<PAGE> 1
[SCHWABFUNDS(R) LOGO]
SCHWAB RETIREMENT MONEY FUND(R)
ANNUAL REPORT
DECEMBER 31, 1995
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[SchwabFunds(R) Logo]
DEAR SHAREHOLDER,
I'm pleased to report to you on the performance of the Schwab Retirement Money
Fund(R) for the annual reporting period ended December 31, 1995. During the
period, the Fund provided you with current income consistent with preservation
of capital. By the end of the reporting period, the Schwab Retirement Money
Fund's net assets stood at almost $99 million.
PERFORMANCE REVIEW
The table below presents 7-day average yields for the Fund at the end of the
reporting period. Bear in mind that, as with all money market funds, past
performance is no guarantee of future results. Also note that although the Fund
seeks to maintain a stable $1.00 share price, money market funds are neither
insured nor guaranteed by the U.S. government, and there can be no assurance
that the Fund will be able to maintain a stable net asset value.
<TABLE>
<CAPTION>
_____________________________________________________________________
7-DAY AVERAGE YIELDS
(As of December 31, 1995)
Current Compound
_____________________________________________________________________
<S> <C> <C>
Schwab Retirement Money Fund 5.12% 5.25%
_____________________________________________________________________
</TABLE>
Enclosed you will find a complete listing of the Fund's holdings as of December
31, 1995.
We appreciate your trust in SchwabFunds(R), and look forward to continuing to
help you achieve your financial goals in the future.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
Chairman
The Charles Schwab Family of Funds
<PAGE> 3
SchwabFunds(R)
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SCHWAB RETIREMENT MONEY FUND(R)
Portfolio Summary
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<TABLE>
<CAPTION>
ASSET GROWTH
Total Total Percentage
Net Assets Net Assets Growth Over
as of 12/31/95 as of 12/31/94 Reporting
(000s) (000s) Period
- --------------------------------------------------------------------------------
<S> <C> <C>
$98,992 $31,415 215%
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</TABLE>
<TABLE>
<CAPTION>
AVERAGE YIELDS FOR THE PERIODS ENDED
DECEMBER 31, 1995
Last Last Last
Seven Days Three Months Twelve Months
- --------------------------------------------------------------------------------
<S> <C> <C>
5.12% 5.14% 5.30%
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</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 3/31/95 6/30/95 9/30/95 12/31/95
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0 - 15 Days 14.4% 13.2% 24.9% 34.6%
16 - 30 Days 22.2 45.8 29.7 28.0
31 - 60 Days 32.6 18.2 18.2 11.4
61 - 90 Days 29.1 15.5 17.2 10.2
91 - 120 Days 0.0 3.7 5.4 7.0
Over 120 Days 1.7 3.6 4.6 8.8
Weighted Average 44 Days 40 Days 44 Days 49 Days
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</TABLE>
PORTFOLIO QUALITY
<TABLE>
<CAPTION>
Percent of
SEC Tier Net Assets
Rating 12/31/95
------------------------------------------
<S> <C>
Tier 1 100.0%
Tier 2 0.0
------------------------------------------
</TABLE>
<PAGE> 4
SchwabFunds(R) 1
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SCHWAB RETIREMENT MONEY FUND(R)
Schedule of Investments (in thousands)
December 31, 1995
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<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS--69.4%(a)
ASSET BACKED SECURITIES--11.5%
Alamo Funding, LP
5.86%, 01/19/96 $1,000 $ 997
Apreco, Inc.
5.80%, 01/22/96 4,000 3,987
Asset Securitization Cooperative Corp.
5.83%, 02/01/96 2,000 1,990
Broadway Capital Corp.
5.95%, 01/03/96 1,523 1,523
Preferred Receivables Funding Corp.
5.79%, 01/11/96 2,000 1,997
Sheffield Receivables Corp.
5.80%, 01/30/96 1,000 995
-------
11,489
-------
AUTOMOTIVE--5.5%
General Motors Acceptance Corp.
5.79%, 02/05/96 1,500 1,492
5.82%, 02/14/96 3,000 2,979
Renault Credit International SA Banque
5.88%, 01/25/96 1,000 996
-------
5,467
-------
BANKING--AUSTRALIA-1.0%
National Australia Funding (Delaware), Inc.
