<PAGE> 1
SCHWABFUNDS(R)
SCHWAB RETIREMENT
MONEY FUND(R)
SEMI-ANNUAL REPORT
JUNE 30, 1997
<PAGE> 2
SCHWABFUNDS(R)
Dear Shareholder,
I'm pleased to report to you on the performance of the Schwab Retirement Money
Fund(R) for the six-month reporting period which ended June 30, 1997. During
the period, the Fund provided you with current income consistent with
preservation of capital. By the end of the six-month period, the Schwab
Retirement Money Fund's net assets were $134 million.
PERFORMANCE REVIEW
The table below presents seven-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 per
share.
_____________________________________________________________________________
7-DAY AVERAGE YIELDS(1)
(6/30/97)
Current Effective
_____________________________________________________________________________
Schwab Retirement Money Fund 5.01% 5.14%
_____________________________________________________________________________
Enclosed you will find a complete listing of the Fund's holdings as of June 30,
1997.
We appreciate your confidence 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
1 A portion of the Fund's fees are waived or reimbursed during the reporting
period. Without the waivers or reimbursements, the 7-day current yield
would have been 4.90% and the 7-day effective yield would have been 5.02%
at June 30, 1997.
<PAGE> 3
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
ASSET GROWTH
<TABLE>
<CAPTION>
Total Total Percentage
Net Assets Net Assets Growth Over
as of 6/30/97 as of 12/31/96 Reporting
(000s) (000s) Period
- --------------------------------------------------------------------------------
<S> <C> <C>
$134,497 $136,319 (1%)
- --------------------------------------------------------------------------------
</TABLE>
AVERAGE YIELDS FOR THE PERIODS ENDED*
JUNE 30, 1997
<TABLE>
<CAPTION>
Last Last Last
Seven Days Three Months Twelve Months
- --------------------------------------------------------------------------------
<S> <C> <C>
5.01% 4.93% 4.85%
- --------------------------------------------------------------------------------
</TABLE>
MATURITY SCHEDULE
PERCENT OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
Maturity Range 9/30/96 12/31/96 3/31/97 6/30/97
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0 - 15 Days 18.8% 23.2% 27.8% 41.2%
16 - 30 Days 12.3 13.8 14.8 7.2
31 - 60 Days 23.8 20.4 16.3 12.2
61 - 90 Days 30.5 28.2 22.2 15.8
91 - 120 Days 7.3 6.1 13.0 11.5
Over 120 Days 7.3 8.3 5.9 12.1
Weighted Average 60 Days 54 Days 50 Days 51 Days
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO QUALITY
<TABLE>
<CAPTION>
Percent of
SEC Tier Net Assets
Rating 6/30/97
---------------------------------------------------------------
<S> <C>
Tier 1 100.0%
Tier 2 0.0
---------------------------------------------------------------
</TABLE>
- -----------------------
* Note: A portion of the Fund's expenses were reduced during the periods. Had
these expenses not been reduced yields would have been lower.
<PAGE> 4
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
COMMERCIAL PAPER AND OTHER CORPORATE OBLIGATIONS - 62.68%
ASSET BACKED SECURITIES - 3.61%
Preferred Receivables Funding Corp.
5.73%, 07/14/97 $ 5,000 $ 4,990
-----
AUTOMOTIVE - 2.15%
General Motors Acceptance Corp.
5.58%, 07/10/97 1,000 999
6.00%, 10/09/97 2,000 1,967
-----
2,966
-----
BANKING-AUSTRALIA - 5.34%
SBNSW Delaware, Inc.
5.74%, 07/07/97 4,400 4,396
Westpac Capital Corp.
5.52%, 07/02/97 3,000 3,000
-----
7,396
-----
BANKING-BELGIUM - 4.29%
Generale Bank, Inc.
5.66%, 09/16/97 6,000 5,928
-----
BANKING-DENMARK - 4.29%
Unifunding Inc.
5.68%, 09/05/97 3,000 2,969
5.66%, 09/17/97 3,000 2,964
-----
5,933
-----
BANKING-DOMESTIC - 2.17%
Bankers Trust New York Corp.
5.54%, 07/07/97 3,000 2,997
-----
BANKING-FRANCE - 3.54%
Banco Nacional de Comercio Exterior (Societe Generale LOC)
5.75%, 11/25/97 5,000 4,885
-----
BANKING-GERMANY - 3.59%
Comision Federal de Electricidad, (Westdeutsche Landesbank LOC)
5.71%, 08/29/97 5,000 4,954
-----
BANKING-SWEDEN - 5.06%
Nordbanken of North America, Inc.
