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Previous: SCHWAB CAPITAL TRUST, N-30D, 1997-07-09 |
Next: HERRICK NORTON, 4, 1997-07-09 |
<PAGE> 1
SCHWABFUNDS(R)
SCHWAB
ASSET DIRECTOR(R)
FUNDS
Semi-Annual Report
April 30, 1997
<PAGE> 2
Dear Shareholder,
[Photo of With the support of investors like you, SchwabFunds(R)
Charles continues to be among the largest and fastest-growing mutual
R. Schwab] fund complexes in the nation. Charles Schwab Investment
Management, Inc. (CSIM) manages over $47 billion in assets for
more than 2.5 million SchwabFunds shareholders. Today, CSIM
offers investors 30 funds spanning a spectrum of financial
markets and investing styles. You'll find in-depth information
on the performance of your SchwabFunds investment in the
following pages.
LONG-TERM INVESTMENT STRATEGIES
When it comes to investing, patience is a virtue. Given the recent market
volatility, it is important to maintain the discipline to adhere to your asset
allocation plan and to ensure you have a diversified investment portfolio. We
created the SchwabFunds Family to offer time-tested strategies for long-term
investing--Indexing, Asset Allocation, Quantitative Models and
Fund-of-Funds--and to provide investors with easy, cost-efficient options to
help achieve portfolio diversification. Furthermore, the tax-efficient strategy
employed by our index funds can help you retain more of what your investments
earn.
COMMITMENT TO VALUE
In our ongoing commitment to provide cost-efficient ways for you to invest, we
recently reduced the operating expense ratios and introduced a new class of
shares--Select Shares--for each of our four index funds. Select Shares have
among the lowest fund expenses in the industry and offer investors even greater
savings through significantly lower expense ratios.
EXPANDING CHANNELS OF COMMUNICATION
If you're among the millions of people exploring the Internet, I encourage you
to visit our Web site at www.schwab.com/funds. There you'll find a wealth of
online information on SchwabFunds as well as other resources available at
Schwab. You can also access mutual fund performance data, chart daily net asset
values, request a free fund prospectus, trade funds and more--all from the
comfort of your home or office, 24 hours a day. Continuing our efforts to
provide you with up-to-date, useful information, we have recently added monthly
portfolio manager commentaries on selected SchwabFunds to our Web site. In these
commentaries, our expert portfolio managers offer insights into market trends
and the effects of those trends on fund performance.
Thank you for placing your trust in SchwabFunds. We will continue to explore new
strategies to help meet your investment needs and to provide you with timely
information on SchwabFunds.
/s/ Charles R. Schwab
Charles R. Schwab
<PAGE> 3
KEEP YOUR
MONEY WORKING
HARDER!
----------------------------
USE THIS ENVELOPE TO EASILY
ADD TO YOUR SCHWAB FUNDS.
CHARLES SCHWAB
<PAGE> 4
WE'VE MADE IT EASIER FOR YOU! TAKE ADVANTAGE OF THIS OPPORTUNITY TO ADD TO YOUR
SCHWABFUNDS(R) INVESTMENT.
Now, you can add to your account by using this convenient Schwab investment
envelope. It's a simple, easy way to increase your investment. You can also
have money transferred to your fund directly from your bank account or payroll
check using Schwab's free Automatic Investment Plan (AIP). If you'd like more
information on AIP, just check the appropriate box on the coupon. We'll send
you everything you need to get started.
DON'T DELAY. USE THIS CONVENIENT INVESTMENT ENVELOPE AND SEND YOUR CHECK TODAY!
THE AUTOMATIC INVESTMENT PLAN DOES NOT INSURE PROFIT OR PROTECT AGAINST LOSS IN
DECLINING MARKETS.
- --------------------------------------------------------------------------------
PLEASE DETACH HERE
SCHWABFUNDS(R)
INVESTMENT COUPON
- --------------------------------------------------------------------------------
Please enclose your check and this completed investment coupon in the attached
postage-paid envelope.
________________________________________________________________________________
NAME
$_______________________________________________________________________________
AMOUNT OF INVESTMENT
________________________________________________________________________________
SIGNATURE
[ ] Check here if you would like more investment coupons for future use.
[ ] Check here if you would like more information on Schwab's Automatic
Investment Plan (AIP).
__________-__________
SCHWAB ACCOUNT NUMBER
Please indicate to which SchwabFund your investment should go:
[ ] Schwab S&P 500 Fund
[ ] Schwab Small-Cap Index Fund(R)
[ ] Schwab International Index Fund(R)
[ ] Schwab Analytics Fund(TM)
[ ] Schwab OneSource Portfolios - International
[ ] Schwab OneSource Portfolios - Growth Allocation
[ ] Schwab OneSource Portfolios - Balanced Allocation
[ ] Schwab Asset Director(R) - High Growth Fund
[ ] Schwab Asset Director(R) - Balanced Growth Fund
[ ] Schwab Asset Director(R) - Conservative Growth Fund
IF NO FUND IS INDICATED, YOUR INVESTMENT WILL GO INTO THE SWEEP ACCOUNT YOU'VE
DESIGNATED.
*This envelope may not be used for initial investments. Subsequent investment
minimum is $100.
(C) 1997 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE
Printed on recycled paper. TF4794C(5/97) CRS 20061
(LIFT HERE FOR MORE INFORMATION)
<PAGE> 5
CHARLES SCHWAB
JUST FOLLOW THESE EASY STEPS TO INVEST IN YOUR SCHWABFUNDS(R) ACCOUNT:
1. Fill out the Schwab investment coupon completely, including your name,
account number, amount of your check and signature. Please use one coupon
for each account.
2. Make your check payable to CHARLES SCHWAB & CO., INC., and enclose your
check with the completed coupon in this postage-paid envelope.
3. Then just drop your SchwabFunds investment envelope in the mail today -
and start putting your money to work. If you have any questions, don't
hesitate to call 1-800-2 NO-LOAD.
This envelope is intended for shareholders who have already received a current
SchwabFunds prospectus.
<PAGE> 6
ATTN: Dept. AIP333-4 NO POSTAGE
NECESSARY IF
MAILED IN THE
BUSINESS REPLY MAIL UNITED STATES
FIRST-CLASS MAIL PERMIT NO. 18125 SAN FRANCISCO, CA
POSTAGE WILL BE PAID BY ADDRESSEE
CHARLES SCHWAB & CO INC
PO BOX 7778
SAN FRANCISCO CA 94120-9419
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
A WORD FROM SCHWABFUNDS(R) ....................................... 2
FUND PERFORMANCE ................................................. 3
HIGH GROWTH FUND SUMMARY ......................................... 4
BALANCED GROWTH FUND SUMMARY ..................................... 6
CONSERVATIVE GROWTH FUND SUMMARY ................................. 8
THE PORTFOLIO MANAGEMENT TEAM .................................... 10
MARKET OVERVIEW .................................................. 11
QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM ....................... 16
FINANCIAL STATEMENTS AND NOTES ................................... 22
</TABLE>
1
<PAGE> 8
A WORD FROM SCHWABFUNDS(R)
We are pleased to provide you with the semi-annual report for the three Schwab
Asset Director(R) Funds for the six-month period ended April 30, 1997. In this
report, you will find performance statistics and other information for the
Schwab Asset Director - High Growth Fund, Balanced Growth Fund and Conservative
Growth Fund (the Funds).
Each of the Funds provides easy diversification among major asset categories
- --stocks, bonds and cash equivalents. Through a single investment, you can
utilize asset allocation, a strategy designed to achieve an optimal balance
between return and risk. Research shows that this asset allocation decision has
been the most significant determinant of a portfolio's investment return.1 We
offer three Funds, each with a different proportion invested in stocks, to help
investors with varying goals and levels of risk tolerance.
Since the Funds commenced operations on November 20, 1995, we have seen steady
growth in assets and the number of shareholder accounts. The Funds' combined
assets have grown from $115 million to $256 million while the number of accounts
has grown from approximately 19,000 to nearly 27,000.
Each of the Funds paid dividend distributions during the six-month reporting
period. The High Growth Fund paid a dividend of $0.20 per share; the Balanced
Growth Fund paid a dividend of $0.23 per share; and the Conservative Growth Fund
paid two dividends totaling $0.17 per share. None of the Funds has paid any
capital gain distributions to date.
NET ASSET VALUE (NAV) IN $
================================================================================
<TABLE>
<CAPTION>
High Growth Fund Balanced Growth Fund Conservative Growth Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
10/31/96 11.30 11.05 10.51
- --------------------------------------------------------------------------------
4/30/97 11.81 11.35 10.71
- --------------------------------------------------------------------------------
Change 0.51 0.30 0.20
- --------------------------------------------------------------------------------
</TABLE>
1 Financial Analysts Journal; Brinson, Singer, Beebower; May-June 1991.
2
<PAGE> 9
FUND PERFORMANCE
The following table compares total returns for various periods ended April 30,
1997, for the three Schwab Asset Director(R) Funds, the S&P500(R) Index, the
Lehman Brothers General U.S. Government Index, and the average asset allocation
fund. 2
TOTAL RETURNS
<TABLE>
<CAPTION>
================================================================================================================================
Cumulative Average Annual
Since Fund Inception Since Fund Inception
Six-Month One-Year (11/20/95) (11/20/95)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High Growth Fund 6.31% 11.43% 20.38% 13.66%
- --------------------------------------------------------------------------------------------------------------------------------
Balanced
Growth Fund 4.85% 9.82% 16.20% 10.92%
- --------------------------------------------------------------------------------------------------------------------------------
Conservative
Growth Fund 3.58% 8.40% 12.06% 8.17%
- --------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers
General U.S.
Government Index 1.32% 6.48% 5.69% 3.90%
- --------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index 14.71% 25.12% 37.76% 24.75%
- --------------------------------------------------------------------------------------------------------------------------------
Average Asset
Allocation Fund 4.23% 9.54% 18.31% 14.05%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1997, the six-month, one-year, cumulative since fund inception,
and average annual since fund inception total returns were respectively: 4.63%,
10.06%, 16.92%, and 12.14% for the High Growth Fund; 3.87%, 8.35%, 13.34%, and
9.61% for the Balanced Growth Fund; and 3.03%, 6.60%, 9.65%, and 6.99% for the
Conservative Growth Fund.
TOTAL RETURN ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS, IF ANY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. The
Investment Manager and Schwab waived a portion of their fees during the
reporting period and have guaranteed that each Fund's total operating expenses
will not exceed 0.89% through at least 2/28/98. Without fee waivers and
guarantees, for the period ended 4/30/97, each Fund's six-month, one-year,
cumulative since fund inception, and average annual since fund inception total
returns would have been respectively: 6.07%, 10.90%, 19.40%, and 13.01% for the
High Growth Fund; 4.60%, 9.26%, 15.14%, and 10.21% for the Balanced Growth Fund;
and 3.09%, 7.44%, 10.28%, and 6.98% for the Conservative Growth Fund. Without
fee waivers and guarantees, for the period ended 3/31/97, the six-month,
one-year, cumulative since fund inception, and average annual since fund
inception total returns would have been respectively: 4.41%, 9.56%, 16.06%, and
11.53% for the High Growth Fund; 3.62%, 7.80%, 12.39%, and 8.94% for the
Balanced Growth Fund; and 2.51%, 5.67%, 7.99%, and 5.80% for the Conservative
Growth Fund. Indices are unmanaged, and unlike funds, do not reflect payment of
advisory fees and other expenses associated with an investment in funds.
Investors cannot invest in an index directly.
2 Source: Morningstar, Inc. Average for 194 asset allocation funds for the
period from 11/1/95 through 4/30/97.
3
<PAGE> 10
HIGH GROWTH FUND SUMMARY 3
(AS OF APRIL 30, 1997)
The High Growth Fund seeks to provide high capital growth with less volatility
than an all-stock portfolio. Of the three Asset Director(R) Funds, this Fund
offers the greatest exposure to stocks and the greatest potential for return and
risk.
ASSET MIX
[The following is a pie chart illustrating the percentage breakdown of each
asset category and stock subcategory.]
<TABLE>
<S> <C>
Large-Company U.S. Stocks 38.6%
Small-Company U.S. Stocks 19.1%
International Stocks 20.5%
Bonds 17.4%
Cash Equivalents 4.4%
</TABLE>
<TABLE>
<CAPTION>
==================================================================================
Asset mix Asset mix Target asset mix
as of 4/30/97: as of 10/31/96: in neutral markets:
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Large-Company
U.S. Stocks 38.6% 35.9%
- -----------------------------------------------------------
Small-Company
U.S. Stocks 19.1% 18.3% 80.0% Stocks
- -----------------------------------------------------------
International Stocks 20.5% 19.1%
- ----------------------------------------------------------------------------------
Bonds 17.4% 16.9% 15.0%
- ----------------------------------------------------------------------------------
Cash Equivalents 4.4% 9.8% 5.0%
- ----------------------------------------------------------------------------------
</TABLE>
3 This information is not indicative of the Fund's asset mix or holdings after
April 30, 1997. A complete listing of the Fund's holdings as of April 30, 1997
can be found in the Statement of Net Assets section of this report. Unlike the
Statement of Net Assets, information is shown here as a percentage of the Fund's
investments, not as a percentage of the Fund's net assets.
4
<PAGE> 11
TOP TEN STOCK AND BOND HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS 3
<TABLE>
<CAPTION>
INVESTMENT %
<S> <C>
Schwab International Index Fund(R) 20.53
Schwab Small-Cap Index Fund(R) 19.12
U.S. Treasury Bond
(8.125%, Maturity 08/15/19) 4.72
U.S. Treasury Bond
(6.00%, Maturity 02/15/26) 4.12
U.S. Treasury Bond
(8.125%, Maturity 05/15/21) 3.25
U.S. Treasury Bond
(7.25%, Maturity 05/15/16) 2.75
General Electric Co. 1.14
U.S. Treasury Bond
(9.125%, Maturity 05/15/18) 1.01
Coca-Cola Co. 0.99
Microsoft Corp. 0.98
TOTAL 58.61%
</TABLE>
5
<PAGE> 12
BALANCED GROWTH FUND SUMMARY 4
(AS OF APRIL 30, 1997)
The Balanced Growth Fund seeks to provide maximum total return, including both
capital growth and income. This Fund invests in a more balanced mix of stocks
and bonds.
ASSET MIX
[The following is a pie charge illustrating the percentage breakdown of each
asset category and stock subcategory.]
<TABLE>
<S> <C>
Large-Company U.S. Stocks 28.9%
Small-Company U.S. Stocks 14.4%
International Stocks 15.4%
Bonds 36.4%
Cash Equivalents 4.9%
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================
Asset mix Asset mix Target asset mix
as of 4/30/97: as of 10/31/96: in neutral markets:
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Large-Company
U.S. Stocks 28.9% 26.5%
- -------------------------------------------------------------------
Small-Company
U.S. Stocks 14.4% 14.2% 60.0% Stocks
- -------------------------------------------------------------------
International Stocks 15.4% 14.2%
- ------------------------------------------------------------------------------------------
Bonds 36.4% 34.7% 35.0%
- ------------------------------------------------------------------------------------------
Cash Equivalents 4.9% 10.4% 5.0%
- ------------------------------------------------------------------------------------------
</TABLE>
4 This information is not indicative of the Fund's asset mix or holdings after
April 30, 1997. A complete listing of the Fund's holdings as of April 30, 1997
can be found in the Statement of Net Assets section of this report. Unlike the
Statement of Net Assets, information is shown here as a percentage of the Fund's
investments, not as a percentage of the Fund's net assets.
6
<PAGE> 13
TOP TEN STOCK AND BOND HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS 4
<TABLE>
<CAPTION>
INVESTMENT %
<S> <C>
Schwab International Index Fund(R) 15.41
Schwab Small-Cap Index Fund(R) 14.37
U.S. Treasury Bond
(8.125%, Maturity 08/15/19) 4.47
U.S. Treasury Note
(7.00%, Maturity 04/15/99) 4.36
U.S. Treasury Bond
(8.125%, Maturity 05/15/21) 2.73
U.S. Treasury Bond
(6.00%, Maturity 02/15/26) 2.37
U.S. Treasury Bond
(7.125%, Maturity 02/15/23) 2.17
U.S. Treasury Note
(8.00%, Maturity 08/15/99) 2.03
U.S. Treasury Bond
(7.25%, Maturity 05/15/16) 1.99
U.S. Treasury Note
(7.50%, Maturity 10/31/99) 1.82
TOTAL 51.72%
</TABLE>
7
<PAGE> 14
CONSERVATIVE GROWTH FUND SUMMARY 5
(AS OF APRIL 30, 1997)
The Conservative Growth Fund seeks to provide income and more growth potential
than an all-bond portfolio. This Fund normally keeps the majority of its assets
invested in bonds. The Fund's stock component is designed to help offset
inflation.
ASSET MIX
[The following is a pie chart illustrating the percentage breakdown of each
asset category and stock subcategory.]
<TABLE>
<S> <C>
Large-Company U.S. Stocks 19.0%
Small-Company U.S. Stocks 10.0%
International Stocks 10.2%
Bonds 55.9%
Cash Equivalents 4.9%
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
Asset mix Asset mix Target asset mix
as of 4/30/97: as of 10/31/96: in neutral markets:
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Large-Company
U.S. Stocks 19.0% 17.1%
- -------------------------------------------------------------------
Small-Company
U.S. Stocks 10.0% 10.5% 40.0% Stocks
- -------------------------------------------------------------------
International Stocks 10.2% 9.8%
- -----------------------------------------------------------------------------------------
Bonds 55.9% 55.4% 55.0%
- -----------------------------------------------------------------------------------------
Cash Equivalents 4.9% 7.2% 5.0%
- -----------------------------------------------------------------------------------------
</TABLE>
5 This information is not indicative of the Fund's asset mix or holdings after
April 30, 1997. A complete listing of the Fund's holdings as of April 30, 1997
can be found in the Statement of Net Assets section of this report. Unlike the
Statement of Net Assets, information is shown here as a percentage of the Fund's
investments, not as a percentage of the Fund's net assets.
8
<PAGE> 15
TOP TEN STOCK AND BOND HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS 5
<TABLE>
<CAPTION>
INVESTMENT %
<S> <C>
Schwab International Index Fund(R) 10.15
Schwab Small-Cap Index Fund(R) 10.02
U.S. Treasury Bond
(8.125%, Maturity 08/15/19) 5.58
U.S. Treasury Note
(6.125%, Maturity 08/31/98) 4.99
U.S. Treasury Bond
(7.125%, Maturity 02/15/23) 4.06
U.S. Treasury Note
(7.875%, Maturity 08/15/01) 4.03
U.S. Treasury Bond
(8.125%, Maturity 05/15/21) 2.80
U.S. Treasury Note
(8.00%, Maturity 08/15/99) 2.78
U.S. Treasury Bond
(6.00%, Maturity 02/15/26) 2.60
U.S. Treasury Bond
(7.25%, Maturity 05/15/16) 2.43
TOTAL 49.44%
</TABLE>
9
<PAGE> 16
THE PORTFOLIO MANAGEMENT TEAM
STEPHEN B. WARD - Senior Vice President and Chief Investment Officer, has
overall responsibility for the management of the Funds' portfolios. Steve joined
Charles Schwab Investment Management, Inc. (CSIM) as Vice President and
Portfolio Manager in 1991 and was promoted to his current position in 1993.
Prior to joining CSIM, Steve was the Vice President and Portfolio Manager at
Federated Investors.
GERI HOM - Vice President and Senior Portfolio Manager, has primary
responsibility for the day-to-day management of the equities in each Fund's
portfolio. Geri joined CSIM in 1995 as Portfolio Manager and was promoted to her
current position in December 1996. She currently manages approximately $4
billion in assets. Prior to joining CSIM, Geri was a Principal for Wells Fargo
Nikko Investment Advisors and Vice President and Manager for its Domestic Equity
Portfolio Management Group.
ANDREA REGAN - Vice President and Senior Portfolio Manager, has primary
responsibility for the day-to-day management of the bonds and cash equivalents
in each Fund's portfolio. Andrea joined CSIM in 1991 and was promoted to her
current position in December 1996. She currently manages approximately $3
billion in assets. Prior to joining CSIM, Andrea was Vice President and Manager
of Trading for Merus Capital Management, the investment management division of
the Bank of California.
The following market overview and answers to questions are provided by the
Portfolio Management Team.
10
<PAGE> 17
MARKET OVERVIEW
REAL GDP GROWTH RATE
[BAR GRAPH]
Real Gross Domestic Product
Chain Weighted
Percent change from preceeding quarter, seasonally adjusted at annual rates
<TABLE>
<CAPTION>
Real GDP
<S> <C>
Q1 1990 4.1%
Q2 1990 1.3%
Q3 1990 -1.9%
Q4 1990 -4.1%
Q1 1991 -2.2%
Q2 1991 1.7%
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 1.9%
Q3 1993 2.3%
Q4 1993 4.8%
Q1 1994 2.5%
Q2 1994 4.9%
Q3 1994 3.5%
Q4 1994 3.0%
Q1 1995 0.4%
Q2 1995 0.7%
Q3 1995 3.8%
Q4 1995 0.3%
Q1 1996 2.0%
Q2 1996 4.7%
Q3 1996 2.1%
Q4 1996 3.8%
Q1 1997 5.8%
</TABLE>
Source: Bloomberg
- - The economy continued to expand at a healthy rate during the reporting period.