5.53%, 06/12/96 1,000 976
-------
BANKING--BELGIUM--2.9%
Generale Bank, Inc.
5.81%, 04/04/96 3,000 2,956
-------
BANKING--CANADA--1.0%
Toronto-Dominion Holdings
5.51%, 07/10/96 1,000 972
-------
BANKING--DOMESTIC BANK HOLDING COMPANY--3.9%
Bankers Trust New York Corp.
5.81%, 01/29/96 2,000 1,991
</TABLE>
<PAGE> 5
SchwabFunds(R) 2
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SCHWAB RETIREMENT MONEY FUND(R)
Schedule of Investments (in thousands)
December 31, 1995
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<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
NationsBank Corp.
5.55%, 05/21/96 $1,000 $ 979
5.61%, 05/28/96 1,000 978
-------
3,948
-------
BANKING--FRANCE--1.0%
Societe Generale, N.A.
5.80%, 03/08/96 1,000 989
-------
BANKING--GERMANY--4.3%
Kredietbank N.A. Finance Corp.
5.78%, 01/11/96 3,000 2,995
5.83%, 03/01/96 1,300 1,288
-------
4,283
-------
BANKING--ITALY--1.0%
Cariplo Finance, Inc.
5.76%, 02/22/96 1,000 992
-------
FINANCE (COMMERCIAL)--2.9%
General Electric Capital Corp.
5.74%, 03/06/96 1,000 990
5.63%, 03/25/96 1,000 987
5.62%, 05/07/96 1,000 981
-------
2,958
-------
FINANCE (CONSUMER)--2.0%
Associates Corp. of North America
5.65%, 05/09/96 2,000 1,960
-------
GOVERNMENT LOCALITY--FOREIGN--4.0%
New South Wales Treasury Corp.
5.81%, 01/10/96 4,000 3,994
-------
MINING AND MINERAL RESOURCES--2.0%
BHP Finance (U.S.A.), Inc.
5.70%, 02/21/96 1,000 992
</TABLE>
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SchwabFunds(R) 3
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<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
BHP Finance (U.S.A.), Inc.
5.76%, 03/05/96 $ 1,000 $ 990
-------
1,982
-------
MORTGAGE BANKING--4.0%
Fleet Mortgage Group, Inc.
5.85%, 01/26/96 3,000 2,988
5.80%, 02/23/96 1,000 992
-------
3,980
-------
SECURITIES BROKERAGE-DEALER--19.4%
BT Securities Corp.
5.80%, 01/03/96 3,000 2,999
5.83%, 01/30/96 1,000 995
Bear Stearns Companies, Inc.
5.80%, 01/12/96 2,500 2,496
Goldman Sachs Group, LP
5.82%, 01/12/96 1,000 998
5.77%, 03/22/96 3,000 2,962
Lehman Brothers Holdings, Inc.
5.85%, 01/23/96 4,000 3,986
Morgan Stanley Group, Inc.
5.83%, 01/08/96 1,000 999
5.78%, 02/08/96 1,000 994
Nomura Holdings America, Inc.
5.92%, 01/04/96 1,000 1,000
5.83%, 03/13/96 1,000 989
Paine Webber Group, Inc.
5.96%, 01/09/96 1,000 999
-------
19,417
-------
</TABLE>
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SchwabFunds(R) 4
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SCHWAB RETIREMENT MONEY FUND(R)
Schedule of Investments (in thousands)
December 31, 1995
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<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C> <C>
CORPORATE OBLIGATIONS (CONTINUED)
STUDENT LOANS--3.0%
Student Loan Corp.
5.80%, 01/12/96 $ 3,000 $ 2,995
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $69,358) 69,358
-------
AGENCY OBLIGATIONS--3.0%
COUPON NOTES--3.0%
Federal National Mortgage Assoc.
5.91%, 08/19/96 3,000 3,005
-------
TOTAL AGENCY OBLIGATIONS
(Cost $3,005) 3,005
-------
CERTIFICATES OF DEPOSIT--24.0%
BANKING--CANADA--4.0%
Canadian Imperial Bank of Commerce
5.81%, 01/24/96 4,000 4,000
-------
BANKING--DOMESTIC--4.0%
MBNA America Bank N.A.
