<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION
14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/ Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Charles Schwab Family of Funds
101 Montgomery Street
San Francisco, CA 94104
(Name of Registrant as Specified in its Charter)
David H. Lui, Esq.
The Charles Schwab Family of Funds
101 Montgomery Street
San Francisco, CA 94104
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
/ / $125 per Item 22(a)(2) of Exchange Act Schedule 14A.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:* N/A
4) Proposed maximum aggregate value of transaction: N/A
* Set forth the amount on which the filing is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes:
<PAGE> 2
October 11, 1996
IMPORTANT INFORMATION REGARDING THE CHARLES SCHWAB FAMILY OF FUNDS
Dear Shareholder,
I am writing to inform you of the upcoming special meeting of shareholders of
the Schwab Tax-Exempt Money Funds, and to request that you take a few minutes to
read the enclosed material and mail back the proxy voting card.
You are being asked to vote on important proposals effecting your Fund. The
Board of Trustees, including myself, unanimously believes that these changes are
in your Fund's and your best interest. The changes proposed will give your Fund
the additional flexibility needed to take advantage of opportunities in today's
market environment. Also, the Board and I believe your approval of these
proposals is important to enable your Fund to remain competitive.
Regardless of the number of shares you own, it is important that you take the
time to read the enclosed proxy, and complete and mail your voting card as soon
as you can. A postage paid envelope is enclosed. If Fund shareholders don't
return their proxies, your Fund may have to incur the expense of follow-up
solicitations. All shareholders benefit from the speedy return of proxies.
The Board of Trustees has approved these proposals and unanimously recommends a
vote "For" each proposal. If you have any questions regarding the enclosed proxy
or need any assistance in voting your shares, please contact our proxy
solicitor, D.F. King & Co., Inc. at 1-800-xxx-xxxx.
Once again, I appreciate the time and consideration that you can give to this
important matter. At Schwab, we realize that we earn your trust day-by-day. We
value your confidence in our efforts and will continue to work hard to offer you
investment opportunities to help you achieve your financial goals.
Sincerely,
Charles R. Schwab
Chairman
The Charles Schwab Family of Funds
<PAGE> 3
SchwabFunds(R)
IMPORTANT VOTING INFORMATION FOR SHAREHOLDERS OF THE SCHWAB TAX-EXEMPT
MONEY FUNDS
PLEASE READ THE FULL TEXT OF THIS PROXY STATEMENT. BELOW IS A BRIEF OVERVIEW OF
THE MATTERS TO BE VOTED UPON.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR VOTE IN A TIMELY FASHION. IF FUND
SHAREHOLDERS DON'T RETURN THEIR PROXIES, YOUR FUND INCURS THE EXPENSE OF
FOLLOW-UP SOLICITATIONS.
Q. WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
A. The proposals you are being asked to vote on are the following:
- - - - To consider eliminating the restriction that currently limits your Fund's
investment to a maximum of 20% of its total assets in AMT investments. An
AMT investment is a security which generates interest income which is
subject to the federal Alternative Minimum Tax (AMT). This change would
require changing the name of your Fund by replacing "Tax-Exempt" with
"Municipal".
- - - - To consider amending your Fund's fundamental investment restrictions.
- - - - To consider electing seven Trustees.
Q. WHY DOES THE INVESTMENT MANAGER WANT THE OPTION OF INVESTING MORE THAN 20%
OF EACH FUND'S TOTAL ASSETS IN AMT INVESTMENTS?
A. The Board of Trustees believes that this is in the best interest of each Fund
and its shareholders. AMT investments typically offer greater yields than other
types of municipal securities with similar credit quality. As a result, more
municipal and tax-free money market funds in the industry are purchasing AMT
investments. Also, the percentage of AMT investments in other funds has grown in
recent years.
In light of these market trends, the Board of Trustees believes approval of this
proposal is important to help enable your Fund to remain competitive. While
there can be no guarantee, the Investment Manager anticipates that it will be
able to achieve higher Fund yields with this enhanced flexibility. Please note,
this change will in no way reduce the credit quality of each Fund's investments.
Q. HOW WILL THE CHANGE IN THE FUNDS' POLICY REGARDING AMT INVESTMENTS IMPACT THE
TAX-EXEMPT INCOME OFFERED BY THESE FUNDS?
A. Shareholders will benefit from the potentially higher yields which will still
be exempt from regular federal income taxes (in addition to California personal
income tax for the
1
<PAGE> 4
California Fund, and New York state and local personal income taxes for the New
York Fund). Although all shareholders will benefit from a potential yield
increase, for the small percentage of shareholders subject to the federal AMT,
the policy change may result in a greater percentage of their income from the
Funds being subject to the federal AMT. While the percentage of the Funds'
shareholders who pay the federal AMT may be slightly different, well under 1%
of all U.S. taxpayers pay the federal AMT, according to IRS data.
Q. WHY WILL PART OF MY FUND'S NAME HAVE TO BE CHANGED TO "MUNICIPAL?"
A. Security regulations require that mutual funds which use the word
"tax-exempt" in their name limit the amount of AMT investments in their
portfolios to 20% of total assets. Many of the mutual funds currently offered in
the market today are called "municipal" funds, reflecting that they are not
required to restrict their AMT investments to 20% of their total assets. This
proposed amendment in your Fund's investment policy, resulting in the name
change, will enable your Fund to purchase additional AMT investments which will
help your Fund remain competitive with the industry.
Q. WITH RESPECT TO MANAGEMENT'S PROPOSAL TO AMEND EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTIONS, ARE THESE CHANGES IN MY BEST INTEREST?
A. The Board of Trustees believes that overall these changes are in your and
each Fund's best interest. The changes in the fundamental investment
restrictions are intended to allow each Fund to act more quickly and efficiently
to capitalize on future investment opportunities or changes in investment laws
or regulations. This proposal will not result in any changes to the investment
philosophy of your Fund nor reduce the credit quality of each Fund's investment.
Q. HAS MY FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSALS?
A. Yes. The Board of Trustees of each Fund unanimously has approved the
proposals and recommends that the shareholders vote "For" all the proposals.
Q. HOW DO I VOTE MY SHARES?
You can vote your shares by completing, signing, dating and mailing the enclosed
proxy card in the postage paid envelope. If you have any questions regarding the
enclosed proxy or need any assistance in voting your shares, please call our
proxy solicitor, D.F. King & Co. at 1-800-xxx-xxxx.
