As filed with the Securities and Exchange Commission on April 28, 2022
File Nos. 033-31894
811-05954
811-05954
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 120
☒
and
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 121
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 121
☒
(Exact Name of Registrant as Specified in Charter)
211 Main Street
San Francisco, California 94105
San Francisco, California 94105
(Address of Principal Executive Offices)
(800) 648-5300
(Registrant’s Telephone Number, including Area Code)
Catherine M. MacGregor, Esq.
211 Main Street
San Francisco, California 94105
211 Main Street
San Francisco, California 94105
(Name and Address of Agent for Service)
Copies of communications to:
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Douglas P. Dick, Esq.
Dechert LLP 1900 K Street, N.W. Washington, DC 20006 |
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John M. Loder, Esq.
Ropes & Gray LLP 800 Boylston Street Boston, MA 02199‑3600 |
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It is proposed that this filing will become effective (check appropriate box):
☒ Immediately upon filing pursuant to paragraph (b)
□ On (date) pursuant to paragraph (b)
□ 60 days after filing pursuant to paragraph (a)(1)
□ On (date) pursuant to paragraph (a)(1)
□ 75 days after filing pursuant to paragraph (a)(2)
□ On (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
□ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
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Prospectus | April 28, 2022
Schwab Funds®
Schwab® Government Money Fund
Sweep Investments®
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Sweep Shares
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SWGXX
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As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved these securities or passed on whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime.
Schwab Government Money Fund
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| | Ticker Symbol: | | | Sweep Shares: | |
The fund’s goal is to seek the highest current income consistent with stability of capital and liquidity.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
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| of the value of your investment) | | |||
| Management fees | | | | |
| Distribution (12b-1) fees | | | | |
| Other expenses | | | | |
| Total annual fund operating expenses | | | | |
| Less expense reduction | | | ( | |
| Total annual fund operating expenses after expense reduction(1) | | | | |
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
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| Sweep Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in U.S. government securities, such as:
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U.S. Treasury bills and notes
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other obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not fully guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks
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repurchase agreements that are collateralized fully by cash and/ or U.S. government securities
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obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities
The fund intends to operate as a government money market fund under the regulations governing money market funds. The fund will invest at least 99.5% of its total assets in cash, U.S. government securities and/or repurchase agreements that are collateralized fully by cash and/or U.S. government securities; under normal circumstances, at least 80% of the fund’s net assets (including, for this purpose, any borrowings for investment purposes) will be invested solely in U.S. government securities including repurchase agreements that are collateralized fully by U.S. government securities (excluding cash). With respect to the 80% policy, the fund will notify its shareholders at least 60 days before changing the policy.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
As a government money market fund, the fund’s Board of Trustees (the Board) has determined not to subject the fund to a liquidity fee and/or a redemption gate on fund redemptions. Please note that the Board has reserved its ability to change this determination with respect to liquidity fees and/or redemption gates, but only after providing appropriate prior notice to shareholders.
Schwab Government Money Fund | Fund Summary1
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Repurchase Agreements Risk. When the fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counterparty) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that,
when the fund buys a security from a counterparty that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
2Schwab Government Money Fund | Fund Summary
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
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Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the
fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Eligible Investors (as determined by the fund) may invest in Sweep Shares as noted below. The Sweep Shares are designed for use in conjunction with certain accounts held at Charles Schwab & Co., Inc. (Schwab) and are subject to the terms and conditions of your Schwab account agreement, as amended from time to time. If you designate the fund as the sweep fund on your Schwab account, your uninvested cash balances will be invested in the fund according to the terms and conditions of your account agreement. Similarly, when you use your account to purchase other investments or make payments, shares of the fund will be sold to cover these transactions according to the terms and conditions of your account agreement. You may make purchase, exchange and redemption requests in accordance with your account agreement.
Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).
Payments to Financial Intermediaries
The fund pays Schwab for shareholder and sweep administration services. These payments may create a conflict of interest by influencing Schwab and your salesperson to recommend the fund over another investment. Ask your salesperson or visit Schwab’s website for more information.
Schwab Government Money Fund | Fund Summary3
Fund Details
The fund invests exclusively in money market instruments. There can be no assurance that the fund will achieve its investment objective. Except as explicitly described otherwise, the strategies and policies of the fund may be changed without shareholder approval.
The fund is designed for use as a Sweep Investment, in conjunction with certain Schwab accounts. Customers who qualify can designate the fund as their account’s sweep fund.
Money Fund Regulations
Money market funds in the United States are subject to rules governing their operation:
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Credit quality: money market funds must invest exclusively in high-quality securities.
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Diversification: requirements for diversification limit the fund’s exposure to any given issuer, guarantor or liquidity provider.
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Maturity: money market funds must maintain a dollar-weighted average portfolio maturity of no more than 60 days and a dollar-weighted average life to maturity of no more than 120 days. In addition, money market funds cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
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Liquidity: taxable money market funds are subject to minimum liquidity requirements that prohibit a fund from acquiring certain types of securities if, immediately after the acquisition, the fund’s investments in daily or weekly liquid assets would be below 10% or 30%, respectively, of the fund’s total assets.
Investors should be aware that the investments made by the fund and the results achieved by the fund at any given time are not expected to be the same as those made by other money market mutual funds for which Schwab Asset Management serves as investment adviser, including money market mutual funds with names, investment objectives and policies similar to the fund.
The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, and operations.
Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the fund’s Statement of Additional Information (SAI). The fund posts on its website at www.schwabassetmanagement.com/schwabfunds_prospectus a list of the securities held by the fund as of the last business day of the most recent month. This list is updated within 5 business days after the end of each month and remains available online for at least six months after the initial posting. In addition, not later than 5 business days after the end of each calendar month, the fund files a schedule of information regarding its portfolio holdings and other information about the fund as of the last day of that month with the SEC on Form N-MFP. These filings are publicly available immediately upon filing on the SEC’s website at www.sec.gov. A link to the fund’s Form N-MFP filings on the SEC’s website is available at www.schwabassetmanagement.com/schwabfunds_prospectus.
4Schwab Government Money Fund | Fund Details
Financial Highlights
This section provides further details about the fund’s financial history for the past five years. Certain information reflects financial results for a single fund share. “Total return” shows the percentage that an investor in the fund would have earned or lost during a given period, assuming all distributions were reinvested. The information for fiscal years ended December 31, 2017 through December 31, 2019 has been audited by the fund’s prior independent registered public accounting firm. The information for the fiscal years ended December 31, 2020 and December 31, 2021 has been audited by Deloitte & Touche LLP (Deloitte). Deloitte’s full report is included in the fund’s annual report (see back cover).
Schwab Government Money Fund
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Sweep Shares
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1/1/21–
12/31/21 |
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1/1/20–
12/31/20 |
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1/1/19–
12/31/19 |
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1/1/18–
12/31/18 |
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1/1/17–
12/31/17 |
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| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at beginning of period | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net investment income (loss)(1)
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| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.02 | | | | | | 0.01 | | | | | | 0.00(2) | | |
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Net realized and unrealized gains (losses)
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| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | — | | | | | | 0.00(2) | | | | | | 0.00(2) | | |
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Total from investment operations
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| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.02 | | | | | | 0.01 | | | | | | 0.00(2) | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Distributions from net investment income
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| | | | (0.00)(2)(3) | | | | | | (0.00)(2) | | | | | | (0.02) | | | | | | (0.01) | | | | | | (0.00)(2) | | |
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Distributions from net realized gains
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| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | — | | | | | | (0.00)(2) | | | | | | (0.00)(2) | | |
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Total distributions
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| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | (0.02) | | | | | | (0.01) | | | | | | (0.00)(2) | | |
| Net asset value at end of period | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
| Total return | | | | | 0.02%(3) | | | | | | 0.23% | | | | | | 1.65% | | | | | | 1.23% | | | | | | 0.26% | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net operating expenses
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| | | | 0.06%(4) | | | | | | 0.30%(4)(5) | | | | | | 0.59% | | | | | | 0.62% | | | | | | 0.63%(4)(6) | | |
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Gross operating expenses
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| | | | 0.45% | | | | | | 0.52% | | | | | | 0.59% | | | | | | 0.62% | | | | | | 0.68% | | |
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Net investment income (loss)
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| | | | 0.02% | | | | | | 0.18% | | | | | | 1.64% | | | | | | 1.12% | | | | | | 0.25% | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 24,159 | | | | | $ | 20,119 | | | | | $ | 12,450 | | | | | $ | 11,325 | | | | | $ | 25,324 | | |
(1)
Calculated based on the average shares outstanding during the period.
(2)
Per-share amount was less than $0.005.
(3)
These amounts include a non-recurring special distribution. The effect on the distributions from net investment income was less than $0.005 and the effect on the total return was 0.01%.
(4)
Reflects
the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(5)
Effective
September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended
ratio.
(6)
Effective
October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended
ratio.
Schwab Government Money Fund | Financial Highlights5
Fund Management
The investment adviser for the fund is Charles Schwab Investment Management, Inc., dba Schwab Asset Management, 211 Main Street, San Francisco, CA 94105. The investment adviser was founded in 1989 and as of March 31, 2022, managed approximately $658.6 billion in assets.
The investment adviser oversees the asset management and administration of the fund. As compensation for these services, the investment adviser receives a management fee from the fund. For the 12 months ended December 31, 2021, this fee was 0.06% for the fund. This figure, which is expressed as a percentage of the fund’s average daily net assets, represents the actual amount paid, including the effects of reductions. Reductions include any contractual or voluntary waivers or reimbursements. The investment adviser and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes and certain non-routine expenses) of the Sweep Shares to 0.44% for so long as the investment adviser serves as the adviser to the fund. In addition to any contractual expense limitation for the fund, the investment adviser and/or its affiliates also may voluntarily waive and/or reimburse expenses in excess of their current fee waiver and reimbursement commitment to the extent necessary to maintain a non-negative net yield the fund.
A discussion regarding the basis for the Board of Trustees’ approval of the fund’s investment advisory agreement is available in the fund’s 2021 semiannual report, which covers the period from January 1, 2021 through June 30, 2021.
6Schwab Government Money Fund | Fund Management
Investing in the Fund
As a Schwab Funds investor, you have a number of ways to do business with us. On the following pages, you will find information on buying, selling and exchanging shares. These pages include helpful information on taxes as well.
The fund generally is not registered for sale in jurisdictions outside the United States and is intended for purchase by persons residing in the United States. A person is considered resident in the United States if at the time of the investment (i) the account has an address of record in the United States or a U.S. territory (including APO/FPO/DPO) and (ii) all account owners are resident in the United States or a U.S. territory and have a valid U.S. taxpayer identification number. If an existing account is updated to reflect a non-U.S. address, the account may be restricted from making additional investments.
Buying/Selling Shares
Sweep Shares of the fund are designed for use in conjunction with certain accounts held at Schwab and are subject to the eligibility terms and conditions of your Schwab account agreement, as amended from time to time.
When you designate the fund as the sweep fund on your Schwab account, your uninvested cash balances will be invested in the fund according to the terms and conditions of your account agreement. Similarly, when you use your account to purchase other investments or make payments, shares of your sweep fund will be sold to cover these transactions according to the terms and conditions of your account agreement. If you do not designate the fund as the sweep fund on your Schwab account, your uninvested cash balances may be automatically deposited in an interest bearing deposit account of Charles Schwab Bank (Bank Sweep Program). All accounts participating in the Bank Sweep Program may be subject to a maximum deposit amount limit, which will apply to the amount that can be swept into bank deposit accounts under the Bank Sweep Program. Available balances in excess of the maximum deposit amount limit will be automatically invested in a secondary sweep option, which may be the fund.
For more information on Schwab accounts, call 1-877-824-5615 or visit www.schwab.com.
Selling Shares
When selling shares, please be aware of the following policies:
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For accounts held through a financial intermediary, the fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within one business day following receipt of a shareholder redemption order; however, the fund may take up to seven days to pay sale proceeds.
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The fund reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may incur transaction expenses and taxable gains in converting these securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
You are automatically entitled to initiate transactions by telephone. The fund and Schwab employ procedures to confirm the authenticity of telephone instructions. If the fund and Schwab follow these procedures, they will not be responsible for any losses or costs incurred by following telephone instructions that they reasonably believe to be genuine.
Transaction Policies
The fund is open for business each day that the NYSE is open except when the following federal holidays are observed: Columbus Day and Veterans Day. The fund calculates its share price each business day, as of the close of the NYSE (generally 4:00 p.m. Eastern time). If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
The fund’s share price is its net asset value per share, or NAV, which is the fund’s net assets divided by the number of its shares outstanding. The fund seeks to maintain a stable NAV of $1.00.
Orders that are received in good order are executed at the next NAV to be calculated. Orders to buy shares that are accepted no later than 10 a.m. Eastern time generally receive that day’s dividend. Orders to buy that are accepted after 10 a.m. Eastern time generally will receive the next business day’s dividend. Orders to sell or exchange shares that are accepted no later than 10 a.m. Eastern time generally don’t receive that day’s dividend, but those accepted after 10 a.m. Eastern time generally do.
The fund values its investment holdings on the basis of amortized cost (cost plus any discount, or minus any premium, accrued since purchase). Many money market funds use this method to calculate NAV.