5.63%, 04/16/96 4,000 4,000
-------
BANKING--FRANCE--2.0%
Societe Generale
5.80%, 01/25/96 2,000 2,000
-------
BANKING--JAPAN--8.0%
Dai-Ichi Kangyo Bank, Ltd.
6.20%, 01/12/96 1,000 1,000
6.14%, 01/12/96 1,000 1,000
6.09%, 01/12/96 1,000 1,000
Industrial Bank of Japan, Ltd.
6.25%, 01/02/96 2,000 2,000
Mitsubishi Bank, Ltd.
5.83%, 03/19/96 1,000 1,000
Sanwa Bank, Ltd.
6.22%, 02/21/96 1,000 1,000
</TABLE>
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SchwabFunds(R) 5
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<TABLE>
<CAPTION>
PAR VALUE
--- -----
<S> <C> <C>
CERTIFICATES OF DEPOSIT (CONTINUED)
Sumitomo Bank, Ltd.
6.15%, 01/17/96 $ 1,000 $ 1,000
-------
8,000
-------
BANKING--NETHERLANDS--2.0%
ABN-AMRO Bank N.V.
5.58%, 06/05/96 2,000 2,000
-------
BANKING--UNITED KINGDOM--4.0%
Abbey National PLC
5.80%, 01/16/96 4,000 3,996
-------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $23,996) 23,996
-------
MATURITY
--------
REPURCHASE AGREEMENT--3.6%
Donaldson, Lufkin & Jenrette
Securities Corp. 5.80%
Issue Date 12/29/95
Due 01/02/96
Collateralized By:
FNMA: $13,435 Par;
7.04% Due 04/25/23 3,554 3,552
-------
TOTAL REPURCHASE AGREEMENT
(Cost $3,552) 3,552
-------
TOTAL INVESTMENTS--100.0%
(cost $99,911) $99,911
=======
</TABLE>
See accompanying Notes to Schedule of Investments.
<PAGE> 9
SchwabFunds(R) 6
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SCHWAB RETIREMENT MONEY FUND(R)
Schedule of Investments (in thousands)
December 31, 1995
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NOTES TO SCHEDULE OF INVESTMENTS.
Yields shown are effective yields at the time of purchase except for agency
obligations which reflect the coupon rate of the security. Yields for each type
of security are stated according to the market convention for that security
type. For each security, cost (for financial reporting and federal income tax
purposes) and carrying value are the same.
(a) Certain securities purchased by the Fund are private placement securities
exempt from registration by Section 4(2) of the Securities Act of 1933.
These securities generally are issued to institutional investors, such as
the Schwab Retirement Money Fund. Any resale by the Fund must be in an
exempt transaction, normally to a qualified institutional buyer. At
December 31, 1995, the aggregate value of private placement securities
held by Fund was $4,508,000 which represented 4.6% of net assets. All of
these private placement securities were determined by the Investment
Manager to be liquid in accordance with a resolution adopted by the Board
of Trustees relating to Rule 144A, promulgated under the Securities Act of
1933.
Abbreviations
FNMA Federal National Mortgage Association
See accompanying Notes to Financial Statements.
<PAGE> 10
SchwabFunds(R) 7
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SCHWAB RETIREMENT MONEY FUND(R)
Statement of Assets and Liabilities (in thousands)
December 31, 1995
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<TABLE>
ASSETS
<S> <C>
Investments, at value (Cost: $99,911) $ 99,911
Interest receivable 396
Receivable for fund shares sold 177
Deferred organization costs 36
Prepaid expenses 23
--------
Total assets 100,543
--------
LIABILITIES
Payable for:
Dividends 639
Fund shares redeemed 829
Investment advisory and administration fee 37
Transfer agency and shareholder service fees 13
Other 33
--------
Total liabilities 1,551
--------
Net assets applicable to outstanding shares $ 98,992
========
NET ASSETS CONSIST OF:
Capital paid in $ 98,992
Accumulated net realized gain (loss)
on investments sold ---
--------
$ 98,992
========
THE PRICING OF SHARES
Outstanding shares, $0.00001 par value
(unlimited shares authorized) 98,992
Net asset value, offering and redemption
price per share $1.00
</TABLE>
See accompanying Notes to Financial Statements.
