NOTES TO FINANCIAL STATEMENTS
For the six months ended June 30, 1995 (Unaudited)
1. DESCRIPTION OF THE FUND
The Schwab Tax-Exempt 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.
On May 9, 1995, the Board of Trustees of the Trust adopted a multiple class plan for the Fund. On July 7, 1995,
the Fund began offering more than one class of shares. Pursuant to the plan, the existing shares were redesignated
as Sweep Shares, and a new class of shares was added -- the Value Advantage Shares. Both classes represent
interests in the same portfolio of investments of the Fund and are substantially the same in all respects except that
the shares are subject to different transfer agency and shareholder service fees, investment minimums and certain
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 California Tax-Exempt Money Fund, the
Schwab Value Advantage Money Fund(R), the Schwab Institutional Advantage Money Fund(TM), the Schwab
Retirement Money Fund(TM) and the Schwab New York Tax-Exempt Money Fund. The assets of each series
are segregated and accounted for separately.
The Schwab Tax-Exempt Money Fund invests in a diversified portfolio of short-term high quality municipal
2. SIGNIFICANT ACCOUNTING POLICIES
Security valuation -- Investments are stated at amortized cost which approximates market value.
Security transactions and interest income -- Security transactions, in the accompanying financial statements, 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 on investments. Realized gains and losses from security