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SUPPLEMENT DATED DECEMBER 18, 1996
to the Prospectuses dated April 1, 1996
(Value Advantage Shares(TM)) and April 29, 1996
(Sweep Shares) for:
SCHWAB TAX-EXEMPT MONEY FUND
SCHWAB CALIFORNIA TAX-EXEMPT MONEY FUND
SCHWAB NEW YORK TAX-EXEMPT MONEY FUND
LOW-COST INVESTING. As part of a commitment to low-cost investing, Charles
Schwab Investment Management, Inc. and Charles Schwab & Co., Inc. guarantee the
operating expense ratio limits described in the prospectuses for each of the
Funds listed above (each a "Fund") through at least April 30, 1997.
CHANGES IN CERTAIN FUNDAMENTAL POLICIES AND ELECTION OF TRUSTEES. On December
16, 1996, the shareholders of each Fund approved the following matters, which
will become effective January 2, 1997:
1. Amendment of each Fund's fundamental investment policy restricting the Fund
from investing more than 20% of its total assets in investments which generate
interest subject to the Federal Alternative Minimum Tax;
2. Elimination, reclassification or amendment of each Fund's fundamental
investment restrictions; and
3. Election of seven Trustees.
As a result of the amendment referenced in Item No. 1 above, as of January 2,
1997, the name of the Schwab Tax-Exempt Money Fund will be changed to the Schwab
Municipal Money Fund; the name of the Schwab California Tax-Exempt Money Fund
will be changed to the Schwab California Municipal Money Fund; and the name of
the Schwab New York Tax-Exempt Money Fund will be changed to the Schwab New York
Municipal Money Fund.
As a result of the shareholder vote, each Fund's fundamental policy limiting
investment in securities which generate income subject to the Alternative
Minimum Tax will be eliminated. For shareholders subject to the Federal
Alternative Minimum Tax, a greater percentage of their income from each Fund
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may be subject to that tax as a result of the policy change. As of January 2,
1997, each Fund's investment objective will be to seek maximum current income
that is exempt from regular Federal income taxes (in addition to California
personal income tax for the Schwab California Municipal Money Fund and New York
state and local income taxes for the Schwab New York Municipal Money Fund)
consistent with the stability of capital.
TF 4467
