.05) (0.05) (0.05) (0.06) (0.04)
----------- ----------- ----------- ----------- ---------- ----------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ========== ==========
Total return (%) 2.35** 5.35 5.40 5.26 5.80 4.09
RATIOS/SUPPLEMENTAL DATA (%)
- ----------------------------
Ratio of net operating expenses to
average net assets 0.40* 0.40 0.40 0.40 0.40 0.40
Reductions reflected in above
expense ratio 0.23* 0.27 0.29 0.30 0.32 0.39
Ratio of net investment income to
average net assets 4.68* 5.21 5.28 5.14 5.63 4.40
Net assets, end of period (000s) $25,294,573 $22,195,812 $13,662,185 $10,476,537 $6,923,890 $3,731,629
<FN>
1 For the six months ended June 30, 1999 (unaudited).
* Annualized.
** Not annualized.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the six months ended June 30, 1999 (unaudited)
(All dollar amounts are in thousands unless otherwise noted)
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"), an open-end investment management company
organized as a Massachusetts business trust on October 20, 1989 and registered
under the Investment Company Act of 1940 (the "Act"), as amended.
In addition to the fund, the Trust also offers the Schwab Money Market Fund,
Schwab Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab
Institutional Advantage Money Fund,(REGISTRATION MARK) Schwab Retirement Money
Fund,(REGISTRATION MARK) Schwab Municipal Money Fund, Schwab California
Municipal Money Fund, Schwab New York Municipal Money Fund, Schwab New Jersey
Municipal Money Fund, Schwab Pennsylvania Municipal Money Fund, Schwab Florida
Municipal Money Fund and Schwab Government Cash Reserves. The assets of each
series are segregated and accounted for separately.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in conformity with generally
accepted accounting principles. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
SECURITY VALUATION -- Investments are stated at amortized cost, which
approximates market value.
SECURITY TRANSACTIONS, INTEREST INCOME AND REALIZED GAINS (LOSSES) -- Security
transactions are accounted for on a trade date basis (date the order to buy or
sell is executed). Interest income is accrued daily and includes amortization of
premium and accretion of discount on investments. Realized gains and losses from
security transactions are determined on an identified cost basis.
REPURCHASE AGREEMENTS -- Repurchase agreements are fully collateralized by U.S.
government securities. All collateral is held by the fund's custodian, except in
the case of a tri-party agreement, under which the collateral is held by an
agent bank. The collateral is monitored daily to ensure that its market value at
least equals the repurchase price under the agreement.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The fund declares a daily
dividend, equal to its net investment income for that day, payable monthly. Net
realized capital gains, if any, are normally distributed annually.
EXPENSES -- Expenses arising in connection with the fund are charged directly to
the fund. Expenses common to all series of the Trust are generally 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 federal income tax purposes.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
As of December 31, 1998, the unused capital loss carryforwards, for federal
income tax purposes with expiration dates, were as follows:
Schwab Value Advantage
Expiring in: Money Fund(REGISTRATION MARK)
---------- ------------------------------
12/31/01 $ 1
12/31/02 2
12/31/03 122
----
Total capital loss carryforwards $125
====
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The Trust has an investment
advisory and administration agreement with Charles Schwab Investment Management,
Inc. (the "investment adviser"). For advisory services and facilities furnished,
the fund pays an annual fee, payable monthly, of 0.38% on the first $1 billion
of average daily net assets, 0.35% on such assets in excess of $1 billion to $10
billion, 0.32% on such assets in excess of $10 billion to $20 billion, and 0.30%
on such assets in excess of $20 billion. Prior to May 1, 1999 the fund paid an
annual fee, payable monthly, of 0.46% on the first $1 billion of average daily
net assets, 0.45% on the next $2 billion, 0.40% on the next $7 billion, 0.37% on
the next $10 billion, and 0.34% on such net assets in excess of $20 billion. The
investment adviser has reduced a portion of its fee for the six months ended
June 30, 1999 (see Note 4).