The GDP growth rate was 3.2% for the 1996 calendar year and a very strong 5.8%
for the first quarter of 1997 -- the highest level since the fourth quarter of
1987.
- - These strong growth rates resulted in a focus on the apparent strength of the
economy, its potential impact on future inflation, and the potential for more
restrictive Federal Reserve policy.
- - At the time of this writing, the economy appears to be on track for moderate
growth, continuing the six-year expansion which began in 1991.
11
<PAGE> 18
U.S. UNEMPLOYMENT RATE
[LINE GRAPH]
<TABLE>
<S> <C>
Jan-90 5.3%
Feb-90 5.3%
Mar-90 5.2%
Apr-90 5.4%
May-90 5.3%
Jun-90 5.1%
Jul-90 5.4%
Aug-90 5.6%
Sep-90 5.7%
Oct-90 5.8%
Nov-90 6.0%
Dec-90 6.2%
Jan-91 6.3%
Feb-91 6.5%
Mar-91 6.8%
Apr-91 6.6%
May-91 6.8%
Jun-91 6.8%
Jul-91 6.7%
Aug-91 6.8%
Sep-91 6.8%
Oct-91 6.9%
Nov-91 6.9%
Dec-91 7.1%
Jan-92 7.1%
Feb-92 7.3%
Mar-92 7.3%
Apr-92 7.3%
May-92 7.4%
Jun-92 7.7%
Jul-92 7.6%
Aug-92 7.6%
Sep-92 7.5%
Oct-92 7.4%
Nov-92 7.3%
Dec-92 7.3%
Jan-93 7.1%
Feb-93 7.0%
Mar-93 7.0%
Apr-93 7.0%
May-93 6.9%
Jun-93 6.9%
Jul-93 6.8%
Aug-93 6.7%
Sep-93 6.7%
Oct-93 6.7%
Nov-93 6.5%
Dec-93 6.4%
Jan-94 6.7%
Feb-94 6.6%
Mar-94 6.5%
Apr-94 6.4%
May-94 6.0%
Jun-94 6.0%
Jul-94 6.1%
Aug-94 6.1%
Sep-94 5.9%
Oct-94 5.6%
Nov-94 5.6%
Dec-94 5.4%
Jan-95 5.6%
Feb-95 5.4%
Mar-95 5.8%
Apr-95 5.7%
May-95 5.7%
Jun-95 5.6%
Jul-95 5.7%
Aug-95 5.3%
Sep-95 5.6%
Oct-95 5.5%
Nov-95 5.6%
Dec-95 5.6%
Jan-96 5.8%
Feb-96 5.5%
Mar-96 5.6%
Apr-96 5.4%
May-96 5.6%
Jun-96 5.3%
Jul-96 5.4%
Aug-96 5.1%
Sep-96 5.2%
Oct-96 5.2%
Nov-96 5.3%
Dec-96 5.3%
Jan-97 5.4%
Feb-97 5.3%
Mar-97 5.2%
Apr-97 4.9%
</TABLE>
Source: Bloomberg
- - The unemployment rate during 1996 remained near its lows for the decade, and
declined further to 4.9% in April 1997, the lowest rate since December 1973.
Many economists have questioned how long such low levels of unemployment can
continue without generating inflationary pressures on wages and, ultimately,
prices.
12
<PAGE> 19
MEASURES OF INFLATION
[BAR GRAPH]
CPI & ECI
Consumer Price Index - All Items YOY % Change
Employment Cost Index SA (Includes both wages and salaries and benefits
components) - YOY % Change
RED = DATA INPUTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Monthly Quarterly
Consumer Price Employment Cost
Index - YOY % Index - YOY %
Change Change
- --------------------------------------------------------------------------------
<S> <C> <C>
Jan-90 5.2% 5.3%
Feb-90 5.3% 5.3%
Mar-90 5.2% 5.3%
Apr-90 4.7% 5.4%
May-90 4.4% 5.4%
Jun-90 4.7% 5.4%
Jul-90 4.8% 5.1%
Aug-90 5.6% 5.1%
Sep-90 6.2% 5.1%
Oct-90 6.3% 4.8%
Nov-90 6.3% 4.8%
Dec-90 6.1% 4.8%
Jan-91 5.7% 4.6%
Feb-91 5.3% 4.6%
Mar-91 4.9% 4.6%
Apr-91 4.9% 4.5%
May-91 5.0% 4.5%
Jun-91 4.7% 4.5%
Jul-91 4.4% 4.3%
Aug-91 3.8% 4.3%
Sep-91 3.4% 4.3%
Oct-91 2.9% 4.2%
Nov-91 3.0% 4.2%
Dec-91 3.1% 4.2%
Jan-92 2.6% 4.1%
Feb-92 2.8% 4.1%
Mar-92 3.2% 4.1%
Apr-92 3.2% 3.5%
May-92 3.0% 3.5%
Jun-92 3.1% 3.5%
Jul-92 3.2% 3.4%
Aug-92 3.1% 3.4%
Sep-92 3.0% 3.4%
Oct-92 3.2% 3.5%
Nov-92 3.0% 3.5%
Dec-92 2.9% 3.5%
Jan-93 3.3% 3.4%
Feb-93 3.2% 3.4%
Mar-93 3.1% 3.4%
Apr-93 3.2% 3.6%
May-93 3.2% 3.6%
Jun-93 3.0% 3.6%
Jul-93 2.8% 3.6%
Aug-93 2.8% 3.6%
Sep-93 2.7% 3.6%
Oct-93 2.8% 3.4%
Nov-93 2.7% 3.4%
Dec-93 2.7% 3.4%
Jan-94 2.5% 3.2%
Feb-94 2.5% 3.2%
Mar-94 2.5% 3.2%
Apr-94 2.4% 3.1%
May-94 2.3% 3.1%
Jun-94 2.5% 3.1%
Jul-94 2.8% 3.1%
Aug-94 2.9% 3.1%
Sep-94 3.0% 3.1%
Oct-94 2.6% 3.0%
Nov-94 2.7% 3.0%
Dec-94 2.7% 3.0%
Jan-95 2.8% 3.0%
Feb-95 2.9% 3.0%
Mar-95 2.9% 3.0%
Apr-95 3.1% 3.0%
May-95 3.2% 3.0%
Jun-95 3.0% 3.0%
Jul-95 2.8% 2.8%
Aug-95 2.6% 2.8%
Sep-95 2.5% 2.8%
Oct-95 2.8% 2.8%
Nov-95 2.6% 2.8%
Dec-95 2.5% 2.8%
Jan-96 2.7% 2.9%
Feb-96 2.7% 2.9%
Mar-96 2.8% 2.9%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.8% 2.9%
Jul-96 3.0% 2.9%
Aug-96 2.9% 2.9%
Sep-96 3.0% 2.9%
Oct-96 3.0% 3.0%
Nov-96 3.3% 3.0%
Dec-96 3.3% 3.0%
Jan-97 3.0% 2.8%
Feb-97 3.0% 2.8%
Mar-97 2.8% 2.8%
Apr-97 2.5%
- --------------------------------------------------------------------------------
</TABLE>
Source: Bloomberg L.P.
- - Both the Employment Cost Index and Consumer Price Index (CPI) remained in
check throughout 1996 as well as the first quarter of 1997, reflecting
continued low levels of inflation.
- - CPI rose 3.3% in 1996, the highest annual rate since 1990. However, the core
rate (which excludes the more volatile food and energy components) rose just
2.6%, the lowest rate since 1965.
- - The Federal Reserve has indicated its belief that the economy remains at risk
to inflation and that it is poised to act preemptively by raising interest
rates if necessary. The Federal Reserve did take action in March, increasing
the Fed Funds Rate by 0.25% to 5.50%.
13
<PAGE> 20
TOTAL RETURN OF A HYPOTHETICAL DOLLAR INVESTED
IN FOUR BROAD MARKET INDICES
[LINE GRAPH]
<TABLE>
<CAPTION>
Growth of a $ Investment
----------------------------------------------------
Lehman
MF
Schwab Schwab General
Small Cap International US Govt.
S&P 500 Index Index Index
------- --------- ------------- --------
<S> <C> <C> <C> <C>
$ 1.000 $ 1.000 $ 1.000 $ 1.000
Nov-96 $ 1.076 $ 1.040 $ 1.046 $ 1.017
Dec-96 $ 1.054 $ 1.059 $ 1.037 $ 1.007
Jan-97 $ 1.120 $ 1.084 $ 1.003 $ 1.008
Feb-97 $ 1.129 $ 1.058 $ 1.019 $ 1.010
Mar-97 $ 1.083 $ 1.006 $ 1.026 $ 0.999
Apr-97 $ 1.147 $ 1.009 $ 1.037 $ 1.013
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL VALUE AND
INVESTMENT RETURNS WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Total return assumes
reinvestment of all dividend and capital gain distributions. Indices are
unmanaged, and unlike funds, do not reflect advisory and other fees associated
with an investment in funds. Investors cannot invest in an index directly.
- - Large-cap domestic stocks, as represented by the S&P 500 Index, were clearly
the strongest performing asset class -- achieving a 14.71% return during the
six-month reporting period.
- - Although positive, domestic small-cap stocks (as represented by the Schwab
Small-Cap Index) and International stocks (as represented by the Schwab
International Index) both lagged the S&P 500 Index significantly, with
six-month returns of 0.92% and 3.74%, respectively.
- - The six-month total return for U.S. Government bonds (as represented by the
Lehman Brothers General U.S. Government Index) was 1.32%.
14
<PAGE> 21
S&P 500* PRICE/EARNINGS RATIO
[LINE GRAPH]
<TABLE>
<CAPTION>
S&P 500 Price Earnings Ratio
<S> <C>
Jan-90 14.37
Feb-90 14.21
Mar-90 14.77
Apr-90 14.82
May-90 15.84
Jun-90 16.66
Jul-90 16.65
Aug-90 15.57
Sep-90 14.9
Oct-90 14.36
Nov-90 14.59
Dec-90 15.19
Jan-91 14.95
Feb-91 16.82
Mar-91 17.48
Apr-91 17.85
May-91 17.92
Jun-91 17.96
Jul-91 18.07
Aug-91 19.72
Sep-91 19.88
Oct-91 19.92
Nov-91 21.02
Dec-91 21.85
Jan-92 23.35
Feb-92 23.83
Mar-92 25.45
Apr-92 25.51
May-92 25.71
Jun-92 25.08
Jul-92 25.61
Aug-92 25.5
Sep-92 24.37
Oct-92 23.94
Nov-92 24.08
Dec-92 24.01
Jan-93 24.2
Feb-93 24.25
Mar-93 24.22
Apr-93 23.2
May-93 23.21
Jun-93 22.58
Jul-93 22.52
Aug-93 23.02
Sep-93 23.74
Oct-93 23.97
Nov-93 22.55
Dec-93 23.55
Jan-94 22.98
Feb-94 21.17
Mar-94 20.34
Apr-94 20.1
May-94 20.16
Jun-94 19.76
Jul-94 18.64
Aug-94 18.9
Sep-94 18.26
Oct-94 17.55
Nov-94 16.58
Dec-94 16.98
Jan-95 16.23
Feb-95 16.2
Mar-95 16.5
Apr-95 16.02
May-95 16.43
Jun-95 16.82
Jul-95 16.55
Aug-95 16.18
Sep-95 16.86
Oct-95 16.18
Nov-95 17.14
Dec-95 17.41
Jan-96 18.11
Feb-96 18.56
Mar-96 18.94
Apr-96 19.16
May-96 19.48
Jun-96 19.3
Jul-96 18.31
Aug-96 18.62
Sep-96 19.75
Oct-96 19.6
Nov-96 21.05
Dec-96 20.7
Jan-97 20.55
Feb-97 20.98
Mar-97 19.87
Apr-97 20.24
</TABLE>
Source: Bloomberg L.P.
The price/earnings ratio, also known as a multiple, is the price of a stock
divided by its earnings per share and generally indicates how much investors are
willing to pay for a company's earning potential.
- - The price/earnings ratio for the S&P 500 Index was 20 at the close of the
reporting period, well above its 30-year mean of 15, but below its 1991 and
1987 highs of 26 and 22, respectively.
- - Based on other traditional measures such as the price-to-book value ratio or
dividend yield, the U.S. stock market valuation reached historical highs
during the reporting period.
15
<PAGE> 22
QUESTIONS TO THE PORTFOLIO MANAGEMENT TEAM
Q. HOW DID THE PERFORMANCE OF THE THREE ASSET DIRECTOR(R) FUNDS COMPARE TO THAT
OF THE S&P 500(R) INDEX AND THE LEHMAN BROTHERS GENERAL U.S. GOVERNMENT INDEX?
A. As shown in the Market Overview section, large-cap domestic equities
represented the strongest performing asset class during the reporting period.
Consequently, the Funds with the highest allocations to equities (and in
particular, to domestic large-cap equities) had the strongest performance during
the period. However, there may be future periods in which the short-term results
are reversed because bonds may outperform equities. Keep in mind that the target
equity allocations for the Asset Director Funds, which include domestic
large-cap, domestic small-cap, and international stocks, are 80% for the High
Growth Fund, 60% for the Balanced Growth Fund, and 40% for the Conservative
Growth Fund.
The table below shows the total returns for the three Asset Director Funds, the
S&P 500 Index, and the Lehman Brothers General U.S. Government Index for the
six-month reporting period ended April 30, 1997. The chart on the following page
shows these returns since the Funds' inception on November 20, 1995. The
relative performances of the three Funds remain consistent with our long-term
expectations.
<TABLE>
<CAPTION>
==================================================
Six-Month Total Returns
as of 4/30/97
- --------------------------------------------------
<S> <C>
S&P 500 Index 14.71%
- --------------------------------------------------
High Growth Fund 6.31%
- --------------------------------------------------
Balanced Growth Fund 4.85%
- --------------------------------------------------
Conservative Growth Fund 3.58%
- --------------------------------------------------
Lehman Brothers General
- --------------------------------------------------
U.S. Government Index 1.32%
- --------------------------------------------------
</TABLE>
16
<PAGE> 23
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN THE SCHWAB ASSET DIRECTOR(R) FUNDS,
S&P 500(R) INDEX AND THE LEHMAN BROTHERS
GENERAL U.S. GOVERNMENT INDEX
SCHWAB ASSET DIRECTOR FUNDS AVERAGE ANNUAL
TOTAL RETURNS THROUGH APRIL 30, 1997
<TABLE>
<CAPTION>
One Year Since Inception
<S> <C> <C>
High Growth Fund 11.43% 13.66%
Balanced Growth Fund 9.82% 10.92%
Conservative Growth Fund 8.40% 8.17%
</TABLE>
Schwab Asset Director - High Growth $12,038
Schwab Asset Director - Balanced Growth $11,620
Schwab Asset Director - Conservative Growth $11,206
S&P 500 Index $13,776
Lehman Brothers General U.S. Govt. Index $10,569
*Inception Date
SCHWAB ASSET DIRECTOR - HIGH GROWTH FUND
Hypothetical Growth Chart
<TABLE>
<CAPTION>
Date Schwab AD-High Growth S&P 500 LB Gov't Bond Index
<S> <C> <C> <C>
17-Nov-95 $10,000 $10,000 $10,000
Nov-95 $10,080 $10,104 $10,078
Dec-95 $10,292 $10,299 $10,221
Jan-96 $10,442 $10,649 $10,283
Feb-96 $10,533 $10,748 $10,074
Mar-96 $10,623 $10,852 $ 9,990
Apr-96 $10,803 $11,011 $ 9,926
May-96 $10,954 $11,294 $ 9,909
Jun-96 $10,934 $11,337 $10,037
Jul-96 $10,523 $10,836 $10,062
Aug-96 $10,733 $11,064 $10,040
Sep-96 $11,184 $11,686 $10,207
Oct-96 $11,324 $12,009 $10,431
Nov-96 $11,896 $12,917 $10,613
Dec-96 $11,784 $12,661 $10,505
Jan-97 $12,008 $13,451 $10,516
Feb-97 $12,028 $13,557 $10,531
Mar-97 $11,692 $13,001 $10,419
Apr-97 $12,038 $13,776 $10,569
</TABLE>
SCHWAB ASSET DIRECTOR - BALANCED GROWTH FUND
Hypothetical Growth Chart
<TABLE>
<CAPTION>
Date Schwab AD-Balanced Growth S&P 500 LB Gov't Bond Index
<S> <C> <C> <C>
17-Nov-95 $10,000 $10,000 $10,000
Nov-95 $10,080 $10,104 $10,078
Dec-95 $10,270 $10,299 $10,221
Jan-96 $10,390 $10,649 $10,283
Feb-96 $10,410 $10,748 $10,074
Mar-96 $10,460 $10,852 $ 9,990
Apr-96 $10,581 $11,011 $ 9,926
May-96 $10,691 $11,294 $ 9,909
Jun-96 $10,711 $11,337 $10,037
Jul-96 $10,410 $10,836 $10,062
Aug-96 $10,551 $11,064 $10,040
Sep-96 $10,912 $11,686 $10,207
Oct-96 $11,082 $12,009 $10,431
Nov-96 $11,534 $12,917 $10,613
Dec-96 $11,415 $12,661 $10,505
Jan-97 $11,589 $13,451 $10,516
Feb-97 $11,589 $13,557 $10,531
Mar-97 $11,334 $13,001 $10,419
Apr-97 $11,620 $13,776 $10,569
</TABLE>
SCHWAB ASSET DIRECTOR - CONSERVATIVE GROWTH FUND
Hypothetical Growth Chart
<TABLE>
<CAPTION>
Date Schwab AD-Conservative Growth S&P 500 LB Gov't Bond Index
<S> <C> <C> <C>
17-Nov-95 $10,000 $10,000 $10,000
Nov-95 $10,080 $10,104 $10,078
Dec-95 $10,237 $10,299 $10,221
Jan-96 $10,337 $10,649 $10,283
Feb-96 $10,297 $10,748 $10,074
Mar-96 $10,287 $10,852 $ 9,990
Apr-96 $10,337 $11,011 $ 9,926
May-96 $10,378 $11,294 $ 9,909
Jun-96 $10,439 $11,337 $10,037
Jul-96 $10,256 $10,836 $10,062
Aug-96 $10,337 $11,064 $10,040
Sep-96 $10,643 $11,686 $10,207
Oct-96 $10,818 $12,009 $10,431
Nov-96 $11,179 $12,917 $10,613
Dec-96 $11,070 $12,661 $10,505
Jan-97 $11,174 $13,451 $10,516
Feb-97 $11,184 $13,557 $10,531
Mar-97 $10,965 $13,001 $10,419
Apr-97 $11,206 $13,776 $10,569
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PRINCIPAL VALUE AND
INVESTMENT RETURNS WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. The performance graph
compares a hypothetical $10,000 investment in the Schwab Asset Director Funds,
since inception, with a hypothetical investment in the S&P 500 Index and the
Lehman Brothers General U.S. Government Index. Total return assumes reinvestment
of all dividends and capital gain distributions, if any. Indices are unmanaged,
and unlike the Fund, do not reflect advisory and other fees associated with an
investment in the Fund. Investors cannot invest in an index directly. The
Investment Manager and Schwab waived a portion of their fees during the period,
and have guaranteed that maximum total operating expenses will not exceed 0.89%
through a least 2/28/96. Without fee waivers and guarantees, the Funds' total
returns for each period would have been lower.
17
<PAGE> 24
Q. WHAT ASSET MIX CHANGES WERE MADE DURING THE SIX-MONTH REPORTING PERIOD? WHY?
A. The charts on the following page show the target and actual asset mixes for
the three Funds during the six-month reporting period. The actual asset mixes of
the Funds remained very close to the target mixes throughout the period.
During the first week of November, the Funds were slightly overweighted in bonds
and slightly underweighted in stocks, a position the Funds had maintained since
September 1996. This position reflected a minor bias that the expected return
for bonds was favorable relative to that of stocks and cash. The fall in bond
yields in September and November prompted a shift in early November to a neutral
stock position, a slight underweighting in bonds, and a slight overweighting in
cash. Then, in early January, following a moderate rebound in long-term bond
yields and a continued climb in stock valuations, the Funds returned to the same
weightings used at the beginning of the fiscal year--slightly overweighted in
bonds and slightly underweighted in stocks. These weightings were maintained
throughout the end of the reporting period.