2
<PAGE> 5
THE CHARLES SCHWAB FAMILY OF FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE CHARLES SCHWAB FAMILY OF FUNDS
TO BE HELD ON DECEMBER 16, 1996
To Shareholders of The Charles Schwab Family of Funds:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of the "Sweep Shares" class and "Value Advantage Shares" class of
Schwab Tax-Exempt Money Fund, Schwab California Tax-Exempt Money Fund, and
Schwab New York Tax-Exempt Money Fund (each a "Fund"), each a series of The
Charles Schwab Family of Funds, will be held at 101 Market Street, San
Francisco, California 94104 on December 16, 1996 at 10:00 a.m., Pacific time,
for the following purposes:
1. To consider amending each Fund's fundamental investment policy
restricting each Fund from investing more than 20% of its total
assets in investments the interest from which is subject to the
federal Alternative Minimum Tax;
2. To consider eliminating, reclassifying or amending each Fund's
fundamental investment restrictions;
3. To elect seven Trustees to hold office until their successors are
duly elected and qualified; and
4. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
If Proposal 1 is approved by a majority of a Fund's shareholders, that
Fund's name will be changed by replacing the words "Tax-Exempt" with
"Municipal." These Proposals are discussed in greater detail in the accompanying
Proxy Statement.
<PAGE> 6
The close of business on September 25, 1996 has been fixed as the
record date for the determination of shareholders entitled to notice of, and to
vote at, the Meeting and any adjournment(s) thereof.
By Order of the Trustees,
David H. Lui
Assistant Secretary
October 11, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING! WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN, AND DATE THE
ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS
NO POSTAGE IF MAILED IN THE UNITED STATES. YOU CAN HELP THE FUNDS AVOID THE
NECESSITY AND ADDITIONAL EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM BY
PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU DESIRE TO VOTE IN PERSON, YOU MAY
REVOKE YOUR PROXY PRIOR TO THE MEETING.
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<PAGE> 7
THE CHARLES SCHWAB FAMILY OF FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS OF
THE CHARLES SCHWAB FAMILY OF FUNDS
TO BE HELD ON DECEMBER 16, 1996
This Proxy Statement is being furnished to the shareholders of both the
"Sweep Shares" class and "Value Advantage Shares" class of Schwab Tax-Exempt
Money Fund, Schwab California Tax-Exempt Money Fund, and Schwab New York
Tax-Exempt Money Fund (each a "Fund"), each a series of The Charles Schwab
Family of Funds, a Massachusetts business trust (the "Trust"), in connection
with the solicitation of proxies by and on behalf of the Board of Trustees for
use at a Special Meeting of Shareholders of the Funds (the "Meeting") to be held
at 101 Market Street, San Francisco, California 94105, on December 16, 1996, at
10:00 a.m., Pacific time, and at any adjournment(s) of the Meeting. This Proxy
Statement is first being mailed to shareholders on or about October 11, 1996.
The Board of Trustees has fixed the close of business on September 25,
1996 as the record date (the "Record Date") for determining Fund shareholders
entitled to notice of, and to vote at, the Meeting and any adjournment(s)
thereof. Only holders of record of shares of a Fund at the close of business on
the Record Date are entitled to notice of, and to vote at, the Meeting and at
any adjournment(s) thereof. The number of full shares of each Fund issued and
outstanding and entitled to vote at the Meeting at the close of business on the
Record Date is set forth in Exhibit A.
The holder of each full share of a Fund outstanding as of the close of
business on the Record Date is entitled to one vote for each share held of
record upon each matter properly submitted to the Meeting or any adjournment(s)
thereof, with a proportionate vote for each fractional share. The "Sweep" class
shareholders and "Value Advantage" class shareholders of each Fund will vote in
the aggregate on each of the Proposals at the Meeting. Shareholders of each Fund
will vote on such other business as may properly come before the Meeting by
class or in the aggregate as required by the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules thereunder.
Shareholders of each Fund are requested to complete, date, sign, and
promptly return in the enclosed envelope the accompanying form of proxy. If the
enclosed proxy is properly executed and returned in time to be voted at the
Meeting, the shares represented thereby will be voted in accordance with the
instructions marked on the proxy unless such proxy previously has been revoked.
Unless instructions to the contrary are marked on the proxy, the proxy will be
voted FOR the Proposals described in this Proxy Statement and in the discretion
of the persons named as proxies in connection with any other matter that may
properly come before the Meeting
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or any adjournment(s) thereof. The Board of Trustees does not know of any matter
to be considered at the Meeting other than the matters referred to in the Notice
of Special Meeting accompanying this Proxy Statement.
Any shareholder who has given a proxy has the right to revoke it at any
time prior to its exercise by attending the Meeting and voting his or her shares
in person or by submitting, prior to the date of the Meeting, a written notice
of revocation or a subsequently dated proxy to the following: The Charles Schwab
Family of Funds, 101 Montgomery Street, San Francisco, California 94104,
Attention: Secretary.
In the event a quorum is not present at the Meeting or sufficient votes
to approve the Proposals are not received, the persons named as proxies may
propose one or more adjournment(s) of such Meeting to permit further
solicitation of proxies. A shareholder vote may be taken on any other matter to
properly come before the Meeting prior to such adjournment(s) if sufficient
votes to approve such matters have been received and such vote is otherwise
appropriate. Any adjournment(s) of the Meeting will require the affirmative vote
of a majority of those shares present at the Meeting or represented by proxy and
voting. Abstentions and broker "non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other person entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be counted as shares that are present to determine the presence of a quorum
and will have the effect of a vote against the Proposals set forth in this Proxy
Statement.
In addition to the solicitation of proxies by mail, officers of the
Trust, officers and regular employees of the Investment Manager, the Funds'
investment adviser and administrator, and Charles Schwab & Co., Inc. ("Schwab"),
the Funds' distributor, may also solicit proxies electronically, by telephone or
telegraph or in person. The address of Charles Schwab Investment Management,
Inc. (the "Investment Manager") and Schwab is 101 Montgomery Street, San
Francisco, California 94104. The Trust has retained a proxy solicitation firm in
connection with proxy solicitation for the Meeting. The cost of retaining
such a firm will depend upon the amount and types of services rendered. The
costs of solicitation and expenses incurred in connection with preparing this
Proxy Statement and its enclosures, including any cost of retaining a proxy
solicitation firm, will be borne pro rata by the Funds. The Funds will reimburse
firms and others for their expenses in forwarding solicitation materials to the
beneficial owners of shares of the Funds. As explained more fully below, the
Investment Manager and Schwab have guaranteed through April 30, 1997 that the
total operating expenses of both classes of each Fund will not exceed a certain
percentage of that Fund's average daily net assets. The expenses related to this
proxy solicitation will be excluded from the calculations of each Fund's total
operating expenses for purposes of the Investment Manager's and Schwab's
guarantee.