Schwab Government Money Fund | Investing in the Fund7
Shareholder Servicing and Sweep Administration Plan
The Board has adopted a Shareholder Servicing and Sweep Administration Plan (the Plan) on behalf of the fund. The Plan enables the fund to bear expenses relating to the provision by financial intermediaries, including Schwab (together, service providers), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund. The Plan also enables the fund to pay Schwab for certain sweep administration services, such as processing of automatic purchases and redemptions, it provides to fund shareholders invested in the fund.
Pursuant to the Plan, the fund’s Sweep Shares are subject to an annual shareholder servicing fee of up to 0.15%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab, as distributor of the fund (or, in the case of payments made to Schwab acting as a service provider, pursuant to Schwab’s written agreement with the fund), and the fund will pay no more than 0.15% of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service provider. Pursuant to the Plan, the fund’s Sweep Shares are subject to an annual sweep administration fee of up to 0.10%. The sweep administration fee paid to Schwab is based on the average daily net asset value of the fund shares owned by shareholders holding shares through Schwab. Payments under the Plan are made as described above without regard to whether the fee is more or less than the service provider’s actual cost of providing the services, and if more, such excess may be retained as profit by the service provider.
Policy Regarding Short-Term or Excessive Trading
The fund’s Board has adopted policies and procedures with respect to frequent purchases and redemptions of fund shares. However, the fund is a money market fund and seeks to provide shareholders current income, liquidity and a stable net asset value of $1.00 per share. In addition, the fund is designed to serve as a short-term cash equivalent investment for shareholders and, therefore, expects shareholders to engage in frequent purchases and redemptions. Because of the inherently liquid nature of the fund’s investments, and money market instruments in general, and the fund’s intended purpose to serve as a short-term investment vehicle for shareholders, the fund does not monitor or limit shareholder purchases and redemptions of fund shares. However, the fund’s policies and procedures do provide the fund with the right to reject any purchase or exchange orders by any investor for any reason, including orders which appear to be associated with market timing activities.
The fund and Schwab reserve certain rights, including the following:
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To automatically redeem your shares if the account they are held in is closed for any reason.
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To redeem your shares if your Schwab account is no longer eligible for the fund.
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To temporarily reduce or suspend dividend payments in an effort to maintain a fund’s stable $1.00 share price.
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To materially modify or terminate the exchange privilege upon 60 days’ written notice to shareholders.
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To change or waive the fund’s investment minimums.
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To suspend the right to sell shares back to the fund, and delay sending proceeds, during times when trading on the NYSE is restricted or halted, or otherwise as permitted by the SEC, such as to facilitate an orderly liquidation of the fund.
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To withdraw or suspend any part of the offering made by this prospectus.
Methods to Meet Redemptions
Under normal market conditions, the fund expects to meet redemption orders by using holdings of cash/cash equivalents or by the sale of portfolio investments. In unusual or stressed market conditions or as the investment adviser determines appropriate, the fund may borrow through the fund’s bank lines of credit or through the fund’s interfund lending facility to meet redemption requests. The fund may also utilize its custodian overdraft facility to meet redemptions, if necessary. The fund also reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may be subject to market risk and you may incur transaction expenses and taxable gains in converting the securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
Large Shareholder Redemptions
Certain accounts or Schwab affiliates may from time to time own (beneficially or of record) or control a significant percentage of the fund’s shares. Redemptions by these shareholders of their holdings in the fund or large redemptions by several shareholders resulting from events affecting investor demand may impact the fund’s liquidity and NAV. These redemptions may also force the fund to sell securities, which may negatively impact the fund’s brokerage costs.
Customer Identification and Verification and Anti-Money Laundering Program
Customer identification and verification is part of the fund’s overall obligation to deter money laundering under federal law. The fund has adopted an Anti-Money Laundering Compliance Program designed to prevent the fund from being used for money laundering or the financing of terrorist activities. In this regard, the fund reserves the right to (i) refuse, cancel or rescind any purchase or exchange order; (ii) freeze
8Schwab Government Money Fund | Investing in the Fund
any account and/or suspend account services; or (iii) involuntarily close your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of fund management, they are deemed to be in the best interest of the fund or in cases when the fund is requested or compelled to do so by governmental or law enforcement authority. If your account is closed at the request of governmental or law enforcement authority, you may not receive proceeds of the redemption if the fund is required to withhold such proceeds.
Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. When you open your account, you will have to provide your name, address, date of birth, identification number and other information that will allow your financial intermediary to identify you. This information is subject to verification to ensure the identity of all persons opening an account.
Your financial intermediary is required by law to reject your new account application if the required identifying information is not provided. Your financial intermediary may contact you in an attempt to collect any missing information required on the application, and your application may be rejected if they are unable to obtain this information. In certain instances, your financial intermediary is required to collect documents that will be used solely to establish and verify your identity.
The fund reserves the right to close and/or liquidate your account at the then-current day’s price if the fund or your financial intermediary is unable to verify your identity. As a result, you may be subject to a gain or loss on fund shares and will be subject to corresponding tax consequences.
Distributions and Taxes
Any investment in the fund typically involves several tax considerations. The information below is meant as a general summary for U.S. citizens and residents. Please see the SAI for additional information. Because each person’s tax situation is different, you should consult your tax advisor about the tax implications of your investment in the fund. You also can visit the Internal Revenue Service website at www.irs.gov.
As a shareholder, you are entitled to your share of the dividends the fund earns. The fund distributes to its shareholders substantially all of its net investment income. The fund declares a dividend every business day, based on its determination of its net investment income. The fund pays its dividends in cash or fund shares to its shareholders’ Schwab accounts on the 15th of each month (or next business day, if the 15th is not a business day), except that in December dividends are paid on the last business day of the month. If your daily dividend is less than $0.01, you may not receive a dividend payment. To receive a dividend distribution, you must be a registered shareholder on the date that dividends are declared. Dividend distributions are paid to shareholders on the payable date. Although the fund does not typically intend to distribute any capital gains, it cannot be guaranteed by the fund that it will not make any capital gains distributions for any given year.
Unless you are investing through an IRA, 401(k) or other tax-advantaged account, your fund dividends generally have tax consequences. The fund’s net investment income is distributed as dividends and is taxable as ordinary income. Income dividends generally are taxable in the tax year in which they are declared, whether you reinvest them or take them in cash. The sale or exchange of your fund shares may have tax consequences to you if you do not hold your shares in a tax-advantaged account, but no capital gain or loss to a shareholder is anticipated because the fund seeks to maintain a stable $1.00 share price.
An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gains distributions received from the fund and net gains from redemptions or other taxable dispositions of fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds a threshold amount.
The fund may be required to withhold U.S. federal income tax on all distributions payable to shareholders if they fail to provide the fund with their correct taxpayer identification number or to make required certifications, or if they have been notified by the IRS that they are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder’s U.S. federal income tax liability.
Foreign shareholders may be subject to different U.S. federal income tax treatment, including withholding tax at the rate of 30% (unless a lower treaty rate applies) on amounts treated as ordinary dividends from the fund, as discussed in more detail in the SAI. Furthermore, the fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the fund to enable the fund to determine whether withholding is required.
A liquidity fee imposed by the fund will reduce the amount you will receive upon the redemption of your shares, and will decrease the amount of any capital gains or increase the amount of any capital loss you will recognize from such redemption. There is some degree of
Schwab Government Money Fund | Investing in the Fund9
uncertainty with respect to the tax treatment of liquidity fees received by money market funds, and such tax treatment may be the subject of future guidance issued by the Internal Revenue Service. If the fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the fund at such time.
At the beginning of every year, the fund provides shareholders with information detailing the tax status of any dividend the fund declared during the previous calendar year. Schwab customers also receive information on dividends and transactions in their monthly account statements.
10Schwab Government Money Fund | Investing in the Fund
Prospectus | April 28, 2022
Schwab Government Money Fund
Sweep Investments
To Learn More
This prospectus contains important information on the fund and should be read and kept for reference. You also can obtain more information from the following sources:
Annual and semiannual reports, which are sent to current fund investors, contain more information about the fund’s holdings and detailed financial information about the fund. Annual reports also contain information from the fund’s manager(s) about strategies, recent market conditions and trends and their impact on fund performance during the fund’s last fiscal period.
The Statement of Additional Information (SAI) includes a more detailed discussion of investment policies and the risks associated with various investments. The SAI is incorporated by reference into the prospectus, making it legally part of the prospectus.
For a free copy of any of these documents or to request other information or ask questions about the fund, call Schwab Funds at 1-877-824-5615. In addition, you may visit the Schwab Funds’ website at www.schwabassetmanagement.com/schwabfunds_prospectus for a free copy of a prospectus, SAI or an annual or semiannual report.
The SAI, the fund’s annual and semiannual reports and other related materials are available from the EDGAR Database on the SEC’s website (www.sec.gov). You can obtain copies of this information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov.
| | SEC File Number | | | | |
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The Charles Schwab Family of Funds 811‑05954
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| | REG13850-27 | |
Prospectus | April 28, 2022
Schwab Funds®
Schwab® Money Funds
| | Schwab Value Advantage Money Fund® | | | | |
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Investor Shares
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SWVXX
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Ultra Shares
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SNAXX
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| | Schwab® Government Money Fund | | | | |
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Investor Shares
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SNVXX
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Ultra Shares
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SGUXX
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| | Schwab® Treasury Obligations Money Fund | | | | |
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Investor Shares
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SNOXX
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Ultra Shares
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SCOXX
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Schwab® Retirement Government Money Fund
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| | Schwab® U.S. Treasury Money Fund | | | | |
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Investor Shares
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SNSXX
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Ultra Shares
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SUTXX
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As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved these securities or passed on whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime.
Schwab Money Funds
| | Fund Summaries | | | | | | | |
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| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek the highest current income consistent with stability of capital and liquidity.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
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| | | | Investor Shares | | | Ultra Shares | | ||||||
| | | | | | | | | | | | | ||
| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | ||||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | ||||||
| Total annual fund operating expenses | | | | | | | | ||||||
| Less expense reduction | | | | | ( | ) | | | | ( | ) | ||
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | ||||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
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| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in high-quality short-term money market investments issued by U.S. and foreign issuers, such as:
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commercial paper, including asset-backed commercial paper
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promissory notes
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certificates of deposit and time deposits
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variable- and floating-rate debt securities
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bank notes and bankers’ acceptances
•
repurchase agreements
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obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (U.S. government securities)
All of these investments will be denominated in U.S. dollars, including those that are issued by foreign issuers. Obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities are considered U.S. government securities under the rules that govern money market funds. Certain of the fund’s securities are subject to credit or liquidity enhancements, which are designed to provide incremental levels of creditworthiness or liquidity.
The fund may engage in repurchase agreement transactions that are collateralized by cash or U.S. government securities. In addition, the fund may engage in repurchase agreement transactions that are collateralized by money market instruments, debt securities, loan participations or other securities, including equity securities and securities that are rated below investment grade or their unrated equivalents as determined by the investment adviser.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price by operating as a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
Schwab Value Advantage Money Fund | Fund Summary1
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Retail Money Market Fund Risk. The fund is a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds. A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund may involuntarily redeem any investor who is not a natural person. The fund will provide advance notice of its intent to make any such involuntary redemption. Neither the fund nor the investment adviser will be responsible for any loss or tax liability in an investor’s account resulting from such involuntary redemption. As a “retail money market fund,” the fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, the fund may be subject to liquidity fees and/or redemption gates on fund redemptions if the fund’s liquidity falls below required minimums because of market conditions or other factors.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the
fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Repurchase Agreements Risk. When the fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counterparty) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that, when the fund buys a security from a counterparty that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security. These risks are magnified to the extent that a repurchase agreement is secured by collateral other than cash and government securities, such as debt securities, equity securities and high-yield securities that are rated below investment grade (also referred to as junk bonds) (Alternative Collateral). High-yield securities that are used as Alternative Collateral are subject to greater levels of credit and liquidity risk, and are considered primarily speculative with respect to the issuer’s continuing ability to make principal and interest payments. Alternative Collateral may be subject to greater price volatility and may be more volatile or less liquid than other types of collateral, increasing the risk that the fund will be unable to recover fully in the event of a counterparty’s default.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which
2Schwab Value Advantage Money Fund | Fund Summary
means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Credit and Liquidity Enhancements Risk. The fund may invest in securities with credit or liquidity enhancements provided by a bank or other financial institution, and the existence and nature of such enhancements may be a significant factor in the investment adviser’s decision-making process. Generally, these enhancements are employed by the issuers of the securities to reduce credit risk and provide enhanced or back-up liquidity for the purchaser, such as the fund. Adverse developments affecting these banks and financial institutions could therefore have a negative effect on the value of the fund’s holdings. For example, a rating agency downgrade of a credit or liquidity enhancement provider may adversely affect the value of securities held by the fund. Any decline in the value of the securities held by the fund could cause the fund’s share price or yield to fall. To the extent that a portion of the fund’s underlying investments are enhanced by the same bank or financial institution, these risks may be increased.
