<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Schwab Capital Trust
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement., if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
March 21, 2000
SCHWABFUNDS(R)
SHAREHOLDER PROXY
YOUR VOTE IS IMPORTANT!
PLEASE READ AND RESPOND TODAY.
SEE INSIDE FOR INFORMATION ABOUT
PROPOSALS THAT AFFECT YOUR
SCHWABFUNDS INVESTMENT.
<PAGE> 3
Shareholder message
SchwabFunds
Shareholder Proxy
<TABLE>
<S> <C>
3 Shareholder message
a letter to you from Charles R. Schwab
4 About the proposals
a brief overview of the 3 Proposals
7 Meeting notice
the official "legal" notice of the meeting
8 Proxy statement
contains a complete, more detailed discussion of each Proposal
33 Appendix
a comprehensive list of affected funds' current and proposed fundamental policies
</TABLE>
<PAGE> 4
A special meeting of shareholders of all SchwabFunds(R) will take place on
June 1, 2000, and we're asking for your response.
You don't need to attend the meeting to participate. But it's important that you
take a few minutes to read the enclosed material and vote your shares. You can
vote by internet, by phone or by mailing the enclosed proxy voting card(s) in
the postage-paid envelope.
Every SchwabFund has at least one proposal up for a vote. Shareholders of all
funds are being asked to vote for trustees, including candidates to fill new
seats for additional independent trustees. In addition, some funds have
proposals that are intended to help them increase their management efficiency by
granting them additional investment flexibility. The trustees, including myself,
believe these proposals are in the best interests of the shareholders, and we
recommend a vote "For" each of them.
No matter how many shares you own, your vote is important. A proxy solicitor,
D.F. King & Co., has been retained to make follow-up phone calls as may be
necessary on behalf of the funds. But your prompt response will help reduce
proxy costs -- which are paid by the funds and their shareholders -- and will
also mean that you can avoid receiving follow-up phone calls or mailings. Voting
by internet or phone lowers proxy costs even further.
All of us thank you for your attention to this important matter, and we promise
to continue to work hard to help you achieve your financial goals.
Sincerely,
CHARLES R. SCHWAB, CHAIRMAN
SchwabFunds
<PAGE> 5
WHAT ARE SHAREHOLDERS VOTING ON?
The funds are asking shareholders to vote on two types of proposals:
- TO ELECT TRUSTEES. In this election, most of the nominees are current
SchwabFunds trustees who are up for re-election. Four are first-time
nominees. Three of the four would fill newly created seats for independent
trustees.
- TO CONSIDER CHANGING OR ELIMINATING CERTAIN INVESTMENT POLICIES (NOT FOR ALL
FUNDS). These policies are fundamental policies, meaning that they cannot be
changed without shareholder approval. The main reason for these proposed
changes is to allow the funds a degree of strategic flexibility for more
effective -- and more competitive -- investment management practices.
These pages tell you more about the proposals and explain the main reasons why
the trustees believe the proposals are in the best interests of shareholders.
If any other proposals are brought before the special meeting in an appropriate
fashion, these may be voted on as well. As of the time this document was
prepared, the trustees were not aware of any other proposals.
WHY ARE THE TRUSTEES INCREASING THE NUMBER OF
INDEPENDENT BOARD MEMBERS?
The Board of Trustees is responsible for protecting the interests of the funds'
shareholders. The Board meets regularly to review the funds' activities,
contractual arrangements and performance. SchwabFunds agrees that independent
trustees play an important role in fulfilling this responsibility.
SchwabFunds is not alone in holding this view. Recently, the Securities and
Exchange Commission (SEC), the main federal body that regulates investment
companies, announced a series of proposed amendments to existing laws that
govern the role of independent trustees of mutual funds. Their proposal would
require that a majority of trustees be independent (the current requirement is
40%), and would encourage boards to make independent trustees a super-majority
(two-thirds majority). The trustees for the SchwabFunds agree that a
super-majority is in the best interests of shareholders, and have voted to
create three new seats, which, if approved by shareholders, will give
independent trustees more than a two-thirds majority.
BEFORE YOU VOTE
The information on these pages is only a summary. Before you vote, please read
the proxy statement, which starts on page 8.
It's important to vote as soon as you can. That way, the funds -- and their
shareholders -- won't have to bear the costs of additional solicitations.
4 ABOUT THE PROPOSALS
<PAGE> 6
WHO WOULD THE NEW TRUSTEES BE?
The SchwabFunds trustees set the number of seats on the board and present
nominees to the shareholders, who then vote on them. The current trustees
nominated the candidates who are up for election and urge you to vote for all of
them. This proposal affects all SchwabFunds. To find out more, including
information on each nominee, see Proposal 1 in the full proxy statement.
DO THE PROPOSED POLICY CHANGES AFFECT MY FUND, AND IF SO, HOW?
Many of the funds have NO PROPOSED POLICY CHANGES. The table on the next page
shows which funds would be affected by proposed policy changes (Proposals 2 and
3 in the full proxy statement), and which funds would be affected by which types
of changes. If your fund is among those with proposed policy changes, you should
read the questions below and their corresponding proposals in the full proxy
statement. There are two types of proposed policy changes: changes to
fundamental investment limitations (Proposal 2), and changes to investment
objectives (Proposal 3).
WHAT ARE THE REASONS FOR THE PROPOSED CHANGES IN FUNDAMENTAL LIMITATIONS
(PROPOSAL 2)?
Some of the funds' policies reflect government regulations that no longer exist.
In other cases, limitations are more stringent than current government
regulations require. SchwabFunds believes the proposed changes in investment
limitations will benefit shareholders by allowing funds to adapt more quickly to
future changes in investment opportunities.
The funds' trustees believe that it would benefit shareholders if SchwabFunds
updated their fundamental investment limitations.
WHAT ARE THE REASONS FOR THE PROPOSED CHANGES IN INVESTMENT OBJECTIVES (PROPOSAL
3)?
By approving investment objectives that require a fund to simply track its
target sector using an indexing strategy -- without naming the index
specifically or including any other index criteria -- the funds will have the
flexibility necessary to more accurately capture the returns of their market
sector without the cost and delay of future shareholder meetings.
For example, the Schwab Small-Cap Index's universe consists of the
second-largest 1,000 U.S. stocks (as measured by market capitalization).
However, this universe of stocks may not always be the best barometer of the
small-cap sector and, in the future, could lack the typical characteristics of
small-cap stocks, e.g. higher potential for long-term growth. If this were to
happen the benchmark index might need to be materially modified or the fund
might need to select a different benchmark index in order to continue to
accurately track the small-cap sector of the U.S. stock market.
The funds' trustees believe that it would benefit shareholders if the two funds
amended their investment objectives.
NONE OF THE PROPOSED CHANGES WILL LOWER THE STANDARDS FOR CREDIT QUALITY THAT A
FUND'S INVESTMENTS MUST MEET.
5
About the proposals
<PAGE> 7
<TABLE>
<CAPTION>
Proposed changes in Proposed changes in
limitations objectives
SCHWABFUNDS (PROPOSAL 2) (PROPOSAL 3)
SCHWAB EQUITY FUNDS
<S> <C> <C>
Analytics Fund(R) -
Institutional Select(TM) Large-Cap Value Index Fund
Institutional Select(TM) S&P 500 Fund
Institutional Select(TM) Small-Cap Value Index Fund
MarketManager(TM) Balanced Portfolio
MarketManager(TM) Growth Portfolio
MarketManager(TM) International Portfolio -
MarketManager(TM) Small Cap Portfolio
MarketTrack(TM) All Equity Portfolio
MarketTrack(TM) Balanced Portfolio -
MarketTrack(TM) Conservative Portfolio -
MarketTrack(TM) Growth Portfolio -
S&P 500 Fund -
Schwab 1000 Fund(R) -
Schwab International Index Fund(R) - -
Schwab Small-Cap Index Fund(R) - -
Schwab Total Stock Market Index Fund(TM)
SCHWAB BOND FUNDS
California Long-Term Tax-Free Bond Fund -
California Short/Intermediate Tax-Free Bond Fund -
Long-Term Tax-Free Bond Fund -
Short/Intermediate Tax-Free Bond Fund -
Short-Term Bond Market Index Fund -
Total Bond Market Index Fund(TM) -
YieldPlus Fund(TM)
SCHWAB MONEY FUNDS
California Municipal Money Fund -
Florida Municipal Money Fund
Government Cash Reserves Fund
Government Money Fund -
Institutional Advantage Money Fund(R) -
Money Market Fund -
Municipal Money Fund -
New Jersey Municipal Money Fund
New York Municipal Money Fund -
Pennsylvania Municipal Money Fund
Retirement Money Fund(R) -
U.S. Treasury Money Fund -
Value Advantage Money Fund(R) -
</TABLE>
HOW TO VOTE
YOUR SHARES
Voting your shares is easy and doesn't have to take long. Use any of the
following options -- and remember that voting by internet or phone will help
lower fund expenses. For internet and touch tone phone voting, you'll need the
12-digit number(s) on your enclosed proxy voting card(s).
- - BY INTERNET: go to www.proxyvote.com and
follow the instructions
- - BY TOUCH TONE PHONE: call toll-free 800-690-6903
and follow the recorded instructions
- - BY MAIL: mark your votes on the enclosed proxy card(s), sign and date,
and mail using the postage-paid envelope provided
Remember: If you vote by internet or phone, do not mail in your proxy card(s).
Please make sure you vote all the enclosed proxy card(s).
6
About the proposals
<PAGE> 8
MEETING NOTICE
NOTICE OF SPECIAL MEETING
OF ALL SCHWABFUNDS SHAREHOLDERS TO BE HELD JUNE 1, 2000
TO SHAREHOLDERS OF ALL SCHWABFUNDS: Notice is hereby given that a special
meeting of shareholders of all SchwabFunds will be held at the A.P. Giannini
Auditorium, 555 California Street, Concourse Level, San Francisco, California
94104-1502 on June 1, 2000 beginning at 10:00 a.m. Pacific Time for the
following purposes:
1. To elect trustees of each fund to hold office until their successors are duly
elected and qualified;
2. To eliminate, reclassify or amend certain fundamental investment policies and
restrictions;
3. To amend fundamental investment objectives of certain funds; and
4. To transact such other business as may properly come before the meeting or
any adjournments thereof.
The close of business on March 3, 2000 was fixed as the record date for
determining which shareholders are entitled to notice of the meeting and any
adjournments thereof and are entitled to vote.
By order of the Board of Trustees,
Frances Cole
Secretary
March 21, 2000
7
Meeting Notice
<PAGE> 9
THE CHARLES SCHWAB FAMILY OF FUNDS
SCHWAB INVESTMENTS
SCHWAB CAPITAL TRUST
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
PROXY STATEMENT
FOR
SPECIAL MEETINGS OF SHAREHOLDERS OF THE FUNDS
TO BE HELD ON JUNE 1, 2000
This Proxy Statement is being furnished to the shareholders of each fund of The
Charles Schwab Family of Funds ("Family of Funds"), Schwab Investments
("Investments") and Schwab Capital Trust ("Capital Trust"), each, a
Massachusetts business trust (each, a "Trust" and, collectively, the "Trusts"),
in connection with the solicitation of proxies by and on behalf of each of the
Boards of Trustees (collectively, the "Board of Trustees") for use at the
Special Meetings of Shareholders of the Funds each to be held at the A.P.
Giannini Auditorium, 555 California Street, Concourse Level, San Francisco,
California 94104-1502, on June 1, 2000, at 10:00 a.m. Pacific time for Family of
Funds, at 10:15 a.m. Pacific time for Investments, and at 10:30 a.m. Pacific
time for Capital Trust and at any adjournment(s) of each meeting (each, a
"meeting"). This proxy statement is first being mailed to shareholders on or
about March 21, 2000.
Each Trust and fund shares the same Board of Trustees. The Board of Trustees has
fixed the close of business on March 3, 2000 as the record date (the "record
date") for determining fund shareholders entitled to notice of, and to vote at,
the meetings and any adjournment(s) thereof. Only holders of shares of the funds
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 following chart
shows the number of issued and outstanding shares of each fund entitled to vote:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund California Municipal Money Fund
Institutional Select(TM) Large-Cap California Short/Intermediate Tax-Free Bond Fund Florida Municipal Money Fund
Value Index Fund Long-Term Tax-Free Bond Fund Government Cash Reserves Fund
Institutional Select(TM) S&P 500 Fund Short/Intermediate Tax-Free Bond Fund Government Money Fund
Institutional Select(TM) Small-Cap Short-Term Bond Market Index Fund Institutional Advantage Money Fund(R)
Value Index Fund Total Bond Market Index Fund(TM) Money Market Fund
MarketManager(TM) Balanced Portfolio YieldPlus Fund(TM) Municipal Money Fund
MarketManager(TM) Growth Portfolio New Jersey Municipal Money Fund
MarketManager(TM) International Portfolio New York Municipal Money Fund
MarketManager(TM) Small Cap Portfolio Pennsylvania Municipal Money Fund
MarketTrack(TM) All Equity Portfolio Retirement Money Fund(R)
MarketTrack(TM) Balanced Portfolio U.S. Treasury Money Fund
MarketTrack(TM) Conservative Portfolio Value Advantage Money Fund(R)
MarketTrack(TM) Growth Portfolio
S&P 500 Fund
Schwab 1000 Fund(R)
Schwab International Index Fund(R)
Small-Cap Index Fund(R)
Total Stock Market Index Fund
</TABLE>
8
<PAGE> 10
The holder of each outstanding full share of a fund as of the close of business
on the record date is entitled to one vote upon each matter properly submitted
to the meeting or any adjournment(s) thereof, and a proportionate fractional
vote for each fractional share held. Shareholders of a fund with more than one
class of shares will vote in the aggregate on each of the Proposals and any
element thereof. Shareholders of a fund may vote by class or in the aggregate,
as appropriate, on such other business as may properly come before the meeting
as required by law, including the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder (together, the "1940 Act").
Shareholders are requested to vote by internet, phone or by returning the
enclosed proxy cards. Voting by internet costs the funds less than if you vote
by telephone or mail. Depending on the number of funds for which you are a
shareholder and the number of Schwab accounts you have, you may receive more
than one proxy card.
If you vote by mail, complete, date, sign and promptly return the enclosed proxy
cards in the accompanying envelope. If the enclosed proxy cards are properly
executed and returned prior to the meeting, the shares represented thereby will
be voted in accordance with the instructions marked on the proxy cards or, if no
instructions are marked on the proxy cards, the proxies 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 or any adjournment(s) thereof.
You may revoke your proxy at any time prior to its exercise by attending the
meeting and voting in person or by submitting, prior to the meeting, a written
notice of revocation or subsequently dated proxy.
The Board of Trustees does not know of any matter to be considered at the
meeting other than the matters described in the Notice of Special Meeting
accompanying this Proxy Statement.
In the event a quorum is not present at a meeting or sufficient votes to approve
a Proposal are not received, the persons named as proxies may propose one or
more adjournments of such meeting to permit further solicitation of proxies. A
shareholder vote may be taken on any other matter to come properly 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
a meeting will require the affirmative vote of a majority of those shares of the
funds of the Trust present at the meeting in person or by proxy. Abstentions and
broker "non-votes" (i.e., proxies received from brokers or nominees indicating
that they have not received instructions from the beneficial owner or other
person entitled to vote shares) will be counted as shares that are present for
purposes of determining the presence of a quorum, but will not be counted as
votes "For" a Proposal. Accordingly, abstentions and broker "non-votes" will
have the effect of a vote against the Proposals.
In addition to the solicitation of proxies by mail, officers of the trusts,
officers and employees of Charles Schwab Investment Management, Inc. (the
"investment adviser"), the funds' investment adviser and administrator, and
Charles Schwab & Co., Inc. ("Schwab"), the funds' distributor, transfer agent
and shareholder servicing agent, also may solicit proxies electronically, by
telephone, by telegraph, in person or by other means.
Each fund has retained D.F. King & Co., Inc., a proxy solicitation firm, at an
estimated total cost of $1.5 million, to assist in the solicitation of proxies.
However, the exact cost will depend upon the amount and types of services
rendered. Each fund will bear its pro rata share of costs of solicitation and
expenses incurred in connection with preparing this Proxy Statement, including
the cost of retaining a proxy solicitation firm. Each fund also will reimburse
certain parties for their expenses in forwarding proxy materials to beneficial
owners of fund shares. As described in the funds' prospectuses, the investment
adviser and/or Schwab have guaranteed that the total operating expenses of some
funds will not exceed a certain percentage of a fund's average daily net assets
through a specified period of time. For purposes of the guarantee, total
operating expenses do not include interest, taxes, brokerage commissions and
extraordinary expenses. As extraordinary expenses, therefore, expenses related
to this proxy solicitation will be excluded from the calculations of each fund's
total operating expenses for purposes of the investment adviser's and Schwab's
guarantee.
QUORUM AND REQUIRED VOTE
In order to take action on any Proposal, a "quorum" or a majority of the shares
entitled to vote on that Proposal must be present in person or by proxy.
Election of each Nominee in Proposal 1 requires the affirmative vote of the
holders of a plurality of the shares of each Trust. Approval of the elements of
Proposals 2 and 3, applicable to a fund, requires the favorable vote of a
majority of outstanding voting shares of a fund as defined by the 1940 Act. The
favorable vote of a majority of outstanding shares of a fund is the lesser of
(i) 67% or more of the shares represented at the meeting, if more than 50% of
the outstanding voting shares of the fund are represented at the meeting, or
(ii) more than 50% of the outstanding voting shares of the fund.
On the next page is a table, which lists each fund and the corresponding
proposals.
9
<PAGE> 11
<TABLE>
<CAPTION>
TRUSTEE PROPOSED CHANGES IN PROPOSED CHANGES IN
ELECTION LIMITATIONS OBJECTIVES
SCHWABFUNDS (PROPOSAL 1) (PROPOSAL 2) (PROPOSAL 3)
SCHWAB EQUITY FUNDS
<S> <C> <C> <C>
Analytics Fund(R) (check mark) (c),(d),(i)-(k) -
Institutional Select(TM) Large-Cap Value Index Fund (check mark) - -
Institutional Select(TM) S&P 500 Fund (check mark) - -
Institutional Select(TM) Small-Cap Value Index Fund (check mark) - -
MarketManager(TM) Balanced Portfolio (check mark) - -
MarketManager(TM) Growth Portfolio (check mark) - -
MarketManager(TM) International Portfolio (check mark) (c),(d),(i)-(k) -
MarketManager(TM) Small Cap Portfolio (check mark) - -
MarketTrack(TM) All Equity Portfolio (check mark) - -
MarketTrack(TM) Balanced Portfolio (check mark) (c),(d),(f),(h)-(l) -
MarketTrack(TM) Conservative Portfolio (check mark) (c),(d),(f),(h)-(l) -
MarketTrack(TM) Growth Portfolio (check mark) (c),(d),(f),(h)-(l) -
S&P 500 Fund (check mark) (c),(d),(f),(h)-(l) -
Schwab 1000 Fund(R) (check mark) (c),(d),(f),(h)-(l) -
Schwab International Index Fund(R) (check mark) (c),(d),(f),(h)-(l) (b)
Schwab Small-Cap Index Fund(R) (check mark) (c),(d),(f),(h)-(l) (a)
Schwab Total Stock Market Index Fund(TM) (check mark) - -
SCHWAB BOND FUNDS
California Long-Term Tax-Free Bond Fund (check mark) (c),(f),(h)-(l),(n) -
California Short/Intermediate Tax-Free Bond Fund (check mark) (c),(f),(h)-(l),(n) -
Long-Term Tax-Free Bond Fund (check mark) (c),(f),(h)-(l),(n) -
Short/Intermediate Tax-Free Bond Fund (check mark) (c),(f),(h)-(l),(n) -
Short-Term Bond Market Index Fund(TM) (check mark) (d),(l) -
Total Bond Market Index Fund (check mark) (d),(l) -
YieldPlus Fund(TM) (check mark) - -
SCHWAB MONEY FUNDS
California Municipal Money Fund (check mark) (f),(h)-(n) -
Florida Municipal Money Fund (check mark) - -
Government Cash Reserves Fund (check mark) - -
Government Money Fund (check mark) (a)-(m) -
Institutional Advantage Money Fund(R) (check mark) (c)-(m) -
Money Market Fund (check mark) (a)-(m) -
Municipal Money Fund (check mark) (f),(h)-(m) -
New Jersey Municipal Money Fund (check mark) - -
New York Municipal Money Fund (check mark) (f),(h)-(n) -
Pennsylvania Municipal Money Fund (check mark) - -
Retirement Money Fund(R) (check mark) (c)-(m) -
U.S. Treasury Money Fund (check mark) (b),(c),(d),(i),(j),(k),(l) -
Value Advantage Money Fund(R) (check mark) (c),(i),(j)-(k) -
</TABLE>
10
<PAGE> 12
PROPOSAL 1
THE CHARLES SCHWAB FAMILY OF FUNDS
SCHWAB CAPITAL TRUST
SCHWAB INVESTMENTS
ELECTION OF TRUSTEES
It is proposed that shareholders of each Trust elect ten nominees to serve as
Trustees, each to hold office until a successor is elected and qualified. Six of
the nominees currently serve as Trustees and it is proposed that they be
reelected. It also is proposed that four nominees who have not previously served
as Trustees be elected. It is the intention of the persons named in the
accompanying proxies to vote for the election of the persons listed below unless
shareholders indicate on their proxy cards their desire to withhold authority to
vote for elections to office. Each nominee has consented to being named in this
Proxy Statement and has agreed to serve as a Trustee if elected. A nominee shall
be elected to a Board by the vote of a plurality of the Trust's shareholders.
The Board of Trustees does not know of any reason why any nominee would be
unable or unwilling to serve as a Trustee, but if any nominee should become
unable to serve prior to the meeting, the proxy holders reserve the right to
vote for another person of their choice as nominee or nominees.
INFORMATION REGARDING NOMINEES
Information about each nominee, including his or her name, date of birth,
position with the Trust, length of service in such position and principal
occupation or employment for the past 5 years, and shares of each fund
beneficially owned is set forth below. Each nominee, except for Mariann
Byerwalter, Jeremiah H. Chafkin, William A. Hasler, and Gerald B. Smith,
currently serves as a Trustee to each of the Trusts. The address of each
individual listed below is 101 Montgomery Street, San Francisco, California
94104.
<TABLE>
<CAPTION>
NUMBER AND
% OF SHARES
OF ANY CLASS
OF A FUND
BENEFICIALLY
OWNED AS OF
NAME, DATE OF BIRTH, PRINCIPAL OCCUPATION & OTHER TRUSTEESHIPS TRUSTEE SINCE RECORD DATE**
- -------------------------------------------------------------- ------------- -------------
<S> <C> <C>
MARIANN BYERWALTER
August 13, 1960
Vice President for Business Affairs and Chief Financial Officer, Stanford
University (higher education). Prior to February 1996, Ms. Byerwalter was Chief
Financial Officer of Eureka Bank (savings and loans) and Chief Financial Officer
and Chief Operating Officer of America First Eureka Holdings, Inc. (holding
company). Ms. Byerwalter also is on the Board of Directors of American First
Companies, Omaha, NE (investment banking) and Redwood Trust, Inc. (mortgaging).
JEREMIAH H. CHAFKIN*
May 5, 1959
Executive Vice President, SchwabFunds(R), Charles Schwab & Co., Inc.; President
and Chief Operating Officer, Charles Schwab Investment Management, Inc. Prior to
November 1999, Mr. Chafkin was a Senior Managing Director for Bankers Trust
Company.
DONALD F. DORWARD
September 23, 1931
Chief Executive Officer, Dorward & Associates. From 1996 to 1999, Mr. Dorward 1989 - Family of Funds
was Executive Vice President and Managing Director, Grey Advertising. From 1990 1991 - Investments
to 1996, Mr. Dorward was President and Chief Executive Officer, Dorward & 1993 - Capital Trust
Associates (advertising and marketing/consulting firm). Trustee of Schwab
Annuity Portfolios since 1994.