18
<PAGE> 25
[Bar chart comparing High Growth Fund]
[Bar chart comparing Balanced Growth Fund]
[Bar chart comparing Conservative Growth Fund]
<TABLE>
<CAPTION>
Target Portfolio Allocations
<S> <C> <C> <C> <C> <C> <S> <C> <C> <C> <C> <C>
20% 10% 10% 20% 10% 10%
80% 10% 10% 10% 45% 5% 80% 20% 15% 15% 25% 5%
<CAPTION>
Conservative Growth Balanced Growth
---------------------------------------------------- ----------------------------------------------------
Large Small Large Small
DATE Cap Cap International Bonds Cash Total DATE Cap Cap International Bonds Cash Total
---------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <S> <C> <C> <C> <C> <C> <C>
4/7/97 18% 10% 10% 57% 5% 100% 4/7/97 28% 15% 15% 37% 5% 100%
4/8/97 18% 10% 10% 57% 5% 100% 4/8/97 28% 15% 15% 37% 5% 100%
4/9/97 18% 10% 10% 57% 5% 100% 4/9/97 28% 15% 15% 37% 5% 100%
4/10/97 18% 10% 10% 57% 5% 100% 4/10/97 28% 15% 15% 37% 5% 100%
4/11/97 18% 10% 10% 57% 5% 100% 4/11/97 28% 15% 15% 37% 5% 100%
4/14/97 18% 10% 10% 57% 5% 100% 4/14/97 28% 15% 15% 37% 5% 100%
4/15/97 18% 10% 10% 57% 5% 100% 4/15/97 28% 15% 15% 37% 5% 100%
4/16/97 18% 10% 10% 57% 5% 100% 4/16/97 28% 15% 15% 37% 5% 100%
4/17/97 18% 10% 10% 57% 5% 100% 4/17/97 28% 15% 15% 37% 5% 100%
4/18/97 18% 10% 10% 57% 5% 100% 4/18/97 28% 15% 15% 37% 5% 100%
4/21/97 18% 10% 10% 57% 5% 100% 4/21/97 28% 15% 15% 37% 5% 100%
4/22/97 18% 10% 10% 57% 5% 100% 4/22/97 28% 15% 15% 37% 5% 100%
4/23/97 18% 10% 10% 57% 5% 100% 4/23/97 28% 15% 15% 37% 5% 100%
4/24/97 18% 10% 10% 57% 5% 100% 4/24/97 28% 15% 15% 37% 5% 100%
4/25/97 18% 10% 10% 57% 5% 100% 4/25/97 28% 15% 15% 37% 5% 100%
4/28/97 18% 10% 10% 57% 5% 100% 4/28/97 28% 15% 15% 37% 5% 100%
4/29/97 18% 10% 10% 57% 5% 100% 4/29/97 28% 15% 15% 37% 5% 100%
4/30/97 18% 10% 10% 57% 5% 100% 4/30/97 28% 15% 15% 37% 5% 100%
1/20/97 18% 10% 10% 57% 5% 100% 1/20/97 28% 15% 15% 37% 5% 100%
1/21/97 18% 10% 10% 57% 5% 100% 1/21/97 28% 15% 15% 37% 5% 100%
1/22/97 18% 10% 10% 57% 5% 100% 1/22/97 28% 15% 15% 37% 5% 100%
1/23/97 18% 10% 10% 57% 5% 100% 1/23/97 28% 15% 15% 37% 5% 100%
1/24/97 18% 10% 10% 57% 5% 100% 1/24/97 28% 15% 15% 37% 5% 100%
1/27/97 18% 10% 10% 57% 5% 100% 1/27/97 28% 15% 15% 37% 5% 100%
1/28/97 18% 10% 10% 57% 5% 100% 1/28/97 28% 15% 15% 37% 5% 100%
1/29/97 18% 10% 10% 57% 5% 100% 1/29/97 28% 15% 15% 37% 5% 100%
1/30/97 18% 10% 10% 57% 5% 100% 1/30/97 28% 15% 15% 37% 5% 100%
1/31/97 18% 10% 10% 57% 5% 100% 1/31/97 28% 15% 15% 37% 5% 100%
2/3/97 18% 10% 10% 57% 5% 100% 2/3/97 28% 15% 15% 37% 5% 100%
2/4/97 18% 10% 10% 57% 5% 100% 2/4/97 28% 15% 15% 37% 5% 100%
2/5/97 18% 10% 10% 57% 5% 100% 2/5/97 28% 15% 15% 37% 5% 100%
2/6/97 18% 10% 10% 57% 5% 100% 2/6/97 28% 15% 15% 37% 5% 100%
2/7/97 18% 10% 10% 57% 5% 100% 2/7/97 28% 15% 15% 37% 5% 100%
2/10/97 18% 10% 10% 57% 5% 100% 2/10/97 28% 15% 15% 37% 5% 100%
2/11/97 18% 10% 10% 57% 5% 100% 2/11/97 28% 15% 15% 37% 5% 100%
2/12/97 18% 10% 10% 57% 5% 100% 2/12/97 28% 15% 15% 37% 5% 100%
2/13/97 18% 10% 10% 57% 5% 100% 2/13/97 28% 15% 15% 37% 5% 100%
2/14/97 18% 10% 10% 57% 5% 100% 2/14/97 28% 15% 15% 37% 5% 100%
2/18/97 18% 10% 10% 57% 5% 100% 2/18/97 28% 15% 15% 37% 5% 100%
2/19/97 18% 10% 10% 57% 5% 100% 2/19/97 28% 15% 15% 37% 5% 100%
2/20/97 18% 10% 10% 57% 5% 100% 2/20/97 28% 15% 15% 37% 5% 100%
2/21/97 18% 10% 10% 57% 5% 100% 2/21/97 28% 15% 15% 37% 5% 100%
2/24/97 18% 10% 10% 57% 5% 100% 2/24/97 28% 15% 15% 37% 5% 100%
2/25/97 18% 10% 10% 57% 5% 100% 2/25/97 28% 15% 15% 37% 5% 100%
2/26/97 18% 10% 10% 57% 5% 100% 2/26/97 28% 15% 15% 37% 5% 100%
2/27/97 18% 10% 10% 57% 5% 100% 2/27/97 28% 15% 15% 37% 5% 100%
2/28/97 18% 10% 10% 57% 5% 100% 2/28/97 28% 15% 15% 37% 5% 100%
3/3/97 18% 10% 10% 57% 5% 100% 3/3/97 28% 15% 15% 37% 5% 100%
3/4/97 18% 10% 10% 57% 5% 100% 3/4/97 28% 15% 15% 37% 5% 100%
3/5/97 18% 10% 10% 57% 5% 100% 3/5/97 28% 15% 15% 37% 5% 100%
3/6/97 18% 10% 10% 57% 5% 100% 3/6/97 28% 15% 15% 37% 5% 100%
3/7/97 18% 10% 10% 57% 5% 100% 3/7/97 28% 15% 15% 37% 5% 100%
3/10/97 18% 10% 10% 57% 5% 100% 3/10/97 28% 15% 15% 37% 5% 100%
3/11/97 18% 10% 10% 57% 5% 100% 3/11/97 28% 15% 15% 37% 5% 100%
3/12/97 18% 10% 10% 57% 5% 100% 3/12/97 28% 15% 15% 37% 5% 100%
3/13/97 18% 10% 10% 57% 5% 100% 3/13/97 28% 15% 15% 37% 5% 100%
3/14/97 18% 10% 10% 57% 5% 100% 3/14/97 28% 15% 15% 37% 5% 100%
3/17/97 18% 10% 10% 57% 5% 100% 3/17/97 28% 15% 15% 37% 5% 100%
3/18/97 18% 10% 10% 57% 5% 100% 3/18/97 28% 15% 15% 37% 5% 100%
3/19/97 18% 10% 10% 57% 5% 100% 3/19/97 28% 15% 15% 37% 5% 100%
3/20/97 18% 10% 10% 57% 5% 100% 3/20/97 28% 15% 15% 37% 5% 100%
3/21/97 18% 10% 10% 57% 5% 100% 3/21/97 28% 15% 15% 37% 5% 100%
3/24/97 18% 10% 10% 57% 5% 100% 3/24/97 28% 15% 15% 37% 5% 100%
3/25/97 18% 10% 10% 57% 5% 100% 3/25/97 28% 15% 15% 37% 5% 100%
3/26/97 18% 10% 10% 57% 5% 100% 3/26/97 28% 15% 15% 37% 5% 100%
3/27/97 18% 10% 10% 57% 5% 100% 3/27/97 28% 15% 15% 37% 5% 100%
3/31/97 18% 10% 10% 57% 5% 100% 3/31/97 28% 15% 15% 37% 5% 100%
4/1/97 18% 10% 10% 57% 5% 100% 4/1/97 28% 15% 15% 37% 5% 100%
4/2/97 18% 10% 10% 57% 5% 100% 4/2/97 28% 15% 15% 37% 5% 100%
4/3/97 18% 10% 10% 57% 5% 100% 4/3/97 28% 15% 15% 37% 5% 100%
4/4/97 18% 10% 10% 57% 5% 100% 4/4/97 28% 15% 15% 37% 5% 100%
11/1/96 18% 10% 10% 57% 5% 100% 11/1/96 28% 15% 15% 37% 5% 100%
11/4/96 18% 10% 10% 57% 5% 100% 11/4/96 28% 15% 15% 37% 5% 100%
11/5/96 18% 10% 10% 57% 5% 100% 11/5/96 28% 15% 15% 37% 5% 100%
11/6/96 18% 10% 10% 57% 5% 100% 11/6/96 28% 15% 15% 37% 5% 100%
11/7/96 18% 10% 10% 57% 5% 100% 11/7/96 28% 15% 15% 37% 5% 100%
11/8/96 18% 10% 10% 57% 5% 100% 11/8/96 28% 15% 15% 37% 5% 100%
11/11/96 20% 10% 10% 53% 7% 100% 11/11/96 30% 15% 15% 33% 7% 100%
11/12/96 20% 10% 10% 53% 7% 100% 11/12/96 30% 15% 15% 33% 7% 100%
11/13/96 20% 10% 10% 53% 7% 100% 11/13/96 30% 15% 15% 33% 7% 100%
11/14/96 20% 10% 10% 53% 7% 100% 11/14/96 30% 15% 15% 33% 7% 100%
11/15/96 20% 10% 10% 53% 7% 100% 11/15/96 30% 15% 15% 33% 7% 100%
11/18/96 20% 10% 10% 53% 7% 100% 11/18/96 30% 15% 15% 33% 7% 100%
11/19/96 20% 10% 10% 53% 7% 100% 11/19/96 30% 15% 15% 33% 7% 100%
11/20/96 20% 10% 10% 53% 7% 100% 11/20/96 30% 15% 15% 33% 7% 100%
11/21/96 20% 10% 10% 53% 7% 100% 11/21/96 30% 15% 15% 33% 7% 100%
11/22/96 20% 10% 10% 53% 7% 100% 11/22/96 30% 15% 15% 33% 7% 100%
11/25/96 20% 10% 10% 53% 7% 100% 11/25/96 30% 15% 15% 33% 7% 100%
11/26/96 20% 10% 10% 53% 7% 100% 11/26/96 30% 15% 15% 33% 7% 100%
11/27/96 20% 10% 10% 53% 7% 100% 11/27/96 30% 15% 15% 33% 7% 100%
11/29/96 20% 10% 10% 53% 7% 100% 11/29/96 30% 15% 15% 33% 7% 100%
12/2/96 20% 10% 10% 53% 7% 100% 12/2/96 30% 15% 15% 33% 7% 100%
12/3/96 20% 10% 10% 53% 7% 100% 12/3/96 30% 15% 15% 33% 7% 100%
12/4/96 20% 10% 10% 53% 7% 100% 12/4/96 30% 15% 15% 33% 7% 100%
12/5/96 20% 10% 10% 53% 7% 100% 12/5/96 30% 15% 15% 33% 7% 100%
12/6/96 20% 10% 10% 53% 7% 100% 12/6/96 30% 15% 15% 33% 7% 100%
12/9/96 20% 10% 10% 53% 7% 100% 12/9/96 30% 15% 15% 33% 7% 100%
12/10/96 20% 10% 10% 53% 7% 100% 12/10/96 30% 15% 15% 33% 7% 100%
12/11/96 20% 10% 10% 53% 7% 100% 12/11/96 30% 15% 15% 33% 7% 100%
12/12/96 20% 10% 10% 53% 7% 100% 12/12/96 30% 15% 15% 33% 7% 100%
12/13/96 20% 10% 10% 53% 7% 100% 12/13/96 30% 15% 15% 33% 7% 100%
12/16/96 20% 10% 10% 53% 7% 100% 12/16/96 30% 15% 15% 33% 7% 100%
12/17/96 20% 10% 10% 53% 7% 100% 12/17/96 30% 15% 15% 33% 7% 100%
12/18/96 20% 10% 10% 53% 7% 100% 12/18/96 30% 15% 15% 33% 7% 100%
12/19/96 20% 10% 10% 53% 7% 100% 12/19/96 30% 15% 15% 33% 7% 100%
12/20/96 20% 10% 10% 53% 7% 100% 12/20/96 30% 15% 15% 33% 7% 100%
12/23/96 20% 10% 10% 53% 7% 100% 12/23/96 30% 15% 15% 33% 7% 100%
12/24/96 20% 10% 10% 53% 7% 100% 12/24/96 30% 15% 15% 33% 7% 100%
12/26/96 20% 10% 10% 53% 7% 100% 12/26/96 30% 15% 15% 33% 7% 100%
12/27/96 20% 10% 10% 53% 7% 100% 12/27/96 30% 15% 15% 33% 7% 100%
12/30/96 20% 10% 10% 53% 7% 100% 12/30/06 30% 15% 15% 33% 7% 100%
12/31/96 20% 10% 10% 53% 7% 100% 12/31/96 30% 15% 15% 33% 7% 100%
1/2/97 20% 10% 10% 53% 7% 100% 1/2/97 30% 15% 15% 33% 7% 100%
1/3/97 18% 10% 10% 57% 5% 100% 1/3/97 28% 15% 15% 37% 5% 100%
1/6/97 18% 10% 10% 57% 5% 100% 1/6/97 28% 15% 15% 37% 5% 100%
1/7/97 18% 10% 10% 57% 5% 100% 1/7/97 28% 15% 15% 37% 5% 100%
1/8/97 18% 10% 10% 57% 5% 100% 1/8/97 28% 15% 15% 37% 5% 100%
1/9/97 18% 10% 10% 57% 5% 100% 1/9/97 28% 15% 15% 37% 5% 100%
1/10/97 18% 10% 10% 57% 5% 100% 1/10/97 28% 15% 15% 37% 5% 100%
1/13/97 18% 10% 10% 57% 5% 100% 1/13/97 28% 15% 15% 37% 5% 100%
1/14/97 18% 10% 10% 57% 5% 100% 1/14/97 28% 15% 15% 37% 5% 100%
1/15/97 18% 10% 10% 57% 5% 100% 1/15/97 28% 15% 15% 37% 5% 100%
1/16/97 18% 10% 10% 57% 5% 100% 1/16/97 28% 15% 15% 37% 5% 100%
1/17/97 18% 10% 10% 57% 5% 100% 1/17/97 28% 15% 15% 37% 5% 100%
<CAPTION>
Target Portfolio Allocations
<S> <C> <C> <C> <C> <C>
30% 15% 15%
70% 25% 20% 20% 0% 5%
<CAPTION>
High Growth
----------------------------------------------------
Large Small
DATE Cap Cap International Bonds Cash Total
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4/7/97 37% 20% 20% 18% 5% 100%
4/8/97 37% 20% 20% 18% 5% 100%
4/9/97 37% 20% 20% 18% 5% 100%
4/10/97 37% 20% 20% 18% 5% 100%
4/11/97 37% 20% 20% 18% 5% 100%
4/14/97 37% 20% 20% 18% 5% 100%
4/15/97 37% 20% 20% 18% 5% 100%
4/16/97 37% 20% 20% 18% 5% 100%
4/17/97 37% 20% 20% 18% 5% 100%
4/18/97 37% 20% 20% 18% 5% 100%
4/21/97 37% 20% 20% 18% 5% 100%
4/22/97 37% 20% 20% 18% 5% 100%
4/23/97 37% 20% 20% 18% 5% 100%
4/24/97 37% 20% 20% 18% 5% 100%
4/25/97 37% 20% 20% 18% 5% 100%
4/28/97 37% 20% 20% 18% 5% 100%
4/29/97 37% 20% 20% 18% 5% 100%
4/30/97 37% 20% 20% 18% 5% 100%
1/20/97 37% 20% 20% 18% 5% 100%
1/21/97 37% 20% 20% 18% 5% 100%
1/22/97 37% 20% 20% 18% 5% 100%
1/23/97 37% 20% 20% 18% 5% 100%
1/24/97 37% 20% 20% 18% 5% 100%
1/27/97 37% 20% 20% 18% 5% 100%
1/28/97 37% 20% 20% 18% 5% 100%
1/29/97 37% 20% 20% 18% 5% 100%
1/30/97 37% 20% 20% 18% 5% 100%
1/31/97 37% 20% 20% 18% 5% 100%
2/3/97 37% 20% 20% 18% 5% 100%
2/4/97 37% 20% 20% 18% 5% 100%
2/5/97 37% 20% 20% 18% 5% 100%
2/6/97 37% 20% 20% 18% 5% 100%
2/7/97 37% 20% 20% 18% 5% 100%
2/10/97 37% 20% 20% 18% 5% 100%
2/11/97 37% 20% 20% 18% 5% 100%
2/12/97 37% 20% 20% 18% 5% 100%
2/13/97 37% 20% 20% 18% 5% 100%
2/14/97 37% 20% 20% 18% 5% 100%
2/18/97 37% 20% 20% 18% 5% 100%
2/19/97 37% 20% 20% 18% 5% 100%
2/20/97 37% 20% 20% 18% 5% 100%
2/21/97 37% 20% 20% 18% 5% 100%
2/24/97 37% 20% 20% 18% 5% 100%
2/25/97 37% 20% 20% 18% 5% 100%
2/26/97 37% 20% 20% 18% 5% 100%
2/27/97 37% 20% 20% 18% 5% 100%
2/28/97 37% 20% 20% 18% 5% 100%
3/3/97 37% 20% 20% 18% 5% 100%
3/4/97 37% 20% 20% 18% 5% 100%
3/5/97 37% 20% 20% 18% 5% 100%
3/6/97 37% 20% 20% 18% 5% 100%
3/7/97 37% 20% 20% 18% 5% 100%
3/10/97 37% 20% 20% 18% 5% 100%
3/11/97 37% 20% 20% 18% 5% 100%
3/12/97 37% 20% 20% 18% 5% 100%
3/13/97 37% 20% 20% 18% 5% 100%
3/14/97 37% 20% 20% 18% 5% 100%
3/17/97 37% 20% 20% 18% 5% 100%
3/18/97 37% 20% 20% 18% 5% 100%
3/19/97 37% 20% 20% 18% 5% 100%
3/20/97 37% 20% 20% 18% 5% 100%
3/21/97 37% 20% 20% 18% 5% 100%
3/24/97 37% 20% 20% 18% 5% 100%
3/25/97 37% 20% 20% 18% 5% 100%
3/26/97 37% 20% 20% 18% 5% 100%
3/27/97 37% 20% 20% 18% 5% 100%
3/31/97 37% 20% 20% 18% 5% 100%
4/1/97 37% 20% 20% 18% 5% 100%
4/2/97 37% 20% 20% 18% 5% 100%
4/3/97 37% 20% 20% 18% 5% 100%
4/4/97 37% 20% 20% 18% 5% 100%
11/1/96 37% 20% 20% 18% 5% 100%
11/4/96 37% 20% 20% 18% 5% 100%
11/5/96 37% 20% 20% 18% 5% 100%
11/6/96 37% 20% 20% 18% 5% 100%
11/7/96 37% 20% 20% 18% 5% 100%
11/8/96 37% 20% 20% 18% 5% 100%
11/11/96 40% 20% 20% 12% 8% 100%
11/12/96 40% 20% 20% 12% 8% 100%
11/13/96 40% 20% 20% 12% 8% 100%
11/14/96 40% 20% 20% 12% 8% 100%
11/15/96 40% 20% 20% 12% 8% 100%
11/18/96 40% 20% 20% 12% 8% 100%
11/19/96 40% 20% 20% 12% 8% 100%
11/20/96 40% 20% 20% 12% 8% 100%
11/21/96 40% 20% 20% 12% 8% 100%
11/22/96 40% 20% 20% 12% 8% 100%
11/25/96 40% 20% 20% 12% 8% 100%
11/26/96 40% 20% 20% 12% 8% 100%
11/27/96 40% 20% 20% 12% 8% 100%
11/29/96 40% 20% 20% 12% 8% 100%
12/2/96 40% 20% 20% 12% 8% 100%
12/3/96 40% 20% 20% 12% 8% 100%
12/4/96 40% 20% 20% 12% 8% 100%
12/5/96 40% 20% 20% 12% 8% 100%
12/6/96 40% 20% 20% 12% 8% 100%
12/9/96 40% 20% 20% 12% 8% 100%
12/10/96 40% 20% 20% 12% 8% 100%
12/11/96 40% 20% 20% 12% 8% 100%
12/12/96 40% 20% 20% 12% 8% 100%
12/13/96 40% 20% 20% 12% 8% 100%
12/16/96 40% 20% 20% 12% 8% 100%
12/17/96 40% 20% 20% 12% 8% 100%
12/18/96 40% 20% 20% 12% 8% 100%
12/19/96 40% 20% 20% 12% 8% 100%
12/20/96 40% 20% 20% 12% 8% 100%
12/23/96 40% 20% 20% 12% 8% 100%
12/24/96 40% 20% 20% 12% 8% 100%
12/26/96 40% 20% 20% 12% 8% 100%
12/27/96 40% 20% 20% 12% 8% 100%
12/30/96 40% 20% 20% 12% 8% 100%
12/31/96 40% 20% 20% 12% 8% 100%
1/2/97 40% 20% 20% 12% 8% 100%
1/3/97 37% 20% 20% 18% 5% 100%
1/6/97 37% 20% 20% 18% 5% 100%
1/7/97 37% 20% 20% 18% 5% 100%
1/8/97 37% 20% 20% 18% 5% 100%
1/9/97 37% 20% 20% 18% 5% 100%
1/10/97 37% 20% 20% 18% 5% 100%
1/13/97 37% 20% 20% 18% 5% 100%
1/14/97 37% 20% 20% 18% 5% 100%
1/15/97 37% 20% 20% 18% 5% 100%
1/16/97 37% 20% 20% 18% 5% 100%
1/17/97 37% 20% 20% 18% 5% 100%
</TABLE>
19
<PAGE> 26
Q. HOW ARE SECURITIES SELECTED FOR THE ASSET DIRECTOR(R) FUNDS?
A. One of the primary principles of asset allocation (the strategy used by the
Asset Director Funds) is that the appropriation of assets among different asset
classes (such as stocks, bonds, and cash equivalents) is a much more significant
determinant of long-term investment performance than individual security
selection.