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<PAGE> 9
PROPOSAL 1
AMENDING EACH FUND'S FUNDAMENTAL INVESTMENT POLICY RESTRICTING THE FUND
FROM INVESTING MORE THAN 20% OF ITS TOTAL ASSETS IN INVESTMENTS THE
INTEREST FROM WHICH IS SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX
The Board of Trustees has proposed amending each Fund's fundamental
investment policy restricting each Fund from investing more than 20% of its
total assets in investments the interest from which is subject to the federal
Alternative Minimum Tax.
Each Fund's fundamental investment policies currently limit to 20% the
amount of the Fund's total assets that may be invested in Municipal Obligations,
the interest from which gives rise to a preference item for purposes of the
alternative minimum tax ("AMT Municipal Obligations"). In the current market
environment, the Investment Manager believes that limiting each Fund's
investment in AMT Municipal Obligations to no more than 20% of its total assets
places each Fund in a potentially uncompetitive situation. The Investment
Manager desires to eliminate restrictions on the amount of AMT Municipal
Obligations each Fund may purchase, provided such investment is consistent with
the Fund's investment objective. Accordingly, this Proposal to amend each Fund's
investment restriction regarding AMT Municipal Obligations is being submitted
to each Fund's shareholders at this time.
If this Proposal is approved with respect to a Fund, that Fund will be
permitted to invest without limit in AMT Municipal Obligations. This policy
change should result in greater investment opportunities because a Fund will no
longer be required to restrict investment in AMT Municipal Obligations to 20% of
total assets. The Investment Manager believes that, under current market
conditions, AMT Municipal Obligations may provide higher yields than non-AMT
Municipal Obligations. Should these market conditions continue, a Fund would
have the ability to invest without limit in such higher-yielding obligations,
provided that such obligations otherwise meet the credit quality and other
criteria of a Fund (as described in its prospectus). As a result, investment
returns may be enhanced over time.
Industry trends also tend to support the Investment Manager's
recommendation for this change. A substantial number of municipal and tax-free
money market funds are purchasing AMT Municipal Obligations. In addition, the
percentage of AMT Municipal Obligations in these portfolios has also grown in
recent years. In light of these market trends, the Board of Trustees believes
approval of this Proposal is important to enable our Funds to remain
competitive.
Shareholders will benefit from the potentially higher yields which will
still be exempt from regular federal income taxes (in addition to California
personal income tax for the Schwab California Tax-Exempt Money Fund, and New
York state and local personal income taxes for the Schwab New York Tax-Exempt
Money Fund). Although all shareholders will benefit from the potential for
increased yield, for shareholders subject to the federal Alternative Minimum
Tax, the policy change may result in a greater percentage of their income from
the Funds being subject to that tax.
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Under the 1940 Act and the rules thereunder, if a Fund's policy on
investing in AMT Municipal Obligations is eliminated the words "Tax-Exempt" must
be removed from the Fund's name. Accordingly, if Proposal 1 is approved for a
Fund, the Board of Trustees will change the Fund's name by replacing the words
"Tax-Exempt" with "Municipal" (e.g., from "Schwab Tax-Exempt Money Fund-Sweep
Shares" to "Schwab Municipal Money Fund-Sweep Shares").
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of this Proposal requires the affirmative vote of the holders
of a majority of a Fund's outstanding voting securities which, as used in this
Proxy Statement, means the vote of the lesser of (a) more than 50% of the
outstanding shares of a Fund, or (b) 67% of the shares of the Fund present at
the Meeting if the holders of more than 50% of the outstanding shares of the
Fund are present or represented by proxy at the Meeting.
The Board of Trustees has considered various factors and believes that
this Proposal will increase investment opportunities for, and is in the best
interests, of each Fund and its shareholders. If the Proposal is not approved
with respect to a Fund, that Fund's current fundamental investment policy will
remain in effect and another shareholder vote will be required before the Fund
can engage in activities prohibited by the current policy.
THE BOARD OF TRUSTEES, INCLUDING THE "NON-INTERESTED" TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" AMENDING THEIR FUND'S FUNDAMENTAL
INVESTMENT POLICY AS DESCRIBED ABOVE.
PROPOSAL 2
ELIMINATING, RECLASSIFYING OR AMENDING EACH FUND'S
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
In addition to the fundamental investment policy described above in
Proposal 1, each Fund has other fundamental investment policies and investment
restrictions. The 1940 Act requires each Fund to have certain specific
investment restrictions which can be changed only by a shareholder vote. Any
mutual fund may also elect to designate other restrictions which may be changed
only by a shareholder vote. Both types of restrictions are often referred to as
"fundamental" restrictions. Some fundamental restrictions adopted by the Funds
reflect certain regulatory, business or industry conditions which are no longer
in effect. Accordingly, the Trustees authorized a review of the Funds'
fundamental restrictions to: (1) simplify and modernize those restrictions which
are required to be fundamental; (2) to eliminate as fundamental, any
restrictions which are not now required to be fundamental under state securities
("Blue Sky") laws or the positions of the staff of the Securities and Exchange
Commission (the "SEC") in interpreting the 1940 Act; and (3) to allow the
Investment Manager more flexibility in selecting appropriate investments for the
Funds in a changing regulatory and investment environment. If a restriction is
not required to be fundamental, depending on the circumstances, the restriction
would be reclassified as a non-fundamental restriction in the same or a modified
form, or
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eliminated. The Board of Trustees can change non-fundamental restrictions
without shareholder approval.
This Proposal seeks shareholder approval of changes which are intended
to accomplish the goals described above. By reducing to a minimum those
restrictions which can be changed only by shareholder vote, each Fund would be
able to avoid the costs and delay associated with a future shareholder meeting.