Foreign Investment Risk. Although the fund may invest only in U.S. dollar-denominated securities, the fund’s investments in securities of foreign issuers or securities with credit or liquidity enhancements provided by foreign entities may involve certain risks that are greater than those associated with investments in securities of U.S. issuers or securities with credit or liquidity enhancements provided by U.S. entities. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of the fund’s investments, and could impair the fund’s ability to meet its investment objective or invest in accordance with its investment strategy. In addition, sovereign risk, or the risk that a government may become unwilling or unable to meet its loan obligations or guarantees, could increase the credit risk of financial institutions connected to that particular country.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s
yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
The bar chart below shows how the fund’s Investor Shares investment results have varied from year to year, and the following table shows the fund’s Investor Shares and Ultra Shares (effective November 17, 2017, Select Shares and Premier Shares were consolidated into Ultra Shares) average annual total returns for various periods. This information provides some indication of the risks of investing in the fund. All figures assume distributions were reinvested. Keep in mind that future performance may differ from past performance. For current performance information, please see www.schwabassetmanagement.com/schwabfunds_prospectus or call toll-free 1-877-824-5615 for the fund’s current seven-day yield.
Schwab Value Advantage Money Fund | Fund Summary3
![[MISSING IMAGE: eteungsanddenapo9o5lavhevllt.jpg]](eteungsanddenapo9o5lavhevllt.jpg)
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Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. The fund has adopted policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to involuntarily redeem shares in any account that are not beneficially owned by natural persons, after providing notice.
Eligible Investors (as determined by the fund and which are limited to natural persons) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
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Minimum
Initial Investment |
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Minimum
Additional Investment |
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| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | |
$1
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Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
4Schwab Value Advantage Money Fund | Fund Summary
| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek the highest current income consistent with stability of capital and liquidity.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
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| | | | Investor Shares | | | Ultra Shares | | ||||||
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| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | | | ||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | | | ||||
| Total annual fund operating expenses | | | | | | | | | | ||||
| Less expense reduction | | | | | ( | ) | | | | ( | | | |
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | | | ||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
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| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in U.S. government securities, such as:
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U.S. Treasury bills and notes
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other obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not fully guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks
•
repurchase agreements that are collateralized fully by cash and/ or U.S. government securities
•
obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities
The fund intends to operate as a government money market fund under the regulations governing money market funds. The fund will invest at least 99.5% of its total assets in cash, U.S. government securities and/or repurchase agreements that are collateralized fully by cash and/or U.S. government securities; under normal circumstances, at least 80% of the fund’s net assets (including, for this purpose, any borrowings for investment purposes) will be invested solely in U.S. government securities including repurchase agreements that are collateralized fully by U.S. government securities (excluding cash). With respect to the 80% policy, the fund will notify its shareholders at least 60 days before changing the policy.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
As a government money market fund, the fund’s Board of Trustees (the Board) has determined not to subject the fund to a liquidity fee and/or a redemption gate on fund redemptions. Please note that the Board has reserved its ability to change this determination with respect to liquidity fees and/or redemption gates, but only after providing appropriate prior notice to shareholders.
Schwab Government Money Fund | Fund Summary5
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Repurchase Agreements Risk. When the fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counterparty) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that,
when the fund buys a security from a counterparty that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
6Schwab Government Money Fund | Fund Summary
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: ruv2jeblc0cb1onph2if86ggdbar.jpg]](ruv2jeblc0cb1onph2if86ggdbar.jpg)
| | | ||||||||||||||||||
| | | | 1 Year | | | 5 Years | | | Since Inception ( | | |||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | — | | | — | | |||||||||
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is
closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Eligible Investors (as determined by the fund) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | |
$1
|
| |||
Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Schwab Government Money Fund | Fund Summary7
| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek current income consistent with stability of capital and liquidity. The fund’s investment objective is not fundamental and therefore may be changed by the fund’s Board of Trustees without shareholder approval.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
| | | ||||||||||||
| | | | Investor Shares | | | Ultra Shares | | ||||||
| | | | | | | | | | | | | ||
| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | | | ||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | | | ||||
| Total annual fund operating expenses | | | | | | | | | | ||||
| Less expense reduction | | | | | ( | ) | | | | ( | | | |
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | | | ||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
| | | ||||||||||||||||||||||||
| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund typically invests in securities backed by the full faith and credit of the U.S. government and repurchase
agreements backed by such investments. The fund intends to operate as a government money market fund under the regulations governing money market funds. The fund will invest at least 99.5% of its total assets in cash, government securities and/or repurchase agreements that are collateralized fully by cash and/or government securities; under normal circumstances, at least 80% of the fund’s net assets (including, for this purpose, any borrowings for investment purposes) will be invested solely in U.S. Treasury obligations or repurchase agreements backed by such obligations (excluding cash). With respect to the 80% policy, the fund will notify its shareholders at least 60 days before changing the policy. The full faith and credit backing is the strongest backing offered by the U.S. government, and traditionally is considered by investors to be the highest degree of safety as far as the payment of principal and interest.
Based on the fund manager’s view of market conditions for U.S. Treasury securities, the fund may invest up to 20% of its net assets in: (i) obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not fully guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks, and repurchase agreements backed by such obligations; and (ii) obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities. Obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities are considered U.S. government securities under the rules that govern money market funds.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. By investing primarily in full faith and credit U.S. government investments and repurchase agreements backed by such investments, the fund seeks to provide safety as to its assets. The portfolio manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
As a government money market fund, the fund’s Board of Trustees (the Board) has determined not to subject the fund to a liquidity fee and/or a redemption gate on fund redemptions. Please note that the Board has reserved its ability to change this determination with respect to liquidity fees and/or redemption gates, but only after providing appropriate prior notice to shareholders.
8Schwab Treasury Obligations Money Fund | Fund Summary
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Repurchase Agreements Risk. When the fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counterparty) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that, when the fund buys a security from a counterparty that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event
Schwab Treasury Obligations Money Fund | Fund Summary9
any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: adbt4v53cs0h0vc3m5eaji0gjdb3.jpg]](adbt4v53cs0h0vc3m5eaji0gjdb3.jpg)
| | | ||||||||||||||||||
| | | | 1 Year | | | 5 Years | | | Since Inception ( | | |||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | — | | | — | | |||||||||
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Eligible Investors (as determined by the fund) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | |
$1
|
| |||
Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
10Schwab Treasury Obligations Money Fund | Fund Summary
| | Ticker Symbol: | | | | |
The fund’s goal is to seek current income consistent with stability of capital and liquidity. The fund’s investment objective is not fundamental and therefore may be changed by the fund’s Board of Trustees without shareholder approval.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
| | | |||
| | | | | |
| of the value of your investment) | | |||
| Management fees | | | | |
| Distribution (12b-1) fees | | | | |
| Other expenses | | | | |
| Total annual fund operating expenses | | | | |
| Less expense reduction | | | ( | |
| Total annual fund operating expenses after expense reduction(1) | | | | |
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
| | | | |||||||||||||||||||||
| | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in U.S. government securities, such as:
•
U.S. Treasury bills and notes
•
other obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not fully guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks
•
repurchase agreements that are collateralized fully by cash and/ or U.S. government securities
•
obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities
The fund intends to operate as a government money market fund under the regulations governing money market funds. The fund will invest at least 99.5% of its total assets in cash, U.S. government securities and/or repurchase agreements that are collateralized fully by cash and/or U.S. government securities; under normal circumstances, at least 80% of the fund’s net assets (including, for this purpose, any borrowings for investment purposes) will be invested solely in U.S. government securities including repurchase agreements that are collateralized fully by U.S. government securities (excluding cash). With respect to the 80% policy, the fund will notify its shareholders at least 60 days before changing the policy.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
As a government money market fund, the fund’s Board of Trustees (the Board) has determined not to subject the fund to a liquidity fee and/or a redemption gate on fund redemptions. Please note that the Board has reserved its ability to change this determination with respect to liquidity fees and/or redemption gates, but only after providing appropriate prior notice to shareholders.
Schwab Retirement Government Money Fund | Fund Summary11
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Repurchase Agreements Risk. When the fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counterparty) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that,
when the fund buys a security from a counterparty that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
12Schwab Retirement Government Money Fund | Fund Summary
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
future performance may differ from past performance.
For current performance information, please see
![[MISSING IMAGE: cocc2q0prrrdhpk34lp245l97u9i.jpg]](cocc2q0prrrdhpk34lp245l97u9i.jpg)
| | | ||||||||||||||||||
| | | | 1 Year | | | 5 Years | | | Since Inception ( | | |||||||||
| | | | | | | | | | | | | | | | | | |||
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an
unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
The fund is generally available only to employer-sponsored retirement plans (including profit sharing, 401(k), 403(b), 457(b), and similar plans), defined benefit plans and non-qualified employer sponsored retirement plans. The fund is generally not available to non-retirement accounts, traditional and Roth Individual Retirement Accounts (IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs, individual 403(b) accounts that are not part of an employer’s 403(b) plan, or qualified tuition programs.
Set forth below are the investment minimums for the fund. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Schwab Retirement Government Money Fund | | | | $ | 1,000,000 | | | | | $ | 1 | | |
Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Schwab Retirement Government Money Fund | Fund Summary13
| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek the highest current income that is consistent with stability of capital and liquidity.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
| | | ||||||||||||
| | | | Investor Shares | | | Ultra Shares | | ||||||
| | | | | | | | | | | | | ||
| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | | | ||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | | | ||||
| Total annual fund operating expenses | | | | | | | | | | ||||
| Less expense reduction | | | | | ( | ) | | | | ( | | | |
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | | | ||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
| | | ||||||||||||||||||||||||
| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund typically invests in securities backed by the full faith and credit of the U.S. government. The fund intends to operate as a government money market fund under the
regulations governing money market funds. The fund will invest at least 99.5% of its total assets in cash and/or government securities (including bills and notes); under normal circumstances, at least 80% of the fund’s net assets (including, for this purpose, any borrowings for investment purposes) will be invested solely in U.S. Treasury securities (excluding cash). With respect to the 80% policy, the fund will notify its shareholders at least 60 days before changing the policy. The full faith and credit backing is the strongest backing offered by the U.S. government, and traditionally is considered by investors to be the highest degree of safety as far as the payment of principal and interest.
Based on the fund manager’s view of market conditions for U.S. Treasury securities, the fund may invest up to 20% of its net assets in: (i) obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not fully guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks; and (ii) obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities. Obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities are considered U.S. government securities under the rules that govern money market funds.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. By investing primarily in full faith and credit U.S. government investments, the fund seeks to provide maximum safety as to its assets. The fund is distinct from certain other types of government money market funds in that it does not invest in repurchase agreements. The portfolio manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price.
Because the income from U.S. Treasury securities is exempt from state and local income taxes, the fund generally expects that the majority of the dividends it pays will be exempt from those taxes as well. (Dividends still will be subject to federal income tax.) However, the fund may invest up to 20% of its net assets in non-U.S. Treasury investments that are not exempt from state and local income taxes. Further, during unusual market conditions, the fund may invest a greater portion of its assets in investments that are not exempt from state and local income taxes as a temporary defensive measure. When the fund engages in such activities, it may not achieve its investment goal.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
14Schwab U.S. Treasury Money Fund | Fund Summary
As a government money market fund, the fund’s Board of Trustees (the Board) has determined not to subject the fund to a liquidity fee and/or a redemption gate on fund redemptions. Please note that the Board has reserved its ability to change this determination with respect to liquidity fees and/or redemption gates, but only after providing appropriate prior notice to shareholders.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Schwab U.S. Treasury Money Fund | Fund Summary15
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: qua5m7bt0k4bmg5dlsvq9unjk925.jpg]](qua5m7bt0k4bmg5dlsvq9unjk925.jpg)
| | | ||||||||||||
| | | | 1 Year | | | Since Inception ( | | ||||||
| | | | | | | | | | | | | | |
| | | | | | | — | | ||||||
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is
closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Eligible Investors (as determined by the fund) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | |
$1
|
| |||
Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account, although dividends paid by the fund from income earned on U.S. Treasury securities are exempt from state and local taxes in most states.
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
16Schwab U.S. Treasury Money Fund | Fund Summary
Fund Details
The funds invest exclusively in money market instruments. There can be no assurance that the funds will achieve their investment objectives. Except as explicitly described otherwise, the strategies and policies of the funds may be changed without shareholder approval. In addition, the investment objectives of the Schwab Treasury Obligations Money Fund and the Schwab Retirement Government Money Fund may be changed without shareholder approval.
Money Fund Regulations
Money market funds in the United States are subject to rules governing their operation:
•
Credit quality: money market funds must invest exclusively in high-quality securities.
•
Diversification: requirements for diversification limit a fund’s exposure to any given issuer, guarantor or liquidity provider.
•
Maturity: money market funds must maintain a dollar-weighted average portfolio maturity of no more than 60 days and a dollar-weighted average life to maturity of no more than 120 days. In addition, money market funds cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
•
Liquidity: taxable money market funds are subject to a minimum liquidity requirement that prohibits a fund from acquiring certain types of securities, if immediately after the acquisition, the fund’s investments in daily or weekly liquid assets would be below 10% or 30%, respectively, of the fund’s total assets.
The Schwab Value Advantage Money Fund is a “retail money market fund,” as such term is defined in or interpreted under Rule 2a-7 of the Investment Company Act of 1940, as amended (1940 Act). A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. As a “retail money market fund,” the Schwab Value Advantage Money Fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, the Schwab Value Advantage Money Fund has the ability to impose a liquidity fee and/or redemption gate during times of extraordinary market stress. Please see the section entitled “Information on Liquidity Fees and Redemption Gates” below for additional information.