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The Trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives a
combined annual fee, payable monthly, of 0.25% of average daily net assets. In
addition, Schwab may charge a fee of five dollars for purchases and redemptions
in amounts less than five thousand dollars and may impose a five dollar monthly
fee for balances below the minimum required.
OFFICERS AND TRUSTEES -- Certain officers and trustees of the Trust are also
officers and/or directors of the investment adviser and/or Schwab. During the
six months ended June 30, 1999, the Trust made no direct payments to its
officers or trustees who are "interested persons" within the meaning of the Act,
as amended. The fund incurred fees of $23 related to the Trust's unaffiliated
trustees.
4. EXPENSES REDUCED BY THE INVESTMENT ADVISER AND SCHWAB
The investment adviser and Schwab guarantee that, through at least April 30,
2000, the fund's total operating expenses will not exceed 0.40% of the fund's
average daily net assets, after reductions. For the purpose of this guarantee,
operating expenses do not include interest expenses, extraordinary expenses and
taxes.
For the six months ended June 30, 1999, the total of such fees reduced by the
investment adviser was $28,369.
28
<PAGE>
THE SCHWAB FUNDS FAMILY-REGISTERED TRADEMARK-
The Schwab Funds Family includes a variety of funds to help meet your investment
needs. You can diversify your portfolio in a single step with our asset
allocation funds. Or you can customize your portfolio with a combination of our
stock funds as well as our taxable and tax-advantaged bond and money market
funds.
Please call 800-435-4000 for a free prospectus and brochure for any of these
SchwabFunds.-Registered Trademark-
This report must be preceded or accompanied by a current prospectus.
METHODS FOR PLACING ORDERS
The information below outlines how Schwab brokerage account investors can place
orders. If you are investing through a third-party investment provider, methods
for placing orders may be different.
PHONE
Call 800-435-4000, day or night (for TDD service, call 800-345-2550).
INTERNET
www.schwab.com/schwabfunds
MAIL
Write to SchwabFunds at:
P. O. Box 7575, San Francisco, CA 94120-7575
When selling or exchanging shares, be sure to include the signatures of at least
one of the persons whose name is on the account.
IN PERSON
Visit the nearest Charles Schwab office.
SCHWAB ASSET ALLOCATION FUNDS
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab MarketManager Growth Portfolio
Schwab MarketManager Balanced Portfolio
SCHWAB STOCK FUNDS
Schwab S&P 500-Registered Trademark- Fund
Schwab 1000 Fund-Registered Trademark-
Schwab Analytics Fund-Registered Trademark-
Schwab Small-Cap Index Fund-Registered Trademark-
Schwab MarketManager Small Cap Portfolio
Schwab International Index Fund-Registered Trademark-
Schwab MarketManager International Portfolio
Schwab Total Stock Market Index Fund-TM-
SCHWAB BOND FUNDS
Schwab Total Bond Market Index Fund
Schwab Short-Term Bond Market Index Fund
Schwab Long-Term Tax-Free Bond Fund
Schwab Short/Intermediate Tax-Free Bond Fund
Schwab California Long-Term Tax-Free Bond Fund
Schwab California Short/Intermediate
Tax-Free Bond Fund
SCHWAB MONEY FUNDS
Schwab offers an array of money funds that seek high current income consistent
with stability of capital and liquidity.(1) Choose from taxable or
tax-advantaged alternatives. Many can be linked to your Schwab account to
"sweep" cash balances automatically when you're between investments. Or, for
your larger cash reserves, choose one of our Value Advantage
Investments-Registered Trademark-.
(1)Investments in money funds are neither insured nor guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or any other government agency and,
although money funds seek to preserve the value of your investment at $1 per
share, it is possible to lose money.
<PAGE>
[LOGO]
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery, 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-1999 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
Printed on recycled paper. (0099-2264) MKT3858-1 (7/99)