WILLIAM A. HASLER
November 22, 1941
Co-Chief Executive Officer, Aphton Corporation (bio-pharmaceuticals). Prior to
August 1998, Mr. Hasler was Dean of the Business School for Haas School of
Business (higher education). Mr. Hasler also is on the Board of Directors of
Solectron Corporation (manufacturing), Tenera, Inc. (services and software),
Airlease Ltd. (aircraft leasing) and Mission West Properties (commercial real
estate).
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
NUMBER AND
% OF SHARES
OF ANY CLASS
OF A FUND
BENEFICIALLY
OWNED AS OF
NAME, DATE OF BIRTH, PRINCIPAL OCCUPATION & OTHER TRUSTEESHIPS TRUSTEE SINCE RECORD DATE**
- -------------------------------------------------------------- ------------- -------------
<S> <C> <C>
ROBERT G. HOLMES 1989 - Family of Funds
May 15, 1931 1991 - Investments
Chairman, Chief Executive Officer and Director, Semloh Financial, Inc. 1993 - Capital Trust
(international financial services and investment advisory firm). Trustee of
Schwab Annuity Portfolios since 1994.
STEVEN L. SCHEID* 1998 - Family of Funds
June 28, 1953 1998 - Investments
Vice Chairman and Executive Vice President, The Charles Schwab Corporation; Vice 1998 - Capital Trust
Chairman and Enterprise President - Financial Products and Services, Charles
Schwab & Co., Inc.; Chief Executive Officer, Chief Financial Officer and
Director, Charles Schwab Investment Management, Inc. From 1994 to 1996, Mr.
Scheid was Executive Vice President of Finance for First Interstate Bancorp and
Principal Financial Officer from 1995 to 1996. Prior to 1994, Mr. Scheid was
Chief Financial Officer, First Interstate Bancorp and Principal Financial
Officer from 1995 to 1996. Prior to 1994, Mr. Scheid was Chief Financial
Officer, First Interstate Bank of Texas. Trustee of Schwab Annuity Portfolios
since 1994.
CHARLES R. SCHWAB* 1989 - Family of Funds
July 29, 1937 1991 - Investments
Chairman, Co-Chief Executive Officer and Director, The Charles Schwab 1993 - Capital Trust
Corporation; Chairman, Chief Executive Officer and Director, Charles Schwab
Holdings, Inc.; Chairman and Director, Charles Schwab & Co., Inc., Charles
Schwab Investment Management, Inc., The Charles Schwab Trust Company and Schwab
Retirement Plan Services, Inc.; Chairman and Director (current board positions),
and Chairman (officer position) until December 1995, 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). Trustee of Schwab Annuity Portfolios
since 1994.
GERALD B. SMITH
September 28, 1950
Chairman and Chief Executive Officer, Smith Graham & Co. (investment
management). Mr. Smith also is on the Board of Directors of Pennzoil-Quaker
State Company (automotive).
DONALD R. STEPHENS 1989 - Family of Funds
June 28, 1938 1991 - Investments
Managing Partner, D.R. Stephens & Company (investments) and Chairman 1993 - Capital Trust
and Chief Executive Officer of North American Trust (a real estate
investment trust). Trustee of Schwab Annuity Portfolios since 1994.
MICHAEL W. WILSEY 1989 - Family of Funds
August 18, 1943 1991 - Investments
Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (truck and air 1993 - Capital Trust
transportation, real estate investment and management, and investments). Trustee
of Schwab Annuity Portfolios since 1994.
</TABLE>
*Denotes an "interested person" of a Trust as defined in the 1940 Act.
**The Trusts have no knowledge as to whether any nominee has the right to
acquire beneficial ownership of shares of any class of a Fund. [Each Nominee
owns less than 1% of the outstanding shares of each fund.]
12
<PAGE> 14
MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES
The Board of Trustees met 6 times on behalf of Family of Funds, and 5 times on
behalf of Capital Trust and Investments, during each fund's most recent full
fiscal year. In each such fiscal year, each Trustee, except Mr. Schwab, attended
at least 80% of these meetings. Each Trust also has an Audit/Portfolio
Compliance Committee comprised of all of the Trustees who are not "interested
persons" of such Trust (the "Independent Trustees"), which quarterly (and, as
necessary, more frequently) reviews financial statements and other audit-related
matters for the Trust. The Audit/Portfolio Compliance Committee met 4 times
during each Trust's last fiscal year. In each such year, each member attended at
least 75% of these meetings. Each Trust also has a Nominating Committee
comprised of the Independent Trustees, which meets as often as deemed
appropriate by the Nominating Committee for the primary purpose of nominating
persons to serve as a member of the Board of Trustees. The Nominating Committee
did not meet during each fund's most recent fiscal year. The Nominating
Committee will not consider nominees recommended by shareholders. None of the
Trusts have a standing compensation committee or any committee performing
similar functions.
COMPENSATION OF TRUSTEES, OFFICERS AND OTHERS
Trustees and officers of the Trusts who are also "interested persons" of such
Trust, receive no compensation from the Trusts. However, each Independent
Trustee currently receives a quarterly fee of $21,650 from the Fund Complex,
which includes each Trust, as well as Schwab Annuity Portfolios, and an
additional $5,000 from the Fund Complex for each regular meeting of the Board of
Trustees and each meeting of the Audit/Portfolio Compliance Committee attended,
and is reimbursed for all reasonable out-of-pocket expenses. Each Independent
Trustee also receives $1,000 from the Fund Complex for each special meeting
attended with a duration of over 2 hours, and is reimbursed for all reasonable
out-of-pocket expenses. The Trusts have no bonus, pension, profit sharing or
retirement plan, although the Trusts have adopted deferred compensation plans
for their Trustees, as described following the table below.
The compensation paid to current Trustees from each Trust and the Fund Complex
is shown in the table BELOW.
COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME OF PERSON, POSITION WITH EACH TRUST AGGREGATE COMPENSATION FROM THE TRUSTS TOTAL COMPENSATION FROM THE FUND COMPLEX
FAMILY OF CAPITAL INVEST-
FUNDS(1) TRUST(2) MENTS(3)
<S> <C> <C> <C>
Donald F. Dorward, Trustee
Robert G. Holmes, Trustee
William J. Klipp, (4) Trustee $0 $0 $0 $0
Steven L. Scheid, President and Trustee $0 $0 $0 $0
Charles R. Schwab, Trustee; $0 $0 $0 $0
Chairman and Chief Executive Officer
Donald R. Stephens, Trustee
Michael W. Wilsey, Trustee
</TABLE>
(1) Amounts are for the fiscal year ended December 31, 1999.
(2) Amounts are for the fiscal year ended October 31, 1999.
(3) Amounts are for the fiscal year ended August 31, 1999, except amounts for
the Schwab 1000 Fund(R), which are for the fiscal year ended October 31,
1999.
(4) Mr. Klipp departed Schwab in 1999 and is expected to resign from the Board
of Trustees effective [ ].
DEFERRED COMPENSATION PLAN
Pursuant to exemptive relief received from the Securities and Exchange
Commission ("SEC"), each Trust may enter into a deferred compensation plan (the
"Plan") with 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 elects to participate in the plan, deferred fees will be
credited to an account established by the Trust as of the date that such fees
would have been paid to the Trustee. The value of this account will increase or
decrease as if the fees credited to the account had been invested in the shares
of SchwabFunds selected by the Trustee.
VOTING REQUIREMENTS
Election of each Nominee requires the affirmative vote of the holders of a
plurality of the shares of each Trust.
THE BOARD OF TRUSTEES RECOMMEND THAT YOU VOTE
"FOR" EACH NOMINEE.
13
<PAGE> 15
PROPOSAL 2
ELIMINATING, AMENDING OR RECLASSIFYING CERTAIN FUNDAMENTAL
INVESTMENT POLICIES AND RESTRICTIONS
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Growth Portfolio Short-Term Bond Market Index Fund Municipal Money Fund
S&P 500 Fund Total Bond Market Index Fund(TM) New York Municipal Money Fund
Schwab 1000 Fund(R) Retirement Money Fund(R)
Schwab International Index Fund(R) U.S. Treasury Money Fund
Small-Cap Index Fund(R) Value Advantage Money Fund(R)
</TABLE>
BACKGROUND
Each fund operates in accordance with the investment objectives, policies and
restrictions described in its prospectus and statement of additional information
(together, a fund's "policies"). The funds generally classify their policies as
either "fundamental" or "non-fundamental." A fundamental policy may be changed
only by vote of a majority of a fund's outstanding shares while non-fundamental
policies may be changed by vote of a fund's Board of Trustees. The 1940 Act
requires the funds to classify only certain policies as fundamental. With this
Proposal, the funds seek to modernize their fundamental policies by
reclassifying policies that are not required by the 1940 Act to be fundamental
as non-fundamental so that, with Board approval, they may more easily respond to
a changing investment environment.
Since each fund was created, there have been a number of changes in the SEC
regulations that govern the funds. First, significant federal legislation in
1996 preempted state regulation of all mutual funds. As a result, many
investment policies previously imposed on the funds by various states are no
longer required. Second, significant changes to Rule 2a-7 under the 1940 Act,
which governs the investments and operations of money market funds, took effect
in 1991, 1997 and 1998. Thus, many of the current fundamental policies of the
money market funds predate the current requirements of Rule 2a-7 and are, in
significant respects, more restrictive than Rule 2a-7 currently requires. In
addition, new types of instruments have been developed, which the funds may not
be permitted to invest in because of their outdated fundamental policies.
Recently, the investment adviser performed a comprehensive review of the funds'
fundamental policies and, the Board of Trustees, based on the recommendations of
the investment adviser, has approved revisions to these policies designed to:
(1) simplify and modernize policies required to be fundamental; and (2)
eliminate or recharacterize as non-fundamental, policies not required to be
fundamental.
Approval of these changes by shareholders would allow the investment adviser
greater flexibility, subject to the supervision of the Board of Trustees and
consistent with legal requirements, in selecting investments for the funds. The
Board of Trustees also believes that the proposed changes will enhance the
investment adviser's ability to manage the funds' investment portfolios, such
that your fund's investment opportunities, accordingly, may increase.
In some cases the Board of Trustees recommends that fundamental policies be
amended and/or eliminated completely. In other cases the Board recommends
amending and/or reclassifying policies as non-fundamental. If the Board of
Trustees decides in the future to change or eliminate a reclassified
non-fundamental policy, the change would be disclosed in the funds' prospectus
and/or statement of additional information, if required.
Each proposed change to a fund's fundamental policies recommended by the Board
of Trustees is discussed in detail below. In order to help you understand the
proposed changes, an Appendix has been attached at the end of this proxy
statement. The Appendix contains a complete list of funds affected by Proposals
2 and 3, and a comprehensive list of their current fundamental policies and
proposed fundamental and non-fundamental policies.
14
<PAGE> 16
VOTING REQUIREMENTS
Approval of each element of Proposal 2 requires the favorable vote of a majority
of outstanding voting shares of a fund as defined by the 1940 Act. Proposal 2 is
separated into elements specific to each type of fundamental policy involved,
e.g., maturity, borrowing, and concentration. You may vote for the elements of
Proposal 2 applicable to your fund either (i) as a group; or (ii) by each
element. If you vote on the elements of Proposal 2 as a group, a fund will
record your votes as having been cast "FOR" or "AGAINST," as applicable, each
applicable element within the Proposal. Alternatively, you may vote separately
for or against each element of Proposal 2. If you return a proxy card with a
vote on the entire Proposal as a group and separate votes on specific elements
of the Proposal, your vote on the entire Proposal as a group will control and be
recorded as your intended vote.
If shareholders of a fund approve some, but not all, elements of Proposal 2, the
fund will have a combination of certain current fundamental policies and certain
proposed fundamental and non-fundamental policies.
(a) PROPOSAL TO ELIMINATE FUNDAMENTAL POLICY MAKING ALL POLICIES FUNDAMENTAL
FUNDS AFFECTED:
MONEY MARKET FUNDS:
Government Money Fund
Money Market Fund
Each fund adopted a fundamental policy at its inception requiring that all of
its policies be fundamental. It is proposed that, for each fund listed above,
the fundamental policy making all fund policies fundamental be eliminated. The
Appendix contains a complete statement of each fund's current fundamental
policy.
ANALYSIS OF PROPOSED CHANGE
As described in the "Background" section above, the 1940 Act requires only a
limited number of fund policies to be fundamental. However, disclosure practices
at the time these funds were created resulted in the adoption of more
restrictive and more detailed fundamental policies than new funds of this type
would adopt today. If all of the funds' policies remain fundamental, the funds
will continue to be prohibited from taking advantage of new investment
opportunities that are potentially beneficial to shareholders and available to
other money funds.
If approved, this element of Proposal 2 would allow each fund to adopt
non-fundamental policies, which the Board of Trustees could take appropriate and
timely action to amend as necessary, without the expense and delay associated
with a shareholder meeting, in the event that regulatory changes occur, or new
types of investments become available. Accordingly, the Board of Trustees
believes that the funds would benefit by eliminating this current fundamental
policy.
(b) PROPOSAL TO AMEND AND RECLASSIFY FUND POLICIES REGARDING MATURITY OF FUND
INVESTMENTS
FUNDS AFFECTED:
MONEY MARKET FUNDS
Government Money Fund
Money Market Fund
U.S. Treasury Money Fund
Currently, all three funds have fundamental policies restricting the purchase of
securities with remaining maturities in excess of a certain time. The U.S.
Treasury Money Fund's fundamental policy restricts the purchase of securities
issued or guaranteed by the U.S. government that mature in more than 397 days.
For the other two funds, the policy restricts investment in securities that
mature in more than 365 days. It is proposed that the fundamental policy
regarding maturity of fund investments be (i) for the Government Money Fund and
Money Market Fund, amended and reclassified as a non-fundamental policy, and
(ii) for the U.S. Treasury Money Fund be reclassified as a non-fundamental
policy. The Appendix contains a complete statement of each fund's current
fundamental policy and proposed non-fundamental policy regarding maturity of
fund investments.
ANALYSIS OF PROPOSED CHANGE
Since the time when the Money Market Fund and Government Money Fund were
created, amendments to Rule 2a-7 have extended the maximum remaining maturity
permissible for money market fund investments to 397 days. This element of
Proposal 2 seeks to reclassify the maturity of investments policy of the Money
Market Fund and Government Money Fund as non-fundamental, and extend it up to
the maximum 397 days, as permitted under Rule 2a-7. These changes would make
additional investment opportunities available to both funds and would increase
the investment adviser's flexibility in managing the assets of each fund.
15
<PAGE> 17
If approved, this element of Proposal 2 would allow the funds to invest in money
market securities with remaining maturities of up to 397 days. Investing in
instruments with longer maturities has the potential to increase each fund's
yield. However, prices of securities with longer maturities tend to be more
sensitive to changes in interest rates than prices of securities with shorter
maturities. The Board of Trustees believes that the Government Money Fund and
Money Market Fund would benefit from extending the maximum remaining maturity
for fund investments to 397 days and by reclassifying their current fundamental
policy regarding maturity of fund investments as non-fundamental.
The U.S. Treasury Money Fund's current fundamental policy is consistent with the
limit currently imposed by Rule 2a-7 as to maturity of fund investments and,
accordingly, the fund would continue to be managed in accordance with this
policy even if it is reclassified as non-fundamental. However, approval of this
element of Proposal 2 would allow the Board of Trustees to take appropriate and
timely action to amend the policy in the future without the expense and delay
associated with a shareholder meeting in the event that Rule 2a-7 is amended
with respect to maturity of fund investments. The Board of Trustees believes
this additional flexibility would benefit the fund and its shareholders.
(c) PROPOSAL TO AMEND AND RECLASSIFY FUND POLICIES REGARDING BORROWING,
LENDING, THE ISSUANCE OF SENIOR SECURITIES AND PLEDGING, MORTGAGING OR
HYPOTHECATING FUND ASSETS
(i) PROPOSED CHANGES REGARDING BORROWING
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund Government Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Retirement Money Fund(R)
MarketTrack(TM) Growth Portfolio U.S. Treasury Money Fund
S&P 500 Fund
Schwab 1000 Fund(R)
Schwab International Index Fund(R)
Small-Cap Index Fund(R)
</TABLE>
Each fund's current fundamental borrowing policy is more restrictive than
required by the 1940 Act. It is proposed, for each fund listed above, that the
fundamental policy regarding borrowing be amended and reclassified as a
non-fundamental policy, and a new fundamental policy regarding borrowing be
adopted. The Appendix contains a complete statement of each fund's current
fundamental policy and proposed fundamental and non-fundamental policies
regarding borrowing.
The new fundamental policy on borrowing would be:
The fund may not borrow money, except to the extent permitted under the
1940 Act, the rules or regulations thereunder or any exemption therefrom,
as such statute, rules or regulations may be amended or interpreted from
time to time.
The new non-fundamental policy on borrowing would be:
The fund may not borrow money except that the fund may (i) borrow money
from banks and (ii) engage in reverse repurchase agreements with any party;
provided that (i) and (ii) in combination do not exceed 33 1/3% of its
total assets (any borrowings that come to exceed this amount will be
reduced to the extent necessary to comply with the limitation within three
business days) and the fund will not purchase securities while borrowings
represent more than 5% of its total assets.
ANALYSIS OF PROPOSED CHANGES
The 1940 Act requires all mutual funds to adopt fundamental policies regarding
borrowing. The 1940 Act presently limits each fund's ability to borrow more than
one-third of the value of its total assets. Over time, the SEC has acknowledged
the existence of new types of investment practices that may be considered
borrowings and may be permissible investments for mutual funds.
Approval of this element of Proposal 2 would replace the funds' current
fundamental borrowing policies with a more flexible, standard fundamental
borrowing policy. The Board of Trustees believes that this more flexible
fundamental policy is in the best interests of the funds because it will allow
the funds, subject to approval by the Board, to adapt to future developments in
investment practices and changes in the governing laws and regulations without
the delay and cost of a shareholder meeting.
At the same time, the funds would amend and reclassify their current fundamental
policies so that they reflected the current borrowing practices permissible
under the 1940 Act. The Board of Trustees believes that this non-fundamental
borrowing policy is in the best interests of shareholders because it would allow
the funds be limited only as required by the 1940 Act, thereby improving their
ability to remain competitive. The Board of Trustees also would be able to make
changes to the non-fundamental policy in the future if deemed to be in the best
interests of the funds and their shareholders.
16
<PAGE> 18
(ii) PROPOSED CHANGE REGARDING LENDING
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund Government Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Retirement Money Fund(R)
MarketTrack(TM) Growth Portfolio U.S. Treasury Money Fund
S&P 500 Fund Value Advantage Money Fund(R)
Schwab 1000 Fund(R)
Schwab International Index Fund(R)
Small-Cap Index Fund(R)
</TABLE>
In many cases the funds' current fundamental lending policies are more
restrictive than required by the 1940 Act. It is proposed, for each fund listed
above, that the fundamental policy regarding lending be amended and reclassified
as a non-fundamental policy, and a new fundamental policy regarding lending be
adopted. The Appendix contains a complete statement of each fund's current
fundamental policy and proposed fundamental and non-fundamental policies
regarding lending.
The new fundamental policy on lending would be:
The fund may not make loans to other persons, except to the extent
permitted under the 1940 Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended
or interpreted from time to time.
The new non-fundamental policy on lending would be:
The fund many not lend any security or make any other loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties (this
restriction does not apply to purchases of debt securities or repurchase
agreements).
ANALYSIS OF PROPOSED CHANGES
The 1940 Act requires all mutual funds to adopt fundamental policies regarding
lending. Although the 1940 Act does not impose percentage limits on the amount
that funds may lend, the 1940 Act prohibits the funds from making loans to
persons who control or are under common control with the funds, effectively
prohibiting loans where conflicts of interest or undue influence are most likely
present.
Approval of this element of Proposal 2 would allow the funds to lend to the
extent permitted by current law by replacing the funds' current fundamental
lending policies with a more flexible, standard fundamental lending policy. The
Board of Trustees believes that this more flexible fundamental policy is in the
best interests of the funds because it would allow the funds, subject to
approval by the Board, to adapt to future developments in investment practices
and changes in the governing laws and regulations without the delay and cost of
a shareholder meeting.
At the same time, this element of Proposal 2 would amend and reclassify the
funds' current lending policies as nonfundamental to reflect the current lending
practices permitted by the 1940 Act. The Board of Trustees believes that this
nonfundamental lending policy is in the best interests of the funds because it
would allow the funds to be limited only as required by the 1940 Act, thereby
improving their ability to remain competitive. The Board of Trustees also would
be able to make changes to the nonfundamental policy in the future if deemed to
be in the best interests of the funds and their shareholders.
17
<PAGE> 19
(iii) PROPOSED CHANGE REGARDING ISSUANCE OF SENIOR SECURITIES AND PLEDGING,
MORTGAGING OR HYPOTHECATING FUND ASSETS
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund Government Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Retirement Money Fund(R)
MarketTrack(TM) Growth Portfolio U.S. Treasury Money Fund
S&P 500 Fund Value Advantage Money Fund(R)
Schwab 1000 Fund(R)
Schwab International Index Fund(R)
Small-Cap Index Fund(R)
</TABLE>
The funds generally have fundamental policies restricting them from issuing
senior securities. It is proposed that, for the funds listed above, (i) the
fundamental policy regarding issuance of senior securities and any fundamental
policies regarding pledging, mortgaging or hypothecating assets be replaced with
a new fundamental policy, and (ii) any fundamental policies regarding writing,
purchasing or selling puts and calls, selling shares short or purchasing on
margin be reclassified as non-fundamental policies. The Appendix contains a
complete statement of each fund's current fundamental policies and proposed
fundamental and non-fundamental policies.
The new fundamental policy regarding issuance of senior securities would be:
The fund may not issue senior securities, except to the extent permitted
under the 1940 Act, the rules or regulations thereunder or any exemption
therefrom, as such statute, rules or regulations may be amended or
interpreted from time to time.
ANALYSIS OF PROPOSED CHANGES
The 1940 Act currently prohibits all mutual funds from issuing senior
securities. Additionally, the 1940 Act requires all funds to adopt a fundamental
policy regarding the issuance of senior securities. Under this element of
Proposal 2, each fund seeks to replace its current fundamental policy regarding
the issuance of senior securities with a more flexible, standard fundamental
policy. The Board of Trustees believes that this more flexible fundamental
policy is in the best interests of the funds because it would allow the funds,
subject to Board approval, to adapt to future developments in investment
practices and changes in the governing laws and regulations without the delay
and cost of a shareholder meeting.
Since the funds adopted their current fundamental policies, the SEC staff's
interpretation of what constituted the issuance of a senior security has evolved
as market conditions warranted. For example, the SEC staff's current
interpretation is that the purchase of securities on margin, the making of
certain short sales, and the writing of puts and calls generally do not
necessarily involve the creation of senior securities. To the extent a fund has
a current policy prohibiting writing, purchasing or selling puts or calls,
selling shares short or purchasing securities on margin, this element of
Proposal 2 would reclassify the current policies as non-fundamental. The
proposed changes would enable the Board of Trustees to evaluate the use of new
portfolio management techniques and give the funds the flexibility to respond to
potential future changes.
Some of the funds also have current fundamental policies regarding pledging,
mortgaging or hypothecating assets. These were adopted by the funds because of
requirements imposed by the administrators of securities laws in various states.
However, federal legislation passed in 1996 preempted substantive state
regulation of mutual funds and the sale of their shares. Therefore, the funds
are no longer required to maintain these fundamental policies and this element
of Proposal 2 seeks to eliminate them. The Board of Trustees believes that
elimination of these policies would benefit the funds by increasing the
investment adviser's flexibility in managing the assets of each fund.