The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Portfolio Holdings
A description of the funds’ policies and procedures with respect to the disclosure of each fund’s portfolio securities is available in the funds’ Statement of Additional Information (SAI). Each fund posts on its website at www.schwabassetmanagement.com/schwabfunds_prospectus a list of the securities held by each fund as of the last business day of the most recent month. This list is updated within 5 business days after the end of each month and remains available online for at least six months after the initial posting. In addition, not later than 5 business days after the end of each calendar month, each fund files a schedule of information regarding its portfolio holdings and other information about the fund as of the last day of that month with the SEC on Form N-MFP. These filings are publicly available immediately upon filing on the SEC’s website at www.sec.gov. A link to each fund’s Form N-MFP filings on the SEC’s website is available at www.schwabassetmanagement.com/schwabfunds_prospectus.
Schwab Money Funds | Fund Details17
Financial Highlights
This section provides further details about the financial history of each fund and its respective share classes, for the past five years or, if shorter, for its period of operations, if applicable. Certain information reflects financial results for a single fund share. “Total return” shows the percentage that an investor in a fund would have earned or lost during a given period, assuming all distributions were reinvested. This information for fiscal years/periods ended December 31, 2017 through December 31, 2019 has been audited by the funds’ prior independent registered public accounting firm. The information for the fiscal years/periods ended December 31, 2020 and December 31, 2021 has been audited by Deloitte & Touche LLP (Deloitte). Deloitte’s full report is included in each fund’s annual report (see back cover).
18Schwab Money Funds | Financial Highlights
Schwab Value Advantage Money Fund
|
Investor Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17 |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(1)
|
| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.00(2) | | | | | | (0.00)(2) | | | | | | — | | |
|
Total from investment operations
|
| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(2)(3) | | | | | | (0.00)(2) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.01) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | — | | | | | | — | | |
|
Total distributions
|
| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.01) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.04%(3) | | | | | | 0.44% | | | | | | 2.07% | | | | | | 1.79% | | | | | | 0.81% | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.11%(4) | | | | | | 0.28%(4)(5) | | | | | | 0.34% | | | | | | 0.34% | | | | | | 0.39%(6) | | |
|
Gross operating expenses
|
| | | | 0.35% | | | | | | 0.41% | | | | | | 0.42% | | | | | | 0.44% | | | | | | 0.54% | | |
|
Net investment income (loss)
|
| | | | 0.04% | | | | | | 0.47% | | | | | | 2.02% | | | | | | 1.87% | | | | | | 0.84% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 42,245 | | | | | $ | 56,419 | | | | | $ | 74,972 | | | | | $ | 47,721 | | | | | $ |
14,955 |
| |
|
Ultra Shares
|
| |
1/1/21
12/31/21 |
| |
1/1/20
12/31/20 |
| |
1/1/19
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(7) |
| |||||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(1)
|
| | | | 0.00 | (2) | | | | 0.01 | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00 | (2) | | | | 0.00(2) | | | | | | 0.00(2) | | | | | | (0.00)(2) | | | | | | — | | | |
|
Total from investment operations
|
| | | | 0.00 | (2) | | | | 0.01 | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | | | (0.00 | )(2)(3) | | | | (0.01) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.01) | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(2) | | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | — | | | | | | — | | | |
|
Total distributions
|
| | | | (0.00 | )(2) | | | | (0.01) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.01) | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | ||
| Total return | | | | | 0.04 | %(3) | | | | 0.53% | | | | | | 2.22% | | | | | | 1.94% | | | | | | 1.00% | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | | | 0.11 | %(4) | | | | 0.18%(4)(5) | | | | | | 0.19% | | | | | | 0.19% | | | | | | 0.20%(6) | | | |
|
Gross operating expenses
|
| | | | 0.20 | % | | | | 0.26% | | | | | | 0.27% | | | | | | 0.29% | | | | | | 0.33% | | | |
|
Net investment income (loss)
|
| | | | 0.04 | % | | | | 0.56% | | | | | | 2.17% | | | | | | 2.00% | | | | | | 1.08% | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 33,078 | | | $ | 37,882 | | | | | $ | 47,497 | | | | | $ | 29,554 | | | | | $ | 12,612 | | | ||
(1)
Calculated based on the average shares outstanding during the period.
(2)
Per-share amount was less than $0.005.
(3)
These amounts include a non-recurring special distribution. The effect on the distributions from net investment income was less than $0.005 and the effect on the total return was 0.01%.
(4)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(5)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(6)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(7)
Effective November 17, 2017, the Select Shares and Premier Shares were combined into the Ultra Shares. The financial history as shown in the financial highlights is that of the former Ultra Shares.
Schwab Money Funds | Financial Highlights19
Schwab Government Money Fund
|
Investor Shares
|
| |
1/1/21
12/31/21 |
| |
1/1/20 –
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(1) |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.00(3) | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | — | | | | | | 0.00(3) | | | | | | 0.00(3) | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.00(3) | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3)(4) | | | | | | (0.00)(3) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.00)(3) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | — | | | | | | (0.00)(3) | | | | | | (0.00)(3) | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.00)(3) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.02%(4) | | | | | | 0.30% | | | | | | 1.90% | | | | | | 1.51% | | | | | | 0.50% | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.06%(5) | | | | | | 0.27%(5)(6) | | | | | | 0.35% | | | | | | 0.35% | | | | | | 0.40%(5)(7) | | |
|
Gross operating expenses
|
| | | | 0.35% | | | | | | 0.43% | | | | | | 0.47% | | | | | | 0.48% | | | | | | 0.53% | | |
|
Net investment income (loss)
|
| | | | 0.02% | | | | | | 0.28% | | | | | | 1.84% | | | | | | 1.66% | | | | | | 0.51% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 6,782 | | | | | $ | 11,980 | | | | | $ | 13,436 | | | | | $ | 7,871 | | | | | $ |
1,362 |
| |
|
Ultra Shares
|
| |
1/1/21
12/31/21 |
| |
9/24/20(11) –
12/31/20 |
| | | | | | | | | | | | | ||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total from investment operations
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | |
|
(0.00
|
)(3)(4)
|
| |
|
(0.00)(3)
|
| | | | | | | | | | | | | | | | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Total return | | | | | 0.02 | %(4) | | | | 0.00%(8)(9) | | | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | |
|
0.06
|
%(5)
|
| |
|
0.13%(5)(10)
|
| | | | | | | | | | | | | | | | | | | | |
|
Gross operating expenses
|
| | | | 0.20 | % | | | | 0.20%(10) | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)
|
| | | | 0.03 | % | | | | 0.01%(10) | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 4,726 | | | $ | 1,647 | | | | | | | | | | | | | | | | | | | | | ||
(1)
Effective October 3, 2017, the share class name of Purchased Shares was changed to Investor Shares.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
These amounts include a non-recurring special distribution. The effect on the distributions from net investment income was less than $0.005 and the effect on the total return was 0.01%.
(5)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(6)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(7)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(8)
Not annualized.
(9)
Percentage was less than 0.005%.
(10)
Annualized.
(11)
Commencement of operations.
20Schwab Money Funds | Financial Highlights
Schwab Treasury Obligations Money Fund
|
Investor Shares
|
| |
1/1/21
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(1) |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | (0.01)(4) | | | | | | 0.00(3) | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.02 | | | | | | 0.01 | | | | | | 0.01 | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.02) | | | | | | (0.01) | | | | | | (0.01) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | — | | | | | | (0.00)(3) | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.02) | | | | | | (0.01) | | | | | | (0.01) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.01% | | | | | | 0.27% | | | | | | 1.89% | | | | | | 1.51% | | | | | | 0.58% | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.06%(5) | | | | | | 0.30%(5)(6) | | | | | | 0.35% | | | | | | 0.35% | | | | | | 0.33%(5)(7) | | |
|
Gross operating expenses
|
| | | | 0.35% | | | | | | 0.46% | | | | | | 0.48% | | | | | | 0.49% | | | | | | 0.54% | | |
|
Net investment income (loss)
|
| | | | 0.01% | | | | | | 0.27% | | | | | | 1.86% | | | | | | 1.57% | | | | | | 0.65% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 5,632 | | | | | $ | 7,573 | | | | | $ | 10,820 | | | | | $ | 7,545 | | | | | $ |
3,125 |
| |
|
Ultra Shares
|
| |
1/1/21
12/31/21 |
| |
9/24/20(8) –
12/31/20 |
| | | | | | | | | | | | | ||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total from investment operations
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Total return | | | | | 0.01 | % | | | | 0.00%(9)(11) | | | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | |
|
0.06
|
%(5)
|
| |
|
0.16%(5)(10)
|
| | | | | | | | | | | | | | | | | | | | |
|
Gross operating expenses
|
| | | | 0.20 | % | | | | 0.21%(10) | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)
|
| | | | 0.01 | % | | | | 0.01%(10) | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 2,244 | | | $ | 1,754 | | | | | | | | | | | | | | | | | | | | | ||
(1)
Effective October 3, 2017, the share class name of Value Advantage Shares was changed to Investor Shares.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of fund transactions in relation to fluctuating market values.
(5)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(6)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(7)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(8)
Commencement of operations.
(9)
Percentage was less than 0.005%.
(10)
Annualized.
(11)
Not annualized.
Schwab Money Funds | Financial Highlights21
Schwab Retirement Government Money Fund
| | | |
1/1/21
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17 |
| |||||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at beginning of period | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(1)
|
| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | — | | | | | | 0.00(2) | | | | | | 0.00(2) | | |
|
Total from investment operations
|
| | | | 0.00(2) | | | | | | 0.00(2) | | | | | | 0.02 | | | | | | 0.02 | | | | | | 0.01 | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.01) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | — | | | | | | (0.00)(2) | | | | | | — | | |
|
Total distributions
|
| | | | (0.00)(2) | | | | | | (0.00)(2) | | | | | | (0.02) | | | | | | (0.02) | | | | | | (0.01) | | |
| Net asset value at end of period | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
| Total return | | | | | 0.01% | | | | | | 0.40% | | | | | | 2.07% | | | | | | 1.69% | | | | | | 0.70% | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.07%(3) | | | | | | 0.18%(3) | | | | | | 0.19% | | | | | | 0.19% | | | | | | 0.20%(4) | | |
|
Gross operating expenses
|
| | | | 0.21% | | | | | | 0.31% | | | | | | 0.35% | | | | | | 0.38% | | | | | | 0.37% | | |
|
Net investment income (loss)
|
| | | | 0.01% | | | | | | 0.38% | | | | | | 2.01% | | | | | | 1.68% | | | | | | 0.72% | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 1,610 | | | | | $ | 1,804 | | | | | $ | 2,072 | | | | | $ | 1,019 | | | | | $ | 876 | | |
(1)
Calculated based on the average shares outstanding during the period.
(2)
Per-share amount was less than $0.005.
(3)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(4)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
22Schwab Money Funds | Financial Highlights
Schwab U.S. Treasury Money Fund
|
Investor Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/17/18(1) –
12/31/18 |
| | | |||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.02 | | | | | | 0.02 | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | (0.01)(4) | | | | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.02 | | | | | | 0.01 | | | | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3)(5) | | | | | | (0.00)(3) | | | | | | (0.02) | | | | | | (0.01) | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.02) | | | | | | (0.01) | | | | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | |
|
Total return
|
| | | | 0.02%(5) | | | | | | 0.27% | | | | | | 1.84% | | | | | | 1.40%(6) | | | | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.05%(7) | | | | | | 0.23%(7)(8) | | | | | | 0.35% | | | | | | 0.35%(9) | | | | | |
|
Gross operating expenses
|
| | | | 0.35% | | | | | | 0.45% | | | | | | 0.49% | | | | | | 0.49%(9) | | | | | |
|
Net investment income (loss)
|
| | | | 0.02% | | | | | | 0.15% | | | | | | 1.77% | | | | | | 1.64%(9) | | | | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 7,468 | | | | | $ | 11,297 | | | | | $ | 7,517 | | | | | $ | 3,414 | | | | | |
|
Ultra Shares
|
| |
1/1/21–
12/31/21 |
| |
9/24/20(1)–
12/31/20 |
| | | | | | | | | | | | ||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | |
|
Total from investment operations
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | |
|
(0.00
|
)(3)(5)
|
| |
|
(0.00)(3)
|
| | | | | | | | | | | | | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | ||
| Total return | | | | | 0.02 | %(5) | | | | 0.00%(6)(10) | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | |
|
0.05
|
%(7)
|
| |
|
0.12%(7)(9)
|
| | | | | | | | | | | | | | | | | |
|
Gross operating expenses
|
| | | | 0.20 | % | | | | 0.21%(9) | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)
|
| | | | 0.02 | % | | | | 0.01%(9) | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 3,850 | | | $ | 2,260 | | | | | | | | | | | | | | | | | | ||
(1)
Commencement of operations.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of fund transactions in relation to fluctuating market values.
(5)
These amounts include a non-recurring special distribution. The effect on the distributions from net investment income was less than $0.005 and the effect on the total return was 0.01%.
(6)
Not annualized.
(7)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(8)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(9)
Annualized.