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SchwabFunds(R) 8
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SCHWAB RETIREMENT MONEY FUND(R)
Statement of Operations (in thousands)
For the year ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Interest income $4,616
------
Expenses:
Investment advisory and administration fee 354
Transfer agency and shareholder service fees 192
Custodian fees 60
Registration fees 50
Professional fees 13
Shareholder reports 18
Amortization of deferred organization costs 12
Insurance and other expenses 6
------
705
Less expenses reduced (144)
------
Total expenses incurred by Fund 561
------
Net investment income 4,055
Net realized gain (loss) on investments sold ---
------
Increase in net assets resulting from operations $4,055
======
</TABLE>
See accompanying Notes to Financial Statements.
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SchwabFunds(R) 9
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SCHWAB RETIREMENT MONEY FUND(R)
Statement of Changes in Net Assets (in thousands)
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<TABLE>
<CAPTION>
For the year For the period
ended ended
December 31, December 31,
1995 1994 *
------------- --------------
<S> <C> <C>
Operations:
Net investment income $ 4,055 $ 842
Net realized gain (loss) on investments sold --- ---
--------- --------
Increase in net assets resulting
from operations 4,055 842
--------- --------
Dividends to shareholders from
net investment income (4,055) (842)
--------- --------
Capital share transactions (dollar amounts
and number of shares are the same):
Proceeds from shares sold 173,890 84,340
Net asset value of shares issued in
reinvestment of dividends 3,564 661
Less payments for shares redeemed (109,877) (53,586)
--------- --------
Increase in net assets from
capital share transactions 67,577 31,415
--------- --------
Total increase in net assets 67,577 31,415
Net Assets:
Beginning of period 31,415 ---
--------- --------
End of period $ 98,992 $ 31,415
========= ========
</TABLE>
* For the period March 2, 1994 (commencement of operations)
to December 31, 1994.
See accompanying Notes to Financial Statements.
<PAGE> 13
SchwabFunds(R) 10
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SCHWAB RETIREMENT MONEY FUND(R)
Notes to Financial Statements
For the year ended December 31, 1995
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1. DESCRIPTION OF THE FUND
The Schwab Retirement Money Fund (the "Fund") is a series of The Charles Schwab
Family of Funds (the "Trust"), an open-end, management investment company
organized as a Massachusetts business trust on October 20, 1989 and registered
under the Investment Company Act of 1940, as amended.
In addition to the Fund, the Trust also offers -- the Schwab Money Market Fund,
the Schwab Government Money Fund, the Schwab U.S. Treasury Money Fund, the
Schwab Tax-Exempt Money Fund (Sweep and Value Advantage Shares), the Schwab
California Tax-Exempt Money Fund (Sweep and Value Advantage Shares), the Schwab
New York Tax-Exempt Money Fund (Sweep and Value Advantage Shares), the Schwab
Value Advantage Money Fund(R) and the Schwab Institutional Advantage Money
Fund(TM). The assets of each series are segregated and accounted for separately.
The Schwab Retirement Money Fund invests primarily in a diversified portfolio of
short-term obligations of major banks and corporations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in conformity with generally
accepted accounting principles for investment companies. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
Security valuation - Investments are stated at amortized cost which approximates
market value.
Security transactions and interest income - Security transactions are accounted
for on a trade date basis (date the order to buy or sell is executed). Interest
income is recorded on the accrual basis and includes amortization of premium and
accretion of discount on investments. Realized gains and losses from security
transactions are determined on an identified cost basis.
Repurchase agreements - Repurchase agreements are fully collateralized by U.S.
Treasury or government agency securities. All collateral is held by the Fund's
custodian and is monitored daily to ensure that its market value at least equals
the repurchase price under the agreement.
Dividends to shareholders - The Fund declares a daily dividend, equal to its net
investment income for that day, payable monthly.
<PAGE> 14
SchwabFunds(R) 11
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Deferred organization costs - Costs incurred in connection with the organization
of the Fund and its initial registration with the Securities and Exchange
Commission and with various states are amortized on a straight-line basis over a
five year period from the Fund's commencement of operations.
Expenses - Expenses arising in connection with the Fund are charged directly to
the Fund. Expenses common to all series of the Trust are allocated to each
series in proportion to their relative net assets.