5.72%, 07/01/97 3,000 3,000
Svenska Handelsbanken, Inc.
5.73%, 07/15/97 4,000 3,991
-----
6,991
-----
FINANCE-COMMERCIAL - 8.61%
General Electric Capital Corp.
6.20%, 07/01/97 6,000 6,001
Heller Financial Inc.
5.92%, 10/07/97 6,000 5,905
-----
11,906
------
FINANCE-CONSUMER - 1.45%
Associates Corp. of North America
5.68%, 07/02/97 2,000 2,000
-----
MISCELLANEOUS SERVICES - 4.32%
PHH Corp.
5.68%, 08/07/97 6,000 5,965
-----
</TABLE>
1
<PAGE> 5
SCHWAB RETIREMENT MONEY FUND(R)
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SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
SECURITIES BROKERAGE-DEALER - 14.26%
BT Securities Corp.
5.61%, 09/05/97 $ 2,000 $ 1,980
Goldman Sachs Group, LP
5.90%, 11/14/97 3,000 2,935
Lehman Brothers Holdings, Inc.
6.00%, 11/07/97 3,000 2,937
5.87%, 12/12/97 3,000 2,922
Morgan Stanley Group, Inc.
5.69%, 07/24/97 2,000 1,993
PaineWebber Group, Inc.
5.80%, 08/13/97 5,000 4,967
Salomon, Inc.
5.94%, 08/25/97 1,000 991
5.86%, 09/23/97 1,000 987
---
19,712
------
TOTAL COMMERCIAL PAPER AND OTHER CORPORATE OBLIGATIONS (Cost $86,626) 86,623
------
CERTIFICATES OF DEPOSIT - 23.88%
BANKING-DOMESTIC - 10.14%
Bankers Trust Company
5.53%, 07/09/97 5,000 5,000
5.72%, 07/10/97 1,000 1,000
Chase Manhattan Bank USA
5.53%, 07/21/97 5,000 5,000
Mellon Bank N.A.
5.76%, 12/12/97 3,000 3,000
-----
14,000
------
BANKING-FRANCE - 4.34%
Banque Nationale de Paris
5.67%, 10/02/97 6,000 6,000
-----
BANKING-GERMANY - 2.17%
Bayerische Vereinsbank AG
6.00%, 10/28/97 2,000 1,997
Landesbank Hessen-Thuringen Girozentrale
6.20%, 09/05/97 1,000 1,000
-----
2,997
-----
BANKING-JAPAN - 2.89%
Industrial Bank of Japan, Ltd.
5.83%, 07/11/97 1,000 1,000
Sumitomo Bank, Ltd.
5.84%, 07/25/97 3,000 3,000
-----
4,000
-----
BANKING-NETHERLANDS - 4.34%
ABN-AMRO Bank N.V.
5.60%, 09/02/97 6,000 6,000
-----
TOTAL CERTIFICATES OF DEPOSIT (Cost $32,997) 32,997
------
</TABLE>
2
<PAGE> 6
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Par Value
--- -----
<S> <C> <C>
BANK NOTES - 4.34%
BANKING-DOMESTIC - 4.34%
FCC National Bank
5.53%, 07/07/97 $ 2,000 $ 2,000
First National Bank of Boston
5.72%, 07/15/97 4,000 4,000
-----
TOTAL BANK NOTES (Cost $6,000) 6,000
-----
VARIABLE RATE OBLIGATIONS - 3.39%(a)
BANKING-DOMESTIC - 2.17%
Eagle County, Colorado Taxable Housing Facilities Revenue Bonds (BC Housing, LLC
Project) Series 1997B / (Norwest Bank Minnesota, NA LOC)
5.69%, 07/07/97 1,500 1,500
Village of Sturtevant, Wisconsin Taxable Variable Rate Demand Industrial
Development Revenue Bonds (Andis Company Project) Series 1996B / (M&I Marshall &
Ilsley Bank LOC)
5.85%, 07/07/97 1,500 1,500
-----
3,000
-----
BANKING-UNITED KINGDOM - 1.22%
City of Gary, Indiana Taxable Adjustable Rate Economic Development Revenue
Refunding Bonds (The Miller Partnership, L.P.Project) Series 1996B / (Royal Bank
of Scotland LOC)
5.85%, 07/07/97 1,680 1,680
-----
TOTAL VARIABLE RATE OBLIGATIONS (Cost $4,680) 4,680
-----
BANKER'S ACCEPTANCES - 1.45%
BANKING-DOMESTIC - 1.45%
First National Bank of Boston
5.68%, 07/08/97 1,000 999
5.69%, 07/11/97 1,000 998
---
TOTAL BANKER'S ACCEPTANCES (Cost $1,997) 1,997
-----
REPURCHASE AGREEMENTS - 4.26%(b) MATURITY
--------
Salomon Brothers Inc. 6.15%, Issue Date 06/30/97
Due 07/01/97, Tri-Party Repurchase Agreement,
Collateralized By: U.S. Government Agency Obligations 5,884 5,883
-----
TOTAL REPURCHASE AGREEMENTS (Cost $5,883) 5,883
-----
TOTAL INVESTMENTS (Cost $ 138,180) - 100% $ 138,180
=======
</TABLE>
3
<PAGE> 7
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in thousands)
June 30, 1997 (Unaudited)
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 conventions for that security
type. For each security, cost (for financial reporting and federal income tax
purposes) and carrying value are the same.