(10)
Percentage was less than 0.005%.
Schwab Money Funds | Financial Highlights23
Fund Management
The investment adviser for the funds is Charles Schwab Investment Management, Inc., dba Schwab Asset Management, 211 Main Street, San Francisco, CA 94105. The investment adviser was founded in 1989 and as of March 31, 2022, managed approximately $658.6 billion in assets.
The investment adviser oversees the asset management and administration of the funds. As compensation for these services, the investment adviser receives a management fee from each fund. For the 12 months ended December 31, 2021, these fees were 0.11% for the Schwab Value Advantage Money Fund, 0.06% for the Schwab Government Money Fund, 0.05% for the Schwab Treasury Obligations Money Fund, 0.05% for the Schwab Retirement Government Money Fund and 0.04% for the Schwab U.S. Treasury Money Fund. These figures, which are expressed as a percentage of each fund’s average daily net assets, represent the actual amounts paid, including the effects of reductions. Reductions include any contractual or voluntary waivers or reimbursements. Any applicable contractual expense limitation is described in the Fund Summaries section and in addition to any contractual expense limitation for the funds, the investment adviser and/or its affiliates also may voluntarily waive and/or reimburse expenses in excess of their current fee waiver and reimbursement commitment to the extent necessary to maintain a non-negative net yield for a share class.
A discussion regarding the basis for the Board of Trustees’ approval of the funds’ investment advisory agreement is available in each fund’s 2021 semiannual report, which covers the period from January 1, 2021 through June 30, 2021.
24Schwab Money Funds | Fund Management
Investing in the Funds
In this section, you will find information on buying, selling and exchanging shares. Eligible Investors may only invest in a fund through an intermediary by placing orders through your brokerage account at Schwab or an account with another broker/dealer, investment adviser, 401(k) plan, employee benefit plan, administrator, bank, or other financial intermediary (intermediary) that is authorized to accept orders on behalf of the fund (intermediary orders). You also will see how to choose a distribution option for your investment. These pages include helpful information on taxes as well.
The funds generally are not registered for sale in jurisdictions outside the United States and are intended for purchase by persons residing in the United States. A person is considered resident in the United States if at the time of the investment (i) the account has an address of record in the United States or a U.S. territory (including APO/FPO/DPO) and (ii) all account owners are resident in the United States or a U.S. territory and have a valid U.S. taxpayer identification number. If an existing account is updated to reflect a non-U.S. address, the account may be restricted from making additional investments.
Exchanges from the Schwab Value Advantage Money Fund into a permissible Schwab Fund may be subject to a liquidity fee imposed by the fund or exchanges may be prevented if the fund has imposed a redemption gate.
The Schwab Value Advantage Money Fund is a retail money market fund. Under Rule 2a-7 of the 1940 Act, a “retail money market fund” is defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons, which means that a retail money market fund’s shares can be held only by individual investors (Eligible Investors).
Natural persons may invest in the funds through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual retirement accounts; simple retirement accounts; custodial accounts; deferred compensation plans for government or tax-exempt organization employees; Archer medical savings account plans; college savings plans; health savings account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts having an institutional decision maker with ultimate investment authority held by the natural person beneficial owner (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Investing Through a Financial Intermediary
Placing Orders Through Your Intermediary
When you place orders through Schwab or another intermediary, you are not placing your orders directly with a fund, and you must follow Schwab’s or the other intermediary’s transaction procedures. Your intermediary may impose different or additional conditions than the funds on purchases, redemptions and exchanges of fund shares. These differences may include initial and subsequent investment requirements, exchange policies, fund choices, and cut-off times for investment and trading restrictions. Your intermediary may independently establish and charge its customers transaction fees, account fees and other fees in addition to the fees charged by the funds, and the intermediary may require its customers to pay a commission when transacting in fund shares. These additional fees will vary between intermediaries and may vary over time and would increase the cost of your investment and lower investment returns. You should consult your intermediary directly for information regarding these conditions and fees. The funds are not responsible for the failure of your intermediary to carry out its responsibilities.
Only certain intermediaries are authorized to accept orders on behalf of a fund. If your fund shares are no longer held by an authorized intermediary, a fund may impose restrictions on your ability to manage or maintain your shares. For example, you will not be able to place orders to purchase additional shares. To remove these restrictions, you may move your shares to Schwab or another intermediary that is authorized to accept fund orders.
Buying, Selling, Exchanging and Converting Shares Through an Intermediary
To purchase, redeem, exchange or convert shares held in your Schwab account or in your account at another intermediary, you must place your orders with the intermediary that holds your shares. You may not purchase, redeem, exchange or convert shares held in your intermediary account directly with a fund.
When selling or exchanging shares, you should be aware of the following fund policies:
•
For accounts held through a financial intermediary, each fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within two business days following receipt of a shareholder redemption order; however, each fund may take up to seven days to pay sale proceeds.
Schwab Money Funds | Investing in the Funds25
•
Each fund reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may incur transaction expenses and taxable gains in converting these securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
•
Exchange orders are limited to Schwab Funds (that are not Sweep Investments®) and must meet the minimum investment and other requirements for the fund and share class, if applicable, into which you are exchanging.
•
You should obtain and read the prospectus for the fund into which you are exchanging prior to placing your order.
•
Conversion orders are limited to other shares classes of your Fund (that are not Sweep Investments®), and must meet the minimum investment and other requirements for the share class into which you are exchanging.
Investing Directly with the Funds
Placing Direct Orders
Investors generally may not purchase shares directly from the funds’ transfer agent, BNY Mellon Investment Servicing (US) Inc. The funds reserve the right to accept direct purchases from certain eligible shareholders (Eligible Shareholders) and to suspend the privilege of directly purchasing additional shares of the funds at any time.
Financial intermediaries and Eligible Shareholders may contact the transfer agent by telephone at 1-877-332-2371.
Share Price
The funds are open for business each day that the NYSE is open except when the following federal holidays are observed: Columbus Day and Veterans Day. The funds calculate their share prices each business day, as of the close of the NYSE (generally 4:00 p.m. Eastern time). If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, each fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
A fund’s share price is its net asset value per share, or NAV, which is the fund’s net assets divided by the number of its shares outstanding. The funds seek to maintain a stable NAV of $1.00.
Orders that are received in good order are executed at the next NAV to be calculated. Orders to buy shares that are accepted no later than the close of a fund (generally 4:00 p.m. Eastern time) generally will receive the next business day’s dividend. Orders to sell or exchange shares that are accepted and executed no later than the close of a fund on a given day generally will receive that day’s dividend.
The funds value their investment holdings on the basis of amortized cost (cost plus any discount, or minus any premium, accrued since purchase). Many money market funds use this method to calculate NAV.
Additional Policies Affecting Your Investment
Each Fund Reserves Certain Rights, Including the Following:
•
To involuntarily redeem your shares after providing 60 days’ written notice if you do not satisfy the eligibility requirements for a retail money market fund (i.e., you are not a natural person).
•
To deny purchase of fund shares to investors who do not satisfy the eligibility requirements to invest in a retail money market fund (i.e., investor is not a natural person).
•
To temporarily reduce or suspend dividend payments in an effort to maintain a fund’s stable $1.00 share price.
•
To materially modify or terminate the exchange privilege upon 60 days’ written notice to shareholders.
•
To change or waive a fund’s investment minimums.
•
To suspend the right to sell shares back to a fund, and delay sending proceeds, during times when trading on the NYSE is restricted or halted, or otherwise as permitted by the SEC, such as to facilitate an orderly liquidation of a fund.
•
To withdraw or suspend any part of the offering made by this prospectus.
•
With respect to the Schwab Value Advantage Money Fund, to impose a liquidity fee and/or redemption gate (as discussed below).
26Schwab Money Funds | Investing in the Funds
Investment Minimums
Choose a fund and a share class. Your choice may depend on the amount of your investment. Schwab Value Advantage Money Fund, Schwab Government Money Fund, Schwab Treasury Obligations Money Fund and Schwab U.S. Treasury Money Fund offer two classes of shares. Each share class or fund in this prospectus has different minimum investments and different expenses. You may convert your Investor Shares of Schwab Value Advantage Money Fund into Ultra Shares at any time if your account balance in the fund is at least $1,000,000. You must contact the fund, Schwab or your other intermediary to request an interclass exchange of your shares — conversion is not automatic. Not all share classes may be available through financial intermediaries other than Schwab.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investments |
| ||||||
| | Schwab Value Advantage Money Fund | | | | | | | | | | | | | |
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab Government Money Fund | | | | | | | | | | | | | |
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab Treasury Obligations Money Fund | | | | | | | | | | | | | |
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab Retirement Government Money Fund | | | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab U.S. Treasury Money Fund | | | | | | | | | | | | | |
| |
Investor Shares
|
| | | | None | | | | | | None | | |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
These minimums may be waived for certain retirement plans and plan participants, and for certain investment programs, or in a fund’s sole discretion.
Options for Fund Distributions
Choose an option for fund distributions. When placing orders through an intermediary, you will select from the options for fund distributions provided by your intermediary. You should consult with your financial intermediary to discuss available options.
Information on Liquidity Fees and Redemption Gates
Pursuant to Rule 2a-7 under the 1940 Act, the Board of Trustees (Board) is permitted to impose a liquidity fee on redemptions from the Schwab Value Advantage Money Fund (up to 2%) or a redemption gate to temporarily restrict redemptions from the fund up to 10 business days (in any 90-day period) in the event that the fund’s “weekly liquid assets” fall below certain designated thresholds. Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain other U.S. government or agency securities; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; and amounts receivable and due unconditionally within five business days on pending sales of portfolio securities.
If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, the Board is permitted, but not required, to: (i) impose a liquidity fee of no more than 2% of the amount redeemed; and/or (ii) impose a redemption gate to temporarily suspend the right of redemption. If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, generally as of the beginning of the next business day, a liquidity fee of 1% of the amount redeemed unless the Board determines that such a fee would not be in the best interests of the fund or determines that a lower or higher fee (subject to the 2% limit) would be in the best interests of the fund.
Liquidity fees and redemption gates are most likely to be imposed during times of extraordinary market stress. Additionally, the Board generally expects that a liquidity fee or redemption gate would be imposed, if at all, after the fund has notified financial intermediaries and shareholders that a liquidity fee or redemption gate will be imposed (generally, as of the beginning of the next business day following the announcement that the fund will impose a liquidity fee or redemption gate). The imposition and termination of a liquidity fee or redemption gate will be reported by the fund to the SEC on Form N-CR. Such information will also be available on the fund’s website (www.schwabassetmanagement.com). In addition, the fund will make such announcements through a supplement to this prospectus and may make such announcements through a press release or by other means.
Liquidity fees would reduce the amount you receive upon redemption of your shares. The fund retains the liquidity fees for the benefit of remaining shareholders. Any redemption requests submitted while a redemption gate is in place will be cancelled without further notice. A new redemption request must be submitted to the fund if you wish to redeem your shares after the redemption gate has been lifted. For more information, please see “Purchasing and Redeeming Shares of the Fund — Liquidity Fees and Gates” in the SAI.
Schwab Money Funds | Investing in the Funds27
As a government money market fund, the Schwab Government Money Fund, Schwab Treasury Obligations Money Fund, Schwab Retirement Government Money Fund and Schwab U.S. Treasury Money Fund are not required to impose a liquidity fee and/or a redemption gate on fund redemptions. The Board has determined not to subject the Schwab Government Money Fund, Schwab Treasury Obligations Money Fund, Schwab Retirement Government Money Fund and Schwab U.S. Treasury Money Fund to a liquidity fee and/or a redemption gate on fund redemptions. Please note that the Board has reserved its ability to change this determination with respect to liquidity fees and/or redemption gates, but only after providing appropriate prior notice to shareholders.
Payments by the Investment Adviser or its Affiliates
The investment adviser or its affiliates make payments out of their own resources, or provide products and services at a discount, to certain brokerage firms, banks, insurance companies, retirement plan service providers and other financial intermediaries that perform shareholder, recordkeeping, sub-accounting and other administrative services in connection with investments in fund shares. These payments or discounts are separate from, and may be in addition to, any shareholder service fees or other administrative fees the funds may pay to those intermediaries. The investment adviser or its affiliates also make payments out of their own resources, or provide products and services at a discount, to certain financial intermediaries in connection with certain activities or services which may facilitate, directly or indirectly, investment in the funds. These payments may relate to marketing and/or fund promotion activities and presentations, educational training programs, conferences, the development and support of technology platforms and/or reporting systems, data analytics and support, or making shares of the funds available to their customers. These payments, which may be significant, are paid by the investment adviser or its affiliates out of their own resources and not from the assets of the funds.
Payments to a financial intermediary may create potential conflicts of interest between the intermediary and its clients as the payments may provide such intermediary with an incentive to favor sales of shares of the funds over other investment options they make available to their customers. Please see the SAI for additional information.