18
<PAGE> 20
(d) PROPOSAL TO AMEND FUND POLICIES REGARDING DIVERSIFICATION
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) Short-Term Bond Market Index Fund Government Money Fund
MarketManager(TM) International Portfolio Total Bond Market Index Fund(TM) Institutional Advantage Money Fund(R)
MarketTrack(TM) Balanced Portfolio Money Market Fund
MarketTrack(TM) Conservative Portfolio Retirement Money Fund(R)
MarketTrack(TM) Growth Portfolio U.S. Treasury Money Fund
S&P 500 Fund
Schwab 1000 Fund(R)
Schwab International Index Fund(R)
Small-Cap Index Fund(R)
</TABLE>
Each of the funds listed above are diversified mutual funds. It is proposed that
the fundamental policy regarding diversification (i) for non-money market funds
listed above, be reclassified as a non-fundamental policy, and (ii) for money
market funds listed above, be amended and reclassified as a non-fundamental
policy. It is also proposed that all funds listed above adopt a new fundamental
policy regarding diversification. The Appendix contains a complete statement of
each fund's current fundamental policies and proposed fundamental and
non-fundamental policies regarding diversification.
The new fundamental policy for all funds would be:
The fund may not purchase securities of an issuer, except as consistent
with the maintenance of its status as an open-end diversified company under
the 1940 Act, the rules or regulations thereunder or any exemption
therefrom, as such statute, rules or regulations may be amended or
interpreted from time to time.
ANALYSIS OF PROPOSED CHANGE
Under this element of Proposal 2, the funds' current fundamental policies would
be replaced by a more flexible fundamental policy regarding diversification. As
diversified funds, the funds are limited by Section 5(b) of the 1940 Act, as to
75% of total assets, to invest no more than 5% of total assets in the securities
of a single issuer and to purchase no more than 10% of the issuer's voting
securities. Funds are not permitted to change their diversified status unless
approved by shareholders. This element of Proposal 2 does not seek to change the
funds' status as diversified investment management companies. This element of
Proposal 2 does seek to amend the funds' diversification policy so that it would
provide the maximum flexibility allowed for diversified mutual funds under the
1940 Act. The Board believes that this more flexible fundamental policy is in
the best interests of the funds because it will allow the Board to take
necessary and timely action to make changes to the funds' non-fundamental
diversification policies when necessary.
In addition to the above limitations imposed on diversified mutual funds, the
money market funds are subject to additional, stricter diversification
requirements imposed by Rule 2a-7. Rule 2a-7 limits a money market fund to
investing no more than 5% of its assets in the securities of a single issuer.
This requirement applies with respect to 100% of a fund's assets, in contrast to
Section 5(b) diversification requirements which apply only with respect to 75%
of a fund's assets. Rule 2a-7 does provide a safe harbor for a money market fund
to invest up to 25% of its assets in the securities of a single issuer, but only
for a period of up to three days. If this element of Proposal 2 is approved, the
money market funds would adopt these as a non-fundamental policy.
Also, under this element of Proposal 2, the money market funds would no longer
be limited to owning in aggregate with the holdings of other Schwab Money Funds
10% of any class of securities of any issuer. This limitation is not currently
required under Rule 2a-7 or the diversification requirements of the 1940 Act.
The Board of Trustees believes that eliminating this limitation will increase
the potential investment opportunities for the money funds.
Approval of this element of Proposal 2 will not affect the funds' status as
diversified mutual funds, which could only be changed in the future by
shareholder vote. Additionally, if this element of Proposal 2 is approved, the
U.S. Treasury Money Fund will adopt a new fundamental investment policies making
the fund diversified.
19
<PAGE> 21
(e) PROPOSAL TO ELIMINATE FUND POLICIES REGARDING INVESTMENTS IN
"UNSEASONED ISSUERS"
FUNDS AFFECTED:
MONEY MARKET FUNDS
Government Money Fund
Institutional Advantage Money Fund(R)
Money Market Fund
Retirement Money Fund(R)
The current fundamental policies limit the funds' ability to purchase securities
issued by "unseasoned issuers" (i.e., issuers which have less than three years
of operations), to 5% of total assets. It is proposed that the fundamental
policy regarding investments in "unseasoned issuers" for each fund listed above
be eliminated. The Appendix contains a complete statement of each fund's current
fundamental policy.
ANALYSIS OF PROPOSED CHANGE
Each fund's current fundamental policy is based on requirements imposed by the
administrators of securities laws in various states. However, federal
legislation passed in 1996 preempted substantive state regulation of mutual
funds and the sale of their shares, and the 1940 Act does not require the
current fundamental policy. If this policy is eliminated and the investment
adviser determines it is advisable to so invest, shareholders would have a
greater exposure to the risks associated with such investments. The Board of
Trustees does not believe that elimination of the current fundamental policy
would materially increase the risks to fund shareholders. Accordingly, the Board
of Trustees believes that the funds would benefit by eliminating their current
fundamental policies regarding investment in "unseasoned issuers."
(f) PROPOSAL TO AMEND AND RECLASSIFY FUND POLICIES REGARDING INVESTMENTS IN
RESTRICTED OR ILLIQUID SECURITIES
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
MarketTrack(TM) Balanced Portfolio California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketTrack(TM) Conservative Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Growth Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
S&P 500 Fund Short/Intermediate Tax-Free Bond Fund Money Market Fund
Schwab 1000 Fund(R) Municipal Money Fund
Schwab International Index Fund(R) New York Municipal Money Fund
Small-Cap Index Fund(R) Retirement Money Fund(R)
</TABLE>
The funds currently operate subject to a variety of fundamental policies
regarding investments in restricted securities and illiquid securities,
including repurchase agreements that mature in more than seven days. It is
proposed that the fundamental policy regarding investments in restricted
securities, illiquid securities or repurchase agreements for each fund listed
above be amended and reclassified as a non-fundamental policy. The Appendix
contains a complete statement of each fund's current fundamental policies and
proposed non-fundamental policies.
For each non-money market fund, the new non-fundamental policy regarding
investments in illiquid securities would be:
The fund may not invest more than 15% of its net assets in illiquid
securities.
For each money market fund, the new non-fundamental policy regarding investments
in illiquid securities would be:
The fund may not invest more than 10% of its net assets in illiquid
securities.
ANALYSIS OF PROPOSED CHANGES
The 1940 Act does not currently require the funds to have fundamental policies
restricting illiquid or restricted securities investments. Therefore, this
element of Proposal 2 would reclassify the funds' fundamental policies as a
standard non-fundamental policy.
Generally, restricted securities may be sold only in privately negotiated
transactions that meet an exception to securities registration requirements. The
funds' current fundamental policies limiting investment in restricted securities
reflect requirements imposed by the administrators of certain states' securities
laws that such restricted securities should be deemed illiquid. However, federal
legislation passed in 1996 preempted the states' ability to impose such
limitations, and the 1940 Act does not require such a limitation. In addition,
the exception to securities registration requirements added by Rule 144A under
the Securities Act of 1933, permits trading of restricted securities among
institutional investors, such as the funds. This has created active markets in
restricted securities, allowing certain restricted securities to be considered
liquid under guidelines approved by the funds' Board of Trustees.
20
<PAGE> 22
SEC staff interpretations have indicated that funds should consider repurchase
agreements that mature in more than seven days to be illiquid. Certain of the
funds have this as a fundamental policy. The 1940 Act does not require that this
policy be a fundamental policy. As discussed above, the proposed non-fundamental
policy will limit fund investments in illiquid securities and, accordingly, will
encompass the restriction imposed by the current fundamental policy.
Accordingly, this element of Proposal 2 would eliminate this fundamental policy.
The proposed non-fundamental policy will limit the funds to investing 15% (10%
for the money market funds) of their net assets in illiquid securities
(including restricted securities that are deemed illiquid under guidelines
approved by the Board of Trustees). However, the proposed non-fundamental policy
will permit the funds to invest without limit in restricted securities that, in
accordance with the funds' procedures, are determined to be liquid. Of course,
all of the funds' investments in restricted securities will still satisfy the
funds' other investment criteria. It is believed that eliminating this
restriction with respect to liquid restricted securities will expand the funds'
universe of available investments. In addition, by converting this policy to
non-fundamental, the Board will be able to take appropriate and timely action to
amend the non-fundamental policy without the expense and delay associated with a
shareholder meeting, in the event that regulatory changes occur in the future.
The Board believes that this more flexible non-fundamental policy is in the best
interests of the funds.
(g) PROPOSAL TO AMEND AND RECLASSIFY FUND POLICIES REGARDING INVESTMENTS IN
SECURITIES OF OTHER INVESTMENT COMPANIES
FUNDS AFFECTED:
MONEY MARKET FUNDS
Government Money Fund
Institutional Advantage Money Fund(R)
Money Market Fund
Retirement Money Fund(R)
The current fundamental policy limits each fund's ability to purchase securities
of other investment companies except in narrow circumstances. It is proposed
that, for each fund listed above, the fundamental policy regarding investments
in securities of other investment companies be amended and reclassified as a
non-fundamental policy. The Appendix contains a complete statement of each
fund's current fundamental policy and proposed non-fundamental policy.
The new non-fundamental policy regarding investments in securities of other
investment companies would be:
The fund may not purchase securities of other investment companies, except
as permitted under the 1940 Act, the rules and regulations thereunder or
any exemption therefrom, as such statute, rules or regulations may be
interpreted from time to time.
ANALYSIS OF PROPOSED CHANGE
The funds' current fundamental policies are based on requirements imposed by the
administrators of securities laws in various states. However, federal
legislation passed in 1996 preempted substantive state regulation of mutual
funds and the sale of their shares. Investment in shares of other investment
companies is specifically addressed by section 12(d)(1) of the 1940 Act and is
further limited for money market funds by Rule 2a-7. The 1940 Act generally
limits a fund to (i) purchasing 3% of the total outstanding voting stock of a
single other investment company; (ii) investing 5% of its total assets in the
securities of a single other investment company; and (iii) investing 10% of its
total assets in securities of all other investment companies. Rule 2a-7 imposes
additional limitations on the money market funds' investments in other
investment companies because Rule 2a-7 limits money market fund investments to
high quality instruments which present minimal credit risk. Accordingly, money
market funds generally may only invest in other investment companies if the
investment companies are money market funds.
The proposed non-fundamental policy will allow each fund to invest in other
investment companies to the extent permitted by the 1940 Act. To the extent a
fund invests in shares of other investment companies, shareholders may
indirectly bear any expenses of the investment companies in which the fund
invests. The investment adviser will take these expenses into account prior to
deciding that such an investment is suitable for a fund and its shareholders.
The Board of Trustees believes that the funds would benefit by replacing their
current fundamental policies regarding investment in the securities of other
investment companies with a more flexible, standard nonfundamental policy, which
the Board of Trustees could take appropriate and timely action to amend in the
future, if necessary, without the expense and delay associated with a
shareholder meeting.
21
<PAGE> 23
(h) PROPOSAL TO ELIMINATE FUND POLICIES REGARDING THE BENEFICIAL OWNERSHIP
OF SECURITIES BY FUND OFFICERS AND TRUSTEES
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
MarketTrack(TM) Balanced Portfolio California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketTrack(TM) Conservative Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Growth Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
S&P 500 Fund Short/Intermediate Tax-Free Bond Fund Money Market Fund
Schwab 1000 Fund(R) Municipal Money Fund
Schwab International Index Fund(R) New York Municipal Money Fund
Small-Cap Index Fund(R) Retirement Money Fund(R)
</TABLE>
Each fund's current fundamental policy limits the fund's ability to purchase
securities of issuers whose securities are owned by officers, Trustees or
directors of the Trust or the investment adviser. It is proposed that, for each
fund listed above, the fundamental policy regarding investments in issuers whose
securities are beneficially owned by officers and Trustees be eliminated. The
Appendix contains a complete statement of each fund's current fundamental
policy.
ANALYSIS OF PROPOSED CHANGE
The current fundamental policy is based on a requirement imposed by the
administrators of securities laws in various states. However, federal
legislation passed in 1996 preempted substantive state regulation of mutual
funds and the sale of their shares. The Board of Trustees believes that
eliminating this policy would be in the best interests of the funds because it
would increase the investment adviser's flexibility in managing the assets of
each fund, and that any increase in risks to shareholders would be immaterial.
Accordingly, the Board of Trustees recommends that shareholders vote to
eliminate this policy for the funds.
(i) PROPOSAL TO REPLACE AND RECLASSIFY FUND POLICIES REGARDING INDUSTRY
CONCENTRATION
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Growth Portfolio Municipal Money Fund
S&P 500 Fund New York Municipal Money Fund
Schwab 1000 Fund(R) Retirement Money Fund(R)
Schwab International Index Fund(R) U.S. Treasury Money Fund
Small-Cap Index Fund(R) Value Advantage Money Fund(R)
</TABLE>
Each fund's current fundamental investment policy generally prohibits investment
of more than 25% of fund assets in companies considered to be in the same
industry. It is proposed that, for each fund listed above, the fundamental
policy regarding concentration of investments in certain industries be
reclassified as non-fundamental and a new fundamental policy be adopted. The
Appendix contains a complete statement of each fund's current fundamental policy
and proposed fundamental and non-fundamental policies.
The new fundamental policy regarding industry concentration would be:
The fund may not concentrate investments in securities of issuers in a
particular industry, as concentration is defined under the 1940 Act, the
rules or regulations thereunder or any exemption therefrom, as such
statute, rules or regulations may be amended or interpreted from time to
time.
22
<PAGE> 24
ANALYSIS OF PROPOSED CHANGES
The 1940 Act requires all funds to adopt a fundamental policy regarding
concentration of investments in particular industries. It is currently the
position of the Staff of the SEC that if more than 25% of the value of a fund's
assets are invested in one industry, that fund's investments will be deemed to
be concentrated in that industry. However, this 25% limitation does not apply to
(i) fund investments in government securities, (ii) municipal bond fund
investments in industrial development and pollution control bonds, and (iii)
money market fund investments in certain obligations of domestic banks.
By reclassifying the funds' current fundamental policies regarding concentration
as non-fundamental, and adopting the proposed fundamental policy, the Board of
Trustees would be permitted to take appropriate and timely action to amend the
funds' non-fundamental policies in the future, without the expense and delay
associated with a shareholder meeting. The Board of Trustees anticipates taking
such action only in the event that the SEC changes its position on the meaning
of industry concentration. The Board of Trustees believes that this more
flexible fundamental policy is in the best interests of the funds.
Additionally, if this element of Proposal 2 is approved, the U.S. Treasury Money
Fund will adopt the proposed fundamental policy regarding concentration.
(j) PROPOSAL TO REPLACE AND RECLASSIFY FUND POLICIES REGARDING INVESTMENTS
IN COMMODITIES, FUTURES CONTRACTS AND REAL ESTATE
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Growth Portfolio Municipal Money Fund
S&P 500 Fund New York Municipal Money Fund
Schwab 1000 Fund(R) Retirement Money Fund(R)
Schwab International Index Fund(R) U.S. Treasury Money Fund
Small-Cap Index Fund(R) Value Advantage Money Fund(R)
</TABLE>
Under the current fundamental policies, each fund is restricted from investing
in commodities, futures contracts and/or real estate. It is proposed that, for
each fund listed above, the fundamental policies regarding investments in
commodities, futures contracts and real estate be reclassified as
non-fundamental policies, and a new fundamental policy regarding commodities and
real estate investments be adopted. The Appendix contains a complete statement
of each fund's current fundamental policy and proposed fundamental and
non-fundamental policies.
The new fundamental policy regarding investments in commodities and real estate
would be:
The fund may not purchase or sell commodities or real estate, except to the
extent permitted under the 1940 Act, the rules and regulations thereunder
or any exemption therefrom, as such statute, rules or regulations may be
amended or interpreted from time to time
ANALYSIS OF PROPOSED CHANGE
The 1940 Act requires all funds to adopt a fundamental policy regarding
investment in real estate and commodities and the proposed fundamental
limitation would limit such investments to the extent permitted under the 1940
Act. In addition, each fund's current fundamental policy would be converted to a
non-fundamental policy, and each fund would continue to operate in accordance
with its non-fundamental policy until such time as the Board decided that
changing it would be in the best interests of the funds and their shareholders.
These changes, however, would allow the Board of Trustees to take appropriate
and timely action to amend the funds' non-fundamental policies in the future if
such investments were determined to be desirable. In addition, such a change
could be made without the expense and delay associated with a shareholder
meeting. The Board of Trustees believes that this more flexible fundamental
policy is in the best interests of the funds.
23
<PAGE> 25
(k) PROPOSAL TO REPLACE POLICY REGARDING THE UNDERWRITING OF SECURITIES
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
Analytics Fund(R) California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketManager(TM) International Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Balanced Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
MarketTrack(TM) Conservative Portfolio Short/Intermediate Tax-Free Bond Fund Money Market Fund
MarketTrack(TM) Growth Portfolio Municipal Money Fund
S&P 500 Fund New York Municipal Money Fund
Schwab 1000 Fund(R) Retirement Money Fund(R)
Schwab International Index Fund(R) U.S. Treasury Money Fund
Small-Cap Index Fund(R) Value Advantage Money Fund(R)
</TABLE>
Under the current fundamental policy, a fund may not underwrite the securities
of other issuers, except in connection with the disposition of securities from
its investment portfolio. It is proposed that, for each fund listed above, the
fundamental policy regarding the underwriting of securities be replaced with a
new fundamental policy. The Appendix contains a complete statement of each
fund's current fundamental policy and proposed fundamental policy.
The new fundamental policy regarding the underwriting of securities would be:
The fund may not underwrite securities issued by other persons, except to
the extent permitted under the 1940 Act, the rules or regulations
thereunder or any exemption therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time.
ANALYSIS OF PROPOSED CHANGE
The SEC staff's interpretation with respect to the underwriting of securities,
is that funds should generally not engage in the business of underwriting
securities. While this fundamental policy has not affected the funds'
investments in the past, its replacement with a more flexible fundamental policy
could provide investment flexibility in the future. Approval of this element of
Proposal 2 would allow the Board of Trustees to take appropriate and timely
action to adopt non-fundamental policies, without the expense and delay
associated with a shareholder meeting. Accordingly, the Board of Trustees
believes that this change is in the best interests of the funds and their
shareholders.
(l) PROPOSAL TO RECLASSIFY FUND POLICY REGARDING CONTROL OF AN ISSUER
FUNDS AFFECTED:
<TABLE>
<CAPTION>
EQUITY FUNDS: BOND FUNDS: MONEY MARKET FUNDS:
- ------------- ----------- -------------------
<S> <C> <C>
MarketTrack(TM) Balanced Portfolio California Long-Term Tax-Free Bond Fund California Municipal Money Fund
MarketTrack(TM) Conservative Portfolio California Short/Intermediate Tax-Free Bond Fund Government Money Fund
MarketTrack(TM) Growth Portfolio Long-Term Tax-Free Bond Fund Institutional Advantage Money Fund(R)
S&P 500 Fund Short/Intermediate Tax-Free Bond Fund Money Market Fund
Schwab 1000 Fund(R) Short-Term Bond Market Index Fund Municipal Money Fund
Schwab International Index Fund(R) Total Bond Market Index Fund(TM) New York Municipal Money Fund
Small-Cap Index Fund(R) Retirement Money Fund(R)
U.S. Treasury Money Fund
</TABLE>
Under the current fundamental policy, a fund may not invest with the purpose of
exercising control over an issuer. It is proposed that, for each fund listed
above, the fundamental policy regarding the control of an issuer be reclassified
as a non-fundamental policy. The Appendix contains a complete statement of each
fund's current fundamental policy and proposed non-fundamental policy.
ANALYSIS OF PROPOSED CHANGE
The 1940 Act does not require the funds to have such a fundamental policy. The
current fundamental policy is based on requirements imposed by the
administrators of securities laws in various states. However, federal
legislation passed in 1996 preempted substantive state regulation of
24
<PAGE> 26
mutual funds and the sale of their shares. This element of Proposal 2 would
reclassify this policy as non-fundamental. The Board of Trustees believes that
the funds would benefit by the change because of the increased future
flexibility it would provide for the funds.
(m) PROPOSAL TO RECLASSIFY FUND POLICIES REGARDING PURCHASES OF OIL, GAS OR
MINERAL INTERESTS
FUNDS AFFECTED:
MONEY MARKET FUNDS:
California Municipal Money Fund
Government Money Fund
Institutional Advantage Money Fund(R)
Money Market Fund
Municipal Money Fund
New York Municipal Money Fund
Retirement Money Fund(R)
Under each fund's current fundamental policy, a fund may not invest in oil, gas
or mineral interests. It is proposed that, for each fund listed above, the
fundamental policy regarding investments in oil, gas or mineral exploration or
development programs be reclassified as a non-fundamental policy. The Appendix
contains a complete statement of each fund's current fundamental policy and
proposed non-fundamental policy.
ANALYSIS OF PROPOSED CHANGE
The 1940 Act does not require the funds to have such a fundamental policy. The
current fundamental policy is based on requirements imposed by the
administrators of securities laws in various states. However, federal
legislation passed in 1996 preempted substantive state regulation of mutual
funds and the sale of their shares. This element of Proposal 2 would reclassify
the policy as non-fundamental. The Board of Trustees believes that the funds
would benefit from the change because of the increased future flexibility it
would provide for the funds.
(n) PROPOSAL TO RECLASSIFY FUND POLICIES REGARDING NON-DIVERSIFICATION
FUNDS AFFECTED:
<TABLE>
<CAPTION>
BOND FUNDS: MONEY MARKET FUNDS:
- ----------- -------------------
<S> <C>
California Long-Term Tax-Free Bond Fund California Municipal Money Fund
California Short/Intermediate Tax-Free Bond Fund New York Municipal Money Fund
Long-Term Tax-Free Bond Fund
Short/Intermediate Tax-Free Bond Fund
</TABLE>
Each fund is a non-diversified investment company, which means that it is not
required by the 1940 Act to diversify its investments. It is proposed that, for
each fund listed above, the fundamental policy regarding non-diversification be
reclassified as a non-fundamental policy. The Appendix contains a complete
statement of each fund's current fundamental policy and proposed non-fundamental
policy.
ANALYSIS OF PROPOSED CHANGE
Unlike diversified mutual funds, the 1940 Act does not require that a
non-diversified fund obtain shareholder approval prior to changing its status.
Although it is anticipated that the funds will continue to be non-diversified,
if the Board of Trustees determines it is advisable and in the best interest of
the shareholders, the funds would be permitted to change their classification
from non-diversified to diversified if this element of Proposal 2 is approved.
The Proposal also would allow the Board of Trustees to take appropriate and
timely action to amend the funds' non-fundamental policies without the expense
and delay associated with a shareholder meeting in the event any requirements as
to non-diversification classification change. The Board of Trustees believes
that the funds would benefit by reclassifying this policy as non-fundamental.
THE BOARD OF TRUSTEES RECOMMEND THAT YOU VOTE
"FOR" PROPOSAL 2 AND ALL ELEMENTS CONTAINED THEREIN.
25
<PAGE> 27
PROPOSAL 3
AMENDING INVESTMENT OBJECTIVES
FUNDS AFFECTED:
EQUITY FUNDS
Small-Cap Index Fund(R)
International Index Fund(R)
(a) PROPOSAL TO AMEND THE INVESTMENT OBJECTIVE OF THE SCHWAB
SMALL-CAP INDEX FUND(R) AND ELIMINATE THE INVESTMENT POLICY
REGARDING PORTFOLIO COMPOSITION
The fund's investment objective sets forth the fund's benchmark index. It is
proposed that the investment objective of the fund be amended so that its policy
to track the Schwab Small-Cap Index is reclassified as a non-fundamental
investment policy. It is also proposed that the fund's fundamental investment
policy regarding portfolio composition be eliminated.