The Board of Trustees believes that this change would enhance the Investment
Manager's ability to manage the Funds' portfolios in a changing regulatory or
investment environment. Accordingly, investment management opportunities would
be increased. For example, until the SEC amended its rules in 1991, a money
market fund could not purchase securities (other than certain government
securities) with a deemed maturity of greater than one year (365 days). In 1991,
the SEC extended the maturity limitation to 13 months (397 days). Unfortunately,
if a money market fund had elected to adopt a fundamental investment policy
specifically limiting its investments to those with a deemed maturity of 365
days or less, that fund was faced with the difficult dilemma of either bearing
the expense of a shareholders' meeting to change its fundamental investment
restriction or foregoing the investment opportunities afforded by the SEC's
change in the maturity limitations (and foregoing the higher yields typically
associated with longer maturities). The proposed revision of the Funds'
fundamental investment restrictions are designed to avoid this type of dilemma.
The Board of Trustees believes that submitting Proposal 2 to each
Fund's shareholders at this time is in the shareholders' and each Fund's best
interest because it takes advantage of the opportunity afforded by the need to
submit Proposal 1 to the Funds' shareholders. This will spare the Funds the
extra costs and time delays of having a second or separate shareholder meeting
to consider Proposal 2. It will also provide each Fund with additional
flexibility and the other advantages discussed above.
The proposed changes to each Fund's fundamental investment restrictions
are discussed in detail below. Each Fund's current fundamental investment
restrictions, which are found in its statement of additional information, are
set forth in Exhibit C.
Except as described below, each Fund's fundamental investment
restrictions will be reclassified as non-fundamental investment restrictions
(which may be eliminated, reclassified, or amended by the Board of Trustees
without shareholder approval). Investment restriction 4 (which is based on a
Blue Sky position that is no longer applicable) will be eliminated. Investment
restriction 3 pertains to each Fund's ability (i) to concentrate (as defined in
the 1940 Act) its investments and (ii) to invest in repurchase agreements. The
portion of investment restriction 3 pertaining to concentration is amended and
renumbered as fundamental investment restriction 2 as set forth below. The
portion of investment restriction 3 pertaining to investment in repurchase
agreements will be reclassified as a non-fundamental investment restriction.
The following investment restrictions are proposed as the new
fundamental investment restrictions for each Fund. They are designed to meet the
requirements of the 1940 Act and the rules and regulations thereunder while
allowing the Investment Manager the greatest possible flexibility to pursue
investment opportunities as the regulatory landscape and investment and economic
markets change. If Proposal 2 is approved, each Fund will have no fundamental
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<PAGE> 12
investment policies or investment restrictions except those set forth below.
Each Fund's prospectus and statement of additional information will be revised
to reflect the changes in the Fund's fundamental investment policies and
restrictions. The proposed new fundamental investment restrictions for each Fund
are:
The Fund:
1. May purchase securities of any issuer only when consistent
with the maintenance of its status as a diversified company
under the 1940 Act.
2. May not concentrate investments in a particular industry or
group of industries, or within any one state (except that
the limitation as to investments in any one state or its
political subdivision shall not apply to Schwab California
Tax-Exempt Money Fund and Schwab New York Tax-Exempt Money
Fund) as concentration is defined under the 1940 Act, or the
rules or regulations thereunder.
3. May (a) purchase or sell commodities, commodities contracts,
or real estate; (b) lend or borrow money; (c) issue senior
securities; (d) underwrite securities; or (e) pledge,
mortgage or hypothecate any of its assets, only if permitted
by the 1940 Act or the rules or regulations thereunder.
Each Fund may adopt additional or revised fundamental investment
restrictions if required by federal or state regulators.
Required Vote and Board of Trustees' Recommendation
Approval of this Proposal requires the affirmative vote of the holders
of a majority of a Fund's outstanding voting securities. The Board of Trustees
has considered various factors and believes that this Proposal will increase
investment management flexibility and is in the best interests of each Fund and
its shareholders.
THE BOARD OF TRUSTEES, INCLUDING THE "NON-INTERESTED" TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ELIMINATING, RECLASSIFYING OR
AMENDING EACH FUND'S FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS AS
DESCRIBED ABOVE.
PROPOSAL 3
ELECTION OF TRUSTEES
It is proposed that seven Trustees be elected, each Trustee to hold
office until a successor is elected and qualified. It is the intention of the
persons named in the accompanying form of proxy to vote such proxy for the
election of the persons listed below unless shareholders
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specifically indicate in their proxies their desire to withhold authority to
vote for elections to office. The Board of Trustees does not contemplate that
any nominee will be unable to serve as a Trustee for any reason, but if that
should occur prior to the Meeting, the proxy holders reserve the right to
substitute another person or persons of their choice as nominee or nominees.
Each person listed below has consented to being named in this Proxy
Statement and has agreed to serve as a Trustee if elected.
<TABLE>
<CAPTION>
NAME/BIRTHDAY TRUSTEE SINCE PRINCIPAL OCCUPATION
- - - ------------- ------------- --------------------
<S> <C> <C>
CHARLES R. SCHWAB(1) 1989 Chairman, Chief Executive Officer and Director,
July 29, 1937 The Charles Schwab Corporation; Chairman and Director
of Schwab and the Investment Manager; Chairman and
Director, The Charles Schwab Trust Company; Chairman
and Director, Mayer & Schweitzer, Inc. (a securities
brokerage subsidiary of The Charles Schwab Corporation);
Director, The Gap, Inc. (a clothing retailer),
Transamerica Corporation (a financial services organization),
AirTouch Communications (a telecommunications company) and
Siebel Systems (a software company).
TIMOTHY F. McCARTHY(2) 1995 Executive Vice President - Mutual Funds of Schwab
September 19, 1951 and The Charles Schwab Corporation; Chief Executive
Officer of the Investment Manager and President of
the Trust. From 1994 to 1995, Mr. McCarthy was
Chief Executive Officer, Jardine Fleming Unit
Trusts Ltd.; Executive Director, Jardine Fleming
Holdings Ltd.; Chairman, Jardine Fleming Taiwan
Securities Ltd.; and Director of JF India and
Fleming Flagship, Europe. Prior to 1994, he was
President of Fidelity Investments Advisor Group, a
division of Fidelity Investments in Boston.
DONALD F. DORWARD 1989 President and Chief Executive Officer, Dorward &
September 23, 1931 Associates (advertising and marketing/consulting).
</TABLE>
- - - --------------------
(1) An "interested person" of the Trust as defined in the 1940 Act.