Shareholder Servicing and Sweep Administration Plan
The Board has adopted a Shareholder Servicing and Sweep Administration Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by financial intermediaries, including Schwab (together, service providers), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to the amount in the table below. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab, as distributor of the funds (or, in the case of payments made to Schwab acting as a service provider, pursuant to Schwab’s written agreement with the funds), and a fund will pay no more than the amount in the table below, calculated based on the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service provider. Payments under the Plan are made as described above without regard to whether the fee is more or less than the service provider’s actual cost of providing the services, and if more, such excess may be retained as profit by the service provider.
|
Fund
|
| |
Shareholder Servicing Fee
|
| |||
| Schwab Value Advantage Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab Value Advantage Money Fund – Ultra Shares | | | | | 0.00% | | |
| Schwab Government Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab Government Money Fund – Ultra Shares | | | | | 0.00% | | |
| Schwab Treasury Obligations Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab Treasury Obligations Money Fund – Ultra Shares | | | | | 0.00% | | |
| Schwab Retirement Government Money Fund | | | | | 0.00% | | |
| Schwab U.S. Treasury Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab U.S. Treasury Money Fund – Ultra Shares | | | | | 0.00% | | |
Policy Regarding Short-Term or Excessive Trading
Each fund’s Board has adopted policies and procedures with respect to frequent purchases and redemptions of fund shares. However, the funds are money market funds and seek to provide shareholders current income, liquidity and a stable net asset value of $1.00 per share. In addition, the funds are designed to serve as a short-term cash equivalent investment for shareholders and, therefore, expect shareholders to engage in frequent purchases and redemptions. Because of the inherently liquid nature of the funds’ investments, and money market instruments in general, and the funds’ intended purpose to serve as a short-term investment vehicle for shareholders, these funds do not monitor or limit shareholder purchases and redemptions of fund shares. However, the funds’ policies and procedures do provide each fund with the right to reject any purchase or exchange orders by any investor for any reason, including orders which appear to be associated with market timing activities.
28Schwab Money Funds | Investing in the Funds
Methods to Meet Redemptions
Under normal market conditions, each fund expects to meet redemption orders by using holdings of cash/cash equivalents or by the sale of portfolio investments. In unusual or stressed market conditions or as the investment adviser determines appropriate, each fund may borrow through the fund’s bank lines of credit or through the fund’s interfund lending facility to meet redemption requests. Each fund may also utilize its custodian overdraft facility to meet redemptions, if necessary. Each fund also reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may be subject to market risk and you may incur transaction expenses and taxable gains in converting the securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
Large Shareholder Redemptions
Certain accounts or Schwab affiliates may from time to time own (beneficially or of record) or control a significant percentage of a fund’s shares. Redemptions by these shareholders of their holdings in a fund or large redemptions by several shareholders resulting from events affecting investor demand may impact the fund’s liquidity and NAV. These redemptions may also force a fund to sell securities, which may negatively impact the fund’s brokerage costs.
Customer Identification and Verification and Anti-Money Laundering Program
Customer identification and verification is part of each fund’s overall obligation to deter money laundering under federal law. Each fund has adopted an Anti-Money Laundering Compliance Program designed to prevent the fund from being used for money laundering or the financing of terrorist activities. In this regard, the funds reserve the right to (i) refuse, cancel or rescind any purchase or exchange order; (ii) freeze any account and/or suspend account services; or (iii) involuntarily close your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of fund management, they are deemed to be in the best interest of a fund or in cases when a fund is requested or compelled to do so by governmental or law enforcement authority. If your account is closed at the request of governmental or law enforcement authority, you may not receive proceeds of the redemption if a fund is required to withhold such proceeds.
Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. When you open your account, you will have to provide your name, address, date of birth, identification number and other information that will allow your financial intermediary to identify you. This information is subject to verification to ensure the identity of all persons opening an account.
Your financial intermediary is required by law to reject your new account application if the required identifying information is not provided. Your financial intermediary may contact you in an attempt to collect any missing information required on the application, and your application may be rejected if they are unable to obtain this information. In certain instances, your financial intermediary is required to collect documents that will be used solely to establish and verify your identity.
Each fund reserves the right to close and/or liquidate your account at the then-current day’s price if the fund or your financial intermediary is unable to verify your identity. As a result, you may be subject to a gain or loss on fund shares and will be subject to corresponding tax consequences.
Distributions and Taxes
Any investment in the funds typically involves several tax considerations. The information below is meant as a general summary for U.S. citizens and residents. Please see the SAI for additional information. Because each person’s tax situation is different, you should consult your tax advisor about the tax implications of your investment in a fund. You also can visit the Internal Revenue Service website at www.irs.gov.
As a shareholder, you are entitled to your share of the dividends a fund earns. Each fund distributes to its shareholders substantially all of its net investment income. Each fund declares a dividend every business day, based on its determination of its net investment income. The funds pay their dividends on the 15th of each month (or next business day, if the 15th is not a business day), except that in December dividends are paid on the last business day of the month. If your daily dividend is less than $0.01, you may not receive a dividend payment. To receive a dividend distribution, you must be a registered shareholder on the date that dividends are declared. Dividend distributions are paid to shareholders on the payable date. Although the funds do not typically intend to distribute any capital gains, certain funds have done so in the past and it cannot be guaranteed by the funds that they will not make any capital gains distributions for any given year.
Unless you are investing through an IRA, 401(k) or other tax-advantaged account, your fund dividends generally have tax consequences. Each fund’s net investment income is distributed as dividends and dividends are taxable as ordinary income. Taxable income dividends generally are taxable in the tax year in which they are declared, whether you reinvest them or take them in cash. The sale or exchange of your fund shares may have tax consequences to you if you do not hold your shares in a tax-advantaged account, but no capital gain or loss to a shareholder is anticipated because the funds seek to maintain a stable $1.00 share price.
Schwab Money Funds | Investing in the Funds29
An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gains distributions received from a fund and net gains from redemptions or other taxable dispositions of fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds a threshold amount.
A fund may be required to withhold U.S. federal income tax on all taxable distributions payable to shareholders if they fail to provide the fund with their correct taxpayer identification number or to make required certifications, or if they have been notified by the IRS that they are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder’s U.S. federal income tax liability.
Foreign shareholders may be subject to different U.S. federal income tax treatment, including withholding tax at the rate of 30% (unless a lower treaty rate applies) on amounts treated as taxable ordinary dividends from a fund, as discussed in more detail in the SAI. Furthermore, the funds are required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the funds to enable the funds to determine whether withholding is required.
A liquidity fee imposed by a fund will reduce the amount you will receive upon the redemption of your shares, and will decrease the amount of any capital gains or increase the amount of any capital loss you will recognize from such redemption. There is some degree of uncertainty with respect to the tax treatment of liquidity fees received by money market funds, and such tax treatment may be the subject of future guidance issued by the Internal Revenue Service. If a fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the fund at such time.
At the beginning of every year, the funds provide shareholders with information detailing the tax status of any dividend a fund declared during the previous calendar year. Schwab customers also receive information on dividends and transactions in their monthly account statements.
30Schwab Money Funds | Investing in the Funds
Prospectus | April 28, 2022
Schwab Money Funds
To Learn More
This prospectus contains important information on the funds and should be read and kept for reference. You also can obtain more information from the following sources:
Annual and semiannual reports, which are sent to current fund investors, contain more information about the funds’ holdings and detailed financial information about the funds. Annual reports also contain information from the funds’ manager(s) about strategies, recent market conditions and trends and their impact on fund performance during the funds’ last fiscal period.
The Statement of Additional Information (SAI) includes a more detailed discussion of investment policies and the risks associated with various investments. The SAI is incorporated by reference into the prospectus, making it legally part of the prospectus.
For a free copy of any of these documents or to request other information or ask questions about the funds, call Schwab Funds at 1-877-824-5615. In addition, you may visit the Schwab Funds’ website at www.schwabassetmanagement.com/schwabfunds_prospectus for a free copy of a prospectus, SAI or an annual or semiannual report.
The SAI, the funds’ annual and semiannual reports and other related materials are available from the EDGAR Database on the SEC’s website (www.sec.gov). You can obtain copies of this information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov.
| | SEC File Number | | | | |
| |
The Charles Schwab Family of Funds 811‑05954
|
| | REG13852-26 | |
Prospectus | April 28, 2022
Schwab Funds®
Schwab® Municipal Money Funds
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Investor Shares
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SWWXX
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Ultra Shares
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SCTXX
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| | Schwab® Municipal Money Fund | | | | |
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Investor Shares
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SWTXX
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Ultra Shares
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SWOXX
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Schwab® California Municipal Money Fund
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Investor Shares
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SWKXX
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Ultra Shares
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SCAXX
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Schwab® New York Municipal Money Fund
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Investor Shares
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SWYXX
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Ultra Shares
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SNYXX
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As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved these securities or passed on whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime.
Schwab Municipal Money Funds
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| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek the highest current income exempt from federal income tax that is consistent with stability of capital and liquidity.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
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| | | | Investor Shares | | | Ultra Shares | | ||||||
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| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | ||||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | ||||||
| Total annual fund operating expenses | | | | | | | | ||||||
| Less expense reduction | | | | | ( | ) | | | | ( | ) | ||
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | ||||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
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| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in money market securities from states and municipal agencies around the country and from U.S. territories and possessions. These securities may include
general obligation issues, which typically are backed by the issuer’s ability to levy taxes; revenue bonds, which typically are backed by a stream of revenue from a given source, such as a public water system or hospital; municipal commercial paper and municipal notes; and municipal leases, which may be used to finance construction or equipment purchases. The fund may invest more than 25% of its total assets in municipal securities financing similar projects such as those relating to education, health care, transportation, utilities, industrial development and housing. Under normal circumstances, the fund will invest at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in municipal money market securities whose interest is exempt from federal income tax, including the federal alternative minimum tax (AMT). The fund does not currently intend to invest in any municipal securities whose interest is subject to AMT; however, this would not prevent the fund from investing in such securities as a temporary defensive measure discussed below.
The fund may purchase certain variable-rate demand securities issued by single state or national closed-end municipal bond funds, which, in turn, invest primarily in portfolios of tax-exempt municipal bonds. It is anticipated that the interest on the variable-rate demand securities will be exempt from federal income tax, including the AMT. These securities are considered “municipal money market securities” for purposes of the fund’s 80% investment policy stated above.
Many of the fund’s securities will be subject to credit or liquidity enhancements from U.S. and/or non-U.S. entities, which are designed to provide incremental levels of creditworthiness or liquidity. Some municipal securities have been structured to resemble variable- and floating-rate securities so that they meet the requirements for being considered money market instruments.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price by operating as a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds.
During unusual market conditions, the fund may invest in cash and taxable money market securities and municipal securities whose interest is subject to the AMT as a temporary defensive measure. When the fund engages in such activities, it may not achieve its investment goal.
Schwab AMT Tax-Free Money Fund | Fund Summary1
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Retail Money Market Fund Risk. The fund is a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds. A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund may involuntarily redeem any investor who is not a natural person. The fund will provide advance notice of its intent to make any such involuntary redemption. Neither the fund nor the investment adviser will be responsible for any loss or tax liability in an investor’s account resulting from such involuntary redemption. As a “retail money market fund,” the fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, the fund may be subject to liquidity fees and/or redemption gates on fund redemptions if the fund’s liquidity falls below required minimums because of market conditions or other factors.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the
fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Credit and Liquidity Enhancements Risk. The fund may invest in securities with credit or liquidity enhancements provided by a bank or other financial institution, and the existence and nature of such enhancements may be a significant factor in the investment adviser’s decision-making process. Generally, these enhancements are employed by the issuers of the securities to reduce credit risk and provide enhanced or back-up liquidity for a purchaser, such as the fund. Adverse developments affecting these banks and financial institutions could therefore have a negative effect on the value of the fund’s holdings. For example, a rating agency downgrade of a credit or liquidity enhancement provider may adversely affect the value of securities held by the fund. Any decline in the value of the securities held by the fund could cause the fund’s share price or yield to fall. To the extent that a portion of the fund’s underlying investments are enhanced by the same bank or financial institution, these risks may be increased.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s
2Schwab AMT Tax-Free Money Fund | Fund Summary
yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
State and Regional Risk. State and regional factors could affect the fund’s performance. To the extent that the fund invests in securities from a given state or geographic region, its share price and performance could be affected by local, state and regional factors, including erosion of the tax base and changes in the economic climate. National governmental actions, such as the elimination of tax-exempt status, also could affect performance. In addition, a municipality or municipal project that relies directly or indirectly on national governmental funding mechanisms may be negatively affected by the national government’s current budgetary constraints.
Investment Concentration Risk. To the extent that the fund invests a substantial portion of its assets in municipal securities financing similar projects, the fund may be more sensitive to adverse economic, business or political developments affecting those projects. A change that affects one project, such as proposed legislation on the financing of the project, a shortage of materials needed for the project, or a declining need for the project, would likely affect all similar projects and the overall municipal securities market.
Taxable Determinations Risk. Some of the fund’s income could be taxable. If certain types of investments the fund buys as tax-exempt are later ruled to be taxable, a portion of the fund’s income could become taxable. This risk, although generally considered low, is somewhat higher for investments that have been structured as municipal money market securities than for investments in other types of municipal money market securities. Any defensive investments in taxable securities or securities whose interest is subject to the AMT could generate taxable income.
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value,
other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: aeb6ipu4blghdva1u1te4h5tss5s.jpg]](aeb6ipu4blghdva1u1te4h5tss5s.jpg)
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Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays
Schwab AMT Tax-Free Money Fund | Fund Summary3
are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. The fund has adopted policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to involuntarily redeem shares in any account that are not beneficially owned by natural persons, after providing notice.