Perhaps the most effective way to ensure that a particular portfolio has
performance and risk characteristics that match those of its component asset
classes is to use an indexing strategy. The Asset Director Funds use indexing
techniques to try to track the investment returns of the asset classes in which
they invest. For example, the large-cap domestic stock component of the Funds is
managed very much like our Schwab S&P 500 Fund. Most, if not all, of the S&P
500(R) Index stocks are held by the Funds and in proportion to their relative
weightings in the Index. For the small-cap stock and international stock
components, where economies of scale have a significant impact on trading costs,
the Asset Director Funds achieve their target asset class weightings by
investing in both the Schwab Small-Cap Index Fund(R) and the Schwab
International Index Fund(R). For the bond asset class, where the indices we seek
to replicate include thousands of issues, we utilize a sampling strategy
designed to replicate the return and risk characteristics of the indices we seek
to track. Combined, these techniques provide the Funds with a low-cost
investment strategy.
The asset classes in which the Asset Director Funds invest and the indices the
Funds seek to track are as follows:
<TABLE>
<S> <C>
Large-Company Stock S&P 500 Index
- --------------------------------------------------------------
Small-Company Stock Schwab Small-Cap Index(R)
- --------------------------------------------------------------
International Stock Schwab International Index Fund
- --------------------------------------------------------------
Bonds Lehman Brothers General
U.S. Government Index and
Lehman Brothers 20+ Treasury Index
- --------------------------------------------------------------
</TABLE>
20
<PAGE> 27
Q. HOW DO THE ASSET DIRECTOR(R) FUNDS ATTEMPT TO REDUCE VOLATILITY OVER THE LONG
TERM?
A. The Asset Director Funds attempt to reduce two types of volatility, or risk--
individual asset class risk and total portfolio risk. Although individual asset
class risk is important, total portfolio risk generally has the greatest impact
in determining whether a given mix of investments is appropriate for any
particular investor.
INDIVIDUAL ASSET CLASS RISK is the risk inherent in investing in a single asset
class. Although there are many ways of measuring risk, or volatility, a
statistical calculation called standard deviation is the most commonly used
measure. The higher the standard deviation, the wider the range of expected
outcomes and the greater the volatility, or risk, of a particular investment.
All other things being equal, investors can reduce their exposure to risk by
investing in asset classes with lower standard deviations. However, investments
with higher standard deviations, or greater risk, typically have greater return
potential. International investments present additional risk including currency
fluctuations, political instability, and foreign regulations.
TOTAL PORTFOLIO RISK measures the risk in an entire portfolio, or combination of
asset classes, as opposed to the risk of investing in just one investment or
asset class. Since the value of different types of investments tends to rise and
fall at different times, combining asset classes can actually have a beneficial
effect on an investor's portfolio.
A primary objective of the Asset Director Funds is to combine asset classes to
enhance the total portfolio return and to moderate risk. It is our expectation
over the long term that the Conservative Growth Fund should exhibit less
volatility than the Balanced Growth Fund, which should in turn exhibit less
volatility than the High Growth Fund. Although past performance does not
guarantee future results, bonds have traditionally exhibited less volatility
than stocks. Therefore, as the proportion of the portfolio allocated to bonds
increases, volatility should decrease. As a result, all three Asset Director
Funds should exhibit less volatility than an all stock fund such as an S&P
500(R) Index fund.
21
<PAGE> 28
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
COMMON STOCK--38.4%
AEROSPACE/DEFENSE--0.8%
BFGoodrich Co. 300 $ 12
Boeing Co. 2,784 274
General Dynamics Corp. 400 29
Lockheed Martin Corp. 1,900 170
McDonnell Douglas Corp. 1,600 95
Northrop Grumman Corp. 400 33
Raytheon Co. 1,700 74
Textron, Inc. 1,100 123
United Technologies Corp. 1,800 136
----
946
----
AIR TRANSPORTATION--0.2%
AMR Corp.+ 800 75
Delta Airlines, Inc. 700 64
Southwest Airlines Co. 800 22
USAir Group, Inc.+ 3,000 97
----
258
----
ALCOHOLIC BEVERAGES--0.2%
Adolph Coors Co. Class B 200 5
Anheuser-Busch Companies, Inc. 3,600 154
Brown-Forman Corp. Class B 500 25
Seagram Co., Ltd. 2,500 96
----
280
----
APPAREL--0.2%
Fruit of the Loom, Inc. Class A+ 400 14
Liz Claiborne, Inc. 400 18
NIKE, Inc. Class B 2,300 129
Reebok International Ltd. 400 15
Russell Corp. 200 6
Springs Industries, Inc. 700 33
Stride Rite Corp. 300 4
V.F. Corp. 900 65
----
284
----
AUTOMOTIVE PRODUCTS--0.1%
Cooper Tire & Rubber Co. 400 9
Goodyear Tire & Rubber Co. 1,000 52
----
61
----
BANKS--3.1%
Banc One Corp. 2,950 125
Bank of New York Co., Inc. 2,600 103
BankAmerica Corp. 2,900 339
BankBoston Corp. 1,300 95
Bankers Trust New York Corp. 1,000 81
</TABLE>
22
<PAGE> 29
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Barnett Banks, Inc. 1,200 $ 59
Chase Manhattan Corp. (New) 3,440 319
Citicorp 3,400 383
Comerica, Inc. 700 41
CoreStates Financial Corp. 1,600 81
Fifth Third Bancorp 700 52
First Bank System, Inc. 982 75
First Chicago NBD Corp. 2,505 141
First Union Corp. 2,410 202
Fleet Financial Group, Inc. 1,924 117
J.P. Morgan & Co., Inc. 1,600 163
KeyCorp, Inc. 1,300 68
MBNA Corp. 2,400 79
Mellon Bank Corp. 900 75
National City Corp. 1,300 63
NationsBank Corp. 7,226 437
Norwest Corp. 2,710 135
PNC Bank Corp. 2,500 103
Republic New York Corp. 800 73
SunTrust Banks, Inc. 1,600 81
U.S. Bancorp 885 51
Wachovia Corp. 1,100 64
Wells Fargo & Co. 733 196
-----
3,801
-----
BUSINESS MACHINES & SOFTWARE--3.2%
3COM Corp.+ 1,200 35
Amdahl Corp.+ 600 5
Apple Computer, Inc.+ 800 14
Autodesk, Inc. 100 4
Bay Networks, Inc.+ 800 14
Cabletron Systems, Inc.+ 1,100 38
Ceridian Corp.+ 428 14
Cisco Systems, Inc. 4,700 243
Compaq Computer Corp.+ 2,200 188
Computer Associates International, Inc. 2,550 133
Computer Sciences Corp.+ 1,190 74
Data General Corp.+ 300 6
Dell Computer Corp.+ 1,100 92
Digital Equipment Corp.+ 1,100 33
EMC Corp.+ 1,500 55
Hewlett-Packard Co. 7,400 389
Honeywell, Inc. 900 64
Intergraph Corp.+ 500 3
International Business Machines Corp. 3,800 611
Microsoft Corp.+ 9,800 1,188
Novell, Inc.+ 2,100 16
Oracle Systems Corp.+ 4,650 185
</TABLE>
23
<PAGE> 30
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Parametric Technology Corp.+ 1,100 $ 50
Pitney Bowes, Inc. 1,000 64
Seagate Technology, Inc.+ 1,368 63
Silicon Graphics, Inc.+ 1,276 19
Sun Microsystems, Inc.+ 2,500 72
Tandem Computers, Inc.+ 600 8
Unisys Corp.+ 900 5
Xerox Corp. 2,400 148
-----
3,833
-----
BUSINESS SERVICES--0.6%
Automatic Data Processing, Inc. 2,100 95
Browning-Ferris Industries, Inc. 1,300 37
Cognizant Corp. 900 29
Deluxe Corp. 100 3
Dun & Bradstreet Corp. 900 22
Ecolab, Inc. 300 12
First Data Corp. 3,100 109
H & R Block, Inc. 600 19
IKON Office Solutions 900 24
Interpublic Group of Companies, Inc.+ 500 28
John H. Harland Co. 1,500 31
Laidlaw, Inc. Class B 1,500 20
Moore Corp. Ltd. 500 10
National Service Industries, Inc. 200 8
R.R. Donnelley & Sons Co. 1,000 34
Safety-Kleen Corp. 2,200 33
Service Corp. International 1,600 55
Shared Medical Systems Corp. 100 4
SUPERVALU, Inc. 300 9
WMX Technologies, Inc. 3,500 103
-----
685
-----
CHEMICAL--1.4%
Air Products & Chemicals, Inc. 1,000 72
Dow Chemical Co. 2,300 195
E.I. du Pont de Nemours & Co. 4,700 496
Eastman Chemical Co. 500 26
Great Lakes Chemical Corp. 400 17
Hercules, Inc. 700 28
Minnesota Mining & Manufacturing Co. 3,700 322
Monsanto Co. 4,300 184
Morton International, Inc. 1,000 42
Nalco Chemical Co. 300 11
PPG Industries, Inc. 1,300 71
Praxair, Inc. 1,000 52
Rohm & Haas Co. 500 42
Sigma-Aldrich Corp. 800 24
</TABLE>
24
<PAGE> 31
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Union Carbide Corp. 900 $ 45
W.R. Grace & Co. 700 36
-----
1,663
-----
CONSTRUCTION--0.2%
Armstrong World Industries, Inc. 300 20
Centex Corp. 1,400 50
Crane Co. 150 6
Fluor Corp. 600 33
Kaufman & Broad Home Corp. 200 3
Owens Corning 400 16
Pulte Corp. 100 3
Sherwin-Williams Co. 1,200 36
Stanley Works 600 23
-----
190
-----
CONSUMER-DURABLE--0.1%
Black & Decker Corp. 600 20
Masco Corp. 1,000 38
Maytag Corp. 500 11
Newell Co. 1,100 38
Snap-on, Inc. 300 12
Whirlpool Corp. 100 5
-----
124
-----
CONSUMER-NONDURABLE--0.4%
American Greetings Corp. Class A 500 16
Corning, Inc. 1,600 77
Darden Restaurants, Inc. 800 6
Hasbro, Inc. 900 23
Jostens, Inc. 200 5
Mattel, Inc. 1,750 49
McDonald's Corp. 5,100 272
Rubbermaid, Inc. 1,000 24
Wendy's International, Inc. 800 17
-----
489
-----
CONTAINERS--0.1%
Ball Corp. 200 5
Bemis Co., Inc. 200 8
Crown Cork & Seal Co., Inc. 900 49
Stone Container Corp. 500 5
-----
67
-----
ELECTRONICS--1.7%
Advanced Micro Devices, Inc.+ 620 26
AMP, Inc. 1,200 43
Applied Materials, Inc.+ 1,100 60
EG&G, Inc. 4,800 91
</TABLE>
25
<PAGE> 32
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
General Instrument Corp.+ 800 $ 19
General Signal Corp. 200 8
Harris Corp. 200 17
Intel Corp. 6,000 920
LSI Logic Corp.+ 400 15
Lucent Technologies, Inc. 4,548 269
Micron Technology, Inc. 1,300 46
Motorola, Inc. 4,200 240
National Semiconductor Corp.+ 600 15
Perkin Elmer Corp. 200 15
Rockwell International Corp. (New) 2,000 133
Scientific-Atlanta, Inc. 400 6
Tektronix, Inc. 300 16
Texas Instruments, Inc. 1,300 116
Thermo Electron Corp.+ 1,200 41
Thomas & Betts Corp. 81 4
-----
2,100
-----
ENERGY-DEVELOPMENT--0.5%
Baker Hughes, Inc. 1,000 35
Burlington Resources, Inc. 800 34
Dresser Industries, Inc. 800 24
Halliburton Co. 1,029 73
Helmerich & Payne, Inc. 1,200 57
Louisiana Land & Exploration Co. 200 10
Occidental Petroleum Corp. 2,200 49
Rowan Companies, Inc.+ 3,100 56
Schlumberger Ltd. 2,000 220
Union Pacific Resources Group 1,439 39
Western Atlas, Inc.+ 400 25
-----
622
-----
FOOD-AGRICULTURE--2.6%
Archer-Daniels Midland Co. 3,810 70
Campbell Soup Co. 4,000 205
Coca-Cola Co. 18,800 1,195
ConAgra, Inc. 1,600 92
CPC International, Inc. 1,500 124
Fleming Companies, Inc. 400 7
General Mills, Inc. 1,563 97
H.J. Heinz Co. 2,700 112
Hershey Foods Corp. 1,100 60
Kellogg Co. 1,500 105
PepsiCo, Inc. 11,400 398
Pioneer Hi-Bred International, Inc. 600 42
Quaker Oats Co.+ 900 36
Ralston Purina Co. 1,200 99
</TABLE>
26
<PAGE> 33
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Sara Lee Corp. 3,500 $ 147
SYSCO Corp. 1,300 46
Unilever N V 1,400 275
Whitman Corp. 700 16
Wm. Wrigley Jr. Co. 800 47
-----
3,173
-----
GOLD--0.1%
Barrick Gold Corp. 2,300 51
Echo Bay Mines Ltd. 600 3
Homestake Mining Co. 500 7
Newmont Mining Corp. 600 21
Placer Dome, Inc. 1,400 23
Santa Fe Pacific Gold Corp. 700 10
-----
115
-----
HEALTHCARE--4.2%
Abbott Laboratories 5,700 348
Allergan, Inc. 300 8
ALZA Corp.+ 400 12
American Home Products Corp. 4,600 305
Amgen, Inc. 2,100 124
Bausch & Lomb, Inc. 300 12
Baxter International, Inc. 2,000 96
Becton, Dickinson & Co. 500 23
Beverly Enterprises, Inc.+ 500 7
Biomet, Inc. 600 9
Boston Scientific Corp.+ 1,437 69
Bristol-Myers Squibb Co. 7,200 472
C.R. Bard, Inc. 400 13
Columbia/HCA Healthcare Corp. 4,600 161
Eli Lilly & Co.+ 4,700 413
Guidant Corp. 600 41
HealthSouth Corp.+ 6,152 122
Humana, Inc.+ 700 15
Johnson & Johnson 9,700 594
Mallinckrodt, Inc. 400 15
Manor Care, Inc. 300 7
Medtronic, Inc. 1,900 132
Merck & Co., Inc. 9,800 886
Pfizer, Inc. 5,300 509
Pharmacia & Upjohn, Inc. 3,700 110
Schering Plough Corp. 2,800 224
St. Jude Medical, Inc.+ 225 7
Tenet Healthcare Corp.+ 2,300 60
U.S. Surgical Corp. 300 10
</TABLE>
27
<PAGE> 34
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
United Healthcare Co. 1,200 $ 58
Warner Lambert Co. 2,500 245
-----
5,107
-----
HOUSEHOLD PRODUCTS--1.2%
Alberto-Culver Co. Class B 200 6
Avon Products, Inc. 900 55
Clorox Co. 600 76
Colgate-Palmolive Co. 1,300 144
Gillette Co. 4,800 408
International Flavors & Fragrances, Inc. 800 34
Procter & Gamble Co. 5,700 718
Tupperware Corp. 400 13
-----
1,454
-----
IMAGING & PHOTO--0.2%
Eastman Kodak Co. 2,700 225
Polaroid Corp. 200 10
-----
235
-----
INSURANCE--1.7%
Aetna, Inc. 1,524 139
Allstate Financial Corp. 3,200 210
American General Corp. 1,100 48
American International Group, Inc. 3,900 501
Aon Corp. 900 60
Chubb Corp. 1,200 69
CIGNA Corp. 800 120
Conseco, Inc. 2,804 116
General Re Corp. 935 156
ITT Hartford Group, Inc. 800 60
Jefferson-Pilot Corp. 450 26
Lincoln National Corp. 700 39
Marsh & McLennan Companies, Inc. 1,000 121
MBIA Corp. 300 29
MGIC Investment Corp. 900 73
Providian Corp. 700 40
SAFECO Corp. 800 32
St. Paul Companies, Inc. 600 40
Torchmark Corp. 500 31
Transamerica Corp. 1,000 85
UNUM Corp. 1,000 77
USF & G Corp. 500 10
USLIFE Corp. 100 5
-----
2,087
-----
MEDIA--0.8%
Comcast Corp. Class A 1,600 25
Dow Jones & Co., Inc. 700 28
</TABLE>
28
<PAGE> 35
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Gannett Co., Inc. 1,000 $ 87
King World Productions, Inc.+ 300 11
Knight-Ridder, Inc. 600 23
McGraw Hill Companies, Inc.+ 600 31
Meredith Corp. 200 5
New York Times Co. Class A+ 700 30
SBC Communications, Inc. 6,367 353
Telecommunications, Inc. Series A (TCI Group)+ 4,400 61
Time Warner, Inc. 4,000 180
Times Mirror Co. Series A 800 44
Tribune Co. (New) 1,800 79
Viacom, Inc. Class B+ 2,600 70
-----
1,027
-----
MISCELLANEOUS FINANCE--1.3%
American Express Co. 3,300 217
Beneficial Corp. 300 19
Dean Witter Discover and Company 2,800 107
Federal Home Loan Mortgage Corp. 5,600 179
Federal National Mortgage Association 8,000 328
Golden West Financial Corp. 500 33
Great Western Financial Corp. 1,000 42
Green Tree Financial Corp. 1,000 30
H.F. Ahmanson & Co. 600 23