(2) An "interested person" of the Trust as defined in the 1940 Act.
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<TABLE>
<S> <C> <C>
ROBERT G. HOLMES 1989 Chairman, Chief Executive Officer and Director,
May 15, 1931 Semloh Financial, Inc. (international financial
services); and International Investment Consultant,
Cannon Street, Inc. (private investigative firm).
DONALD R. STEPHENS 1989 Managing Partner, D.R. Stephens & Co. (real estate
June 28, 1938 investment). Prior to 1993, Mr. Stephens was
Chairman and Chief Executive Officer of the Bank
of San Francisco.
MICHAEL W. WILSEY 1989 Chairman, Chief Executive Officer and Director,
August 18, 1943 Wilsey Bennett, Inc. (truck and air transportation,
real estate investment and management, and
investments).
WILLIAM J. KLIPP(3) 1995 Executive Vice President of Schwab; President and
December 9, 1955 Chief Operating Officer of the Investment Manager and
Senior Vice President and Chief Operating Officer
of the Trust. Prior to 1993, Mr. Klipp was
Treasurer of Schwab and Mayer & Schweitzer, Inc.
</TABLE>
Each of the above-referenced individuals is also a Trustee for Schwab
Investments, Schwab Capital Trust and Schwab Annuity Portfolios, each of which
is an investment company affiliated with the Trust and managed by the Investment
Manager (collectively, the "Affiliated Trusts"). The address of each individual
listed above is 101 Montgomery Street, San Francisco, California 94104.
In addition to Messrs. McCarthy and Klipp, the executive officers of
the Funds are:
Tai-Chin Tung, born March 7, 1951, is Treasurer and Principal Financial
Officer of the Funds. She is Controller of the Investment Manager and Vice
President - Finance of Schwab. From 1994 to 1996, Ms. Tung was Controller for
Robertson Stephens Investment Management, Inc. From 1993 to 1994, she was Vice
President of Fund Accounting, Capital Research and Management Co. Prior to 1993,
Ms. Tung was Senior Vice President of the Sierra Funds and Chief Operating
Officer of Great Western Financial Securities.
- - - --------------------
(3) An "interested person" of the Trust as defined in the 1940 Act.
-10-
<PAGE> 15
Stephen B. Ward, born April 5, 1955, is Senior Vice President & Chief
Investment Officer of the Funds. Mr. Ward is Senior Vice President and Chief
Investment Officer of the Investment Manager and is Senior Vice President of The
Charles Schwab Corporation and has been an employee of the Investment Manager
and The Charles Schwab Corporation since October and April 1993, respectively.
Prior to April 1993, Mr. Ward was a Vice President and Portfolio Manager for
Schwab.
Frances Cole, born September 9, 1955, is Secretary of the Funds. Ms.
Cole is Vice President, Chief Counsel, Chief Compliance Officer and Assistant
Corporate Secretary of the Investment Manager and has been an employee of the
Investment Manager since 1991.
David H. Lui, born October 14, 1960, is Assistant Secretary of the
Funds. Mr. Lui is Vice President and Senior Counsel of the Investment Manager.
Prior to 1992, he was Assistant Secretary of the Franklin Group of Mutual Funds
and Assistant Corporate Counsel of Franklin Resources, Inc.
Christina M. Perrino, born June 16, 1961, is Assistant Secretary of the
Funds. Ms. Perrino is Vice President and Senior Counsel of the Investment
Manager. Prior to 1994, she was Counsel and Assistant Secretary for North
American Security Life Insurance Company and Secretary for North American Funds.
Each of the above-referenced officers and Messrs. McCarthy and Klipp
are also officers of each Affiliated Trust. All Trustees, nominees and executive
officers as a group beneficially owned less than 1% of each Fund's outstanding
shares on September 16, 1996.
The Trust has an audit committee comprised of all of the Trustees,
which quarterly (and, as necessary, more frequently) reviews financial
statements and other audit-related matters for each series of the Trust. The
Trust has no standing nominating or compensation committee or any committee
performing similar functions.
Remuneration of Trustees, Officers and Others
Trustees and officers of the Funds who are also directors, officers,
stockholders or employees of the Investment Manager or any of its affiliates
receive no remuneration from the Funds. Each other Trustee receives a quarterly
retainer fee of $8,000 and an additional $1,500 for each regular Board of
Trustees and Audit Committee meeting attended and is reimbursed for reasonable
out-of-pocket expenses. Five Board meetings were held during the last fiscal
year. The Trustees as a group received fees and expenses totaling $154,000. Each
Trustee, except Mr. McCarthy, who joined the Board in October 1995, and Mr.
Schwab, attended at least 75% of the meetings of the Board. Each Fund has no
bonus, pension, profit-sharing or retirement plan, although each Fund has
adopted a compensation plan for its Trustees, as described below.
-11-
<PAGE> 16
Pursuant to exemptive relief the Trust received from the SEC, the Trust
may enter into a deferred compensation plan (the "Plan") with the Trustees who
are not "interested persons" of any of the Funds (the "Independent Trustees").
As of the date of this Proxy Statement, none of the Independent Trustees has
elected to participate in the Plan. If an Independent Trustee does elect to
participate in the Plan, the Plan would operate as described herein. Under the
Plan, deferred Trustee's fees will be credited to a book reserve account
established by the Trust (the "Deferred Fee Account") as of the date such fees
would have been paid to such Trustee. The value of the Deferred Fee Account as
of any date will be equal to the value the Account would have had as of that
date if the amount credited to the Account had been invested and reinvested in
the securities of the SchwabFund or SchwabFunds(R) selected by the participating
Trustee (the "Selected SchwabFund Securities"). "SchwabFunds" include the series
or classes of shares of beneficial interest of the Trust, Schwab Investments,
and Schwab Capital Trust. Pursuant to the exemptive relief granted to the Trust,
each Fund will purchase and maintain the Selected SchwabFund Securities in an
amount equal to the deemed investments in that Fund of the Deferred Fee Accounts
of the Independent Trustees.
Information Pertaining to Certain Interests in Matters of the Funds
The Investment Manager (who also serves as the Funds' administrator),
located at 101 Montgomery Street, San Francisco, California 94104, serves as
investment adviser to the Funds pursuant to two separate yet otherwise
substantially similar Investment Advisory and Administration Agreements (the
"Advisory Agreements") dated June 15, 1994 between it and the Trust. The Board
of Trustees, including a majority of the Trustees who are not "interested
persons," last voted to approve the Advisory Agreements on February 23, 1996.