The fund's current investment objective is:
The fund seeks to track the price and dividend performance (total return)
of the Schwab Small-Cap Index (Small-Cap Index), an index created to
represent the performance of common stocks of the second 1,000 largest U.S.
companies, ranked by market capitalization (share price times the number of
shares outstanding).
The fund's new investment objective would be:
The fund seeks to track the performance of a benchmark index that measures
total return of small capitalization U.S. stocks.
The fund's new non-fundamental investment policy to track the Schwab Small-Cap
Index would be:
The fund intends to achieve its investment objective by tracking the price
and dividend performance (total return) of the Schwab Small-Cap Index.
The fund's current fundamental investment policy regarding portfolio composition
would be eliminated:
The fund will invest at least 65% of its total assets in common stocks, or
other equity securities including preferred stocks, rights
and warrants.
ANALYSIS OF PROPOSED CHANGE
The Board of Trustees has determined that it would be in the best interests of
the fund and its shareholders to amend the fund's investment objective. As
currently stated, the fund's investment objective requires the fund to seek to
track the price and dividend performance (total return) of the Schwab Small-Cap
Index. At the time the fund was created it was thought that tracking this index,
which uses the second-largest 1,000 U.S. stocks to represent the small-cap U.S.
sector, would provide the best opportunity for the fund to track the overall
performance of the small-cap U.S. market. In addition, the disclosure practices
at that time resulted in the adoption of a more restrictive and detailed
investment objective than an index fund of this type would adopt today.
The fund is asking its shareholders to approve a more flexible investment
objective that requires the fund to seek to track the performance of a benchmark
index that measures the total return of small-cap U.S. stocks. The proposed
investment objective would not specifically name the fund's benchmark index or
include any other index criteria. The Board of Trustees believes that the
proposed investment objective is in the best interests of the fund and its
shareholders because it will allow the Board in the future to take necessary and
timely action to change the fund's benchmark index, including selecting a new
one, if such changes would better enable the fund to seek its objective of
tracking the small-cap U.S. stock sector.
For example, the Schwab Small-Cap Index consists of the second-largest 1,000
U.S. stocks. However, this universe of stocks may not always be the best
representation of the small-cap U.S. stock sector. If this were to happen, the
fund's benchmark index might need to be materially modified or the fund might
need to select a different index in order to continue to accurately track the
small-cap sector of the U.S. stock market.
If shareholders approve these changes to the fund's investment objective, the
current objective would be amended and reclassified as a nonfundamental policy.
This means that the fund would continue to seek to track the Schwab Small-Cap
Index, but the Board of Trustees could make changes to this policy in the
future. The Board of Trustees believes that these changes would provide the fund
greater flexibility to pursue its investment goals as market and regulatory
conditions change over time.
The investment adviser has extensive experience employing indexing strategies.
The investment adviser currently manages seven equity index funds, two bond
index funds, and four asset allocation funds that use indexing strategies.
The Board of Trustees also has determined that it would be in the best interests
of the fund and its shareholders to eliminate the fundamental policy requiring
the fund to invest at least 65% of its total assets in common stocks, or other
equity securities including preferred stocks, rights and warrants. The 1940 Act
does not require that this policy be fundamental. Approval of this Proposal
would allow the fund to invest in any
26
<PAGE> 28
type of equity security, providing more opportunities for the fund's future
investments. The Board of Trustees has considered various factors and believes
that all of these changes will increase investment opportunities for, and are in
the best interests of, the fund and its shareholders.
VOTING REQUIREMENTS
Approval of this element of Proposal 3 requires the favorable vote of a majority
of outstanding voting shares of a fund as defined by the 1940 Act.
THE BOARD OF TRUSTEES RECOMMEND THAT YOU VOTE
"FOR" THIS ELEMENT OF PROPOSAL 3.
(b) PROPOSAL TO AMEND THE INVESTMENT OBJECTIVE OF THE SCHWAB
INTERNATIONAL INDEX FUND AND ELIMINATE THE INVESTMENT POLICY
REGARDING PORTFOLIO COMPOSITION
The fund's investment objective sets forth the fund's benchmark index. It is
proposed that the investment objective of the fund be amended so that its policy
to track the Schwab International Index is reclassified as a non-fundamental
investment policy. It is also proposed that the fund's fundamental policy
regarding portfolio composition be eliminated.
The fund's current investment objective is:
The fund seeks to track the price and dividend performance (total return)
of the Schwab International Index (International Index), an index created
to represent the performance of common stocks and other equity securities
issued by large publicly traded companies from countries around the world
with major developed securities markets, excluding the United States.
The fund's new investment objective would be:
The fund seeks to track the performance of a benchmark index that measures
the total return of large, publicly traded non-U.S. companies from
countries with developed equity markets outside of the United States.
The fund's new non-fundamental investment policy to track the Schwab
International Index would be:
The fund intends to achieve its investment objective by tracking the price
and dividend performance (total return) of the Schwab International Index.
The fund's current fundamental investment policy regarding portfolio composition
would be eliminated:
The fund will invest at least 65% of its total assets in common stocks and
other equity securities including preferred stocks, rights and warrants of
companies located in at least three countries other than the United States.
ANALYSIS OF PROPOSED CHANGE
The Board of Trustees has determined that it would be in the best interests of
the fund and its shareholders to amend the fund's investment objective. As
currently stated, the fund's investment objective requires the fund to seek to
track the price and dividend performance (total return) of the Schwab
International Index. At the time the fund was created it was thought that
tracking this index would provide the best opportunity for the fund to track the
overall performance of the international stock market. In addition, the
disclosure practices at that time resulted in the adoption of a more restrictive
and detailed investment objective than an index fund of this type would adopt
today.
The fund is asking its shareholders to approve a more flexible investment
objective that requires the fund to seek to track the performance of a benchmark
index that measures the total return of international stocks. The proposed
investment objective would not specifically name the fund's benchmark index or
include any other index criteria. The Board of Trustees believes that the
proposed investment objective is in the best interests of the fund and its
shareholders because it will allow the Board in the future to take necessary and
timely action to change the fund's benchmark index, including selecting a new
one, if such changes will better enable the fund to seek its objective of
tracking the international stock sector.
If shareholders approve these changes to the fund's investment objective, the
current objective would be amended and reclassified as a nonfundamental policy.
This means that the fund would continue to seek to track the Schwab
International Index, but the Board of Trustees could make changes to this policy
in the future. The Board of Trustees believes that these changes would provide
the fund greater flexibility to pursue its investment goals as market and
regulatory conditions change over time.
The investment adviser has extensive experience employing indexing strategies.
The investment adviser currently manages seven equity index funds, two bond
index funds, and four asset allocation funds that use indexing strategies.
The Board of Trustees has also determined that it would be in the best interests
of the fund and its shareholders to eliminate the fundamental policy requiring
the fund to invest at least 65% of its total assets in common stocks, or other
equity securities including preferred stocks, rights and warrants. The 1940 Act
does not require that this policy be fundamental. Approval of this Proposal
would allow the fund to invest in any type of equity security, providing more
opportunities for the funds' future investments. The Board of Trustees has
considered various factors and believes that all of these changes will increase
investment opportunities for, and are in the best interests of, the fund and its
shareholders.
27
<PAGE> 29
VOTING REQUIREMENTS
Approval of this element of Proposal 3 requires the favorable vote of a majority
of outstanding voting shares of a fund as defined by the 1940 Act.
THE BOARD OF TRUSTEES RECOMMEND THAT YOU VOTE
"FOR" THIS ELEMENT OF PROPOSAL 3.
ADDITIONAL INFORMATION
OFFICERS OF THE TRUSTS
Information about each Trust's current executive officers, including his or her
name, date of birth, positions with the trusts and principal occupations or
employment during the past five years is stated below. As of March 3, 2000, the
Trustees and officers, as a group, owned less than __% of the shares of each
class of each Fund.
<TABLE>
<CAPTION>
NAME, DATE OF BIRTH AND POSITION WITH NUMBER AND % OF SHARES OF ANY CLASS OF FUND
PRINCIPAL OCCUPATION EACH TRUST BENEFICIALLY OWNED AS OF RECORD DATE*
<S> <C> <C>
JEREMIAH H. CHAFKIN Executive Vice President and
(for biographical information Chief Operating Officer
see p.__)
FRANCES COLE Secretary
September 9, 1955
Senior Vice President, Chief Counsel
and Assistant Corporate Secretary,
Charles Schwab Investment
Management, Inc.
STEVEN L. SCHEID* Trustee; President
(for biographical information
see p. __)
CHARLES R. SCHWAB* Trustee; Chairman and
(for biographical information Chief Executive Officer
see p. __)
TAI-CHIN TUNG Treasurer and Principal Financial
March 7, 1951 Officer
Vice President, Treasurer and
Controller, Charles Schwab Investment
Management, Inc. From 1994 to 1996,
Ms. Tung was Controller for Robertson
Stephens Investment Management, Inc.
STEPHEN B. WARD Senior Vice President and Chief
April 5, 1955 Investment Officer
Senior Vice President and Chief
Investment Officer, Charles Schwab
Investment Management, Inc.
</TABLE>
- -----------------------
* The Trusts have no knowledge as to whether any executive officer has the right
to acquire beneficial ownership of shares of any class of a Fund.
28
<PAGE> 30
OTHER MATTERS
The Board of Trustees is not aware of any other matter that may come before any
of the meetings. However, should any such matters properly come before a
meeting, the persons named in the accompanying proxy card intend to vote the
proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Trusts are not required to hold annual shareholders' meetings and none of
the Trusts intends to do so. A Trust may hold special meetings as required or as
deemed desirable by its Board of Trustees for other purposes, such 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 of the funds of such Trust at a special meeting called upon written
request of shareholders owning, in the aggregate, at least 10% of the
outstanding shares of such Trust.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a future shareholders meeting should send their written submissions to the
particular Trust in which they own shares c/o 101 Montgomery, San Francisco, CA
94104. Proposals must be received a reasonable time in advance of a proxy
solicitation to be included. Submission of a proposal does not guarantee
inclusion in a proxy statement, because the proposal must comply with certain
federal securities regulations.
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc., located at 101 Montgomery Street,
San Francisco, CA 94104, serves as investment adviser to the funds.
PRINCIPAL UNDERWRITER
Charles Schwab & Co., Inc., located at 101 Montgomery Street, San Francisco, CA
94104, acts as each fund's principal underwriter.
TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT
Charles Schwab & Co., Inc., located at 101 Montgomery Street, San Francisco, CA
94104, acts as each fund's transfer agent and shareholder servicing agent.
FUND ACCOUNTANTS
PFPC, Inc., located at 103 Bellevue Parkway, Wilmington, Delaware 19809, serves
as fund accountant for each bond and money fund. SEI Investments Mutual Fund
Services, located at One Freedom Valley Drive, Oaks, Pennsylvania 19456, serves
as fund accountant for each equity fund.
CUSTODIAN
PFPC Trust Co., located at 8800 Tinicum Blvd., Third Floor, Suite 200,
Philadelphia, Pennsylvania 19153, serves as custodian for each bond and money
fund and for the following equity funds: Analytics Fund, Institutional Select
Funds, S&P 500 Fund, and Total Stock Market Index Fund. Brown Brothers Harriman
& Co., located at 40 Water Street, Boston, Massachusetts 02109, serves as
custodian for the following equity funds: Schwab International Index Fund,
Schwab Small Cap Index Fund, MarketTrack Growth, Balanced, Conservative and All
Equity Portfolios, and MarketManager International, Growth, Balanced and Small
Cap Portfolios.
29
<PAGE> 31
PORTFOLIO TRANSACTIONS
For the fiscal years indicated below, [the funds paid the following brokerage
commissions to affiliated brokers/none of the funds paid brokerage commissions
to affiliated brokers].
<TABLE>
<CAPTION>
FUND NAME FISCAL YEAR ENDING 1999
- --------------------------------------------------------------------------------
<S> <C>
Analytics Fund(R) October 31
Institutional Select(TM) Large-Cap Value Index Fund October 31
Institutional Select(TM) S&P 500 Fund October 31
Institutional Select(TM) Small-Cap Value Index Fund October 31
International Index Fund(R) October 31
MarketManager(TM) Balanced Portfolio October 31
MarketManager(TM) Growth Portfolio October 31
MarketManager(TM) International Portfolio October 31
MarketManager(TM) Small Cap Portfolio October 31
MarketTrack(TM) All Equity Portfolio October 31
MarketTrack(TM) Balanced Portfolio October 31
MarketTrack(TM) Conservative Portfolio October 31
MarketTrack(TM) Growth Portfolio October 31
Schwab 1000 Fund(R) October 31
S&P 500 Fund October 31
Small-Cap Index Fund(R) October 31
Total Stock Market Index Fund October 31
California Long-Term Tax-Free Bond Fund August 31
California Short/Intermediate Tax-Free Bond Fund August 31
Long-Term Tax-Free Bond Fund August 31
Short/Intermediate Tax-Free Bond Fund August 31
Short-Term Bond Market Index Fund August 31
Total Bond Market Index Fund(TM) August 31
YieldPlus Fund(TM) August 31
California Municipal Money Fund December 31
Florida Municipal Money Fund December 31
Government Cash Reserves Fund December 31
Government Money Fund December 31
Institutional Advantage Money Fund(R) December 31
Money Market Fund December 31
Municipal Money Fund December 31
New Jersey Municipal Money Fund December 31
New York Municipal Money Fund December 31
Pennsylvania Municipal Money Fund December 31
Retirement Money Fund(R) December 31
U.S. Treasury Money Fund December 31
Value Advantage Money Fund(R) December 31
</TABLE>
INDEPENDENT AUDITORS
A majority of each Trust's Board of Trustees, including the independent
Trustees, has selected PricewaterhouseCoopers LLP as the independent auditors of
the funds for the most recently completed fiscal years. [A representative of
PricewaterhouseCoopers LLP will be available in person or by phone during the
meeting, if needed, to make a statement if desired and to respond to appropriate
questions from shareholders.]
30
<PAGE> 32
BENEFICIAL OWNERS
To the knowledge of each Trust as of March 3, 2000, the following persons owned
more than 5% of any class of shares of a fund:
<TABLE>
<CAPTION>
NAME AND ADDRESS TOTAL NUMBER OF PERCENTAGE OF
FUND/CLASS OF BENEFICIAL OWNER SHARES OWNED* FUND/CLASS
- ---------- ------------------- --------------- -------------
<S> <C> <C> <C>
</TABLE>
- -----------------------
* The Trusts have no knowledge as to whether the listed beneficial owner has the
right to acquire beneficial ownership of shares of any class of a fund.
SHAREHOLDER REPORTS
Each fund will furnish, without charge, a copy of its most recent Annual Report
and, if available, Semi-Annual Report, to any shareholder upon request.
Shareholders desiring a copy of such reports should direct all written requests
to the particular fund's Trust c/o P.O. Box 7575, San Francisco, California
94120-7575, or should call Schwab at 1-800-435-4000.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the funds, in care of the particular fund's Trust c/o 101
Montgomery Street, San Francisco, California 94104, Attention: Frances Cole,
Secretary (120 KNY-14-109), 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 Statements, other soliciting material, and Annual Reports
(or Semi-Annual Reports) you wish to receive in order to supply copies to the
beneficial owners of shares.
IT IS IMPORTANT THAT YOUR VOTE BE RETURNED PROMPTLY, THEREFORE,
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON
ARE URGED TO VOTE THEIR SHARES BY INTERNET, PHONE OR MAIL.
SCHWABFUNDS(R)
Thank you for voting your shares promptly!
We appreciate you placing your trust in SchwabFunds and look forward to helping
you achieve your financial goals.
31
<PAGE> 33
The Proxy rules require us to disclose both the current fundamental policies and
the proposed policies for each fund affected by Proposals 2 and 3. On the next
page you will find the Appendix, which contains this information. A complete
analysis of each Proposal is included in the Proxy Statement, which starts on
page 8. As you read the Proxy Statement, you may want to refer to the Appendix
to compare your fund's current fundamental policies to those being proposed.
32
<PAGE> 34
APPENDIX
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Schwab Equity Funds Page
- ------------------- ----
<S> <C>
Analytics Fund(R) A-1
Institutional Select(TM) Large-Cap Value Index Fund N/A
Institutional Select(TM) S&P 500 Fund N/A
Institutional Select(TM) Small-Cap Value Index Fund N/A
MarketManager(TM) Balanced Portfolio N/A
MarketManager(TM) Growth Portfolio N/A
MarketManager(TM) International Portfolio A-3
MarketManager(TM) Small Cap Portfolio N/A
MarketTrack(TM) All Equity Portfolio N/A
MarketTrack(TM) Balanced Portfolio A-5
MarketTrack(TM) Conservative Portfolio A-7
MarketTrack(TM) Growth Portfolio A-9
S&P 500 Fund A-11
Schwab 1000 Fund(R) A-14
Schwab International Index Fund(R) A-17
Schwab Small-Cap Index Fund(R) A-20
Schwab Total Stock Market Index Fund N/A
Schwab Bond Funds
- -----------------
California Long-Term Tax-Free Bond Fund A-23
California Short/Intermediate Tax-Free Bond Fund A-26
Long-Term Tax-Free Bond Fund A-29
Short/Intermediate Tax-Free Bond Fund A-32
Short-Term Bond Market Index Fund A-35
Total Bond Market Index Fund(TM) A-37
YieldPlus Fund(TM) N/A
Schwab Money Funds
- ------------------
California Municipal Money Fund A-39
Florida Municipal Money Fund N/A
Government Cash Reserves Fund N/A
Government Money Fund A-41
Institutional Advantage Money Fund(R) A-45
Money Market Fund A-49
Municipal Money Fund A-53
New Jersey Municipal Money Fund N/A
New York Municipal Money Fund A-55
Pennsylvania Municipal Money Fund N/A
Retirement Money Fund(R) A-57
U.S. Treasury Money Fund A-61
Value Advantage Money Fund(R) A-63
</TABLE>
33
<PAGE> 35
APPENDIX
Analytics Fund(R)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks long-term capital No change Same None
growth.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined under government, its agencies or
a result of such purchase, 25% or more the 1940 Act, the rules or instrumentalities) if, as a result
of the value of its total assets would regulations thereunder or any of such purchase, 25% or more of
be invested in any industry (except exemption therefrom, as such the value of its total assets
that the fund may purchase securities statute, rules or regulations would be invested in any industry
under such circumstances only to the may be amended or interpreted (except that the fund may purchase
extent that the S&P 500(R) also is so from time to time. securities under such
concentrated). circumstances only to the extent
that the S&P 500(R) also is so
concentrated).
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts
real estate, including interests in FP - Proposal 2(j) except to the extent permitted or real estate, including
real estate limited partnerships, under the 1940 Act, the rules or interests in real estate limited
provided that the fund may (1) regulations thereunder or any partnerships, provided that the
purchase securities of companies that exemption therefrom, as such fund may (1) purchase securities
deal in real estate or interests statute, rules or regulations of companies that deal in real
therein, (2) purchase or sell futures may be amended or interpreted estate or interests therein, (2)
contracts, options contracts, equity from time to time. purchase or sell futures
index participations and index contracts, options contracts,
participation contracts, and (3) equity index participations and
purchase securities of companies that index participation contracts, and
deal in precious metals or interests (3) purchase securities of
therein. companies that deal in precious
metals or interests therein.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that the fund may (1) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (2) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE> 36
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that the to NFP; replace except to the extent permitted except that the fund may (i) borrow
fund may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that the fund will See also new fundamental policy extent necessary to comply with the
not purchase securities while on senior securities below. limitation within three business
borrowings represent more than 5% of days) and the fund will not
its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal securities, except to the extent
that, to secure allowable borrowings, 2(c)(iii) permitted under the 1940 Act, the
fund may do so with respect to no the rules or regulations
more than one-third of the value of thereunder or any exemption
its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-2
<PAGE> 37
APPENDIX
MarketManager(TM) International Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks long-term capital No change Same None
appreciation.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined government, its agencies or
a result of such purchase, 25% or more under the 1940 Act, the rules or instrumentalities) if, as a result
of the value of its total assets would regulations thereunder or any of such purchase, 25% or more of
be invested in any industry (except exemption therefrom, as such the value of its total assets would
the portfolio will invest 25% or more statute, rules or regulations may be invested in any industry
of its total assets in other be amended or interpreted from (except the portfolio will invest
investment companies). time to time. 25% or more of its total assets in
other investment companies).