Household International, Inc. 1,200 106
Merrill Lynch & Co., Inc. 1,700 162
Morgan Stanley Group, Inc. 1,000 63
Salomon, Inc. 800 40
Travelers Group, Inc.+ 4,666 258
-----
1,607
-----
MOTOR VEHICLE--0.8%
Chrysler Corp. 5,300 159
Cummins Engine Co., Inc. 200 11
Dana Corp. 700 22
Eaton Corp. 500 37
Echlin, Inc. 300 10
Fleetwood Enterprises, Inc. 1,400 37
Ford Motor Co. 8,700 302
General Motors Corp. 5,500 319
Genuine Parts Co. 1,200 39
Navistar International Corp.+ 100 1
Paccar, Inc. 200 14
TRW, Inc.+ 900 47
-----
998
-----
NON-FERROUS--0.3%
Alcan Aluminum Ltd. 1,600 54
Aluminum Company of America 1,600 112
</TABLE>
29
<PAGE> 36
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Asarco, Inc. 200 $ 6
Cyprus Minerals Co. 600 13
Engelhard Corp. 1,000 21
Freeport-McMoran Copper & Gold, Inc. Class B 1,400 41
Inco Ltd. 1,200 38
Phelps Dodge Corp. 400 31
Reynolds Metals Co. 400 27
-----
343
-----
OIL-DOMESTIC--0.4%
Amerada Hess Corp. 600 29
Ashland, Inc. 400 18
Atlantic Richfield Co. 1,400 190
Kerr-McGee Corp. 400 24
Oryx Energy Co.+ 500 10
Pennzoil Co. 200 10
Phillips Petroleum Co. 1,900 75
Santa Fe Energy Resources, Inc.+ 400 6
Sun, Inc. 400 11
Unocal Corp. 1,700 65
USX-Marathon Group 2,000 55
-----
493
-----
OIL-INTERNATIONAL--2.6%
Amoco Corp. 3,900 326
Chevron Corp. 4,700 322
Exxon Corp. 19,800 1,121
Mobil Corp. 3,100 403
Royal Dutch Petroleum Company+ 4,200 757
Texaco, Inc. 2,100 222
-----
3,151
-----
PAPER--0.5%
Boise Cascade Corp. 300 10
Champion International Corp. 700 33
Georgia-Pacific Corp. 600 47
International Paper Co. 2,100 89
James River Corp. 400 12
Kimberly-Clark Corp. 4,560 233
Louisiana-Pacific Corp. 700 13
Mead Corp. 300 17
Potlatch Corp. 100 4
Temple Inland, Inc. 400 22
Union Camp Corp. 500 24
Westvaco Corp. 700 20
Weyerhaeuser Co. 1,400 64
Willamette Industries, Inc. 600 38
-----
626
-----
</TABLE>
30
<PAGE> 37
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
PRODUCER GOODS & MANUFACTURING--2.2%
Allied Signal, Inc. 2,300 $ 166
Avery Dennison Corp. 300 11
Briggs & Stratton Corp. 100 5
Case Corp. 600 33
Caterpillar, Inc. 1,500 134
Cincinnati Milacron, Inc. 100 2
Cooper Industries, Inc. 300 14
Deere & Co. 1,400 64
Dover Corp. 800 42
Emerson Electric Co. 4,200 213
FMC Corp.+ 200 13
Foster Wheeler Corp. 300 12
General Electric Co. 12,400 1,374
Giddings & Lewis, Inc. 200 4
Harnischfeger Industries, Inc. 200 8
Illinois Tool Works, Inc. 1,300 119
Ingersoll-Rand Co. 700 34
ITT Industries, Inc. 800 20
Johnson Controls, Inc. 600 23
McDermott International, Inc. 2,000 37
Millipore Corp. 200 8
NACCO Industries, Inc. Class A 100 5
Pall Corp. 600 14
Parker-Hannifin Corp. 500 25
Raychem Corp. 800 52
Tenneco, Inc. (New) 1,200 48
Timken Co. 100 6
Tyco International, Ltd. 1,100 67
W.W. Grainger, Inc. 400 30
Westinghouse Electric Corp. 4,500 77
-----
2,660
-----
RAILROAD--0.4%
Burlington Northern Santa Fe Corp. 1,300 102
Conrail, Inc. 874 100
CSX Corp. 1,200 56
Norfolk Southern Corp. 1,400 126
Union Pacific Corp. 1,700 108
-----
492
-----
REAL PROPERTY--0.0%
HFS, Inc.+ 900 53
-----
RETAIL--1.5%
Albertson's, Inc. 1,800 59
American Stores Co.+ 1,000 46
AutoZone, Inc.+ 1,300 32
</TABLE>
31
<PAGE> 38
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Charming Shoppes, Inc.+ 700 $ 4
Circuit City Stores, Inc. 700 28
Costco Companies, Inc.+ 1,300 38
CUC International, Inc.+ 2,097 44
CVS Corp. 600 30
Dayton Hudson Corp. 1,200 54
Dillard Department Stores, Inc. Class A 800 25
Federated Department Stores, Inc.+ 1,400 48
Gap, Inc. 2,000 64
Giant Food, Inc. Class A 300 10
Great Atlantic & Pacific Tea Co., Inc. 200 5
Harcourt General, Inc. 100 5
Home Depot, Inc. 3,600 209
J.C. Penney Co., Inc. 1,600 76
K Mart Corp.+ 3,100 42
Kroger Co.+ 1,600 44
Limited, Inc. 1,497 27
Longs Drug Stores, Inc. 200 5
Lowe's Companies, Inc. 1,100 42
May Department Stores Co. 1,700 79
Mercantile Stores Co., Inc. 300 15
Nordstrom, Inc. 500 20
Pep Boys-Manny Moe & Jack 300 10
Rite Aid Corp. 600 28
Sears Roebuck & Co. 2,400 115
Tandy Corp. 400 21
TJX Companies, Inc. 100 5
Toys 'R' Us, Inc.+ 1,700 48
Wal Mart Stores, Inc. 16,800 472
Walgreen Co. 1,700 78
Winn Dixie Stores, Inc. 1,100 38
Woolworth Corp.+ 700 15
-----
1,881
-----
STEEL--0.1%
Allegheny Teledyne, Inc. 770 21
Armco, Inc.+ 200 1
Bethlehem Steel Corp.+ 500 4
Inland Steel Industries, Inc. 1,800 40
Nucor Corp. 600 30
USX-U.S. Steel Group 500 15
Worthington Industries, Inc. 500 9
-----
120
-----
TELEPHONE--2.3%
Air Touch Communications+ 3,600 92
Alltel Corp. 1,200 38
Ameritech Corp. 4,000 245
</TABLE>
32
<PAGE> 39
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Andrew Corp. 750 $ 19
AT&T Corp. 11,900 398
Bell Atlantic Corp. 3,800 257
BellSouth Corp. 7,300 325
DSC Communications Corp.+ 700 14
Frontier Corp. 1,300 21
GTE Corp. 7,000 321
MCI Communications Corp. 5,000 191
Northern Telecom Ltd. 1,700 123
Nynex Corp. 3,200 166
Sprint Corp. 2,900 127
Tellabs, Inc.+ 1,200 48
U.S. West, Inc. (Communications Group) 3,400 119
U.S. West, Inc. (Media Group)+ 4,500 78
WorldCom, Inc. 7,100 170
-----
2,752
-----
TOBACCO--0.8%
American Brands, Inc. 1,200 65
Loew's Corp. 1,300 119
Philip Morris Companies, Inc. 18,400 725
UST, Inc. 1,000 26
-----
935
-----
TRANSPORTATION-MISCELLANEOUS--0.1%
Caliber Systems, Inc. 200 6
Federal Express Corp.+ 800 44
Ryder Systems, Inc. 400 12
-----
62
-----
TRAVEL & RECREATION--0.5%
Brunswick Corp. 500 14
Harrah's Entertainment, Inc.+ 700 11
Hilton Hotels Corp. 1,800 49
ITT Corp. (New)+ 800 47
Marriott International, Inc. 900 50
Walt Disney Co. 4,973 408
-----
579
-----
UTILITIES--1.0%
American Electric Power Co., Inc. 1,000 41
Baltimore Gas & Electric Co. 500 13
Carolina Power & Light Co. 1,000 34
Central & South West Services Corp. 1,000 20
Cinergy Corp. 1,100 37
Coastal Corp. 700 33
Columbia Gas System, Inc. 400 25
Consolidated Edison Co. of New York, Inc. 1,500 42
</TABLE>
33
<PAGE> 40
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Consolidated Natural Gas Co. 600 $ 30
Dominion Resources, Inc. 1,300 45
DTE Energy Co. 1,000 27
Duke Power Co. 1,400 61
Eastern Enterprises 100 3
Edison International 2,800 59
Enron Corp. 1,800 68
ENSERCH Corp. 300 6
Entergy Corp. 1,200 28
FPL Group, Inc. 1,000 45
GPU, Inc. 800 26
Houston Industries, Inc. 1,400 28
Niagara Mohawk Power Corp.+ 700 6
NICOR, Inc. 200 7
Noram Energy Corp. 600 9
Northern States Power Co. 500 23
Ohio Edison Co. 600 12
ONEOK, Inc. 200 6
Pacific Enterprises, Inc. 400 12
Pacific Gas & Electric Corp. 2,600 62
PacifiCorp. 1,600 32
Panhandle Eastern Corp. 1,100 49
PECO Energy Co. 1,100 22
Peoples Energy Corp. 100 3
PP&L Resources, Inc. 800 16
Public Service Enterprises 1,300 31
Sonat, Inc. 600 34
Southern Co. 4,900 97
Texas Utilities Co. 1,300 44
Unicom Corp. 1,100 24
Union Electric Co. 700 25
Williams Companies, Inc. 1,050 46
-----
1,231
-----
INTERNATIONAL--0.0%
GERMANY--0.0%
VIAG AG+ 20 9
</TABLE>
34
<PAGE> 41
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
UNITED KINGDOM--0.0%
Centrica+ 21,063 $ 19
Energy Group+ 2,663 21
------
40
------
49
------
TOTAL COMMON STOCK
(Cost $35,149) 46,633
------
WARRANTS--0.0%
BELGIUM--0.0%
Generale de Banque (expire 11/15/99)+ 88 1
------
FRANCE--0.0%
AXA UAP CVG (expire 01/07/99)+ 636 3
------
SWITZERLAND--0.0%
Schweizerische Bankverein (expire 6/30/2000)+ 30 0
------
TOTAL WARRANTS
(Cost $0) 4
------
MUTUAL FUNDS--39.4% (SEE NOTE 3)
Schwab International Index Fund 1,986,403 24,830
Schwab Small-Cap Index Fund 1,708,699 23,119
------
TOTAL MUTUAL FUNDS
(Cost $48,559) 47,949
------
Par
----------
U.S. TREASURY OBLIGATIONS--17.3%(A)
U.S. Treasury Bonds
7.250%, 05/15/16 $3,250,000 3,328
7.500%, 11/15/16 500,000 524
9.125%, 05/15/18 1,000,000 1,227
8.125%, 08/15/19 5,100,000 5,705
8.125%, 05/15/21 3,500,000 3,928
7.125%, 02/15/23 350,000 353
6.000%, 02/15/26 5,700,000 4,985
6.500%, 11/15/26 1,000,000 938
------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $21,110) 20,988
------
CASH EQUIVALENTS--4.4%
Federal National Mortgage Association Discount Note (b)
5.350%, 05/29/97 5,200,000 5,178
</TABLE>
35
<PAGE> 42
SCHWAB ASSET DIRECTOR(R)--HIGH GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
MSTC Cash Reserve Liquid Asset Fund (c)
5.330%, 05/07/97 187,107 $ 187
-------
TOTAL CASH EQUIVALENTS (Cost $5,365) 5,365
-------
TOTAL INVESTMENTS--99.5%
(Cost $110,183) 120,939
OTHER ASSETS AND LIABILITIES--0.5%
Other Assets 986
Liabilities (346)
-------
640
-------
NET ASSETS--100.0% (see Note 6)
Applicable to 10,296,181 outstanding $0.00001 par value
shares (unlimited shares authorized) $121,579
=======
NET ASSET VALUE PER SHARE $11.81
=====
</TABLE>
See accompanying Notes to Statements of Net Assets and Notes to Financial
Statements.
36
<PAGE> 43
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
COMMON STOCK--28.8%
AEROSPACE/DEFENSE--0.6%
BFGoodrich Co. 200 $ 8
Boeing Co. 1,942 192
General Dynamics Corp. 200 14
Lockheed Martin Corp. 1,200 107
McDonnell Douglas Corp. 1,000 59
Northrop Grumman Corp. 500 42
Raytheon Co. 1,100 48
Textron, Inc. 700 78
United Technologies Corp. 1,600 121
-----
669
-----
AIR TRANSPORTATION--0.1%
AMR Corp.+ 500 47
Delta Airlines, Inc. 400 37
Southwest Airlines Co. 600 17
USAir Group, Inc.+ 1,800 57
-----
158
-----
ALCOHOLIC BEVERAGES--0.2%
Adolph Coors Co. Class B 100 2
Anheuser-Busch Companies, Inc. 2,400 103
Brown-Forman Corp. Class B 300 15
Seagram Co., Ltd. 1,800 69
-----
189
-----
APPAREL--0.1%
Fruit of the Loom, Inc. Class A+ 200 7
Liz Claiborne, Inc. 200 9
NIKE, Inc. Class B 1,400 78
Reebok International Ltd. 200 8
Russell Corp. 100 3
Springs Industries, Inc. 100 5
Stride Rite Corp. 200 3
V.F. Corp. 500 36
-----
149
-----
AUTOMOTIVE PRODUCTS--0.0%
Cooper Tire & Rubber Co. 200 4
Goodyear Tire & Rubber Co. 600 32
-----
36
-----
BANKS--2.5%
Banc One Corp. 2,088 88
Bank of New York Co., Inc. 1,800 71
BankAmerica Corp. 2,000 234
BankBoston Corp. 800 58
Bankers Trust New York Corp. 600 49
</TABLE>
37
<PAGE> 44
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Barnett Banks, Inc. 1,000 $ 49
Chase Manhattan Corp. (New) 2,232 207
Citicorp 2,500 282
Comerica, Inc. 600 35
CoreStates Financial Corp. 1,200 61
Fifth Third Bancorp 500 37
First Bank System, Inc. 764 59
First Chicago NBD Corp. 1,643 92
First Union Corp. 1,672 140
Fleet Financial Group, Inc. 1,256 77
J.P. Morgan & Co., Inc. 900 92
KeyCorp, Inc. 1,100 57
MBNA Corp. 1,650 54
Mellon Bank Corp. 800 67
National City Corp. 1,100 54
NationsBank Corp. 4,374 264
Norwest Corp. 1,810 90
PNC Bank Corp. 1,500 62
Republic New York Corp. 500 46
SunTrust Banks, Inc. 1,100 56
U.S. Bancorp 790 45
Wachovia Corp. 900 53
Wells Fargo & Co. 500 133
-----
2,612
-----
BUSINESS MACHINES & SOFTWARE--2.5%
3COM Corp.+ 900 26
Amdahl Corp.+ 300 3
Apple Computer, Inc.+ 400 7
Autodesk, Inc. 100 4
Bay Networks, Inc.+ 700 12
Cabletron Systems, Inc.+ 700 24
Ceridian Corp.+ 214 7
Cisco Systems, Inc. 3,500 181
Compaq Computer Corp.+ 1,400 120
Computer Associates International, Inc. 1,750 91
Computer Sciences Corp.+ 595 37
Data General Corp.+ 100 2
Dell Computer Corp.+ 900 75
Digital Equipment Corp.+ 600 18
EMC Corp.+ 1,100 40
Hewlett-Packard Co. 5,100 268
Honeywell, Inc. 800 57
Intergraph Corp.+ 200 1
International Business Machines Corp. 2,500 402
Microsoft Corp.+ 6,400 778
Novell, Inc.+ 1,200 9
Oracle Systems Corp.+ 3,300 131
</TABLE>
38
<PAGE> 45
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Parametric Technology Corp.+ 700 $ 32
Pitney Bowes, Inc. 700 45
Seagate Technology, Inc.+ 1,184 54
Silicon Graphics, Inc.+ 654 10
Sun Microsystems, Inc.+ 1,700 49
Tandem Computers, Inc.+ 300 4
Unisys Corp.+ 400 2
Xerox Corp. 1,500 92
-----
2,581
-----
BUSINESS SERVICES--0.4%
Automatic Data Processing, Inc. 1,400 63
Browning-Ferris Industries, Inc. 800 23
Cognizant Corp. 800 26
Deluxe Corp. 400 12
Dun & Bradstreet Corp. 800 20
Ecolab, Inc. 300 12
First Data Corp. 2,100 73
H & R Block, Inc. 300 10
IKON Office Solutions 400 11
Interpublic Group of Companies, Inc.+ 300 17
Laidlaw, Inc. Class B 1,500 20
Moore Corp. Ltd. 200 4
National Service Industries, Inc. 100 4
R.R. Donnelley & Sons Co. 700 24
Safety-Kleen Corp. 1,400 21
Service Corp. International 900 31
Shared Medical Systems Corp. 100 4
SUPERVALU, Inc. 300 9
WMX Technologies, Inc. 2,100 62
-----
446
-----
CHEMICAL--1.0%
Air Products & Chemicals, Inc. 700 50
Dow Chemical Co. 1,400 119
E.I. du Pont de Nemours & Co. 3,000 319
Eastman Chemical Co. 300 15
Great Lakes Chemical Corp. 200 8
Hercules, Inc. 300 12
Minnesota Mining & Manufacturing Co. 2,100 183
Monsanto Co. 2,700 115
Morton International, Inc. 600 25
Nalco Chemical Co. 300 11
PPG Industries, Inc. 1,000 54
Praxair, Inc. 700 36
Rohm & Haas Co. 500 42
</TABLE>
39
<PAGE> 46
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Sigma-Aldrich Corp. 400 $ 12
Union Carbide Corp. 500 25
W.R. Grace & Co. 400 21
-----
1,047
-----
CONSTRUCTION--0.1%
Armstrong World Industries, Inc. 400 26
Crane Co. 150 6
Fluor Corp. 600 33
Kaufman & Broad Home Corp. 100 1
Owens Corning 300 12
Pulte Corp. 100 3
Sherwin-Williams Co. 1,000 30
Stanley Works 400 16
-----
127
-----
CONSUMER-DURABLE--0.1%
Black & Decker Corp. 300 10
Masco Corp. 700 26
Maytag Corp. 300 7
Newell Co. 600 21
Snap-on, Inc. 150 6
Whirlpool Corp. 300 14
-----
84
-----
CONSUMER-NONDURABLE--0.3%
American Greetings Corp. Class A 200 6
Corning, Inc. 1,100 53
Darden Restaurants, Inc. 400 3
Hasbro, Inc. 450 11
Jostens, Inc. 100 2
Mattel, Inc. 1,125 31
McDonald's Corp. 3,300 179
Rubbermaid, Inc. 600 14
Wendy's International, Inc. 300 6
-----
305
-----
CONTAINERS--0.0%
Ball Corp. 200 5
Bemis Co., Inc. 100 4
Crown Cork & Seal Co., Inc. 700 39
Stone Container Corp. 200 2
-----
50
-----
ELECTRONICS--1.3%
Advanced Micro Devices, Inc.+ 520 22
AMP, Inc. 1,100 39
Applied Materials, Inc.+ 800 44
EG&G, Inc. 2,200 42
</TABLE>
40
<PAGE> 47
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
General Instrument Corp.+ 500 $ 12
General Signal Corp. 100 4
Harris Corp. 100 9
Intel Corp. 4,200 643
LSI Logic Corp.+ 500 19
Lucent Technologies, Inc. 3,165 187