(a) Variable rate securities. Interest rates vary periodically based on
current market rates. Rates shown are the effective rates on June 30,
1997. Dates shown represent the latter of the demand date or next
interest rate change date, which is considered the maturity date for
financial reporting purposes. For variable rate securities without demand
features, the next interest reset date is shown.
(b) Due dates shown for repurchase agreements represent either the final
maturity date or put date, which is considered the maturity date for
financial reporting purposes.
Abbreviations
- -------------
LOC Letter of Credit
See accompanying Notes to Financial Statements.
4
<PAGE> 8
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (in thousands)
June 30, 1997 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost: $138,180) $ 138,180
Interest receivable 691
Receivable for Fund shares sold 3,608
Deferred organization costs 18
Prepaid expenses 20
---------
Total assets 142,517
---------
LIABILITIES
Payable for:
Dividends 254
Investments purchased 6,000
Fund shares redeemed 1,714
Investment advisory and administration fee 8
Transfer agency and shareholder service fees 5
Other 39
---------
Total liabilities 8,020
---------
Net assets applicable to outstanding shares $ 134,497
=========
NET ASSETS CONSIST OF:
Paid-in-capital $ 134,498
Accumulated net realized loss on investments sold (1)
---------
$ 134,497
=========
PRICING OF SHARES
Outstanding shares, $0.00001 par value
(unlimited shares authorized) 134,498
Net asset value, offering and redemption price per share $ 1.00
=========
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE> 9
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (in thousands)\
Six months ended June 30, 1997 (Unaudited)
<TABLE>
<S> <C>
Interest income $ 3,894
Expenses:
Investment advisory and administration fee 320
Transfer agency and shareholder service fees 174
Custodian fees 44
Registration fees 20
Professional fees 12
Shareholder reports 4
Trustees' fees 4
Amortization of deferred organization costs 6
Insurance and other expenses 3
-------
587
Less: expenses reduced (see Note 4) (80)
-------
Total expenses incurred by Fund 507
-------
Net investment income 3,387
Net realized gain on investments sold 0
-------
Increase in net assets resulting from operations $ 3,387
=======
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE> 10
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended
1997 December 31,
(Unaudited) 1996
----------- ------------
<S> <C> <C>
Operations:
Net investment income $ 3,387 $ 5,419
Net realized loss on investments sold 0 (1)
--------- ---------
Increase in net assets resulting
from operations 3,387 5,418
--------- ---------
Dividends to shareholders from
net investment income (3,387) (5,419)
--------- ---------
Capital share transactions (at $1.00 per share):
Proceeds from shares sold 104,117 166,968
Net asset value of shares issued in
reinvestment of dividends 3,868 5,286
Less payments for shares redeemed (109,807) (134,926)
--------- ---------
Increase(decrease) in net assets from
capital share transactions (1,822) 37,328
--------- ---------
Total increase(decrease) in net assets (1,822) 37,327
Net Assets:
Beginning of period 136,319 98,992
--------- ---------
End of period $ 134,497 $ 136,319
========= =========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 11
SCHWAB RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Six months ended June 30, 1997 (Unaudited)
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, investment management company
organized as a Massachusetts business trust on October 20, 1989 and registered
under the Investment Company Act of 1940, as amended.
In addition to the Fund, the Trust also offers -- The Schwab Money Market Fund,
Schwab Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Municipal
Money Fund, Schwab California Municipal Money Fund, Schwab New York Municipal
Money Fund, Schwab Value Advantage Money Fund(R) and Schwab Institutional
Advantage Money Fund(R). 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 are stated at amortized cost which approximates
market value.
Security transactions, interest income and realized gains (losses) - Security
transactions are accounted for on a trade date basis (date the order to buy or
sell is executed). Interest income is accrued daily and includes amortization
of premium and accretion of discount on investments. Realized gains and losses
from security transactions are determined on an identified cost basis.