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that the portfolio may (1) regulations thereunder or any provided that the portfolio may (1)
purchase securities of companies that exemption therefrom, as such purchase securities of companies
deal in real estate or interests statute, rules or regulations that deal in real estate or
therein, (2) purchase or sell futures may be amended or interpreted interests therein, (2) purchase or
contracts, options contracts, equity from time to time. sell futures contracts, options
index participations and index contracts, equity index
participation contracts. participations and index
participation contracts.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that the portfolio may to NFP; replace other persons, except to the or make any other loan if, as a
(1) purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (2) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE> 38
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that the to NFP; replace except to the extent permitted except that the fund may (i) borrow
portfolio may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that the portfolio See also new fundamental policy extent necessary to comply with the
will not purchase securities while on senior securities below. limitation within three business
borrowings represent more than 5% of days) and the fund will not
its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal 2(c) securities, except to the extent
that, to secure allowable borrowings, (iii) permitted under the 1940 Act,
the portfolio may do so with respect the rules or regulations
to no more than one-third of the value thereunder or any exemption
of its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 39
APPENDIX
MarketTrack(TM) Balanced Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks maximum total return, No change Same None
including both capital growth and
income.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined government, its agencies or
a result of such purchase, 25% or more under the 1940 act, the rules or instrumentalities) if, as a result
of the value of its total assets would regulations thereunder or any of such purchase, 25% or more of
be invested in any industry. exemption therefrom, as such the value of its total assets would
statute, rules or regulations may be invested in any industry.
be amended or interpreted from
time to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 15% of its net assets in illiquid
securities, including repurchase 2(f) securities.
agreements with maturities in excess
of seven days.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than one-half of 1% of the securities
of such issuer and together
beneficially own more than 5% of the
securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that each portfolio may (1) regulations thereunder or any provided that each portfolio may
purchase securities of companies that exemption therefrom, as such (1) purchase securities of
deal in real estate or interests statute, rules or regulations companies that deal in real estate
therein, (2) purchase or sell futures may be amended or interpreted or interests therein, (2) purchase
contracts, options contracts, equity from time to time. or sell futures contracts, options
index participations and index contracts, equity index
participation contracts and (3) participations and index
purchase securities of companies that participation contracts and (3)
deal in precious metals or interests purchase securities of companies
therein. that deal in precious metals or
interests therein.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-5
<PAGE> 40
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act,
including any exemptive relief granted
by the SEC.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each portfolio may to NFP; replace other persons, except to the or make any other loan if, as a
(1) purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (2) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that each to NFP; replace except to the extent permitted except that the fund may (i) borrow
portfolio may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that each See also new fundamental policy extent necessary to comply with the
portfolio will not purchase securities on senior securities below. limitation within three business
while borrowings represent more than days) and the fund will not
5% of its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal 2(c) securities, except to the extent
that, to secure allowable borrowings, (iii) permitted under the 1940 Act,
each portfolio may do so with respect the rules or regulations
to no more than one-third of the value thereunder or any exemption
of its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-6
<PAGE> 41
APPENDIX
MarketTrack(TM) Conservative Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks income and more growth No change Same None
potential than an all bond fund.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined under government, its agencies or
a result of such purchase, 25% or more the 1940 Act, the rules or instrumentalities) if, as a result
of the value of its total assets would regulations thereunder or any of such purchase, 25% or more of
be invested in any industry. exemption therefrom, as such the value of its total assets would
statue, rules or regulations may be invested in any industry.
be amended or interpreted from
time to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 15% of its net assets in illiquid
securities, including repurchase 2(f) securities.
agreements with maturities in excess
of seven days.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than one-half of 1% of the securities
of such issuer and together
beneficially own more than 5% of the
securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that each portfolio may (1) regulations thereunder or any provided that each portfolio may
purchase securities of companies that exemption therefrom, as such (1) purchase securities of
deal in real estate or interests statute, rules or regulations companies that deal in real estate
therein, (2) purchase or sell futures may be amended or interpreted or interests therein, (2) purchase
contracts, options contracts, equity from time to time. or sell futures contracts, options
index participations and index contracts, equity index
participation contracts and (3) participations and index
purchase securities of companies that participation contracts and (3)
deal in precious metals or interests purchase securities of companies
therein. that deal in precious metals or
interests therein.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-7
<PAGE> 42
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act,
including any exemptive relief granted
by the SEC.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each portfolio may to NFP; replace other persons, except to the or make any other loan if, as a
(1) purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (2) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that each to NFP; replace except to the extent permitted except that the fund may (i) borrow
portfolio may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that each See also new fundamental policy extent necessary to comply with the
portfolio will not purchase securities on senior securities below. limitation within three business
while borrowings represent more than days) and the fund will not
5% of its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal 2(c) securities, except to the extent
that, to secure allowable borrowings, (iii) permitted under the 1940 Act,
each portfolio may do so with respect the rules or regulations
to no more than one-third of the value thereunder or any exemption
of its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-8
<PAGE> 43
APPENDIX
MarketTrack(TM) Growth Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks high capital growth No change Same None
with less volatility than an all
stock portfolio.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined government, its agencies or
a result of such purchase, 25% or more under the 1940 Act, the rules instrumentalities) if, as a result
of the value of its total assets would or regulations thereunder or of such purchase, 25% or more of
be invested in any industry. any exemption therefrom, as the value of its total assets would
such statute, rules or be invested in any industry.
regulations may be amended or
interpreted from time to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 15% of its net assets in illiquid
securities, including repurchase 2(f) securities.
agreements with maturities in excess
of seven days.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than one-half of 1% of the securities
of such issuer and together
beneficially own more than 5% of the
securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that each portfolio may (1) regulations thereunder or any provided that each portfolio may
purchase securities of companies that exemption therefrom, as such (1) purchase securities of
deal in real estate or interests statute, rules or regulations companies that deal in real estate
therein, (2) purchase or sell futures may be amended or interpreted or interests therein, (2) purchase
contracts, options contracts, equity from time to time. or sell futures contracts, options
index participations and index contracts, equity index
participation contracts and (3) participations and index
purchase securities of companies that participation contracts and (3)
deal in precious metals or interests purchase securities of companies
therein. that deal in precious metals or
interests therein.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-9
<PAGE> 44
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act,
including any exemptive relief granted
by the SEC.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each portfolio may to NFP; replace other persons, except to the or make any other loan if, as a
(1) purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (2) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that each to NFP; replace except to the extent permitted except that the fund may (i) borrow
portfolio may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that each See also new fundamental policy extent necessary to comply with the
portfolio will not purchase securities on senior securities below. limitation within three business
while borrowings represent more than days) and the fund will not
5% of its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new FP - The fund may not issue senior None
hypothecate any of its assets, except Proposal 2(c)(iii) securities, except to the extent
that, to secure allowable borrowings, permitted under the 1940 Act,
each portfolio may do so with respect the rules or regulations
to no more than one-third of the value thereunder or any exemption
of its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-10
<PAGE> 45
APPENDIX
S&P 500 Fund
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks to track the price and No change Same None
dividend performance (total return) of
common stocks of U.S. companies, as
represented by Standard & Poor's 500
Composite Stock Price Index (the S&P
500(R)).
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than half of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each fund may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (ii) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal securities, except to the extent
that, to secure allowable borrowings, 2(c)(iii) permitted under the 1940 Act,
each fund may do so with respect to no the rules or regulations
more than one-third of the value of thereunder or any exemption
its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-11
<PAGE> 46
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined government, its agencies or
a result of such purchase, 25% or more under the 1940 Act, the rules instrumentalities) if, as a result
of the value of its total assets would or regulations thereunder or of such purchase, 25% or more of
be invested in any industry (except any exemption therefrom, as the value of its total assets would
that each fund may purchase securities such statute, rules or be invested in any industry (except
under such circumstances only to the regulations may be amended or that each fund may purchase
extent that its index is also so interpreted from time to time. securities under such circumstances
concentrated). only to the extent that its index
is also so concentrated).
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 15% of its net assets in illiquid
securities, including repurchase 2(f) securities.
agreements with maturities in excess
of seven days.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that each fund may (i) regulations thereunder or any provided that each fund may (i)
purchase securities of companies that exemption therefrom, as such purchase securities of companies
deal in real estate or interests statute, rules or regulations that deal in real estate or
therein, (ii) purchase or sell futures may be amended or interpreted interests therein, (ii) purchase or
contracts, options contracts, equity from time to time. sell futures contracts, options
index participations and index contracts, equity index
participation contracts, and (iii) for participations and index
the S&P 500 Fund, purchase securities participation contracts, and (iii)
of companies that deal in precious for the S&P 500 Fund, purchase
metals or interests therein. securities of companies that deal
in precious metals or interests
therein.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act,
including any exemptive relief granted
by the SEC.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-12
<PAGE> 47
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that the to NFP; replace except to the extent permitted except that the fund may (i) borrow
fund may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that each fund See also new fundamental policy extent necessary to comply with the
will not purchase securities while on senior securities above. limitation within three business
borrowings represent more than 5% of days) and the fund will not
its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-13
<PAGE> 48
Schwab 1000 Fund(R) APPENDIX
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks to match the price and No change Same None
dividend performance (total return) of
the Schwab 1000 Index,(R) an index
created to represent the performance
of publicly traded common stocks of
the 1,000 largest U.S. companies.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than half of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each fund may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (ii) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal 2(c) securities, except to the extent
that, to secure allowable borrowings, (iii) permitted under the 1940 Act,
each fund may do so with respect to no the rules or regulations
more than one-third of the value of thereunder or any exemption
its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-14
<PAGE> 49
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities) if, open-end diversified company government, its agencies or
as a result, more than 5% of the value under the 1940 Act, the rules or instrumentalities) if, as a result,
of its total assets would be invested regulations thereunder or any more than 5% of the value of its
in the securities of such issuer. exemption therefrom, as such total assets would be invested in
statute, rules or regulations the securities of such issuer.
may be amended or interpreted
from time to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other then securities issued or replace with new investments in a particular securities (other then securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined under government, its agencies or
a result of such purchase, 25% or more the 1940 Act, the rules or instrumentalities) if, as a result
of the value of its total assets would regulations thereunder or any of such purchase, 25% or more of
be invested in any industry (except to exemption therefrom, as such the value of its total assets would
the extent that the Schwab 1000 statute, rules or regulations be invested in any industry (except
Index(R) is also so concentrated). may be amended or interpreted to the extent that the Schwab 1000
Securities issued by governments or from time to time. Index(R) is also so concentrated).
political subdivisions or authorities Securities issued by governments
of governments are not considered to or political subdivisions or
be securities subject to this authorities of governments are not
concentration restriction. considered to be securities subject
to this concentration restriction.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of the total value of its assets in to NFP - Proposal 15% of net assets in illiquid
illiquid securities, including 2(f) securities.
repurchase agreements with maturities
in excess of seven days.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities or real estate, including replace with new sell commodities or real estate, commodities or real estate,
interests in real estate limited FP - Proposal 2(j) except to the extent permitted including interests in real estate
partnerships, provided that the fund under the 1940 Act, the rules or limited partnerships, provided that
may (i) purchase securities of regulations thereunder or any the fund may (i) purchase
companies that deal in real estate or exemption therefrom, as such securities of companies that deal
interests therein, and (ii) purchase statute, rules or regulations in real estate or interests
or sell futures contracts, options may be amended or interpreted therein, and (ii) purchase or sell
contracts, equity index participations from time to time. futures contracts, options
and index participation contracts. contracts, equity index
participations and index
participation contracts.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-15
<PAGE> 50
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money except Amend and convert The fund may not borrow money, The fund may not borrow money
from banks as a temporary measure to to NFP; replace except to the extent permitted except that the fund may (i) borrow
satisfy redemption requests or for with new FP - under the 1940 Act, the rules or money from banks and (ii) engage in
extraordinary or emergency purposes Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
and then only in an amount not to exemption therefrom, as such any party; provided that (i) and
exceed one-third of the value of its statute, rules or regulations (ii) in combination do not exceed
total assets (including the amount may be amended or interpreted 33 1/3% of its total assets (any
borrowed), provided that the fund will from time to time. borrowings that come to exceed this
not purchase securities while amount will be reduced to the
borrowings represent more than 5% of extent necessary to comply with the
its total assets. limitation within three business
days) and the fund will not
purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-16
<PAGE> 51
APPENDIX
Schwab International Index Fund(R)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks to track the price and Amend and convert The fund seeks to track the The fund intends to achieve its
dividend performance (total return) of to NFP; replace performance of a benchmark index investment objective by tracking
the Schwab International Index(R), an with new FP - that measures the total return the price and dividend performance
index created to represent the Proposal 3(b) of large, publicly-traded non (total return) of the Schwab
performance of common stocks and other U.S. companies from countries International Index.
equity securities issued by large with developed equity markets
publicly traded companies from outside the United States.
countries around the world with major
developed securities markets,
excluding the United States).
- -----------------------------------------------------------------------------------------------------------------------------------
The fund will invest at least 65% of Eliminate - None None
its total assets in common stocks and Proposal 3(b)
other equity securities including
preferred stocks, rights and warrants
of companies located in at least three
countries other than the United States.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than half of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each fund may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (ii) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal 2(c) securities, except to the extent
that, to secure allowable borrowings, (iii) permitted under the 1940 Act,
each fund may do so with respect to no the rules or regulations
more than one-third of the value of thereunder or any exemption
its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-17
<PAGE> 52
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities issued or replace with new investments in a particular securities (other than securities
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, issued or guaranteed by the U.S.
agencies or instrumentalities) if, as as concentration is defined under government, its agencies or
a result of such purchase, 25% or more the 1940 Act, the rules or instrumentalities) if, as a result
of the value of its total assets would regulations thereunder or any of such purchase, 25% or more of
be invested in any industry (except exemption therefrom, as such the value of its total assets would
that each fund may purchase securities statute, rules or regulations be invested in any industry (except
under such circumstances only to the may be amended or interpreted that each fund may purchase
extent that its index is also so from time to time. securities under such circumstances
concentrated). only to the extent that its index
is also so concentrated).
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 15% of its net assets in illiquid
securities, including repurchase 2(f) securities.
agreements with maturities in excess
of seven days.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that each fund may (i) regulations thereunder or any provided that each fund may (i)
purchase securities of companies that exemption therefrom, as such purchase securities of companies
deal in real estate or interests statute, rules or regulations that deal in real estate or
therein, (ii) purchase or sell futures may be amended or interpreted interests therein, (ii) purchase or
contracts, options contracts, equity from time to time. sell futures contracts, options
index participations and index contracts, equity index
participation contracts, and (iii) for participations and index
the S&P 500 Fund, purchase securities participation contracts, and (iii)
of companies that deal in precious for the S&P 500 Fund, purchase
metals or interests therein. securities of companies that deal
in precious metals or interests
therein.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-18
<PAGE> 53
APPENDIX
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act,
including any exemptive relief granted
by the SEC.
- -----------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money
senior securities, except that the to NFP; replace except to the extent permitted except that the fund may (i) borrow
fund may borrow from banks as a with new FPs - under the 1940 Act, the rules or money from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed
and then only in an amount not to may be amended or interpreted 33 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the
borrowed), provided that each fund See also new fundamental policy extent necessary to comply with the
will not purchase securities while on senior securities above. limitation within three business
borrowings represent more than 5% of days) and the fund will not
its total assets. purchase securities while
borrowings represent more than 5%
of its total assets.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-19
<PAGE> 54
APPENDIX
Schwab Small-Cap Index Fund(R)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks to track the price and Amend and convert The fund seeks to track the The fund intends to achieve its
dividend performance (total return) of to NFP; replace performance of a benchmark index investment objective by tracking the
the Schwab Small-Cap Index(R), an with new FP - that measures the total return price and dividend performance
index created to represent the Proposal 3(a) of small capitalization U.S. (total return) of the Schwab
performance of common stocks of the stocks. Small-Cap Index.
second 1,000 largest U.S. companies,
ranked by market capitalization (share
price times the number of shares
outstanding).
- ------------------------------------------------------------------------------------------------------------------------------------
The fund will invest at least 65% of Eliminate - None None
its total assets in common stocks, or Proposal 3(a)
other equity securities including
preferred stocks, rights and warrants.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than half of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that each fund may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are distributed therefrom, as such statute, apply to purchases of debt
publicly or customarily purchased by rules or regulations may be securities or repurchase
institutional investors, and (ii) lend amended or interpreted from time agreements).
its portfolio securities. to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets, except FP - Proposal securities, except to the extent
that, to secure allowable borrowings, 2(c)(iii) permitted under the 1940 Act,
each fund may do so with respect to no the rules or regulations
more than one-third of the value of thereunder or any exemption
its total assets. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-20
<PAGE> 55
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP and The fund may not purchase The fund may not, as to 75% of its
assets, purchase securities of any replace with new securities of an issuer, except assets, purchase securities of any
issuer (other than obligations of, or FP - Proposal 2(d) as consistent with the issuer (other than obligations of,
guaranteed by, the U.S. government, maintenance of its status as an or guaranteed by, the U.S.
its agencies or instrumentalities or open-end diversified company government, its agencies or
investments in other registered under the 1940 Act, the rules or instrumentalities or investments in
investment companies) if, as a result, regulations thereunder or any other registered investment
more than 5% of the value of its total exemption therefrom, as such companies) if, as a result, more
assets would be invested in the statute, rules or regulations than 5% of the value of its total
securities of such issuer. may be amended or interpreted assets would be invested in the
from time to time. securities of such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase securities
(other than securities issued or replace with new investments in a particular (other than securities issued or
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, guaranteed by the U.S. government,
agencies or instrumentalities) if, as as concentration is defined its agencies or instrumentalities)
a result of such purchase, 25% or more under the 1940 Act, the rules if, as a result of such purchase,
of the value of its total assets would or regulations thereunder or 25% or more of the value of its
be invested in any industry (except any exemption therefrom, as total assets would be invested in
that each fund may purchase securities such statute, rules or any industry (except that each fund
under such circumstances only to the regulations may be amended or may purchase securities under such
extent that its index is also so interpreted from time to time. circumstances only to the extent
concentrated). that its index is also so
concentrated).
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 15% of its net assets in illiquid
securities, including repurchase 2(f) securities.
agreements with maturities in excess
of seven days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities, commodity contracts or replace with new sell commodities or real estate, commodities, commodity contracts or
real estate, including interests in FP - Proposal 2(j) except to the extent permitted real estate, including interests in
real estate limited partnerships, under the 1940 Act, the rules or real estate limited partnerships,
provided that each fund may (i) regulations thereunder or any provided that each fund may (i)
purchase securities of companies that exemption therefrom, as such purchase securities of companies
deal in real estate or interests statute, rules or regulations that deal in real estate or
therein, (ii) purchase or sell futures may be amended or interpreted interests therein, (ii) purchase or
contracts, options contracts, equity from time to time. sell futures contracts, options
index participations and index contracts, equity index
participation contracts, and (iii) for participations and index
the S&P 500 Fund, purchase securities participation contracts, and (iii)
of companies that deal in precious for the S&P 500 Fund, purchase
metals or interests therein. securities of companies that deal in
precious metals or interests
therein.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-21
<PAGE> 56
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act,
including any exemptive relief granted
by the SEC.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money or issue Amend and convert The fund may not borrow money, The fund may not borrow money except
senior securities, except that the to NFP; replace except to the extent permitted that the fund may (i) borrow money
fund may borrow from banks as a with new FPs - under the 1940 Act, the rules or from banks and (ii) engage in
temporary measure to satisfy Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
redemption requests or for and (iii) exemption therefrom, as such any party; provided that (i) and
extraordinary or emergency purposes statute, rules or regulations (ii) in combination do not exceed 33
and then only in an amount not to may be amended or interpreted 1/3% of its total assets (any
exceed one-third of the value of its from time to time. borrowings that come to exceed this
total assets (including the amount amount will be reduced to the extent
borrowed), provided that each fund See also new fundamental policy necessary to comply with the
will not purchase securities while on senior securities above. limitation within three business
borrowings represent more than 5% of days) and the fund will not purchase
its total assets. securities while borrowings
represent more than 5% of its total
assets.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-22
<PAGE> 57
APPENDIX
California Long-Term Tax-Free Bond Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks a high level of current No Change Same None
income that is exempt from Federal
income and State of California
personal income taxes, consistent with
preservation of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP - None The fund may not, as to 75% of its
assets, purchase securities of any Proposal 2(n) assets, purchase securities of any
issuer (other than obligations of, or issuer (other than obligations of,
guaranteed by, the U.S. government, or guaranteed by, the U.S.
its agencies or instrumentalities) if, government, its agencies or
as a result, more than 5% of the value instrumentalities) if, as a result,
of its total assets would be invested more than 5% of the value of its
in the securities of such issuer, total assets would be invested in
except that provided that no more than the securities of such issuer,
25% of the fund's total assets would except that provided that no more
be invested in the securities of a than 25% of the fund's total assets
single issuer, up to 50% of the fund's would be invested in the securities
total assets may be invested without of a single issuer, up to 50% of the
regard to this 5% limitation. fund's total assets may be invested
without regard to this 5%
limitation.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase securities
(other than securities issued or replace with new investments in a particular (other than securities issued or
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, guaranteed by the U.S. government,
agencies or instrumentalities) if, as as concentration is defined its agencies or instrumentalities)
a result of such purchase, 25% or more under the 1940 Act, the rules if, as a result of such purchase,
of the value of its total assets would or regulations thereunder 25% or more of the value of its
be invested in any industry. or any exemption therefrom, as total assets would be invested in
Securities issued by governments or such statute, rules or any industry. Securities issued by
political subdivisions or authorities regulations may be amended or governments or political
of governments are not considered to interpreted from time to time. subdivisions or authorities of
be securities subject to this industry governments are not considered to be
concentration restriction. securities subject to this industry
concentration restriction.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of the total value of its net assets to NFP - Proposal 15% of its net assets in illiquid
in illiquid securities, including 2(f) securities.
repurchase agreements with maturities
in excess of seven days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than 1/2 of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-23
<PAGE> 58
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities or real estate, including replace with new sell commodities or real estate, commodities or real estate,
interests in real estate limited FP - Proposal 2(j) except to the extent permitted including interests in real estate
partnerships, provided that the fund under the 1940 Act, the rules or limited partnerships, provided that
may (i) purchase securities of regulations thereunder or any the fund may (i) purchase securities
companies that deal in real estate or exemption therefrom, as such of companies that deal in real
interests therein, and (ii) purchase statute, rules or regulations estate or interests therein, and
or sell futures contracts, options may be amended or interpreted (ii) purchase or sell futures
contracts, equity index participations from time to time. contracts, options contracts, equity
and index participation contracts. index participations and index
participation contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that it may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are publicly therefrom, as such statute, apply to purchases of debt
distributed or customarily purchased rules or regulations may be securities or repurchase
by institutional investors, and (ii) amended or interpreted from time agreements).
lend its portfolio securities. to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money except Amend and convert The fund may not borrow money, The fund may not borrow money except
from banks as a temporary measure to to NFP; replace except to the extent permitted that the fund may (i) borrow money
satisfy redemption requests or for with new FP - under the 1940 Act, the rules or from banks and (ii) engage in
extraordinary or emergency purposes Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
and then only in an amount not to exemption therefrom, as such any party; provided that (i) and
exceed one-third of the value of its statute, rules or regulations (ii) in combination do not exceed 33
total assets (including the amount may be amended or interpreted 1/3% of its total assets (any
borrowed), provided that the fund will from time to time. borrowings that come to exceed this
not purchase securities while amount will be reduced to the extent
borrowings represent more than 5% of necessary to comply with the
its total assets. limitation within three business
days) and the fund will not purchase
securities while borrowings
represent more than 5% of its total
assets.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new FP - The fund may not issue senior None
hypothecate any of its assets except Proposal 2(c)(iii) securities, except to the extent
that to secure allowable borrowings, permitted under the 1940 Act,
the fund may do so with respect to no the rules or regulations
more than 10% of its net assets. thereunder or any exemption
therefrom, as such
statute, rules or
regulations may be
amended or
interpreted from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-24
<PAGE> 59
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-25
<PAGE> 60
APPENDIX
California Short/Intermediate Tax-Free Bond Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The fund seeks a high level of current No Change Same None
income that is exempt from Federal
income and State of California
personal income taxes, consistent with
preservation of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP - None The fund may not, as to 75% of its
assets, purchase securities of any Proposal 2(n) assets, purchase securities of any
issuer (other than obligations of, or issuer (other than obligations of,
guaranteed by, the U.S. government, or guaranteed by, the U.S.
its agencies or instrumentalities) if, government, its agencies or
as a result, more than 5% of the value instrumentalities) if, as a result,
of its total assets would be invested more than 5% of the value of its
in the securities of such issuer, total assets would be invested in
except that provided that no more than the securities of such issuer,
25% of the fund's total assets would except that provided that no more
be invested in the securities of a than 25% of the fund's total assets
single issuer, up to 50% of the fund's would be invested in the securities
total assets may be invested without of a single issuer, up to 50% of the
regard to this 5% limitation. fund's total assets may be invested
without regard to this 5%
limitation.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase securities
(other than securities issued or replace with new investments in a particular (other than securities issued or
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of indus- guaranteed by the U.S. government,
agencies or instrumentalities) if, as tries, as concentration is its agencies or instrumentalities)
a result of such purchase, 25% or more defined under the 1940 Act, the if, as a result of such purchase,
of the value of its total assets would rules or regulations thereunder 25% or more of the value of its
be invested in any industry. or any exemption therefrom, as total assets would be invested in
Securities issued by governments or such statute, rules or any industry. Securities issued by
political subdivisions or authorities regulations may be amended or governments or political
of governments are not considered to interpreted from time to time. subdivisions or authorities of
be securities subject to this industry governments are not considered to be
concentration restriction. securities subject to this industry
concentration restriction.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of the total value of its net assets to NFP - Proposal 15% of its net assets in illiquid
in illiquid securities, including 2(f) securities.
repurchase agreements with maturities
in excess of seven days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than 1/2 of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-26
<PAGE> 61
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities or real estate, including replace with new sell commodities or real estate, commodities or real estate,
interests in real estate limited FP - Proposal 2(j) except to the extent permitted including interests in real estate
partnerships, provided that the fund under the 1940 Act, the rules or limited partnerships, provided that
may (i) purchase securities of regulations thereunder or any the fund may (i) purchase securities
companies that deal in real estate or exemption therefrom, as such of companies that deal in real
interests therein, and (ii) purchase statute, rules or regulations estate or interests therein, and
or sell futures contracts, options may be amended or interpreted (ii) purchase or sell futures
contracts, equity index participations from time to time. contracts, options contracts, equity
and index participation contracts. index participations and index
participation contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that it may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are publicly therefrom, as such statute, apply to purchases of debt
distributed or customarily purchased rules or regulations may be securities or repurchase
by institutional investors, and (ii) amended or interpreted from time agreements).