Micron Technology, Inc. 1,000 35
Motorola, Inc. 3,200 183
National Semiconductor Corp.+ 600 15
Perkin Elmer Corp. 100 7
Rockwell International Corp. (New) 1,000 67
Scientific-Atlanta, Inc. 200 3
Tektronix, Inc. 100 5
Texas Instruments, Inc. 900 80
Thermo Electron Corp.+ 800 28
Thomas & Betts Corp. 181 8
-----
1,452
-----
ENERGY-DEVELOPMENT--0.4%
Baker Hughes, Inc. 600 21
Burlington Resources, Inc. 600 25
Dresser Industries, Inc. 700 21
Halliburton Co. 787 56
Helmerich & Payne, Inc. 800 38
Louisiana Land & Exploration Co. 100 5
Occidental Petroleum Corp. 1,500 33
Rowan Companies, Inc.+ 1,900 34
Schlumberger Ltd. 1,400 155
Union Pacific Resources Group 1,062 29
Western Atlas, Inc.+ 500 31
-----
448
-----
FOOD-AGRICULTURE--1.9%
Archer-Daniels Midland Co. 2,610 48
Campbell Soup Co. 2,800 143
Coca-Cola Co. 12,200 775
ConAgra, Inc. 1,200 69
CPC International, Inc. 700 58
Fleming Companies, Inc. 200 3
General Mills, Inc. 1,046 65
H.J. Heinz Co. 1,800 75
Hershey Foods Corp. 700 38
Kellogg Co. 1,200 84
PepsiCo, Inc. 7,400 258
Pioneer Hi-Bred International, Inc. 400 28
Quaker Oats Co.+ 700 28
Ralston Purina Co. 700 58
Sara Lee Corp. 2,300 97
</TABLE>
41
<PAGE> 48
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
SYSCO Corp. 700 $ 25
Unilever N V 800 157
Whitman Corp. 300 7
Wm. Wrigley Jr. Co. 700 41
-----
2,057
-----
GOLD--0.1%
Barrick Gold Corp. 1,500 34
Echo Bay Mines Ltd. 300 2
Homestake Mining Co. 600 8
Newmont Mining Corp. 500 17
Placer Dome, Inc. 1,000 16
Santa Fe Pacific Gold Corp. 300 4
-----
81
-----
HEALTHCARE--3.2%
Abbott Laboratories 3,700 226
Allergan, Inc. 300 8
ALZA Corp.+ 200 6
American Home Products Corp. 3,300 219
Amgen, Inc. 1,200 71
Bausch & Lomb, Inc. 200 8
Baxter International, Inc. 1,300 62
Becton, Dickinson & Co. 600 28
Beverly Enterprises, Inc.+ 200 3
Biomet, Inc. 300 5
Boston Scientific Corp.+ 937 45
Bristol-Myers Squibb Co. 5,400 354
C.R. Bard, Inc. 200 6
Columbia/HCA Healthcare Corp. 3,300 116
Eli Lilly & Co.+ 3,000 264
Guidant Corp. 400 27
HealthSouth Corp.+ 3,476 69
Humana, Inc.+ 500 11
Johnson & Johnson 6,400 392
Mallinckrodt, Inc. 400 15
Manor Care, Inc. 200 5
Medtronic, Inc. 1,300 90
Merck & Co., Inc. 6,200 559
Pfizer, Inc. 3,400 326
Pharmacia & Upjohn, Inc. 2,300 68
Schering Plough Corp. 1,800 144
St. Jude Medical, Inc.+ 430 14
Tenet Healthcare Corp.+ 1,500 39
U.S. Surgical Corp. 100 3
United Healthcare Co. 900 44
Warner Lambert Co. 1,500 147
-----
3,374
-----
</TABLE>
42
<PAGE> 49
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
HOUSEHOLD PRODUCTS--0.8%
Alberto-Culver Co. Class B 200 $ 6
Avon Products, Inc. 600 37
Clorox Co. 200 25
Colgate-Palmolive Co. 1,000 111
Gillette Co. 2,800 238
International Flavors & Fragrances, Inc. 500 21
Procter & Gamble Co. 3,600 453
Tupperware Corp. 200 7
-----
898
-----
IMAGING & PHOTO--0.1%
Eastman Kodak Co. 1,800 150
Polaroid Corp. 100 5
-----
155
-----
INSURANCE--1.2%
Aetna, Inc. 734 67
Allstate Financial Corp. 2,300 151
American General Corp. 900 39
American International Group, Inc. 2,400 310
Aon Corp. 500 33
Chubb Corp. 800 46
CIGNA Corp. 600 90
Conseco, Inc. 1,930 80
General Re Corp. 386 65
ITT Hartford Group, Inc. 700 52
Jefferson-Pilot Corp. 300 17
Lincoln National Corp. 400 22
Marsh & McLennan Companies, Inc. 600 72
MBIA Corp. 200 19
MGIC Investment Corp. 500 41
Providian Corp. 500 29
SAFECO Corp. 500 20
St. Paul Companies, Inc. 300 20
Torchmark Corp. 400 25
Transamerica Corp. 300 25
UNUM Corp. 600 46
USF & G Corp. 300 6
USLIFE Corp. 100 5
-----
1,280
-----
MEDIA--0.7%
Comcast Corp. Class A 1,500 24
Dow Jones & Co., Inc. 400 16
Gannett Co., Inc. 700 61
King World Productions, Inc.+ 100 4
Knight-Ridder, Inc. 400 16
McGraw Hill Companies, Inc.+ 400 20
</TABLE>
43
<PAGE> 50
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Meredith Corp. 200 $ 5
New York Times Co. Class A+ 400 17
SBC Communications, Inc. 4,662 258
Telecommunications, Inc. Series A (TCI Group)+ 3,100 43
Time Warner, Inc. 2,600 117
Times Mirror Co. Series A 400 22
Tribune Co. (New) 1,200 53
Viacom, Inc. Class B+ 1,700 45
-----
701
-----
MISCELLANEOUS FINANCE--1.0%
American Express Co. 2,300 152
Beneficial Corp. 200 13
Dean Witter Discover and Company 1,600 61
Federal Home Loan Mortgage Corp. 4,400 140
Federal National Mortgage Association 5,200 214
Golden West Financial Corp. 200 13
Great Western Financial Corp. 700 29
Green Tree Financial Corp. 700 21
H.F. Ahmanson & Co. 300 11
Household International, Inc. 700 62
Merrill Lynch & Co., Inc. 1,000 95
Morgan Stanley Group, Inc. 700 44
Salomon, Inc. 400 20
Travelers Group, Inc.+ 3,033 168
-----
1,043
-----
MOTOR VEHICLE--0.6%
Chrysler Corp. 3,500 105
Cummins Engine Co., Inc. 100 6
Dana Corp. 400 13
Eaton Corp. 600 45
Echlin, Inc. 200 7
Fleetwood Enterprises, Inc. 1,700 45
Ford Motor Co. 5,700 198
General Motors Corp. 3,600 208
Genuine Parts Co. 750 24
Navistar International Corp.+ 100 1
Paccar, Inc. 100 7
TRW, Inc.+ 600 31
-----
690
-----
NON-FERROUS--0.2%
Alcan Aluminum Ltd. 900 30
Aluminum Company of America 1,100 77
Asarco, Inc. 100 3
Cyprus Minerals Co. 400 9
Engelhard Corp. 400 8
Freeport-McMoran Copper & Gold, Inc. Class B 700 20
</TABLE>
44
<PAGE> 51
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Inco Ltd. 800 $ 26
Phelps Dodge Corp. 300 23
Reynolds Metals Co. 200 14
-----
210
-----
OIL-DOMESTIC--0.3%
Amerada Hess Corp. 600 29
Ashland, Inc. 200 9
Atlantic Richfield Co. 800 109
Kerr-McGee Corp. 200 12
Oryx Energy Co.+ 200 4
Pennzoil Co. 300 15
Phillips Petroleum Co. 1,300 51
Santa Fe Energy Resources, Inc.+ 200 3
Sun, Inc. 200 5
Unocal Corp. 1,100 42
USX-Marathon Group 1,200 33
-----
312
-----
OIL-INTERNATIONAL--1.9%
Amoco Corp. 2,700 226
Chevron Corp. 3,400 233
Exxon Corp. 12,200 690
Mobil Corp. 2,200 286
Royal Dutch Petroleum Company+ 2,600 469
Texaco, Inc. 1,500 158
-----
2,062
-----
PAPER--0.4%
Boise Cascade Corp. 100 3
Champion International Corp. 500 23
Georgia-Pacific Corp. 500 39
International Paper Co. 1,400 59
James River Corp. 400 12
Kimberly-Clark Corp. 3,180 163
Louisiana-Pacific Corp. 300 6
Mead Corp. 200 11
Potlatch Corp. 100 4
Temple Inland, Inc. 200 11
Union Camp Corp. 200 10
Westvaco Corp. 400 11
Weyerhaeuser Co. 1,000 46
Willamette Industries, Inc. 200 13
-----
411
-----
PRODUCER GOODS & MANUFACTURING--1.7%
Aeroquip-Vickers, Inc. 1,600 65
Allied Signal, Inc. 1,600 116
Avery Dennison Corp. 500 18
</TABLE>
45
<PAGE> 52
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Briggs & Stratton Corp. 100 $ 5
Case Corp. 300 17
Caterpillar, Inc. 1,200 107
Cincinnati Milacron, Inc. 1,000 20
Cooper Industries, Inc. 400 18
Deere & Co. 1,300 60
Dover Corp. 500 27
Emerson Electric Co. 2,600 132
FMC Corp.+ 400 27
Foster Wheeler Corp. 100 4
General Electric Co. 8,100 895
Giddings & Lewis, Inc. 100 2
Harnischfeger Industries, Inc. 100 4
Illinois Tool Works, Inc. 600 55
Ingersoll-Rand Co. 400 20
ITT Industries, Inc. 400 10
Johnson Controls, Inc. 400 15
McDermott International, Inc. 2,600 48
Millipore Corp. 100 4
NACCO Industries, Inc. Class A 100 5
Pall Corp. 300 7
Parker-Hannifin Corp. 200 10
Raychem Corp. 200 13
Tenneco, Inc. (New) 800 32
Timken Co. 100 6
Tyco International, Ltd. 900 55
W.W. Grainger, Inc. 500 38
Westinghouse Electric Corp. 2,800 48
-----
1,883
-----
RAILROAD--0.3%
Burlington Northern Santa Fe Corp. 1,000 79
Conrail, Inc. 612 70
CSX Corp. 1,100 51
Norfolk Southern Corp. 900 80
Union Pacific Corp. 1,200 77
-----
357
-----
REAL PROPERTY--0.0%
HFS, Inc.+ 800 47
-----
RETAIL--1.2%
Albertson's, Inc. 1,200 40
American Stores Co.+ 600 27
AutoZone, Inc.+ 800 20
Charming Shoppes, Inc.+ 500 3
Circuit City Stores, Inc. 400 16
Costco Companies, Inc.+ 1,000 29
</TABLE>
46
<PAGE> 53
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
CUC International, Inc.+ 1,832 $ 39
CVS Corp. 400 20
Dayton Hudson Corp. 900 41
Dillard Department Stores, Inc. Class A 400 12
Federated Department Stores, Inc.+ 1,000 34
Gap, Inc. 1,200 38
Giant Food, Inc. Class A 300 10
Great Atlantic & Pacific Tea Co., Inc. 100 2
Harcourt General, Inc. 300 14
Home Depot, Inc. 2,400 139
J.C. Penney Co., Inc. 1,100 53
K Mart Corp.+ 1,800 25
Kroger Co.+ 1,000 28
Limited, Inc. 1,044 19
Longs Drug Stores, Inc. 200 5
Lowe's Companies, Inc. 700 27
May Department Stores Co. 1,000 46
Mercantile Stores Co., Inc. 100 5
Nordstrom, Inc. 400 16
Pep Boys-Manny Moe & Jack 200 7
Rite Aid Corp. 600 28
Sears Roebuck & Co. 1,900 91
Tandy Corp. 300 16
TJX Companies, Inc. 400 19
Toys 'R' Us, Inc.+ 1,300 37
Wal Mart Stores, Inc. 11,000 306
Walgreen Co. 1,200 55
Winn Dixie Stores, Inc. 600 21
Woolworth Corp.+ 400 9
-----
1,297
-----
STEEL--0.1%
Allegheny Teledyne, Inc. 585 16
Armco, Inc.+ 400 1
Bethlehem Steel Corp.+ 300 2
Inland Steel Industries, Inc. 100 2
Nucor Corp. 500 25
USX-U.S. Steel Group 200 6
Worthington Industries, Inc. 200 4
-----
56
-----
TELEPHONE--1.7%
Air Touch Communications+ 2,400 61
Alltel Corp. 800 25
Ameritech Corp. 2,900 177
Andrew Corp. 525 13
AT&T Corp. 7,800 260
Bell Atlantic Corp. 2,400 163
</TABLE>
47
<PAGE> 54
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
BellSouth Corp. 4,700 $ 209
DSC Communications Corp.+ 300 6
Frontier Corp. 800 13
GTE Corp. 4,600 211
MCI Communications Corp. 3,800 145
Northern Telecom Ltd. 1,400 102
Nynex Corp. 2,000 104
Sprint Corp. 2,100 92
Tellabs, Inc.+ 800 32
U.S. West, Inc. (Communications Group) 2,300 81
U.S. West, Inc. (Media Group)+ 3,000 52
WorldCom, Inc. 4,400 106
-----
1,852
-----
TOBACCO--0.6%
American Brands, Inc. 900 48
Loew's Corp. 600 55
Philip Morris Companies, Inc. 12,900 509
UST, Inc. 700 18
-----
630
-----
TRANSPORTATION-MISCELLANEOUS--0.0%
Caliber Systems, Inc. 100 3
Federal Express Corp.+ 500 27
Ryder Systems, Inc. 200 6
-----
36
-----
TRAVEL & RECREATION--0.4%
Brunswick Corp. 200 6
Harrah's Entertainment, Inc.+ 400 6
Hilton Hotels Corp. 1,100 30
ITT Corp. (New)+ 600 36
Marriott International, Inc. 600 33
Walt Disney Co. 3,539 290
-----
401
-----
UTILITIES--0.8%
American Electric Power Co., Inc. 800 32
Baltimore Gas & Electric Co. 700 18
Carolina Power & Light Co. 500 17
Central & South West Services Corp. 800 16
Cinergy Corp. 600 20
Coastal Corp. 500 24
Columbia Gas System, Inc. 300 19
Consolidated Edison Co. of New York, Inc. 900 25
Consolidated Natural Gas Co. 600 30
Dominion Resources, Inc. 900 31
DTE Energy Co. 600 16
Duke Power Co. 900 39
</TABLE>
48
<PAGE> 55
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
Eastern Enterprises 100 $ 3
Edison International 1,800 38
Enron Corp. 1,200 45
ENSERCH Corp. 100 2
Entergy Corp. 900 21
FPL Group, Inc. 800 36
GPU, Inc. 500 16
Houston Industries, Inc. 1,000 20
Niagara Mohawk Power Corp.+ 400 3
NICOR, Inc. 100 3
Noram Energy Corp. 300 4
Northern States Power Co. 200 9
Ohio Edison Co. 500 10
ONEOK, Inc. 100 3
Pacific Enterprises, Inc. 200 6
Pacific Gas & Electric Corp. 1,900 46
PacifiCorp. 1,200 24
Panhandle Eastern Corp. 600 27
PECO Energy Co. 900 18
Peoples Energy Corp. 100 3
PP&L Resources, Inc. 600 12
Public Service Enterprises 1,100 27
Sonat, Inc. 300 17
Southern Co. 3,200 66
Texas Utilities Co. 1,100 37
Unicom Corp. 800 17
Union Electric Co. 500 18
Williams Companies, Inc. 600 26
------
844
------
INTERNATIONAL--0.0%
GERMANY--0.0%
VIAG AG+ 12 5
UNITED KINGDOM--0.0%
Centrica+ 11,258 10
Energy Group+ 2,304 19
------
29
------
34
------
TOTAL COMMON STOCK (Cost $24,145) 31,064
------
</TABLE>
49
<PAGE> 56
SCHWAB ASSET DIRECTOR(R)--BALANCED GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- --------
<S> <C> <C>
WARRANTS--0.0%
BELGIUM--0.0%
Generale de Banque (expire 11/15/99)+ 44 $ 0
------
FRANCE--0.0%
Axa UAP CVG (expire 01/07/99)+ 328 2
------
SWITZERLAND--0.0%
Schweizerische Bankverein (expire 6/30/2000)+ 20 0
------
TOTAL WARRANTS (Cost $0) 2
------
MUTUAL FUNDS--29.5% (SEE NOTE 3)
Schwab International Index Fund 1,318,381 16,480
Schwab Small-Cap Index Fund 1,135,833 15,368
------
TOTAL MUTUAL FUNDS (Cost $32,292) 31,848
------
Par
----------
U.S. TREASURY OBLIGATIONS--32.7%(A)
U.S. Treasury Bonds
10.000%, 05/15/10 $ 475,000 567
10.375%, 11/15/12 500,000 629
11.250%, 02/15/15 350,000 500
7.250%, 05/15/16 2,075,000 2,125
7.500%, 11/15/16 500,000 524
9.125%, 05/15/18 1,100,000 1,350
8.125%, 08/15/19 4,275,000 4,782
8.125%, 05/15/21 2,600,000 2,918
7.125%, 02/15/23 2,300,000 2,320
6.250%, 08/15/23 175,000 159
6.000%, 02/15/26 2,900,000 2,536
6.500%, 11/15/26 1,000,000 938
U.S. Treasury Notes
7.250%, 02/15/98 700,000 707
6.125%, 08/31/98 1,400,000 1,400
5.000%, 02/15/99 500,000 490
7.000%, 04/15/99 4,600,000 4,662
8.000%, 08/15/99 2,100,000 2,174
7.500%, 10/31/99 1,900,000 1,949
5.750%, 10/31/00 1,000,000 978
6.250%, 04/30/01 1,900,000 1,883
</TABLE>
50
<PAGE> 57
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par (000s)
---------- --------
<S> <C> <C>
6.375%, 08/15/02 $ 900,000 $ 893
5.875%, 02/15/04 700,000 670
------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $35,567) 35,154
------
AGENCY NOTES--3.3%(A)
Federal Home Loan Mortgage Corp.
6.875%, 11/22/06 850,000 830
Federal Home Loan Mortgage Corp. Debenture
7.140%, 09/13/06 1,000,000 1,010
Federal National Mortgage Association
8.500%, 02/01/05 1,050,000 1,094
7.250%, 06/01/05 650,000 649
-------
TOTAL AGENCY NOTES (Cost $3,600) 3,583
-------
CASH EQUIVALENTS--4.9%
Federal Home Loan Bank Consolidated Discount Note (b)
5.380%, 05/02/97 1,100,000 1,100
Federal National Mortgage Association Discount Note (b)
5.350%, 05/29/97 3,000,000 2,987
Number
of Shares
----------
MSTC Cash Reserve Liquid Asset Fund (c)
5.330%, 05/07/97 1,215,836 1,216
-------
TOTAL CASH EQUIVALENTS (Cost $5,303) 5,303
-------
TOTAL INVESTMENTS--99.2%
(Cost $100,907) 106,954
OTHER ASSETS AND LIABILITIES--0.8%
Other Assets 1,091
Liabilities (229)
-------
862
-------
NET ASSETS--100.0% (see Note 6)
Applicable to 9,501,367 outstanding $0.00001 par value
shares (unlimited shares authorized) $107,816
=======
NET ASSET VALUE PER SHARE $11.35
=====
</TABLE>
See accompanying Notes to Statements of Net Assets and Notes to Financial
Statements.
