<PAGE> 1
Supplement to the
SchwabFunds(R) Prospectus dated November 15, 2000
The Board of Trustees of Schwab Capital Trust previously approved the adoption
of a 0.75% redemption fee on shares of the Schwab S&P 500 Fund sold 180 days or
less after purchase. The Redemption Fee program will be operative as of February
28, 2001. Accordingly, and notwithstanding earlier communications to the effect
that the Redemption Fee program would begin September 15, 2000, the Redemption
Fee will be payable only with regard to redemptions of shares held for 180 days
or less where the shares were purchased on or after February 28, 2001.
Thus, the following information has been modified in the fee table for the
Schwab S&P 500 Fund under the heading "Fund Fees and Expenses:"
Fee Table (%)
<TABLE>
<CAPTION>
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INVESTOR SELECT
SHARES SHARES(R) E.SHARES(R)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER FEES
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Redemption fee, charged only on shares 0.75 0.75 0.75
you sell 180 days or less after buying them,
and paid directly to the fund.+
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</TABLE>
+ This fee applies only to shares purchased on or after 02/28/01.
The following information has been modified in the "Selling/Exchanging Shares"
section of the SchwabFunds Prospectus:
o As indicated in each fund's fee table, each fund charges a redemption
fee, payable to the fund, on the sale or exchange of any shares that
occurs 180 days or less after purchasing them; in attempting to
minimize this fee, a fund will first sell any shares in your account
that aren't subject to the fee (including shares acquired through
reinvestment or exchange).
Please retain this supplement for future reference.
TF8704(12/19/00)