lend its portfolio securities. to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money except Amend and convert The fund may not borrow money, The fund may not borrow money except
from banks as a temporary measure to to NFP; replace except to the extent permitted that the fund may (i) borrow money
satisfy redemption requests or for with new FP - under the 1940 Act, the rules or from banks and (ii) engage in
extraordinary or emergency purposes Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
and then only in an amount not to exemption therefrom, as such any party; provided that (i) and
exceed one-third of the value of its statute, rules or regulations (ii) in combination do not exceed 33
total assets (including the amount may be amended or interpreted 1/3% of its total assets (any
borrowed), provided that the fund will from time to time. borrowings that come to exceed this
not purchase securities while amount will be reduced to the extent
borrowings represent more than 5% of necessary to comply with the
its total assets. limitation within three business
days) and the fund will not
purchase securities while
borrowings represent more
than 5% of its total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets except FP - Proposal securities, except to the extent
that to secure allowable borrowings, 2(c)(iii) permitted under the 1940 Act,
the fund may do so with respect to no the rules or regulations
more than 10% of its net assets. thereunder or any exemption
therefrom, as such statute, rules
or regulations may be amended
or interpreted from time to
time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-27
<PAGE> 62
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-28
<PAGE> 63
APPENDIX
Long-Term Tax-Free Bond Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks a high level of current No change Same None
income that is exempt from federal
income tax, consistent with
presentation of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP - None The fund may not, as to 75% of its
assets, purchase securities of any Proposal 2(n) assets, purchase securities of any
issuer (other than obligations of, or issuer (other than obligations of,
guaranteed by, the U.S. government, or guaranteed by, the U.S.
its agencies or instrumentalities) if, government, its agencies or
as a result, more than 5% of the value instrumentalities) if, as a result,
of its total assets would be invested more than 5% of the value of its
in the securities of such issuer, total assets would be invested in
except that provided that no more than the securities of such issuer,
25% of the fund's total assets would except that provided that no more
be invested in the securities of a than 25% of the fund's total assets
single issuer, up to 50% of the fund's would be invested in the securities
total assets may be invested without of a single issuer, up to 50% of the
regard to this 5% limitation. fund's total assets may be invested
without regard to this 5%
limitation.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase securities
(other than securities issued or replace with new investments in a particular (other than securities issued or
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, guaranteed by the U.S. government,
agencies or instrumentalities) if, as as concentration is defined its agencies or instrumentalities)
a result of such purchase, 25% or more under the 1940 Act, the rules if, as a result of such purchase,
of the value of its total assets would or regulations thereunder 25% or more of the value of its
be invested in any industry. or any exemption therefrom, as total assets would be invested in
Securities issued by governments or such statute, rules or any industry. Securities issued by
political subdivisions or authorities regulations may be amended or governments or political
of governments are not considered to interpreted from time to time. subdivisions or authorities of
be securities subject to this industry governments are not considered to be
concentration restriction. securities subject to this industry
concentration restriction.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of the total value of its net assets to NFP - Proposal 15% of its net assets in illiquid
in illiquid securities, including 2(f) securities.
repurchase agreements with maturities
in excess of seven days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than 1/2 of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-29
<PAGE> 64
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities or real estate, including replace with new sell commodities or real estate, commodities or real estate,
interests in real estate limited FP - Proposal 2(j) except to the extent permitted including interests in real estate
partnerships, provided that the fund under the 1940 Act, the rules or limited partnerships, provided that
may (i) purchase securities of regulations thereunder or any the fund may (i) purchase securities
companies that deal in real estate or exemption therefrom, as such of companies that deal in real
interests therein, and (ii) purchase statute, rules or regulations estate or interests therein, and
or sell futures contracts, options may be amended or interpreted (ii) purchase or sell futures
contracts, equity index participations from time to time. contracts, options contracts, equity
and index participation contracts. index participations and index
participation contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that it may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are publicly therefrom, as such statute, apply to purchases of debt
distributed or customarily purchased rules or regulations may be securities or repurchase
by institutional investors, and (ii) amended or interpreted from time agreements).
lend its portfolio securities. to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money except Amend and convert The fund may not borrow money, The fund may not borrow money except
from banks as a temporary measure to to NFP; replace except to the extent permitted that the fund may (i) borrow money
satisfy redemption requests or for with new FP - under the 1940 Act, the rules or from banks and (ii) engage in
extraordinary or emergency purposes Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
and then only in an amount not to exemption therefrom, as such any party; provided that (i) and
exceed one-third of the value of its statute, rules or regulations (ii) in combination do not exceed 33
total assets (including the amount may be amended or interpreted 1/3% of its total assets (any
borrowed), provided that the fund will from time to time. borrowings that come to exceed this
not purchase securities while amount will be reduced to the extent
borrowings represent more than 5% of necessary to comply with the
its total assets. limitation within three business
days) and the fund will not
purchase securities while
borrowings represent more
than 5% of its total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets except FP - Proposal securities, except to the extent
that to secure allowable borrowings, 2(c)(iii) permitted under the 1940 Act,
the fund may do so with respect to no the rules or regulations
more than 10% of its net assets. thereunder or any exemption
therefrom, as such statute, rules
or regulations may be amended
or interpreted from time to
time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-30
<PAGE> 65
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-31
<PAGE> 66
APPENDIX
Short/Intermediate Tax-Free Bond Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks a high level of current No change Same None
income that is exempt from federal
income tax, consistent with
preservation of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of its Convert to NFP - None The fund may not, as to 75% of its
assets, purchase securities of any Proposal 2(n) assets, purchase securities of any
issuer (other than obligations of, or issuer (other than obligations of,
guaranteed by, the U.S. government, or guaranteed by, the U.S.
its agencies or instrumentalities) if, government, its agencies or
as a result, more than 5% of the value instrumentalities) if, as a result,
of its total assets would be invested more than 5% of the value of its
in the securities of such issuer, total assets would be invested in
except that provided that no more than the securities of such issuer,
25% of the fund's total assets would except that provided that no more
be invested in the securities of a than 25% of the fund's total assets
single issuer, up to 50% of the fund's would be invested in the securities
total assets may be invested without of a single issuer, up to 50% of the
regard to this 5% limitation. fund's total assets may be invested
without regard to this 5%
limitation.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase securities
(other than securities issued or replace with new investments in a particular (other than securities issued or
guaranteed by the U.S. government, its FP - Proposal 2(i) industry or group of industries, guaranteed by the U.S. government,
agencies or instrumentalities) if, as as concentration is defined its agencies or instrumentalities)
a result of such purchase, 25% or more under the 1940 Act, the rules if, as a result of such purchase,
of the value of its total assets would or regulations thereunder 25% or more of the value of its
be invested in any industry. or any exemption therefrom, as total assets would be invested in
Securities issued by governments or such statute, rules or any industry. Securities issued by
political subdivisions or authorities regulations may be amended or governments or political
of governments are not considered to interpreted from time to time. subdivisions or authorities of
be securities subject to this industry governments are not considered to be
concentration restriction. securities subject to this industry
concentration restriction.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 10% Amend and convert None The fund may not invest more than
of the total value of its net assets to NFP - Proposal 15% of its net assets in illiquid
in illiquid securities, including 2(f) securities.
repurchase agreements with maturities
in excess of seven days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
trust or the investment adviser
individually own beneficially more
than 1/2 of 1% of the securities of
such issuer and together beneficially
own more than 5% of the securities of
such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-32
<PAGE> 67
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not purchase or sell Convert to NFP and The fund may not purchase or The fund may not purchase or sell
commodities or real estate, including replace with new sell commodities or real estate, commodities or real estate,
interests in real estate limited FP - Proposal 2(j) except to the extent permitted including interests in real estate
partnerships, provided that the fund under the 1940 Act, the rules or limited partnerships, provided that
may (i) purchase securities of regulations thereunder or any the fund may (i) purchase securities
companies that deal in real estate or exemption therefrom, as such of companies that deal in real
interests therein, and (ii) purchase statute, rules or regulations estate or interests therein, and
or sell futures contracts, options may be amended or interpreted (ii) purchase or sell futures
contracts, equity index participations from time to time. contracts, options contracts, equity
and index participation contracts. index participations and index
participation contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend money to any Amend and convert The fund may not make loans to The fund may not lend any security
person, except that it may (i) to NFP; replace other persons, except to the or make any other loan if, as a
purchase a portion of an issue of with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
short-term debt securities or similar Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
obligations (including repurchase thereunder or any exemption parties (this restriction does not
agreements) that are publicly therefrom, as such statute, apply to purchases of debt
distributed or customarily purchased rules or regulations may be securities or repurchase
by institutional investors, and (ii) amended or interpreted from time agreements).
lend its portfolio securities. to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money except Amend and convert The fund may not borrow money, The fund may not borrow money except
from banks as a temporary measure to to NFP; replace except to the extent permitted that the fund may (i) borrow money
satisfy redemption requests or for with new FP - under the 1940 Act, the rules or from banks and (ii) engage in
extraordinary or emergency purposes Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
and then only in an amount not to exemption therefrom, as such any party; provided that (i) and
exceed one-third of the value of its statute, rules or regulations (ii) in combination do not exceed 33
total assets (including the amount may be amended or interpreted 1/3% of its total assets (any
borrowed), provided that the fund will from time to time. borrowings that come to exceed this
not purchase securities while amount will be reduced to the extent
borrowings represent more than 5% of necessary to comply with the
its total assets. limitation within three business
days) and the fund will not
purchase securities while
borrowings represent more
than 5% of its total assets.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or Replace with new The fund may not issue senior None
hypothecate any of its assets except FP - Proposal 2(c) securities, except to the extent
that to secure allowable borrowings, (iii) permitted under the 1940 Act,
the fund may do so with respect to no the rules or regulations
more than 10% of its net assets. thereunder or any exemption
therefrom, as such statute,
rules or regulations may be
amended or interpreted from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-33
<PAGE> 68
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-34
<PAGE> 69
APPENDIX
Short-Term Bond Market Index Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Fund attempts to provide a high No change Same None
level of current income consistent
with preservation of capital by
seeking to track the investment
results of a particular bond index
through the use of an indexing
strategy.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend or borrow money No change Same None
except to the extent permitted by the
Investment Company Act of 1940 or
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or No change Same None
hypothecate any of its assets except
to the extent permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations
may be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not concentrate No change Same None
investments in a particular industry
or group of industries, or within one
state (except to the extent that the
index which the fund seeks to track
is also so concentrated) as
concentration is defined under the
Investment Company Act of 1940 or
the rules or regulations thereunder,
as such statute, rules or regulations
may be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may underwrite securities to No change Same None
the extent permitted by the Investment
Company Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may be
amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of the Convert to NFP and The fund may not purchase The fund may not, as to 75% of the
fund's assets, purchase securities of replace with new securities of an issuer, except fund's assets, purchase securities
any issuer (other than obligations of, FP - Proposal 2(d) as consistent with the of any issuer (other than
or guaranteed by, the U.S. government, maintenance of its status as an obligations of, or guaranteed by,
its agencies or instrumentalities) if, open-end diversified company the U.S. government, its agencies or
as a result more than 5% of the value under the 1940 Act, the rules or instrumentalities) if, as a result
of its total assets would be invested regulations thereunder or any more than 5% of the value of its
in the securities of such issuer. exemption therefrom, as such total assets would be invested in
statute, rules or regulations the securities of such issuer.
may be amended or interpreted
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-35
<PAGE> 70
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the Investment Company
Act of 1940.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior No change Same None
securities except to the extent
permitted by the Investment Company
Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell No change Same None
commodities, commodities contracts,
futures contracts, or real estate
except to the extent permitted by
the Investment Company Act of 1940
or rules or regulations thereunder,
as such statute, rules or
regulations may be amended from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-36
<PAGE> 71
APPENDIX
Total Bond Market Index Fund(TM)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Fund attempts to provide a high No change Same None
level of current income consistent
with preservation of capital by
seeking to track the investment
results of a particular bond index
through the use of an indexing
strategy.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend or borrow money No change Same None
except to the extent permitted by the
Investment Company Act of 1940 or
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or No change Same None
hypothecate any of its assets
except to the extent permitted by
the Investment Company Act of 1940
or the rules or regulations
thereunder, as such statute, rules
or regulations may be amended from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not concentrate No change Same None
investments in a particular industry
or group of industries, or within
one state (except to the extent
that the index which the fund seeks
to track is also so concentrated)
as concentration is defined under
the Investment Company Act of 1940
or the rules or regulations
thereunder, as such statute, rules
or regulations may be amended from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may underwrite securities to No change Same None
the extent permitted by the Investment
Company Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not, as to 75% of the Convert to NFP and The fund may not purchase The fund may not, as to 75% of the
fund's assets, purchase securities of replace with new securities of an issuer, except fund's assets, purchase securities
any issuer (other than obligations of, FP - Proposal 2(d) as consistent with the of any issuer (other than
or guaranteed by, the U.S. government, maintenance of its status as an obligations of, or guaranteed by,
its agencies or instrumentalities) if, open-end diversified company the U.S. government, its agencies or
as a result more than 5% of the value under the 1940 Act, the rules or instrumentalities) if, as a result
of its total assets would be invested regulations thereunder or any more than 5% of the value of its
in the securities of such issuer. exemption therefrom, as such total assets would be invested in
statute, rules or regulations the securities of such issuer.
may be amended or interpreted
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-37
<PAGE> 72
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of other investment companies, except
as permitted by the Investment Company
Act of 1940.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior No change Same None
securities except to the extent
permitted by the Investment Company
Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or sell No change Same None
commodities, commodities contracts,
futures contracts, or real estate
except to the extent permitted by
the Investment Company Act of 1940
or rules or regulations thereunder,
as such statute, rules or
regulations may be amended from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-38
<PAGE> 73
APPENDIX
California Municipal Money Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks maximum current income No change Same None
exempt from federal and California
state personal income taxes,
consistent with liquidity and
stability of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
or make investments other than in
accordance with investment objectives
and policies.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not enter into a Amend and convert None The fund may not invest more than
repurchase agreement if more than 10% to NFP - Proposal 10% of its net assets in illiquid
of its net assets would be subject to 2(f) securities.
repurchase agreements maturing in more
than 7-days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase securities
(other than securities of the U.S. replace with new investments in a particular (other than securities of the U.S.
government, its agencies or FP - Proposal 2(i) industry or group of industries, government, its agencies or
instrumentalities) if, as a result of as concentration is instrumentalities) if, as a result
such purchase, 25% or more of its defined under the 1940 Act, the of such purchase, 25% or more of its
total assets would be invested in any rules or regulations thereunder total assets would be invested in
industry (although securities issued or any exemption therefrom, as any industry (although securities
by governments or political such statute, rules or issued by governments or political
subdivisions of governments are not regulations may be amended or subdivisions of governments are not
considered to be securities subject to interpreted from time to time. considered to be securities subject
this industry concentration to this industry concentration
restriction). restriction).
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate 2(h) None None
securities of an issuer if any of
the officers, trustees or directors
of the trust or its investment
adviser 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.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP and The fund may not purchase or The fund may not invest in or
commodity futures contracts or in replace with new sell commodities or real estate, commodities or commodity futures
real estate, except that each fund may FP - Proposal 2(j) except to the extent permitted contracts or in real estate, except
invest in municipal securities secured under the 1940 Act, the rules or that each fund may invest in
by real estate or interests therein. regulations thereunder or any municipal securities secured by real
exemption therefrom, as such estate or interests therein.
statute, rules or regulations
may be amended or interpreted
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-39
<PAGE> 74
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not invest in interests Convert to NFP - None The fund may not invest in interests
in oil, gas or other mineral Proposal 2(m) in oil, gas or other mineral
exploration or development programs, exploration or development programs,
although it may invest in municipal although it may invest in municipal
securities of issuers which invest in securities of issuers which invest
or sponsor such programs. in or sponsor such programs.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed an underwriter under persons, except to the extent
the federal securities laws in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend or borrow money, No change Same None
except to the extent permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or No change Same None
hypothecate any of its assets, except
to the extent as permitted by the
Investment Company Act of 1940 or
the rules or regulations
thereunder, as such statute, rules
or regulations may be amended from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior No change Same None
securities, except to the extent as
permitted by the Investment Company
Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP - None The fund may not purchase securities
of any issuer unless consistent with Proposal 2(n) of any issuer unless consistent with
the maintenance of its status as a the maintenance of its respective
non-diversified company under the status as a non-diversified company
Investment Company Act of 1940 or the under the Investment Company Act of
rules or regulations thereunder, as 1940 or the rules or regulations
such statute, rules or regulations may thereunder, as such statute, rules
be amended from time to time. or regulations may be amended from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-40
<PAGE> 75
APPENDIX
Government Money Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks maximum current income No change Same None
consistent with stability of
capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not amend any investment Eliminate - None None
policy without approval by holders of Proposal 2(a)
a majority of its outstanding voting
shares as defined by the 1940 Act.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Amend and convert None The fund may not purchase money
deemed to mature in more than 365 days. to NFP - Proposal market securities deemed to mature
2(b) in more than 397 days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
or make investments other than in
accordance with its investment
objectives and policies.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Amend and convert The fund may not purchase The fund may not purchase
of any issuer (other than obligations to NFP; replace securities of an issuer, except securities of any issuer (other
of, or guaranteed by, the U.S. with new FP - as consistent with the than obligations of, or guaranteed
government, its agencies or Proposal 2(d) maintenance of its status as an by, the U.S. government, its
instrumentalities) if, as a result open-end diversified company agencies or instrumentalities, or
thereof, more than 5% of the value of under the 1940 Act, the rules or securities of other investment
its assets would be invested in the regulations thereunder or any companies) if, as a result more
securities of such issuer. exemption therefrom, as such than 5% of the value of its assets
statute, rules or regulations securities of such issuer, except
The fund may not purchase, in the may be amended or interpreted would be invested in the that the
aggregate with all other Schwab Money from time to time. fund may invest up to 25% of its
Funds, more than 10% of any class of Eliminate - total assets in the first tier
securities of any issuer. All debt Proposal 2(d) securities of a single issuer for
securities and all preferred stocks up to three business days.
are each considered as one class.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not concentrate 25% or Convert to NFP; The fund may not concentrate The fund may not concentrate 25% or
more of the value of its assets in any replace with new investments in a particular more of the value of its assets in
one industry; provided, however, that FP - Proposal 2(i) industry or group of industries, any one industry; provided, however,
it reserves the freedom of action to as concentration is defined that it reserves the freedom of
invest up to 100% of its assets in under the 1940 Act, the action to invest up to 100% of its
certificates of deposit or bankers' rules or regulations thereunder assets in certificates of deposit or
acceptances issued by domestic or any exemption therefrom, as bankers' acceptances issued by
branches of U.S. banks and U.S. such statute, rules or domestic branches of U.S. banks and
branches of foreign banks (which the regulations may be amended or U.S. branches of foreign banks
fund has determined to be subject to interpreted from time to time. (which the fund has determined to be
the same regulation as U.S. banks), or subject to the same regulation as
obligations of, or guaranteed by, the U.S. banks), or obligations of, or
U.S. government, its agencies or guaranteed by, the U.S. government,
instrumentalities in accordance with its agencies or instrumentalities
its investment objective and policies. in accordance to its investment
objective and policies.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-41
<PAGE> 76
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not invest more than 5% Eliminate - None None
of its total assets in securities of Proposal 2(e)
issuers (other than obligations of, or
guaranteed by, the U.S. government,
its agencies or instrumentalities)
that, with their predecessors, have a
record of less than three years of
continuous operation.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund will invest no more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 10% of its net assets in illiquid
securities. The fund may not enter 2(f) securities.
into repurchase agreements if, as a
result thereof, more than 10% its net
assets valued at the time of the
transaction would be subject to
repurchase agreements maturing in
more than 7-days. The fund may not
invest more than 5% of its total
assets in securities restricted as
to disposition under the federal
securities laws (except commercial
paper issued under Section 4(2) of
the Securities Act of 1933, as
amended).
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of
the Trust or its investment adviser
or sub-adviser individually owns
beneficially more than 1/2 of 1% of
the securities of such issuer and
together beneficially own more than
5% of the securities of such
issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP; The fund may not purchase or The fund may not invest in
or commodity contracts, futures replace with new sell commodities or real estate, commodities or commodity contracts,
contracts, real estate or real estate FP - Proposal 2(j) except to the extent permitted futures contracts, real estate or
limited partnerships, although it may under the 1940 Act, the rules or real estate limited partnerships,
invest in securities which are secured regulations thereunder or any although it may invest in securities
by real estate and securities of exemption therefrom, as such which are secured by real estate and
issuers which invest or deal in real statute, rules or regulations securities of issuers which invest
estate. may be amended or interpreted or deal in real estate.
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-42
<PAGE> 77
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not purchase securities Amend and convert None The fund may not purchase securities
of other investment companies, except to NFP - Proposal of other investment companies,
in connection with a merger, 2(g) except as permitted by the
consolidation, reorganization or Investment Company Act of 1940, the
acquisition of assets. rules or regulations thereunder or
any exemption therefrom, as such
statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not make loans to others Amend and convert The fund may not make loans to The fund may not lend any security
(except through the purchase of debt to NFP; replace other persons, except to the or make any other loan if, as a
obligations or repurchase agreements with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
in accordance with its investment Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
objectives and policies). thereunder or any exemption parties (this restriction does not
therefrom, as such statute, apply to purchases of debt
rules or regulations may be securities or repurchase
amended or interpreted from time agreements).
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money, except Amend and convert The fund may not borrow money, The fund may not borrow money except
as a temporary measure for to NFP; replace except to the extent permitted that the fund may (i) borrow money
extraordinary or emergency purposes, with new FP - under the 1940 Act, the rules or from banks and (ii) engage in
and then only in an amount up to Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
one-third of the value of its total exemption therefrom, as such any party; provided that (i) and
assets in order to meet redemption statute, rules or regulations (ii) in combination do not exceed 33
requests without immediately selling may be amended or interpreted 1/3% of its total assets (any
any portfolio securities. The fund from time to time. borrowings that come to exceed this
will not borrow for leverage purposes amount will be reduced to the extent
or purchase securities or make necessary to comply with the
investments while reverse repurchase limitation within three business
agreements or borrowings are days) and the fund will not purchase
outstanding. Any borrowings will not securities while borrowings
be collateralized. If for any reason represent more than 5% of its total
the current value of the total net assets.
assets of the fund falls below an
amount equal to three times the amount
of indebtedness from money borrowed,
the fund will, within three business
days, reduce its indebtedness to the
extent necessary.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in interests Convert to NFP - None The fund may not invest in interests
in oil, gas, mineral leases or other Proposal 2(m) in oil, gas, mineral leases or other
mineral exploration or development mineral exploration or development
programs, although it may invest in programs, although it may invest in
the securities of issuers which invest the securities of issuers which
in or sponsor such programs. invest in or sponsor such programs.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-43
<PAGE> 78
APPENDIX
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior Replace with new The fund may not issue senior None
securities as defined in the 1940 Act. FP - Proposal securities, except to the extent
2(c)(iii) permitted under the 1940 Act,
the rules or regulations
thereunder or any exemption
therefrom, as such statute, rules
or regulations may be amended or
interpreted from time to time.
The fund may not write, purchase or Convert to NFP - None The fund may not write, purchase or
sell puts, calls or combinations Proposal 2(c)(iii) sell puts, calls or combinations
thereof. thereof.
The fund may not make short sales of Convert to NFP None The fund may not make short sales of
securities, or purchase any securities Proposal 2(c)(iii) securities, or purchase any
on margin, except to obtain such securities on margin, except to
short-term credits as may be necessary obtain such short-term credits as
for the clearance of transactions. may be necessary for the clearance
of transactions.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-44
<PAGE> 79
APPENDIX
Institutional Advantage Money Fund(R)
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- -------------------------------- ------------------ ------------------------------------ ----------------------------------------
<S> <C> <C> <C>
The fund seeks maximum No change Same None
current income consistent
with liquidity and stability
of capital.
- -------------------------------- ------------------ ------------------------------------ ----------------------------------------
The fund may not purchase No change Same None
securities or make
investments other than in
accordance with its
investment objectives and
policies.