Eligible Investors (as determined by the fund and which are limited to natural persons) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
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Minimum
Initial Investment |
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Minimum
Additional Investment |
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| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | | | $ | 1 | | |
Tax Information
Distributions received from the fund are typically intended to be exempt from federal income tax, including the AMT, but are generally subject to state and local personal income taxes. The fund may invest a portion of its assets in securities that generate income that is not exempt from federal income tax. Further, any of the fund’s defensive investments in taxable securities and securities whose interest is subject to the AMT also could generate taxable income.
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
4Schwab AMT Tax-Free Money Fund | Fund Summary
| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek the highest current income that is consistent with stability of capital and liquidity, and is exempt from federal income tax.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
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| | | | Investor Shares | | | Ultra Shares | | ||||||
| | | | | | | | | | | | | ||
| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | ||||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | ||||||
| Total annual fund operating expenses | | | | | | | | ||||||
| Less expense reduction | | | | | ( | ) | | | | ( | ) | ||
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | ||||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
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| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in municipal money market securities from states and municipal agencies around the country and from U.S. territories and possessions. These securities may
include general obligation issues, which typically are backed by the issuer’s ability to levy taxes; revenue bonds, which typically are backed by a stream of revenue from a given source, such as a public water system or hospital; municipal commercial paper and municipal notes; and municipal leases, which may be used to finance construction or equipment purchases. The fund may invest more than 25% of its total assets in municipal securities financing similar projects such as those relating to education, health care, transportation, utilities, industrial development and housing. Under normal circumstances, the fund will invest at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in municipal money market securities the interest from which is exempt from federal income tax.
The fund may purchase certain variable-rate demand securities issued by single state or national closed-end municipal bond funds, which, in turn, invest primarily in portfolios of tax-exempt municipal bonds. It is anticipated that the interest on the variable-rate demand securities will be exempt from federal income tax. These securities are considered “municipal money market securities” for purposes of the fund’s 80% investment policy stated above.
Many of the fund’s securities will be subject to credit or liquidity enhancements from U.S. and/or non-U.S. entities, which are designed to provide incremental levels of creditworthiness or liquidity. Some municipal securities have been structured to resemble variable- and floating-rate securities so that they meet the requirements for being considered money market instruments.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price by operating as a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds.
During unusual market conditions, the fund may invest in cash and taxable money market securities as a temporary defensive measure. When the fund engages in such activities, it may not achieve its investment goal.
Schwab Municipal Money Fund | Fund Summary5
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Retail Money Market Fund Risk. The fund is a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds. A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund may involuntarily redeem any investor who is not a natural person. The fund will provide advance notice of its intent to make any such involuntary redemption. Neither the fund nor the investment adviser will be responsible for any loss or tax liability in an investor’s account resulting from such involuntary redemption. As a “retail money market fund,” the fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, the fund may be subject to liquidity fees and/or redemption gates on fund redemptions if the fund’s liquidity falls below required minimums because of market conditions or other factors.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest
rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Credit and Liquidity Enhancements Risk. The fund may invest in securities with credit or liquidity enhancements provided by a bank or other financial institution, and the existence and nature of such enhancements may be a significant factor in the investment adviser’s decision-making process. Generally, these enhancements are employed by the issuers of the securities to reduce credit risk and provide enhanced or back-up liquidity for a purchaser, such as the fund. Adverse developments affecting these banks and financial institutions could therefore have a negative effect on the value of the fund’s holdings. For example, a rating agency downgrade of a credit or liquidity enhancement provider may adversely affect the value of securities held by the fund. Any decline in the value of the securities held by the fund could cause the fund’s share price or yield to fall. To the extent that a portion of the fund’s underlying investments are enhanced by the same bank or financial institution, these risks may be increased.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
6Schwab Municipal Money Fund | Fund Summary
State and Regional Risk. State and regional factors could affect the fund’s performance. To the extent that the fund invests in securities from a given state or geographic region, its share price and performance could be affected by local, state and regional factors, including erosion of the tax base and changes in the economic climate. National governmental actions, such as the elimination of tax-exempt status, also could affect performance. In addition, a municipality or municipal project that relies directly or indirectly on national governmental funding mechanisms may be negatively affected by the national government’s current budgetary constraints.
Investment Concentration Risk. To the extent that the fund invests a substantial portion of its assets in municipal securities financing similar projects, the fund may be more sensitive to adverse economic, business or political developments affecting those projects. A change that affects one project, such as proposed legislation on the financing of the project, a shortage of materials needed for the project, or a declining need for the project, would likely affect all similar projects and the overall municipal securities market.
Taxable Determinations Risk. Some of the fund’s income could be taxable. If certain types of investments the fund buys as tax-exempt are later ruled to be taxable, a portion of the fund’s income could become taxable. This risk, although generally considered low, is somewhat higher for investments that have been structured as municipal money market securities than for investments in other types of municipal money market securities. Any defensive investments in taxable securities could generate taxable income. Also, some types of municipal securities produce income that is subject to the federal alternative minimum tax (AMT).
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: ebfqupu64jf8d3lbj8eicmkg6grd.jpg]](ebfqupu64jf8d3lbj8eicmkg6grd.jpg)
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| | | | 1 Year | | | 5 Years | | | 10 Years | | |||||||||
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Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an
Schwab Municipal Money Fund | Fund Summary7
unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. The fund has adopted policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to involuntarily redeem shares in any account that are not beneficially owned by natural persons, after providing notice.
Eligible Investors (as determined by the fund and which are limited to natural persons) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | |
$1
|
| |||
Tax Information
Distributions received from the fund are typically intended to be exempt from federal income tax, but are generally subject to state and local personal income taxes. While interest from municipal securities is generally exempt from federal income tax, some municipal securities in which the fund may invest may produce income that is subject to the AMT. The fund may invest a portion of its assets in securities that generate income that is not exempt from federal income tax. Further, any of the fund’s defensive investments in taxable securities also could generate taxable income.
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
8Schwab Municipal Money Fund | Fund Summary
| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek the highest current income that is consistent with stability of capital and liquidity, and is exempt from federal and California personal income tax.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
| | | ||||||||||||
| | | | Investor Shares | | | Ultra Shares | | ||||||
| | | | | | | | | | | | | ||
| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | ||||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | ||||||
| Total annual fund operating expenses | | | | | | | | ||||||
| Less expense reduction | | | | | ( | ) | | | | ( | ) | ||
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | ||||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
| | | ||||||||||||||||||||||||
| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in money market securities from California issuers and from municipal agencies, U.S. territories and possessions. These securities may include general obligation
issues, which typically are backed by the issuer’s ability to levy taxes; revenue bonds, which typically are backed by a stream of revenue from a given source, such as a public water system or hospital; municipal commercial paper and municipal notes; and municipal leases, which may be used to finance construction or equipment purchases. The fund may invest more than 25% of its total assets in municipal securities financing similar projects such as those relating to education, health care, transportation, utilities, industrial development and housing. Under normal circumstances, the fund will invest at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in municipal money market securities the interest from which is exempt from federal and California personal income tax.
The fund may purchase certain variable-rate demand securities issued by closed-end municipal bond funds, which, in turn, invest primarily in portfolios of California tax-exempt municipal bonds. It is anticipated that the interest on the variable-rate demand securities will be exempt from federal income tax and California personal income tax. These securities are considered “municipal money market securities” for purposes of the fund’s 80% investment policy stated above.
Many of the fund’s securities will be subject to credit or liquidity enhancements from U.S. and/or non-U.S. entities, which are designed to provide incremental levels of creditworthiness or liquidity. Some municipal securities have been structured to resemble variable- and floating-rate securities so that they meet the requirements for being considered money market instruments.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price by operating as a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds.
During unusual market conditions, the fund may invest in cash and taxable money market securities as a temporary defensive measure. When the fund engages in such activities, it may not achieve its investment goal.
Schwab California Municipal Money Fund | Fund Summary9
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Retail Money Market Fund Risk. The fund is a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds. A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund may involuntarily redeem any investor who is not a natural person. The fund will provide advance notice of its intent to make any such involuntary redemption. Neither the fund nor the investment adviser will be responsible for any loss or tax liability in an investor’s account resulting from such involuntary redemption. As a “retail money market fund,” the fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, the fund may be subject to liquidity fees and/or redemption gates on fund redemptions if the fund’s liquidity falls below required minimums because of market conditions or other factors.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest
rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Credit and Liquidity Enhancements Risk. The fund may invest in securities with credit or liquidity enhancements provided by a bank or other financial institution, and the existence and nature of such enhancements may be a significant factor in the investment adviser’s decision-making process. Generally, these enhancements are employed by the issuers of the securities to reduce credit risk and provide enhanced or back-up liquidity for a purchaser, such as the fund. Adverse developments affecting these banks and financial institutions could therefore have a negative effect on the value of the fund’s holdings. For example, a rating agency downgrade of a credit or liquidity enhancement provider may adversely affect the value of securities held by the fund. Any decline in the value of the securities held by the fund could cause the fund’s share price or yield to fall. To the extent that a portion of the fund’s underlying investments are enhanced by the same bank or financial institution, these risks may be increased.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
10Schwab California Municipal Money Fund | Fund Summary
State Risk. The fund invests primarily in securities issued by the State of California and its municipalities. Any reduction in the credit ratings of obligations of these issuers could adversely affect the market values and marketability of such securities, and, consequently, the value of the fund’s portfolio. Further, the fund’s share price and performance could be affected by local, state and regional factors, including erosion of the tax base and changes in the economic climate. Certain California constitutional amendments, legislative measures, executive orders, administrative regulations and voter initiatives could result in adverse consequences affecting the State of California and/or its municipalities. The possibility exists that a natural disaster, including an earthquake, could create a major dislocation of the California economy and significantly affect the ability of state and local governments to raise money to pay principal and interest on their municipal securities. National governmental actions, such as the elimination of tax-exempt status, also could affect performance. In addition, a municipality or municipal project that relies directly or indirectly on national governmental funding mechanisms may be negatively affected by the national government’s current budgetary constraints.
Investment Concentration Risk. To the extent that the fund invests a substantial portion of its assets in municipal securities financing similar projects, the fund may be more sensitive to adverse economic, business or political developments affecting those projects. A change that affects one project, such as proposed legislation on the financing of the project, a shortage of materials needed for the project, or a declining need for the project, would likely affect all similar projects and the overall municipal securities market.
Taxable Determinations Risk. Some of the fund’s income could be taxable. If certain types of investments the fund buys as tax-exempt are later ruled to be taxable, a portion of the fund’s income could become taxable. This risk, although generally considered low, is somewhat higher for investments that have been structured as municipal money market securities than for investments in other types of municipal money market securities. Any defensive investments in taxable securities could generate taxable income. Also, some types of municipal securities produce income that is subject to the federal alternative minimum tax (AMT).
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during
periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: a089vfamfjgqfmrrr5nndf0m4qr2.jpg]](a089vfamfjgqfmrrr5nndf0m4qr2.jpg)
| | | ||||||||||||||||||
| | | | 1 Year | | | 5 Years | | | 10 Years | | |||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | — | | | — | | |||||||||
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Schwab California Municipal Money Fund | Fund Summary11
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. The fund has adopted policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to involuntarily redeem shares in any account that are not beneficially owned by natural persons, after providing notice.
Eligible Investors (as determined by the fund and which are limited to natural persons) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | | | $ | 1 | | |
Tax Information
Distributions received from the fund are typically intended to be exempt from federal and California personal income tax. While interest from municipal securities is generally exempt from federal income tax, some municipal securities in which the fund may invest may produce income that is subject to the AMT. The fund may invest a portion of its assets in securities that generate income that is not exempt from federal and California personal income tax. Further, any of the fund’s defensive investments in taxable securities also could generate taxable income.
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
12Schwab California Municipal Money Fund | Fund Summary
| | Ticker Symbols: | | | Investor Shares: | | | Ultra Shares: | |
The fund’s goal is to seek current income that is exempt from federal income and New York state and local income tax, consistent with preservation of capital and liquidity. The fund’s investment objective is not fundamental and therefore may be changed by the fund’s Board of Trustees without shareholder approval.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
| | | ||||||||||||
| | | | Investor Shares | | | Ultra Shares | | ||||||
| | | | | | | | | | | | | ||
| of the value of your investment) | | ||||||||||||
| Management fees | | | | | | | | ||||||
| Distribution (12b-1) fees | | | | | | | | ||||||
| Other expenses | | | | | | | | ||||||
| Total annual fund operating expenses | | | | | | | | ||||||
| Less expense reduction | | | | | ( | ) | | | | ( | ) | ||
| Total annual fund operating expenses after expense reduction(1) | | | | | | | | ||||||
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
| | | ||||||||||||||||||||||||
| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Investor Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
To pursue its goal, the fund invests in money market securities from New York issuers and from municipal agencies, U.S. territories
and possessions. These securities may include general obligation issues, which typically are backed by the issuer’s ability to levy taxes; revenue bonds, which typically are backed by a stream of revenue from a given source, such as a public water system or hospital; municipal commercial paper and municipal notes; and municipal leases, which may be used to finance construction or equipment purchases. The fund may invest more than 25% of its total assets in municipal securities financing similar projects such as those relating to education, health care, transportation, utilities, industrial development and housing. Under normal circumstances, the fund will invest at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in municipal money market securities the interest from which is exempt from federal income and New York state and local income tax.