51
<PAGE> 58
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
COMMON STOCK--18.9%
AEROSPACE/DEFENSE--0.4%
BFGoodrich Co. 100 $ 4
Boeing Co. 308 31
General Dynamics Corp. 100 7
Lockheed Martin Corp. 200 18
McDonnell Douglas Corp. 200 12
Northrop Grumman Corp. 100 8
Raytheon Co. 200 9
Textron, Inc. 100 11
United Technologies Corp. 200 15
----
115
----
AIR TRANSPORTATION--0.2%
AMR Corp.+ 100 9
Delta Airlines, Inc. 100 9
Southwest Airlines Co. 100 3
USAir Group, Inc.+ 600 20
----
41
----
ALCOHOLIC BEVERAGES--0.1%
Adolph Coors Co. Class B 100 2
Anheuser-Busch Companies, Inc. 300 13
Brown-Forman Corp. Class B 100 5
Seagram Co., Ltd. 200 8
----
28
----
APPAREL--0.2%
Fruit of the Loom, Inc. Class A+ 100 4
Liz Claiborne, Inc. 100 5
NIKE, Inc. Class B 200 11
Reebok International Ltd. 100 4
Springs Industries, Inc. 200 9
Stride Rite Corp. 100 1
V.F. Corp. 100 7
----
41
----
AUTOMOTIVE PRODUCTS--0.0%
Cooper Tire & Rubber Co. 100 2
Goodyear Tire & Rubber Co. 100 5
----
7
----
BANKS--1.4%
Banc One Corp. 307 13
Bank of New York Co., Inc. 200 8
BankAmerica Corp. 300 35
BankBoston Corp. 100 7
Bankers Trust New York Corp. 100 8
Barnett Banks, Inc. 100 5
</TABLE>
52
<PAGE> 59
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Chase Manhattan Corp. (New) 308 $ 29
Citicorp 400 45
Comerica, Inc. 100 6
CoreStates Financial Corp. 100 5
Fifth Third Bancorp 100 7
First Bank System, Inc. 88 7
First Chicago NBD Corp. 181 10
First Union Corp. 257 22
Fleet Financial Group, Inc. 189 12
J.P. Morgan & Co., Inc. 200 20
KeyCorp, Inc. 200 10
MBNA Corp. 225 7
Mellon Bank Corp. 100 8
National City Corp. 100 5
NationsBank Corp. 530 32
Norwest Corp. 200 10
PNC Bank Corp. 300 12
Republic New York Corp. 100 9
SunTrust Banks, Inc. 100 5
U.S. Bancorp 100 6
Wachovia Corp. 100 6
Wells Fargo & Co. 66 18
----
367
----
BUSINESS MACHINES & SOFTWARE--1.3%
3COM Corp.+ 200 6
Apple Computer, Inc.+ 100 2
Bay Networks, Inc.+ 100 2
Cabletron Systems, Inc.+ 100 3
Ceridian Corp.+ 57 2
Cisco Systems, Inc. 500 26
Compaq Computer Corp.+ 200 17
Computer Associates International, Inc. 200 10
Computer Sciences Corp.+ 179 11
Data General Corp.+ 100 2
Dell Computer Corp.+ 100 8
Digital Equipment Corp.+ 100 3
EMC Corp.+ 100 4
Hewlett-Packard Co. 800 42
Honeywell, Inc. 100 7
Intergraph Corp.+ 100 1
International Business Machines Corp. 400 64
Microsoft Corp.+ 900 108
Novell, Inc.+ 200 2
Oracle Systems Corp.+ 500 20
Parametric Technology Corp.+ 100 5
Pitney Bowes, Inc. 100 6
Seagate Technology, Inc.+ 176 8
</TABLE>
53
<PAGE> 60
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Silicon Graphics, Inc.+ 122 $ 2
Sun Microsystems, Inc.+ 200 6
Tandem Computers, Inc.+ 100 1
Unisys Corp.+ 100 1
Xerox Corp. 200 12
----
381
----
BUSINESS SERVICES--0.3%
Automatic Data Processing, Inc. 200 9
Browning-Ferris Industries, Inc. 100 3
Cognizant Corp. 100 3
Deluxe Corp. 100 3
Dun & Bradstreet Corp. 100 2
First Data Corp. 300 12
H & R Block, Inc. 100 3
IKON Office Solutions 100 3
Interpublic Group of Companies, Inc.+ 100 6
John H. Harland Co. 300 6
Laidlaw, Inc. Class B 200 3
Moore Corp. Ltd. 100 2
R.R. Donnelley & Sons Co. 100 3
Safety-Kleen Corp. 300 4
Service Corp. International 100 3
WMX Technologies, Inc. 300 9
----
74
----
CHEMICAL--0.7%
Air Products & Chemicals, Inc. 100 7
Dow Chemical Co. 200 17
E.I. du Pont de Nemours & Co. 500 55
Eastman Chemical Co. 100 5
Great Lakes Chemical Corp. 100 4
Hercules, Inc. 100 4
Minnesota Mining & Manufacturing Co. 400 35
Monsanto Co. 500 21
Morton International, Inc. 100 4
PPG Industries, Inc. 100 5
Praxair, Inc. 100 5
Rohm & Haas Co. 100 8
Union Carbide Corp. 100 5
W.R. Grace & Co. 100 5
----
180
----
CONSTRUCTION--0.1%
Fluor Corp. 100 6
Kaufman & Broad Home Corp. 100 1
</TABLE>
54
<PAGE> 61
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Pulte Corp. 100 $ 3
Sherwin-Williams Co. 200 6
----
16
----
CONSUMER-DURABLE--0.1%
Black & Decker Corp. 100 3
Masco Corp. 100 4
Maytag Corp. 100 2
Newell Co. 100 4
Whirlpool Corp. 100 5
----
18
----
CONSUMER-NONDURABLE--0.2%
American Greetings Corp. Class A 100 3
Corning, Inc. 100 5
Darden Restaurants, Inc. 100 1
Hasbro, Inc. 150 4
Jostens, Inc. 100 2
Mattel, Inc. 150 4
McDonald's Corp. 500 27
Rubbermaid, Inc. 100 2
Wendy's International, Inc. 100 2
----
50
----
CONTAINERS--0.0%
Ball Corp. 200 5
Crown Cork & Seal Co., Inc. 100 6
Stone Container Corp. 100 1
----
12
----
ELECTRONICS--0.9%
Advanced Micro Devices, Inc.+ 80 3
AMP, Inc. 100 4
Applied Materials, Inc.+ 100 5
EG&G, Inc. 200 4
General Instrument Corp.+ 100 2
Harris Corp. 100 9
Intel Corp. 700 106
LSI Logic Corp.+ 100 4
Lucent Technologies, Inc. 456 27
Micron Technology, Inc. 100 4
Motorola, Inc. 400 23
National Semiconductor Corp.+ 100 3
Rockwell International Corp. (New) 200 13
Texas Instruments, Inc. 200 18
Thermo Electron Corp.+ 100 3
Thomas & Betts Corp. 63 3
----
231
----
</TABLE>
55
<PAGE> 62
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
ENERGY-DEVELOPMENT--0.3%
Baker Hughes, Inc. 100 $ 3
Burlington Resources, Inc. 100 4
Dresser Industries, Inc. 100 3
Halliburton Co. 157 11
Helmerich & Payne, Inc. 200 10
Occidental Petroleum Corp. 200 4
Rowan Companies, Inc.+ 500 9
Schlumberger Ltd. 200 23
Union Pacific Resources Group 169 5
Western Atlas, Inc.+ 100 6
----
78
----
FOOD-AGRICULTURE--1.2%
Archer-Daniels Midland Co. 320 6
Campbell Soup Co. 400 20
Coca-Cola Co. 1,900 121
ConAgra, Inc. 200 12
CPC International, Inc. 100 8
Fleming Companies, Inc. 100 2
General Mills, Inc. 116 7
H.J. Heinz Co. 200 8
Hershey Foods Corp. 100 5
Kellogg Co. 200 14
PepsiCo, Inc. 1,100 38
Pioneer Hi-Bred International, Inc. 100 7
Quaker Oats Co.+ 100 4
Ralston Purina Co. 100 8
Sara Lee Corp. 300 13
SYSCO Corp. 100 4
Unilever N V 100 20
Whitman Corp. 100 2
Wm. Wrigley Jr. Co. 100 6
----
305
----
GOLD--0.0%
Barrick Gold Corp. 200 5
Echo Bay Mines Ltd. 100 1
Homestake Mining Co. 100 1
Newmont Mining Corp. 100 3
Placer Dome, Inc. 100 2
Santa Fe Pacific Gold Corp. 100 1
----
13
----
HEALTHCARE--2.0%
Abbott Laboratories 600 37
ALZA Corp.+ 100 3
American Home Products Corp. 500 33
Amgen, Inc. 200 12
</TABLE>
56
<PAGE> 63
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Baxter International, Inc. 200 $ 10
Becton, Dickinson & Co. 200 9
Biomet, Inc. 100 2
Boston Scientific Corp.+ 167 8
Bristol-Myers Squibb Co. 1,000 66
Columbia/HCA Healthcare Corp. 500 18
Eli Lilly & Co.+ 400 35
Guidant Corp. 100 7
HealthSouth Corp.+ 200 4
Humana, Inc.+ 100 2
Johnson & Johnson 1,000 61
Mallinckrodt, Inc. 100 4
Medtronic, Inc. 200 14
Merck & Co., Inc. 1,100 95
Pfizer, Inc. 600 58
Pharmacia & Upjohn, Inc. 400 12
Schering Plough Corp. 300 24
St. Jude Medical, Inc.+ 100 3
Tenet Healthcare Corp.+ 100 3
United Healthcare Co. 100 5
Warner Lambert Co. 200 20
----
545
----
HOUSEHOLD PRODUCTS--0.5%
Avon Products, Inc. 200 12
Clorox Co. 100 13
Colgate-Palmolive Co. 100 11
Gillette Co. 400 34
International Flavors & Fragrances, Inc. 100 4
Procter & Gamble Co. 500 64
Tupperware Corp. 100 3
----
141
----
IMAGING & PHOTO--0.1%
Eastman Kodak Co. 300 25
----
INSURANCE--0.9%
Aetna, Inc. 122 11
Allstate Financial Corp. 300 20
American General Corp. 100 4
American International Group, Inc. 400 51
Aon Corp. 100 7
Chubb Corp. 100 6
CIGNA Corp. 100 15
Conseco, Inc. 332 14
General Re Corp. 37 6
ITT Hartford Group, Inc. 100 7
Jefferson-Pilot Corp. 100 6
</TABLE>
57
<PAGE> 64
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Lincoln National Corp. 100 $ 6
Marsh & McLennan Companies, Inc. 100 12
MBIA Corp. 100 10
MGIC Investment Corp. 100 8
Providian Corp. 100 6
SAFECO Corp. 100 4
St. Paul Companies, Inc. 100 7
Torchmark Corp. 100 6
Transamerica Corp. 100 8
UNUM Corp. 100 8
USF & G Corp. 100 2
----
224
----
MEDIA--0.4%
Comcast Corp. Class A 200 3
Dow Jones & Co., Inc. 100 4
Gannett Co., Inc. 100 9
Knight-Ridder, Inc. 100 4
McGraw Hill Companies, Inc.+ 100 5
Meredith Corp. 200 5
New York Times Co. Class A+ 100 4
SBC Communications, Inc. 719 39
Telecommunications, Inc. Series A (TCI Group)+ 400 6
Time Warner, Inc. 400 18
Times Mirror Co. Series A 100 6
Tribune Co. (New) 200 9
Viacom, Inc. Class B+ 200 5
----
117
----
MISCELLANEOUS FINANCE--0.7%
American Express Co. 400 26
Beneficial Corp. 100 6
Dean Witter Discover and Company 200 8
Federal Home Loan Mortgage Corp. 800 26
Federal National Mortgage Association 800 33
Great Western Financial Corp. 100 4
Green Tree Financial Corp. 100 3
H.F. Ahmanson & Co. 100 4
Household International, Inc. 100 9
Merrill Lynch & Co., Inc. 200 19
Morgan Stanley Group, Inc. 100 6
Salomon, Inc. 100 5
Travelers Group, Inc.+ 500 28
----
177
----
MOTOR VEHICLE--0.5%
Chrysler Corp. 500 15
Dana Corp. 100 3
Eaton Corp. 100 7
</TABLE>
58
<PAGE> 65
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Echlin, Inc. 100 $ 3
Fleetwood Enterprises, Inc. 400 11
Ford Motor Co. 800 28
General Motors Corp. 600 36
Genuine Parts Co. 150 5
Navistar International Corp.+ 300 3
TRW, Inc.+ 200 10
----
121
----
NON-FERROUS--0.2%
Alcan Aluminum Ltd. 100 3
Aluminum Company of America 200 14
Cyprus Minerals Co. 100 2
Engelhard Corp. 100 2
Freeport-McMoran Copper & Gold, Inc. Class B 100 3
Inco Ltd. 100 3
Phelps Dodge Corp. 100 8
Reynolds Metals Co. 100 7
----
42
----
OIL-DOMESTIC--0.2%
Amerada Hess Corp. 100 5
Atlantic Richfield Co. 100 12
Kerr-McGee Corp. 100 6
Phillips Petroleum Co. 200 8
Sun, Inc. 100 3
Unocal Corp. 100 4
USX-Marathon Group 200 6
----
44
----
OIL-INTERNATIONAL--1.2%
Amoco Corp. 500 42
Chevron Corp. 500 34
Exxon Corp. 1,900 108
Mobil Corp. 300 39
Royal Dutch Petroleum Company+ 400 72
Texaco, Inc. 200 21
----
316
----
PAPER--0.3%
Champion International Corp. 100 5
Georgia-Pacific Corp. 100 8
International Paper Co. 200 8
James River Corp. 100 3
Kimberly-Clark Corp. 356 17
Louisiana-Pacific Corp. 100 2
Mead Corp. 100 6
Temple Inland, Inc. 100 6
Union Camp Corp. 100 5
</TABLE>
59
<PAGE> 66
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Westvaco Corp. 100 $ 3
Weyerhaeuser Co. 100 5
Willamette Industries, Inc. 100 6
----
74
----
PRODUCER GOODS & MANUFACTURING--1.3%
Aeroquip-Vickers, Inc. 200 8
Allied Signal, Inc. 300 22
Avery Dennison Corp. 100 4
Case Corp. 100 6
Caterpillar, Inc. 200 18
Cincinnati Milacron, Inc. 400 8
Cooper Industries, Inc. 100 5
Deere & Co. 200 9
Dover Corp. 100 5
Emerson Electric Co. 400 20
FMC Corp.+ 100 7
General Electric Co. 1,300 142
Giddings & Lewis, Inc. 100 2
Illinois Tool Works, Inc. 100 9
Ingersoll-Rand Co. 100 5
ITT Industries, Inc. 100 3
Johnson Controls, Inc. 200 8
McDermott International, Inc. 200 4
NACCO Industries, Inc. Class A 100 5
Pall Corp. 100 2
Parker-Hannifin Corp. 100 5
Raychem Corp. 100 6
Tenneco, Inc. (New) 200 8
Tyco International, Ltd. 100 6
W.W. Grainger, Inc. 100 8
Westinghouse Electric Corp. 400 7
----
332
----
RAILROAD--0.2%
Burlington Northern Santa Fe Corp. 100 8
Conrail, Inc. 87 10
CSX Corp. 100 5
Norfolk Southern Corp. 100 9
Union Pacific Corp. 200 12
----
44
----
REAL PROPERTY--0.0%
HFS, Inc.+ 100 6
----
RETAIL--0.8%
Albertson's, Inc. 100 3
American Stores Co.+ 100 5
</TABLE>
60
<PAGE> 67
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
AutoZone, Inc.+ 100 $ 2
Charming Shoppes, Inc.+ 100 1
Circuit City Stores, Inc. 100 4
Costco Companies, Inc.+ 100 3
CUC International, Inc.+ 219 5
CVS Corp. 100 5
Dayton Hudson Corp. 100 5
Dillard Department Stores, Inc. Class A 100 3
Federated Department Stores, Inc.+ 100 3
Gap, Inc. 200 6
Harcourt General, Inc. 100 5
Home Depot, Inc. 400 23
J.C. Penney Co., Inc. 200 10
K Mart Corp.+ 300 4
Kroger Co.+ 200 6
Limited, Inc. 109 2
Longs Drug Stores, Inc. 600 15
Lowe's Companies, Inc. 100 4
May Department Stores Co. 200 9
Nordstrom, Inc. 100 4
Rite Aid Corp. 100 5
Sears Roebuck & Co. 300 14
Tandy Corp. 100 5
Toys 'R' Us, Inc.+ 200 6
Wal Mart Stores, Inc. 1,800 50
Walgreen Co. 100 5
Winn Dixie Stores, Inc. 100 3
Woolworth Corp.+ 100 2
----
217
----
STEEL--0.1%
Allegheny Teledyne, Inc. 92 2
Armco, Inc.+ 100 0
Bethlehem Steel Corp.+ 100 1
Inland Steel Industries, Inc. 200 5
Nucor Corp. 100 5
USX-U.S. Steel Group 100 3
Worthington Industries, Inc. 100 2
----
18
----
TELEPHONE--1.0%
Air Touch Communications+ 300 8
Alltel Corp. 100 3
Ameritech Corp. 400 24
AT&T Corp. 1,200 40
Bell Atlantic Corp. 400 27
BellSouth Corp. 700 31
DSC Communications Corp.+ 100 2
</TABLE>
61
<PAGE> 68
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Frontier Corp. 100 $ 2
GTE Corp. 700 32
MCI Communications Corp. 500 19
Northern Telecom Ltd. 200 15
Nynex Corp. 300 16
Sprint Corp. 300 13
Tellabs, Inc.+ 100 4
U.S. West, Inc. (Communications Group) 300 11
U.S. West, Inc. (Media Group)+ 300 5
WorldCom, Inc. 600 14
----
266
----
TOBACCO--0.3%
American Brands, Inc. 100 5
Loew's Corp. 100 9
Philip Morris Companies, Inc. 1,800 71
UST, Inc. 100 3
----
88
----
TRANSPORTATION-MISCELLANEOUS--0.1%
Caliber Systems, Inc. 200 6
Federal Express Corp.+ 200 11
Ryder Systems, Inc. 100 3
----
20
----
TRAVEL & RECREATION--0.2%
Brunswick Corp. 100 3
Harrah's Entertainment, Inc.+ 100 2
Hilton Hotels Corp. 100 3
ITT Corp. (New)+ 100 6
Marriott International, Inc. 100 6
Walt Disney Co. 509 40
----
60
----
UTILITIES--0.5%
American Electric Power Co., Inc. 100 4
Baltimore Gas & Electric Co. 100 3
Carolina Power & Light Co. 100 3
Central & South West Services Corp. 100 2
Cinergy Corp. 100 3
Coastal Corp. 100 5
Consolidated Edison Co. of New York, Inc. 100 3
Consolidated Natural Gas Co. 100 5
Dominion Resources, Inc. 100 3
DTE Energy Co. 100 3
Duke Power Co. 100 4
Eastern Enterprises 100 3
Edison International 300 6
Enron Corp. 100 4
</TABLE>
62
<PAGE> 69
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
Entergy Corp. 100 $ 2
FPL Group, Inc. 100 4
GPU, Inc. 100 3
Houston Industries, Inc. 100 2
Niagara Mohawk Power Corp.+ 100 1
Noram Energy Corp. 100 1
Northern States Power Co. 100 5
Ohio Edison Co. 100 2
ONEOK, Inc. 100 3
Pacific Enterprises, Inc. 100 3
Pacific Gas & Electric Corp. 300 7
PacifiCorp. 200 4
Panhandle Eastern Corp. 100 4
PECO Energy Co. 100 2
PP&L Resources, Inc. 100 2
Public Service Enterprises 100 2
Sonat, Inc. 100 6
Southern Co. 500 13
Texas Utilities Co. 100 3
Unicom Corp. 100 2
Union Electric Co. 100 4
Williams Companies, Inc. 50 2
-----
128
-----
INTERNATIONAL--0.0%
GERMANY--0.0%
VIAG AG+ 3 1
-----
UNITED KINGDOM--0.0%
Centrica+ 2,541 2
Energy Group+ 217 2
-----
4
-----
5
-----
TOTAL COMMON STOCK (Cost $3,845) 4,967
-----
WARRANTS--0.0%
BELGIUM--0.0%
Generale de Banque (expire 11/15/99)+ 8 0
-----
FRANCE--0.0%
Axa UAP CVG (expire 01/07/99)+ 72 0
-----
</TABLE>
63
<PAGE> 70
SCHWAB ASSET DIRECTOR(R)--CONSERVATIVE GROWTH FUND
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
---------- -------
<S> <C> <C>
SWITZERLAND--0.0%
Schweizerische Bankverein (expire 6/30/2000)+ 5 $ 0
------
TOTAL WARRANTS (Cost $0) 0
------
MUTUAL FUNDS--20.0% (SEE NOTE 3)
Schwab International Index Fund 211,680 2,646
Schwab Small-Cap Index Fund 193,143 2,613
------
TOTAL MUTUAL FUNDS (Cost $5,338) 5,259
------
Par
----------
U.S. TREASURY OBLIGATIONS--51.1%(A)
U.S. Treasury Bonds
10.000%, 05/15/10 $ 300,000 358
11.250%, 02/15/15 150,000 214
7.250%, 05/15/16 620,000 635
9.125%, 05/15/18 150,000 184
8.125%, 08/15/19 1,300,000 1,452
8.125%, 05/15/21 650,000 730
8.000%, 11/15/21 400,000 444
7.125%, 02/15/23 1,050,000 1,059
6.000%, 02/15/26 775,000 678
U.S. Treasury Notes
7.250%, 02/15/98 250,000 253
5.875%, 08/15/98 400,000 399
6.125%, 08/31/98 1,300,000 1,300
5.000%, 02/15/99 600,000 588
7.000%, 04/15/99 300,000 304
9.125%, 05/05/99 400,000 421
8.000%, 08/15/99 700,000 725
7.500%, 10/31/99 600,000 616
7.125%, 02/29/00 200,000 204
5.750%, 10/31/00 200,000 196
6.375%, 03/31/01 400,000 398
7.875%, 08/15/01 1,000,000 1,050
6.375%, 08/15/02 525,000 521
5.875%, 02/15/04 500,000 479
6.250%, 02/15/17 250,000 242
------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $13,557) 13,450
------
</TABLE>
64
<PAGE> 71
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par (000s)
---------- -------
<S> <C> <C>
AGENCY NOTES--4.3%(A)
Federal Home Loan Mortgage Corp. 6.875%,
11/22/06 $150,000 $ 146
Federal Home Loan Mortgage Corp. Debenture
7.140%, 09/13/06 575,000 581
Federal National Mortgage Association 7.250%,
06/01/05 400,000 399
------
TOTAL AGENCY NOTES (Cost $1,126) 1,126
------
CASH EQUIVALENTS--4.8%
Federal National Mortgage Association Discount Note (b)
5.350%, 05/29/97 1,000,000 996
Number
of Shares
----------
MSTC Cash Reserve Liquid Asset Fund (c)
5.330%, 05/07/97 274,078 274
------
TOTAL CASH EQUIVALENTS (Cost $1,270) 1,270
------
TOTAL INVESTMENTS--99.1% (Cost $25,136) 26,072
OTHER ASSETS AND LIABILITIES--0.9%
Other Assets 349
Liabilities (109)
------
240
------
NET ASSETS--100.0% (see Note 6)
Applicable to 2,457,556 outstanding $0.00001 par value shares
(unlimited shares authorized) $26,312
======
NET ASSET VALUE PER SHARE $10.71
=====
</TABLE>
- ---------------
NOTES TO STATEMENTS OF NET ASSETS
(a) Interest rates represent stated coupon rate of security.
(b) Interest rates represent effective yield at time of purchase.
(c) Interest rates represent the yield on report date.
+ Non-Income Producing Security.
See accompanying Notes to Financial Statements.