The Investment Manager was formed in 1989, as a wholly-owned subsidiary
of The Charles Schwab Corporation, and has served as the investment adviser to
each series of the Trust, including the Funds, as well as each series of the
Affiliated Trusts. The Chairman of the Board of Directors of the Investment
Manager is Charles R. Schwab. As a result of his beneficial ownership
interests and other relationships with The Charles Schwab Corporation and its
affiliates, Mr. Schwab may be deemed to be a controlling person of Schwab and
the Investment Manager.
Each Advisory Agreement will continue in effect for successive one-year
terms for each Fund to which it relates, subject to annual approval by: (1) the
Board of Trustees or (2) a vote of the majority (as defined in the 1940 Act) of
the outstanding voting securities of each Fund subject thereto. In either event,
the continuance must also be approved by a majority of the Independent Trustees,
by vote cast in person at a meeting called for the purpose of voting on such
approval. Each Advisory Agreement may be terminated at any time upon 60 days
notice by either party, or by a majority vote of the outstanding shares of a
Fund subject thereto, and will terminate automatically upon assignment.
Pursuant to an Advisory Agreement, as may be amended from time to time,
the Investment Manager is entitled to receive from Schwab Tax-Exempt Money Fund
a graduated annual fee,
-12-
<PAGE> 17
payable monthly, of 0.46% of the average daily net assets of the Fund's average
daily net assets not in excess of $1 billion, 0.41% of such net assets over $1
billion but not in excess of $2 billion, and 0.40% of such net assets over $2
billion. For the fiscal year ended December 31, 1995, the investment advisory
fees paid by Schwab Tax-Exempt Money Fund were $6,482,000 (fees were reduced by
$7,212,000).
Pursuant to a separate Advisory Agreement, as may be amended from time
to time, the Investment Manager is entitled to receive a graduated annual fee,
payable monthly, of 0.46% of each of Schwab California Tax-Exempt Money Fund's
and Schwab New York Tax-Exempt Money Fund's average daily net assets not in
excess of $1 billion, 0.41% of such net assets over $1 billion but not in excess
of $2 billion, and 0.40% of such net assets over $2 billion. For the fiscal year
ended December 31, 1995, the investment advisory fees paid by Schwab California
Tax-Exempt Money Fund and Schwab New York Tax-Exempt Money Fund were $2,748,000
(fees were reduced by $3,697,000) and $741,000 (fees were reduced by $277,000),
respectively.
The Investment Manager has guaranteed that the management fee paid by
each class of each Fund will not exceed the following percentages of each Fund's
average daily net assets through the date set forth below. The Investment
Manager and Schwab have guaranteed that the total operating expenses of each
class of the Funds will not exceed the following percentages of each Fund's
average daily net assets through the date set forth below.
<TABLE>
<CAPTION>
MANAGEMENT TOTAL OPERATING
GUARANTEED FEE WILL NOT EXPENSES WILL
FUND - CLASS THROUGH EXCEED NOT EXCEED
------------ ------- ------ ----------
<S> <C> <C> <C>
Schwab Tax-Exempt Money April 30, 1997 0.20% 0.66%
Fund-Sweep Shares
Schwab California Tax-Exempt April 30, 1997 0.19% 0.65%
Money Fund-Sweep Shares
Schwab New York Tax-Exempt April 30, 1997 0.20% 0.69%
Money Fund-Sweep Shares
Schwab Tax-Exempt Money April 30, 1997 0.20% 0.45%
Fund-Value Advantage Shares
Schwab California Tax-Exempt April 30, 1997 0.19% 0.45%
Money Fund-Value Advantage
Shares
Schwab New York Tax-Exempt April 30, 1997 0.20% 0.45%
Money Fund-Value Advantage
Shares
</TABLE>
-13-
<PAGE> 18
The Trust pays the expenses of its operations, including: the fees and
expenses of independent accountants, counsel and the custodian of its assets;
the cost of maintaining books and records of account; taxes; registration fees;
the fees and expenses of qualifying the Trust and its shares for distribution
under federal and state securities laws; and industry association membership
dues. The Trust generally allocates expenses among individual series of the
Trust, including the Funds, on the basis of relative net assets at the time the
expense is incurred, except that expenses directly attributable to a particular
series or class of a series are charged to that series or class, respectively.
Required Vote and Board of Trustees' Recommendation
Approval of this Proposal requires the affirmative vote of the holders
of a majority of a Fund's outstanding voting securities.
THE BOARD OF TRUSTEES, INCLUDING THE "NON-INTERESTED" TRUSTEES,
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH NOMINATED TRUSTEE.
OTHER MATTERS
The Board of Trustees is not aware of any other matter which may come
before the Meeting. However, should any such matters properly come before the
Meeting, the persons named in the accompanying form of proxy intend to vote the
proxy in accordance with their judgment on such matters.
The Trust is not required to hold annual shareholders' meetings and
does not intend to do so. It will, however, hold special meetings, such as the
Meeting, as required or deemed desirable by the Board of Trustees for such
purposes as changing fundamental policies, electing or removing Trustees, or
approving or amending an investment advisory agreement. In addition, a Trustee
may be removed by shareholders at a special meeting called upon written request
of shareholders owning in the aggregate at least 10% of the outstanding shares
of the Trust.
Shareholders wishing to submit Proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
submissions to the principal executive offices of the Fund at The Charles Schwab
Family of Funds, 101 Montgomery Street, San Francisco, California 94104,
Attention: Secretary. Proposals must be received a reasonable time in advance of
a proxy solicitation to be included and the mere submission of a proposal does
not guarantee inclusion in the proxy statement because the proposal must comply
with certain federal securities law rules.
-14-
<PAGE> 19
Each Fund will furnish, without charge, a copy of its most recent
Annual Report and Semi-Annual Report succeeding the Annual Report (if any) to
any shareholder upon request. Shareholders desiring to obtain a copy of such
reports should direct all written requests to: Frances Cole, Secretary, The
Charles Schwab Family of Funds, 101 Montgomery Street, San Francisco, California
94104, or should call Schwab Shareholder Services at 1-800-2 NO-LOAD.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise a Fund, in care of The Charles Schwab Family of Funds,
101 Montgomery Street, San Francisco, California 94104, Attention: Secretary,
whether other persons are the beneficial owners of the shares for which proxies
are being solicited, and if so, the number of copies of the Proxy Statement,
other soliciting material, and Annual Report (or Semi-Annual Report) you wish to
receive in order to supply copies to the beneficial owners of shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY, THEREFORE, SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE, DATE, SIGN
AND RETURN THE PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.
