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SUPPLEMENT DATED SEPTEMBER 25, 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. (the "Investment Manager") and Charles Schwab
& Co., Inc. ("Schwab") guar- antee the reduction of the operating expense ratio
described in the prospectuses for each of the funds listed above (each a "Fund")
through at least April 30, 1997.
UPCOMING PROXY. On August 13, 1996, the Board of Trustees of each Fund approved
the submission of the following matters to a vote of the shareholders of each
Fund:
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; and
4. To transact such other business as may properly come before the Meeting or
any adjournment(s) thereof.
Proxies from each shareholder of record of each Fund will be, or are being,
solicited by and on behalf of the Board of Trustees for use at a Special Meeting
of Shareholders of the Funds (the "Meeting") currently scheduled to be held on
December 16, 1996, at 10:00 a.m., Pacific time, and any adjournment(s) thereof.
The proxy statement and proxies are first being mailed to shareholders on or
about October 11, 1996.
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The Board of Trustees has fixed the close of business on September 25, 1996 as
the record date (the "Record Date") for the determination of shareholders of the
Funds 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. Shares of a Fund purchased after the Record Date
will not be entitled to vote at the Meeting or any adjournment(s) thereof. The
Sweep Class Shareholders and the Value Advantage Class Shareholders of each Fund
will vote in the aggregate on each of the proposals.
In addition to the solicitation of proxies by mail, officers of the Trust,
officers and regular employees of the Investment Manager and Schwab may also
solicit proxies electronically, by telephone, by telegraph or in person.
The Trust also may retain a proxy solicitation firm to assist in the
solicitation of proxies. The cost of retaining such a firm would depend upon the
amount and types of services rendered. The Trust anticipates that it will retain
such a firm in connection with the proxy solicitation for the Meeting. The costs
of solicitation and expenses incurred in connection with preparing the 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.
The Investment Manager and Schwab have guaranteed through April 30, 1997 that
the total operating expenses of the Sweep Shares and Value Advantage Shares
class of each Fund will not exceed a certain percentage of the 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.
TF 4293