65
<PAGE> 72
- ------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (in thousands)
Six months ended April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Schwab Asset Director(R)
-----------------------------------------
High Balanced Conservative
Growth Fund Growth Fund Growth Fund
----------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividends (net of foreign tax withheld of
$19, $11 and $2, respectively) $ 627 $ 400 $ 65
Interest 813 1,323 451
------- ------- -----
Total investment income 1,440 1,723 516
------- ------- -----
Expenses:
Investment advisory and administration fee 418 365 87
Transfer agency and shareholder service
fees 143 125 30
Custodian fees 91 104 65
Portfolio accounting fees 4 3 1
Registration fees 25 30 12
Professional fees 15 13 10
Shareholder reports 39 25 8
Trustees' fees 4 4 2
Amortization of deferred organization
costs 2 2 2
Insurance and other expenses 1 1 1
------- ------- -----
742 672 218
Less expenses reduced and absorbed (see Note
4) (266) (250) (116)
------- ------- -----
Total expenses incurred by Fund 476 422 102
------- ------- -----
Net investment income 964 1,301 414
------- ------- -----
Net realized gain (loss) on investments and
foreign currency transactions:
Net realized gain from changes in market
value 6,768 3,801 731
Net realized loss from changes in foreign
exchange rates (1,923) (1,280) (220)
------- ------- -----
Net realized gain on investments sold 4,845 2,521 511
Net realized loss on foreign currency
transactions (5) (14) (2)
------- ------- -----
Net realized gain on investments sold
and foreign currency transactions 4,840 2,507 509
------- ------- -----
Change in net unrealized gain (loss) on
investments and foreign currency
translation:
Net unrealized loss from changes in market
value on underlying funds (610) (444) (79)
Net unrealized gain (loss) from changes in
market value on securities 941 627 (127)
------- ------- -----
Net unrealized gain (loss) from changes in
market value 331 183 (206)
------- ------- -----
Net unrealized gain from changes in
foreign exchange rates 660 378 87
------- ------- -----
Net unrealized gain (loss) on
investments 991 561 (119)
Net unrealized loss on translating
assets and liabilities into the
reporting currency (15) (7) --
------- ------- -----
Net unrealized gain (loss) on
investments and foreign currency
translation 976 554 (119)
------- ------- -----
Net gain on investments 5,816 3,061 390
------- ------- -----
Increase in net assets resulting from
operations $ 6,780 $ 4,362 $ 804
======= ======= =====
</TABLE>
See accompanying Notes to Financial Statements.
66
<PAGE> 73
- ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Schwab Asset Director(R)
----------------------------------------------------------------------------
High Growth Fund Balanced Growth Fund Conservative Growth Fund
------------------------ ------------------------ ------------------------
Six months Six months Six months
ended Period ended Period ended Period
April 30, ended April 30, ended April 30, ended
1997 October 31, 1997 October 31, 1997 October 31,
(Unaudited) 1996* (Unaudited) 1996* (Unaudited) 1996*
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 964 $ 1,751 $ 1,301 $ 1,751 $ 414 $ 690
Net realized gain (loss) on
investments sold and foreign
currency transactions 4,840 (559) 2,507 (560) 509 (148)
Net unrealized gain (loss) on
investments and foreign
currency translation 976 9,767 554 5,487 (119) 1,055
-------- -------- -------- -------- ------- -------
Increase in net assets resulting
from operations 6,780 10,959 4,362 6,678 804 1,597
-------- -------- -------- -------- ------- -------
Dividends to shareholders from
net investment income (1,915) (158) (2,005) (151) (399) (616)
-------- -------- -------- -------- ------- -------
Capital Share Transactions:
Proceeds from shares sold 25,081 117,538 41,649 89,829 8,006 29,367
Net asset value of shares issued
in reinvestment of dividends 1,850 152 1,893 138 183 551
Less payments for shares
redeemed (16,171) (22,538) (19,063) (15,515) (4,741) (8,441)
-------- -------- -------- -------- ------- -------
Increase in net assets from
capital share transactions 10,760 95,152 24,479 74,452 3,448 21,477
-------- -------- -------- -------- ------- -------
Total increase in net assets 15,625 105,953 26,836 80,979 3,853 22,458
Net Assets:
Beginning of period 105,954 1 80,980 1 22,459 1
-------- -------- -------- -------- ------- -------
End of period (including
undistributed net investment
income of $642, $1,593, $896
and $1,600, $88, $73,
respectively) $ 121,579 $ 105,954 $ 107,816 $ 80,980 $26,312 $22,459
======== ======== ======== ======== ======= =======
Number of Fund shares:
Sold 2,148 11,467 3,699 8,788 747 2,908
Reinvested 159 15 169 14 18 54
Redeemed (1,386) (2,107) (1,698) (1,471) (443) (826)
-------- -------- -------- -------- ------- -------
Net increase in shares
outstanding 921 9,375 2,170 7,331 322 2,136
Shares outstanding:
Beginning of period 9,375 -- 7,331 -- 2,136 --
-------- -------- -------- -------- ------- -------
End of period 10,296 9,375 9,501 7,331 2,458 2,136
======== ======== ======== ======== ======= =======
</TABLE>
- ---------------
* For the period from November 20, 1995 (commencement of operations) to October
31, 1996.
See accompanying Notes to Financial Statements.
67
<PAGE> 74
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Six months ended April 30, 1997 (Unaudited)
1. DESCRIPTION OF THE FUNDS
The Schwab Asset Director(R) -- High Growth Fund, Schwab Asset Director --
Balanced Growth Fund and Schwab Asset Director -- Conservative Growth Fund (the
"Funds") are series of Schwab Capital Trust (the "Trust"), a no-load, open-end
investment management company organized as a Massachusetts business trust on May
7, 1993 and registered under the Investment Company Act of 1940, as amended (the
"1940 Act").
In addition to the three Funds described above, the Trust also offers the Schwab
International Index Fund(R), Schwab Small-Cap Index Fund(R), Schwab S&P 500
Fund, Schwab Analytics Fund(TM), Schwab OneSource Portfolios -- International,
Schwab OneSource Portfolios -- Growth Allocation and Schwab OneSource
Portfolios -- Balanced Allocation. 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 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 in securities traded on an exchange and
unlisted securities are valued at the last quoted sale price for a given day, or
if a sale is not reported for that day, at the mean between the most recent
quoted bid and asked prices. Securities for which no quotations are readily
available are valued at fair value as determined by the Funds' investment
manager pursuant to guidelines adopted in good faith by the Board of Trustees.
Bonds and notes are generally valued at prices obtained from an independent
bond-pricing service. These securities are valued at the mean between the
representative quoted bid and asked prices, or if such prices are not available,
at prices for securities of comparable maturity, quality and type. Investments
in underlying funds are valued at their respective net asset values as
determined by those funds, in accordance with the 1940 Act, for a given day.
Short-term securities with 60 days or less to maturity are stated at amortized
cost, which approximates market value.
68
<PAGE> 75
- ------------------------------------------------------------------------------
Security transactions and investment income -- Security transactions are
accounted for on a trade date basis (date the order to buy or sell is executed).
Realized gains and losses from security transactions are determined on an
identified cost basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and accretion of discount on
investments. For callable bonds purchased at a premium, the excess of the
purchase price over the call value is amortized against interest income through
the call date. If the call provision is not exercised, any remaining premium is
amortized through the final maturity date.
Repurchase agreements -- Repurchase agreements are fully collateralized by U.S.
Treasury or government agency securities. All collateral is held by the Funds'
custodian and is monitored daily to ensure that its market value at least equals
the repurchase price under the agreement.
Foreign currency translation -- The accounting records of the Funds are
maintained in U.S. dollars. Investment securities and all other assets and
liabilities of the Funds denominated in a foreign currency are translated into
U.S. dollars at the exchange rates on April 30, 1997. Purchases and sales of
foreign securities, foreign income receipts and foreign expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions.
The Funds separate within their statement of operations the portion of realized
and unrealized gains and losses resulting from changes in foreign exchange rates
from that arising from changes in securities' market values.
Forward currency contracts -- A forward currency contract ("Forward") is an
agreement between two parties to buy and sell a currency at a set price on a
future date. The value of the Forward fluctuates with changes in currency
exchange rates. The Forward is marked-to-market daily and the change in value is
recorded by the Funds as an unrealized gain or loss. When the Forward is closed,
the Funds record a realized gain or loss equal to the difference between the
value at the time the contract was opened and the value at the time the contract
was closed. The Funds engage in Forwards in connection with the purchase and
sale of portfolio securities to minimize the uncertainty of changes in future
exchange rates. The Funds could be exposed to risk if counterparties
69
<PAGE> 76
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
to the contracts are unable to meet the terms of the contracts or if the value
of the foreign currency changes unfavorably.
Deferred organization costs -- Costs incurred in connection with the
organization of the Funds are amortized on a straight-line basis over a
five-year period from each Fund's commencement of operations.
Expenses -- Expenses arising in connection with a Fund are charged directly to
that 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 each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all net investment income and realized net capital gains, if any, to
shareholders. Therefore, no federal income tax provision is required. Each Fund
is considered a separate entity for tax purposes.
At April 30, 1997 (for financial reporting and federal income tax purposes), net
unrealized gain for the High Growth Fund, Balanced Growth Fund and Conservative
Growth Fund aggregated $10,756,000, $6,047,000 and $936,000, respectively, of
which $13,002,000, $7,848,000 and $1,321,000, respectively, related to
appreciated securities and $2,246,000, $1,801,000 and $385,000, respectively,
related to depreciated securities.
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 Manager"). For advisory services and facilities furnished,
each Fund pays an annual fee, payable monthly, of 0.74% of each Fund's average
daily net assets not in excess of $1 billion, 0.69% of such assets over $1
billion and 0.64% of such assets over $2 billion. The Investment Manager has
reduced a portion of its fee for the six months ended April 30, 1997 (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 0.05% of each Fund's average daily net assets
for transfer agency services and 0.20% of such assets for shareholder
70
<PAGE> 77
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services. Schwab has reduced a portion of its fee for the six months ended April
30, 1997 (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
period ended April 30, 1997, the Trust made no direct payments to its officers
or trustees who were "interested persons" within the meaning of the Investment
Company Act of 1940, as amended. The Funds incurred fees aggregating $10,000
related to the Trust's unaffiliated trustees.
Other affiliated parties and transactions -- Pursuant to an Exemptive Order
issued by the SEC, the Funds may invest in other SchwabFunds(R). As of April 30,
1997 the High Growth Fund, Balanced Growth Fund and Conservative Growth Fund
owned 8%, 5% and 1%, respectively of the outstanding shares of the Schwab
International Index Fund(R), and owned 9%, 6% and 1%, respectively of the
outstanding shares of the Schwab Small-Cap Index Fund(R).
Interfund Transactions -- During the period ended April 30, 1997, the Funds
engaged in sale transactions with funds that have a common investment advisor,
common trustees and/or common officers. These sale transactions were made at
current market value pursuant to Rule 17a-7 under the Act and were as follows:
<TABLE>
<CAPTION>
High Growth Balanced Conservative
Fund Growth Fund Growth Fund
----------- ----------- -----------
<S> <C> <C> <C>
Proceeds of sales and
maturities $42,609,000 $28,242,000 $4,378,000
</TABLE>
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT MANAGER AND SCHWAB
The Investment Manager and Schwab reduced a portion of their fees and absorbed
certain expenses in order to limit each Fund's ratio of operating expenses to
average net assets. For the period ended April 30, 1997, the total of such fees
and expenses reduced and absorbed by the Investment Manager were $156,000,
$150,000 and $86,000 for the High Growth Fund, Balanced Growth Fund and
Conservative Growth Fund, respectively, and the total of such fees reduced by
Schwab was $110,000 $100,000 and $30,000 for the High Growth Fund, Balanced
Growth Fund and Conservative Growth Fund, respectively.
71
<PAGE> 78
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NOTES TO FINANCIAL STATEMENTS (continued)
5. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than short-term
obligations, for the six months ended April 30, 1997, were as follows (in
thousands):
<TABLE>
<CAPTION>
High Balanced Conservative
Growth Fund Growth Fund Growth Fund
----------- ----------- -----------
<S> <C> <C> <C>
Purchases $73,902,000 $74,190,000 $14,211,000
Proceeds of sales and
maturities $70,504,000 $55,098,000 $11,750,000
</TABLE>
6. COMPOSITION OF NET ASSETS
At April 30, 1997, net assets for each Fund consisted of:
<TABLE>
<CAPTION>
High Balanced Conservative
Growth Fund Growth Fund Growth Fund
------------ ------------ ------------
<S> <C> <C> <C>
Paid-in-capital $105,913,000 $ 98,932,000 $ 24,927,000
Accumulated
undistributed net
investment income 642,000 896,000 88,000
Accumulated net realized
loss on investments
sold and foreign
currency transactions 4,281,000 1,947,000 362,000
Net unrealized gain on
investments 10,756,000 6,047,000 936,000
Net unrealized loss on
translating assets and
liabilities into the
reporting currency (13,000) (6,000) (1,000)
------------ ------------ ------------
$121,579,000 $107,816,000 $ 26,312,000
=========== =========== ===========
</TABLE>
72
<PAGE> 79
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At April 30, 1997, the High Growth Fund's Statement of Net Assets included:
$139,000 payable for Fund shares redeemed, $14,000 payable for investment
advisory and administration fee, $32,000 receivable for Fund shares sold and
receivable for investments sold $1,000. The Balanced Growth Fund's Statement of
Net Assets included: $43,000 payable for Fund shares redeemed, $10,000 payable
for investment advisory and administration fee and $105,000 receivable for Fund
shares sold. The Conservative Growth Fund's Statement of Net Assets included:
$16,000 payable for Fund shares redeemed, $2,000 payable for investment advisory
and administration fee and $26,000 receivable for Fund shares sold.
73
<PAGE> 80
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NOTES TO FINANCIAL STATEMENTS (continued)
7. FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Conservative
High Growth Fund Balanced Growth Fund Growth Fund
------------------------ ------------------------ ------------------------
Six months Six months Six months
ended Period ended Period ended Period
April 30, ended April 30, ended April 30, ended
1997 October 31, 1997 October 31, 1997 October 31,
(Unaudited) 1996+ (Unaudited) 1996+ (Unaudited) 1996+
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $ 11.30 $ 10.00 $ 11.05 $ 10.00 $ 10.51 $ 10.00
Income from investment operations
Net investment income 0.09 0.19 0.11 0.25 0.18 0.33
Net realized and unrealized gain
on investments and foreign
currency transactions 0.62 1.13 0.42 0.83 0.19 0.48
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 0.71 1.32 0.53 1.08 0.37 0.81
Less distributions
Dividends from net investment
income (0.20) (0.02) (0.23) (0.03) (0.17) (0.30)
Distributions from realized gain
on investments -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.20) (0.02) (0.23) (0.03) (0.17) (0.30)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 11.81 $ 11.30 $ 11.35 $ 11.05 $ 10.71 $ 10.51
=========== ========== =========== ========== =========== ==========
Total return (not annualized) 6.31% 13.24% 4.85% 10.82% 3.58% 8.18%
Ratios/Supplemental data
Net assets, end of period
(000's) $121,579 $105,954 $107,816 $80,980 $26,312 $22,459
Ratio of expenses to average net
assets++ 0.83%* 0.89%* 0.84%* 0.89%* 0.85%* 0.89%*
Ratio of net investment income
to average net assets++ 1.68%* 2.03%* 2.60%* 2.79%* 3.45%* 3.49%*
Portfolio turnover rate 66% 46% 68% 44% 60% 64%
Average commission rate $ 0.04 $ 0.03 $ 0.03 $ 0.02 $ 0.02 $ 0.02
</TABLE>
- ---------------
++ The information contained in the above table is based on actual expenses for
the period, after giving effect to the portion of fees and expenses reduced
and expenses absorbed by the Investment Manager and Schwab. Had these fees
and expenses not been reduced and absorbed, the Funds' expense and net
investment income ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio of expenses to average net
assets 1.30%* 1.50%* 1.34%* 1.56%* 1.81%* 2.05%*
Ratio of net investment income
to average net assets 1.21%* 1.42%* 2.10%* 2.12%* 2.49%* 2.33%*
</TABLE>
* Annualized
+ For the period from November 20, 1995 (commencement of operations) to October
31, 1996.
74
<PAGE> 81
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE> 82
THIS SPACE RESERVED FOR YOUR COMMENTS AND QUESTIONS.
A SCHWAB REPRESENTATIVE WILL BE HAPPY TO ASSIST YOU.
<PAGE> 83
KEEP YOUR
MONEY WORKING
HARDER!
----------------------------
USE THIS ENVELOPE TO EASILY
ADD TO YOUR SCHWAB FUNDS.
CHARLES SCHWAB
<PAGE> 84
WE'VE MADE IT EASIER FOR YOU! TAKE ADVANTAGE OF THIS OPPORTUNITY TO ADD TO YOUR
SCHWABFUNDS(R) INVESTMENT.
Now, you can add to your account by using this convenient Schwab investment
envelope. It's a simple, easy way to increase your investment. You can also
have money transferred to your fund directly from your bank account or payroll
check using Schwab's free Automatic Investment Plan (AIP). If you'd like more
information on AIP, just check the appropriate box on the coupon. We'll send
you everything you need to get started.
DON'T DELAY. USE THIS CONVENIENT INVESTMENT ENVELOPE AND SEND YOUR CHECK TODAY!
THE AUTOMATIC INVESTMENT PLAN DOES NOT INSURE PROFIT OR PROTECT AGAINST LOSS IN
DECLINING MARKETS.
- --------------------------------------------------------------------------------
PLEASE DETACH HERE
SCHWABFUNDS(R)
INVESTMENT COUPON
- --------------------------------------------------------------------------------
Please enclose your check and this completed investment coupon in the attached
postage-paid envelope.
________________________________________________________________________________
NAME
$_______________________________________________________________________________
AMOUNT OF INVESTMENT
________________________________________________________________________________
SIGNATURE
[ ] Check here if you would like more investment coupons for future use.
[ ] Check here if you would like more information on Schwab's Automatic
Investment Plan (AIP).
__________-__________
SCHWAB ACCOUNT NUMBER
Please indicate to which SchwabFund your investment should go:
[ ] Schwab S&P 500 Fund
[ ] Schwab Small-Cap Index Fund(R)
[ ] Schwab International Index Fund(R)
[ ] Schwab Analytics Fund(TM)
[ ] Schwab OneSource Portfolios - International
[ ] Schwab OneSource Portfolios - Growth Allocation
[ ] Schwab OneSource Portfolios - Balanced Allocation
[ ] Schwab Asset Director(R) - High Growth Fund
[ ] Schwab Asset Director(R) - Balanced Growth Fund
[ ] Schwab Asset Director(R) - Conservative Growth Fund
IF NO FUND IS INDICATED, YOUR INVESTMENT WILL GO INTO THE SWEEP ACCOUNT YOU'VE
DESIGNATED.
*This envelope may not be used for initial investments. Subsequent investment
minimum is $100.
(C) 1997 Charles Schwab & Co., Inc. All rights reserved. Member SIPC/NYSE
Printed on recycled paper. TF4794C(5/97) CRS 20061
(LIFT HERE FOR MORE INFORMATION)
<PAGE> 85
CHARLES SCHWAB
JUST FOLLOW THESE EASY STEPS TO INVEST IN YOUR SCHWABFUNDS(R) ACCOUNT:
1. Fill out the Schwab investment coupon completely, including your name,
account number, amount of your check and signature. Please use one coupon
for each account.
2. Make your check payable to CHARLES SCHWAB & CO., INC., and enclose your
check with the completed coupon in this postage-paid envelope.
3. Then just drop your SchwabFunds investment envelope in the mail today -
and start putting your money to work. If you have any questions, don't
hesitate to call 1-800-2 NO-LOAD.
This envelope is intended for shareholders who have already received a current
SchwabFunds prospectus.
<PAGE> 86
ATTN: Dept. AIP333-4 NO POSTAGE
NECESSARY IF
MAILED IN THE
BUSINESS REPLY MAIL UNITED STATES
FIRST-CLASS MAIL PERMIT NO. 18125 SAN FRANCISCO, CA
POSTAGE WILL BE PAID BY ADDRESSEE
CHARLES SCHWAB & CO INC
PO BOX 7778
SAN FRANCISCO CA 94120-9419
<PAGE> 87
SCHWABFUNDS FAMILY(R)
The SchwabFunds 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 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 OneSource Portfolios--Growth Allocation
Schwab OneSource Portfolios--Balanced Allocation
SCHWAB STOCK FUNDS
Schwab 1000 Fund(R)
Schwab S&P 500 Fund
Schwab Analytics Fund(TM)
Schwab Small-Cap Index Fund(R)
Schwab International Index Fund(R)
Schwab OneSource Portfolios--International
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-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(R).
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 must be preceded or accompanied by a current prospectus.
* 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> 88
==============
SCHWAB FUNDS BULK RATE
F A M I L Y U.S. POSTAGE
PAID
101 Montgomery Street CHARLES SCHWAB
San Francisco, California 94104 ==============
INVESTMENT ADVISOR
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)1997 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC/NYSE.
TF4730R(5/97) CRS 20064 Printed on recycled paper.
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