Dated: October 11 , 1996
<PAGE> 20
SCHWABFUNDS(R)
Thank you for mailing your proxy card promptly!
We appreciate your placing your trust in SchwabFunds and look forward to helping
you achieve your financial goals.
<PAGE> 21
EXHIBIT A
NUMBER OF EACH FUND'S OUTSTANDING SHARES
AS OF SEPTEMBER 25, 1996
<TABLE>
<CAPTION>
Number
Fund - Class of Shares
- - - ------------ ---------
<S> <C>
Schwab Tax-Exempt Money Fund ________
-- Sweep Shares ________
-- Value Advantage Shares ________
Schwab California Tax-Exempt Money Fund ________
-- Sweep Shares ________
-- Value Advantage Shares ________
Schwab New York Tax-Exempt Money Fund ________
-- Sweep Shares ________
-- Value Advantage Shares ________
</TABLE>
<PAGE> 22
EXHIBIT B
CERTAIN SHAREHOLDERS OF THE FUNDS
AS OF SEPTEMBER 25, 1996
<TABLE>
<CAPTION>
Number Percentage of
Person Fund of Shares Outstanding Shares
- - - ------ ---- --------- ------------------
<S> <C> <C> <C>
Schwab Tax-Exempt Money Fund ________ ________
-- Sweep Shares ________ ________
-- Value Advantage Shares ________ ________
Schwab California Tax-Exempt
Money Fund ________ ________
-- Sweep Shares ________ ________
-- Value Advantage Shares ________ ________
Schwab New York Tax-Exempt
Money Fund ________ ________
-- Sweep Shares ________ ________
-- Value Advantage Shares ________ ________
</TABLE>
<PAGE> 23
EXHIBIT C
CURRENT FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE FUNDS
The Funds May NOT
(1) Purchase securities or make investments other than in accordance with
investment objectives and policies.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities)
if, as a result, more than 5% of the value of its assets would be
invested in the securities of that issuer, except that, with respect to
Schwab California Tax-Exempt Money Fund and Schwab New York Tax-Exempt
Money Fund, provided no more than 25% of the Fund's total assets would
be invested in the securities of a single issuer, up to 50% of the
value of the Fund's assets may be invested without regard to this 5%
limitation. For purposes of this limitation, the Fund will regard the
entity which has the primary responsibility for the payment of interest
and principal as the issuer.
(3) Purchase securities (other than securities of the U.S. Government, its
agencies or instrumentalities) if as a result of such purchase 25% or
more of its total assets would be invested in any industry (although
securities issued by governments or political subdivisions of
governments are not considered to be securities subject to this
industry concentration restriction) or in any one state (although the
limitation as to investments in a state or its political subdivision
shall not apply to Schwab California Tax-Exempt Money Fund or Schwab
New York Tax-Exempt Money Fund), nor may, it enter into a repurchase
agreement if more than 10% of its net assets would be subject to
repurchase agreements maturing in more than 7-days.
(4) Invest more than 5% of its total assets in industrial development bonds
sponsored by companies which, with their predecessors, have less than
three years of continuous operation, although each Fund may invest more
than 25% of its total net assets in industrial development bonds.
(5) Invest more than 5% of its total assets in securities restricted as to
disposition under the federal securities laws, although this limitation
shall be 10% with respect to Schwab California Tax-Exempt Money Fund
and Schwab New York Tax-Exempt Money Fund.
(6) Purchase or retain securities of an issuer if any of the officers,
trustees or directors of the Trust or its Investment Manager
individually, own beneficially more than 1/2 of 1% of the securities of
such issuer and together own more than 5% of the securities of such
issuer.
(7) Invest in commodities or commodity futures contracts or in real estate,
except that each Fund may invest in Municipal Securities secured by
real estate or interests therein.
<PAGE> 24
(8) Invest for the purpose of exercising control or management of another
issuer.
(9) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(1)
(10) Make loans to others (except through the purchase of debt obligations
or repurchase agreements in accordance with its investment objective
and policies).
(11) Borrow money, except from banks for temporary purposes (but not for the
purpose of purchasing investments), and then only in an amount not to
exceed one-third of the value of its total assets (including the amount
borrowed) in order to meet redemption requests which otherwise might
result in the untimely disposition of securities; or pledge its
securities or receivables or transfer or assign or otherwise encumber
them in an amount to exceed 10% of the Fund's net assets to secure
borrowings. Reverse repurchase agreements entered into by the Fund are
permitted within the limitations of this paragraph. No such Fund will
purchase securities or make investments while reverse repurchase
agreements or borrowings are outstanding.
(12) Write, purchase or sell puts, calls or combinations thereof, although
it may purchase Municipal Securities subject to standby commitments,
variable rate demand notes or repurchase agreements in accordance with
its investment objective and policies.
(13) Make short sales of securities or purchase securities on margin, except
to obtain such short-term credits as may be necessary for the clearance
of transactions.
(14) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in Municipal Securities of
issuers which invest in or sponsor such programs.
(15) Underwrite securities issued by others, except to the extent it may be
deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of securities from its investment
portfolio.
(16) Issue senior securities as defined in the 1940 Act.
- - - --------------------
(1) See the description of the Trustees' deferred compensation plan under
"Management of the Trust" in each Fund's Statement of Additional
Information for an exception to this investment restriction.
<PAGE> 25
SCHWAB TAX-EXEMPT MONEY FUND
(A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF THE CHARLES SCHWAB FAMILY OF FUNDS
KNOW ALL BY THESE PRESENTS: That the undersigned, revoking previous proxies for
such shares, hereby appoints William J. Klipp, Christina M. Perrino and David H.
Lui, or any of them, attorneys of the undersigned with full power of
substitution, to vote all shares of the above-referenced fund (the "Fund") which
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Fund (the "Meeting") to be held on December 16, 1996 at 101 Market Street,
San Francisco, California 94105, commencing at 10:00 a.m., Pacific time, and at
any and all adjournment(s) thereof. Receipt of the Notice of and Proxy Statement
for said Meeting is acknowledged.