Federal income taxes - It is the Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income and realized net capital gains, if
any, to shareholders. Therefore, no federal income tax provision is required.
The Fund is considered a separate entity for tax purposes.
3. TRANSACTIONS WITH AFFILIATES
Investment advisory and administration agreements - The Trust has investment
advisory and administration agreements with Charles Schwab Investment
Management, Inc. (the "Investment Manager"). For advisory services and
facilities furnished, the Fund pays an annual fee, payable monthly, of .46% of
the first $2 billion of average daily net assets, .45% of such assets over $2
billion, and .40% of such assets in excess of $3 billion. Under these
agreements, the Fund incurred investment advisory and administration fees of
$354,000 for the year ended December 31, 1995, before the Investment Manager
reduced its fee (see Note 4).
Transfer agency and shareholder service agreements - The Trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of .25% of average daily net assets. For the year
ended December 31, 1995, the Fund incurred transfer agency and shareholder
service fees of $192,000, before Schwab reduced its fees (see Note 4).
Officers and trustees - Certain officers and trustees of the Trust are also
officers or directors of the Investment Manager and/or Schwab. During the year
ended December 31, 1995, the Trust made no direct payments to its officers or
trustees who are "interested persons" within the meaning of the Investment
Company Act of 1940, as amended. The Fund did not incur fees related to the
Trust's unaffiliated trustees.
<PAGE> 15
SchwabFunds(R) 12
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SCHWAB RETIREMENT MONEY FUND(R)
Notes to Financial Statements
For the year ended December 31, 1995
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4. EXPENSES REDUCED BY THE INVESTMENT MANAGER AND SCHWAB
The Investment Manager and Schwab reduced a portion of their fees in order to
limit the Fund's ratio of operating expenses to average net assets. For the year
ended December 31, 1995, the total of such fees reduced by the Investment
Manager and Schwab was $16,000 and $128,000, respectively.
5. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities for the year ended
December 31, 1995, aggregated (in thousands) $1,753,661 and $1,685,786,
respectively.
<PAGE> 16
SchwabFunds(R) 13
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6. FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period:
<TABLE>
<CAPTION>
For the year For the period
ended ended
December 31, December 31,
1995 1994(1)
------------ --------------
<S> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00
Income from investment operations
Net investment income .05 .03
Net realized and unrealized gain (loss)
on investments --- ---
------- -------
Total from investment operations .05 .03
Less distributions
Dividends from net investment income (.05) (.03)
Distributions from realized gain
on investments --- ---
------- -------
Total distributions (.05) (.03)
------- -------
Net asset value at end of period $ 1.00 $ 1.00
======= =======
Total return (%) 5.43 3.29
Ratios/Supplemental data
Net assets, end of period(000s) $98,992 $31,415
Ratio of expenses to average net assets(%) .73 .73*
Ratio of net investment income to
average net assets (%) 5.28 4.04*
</TABLE>
The Investment Manager and Schwab have reduced a portion of their fees in order
to limit the Fund's ratio of operating expenses to average net assets. Had these
fees not been reduced the ratio of expenses to average net assets for the
periods ended December 31, 1995 and 1994 would have been .92%, and 1.05%*,
respectively, and the ratio of net investment income to average net assets would
have been 5.09% and 3.72%*, respectively.
(1) For the period March 2, 1994 (commencement of operations) to
December 31, 1994.
* Annualized
<PAGE> 17
SchwabFunds(R) 14
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To the Board of Trustees
and Shareholders of the Schwab Retirement Money Fund(R)
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, the related statements of operations and of changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of the Schwab Retirement Money Fund (one of the
series constituting The Charles Schwab Family of Funds, hereafter referred to as
the "Trust") at December 31, 1995, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1995 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
San Francisco, California
January 31, 1996
<PAGE> 18
[SCHWABFUNDS FAMILY(R) LOGO]
INVESTMENT ADVISER: Charles Schwab Investment Management, Inc., 101 Montgomery
Street, San Francisco, CA 94104
DISTRIBUTOR: Charles Schwab & Co., Inc., 101 Montgomery Street, San Francisco,
CA 94104
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus. TF3961(2/96) CRS 10212