- -------------------------------- ------------------ ------------------------------------ ----------------------------------------
The fund may not purchase Amend and The fund may not purchase The fund may not purchase
securities of any issuer Convert to NFP; securities of an issuer, except as securities of any issuer (other than
(other than obligations replace with new consistent with the maintenance obligations of, or guaranteed by, the
of, or guaranteed by, the U.S. FP - Proposal 2(d) of its status as an open-end U.S. government, its agencies or
government, its agencies or diversified company under the instrumentalities, or securities of
instrumentalities) if, as a 1940 Act, the rules or other investment companies) if, as a
result thereof, more than 5% regulations thereunder or any result more than 5% of the value of
of the value of its assets exemption therefrom, as such its assets would be invested in the
would be invested in the statute, rules or regulations may securities of such issuer, except that
securities of such issuer. be amended or interpreted from the fund may invest up to 25% of its
time to time. total assets in the first tier
The fund may not purchase, in Eliminate - securities of a single issuer for
the aggregate with all other Proposal 2(d) up to three business days.
Schwab Money Funds, more than
10% of any class of securities
of any issuer. All debt
securities and all preferred
stocks are each considered as
one class.
- -------------------------------- ------------------ ------------------------------------ ----------------------------------------
The fund may not concentrate 25% Convert to NFP; The fund may not concentrate The fund may not concentrate 25% or
or more of the value of its replace with new investments in a particular more of the value of its assets in any
assets in any one industry; FP - Proposal 2(i) industry or group of industries, as one industry; provided, however, that
provided, however, that it concentration is defined under the it reserves the freedom of action to
reserves the freedom of action 1940 Act, the rules or regulations invest up to 100% of its assets in
to invest up to 100% of its thereunder or any exemption certificates of deposit or bankers'
assets in certificates of therefrom, as such statute, rules acceptances issued by domestic
deposit or bankers' acceptances or regulations may be amended or branches of U.S. banks and U.S.
issued by domestic branches of interpreted from time to time. branches of foreign banks (which the
U.S. banks and U.S. branches of fund has determined to be subject to
foreign banks (which the fund the same regulation as U.S. banks), or
has determined to be subject to obligations of, or guaranteed by, the
the same regulation as U.S. U.S. government, its agencies or
banks), or obligations of, or instrumentalities in accordance its
guaranteed by, the U.S. investment objective and policies.
government, its agencies or
instrumentalities in accordance
with its investment objective
and policies.
- -------------------------------- ------------------ ------------------------------------ ----------------------------------------
The fund may not invest more Eliminate - None None
than 5% of its total assets in Proposal 2(e)
securities of issuers (other
than obligations of, or
guaranteed by, the U.S.
government, its agencies or
instrumentalities) that, with
their predecessors, have a
record of less than three years
of continuous operation.
- -------------------------------- ------------------ ------------------------------------ ----------------------------------------
</TABLE>
A-45
<PAGE> 80
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund will invest no more than Amend and None The fund may not invest more
10% of its net assets in illiquid convert to NFP - than 10% of its net assets in
securities. The fund may not enter Proposal 2(f) illiquid securities.
into repurchase agreements if, as a
result thereof, more than 10% its net
assets valued at the time of the
transaction would be subject to
repurchase agreements maturing in
more than 7-days. The fund may not
invest more than 5% of its total
assets in securities restricted as to
disposition under the federal
securities laws (except commercial
paper issued under Section 4(2) of
the Securities Act of 1933, as
amended).
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
Trust or its investment adviser or the
sub-adviser individually own
beneficially more than 1/2 of 1% of
the securities of such issuer and
together beneficially own more than
5% of the securities of such issuer.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not invest in Convert to NFP; The fund may not purchase or The fund may not invest in
commodities or commodity contracts, replace with new sell commodities or real estate, commodities or commodity
futures contracts, real estate or real FP - Proposal 2(j) except to the extent permitted contracts, futures contracts,
estate limited partnerships, although it under the 1940 Act, the rules or real estate or real estate
may invest in securities which are regulations thereunder or any limited partnerships, although
secured by real estate and securities exemption therefrom, as such it may invest in securities
of issuers which invest or deal in real statute, rules or regulations may which are secured by real
estate. be amended or interpreted from estate and securities of
time to time. issuers which invest or deal
in real estate.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for
purpose of exercising control or Proposal 2(l) the purpose of exercising
management of another issuer. control or management of
another issuer.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not purchase securities Amend and None The fund may not purchase
of other investment companies, convert to NFP - securities of other investment
except in connection with a merger, Proposal 2(g) companies, except as permitted
consolidation, reorganization or by the Investment Company Act
acquisition of assets. of 1940, the rules or
regulations thereunder or any
exemption therefrom, as such
statute, rules or regulations
may be amended from time to
time.
</TABLE>
A-46
<PAGE> 81
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not make loans to Amend and The fund may not make loans to The fund may not lend any
others (except through the purchase convert to NFP; other persons, except to the extent security or make any other
of debt obligations or repurchase replace with new permitted under the 1940 Act, loan if, as a result, more
agreements in accordance with its FP - Proposal the rules or regulations than 33 1/3% of its total
investment objectives and policies), 2(c)(ii) thereunder or any exemption assets would be lent to other
except the fund may (1) purchase a therefrom, as such statute, rules parties (this restriction does
portion of an issue of short-term debt or regulations may be amended not apply to purchases of debt
securities or similar obligations or interpreted from time to time. securities or repurchase
(including repurchase agreements) agreements).
that are publicly distributed or
customarily purchased by institutional
investors; and (2) lend its portfolio
securities.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not borrow money, Convert to NFP; The fund may not borrow The fund may not borrow money
except as a temporary measure for replace with new money, except to the extent except that the fund may (i)
extraordinary or emergency purposes, FP - Proposal permitted under the 1940 Act, borrow money from banks and
and then only in an amount up to one- 2(c)(i) the rules or regulations (ii) engage in reverse
third of the value of its total assets in thereunder or any exemption repurchase agreements with any
order to meet redemption requests therefrom, as such statute, rules party; provided that (i) and
without immediately selling any or regulations may be amended (ii) in combination do not
portfolio securities. The fund will not or interpreted from time to time. exceed 33 1/3% of its total
borrow for leverage purposes or assets (any borrowings that
purchase securities or make come to exceed this amount
investments while reverse repurchase will be reduced to the extent
agreements or borrowings are necessary to comply with the
outstanding. If for any reason the limitation within three
current value of the total net assets of business days) and the fund
the fund falls below an amount equal will not purchase securities
to three times the amount of while borrowings represent
indebtedness from money borrowed, more than 5% of its total
the fund will, within three business assets.
days, reduce its indebtedness to the
extent necessary.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not invest in interests Convert to NFP - None The fund may not invest in
in oil, gas, mineral leases or other Proposal 2(m) interests in oil, gas, mineral
mineral exploration or development leases or other mineral
programs, although it may invest in exploration or development
the securities of issuers which invest programs, although it may
in or sponsor such programs. invest in the securities of
issuers which invest in or
sponsor such programs.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not underwrite Replace with new The fund may not underwrite None
securities issued by others except to FP - Proposal 2(k) securities issued by other
the extent it may be deemed to be an persons, except to the extent
underwriter, under the federal permitted under the 1940 Act,
securities laws, in connection with the the rules or regulations
disposition of securities from its thereunder or any exemption
investment portfolio. therefrom, as such statute, rules
or regulations may be amended
or interpreted from time to time.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
</TABLE>
A-47
<PAGE> 82
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not issue senior Replace with new The fund may not issue senior None
securities as defined in the 1940 Act. FP; replace with securities, except to the extent
new FP - permitted under the 1940 Act,
Proposal 2(c)(iii) the rules or regulations
thereunder or any exemption
therefrom, as such statute, rules
or regulations may be amended
or interpreted from time to time.
The fund may not write, purchase or Convert to NFPs - None The fund may not write,
sell puts, calls or combinations Proposal 2(c)(iii) purchase or sell puts, calls
thereof. or combinations thereof.
The fund may not make short sales of Convert to NFPs - None The fund may not make short
securities, or purchase any securities Proposal 2(c)(iii) sales of securities, or
on margin, except to obtain such purchase any securities on
short-term credits as may be margin, except to obtain such
necessary for the clearance of short-term credits as may be
transactions. necessary for the clearance of
transactions.
</TABLE>
A-48
<PAGE> 83
APPENDIX
Money Market Fund
<TABLE>
<CAPTION>
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
<S> <C> <C> <C>
The fund seeks maximum current No change Same None
income consistent with stability of
capital.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not amend any Eliminate - None None
investment policy without approval Proposal 2(a)
by holders of a majority of its
outstanding voting shares as defined
by the 1940 Act.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not purchase securities Amend and None The fund may not purchase
deemed to mature in more than 365 convert to NFP - money market securities deemed
days. Proposal 2(b) to mature in more than 397
days.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not purchase securities No change Same None
or make investments other than in
accordance with its investment
objectives and policies.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not purchase securities Amend and The fund may not purchase The fund may not purchase
of any issuer (other than obligations convert to NFP; securities of an issuer, except as securities of any issuer
of, or guaranteed by, the U.S. replace with new consistent with the maintenance (other than obligations of, or
government, its agencies or FP - Proposal 2(d) of its status as an open-end guaranteed by, the U.S.
instrumentalities) if, as a result diversified company under the government, its agencies or
thereof, more than 5% of the value of 1940 Act, the rules or instrumentalities, or
its assets would be invested in the regulations thereunder or any securities of other investment
securities of such issuer. exemption therefrom, as such companies) if, as a result
statute, rules or regulations may more than 5% of the value of
The fund may not purchase, in the Eliminate - be amended or interpreted from its assets would be invested
aggregate with all other Schwab Proposal 2(d) time to time. in the securities of such
Money Funds, more than 10% of any issuer, except that the fund
class of securities of any issuer. All may invest up to 25% of its
debt securities and all preferred stocks total assets in the first tier
are each considered as one class. securities of a single issuer
for up to three business days.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
The fund may not concentrate 25% or Convert to NFP; The fund may not concentrate The fund may not concentrate
more of the value of its assets in any replace with new investments in a particular 25% or more of the value of
one industry; provided, however, that FP - Proposal 2(i) industry or group of industries, as its assets in any one
it reserves the freedom of action to concentration is defined under the industry; provided, however,
invest up to 100% of its assets in 1940 Act, the rules or regulations that it reserves the freedom
certificates of deposit or bankers' thereunder or any exemption of action to invest up to 100%
acceptances issued by domestic therefrom, as such statute, rules of its assets in certificates
branches of U.S. banks and U.S. or regulations may be amended or of deposit or bankers'
branches of foreign banks (which the interpreted from time to time. acceptances issued by domestic
fund has determined to be subject to branches of U.S. banks and
the same regulation as U.S. banks), or U.S. branches of foreign banks
obligations of, or guaranteed by, the (which the fund has determined
U.S. government, its agencies or to be subject to the same
instrumentalities in accordance with regulation as U.S. banks), or
its investment objective and policies. obligations of, or guaranteed
by, the U.S. government, its
agencies or instrumentalities
in accordance to its
investment objective and
policies.
- ------------------------------------------ ------------------ ------------------------------------ ------------------------------
</TABLE>
A-49
<PAGE> 84
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not invest more than Eliminate - None None
5% of its total assets in securities of Proposal 2(e)
issuers (other than obligations of, or
guaranteed by, the U.S. government,
its agencies or instrumentalities) that,
with their predecessors, have a record
of less than three years of continuous
operation.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund will invest no more than Amend and None The fund may not invest more
10% of its net assets in illiquid convert to NFP - than 10% of its net assets in
securities. The fund may not enter Proposal 2(f) illiquid securities.
into repurchase agreements if, as a
result thereof, more than 10% its net
assets valued at the time of the
transaction would be subject to
repurchase agreements maturing in
more than 7-days. The fund may not
invest more than 5% of its total assets
in securities restricted as to
disposition under the federal
securities laws (except commercial
paper issued under Section 4(2) of the
Securities Act of 1933, as amended).
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
Trust or its investment adviser or sub-
adviser individually owns beneficially
more than 1/2 of 1% of the securities
of such issuer and together
beneficially own more than 5% of the
securities of such issuer.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not invest in Convert to NFP; The fund may not purchase or The fund may not invest in
commodities or commodity contracts, replace with new sell commodities or real estate, commodities or commodity
futures contracts, real estate or real FP - Proposal 2(j) except to the extent permitted contracts, futures contracts,
estate limited partnerships, although it under the 1940 Act, the rules or real estate or real estate
may invest in securities which are regulations thereunder or any limited partnerships, although
secured by real estate and securities exemption therefrom, as such it may invest in securities
of issuers which invest or deal in real statute, rules or regulations may which are secured by real
estate. be amended or interpreted from estate and securities of
time to time. issuers which invest or deal
in real estate.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for
purpose of exercising control or Proposal 2(1) the purpose of exercising
management of another issuer. control or management of
another issuer.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
</TABLE>
A-50
<PAGE> 85
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not purchase securities Amend and None The fund may not purchase
of other investment companies, convert to NFP - securities of other
except in connection with a merger, Proposal 2(g) investment companies, except
consolidation, reorganization or as permitted by the Investment
acquisition of assets. Company Act of 1940, the rules
or regulations thereunder or
any exemption therefrom, as
such statute, rules or
regulations may be amended from
time to time.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not make loans to Amend and The fund may not make loans to The fund may not lend any
others (except through the purchase convert to NFP; other persons, except to the extent security or make any other
of debt obligations or repurchase replace with new permitted under the 1940 Act, loan if, as a result, more
agreements in accordance with its FP - Proposal the rules or regulations than 33 1/3% of its total
investment objectives and policies). 2(c)(ii) thereunder or any exemption assets would be lent to other
therefrom, as such statute, rules parties (this restriction does
or regulations may be amended not apply to purchases of debt
or interpreted from time to time. securities or repurchase
agreements).
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not borrow money, Amend and The fund may not borrow The fund may not borrow money
except as a temporary measure for convert to NFP; money, except to the extent except that the fund may (i)
extraordinary or emergency purposes, replace with new permitted under the 1940 Act, borrow money from banks and
and then only in an amount up to one- FP - Proposal the rules or regulations (ii) engage in reverse
third of the value of its total assets in 2(c)(i) thereunder or any exemption repurchase agreements with any
order to meet redemption requests therefrom, as such statute, rules party; provided that (i) and
without immediately selling any or regulations may be amended (ii) in combination do not
portfolio securities. The fund will not or interpreted from time to time. exceed 33 1/3% of its total
borrow for leverage purposes or assets (any borrowings that
purchase securities or make come to exceed this amount
investments while reverse repurchase will be reduced to the extent
agreements or borrowings are necessary to comply with the
outstanding. Any borrowings will not limitation within three
be collateralized. If for any reason business days) and the fund
the current value of the total net assets will not purchase securities
of the fund falls below an amount while borrowings represent
equal to three times the amount of more than 5% of its total
indebtedness from money borrowed, assets.
the fund will, within three business
days, reduce its indebtedness to the
extent necessary.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not invest in interests Convert to NFP - None The fund may not invest in
in oil, gas, mineral leases or other Proposal 2(m) interests in oil, gas, mineral
mineral exploration or development leases or other mineral
programs, although it may invest in exploration or development
the securities of issuers which invest programs, although it may
in or sponsor such programs. invest in the securities of
issuers which invest in or
sponsor such programs.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
</TABLE>
A-51
<PAGE> 86
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not underwrite Replace with new The fund may not underwrite None
securities issued by others except to FP - Proposal 2(k) securities issued by other
the extent it may be deemed to be an persons, except to the extent
underwriter, under the federal permitted under the 1940 Act,
securities laws, in connection with the the rules or regulations
disposition of securities from its thereunder or any exemption
investment portfolio. therefrom, as such statute, rules
or regulations may be amended
or interpreted from time to time.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
The fund may not issue senior Replace with new The fund may not issue senior None
securities as defined in the 1940 Act. FP - Proposal securities, except to the extent
2(c)(iii) permitted under the 1940 Act,
the rules or regulations
thereunder or any exemption
therefrom, as such statute,
rules or regulations may be
amended or interpreted from
time to time.
The fund may not write, purchase or Convert to NFP - None The fund may not write,
sell puts, calls or combinations Proposal 2(c)(iii) purchase or sell puts, calls
thereof. or combinations thereof.
The fund may not make short sales of Convert to NFP - None The fund may not make short
securities, or purchase any securities Proposal 2(c)(iii) sales of securities, or
on margin, except to obtain such purchase any securities on
short-term credits as may be margin, except to obtain such
necessary for the clearance of short-term credits as may be
transactions. necessary for the clearance of
transactions.
- ------------------------------------------ ------------------ ----------------------------------- ------------------------------
</TABLE>
A-52
<PAGE> 87
APPENDIX
Municipal Money Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks maximum current income No change Same None
exempt from federal income tax
consistent with liquidity and
stability of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
or make investments other than in
accordance with investment objectives
and policies.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities of the U.S. replace with new investments in a particular securities (other than securities
government, its agencies or FP - Proposal 2(i) industry or group of industries, of the U.S. government, its
instrumentalities) if, as a result of as concentration is defined under agencies or instrumentalities) if,
such purchase, 25% or more of its the 1940 Act, the rules or as a result of such purchase, 25%
total assets would be invested in any regulations thereunder or any or more of its total assets would
industry (although securities issued exemption therefrom, as such be invested in any industry
by governments or political statute, rules or regulations (although securities issued by
subdivisions of governments are not may be amended or interpreted governments or political
considered to be securities subject to from time to time. subdivisions of governments are not
this industry concentration considered to be securities subject
restriction) or in any one state. to this industry concentration
restriction) or in any one state.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not enter into a Amend and convert None The fund may not invest more than
repurchase agreement if more than 10% to NFP - Proposal 10% of its net assets in illiquid
of its net assets would be subject to 2(f) securities.
repurchase agreements maturing in more
than 7-days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate 2(h) None None
securities of an issuer if any of the
officers, trustees or directors of the
trust or its investment adviser
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.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP and The fund may not purchase or The fund may not invest in
or commodity futures contracts or in replace with new sell commodities or real estate, commodities or commodity futures
real estate, except that each fund may FP - Proposal 2(j) except to the extent permitted contracts or in real estate, except
invest in municipal securities secured under the 1940 Act, the rules or that each fund may invest in
by real estate or interests therein. regulations thereunder or any municipal securities secured by
exemption therefrom, as such real estate or interests therein.
statute, rules or regulations
may be amended or interpreted
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-53
<PAGE> 88
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in interests Convert to NFP - None The fund may not invest in
in oil, gas or other mineral Proposal 2(m) interests in oil, gas or other
exploration or development programs, mineral exploration or development
although it may invest in municipal programs, although it may invest in
securities of issuers which invest in municipal securities of issuers
or sponsor such programs. which invest in or sponsor such
programs.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed an underwriter under persons, except to the extent
the federal securities laws in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend or borrow money, No change Same None
except to the extent permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or No change Same None
hypothecate any of its assets, except
to the extent as permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior No change Same None
securities, except to the extent as
permitted by the Investment Company
Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may be
amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of any issuer unless consistent with
the maintenance of its status as a
diversified company under the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-54
<PAGE> 89
APPENDIX
New York Municipal Money Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks to provide maximum No change Same None
current income exempt from federal and
New York state and local personal
income taxes, consistent with
stability of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
or make investments other than in
accordance with investment objectives
and policies.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not enter into a Amend and convert None The fund may not invest more than
repurchase agreement if more than 10% to NFP - Proposal 10% of its net assets in illiquid
of its net assets would be subject to 2(f) securities.
repurchase agreements maturing in more
than 7-days.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP and The fund may not concentrate The fund may not purchase
(other than securities of the U.S. replace with new investments in a particular securities (other than securities
government, its agencies or FP - Proposal 2(i) industry or group of industries, of the U.S. government, its
instrumentalities) if, as a result of as concentration is defined under agencies or instrumentalities) if,
such purchase, 25% or more of its the 1940 Act, the rules or as a result of such purchase, 25%
total assets would be invested in any regulations thereunder or any or more of its total assets would
industry (although securities issued exemption therefrom, as such be invested in any industry
by governments or political statute, rules or regulations (although securities issued by
subdivisions of governments are not may be amended or interpreted governments or political
considered to be securities subject to from time to time. subdivisions of governments are not
this industry concentration considered to be securities subject
restriction). to this industry concentration
restriction).
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate 2(h) None None
securities of an issuer if any of the
officers, trustees or directors of the
trust or its investment adviser
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.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP and The fund may not purchase or The fund may not invest in
or commodity futures contracts or in replace with new sell commodities or real estate, commodities or commodity futures
real estate, except that each fund may FP - Proposal 2(j) except to the extent permitted contracts or in real estate, except
invest in municipal securities secured under the 1940 Act, the rules or that each fund may invest in
by real estate or interests therein. regulations thereunder or any municipal securities secured by
exemption therefrom, as such real estate or interests therein.
statute, rules or regulations
may be amended or interpreted
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-55
<PAGE> 90
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in interests Convert to NFP - None The fund may not invest in
in oil, gas or other mineral Proposal 2(m) interests in oil, gas or other
exploration or development programs, mineral exploration or development
although it may invest in municipal programs, although it may invest in
securities of issuers which invest in municipal securities of issuers
or sponsor such programs. which invest in or sponsor such
programs.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed an underwriter under persons, except to the extent
the federal securities laws in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not lend or borrow money, No change Same None
except to the extent permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not pledge, mortgage or No change Same None
hypothecate any of its assets, except
to the extent as permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior No change Same None
securities, except to the extent as
permitted by the Investment Company
Act of 1940 or the rules or
regulations thereunder, as such
statute, rules or regulations may be
amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP - None The fund may not purchase
of any issuer unless consistent with Proposal 2(n) securities of any issuer unless
the maintenance of its status as a consistent with the maintenance of
non-diversified company under the its status as a non-diversified
Investment Company Act of 1940 or the company under the Investment
rules or regulations thereunder, as Company Act of 1940 or the rules or
such statute, rules or regulations may regulations thereunder, as such
be amended from time to time. statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-56
<PAGE> 91
APPENDIX
Retirement Money Fund(R)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks maximum current income No change Same None
consistent with liquidity and
stability of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
or make investments other than in
accordance with its investment
objectives and policies.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Amend and Convert The fund may not purchase The fund may not purchase
of any issuer (other than obligations to NFP; replace securities of an issuer, except securities of any issuer (other
of, or guaranteed by, the U.S. with new FP - as consistent with the than obligations of, or guaranteed
government, its agencies or Proposal 2(d) maintenance of its status as an by, the U.S. government, its
instrumentalities) if, as a result open-end diversified company agencies or instrumentalities, or
thereof, more than 5% of the value of under the 1940 Act, the rules or securities of other investment
its assets would be invested in the regulations thereunder or any companies) if, as a result more
securities of such issuer. exemption therefrom, as such than 5% of the value of its assets
statute, rules or regulations would be invested in the securities
The fund may not purchase, in the may be amended or interpreted of such issuer, except that the
aggregate with all other Schwab Money from time to time. fund may invest up to 25% of its
Funds, more than 10% of any class of Eliminate - total assets in the first tier
securities of any issuer. All debt Proposal 2(d) securities of a single issuer for
securities and all preferred stocks up to three business days.
are each considered as one class.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not concentrate 25% or Convert to NFP; The fund may not concentrate The fund may not concentrate 25% or
more of the value of its assets in any replace with new investments in a particular more of the value of its assets in
one industry; provided, however, that FP - Proposal 2(i) industry or group of industries, any one industry; provided,
it reserves the freedom of action to as concentration is defined however, that it reserves the
invest up to 100% of its assets in under the 1940 Act, the rules or freedom of action to invest up to
certificates of deposit or bankers' regulations thereunder or any 100% of its assets in certificates
acceptances issued by domestic exemption therefrom, as such of deposit or bankers' acceptances
branches of U.S. banks and U.S. statute, rules or regulations issued by domestic branches of U.S.
branches of foreign banks (which the may be amended or interpreted banks and U.S. branches of foreign
fund has determined to be subject to from time to time. banks (which the fund has
the same regulation as U.S. banks), or determined to be subject to the
obligations of, or guaranteed by, the same regulation as U.S. banks), or
U.S. government, its agencies or obligations of, or guaranteed by,
instrumentalities in accordance with the U.S. government, its agencies
its investment objective and policies. or instrumentalities in accordance
its investment objective and
policies.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest more than 5% Eliminate - None None
of its total assets in securities of Proposal 2(e)
issuers (other than obligations of, or
guaranteed by, the U.S. government,
its agencies or instrumentalities)
that, with their predecessors, have a
record of less than three years of
continuous operation.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-57
<PAGE> 92
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund will invest no more than 10% Amend and convert None The fund may not invest more than
of its net assets in illiquid to NFP - Proposal 10% of its net assets in illiquid
securities. The fund may not enter 2(f) securities.
into repurchase agreements if, as a
result thereof, more than 10% its net
assets valued at the time of the
transaction would be subject to
repurchase agreements maturing in more
than 7-days. The fund may not invest
more than 5% of its total assets in
securities restricted as to
disposition under the federal
securities laws (except commercial
paper issued under Section 4(2) of the
Securities Act of 1933, as amended).