The shares represented by this proxy will be voted as specified on the reverse
side by the undersigned. Note: This proxy must be returned in order for your
shares to be voted for you at the Meeting.
Shareholder sign here:
------------------------------------
Co-owner sign here:
---------------------------------------
Dated:
------------------------------
Please sign exactly as your name or name(s) appear at right.
If signing is by attorney, executor, administrator, trustee or
guardian, please give full title.
<PAGE> 26
The Board of Trustees recommends a vote FOR the following matters and FOR the
election of the proposed Trustees. IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL SUCH MATTERS AND FOR THE ELECTION OF THE PROPOSED TRUSTEES.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
1. To approve amending the Fund's investment policy concerning municipal
investments as described in Proposal 1 of the Proxy Statement:
FOR / / AGAINST / / ABSTAIN / /
2. To approve eliminating, reclassifying, or amending the Fund's
fundamental investment restrictions as described in Proposal 2 of the
Proxy Statement:
FOR / / AGAINST / / ABSTAIN / /
3. Election of Trustees:
FOR all nominees WITHHOLD authority only WITHHOLD authority
for those nominee(s) whose for all nominees
names I have written below
/ / / / / /
--------------------------------------------------------
Nominees for the Board of Trustees: Charles R. Schwab, Donald F. Dorward,
Robert G. Holmes, William J. Klipp, Timothy G. McCarthy, Donald R. Stephens
and Michael W. Wilsey.
AS TO ANY OTHER MATTER, SAID ATTORNEYS
SHALL VOTE IN ACCORDANCE WITH THEIR JUDGMENT.
<PAGE> 27
SCHWAB CALIFORNIA TAX-EXEMPT MONEY FUND
(A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF THE CHARLES SCHWAB FAMILY OF FUNDS
KNOW ALL BY THESE PRESENTS: That the undersigned, revoking previous proxies for
such shares, hereby appoints William J. Klipp, Christina M. Perrino and David H.
Lui, or any of them, attorneys of the undersigned with full power of
substitution, to vote all shares of the above-referenced fund (the "Fund") which
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Fund (the "Meeting") to be held on December 16, 1996 at 101 Market Street,
San Francisco, California 94105, commencing at 10:00 a.m., Pacific time, and at
any and all adjournment(s) thereof. Receipt of the Notice of and Proxy Statement
for said Meeting is acknowledged.
The shares represented by this proxy will be voted as specified on the reverse
side by the undersigned. Note: This proxy must be returned in order for your
shares to be voted for you at the Meeting.
Shareholder sign here:
------------------------------------
Co-owner sign here:
---------------------------------------
Dated:
--------------------------------
Please sign exactly as your name or name(s) appear at right.
If signing is by attorney, executor, administrator, trustee or
guardian, please give full title.
<PAGE> 28
The Board of Trustees recommends a vote FOR the following matters and FOR the
election of the proposed Trustees. IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL SUCH MATTERS AND FOR THE ELECTION OF THE PROPOSED TRUSTEES.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
1. To approve amending the Fund's investment policy concerning municipal
investments as described in Proposal 1 of the Proxy Statement:
FOR / / AGAINST / / ABSTAIN / /
2. To approve eliminating, reclassifying, or amending the Fund's fundamental
investment restrictions as described in Proposal 2 of the Proxy Statement:
FOR / / AGAINST / / ABSTAIN / /
3. Election of Trustees:
FOR all nominees WITHHOLD authority only WITHHOLD authority
for those nominee(s) whose for all nominees
names I have written below
/ / / / / /
--------------------------------------------------------
Nominees for the Board of Trustees: Charles R. Schwab, Donald F. Dorward,
Robert G. Holmes, William J. Klipp, Timothy G. McCarthy, Donald R. Stephens
and Michael W. Wilsey.
AS TO ANY OTHER MATTER, SAID ATTORNEYS
SHALL VOTE IN ACCORDANCE WITH THEIR JUDGMENT.
<PAGE> 29
SCHWAB NEW YORK TAX-EXEMPT MONEY FUND
(A SERIES OF THE CHARLES SCHWAB FAMILY OF FUNDS)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES OF THE CHARLES SCHWAB FAMILY OF FUNDS
KNOW ALL BY THESE PRESENTS: That the undersigned, revoking previous proxies for
such shares, hereby appoints William J. Klipp, Christina M. Perrino and David H.
Lui, or any of them, attorneys of the undersigned with full power of
substitution, to vote all shares of the above-referenced fund (the "Fund") which
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Fund (the "Meeting") to be held on December 16, 1996 at 101 Market Street,
San Francisco, California 94105, commencing at 10:00 a.m., Pacific time, and at
any and all adjournment(s) thereof. Receipt of the Notice of and Proxy Statement
for said Meeting is acknowledged.
The shares represented by this proxy will be voted as specified on the reverse
side by the undersigned. Note: This proxy must be returned in order for your
shares to be voted for you at the Meeting.
Shareholder sign here:
------------------------------------
Co-owner sign here:
---------------------------------------
Dated:
--------------------------------
Please sign exactly as your name or name(s) appear at right.
If signing is by attorney, executor, administrator, trustee or
guardian, please give full title.
<PAGE> 30
The Board of Trustees recommends a vote FOR the following matters and FOR the
election of the proposed Trustees. IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL SUCH MATTERS AND FOR THE ELECTION OF THE PROPOSED TRUSTEES.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
1. To approve amending the Fund's investment policy concerning municipal
investments as described in Proposal 1 of the Proxy Statement:
FOR / / AGAINST / / ABSTAIN / /
2. To approve the eliminating, reclassifying, or amending the Fund's
fundamental investment restrictions as described in Proposal 2 of the Proxy
Statement:
FOR / / AGAINST / / ABSTAIN / /
3. Election of Trustees:
FOR all nominees WITHHOLD authority only WITHHOLD authority
for those nominee(s) whose for all nominees
names I have written below
/ / / / / /
--------------------------------------------------------
Nominees for the Board of Trustees: Charles R. Schwab, Donald F. Dorward,
Robert G. Holmes, William J. Klipp, Timothy G. McCarthy, Donald R. Stephens
and Michael W. Wilsey.
AS TO ANY OTHER MATTER, SAID ATTORNEYS
SHALL VOTE IN ACCORDANCE WITH THEIR JUDGMENT.