Repurchase agreements - Repurchase agreements are fully collateralized by U.S.
Treasury or U.S. government agency obligations. All collateral is held by the
Funds' custodian, except in the case of a tri-party agreement, the collateral is
held by an agent bank. The collateral is monitored daily to ensure that its
market value at least equals the repurchase price under the agreement.
Dividends to shareholders - The Fund declares a daily dividend, equal to its
net investment income for that day, payable monthly.
Deferred organization costs - Costs incurred in connection with the
organization of the Fund and its initial registration with the Securities and
Exchange Commission are amortized on a straight-line basis over a five-year
period from the Fund's commencement of operations.
8
<PAGE> 12
SCHWAB RETIREMENT MONEY FUNDS(R)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Six months ended June 30, 1997 (Unaudited)
Expenses - Expenses arising in connection with the Fund are charged directly to
the Fund. Expenses common to all series of the Trust are generally allocated to
each series in proportion to their relative net assets.
Federal income taxes - It is the Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income and realized net capital gains, if
any, to shareholders. Therefore, no federal income tax provision is required.
The Fund is considered a separate entity for tax purposes.
3. TRANSACTIONS WITH AFFILIATES
Investment advisory and administration agreement - 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 0.46% of
the first $1 billion of average daily net assets, 0.45% of the next $2 billion,
0.40% of the next $7 billion, 0.37% of the next $10 billion, and 0.34% of such
assets in excess of $20 billion. The Investment Manager has reduced a portion of
its fee for the six months ended June 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 0.25% of average daily net assets. Schwab has
reduced a portion of its fee for the six months ended June 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
six months ended June 30, 1997, the Trust made no direct payments to its
officers or trustees who are "interested persons" within the meaning of the
Investment Company Act of 1940, as amended. The fund incurred fees of $4,000
related to the Trust's unaffiliated trustees.
4. EXPENSES REDUCED BY THE INVESTMENT MANAGER AND SCHWAB
The Investment Manager and Schwab reduced a portion of their fees in order to
limit the Fund's ration of operating expenses to average net assets. For the six
months ended June 30, 1997, the total of such fees reduced by the Investment
Manager and Schwab was $36,000 and $44,000, respectively (see Note 6).
5. INVESTMENT TRANSACTIONS
Purchases and sales, including maturities of investment securities for the six
months ended June 30, 1997, aggregated (in thousands) $1,250,763 and $1,242,845,
respectively.
9
<PAGE> 13
Schwab RETIREMENT MONEY FUND(R)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
6. FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
Six months ended Year ended Period ended
June 30, 1997 December 31, December 31,
(unaudited) 1996 1995 1994++
---------------- ------------------ -------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period $1.00 $1.00 $1.00 $1.00
---------------- -------- ------- -------------
Income from investment operations
Net investment income 0.02 0.05 0.05 0.03
Net realized and unrealized gain (loss)
on investments -- -- -- --
---------------- -------- ------- -------------
Total from investment operations 0.02 0.05 0.05 0.03
---------------- -------- ------- -------------
Less distributions
Dividends from net investment income (0.02) (0.05) (0.05) (0.03)
Distributions from realized gain on
investments -- -- -- --
---------------- -------- ------- -------------
Total distributions (0.02) (0.05) (0.05) (0.03)
---------------- -------- ------- -------------
Net asset value at end of period $1.00 $1.00 $1.00 $1.00
================ ======== ======= =============
Total return (not annualized) 2.44% 4.93% 5.43% 3.29%
Ratio/Supplemental data
Net assets, end of period (000s) $134,497 $136,319 $98,992 $31,415
Ratio of expenses to average net assets+ 0.73%* 0.73% 0.73% 0.73%*
Ratio of net investment income to average
net assets+ 4.87%* 4.83% 5.28% 4.04%*
</TABLE>
- -----------
++ Period from March 2, 1994 (commencement of operations) to December 31, 1994.
+ The information contained in the above table is based on actual expenses
for the periods, after giving effect to the portion of expenses reduced by
the Investment Manager and Schwab. Had these expenses not been reduced, the
Fund's expense and net investment income ratios would have been:
<TABLE>
<S> <C> <C> <C> <C>
Ratio of expenses to average net assets 0.84%* 0.88% 0.92% 1.05%*
Ratio of net investment income to average
net assets 4.76%* 4.68% 5.09% 3.72%*
</TABLE>
* Annualized
<PAGE> 14
SCHWABFUNDS(R)
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.
TF4826(8/97) CRS 20110