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase or retain Eliminate - None None
securities of an issuer if any of the Proposal 2(h)
officers, trustees or directors of the
Trust or its investment adviser or the
sub-adviser individually own
beneficially more than 1/2 of 1% of
the securities of such issuer and
together beneficially own more than 5%
of the securities of such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP; The fund may not purchase or The fund may not invest in
or commodity contracts, futures replace with new sell commodities or real estate, commodities or commodity contracts,
contracts, real estate or real estate FP - Proposal 2(j) except to the extent permitted futures contracts, real estate or
limited partnerships, although it may under the 1940 Act, the rules or real estate limited partnerships,
invest in securities which are secured regulations thereunder or any although it may invest in
by real estate and securities of exemption therefrom, as such securities which are secured by
issuers which invest or deal in real statute, rules or regulations real estate and securities of
estate. may be amended or interpreted issuers which invest or deal in
from time to time. real estate.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control or Proposal 2(l) purpose of exercising control or
management of another issuer. management of another issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Amend and convert None The fund may not purchase
of other investment companies, except to NFP - Proposal securities of other investment
in connection with a merger, 2(g) companies, except as permitted by
consolidation, reorganization or the Investment Company Act of 1940,
acquisition of assets. the rules or regulations thereunder
or any exemption therefrom, as such
statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-58
<PAGE> 93
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not make loans to others Amend and convert The fund may not make loans to The fund may not lend any security
(except through the purchase of debt to NFP; replace other persons, except to the or make any other loan if, as a
obligations or repurchase agreements with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
in accordance with its investment Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
objectives and policies), except the thereunder or any exemption parties (this restriction does not
fund may (1) purchase a portion of an therefrom, as such statute, apply to purchases of debt
issue of short-term debt securities or rules or regulations may be securities or repurchase
similar obligations (including amended or interpreted from time agreements).
repurchase agreements) that are to time.
publicly distributed or customarily
purchased by institutional investors;
and (2) lend its portfolio securities.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money, except Amend and convert The fund may not borrow money, The fund may not borrow money
as a temporary measure for to NFP;replace with except to the extent permitted except that the fund may (i) borrow
extraordinary or emergency purposes, new FP - Proposal under the 1940 Act, the rules or money from banks and (ii) engage in
and then only in an amount up to 2(c)(i) regulations thereunder or any reverse repurchase agreements with
one-third of the value of its total exemption therefrom, as such any party; provided that (i) and
assets in order to meet redemption statute, rules or regulations (ii) in combination do not exceed
requests without immediately selling may be amended or interpreted 33 1/3% of its total assets (any
any portfolio securities. The fund from time to time. borrowings that come to exceed this
will not borrow for leverage purposes amount will be reduced to the
or purchase securities or make extent necessary to comply with the
investments while reverse repurchase limitation within three business
agreements or borrowings are days) and the fund will not
outstanding. If for any reason the purchase securities while
current value of the total net assets borrowings represent more than 5%
of the fund falls below an amount of its total assets.
equal to three times the amount of
indebtedness from money borrowed, the
fund will, within three business days,
reduce its indebtedness to the extent
necessary.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in interests Convert to NFP - None The fund may not invest in
in oil, gas, mineral leases or other Proposal 2(m) interests in oil, gas, mineral
mineral exploration or development leases or other mineral exploration
programs, although it may invest in or development programs, although
the securities of issuers which invest it may invest in the securities of
in or sponsor such programs. issuers which invest in or sponsor
such programs.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-59
<PAGE> 94
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior Replace with new The fund may not issue senior None
securities as defined in the 1940 Act. FP - Proposal securities, except to the extent
2(c)(iii) permitted under the 1940 Act,
the rules or regulations
thereunder or any exemption
therefrom, as such statute, rules
or regulations may be amended or
interpreted from time to time.
The fund may not write, purchase or Convert to NFP - None The fund may not write, purchase or
sell puts, calls or combinations Proposal 2(c)(iii) sell puts, calls or combinations
thereof. thereof.
The fund may not make short sales of Convert to NFP - None The fund may not make short sales
securities, or purchase any securities Proposal 2(c)(iii) of securities, or purchase any
on margin, except to obtain such securities on margin, except to
short-term credits as may be necessary obtain such short-term credits as
for the clearance of transactions. may be necessary for the clearance
of transactions.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-60
<PAGE> 95
APPENDIX
U.S. Treasury Money Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICIES: NEW NON-FUNDAMENTAL POLICIES:
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund seeks high current income No change Same
consistent with liquidity and
stability of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities Convert to NFP - The fund may not purchase The fund may not purchase
other than obligations issued by the Proposal 2(b) securities of an issuer, except securities other than obligations
U.S. Treasury and securities backed by as consistent with the issued by the U.S. Treasury and
the "full faith and credit" guarantee maintenance of its status as an securities backed by the "full
of the U.S. government that mature in open-end diversified company faith and credit" guarantee of the
397 days or less. Adopt new FPs - under the 1940 Act, the rules or U.S. government that mature in more
Proposals 2(d) and regulations thereunder or any than 397 days or less.
2(i) exemption therefrom, as such
statute, rules or regulations
may be amended or interpreted
from time to time.
The fund may not concentrate
investments in a particular
industry or group of industries,
as concentration is defined
under the 1940 Act, the rules
or regulations thereunder or
any exemption therefrom, as
such statute, rules or
regulations may be amended or
interpreted from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not make loans to others Amend and convert The fund may not make loans to The fund may not lend any security
(except through the purchase of debt to NFP; replace other persons, except to the or make any other loan if, as a
obligations). with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
thereunder or any exemption parties (this restriction does not
therefrom, as such statute, apply to purchases of debt
rules or regulations may be securities or repurchase
amended or interpreted from time agreements).
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior Replace with new The fund may not issue senior None
securities as defined in the 1940 Act. FP - Proposal securities, except to the extent
2(c)(iii) permitted under the 1940 Act,
the rules or regulations
thereunder or any exemption
therefrom, as such statute, rules
or regulations may be amended or
interpreted from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter, persons, except to the extent
under the federal securities laws, in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-61
<PAGE> 96
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP; The fund may not purchase or The fund may not invest in
or in real estate. replace with new sell commodities or real estate, commodities or in real estate.
FP - Proposal 2(j) except to the extent permitted
under the 1940 Act, the rules or
regulations thereunder or any
exemption therefrom, as such
statute, rules or regulations
may be amended or interpreted
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest for the Convert to NFP - None The fund may not invest for the
purpose of exercising control over Proposal 2(l) purpose of exercising control over
management of another company. management of another company.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money, except Amend and convert The fund may not borrow money, The fund may not borrow money
as a temporary measure for to NFP; replace except to the extent permitted except that the fund may (i) borrow
extraordinary or emergency purposes, with new FP - under the 1940 Act, the rules or money from banks and (ii) engage in
and then only in an amount up to Proposal 2(c)(i) regulations thereunder or any reverse repurchase agreements with
one-third of the value of the fund's exemption therefrom, as such any party; provided that (i) and
total assets in order to meet statute, rules or regulations (ii) in combination do not exceed
redemption requests without may be amended or interpreted 33 1/3% of its total assets (any
immediately selling any portfolio from time to time. borrowings that come to exceed this
securities; or pledge its securities amount will be reduced to the
or receivables or transfer or assign extent necessary to comply with the
or otherwise encumber them in an limitation within three business
amount to exceed 33% of the fund's net days) and the fund will not
assets to secure borrowings. The fund purchase securities while
will not borrow for leverage purposes borrowings represent more than 5%
or purchase securities or make of its total assets.
investments while reverse repurchase
agreements or borrowings are
outstanding. If for any reason the
current value of the total net assets
of the fund falls below an amount
equal to three times the amount of its
indebtedness from money borrowed, the
fund will, within three business days,
reduce its indebtedness to the extent
necessary.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-62
<PAGE> 97
APPENDIX
Value Advantage Money Fund(R)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT FUNDAMENTAL POLICY: PROPOSAL: NEW FUNDAMENTAL POLICY: NEW NON-FUNDAMENTAL POLICY:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The fund seeks maximum current income No change None None
consistent with liquidity and
stability of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not underwrite securities Replace with new The fund may not underwrite None
issued by others, except to the extent FP - Proposal 2(k) securities issued by other
it may be deemed to be an underwriter persons, except to the extent
under the federal securities laws in permitted under the 1940 Act,
connection with the disposition of the rules or regulations
securities from its investment thereunder or any exemption
portfolio. therefrom, as such statute,
rules or regulations may be
amended or interpreted from time
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not invest in commodities Convert to NFP and The fund may not purchase or The fund may not invest in
or commodity contracts, including replace with new sell commodities or real estate, commodities or commodity contracts,
futures contracts, or in real estate, FP - Proposal 2(j) except to the extent permitted including futures contracts, or in
although it may invest in securities under the 1940 Act, the rules or real estate, although it may invest
that are secured by real estate and regulations thereunder or any in securities that are secured by
securities of issuers that invest or exemption therefrom, as such real estate and securities of
deal in real estate. statute, rules or regulations issuers that invest or deal in real
may be amended or interpreted estate.
from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not concentrate 25% or Convert to NFP and The fund may not concentrate The fund may not concentrate 25% or
more of the value of its assets in any replace with new investments in a particular more of the value of its assets in
one industry; provided, however, that FP - Proposal 2(i) industry or group of any one industry; provided,
the fund reserves freedom of action to industries, as concentration however, that the fund reserves
invest up to 100% of its assets in is defined under the 1940 Act, freedom of action to invest up to
certificates of deposit or banker's the rules or regulations 100% of its assets in certificates
acceptances issued by U.S. banks and thereunder or any exemption of deposit or banker's acceptances
U.S. branches of those foreign banks therefrom, as such statute, issued by U.S. banks and U.S.
that the investment adviser has rules or regulations may be branches of those foreign banks
determined to be subject to the same amended or interpreted from that the investment adviser has
regulation as U. S. banks, or time to time. determined to be subject to the
obligations of or guaranteed by the same regulation as U. S. banks, or
U.S. government, its agencies or obligations of or guaranteed by the
instrumentalities. U.S. government, its agencies or
instrumentalities.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not make loans to others Amend and convert The fund may not make loans to The fund may not lend any security
(except through the purchase of debt to NFP; replace other persons, except to the or make any other loan if, as a
obligations or repurchase agreements with new FP - extent permitted under the 1940 result, more than 33 1/3% of its
in accordance with its investment Proposal 2(c)(ii) Act, the rules or regulations total assets would be lent to other
objective and policies). thereunder or any exemption parties (this restriction does not
therefrom, as such statute, apply to purchases of debt
rules or regulations may be securities or repurchase
amended or interpreted from time agreements).
to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-63
<PAGE> 98
APPENDIX
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not issue senior Replace by FP - The fund may not issue senior None
securities as defined in the 1940 Act. Proposal 2(c)(iii) securities, except to the extent
permitted under the 1940 Act,
the rules or regulations
thereunder or any exemption
therefrom, as such statute,
rules or regulations may be
amended or interpreted from
time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not purchase securities No change Same None
of any issuer unless consistent with
the maintenance of its respective
status as a diversified company under
the Investment Company Act of 1940 or
the rules or regulations thereunder,
as such statute, rules or regulations
may be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
The fund may not borrow money, except No change Same None
to the extent permitted by the
Investment Company Act of 1940 or the
rules or regulations thereunder, as
such statute, rules or regulations may
be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-64
<PAGE> 99
If you have any questions,
or if you'd like help in voting,
please call the funds' proxy
solicitor, D.F. King & Co., Inc., at
800-431-9633.
SchwabFunds(R)
XXoooo
<PAGE> 100
- --------------------------------------------------------------------------------
SchwabFunds(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy
card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
DO NOT MAIL THIS PROXY CARD IF YOU
ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB ANALYTICS FUND(R)
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWANX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB ANALYTICS FUND(R)
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line
|_| |_| |_| below
--------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
================================================================
Stop here unless you would like to vote on each applicable
element of Proposal 2
=================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
For Against Abstain
(d) Diversification |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
- -------------------------------------------- -------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 101
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy
card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
DO NOT MAIL THIS PROXY CARD IF YOU
ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
ISLVX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Vote on Trustees
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line
below
|-| |-| |-| -------------------------------------
- ------------------------------------------ -------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 102
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy
card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
DO NOT MAIL THIS PROXY CARD IF YOU
ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
INSTITUTIONAL SELECT(TM) S&P 500 FUND
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
ISLCX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
INSTITUTIONAL SELECT(TM) S&P 500 FUND
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Vote on Trustees
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line
below
|-| |-| |-| --------------------------------------
- ------------------------------------------- --------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 103
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
ISSVX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah H.
Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L. Scheid,
Donald R. Stephens and Michael W. Wilsey, Mariann Byerwalter,
Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|-| |-| |-|
-----------------------------------------
- ----------------------------------------- ------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 104
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
,
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy
card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy
card and follow the simple instructions.
DO NOT MAIL THIS PROXY CARD IF YOU
ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETMANAGER(TM) BALANCED PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWOBX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETMANAGER(TM) BALANCED PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Vote on Trustees
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah H.
Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L. Scheid,
Donald R. Stephens and Michael W. Wilsey, Mariann Byerwalter, Gerald
B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the
line below
|-| |-| |-|
-----------------------------------
- ----------------------------------------- --------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 105
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETMANAGER(TM) GROWTH PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWOGX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETMANAGER(TM) GROWTH PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
Vote on Trustees
1. Nominees for the Board of Trustees: Charles R.
Schwab, Jeremiah H. Chafkin, Donald F. Dorward, Robert G. Holmes,
Steven L. Scheid, Donald R. Stephens and Michael W. Wilsey, Mariann
Byerwalter, Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line
below
|-| |-| |-| ---------------------------------------
- ------------------------------------------ ----------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 106
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETMANAGER(TM) INTERNATIONAL PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWOIX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETMANAGER(TM) INTERNATIONAL PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
--------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
================================================================================
STOP HERE UNLESS YOU WOULD LIKE TO VOTE ON EACH APPLICABLE ELEMENT OF PROPOSAL 2
================================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
For Against Abstain
(d) Diversification |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
- ------------------------------------------ ---------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 107
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETMANAGER(TM) SMALL CAP PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWOSX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETMANAGER(TM) SMALL CAP PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_| -------------------------------------------
- ------------------------------------------ ----------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 108
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU
ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETTRACK(TM) ALL EQUITY PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWEGX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETTRACK(TM) ALL EQUITY PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
-------------------------------------------
- ----------------------------------------- ---------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 109
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETTRACK(TM) BALANCED PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104,
commencing at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWBGX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETTRACK(TM) BALANCED PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah H.
Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L. Scheid,
Donald R. Stephens and Michael W. Wilsey, Mariann Byerwalter,
Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_| -----------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
================================================================================
STOP HERE UNLESS YOU WOULD LIKE TO VOTE ON EACH APPLICABLE ELEMENT OF PROPOSAL 2
================================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
(d) Diversification |_| |_| |_|
(f) Restricted or Illiquid Securities |_| |_| |_|
For Against Abstain
(h) Ownership of Securities |_| |_| |_|
(i) Industry Concentration |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
(l) Control of an Issuer |_| |_| |_|
- ----------------------------------------- --------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 110
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETTRACK(TM) CONSERVATIVE PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWCGX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETTRACK(TM) CONSERVATIVE PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah H.
Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L. Scheid,
Donald R. Stephens and Michael W. Wilsey, Mariann Byerwalter,
Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
--------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
================================================================================
STOP HERE UNLESS YOU WOULD LIKE TO VOTE ON EACH APPLICABLE ELEMENT OF PROPOSAL 2
================================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
(d) Diversification |_| |_| |_|
(f) Restricted or Illiquid Securities |_| |_| |_|
For Against Abstain
(h) Ownership of Securities |_| |_| |_|
(i) Industry Concentration |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
(l) Control of an Issuer |_| |_| |_|
- ----------------------------------------- ----------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 111
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy
card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB MARKETTRACK(TM) GROWTH PORTFOLIO
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWHGX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB MARKETTRACK(TM) GROWTH PORTFOLIO
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah
H. Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L.
Scheid, Donald R. Stephens and Michael W. Wilsey, Mariann
Byerwalter, Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
--------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
==================================================================
Stop here unless you would like to vote on each applicable element
of Proposal 2
==================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
(d) Diversification |_| |_| |_|
(f) Restricted or Illiquid Securities |_| |_| |_|
For Against Abstain
(h) Ownership of Securities |_| |_| |_|
(i) Industry Concentration |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
(l) Control of an Issuer |_| |_| |_|
- ----------------------------------------- -------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 112
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB S&P 500 FUND
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWPEX/SWPIX/SWPPX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB S&P 500 FUND - E. SHARES, SELECT & INVESTOR
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah H.
Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L. Scheid,
Donald R. Stephens and Michael W. Wilsey, Mariann Byerwalter,
Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
--------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
==================================================================
Stop here unless you would like to vote on each applicable element
of Proposal 2
==================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
(d) Diversification |_| |_| |_|
(f) Restricted or Illiquid Securities |_| |_| |_|
For Against Abstain
(h) Ownership of Securities |_| |_| |_|
(i) Industry Concentration |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
(l) Control of an Issuer |_| |_| |_|
- ------------------------------------------ --------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 113
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB SMALL-CAP INDEX FUND(R)
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWSMX/SWSSX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB SMALL-CAP INDEX FUND(R) - INVESTOR & SELECT
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees: Charles R. Schwab, Jeremiah H.
Chafkin, Donald F. Dorward, Robert G. Holmes, Steven L. Scheid,
Donald R. Stephens and Michael W. Wilsey, Mariann Byerwalter,
Gerald B. Smith and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
-----------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
==================================================================
Stop here unless you would like to vote on each applicable element
of Proposal 2
==================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
(d) Diversification |_| |_| |_|
(f) Restricted or Illiquid Securities |_| |_| |_|
For Against Abstain
(h) Ownership of Securities |_| |_| |_|
(i) Industry Concentration |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
(l) Control of an Issuer |_| |_| |_|
VOTE ON AMENDING INVESTMENT OBJECTIVES
3(a) Amend the Fund's Investment Objective and Eliminate the Investment
Policy Regarding Portfolio Composition |_| |_| |_|
- ----------------------------------------- --------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 114
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB INTERNATIONAL INDEX FUND(R)
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWISX/SWINX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB INTERNATIONAL INDEX FUND(R) - INVESTOR & SELECT
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
----------------------------------------
VOTE ON FUNDAMENTAL POLICIES For Against Abstain
2. To vote for all applicable elements
of proposal 2. |_| |_| |_|
===================================================================
Stop here unless you would like to vote on each applicable element
of Proposal 2
===================================================================
For Against Abstain
(c)(i) Borrowing |_| |_| |_|
(c)(ii) Lending |_| |_| |_|
(c)(iii) Senior Securities |_| |_| |_|
(d) Diversification |_| |_| |_|
(f) Restricted or Illiquid Securities |_| |_| |_|
For Against Abstain
(h) Ownership of Securities |_| |_| |_|
(i) Industry Concentration |_| |_| |_|
(j) Commodities, Futures & Real Estate |_| |_| |_|
(k) Underwriting of Securities |_| |_| |_|
(l) Control of an Issuer |_| |_| |_|
VOTE ON AMENDING INVESTMENT OBJECTIVES
3(b) Amend the Fund's Investment Objective and Eliminate the Investment
Policy Regarding Portfolio Composition |_| |_| |_|
- -------------------------------------------- -------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 115
- --------------------------------------------------------------------------------
SCHWABFUNDS(C)
SCHWAB FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
TO VOTE BY INTERNET
1)Read the proxy statement and have the proxy card below at hand.
2)Go to the website www.proxyvote.com
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
TO VOTE BY TOUCH-TONE TELEPHONE
1)Read the proxy statement and have the proxy card below at hand.
2)Call toll-free 1-800-690-6903.
3)Enter the 12-digit control number on this proxy card and follow the simple
instructions.
DO NOT MAIL THIS PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK X
SCHWAB TOTAL STOCK MARKET INDEX (R) FUND
SCHWAB CAPITAL TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES OF SCHWAB CAPITAL TRUST
The undersigned, revoking previous proxies for such shares, hereby appoints
Jeremiah H. Chafkin, Stephen B. Ward and Frances Cole, 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
June 1, 2000, at xxx name of Street, San Francisco, California 94104, commencing
at 10:30 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.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please sign exactly as your name(s) appears. If signing is by attorney,
executor, administrator, trustee or guardian, please give full title. If more
than one name appears, all must sign.
The Board of Trustees recommends a vote FOR the election of Trustees and all
other proposals. IF NO SPECIFICATION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF ALL TRUSTEES AND ALL OTHER PROPOSALS.
SWTIX/SWTSX KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SCHWAB TOTAL STOCK MARKET INDEX (R) FUND - INVESTOR & SELECT
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
VOTE ON TRUSTEES
1. Nominees for the Board of Trustees:
Charles R. Schwab, Jeremiah H. Chafkin, Donald F. Dorward,
Robert G. Holmes, Steven L. Scheid, Donald R. Stephens
and Michael W. Wilsey, Mariann Byerwalter, Gerald B. Smith
and William A. Hasler
For Withhold For All To withhold authority to vote,
All All Except mark "For All Except" and write the
name(s) of the nominee(s) on the line below
|_| |_| |_|
---------------------------------------
- ----------------------------------------- --------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owner) Date
<PAGE> 116
[SCHWAB GRAPHIC]
Read the accompanying proxy statement to learn about important issues affecting
your SchwabFund.
Then help your funds reduce processing costs -- by voting on the internet or by
touch-tone telephone. If you vote by internet or telephone, do not mail your
proxy card.
You should have a proxy card for each fund you own shares in. Please make sure
that you vote all proxy cards that are enclosed.
TO VOTE BY INTERNET:
1. Read the proxy statement with your proxy card(s) handy.
2. Go to www.proxyvote.com
3. Enter the 12-digit control number from your proxy card.
4. Follow the easy instructions on the website. Remember to vote each card you
received.
TO VOTE BY TOUCH-TONE TELEPHONE:
1. Read the proxy statement with your proxy card(s) handy.
2. Call toll free 1-800-690-6903
3. Enter the 12-digit control number from your proxy card.
4. Follow the easy recorded instructions. Remember to vote each card you
received.