The fund may purchase certain variable-rate demand securities issued by closed-end municipal bond funds, which, in turn, invest primarily in portfolios of New York tax-exempt municipal bonds. It is anticipated that the interest on the variable-rate demand securities will be exempt from federal and New York State income tax. These securities are considered “municipal money market securities” for purposes of the fund’s 80% investment policy stated above.
Many of the fund’s securities will be subject to credit or liquidity enhancements from U.S. and/or non-U.S. entities, which are designed to provide incremental levels of creditworthiness or liquidity. Some municipal securities have been structured to resemble variable- and floating-rate securities so that they meet the requirements for being considered money market instruments.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates. To preserve its investors’ capital, the fund seeks to maintain a stable $1.00 share price by operating as a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds.
During unusual market conditions, the fund may invest in cash and taxable money market securities as a temporary defensive measure. When the fund engages in such activities, it may not achieve its investment goal.
Schwab New York Municipal Money Fund | Fund Summary13
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Retail Money Market Fund Risk. The fund is a “retail money market fund,” as such term is defined or interpreted under the rules governing money market funds. A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund may involuntarily redeem any investor who is not a natural person. The fund will provide advance notice of its intent to make any such involuntary redemption. Neither the fund nor the investment adviser will be responsible for any loss or tax liability in an investor’s account resulting from such involuntary redemption. As a “retail money market fund,” the fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, the fund may be subject to liquidity fees and/or redemption gates on fund redemptions if the fund’s liquidity falls below required minimums because of market conditions or other factors.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets or maintain a stable $1.00 share price. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest
rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Stable Net Asset Value Risk. If the fund or another money market fund fails to maintain a stable net asset value (or such perception exists in the market place), the fund could experience increased redemptions, which may adversely impact the fund’s share price. The fund is permitted, among other things, to reduce or withhold any income and/or gains generated from its portfolio to maintain a stable $1.00 share price.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Credit and Liquidity Enhancements Risk. The fund may invest in securities with credit or liquidity enhancements provided by a bank or other financial institution, and the existence and nature of such enhancements may be a significant factor in the investment adviser’s decision-making process. Generally, these enhancements are employed by the issuers of the securities to reduce credit risk and provide enhanced or back-up liquidity for a purchaser, such as the fund. Adverse developments affecting these banks and financial institutions could therefore have a negative effect on the value of the fund’s holdings. For example, a rating agency downgrade of a credit or liquidity enhancement provider may adversely affect the value of securities held by the fund. Any decline in the value of the securities held by the fund could cause the fund’s share price or yield to fall. To the extent that a portion of the fund’s underlying investments are enhanced by the same bank or financial institution, these risks may be increased.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
14Schwab New York Municipal Money Fund | Fund Summary
State Risk. The fund invests primarily in securities issued by the state of New York and its municipalities. Any reduction in the credit ratings of obligations of these issuers could adversely affect the market values and marketability of such securities, and, consequently, the value of the fund’s portfolio. Further, the fund’s share price and performance could be affected by local, state and regional factors, including erosion of the tax base and changes in the economic climate. Certain New York constitutional amendments, legislative measures, executive orders and administrative regulations could result in adverse consequences, affecting the state of New York and/or its municipalities. National governmental actions, such as the elimination of tax-exempt status, also could affect performance. In addition, a municipality or municipal project that relies directly or indirectly on national governmental funding mechanisms may be negatively affected by the national government’s current budgetary constraints.
Investment Concentration Risk. To the extent that the fund invests a substantial portion of its assets in municipal securities financing similar projects, the fund may be more sensitive to adverse economic, business or political developments affecting those projects. A change that affects one project, such as proposed legislation on the financing of the project, a shortage of materials needed for the project, or a declining need for the project, would likely affect all similar projects and the overall municipal securities market.
Taxable Determinations Risk. Some of the fund’s income could be taxable. If certain types of investments the fund buys as tax-exempt are later ruled to be taxable, a portion of the fund’s income could become taxable. This risk, although generally considered low, is somewhat higher for investments that have been structured as municipal money market securities than for investments in other types of municipal money market securities. Any defensive investments in taxable securities could generate taxable income. Also, some types of municipal securities produce income that is subject to the federal alternative minimum tax (AMT).
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. Redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s ability to maintain a stable $1.00 share price. In the event
any money market fund fails to maintain a stable net asset value, other money market funds, including the fund, could face a market-wide risk of increased redemption pressures, potentially jeopardizing the stability of their $1.00 share prices.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: el7ffb21e9gr0bi64v3eqi81jt56.jpg]](el7ffb21e9gr0bi64v3eqi81jt56.jpg)
| | | ||||||||||||||||||
| | | | 1 Year | | | 5 Years | | | 10 Years | | |||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | — | | | — | | |||||||||
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays
Schwab New York Municipal Money Fund | Fund Summary15
are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Investments in the fund are intended to be limited to accounts beneficially owned by natural persons. The fund has adopted policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. The fund reserves the right to involuntarily redeem shares in any account that are not beneficially owned by natural persons, after providing notice.
Eligible Investors (as determined by the fund and which are limited to natural persons) may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the fund’s share classes. The minimums may be waived for certain investors or in the fund’s sole discretion.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Investor Shares | | | | | None | | | | | | None | | |
| | Ultra Shares | | | | $ | 1,000,000 | | | | | $ | 1 | | |
Tax Information
Distributions received from the fund are typically intended to be exempt from federal income and New York state and local income tax. While interest from municipal securities is generally exempt from federal income tax, some municipal securities in which the fund may invest may produce income that is subject to the AMT. The fund may invest a portion of its assets in securities that generate income that is not exempt from federal income and New York state and local income tax. Further, any of the fund’s defensive investments in taxable securities also could generate taxable income.
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
16Schwab New York Municipal Money Fund | Fund Summary
Fund Details
Because these funds invest in municipal money market securities, their dividends generally are exempt from federal income tax. In addition to producing federally tax-exempt dividends, the dividends from the Schwab AMT Tax-Free Money Fund are also generally exempt from the AMT. Dividends from the state-specific funds generally are exempt from the respective state’s income tax as well.
Money Fund Regulations
Money market funds in the United States are subject to rules governing their operation:
•
Credit quality: money market funds must invest exclusively in high-quality securities.
•
Diversification: requirements for diversification limit a fund’s exposure to any given issuer, guarantor or liquidity provider.
•
Maturity: money market funds must maintain a dollar-weighted average portfolio maturity of no more than 60 days and a dollar-weighted average life to maturity of no more than 120 days. In addition, money market funds cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
•
Liquidity: tax-exempt money market funds are subject to minimum liquidity requirements that prohibit a fund from acquiring certain types of securities if, immediately after the acquisition, the fund’s investments in weekly liquid assets would be below 30% of the fund’s total assets.
Each fund is a “retail money market fund,” as such term is defined in or interpreted under Rule 2a-7 of the Investment Company Act of 1940, as amended (1940 Act). A “retail money market fund” is a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. As a “retail money market fund,” each fund is permitted to value its securities using the amortized cost method to seek to maintain a stable $1.00 share price. However, each fund has the ability to impose a liquidity fee and/or redemption gate during times of extraordinary market stress. Please see the section entitled “Information on Liquidity Fees and Redemption Gates” below for additional information.
The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Portfolio Holdings
A description of the funds’ policies and procedures with respect to the disclosure of each fund’s portfolio securities is available in the funds’ Statement of Additional Information (SAI). Each fund posts on its website at www.schwabassetmanagement.com/schwabfunds_prospectus a list of the securities held by each fund as of the last business day of the most recent month. This list is updated within 5 business days after the end of each month and remains available online for at least six months after the initial posting. In addition, not later than 5 business days after the end of each calendar month, each fund files a schedule of information regarding its portfolio holdings and other information about the fund as of the last day of that month with the SEC on Form N-MFP. These filings are publicly available immediately upon filing on the SEC’s website at www.sec.gov. A link to each fund’s Form N-MFP filings on the SEC’s website is available at www.schwabassetmanagement.com/schwabfunds_prospectus.
Schwab Municipal Money Funds | Fund Details17
Financial Highlights
This section provides further details about the financial history of each share class of each fund for the past five years, if available. Certain information reflects financial results for a single fund share. “Total return” shows the percentage that an investor in a fund would have earned or lost during a given period, assuming all distributions were reinvested. This information for fiscal years/periods ended December 31, 2017 through December 31, 2019 has been audited by the funds’ prior independent registered public accounting firm. The information for the fiscal years/periods ended December 31, 2020 and December 31, 2021 has been audited by Deloitte & Touche LLP (Deloitte). Deloitte’s full report is included in each fund’s annual report (see back cover).
18Schwab Municipal Money Funds | Financial Highlights
Schwab AMT Tax-Free Money Fund
|
Investor Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(1) |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | (0.00)(3) | | | | | | 0.00(3) | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01)(4) | | | | | | (0.00)(3) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | — | | | | | | — | | | | | | — | | | | | | (0.00)(3) | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.00)(3) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.02% | | | | | | 0.34% | | | | | | 1.19% | | | | | | 1.20%(4) | | | | | | 0.48% | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.11%(5) | | | | | | 0.31%(5)(6) | | | | | | 0.35% | | | | | | 0.35% | | | | | | 0.42%(7) | | |
|
Gross operating expenses
|
| | | | 0.37% | | | | | | 0.49% | | | | | | 0.52% | | | | | | 0.51% | | | | | | 0.55% | | |
|
Net investment income (loss)
|
| | | | 0.01% | | | | | | 0.38% | | | | | | 1.17% | | | | | | 1.14% | | | | | | 0.48% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 644 | | | | | $ | 835 | | | | | $ | 1,273 | | | | | $ | 1,128 | | | | | $ |
632 |
| |
|
Ultra Shares
|
| |
1/1/21–
12/31/21 |
| |
9/24/20(8) –
12/31/20 |
| | | | | | | | | | | | | ||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total from investment operations
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | — | | | | | | | | | | | | | | | | | | | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Total return | | | | | 0.02 | % | | | | 0.01%(9) | | | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | |
|
0.11
|
%(5)
|
| |
|
0.19%(5)(10)
|
| | | | | | | | | | | | | | | | | | | | |
|
Gross operating expenses
|
| | | | 0.22 | % | | | | 0.22%(10) | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)
|
| | | | 0.01 | % | | | | 0.02%(10) | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 161 | | | $ | 229 | | | | | | | | | | | | | | | | | | | | | ||
(1)
Effective October 3, 2017, the share class name of Value Advantage Shares was changed to Investor Shares.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
These amounts include a non-recurring special distribution. The effect on the distributions from net investment income was less than $0.005 and the effect on the total return was 0.07%.
(5)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(6)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(7)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(8)
Commencement of operations.
(9)
Not annualized.
(10)
Annualized.
Schwab Municipal Money Funds | Financial Highlights19
Schwab Municipal Money Fund
|
Investor Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(1) |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | (0.00)(3) | | | | | | 0.00(3) | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.00)(3) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.00)(3) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.02% | | | | | | 0.35% | | | | | | 1.20% | | | | | | 1.15% | | | | | | 0.48% | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.11%(4) | | | | | | 0.29%(4)(5) | | | | | | 0.34% | | | | | | 0.34% | | | | | | 0.42%(6) | | |
|
Gross operating expenses
|
| | | | 0.35% | | | | | | 0.45% | | | | | | 0.48% | | | | | | 0.48% | | | | | | 0.53% | | |
|
Net investment income (loss)
|
| | | | 0.01% | | | | | | 0.35% | | | | | | 1.19% | | | | | | 1.17% | | | | | | 0.50% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 1,597 | | | | | $ | 2,041 | | | | | $ | 2,674 | | | | | $ | 2,735 | | | | | $ |
822
|
| |
|
Ultra Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(7)(8) |
| |||||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.01 | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | (0.00)(3) | | | | | | 0.00(3) | | | |
|
Total from investment operations
|
| | | | 0.00 | (3) | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.01 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.01) | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.01) | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | ||
| Total return | | | | | 0.02 | % | | | | 0.44% | | | | | | 1.35% | | | | | | 1.30% | | | | | | 0.67% | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | | | 0.11 | %(5) | | | | 0.19%(4)(5) | | | | | | 0.19% | | | | | | 0.19% | | | | | | 0.22%(6) | | | |
|
Gross operating expenses
|
| | | | 0.20 | % | | | | 0.30% | | | | | | 0.33% | | | | | | 0.33% | | | | | | 0.47% | | | |
|
Net investment income (loss)
|
| | | | 0.01 | % | | | | 0.45% | | | | | | 1.33% | | | | | | 1.31% | | | | | | 0.71% | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 6,405 | | | $ | 9,948 | | | | | $ | 13,010 | | | | | $ | 12,748 | | | | | $ | 5,832 | | | ||
(1)
Effective October 3, 2017, the share class name of Value Advantage Shares was changed to Investor Shares.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(5)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(6)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(7)
Effective October 3, 2017, the share class name of Premier Shares was changed to Ultra Shares.
(8)
Effective November 17, 2017, the Select Shares merged into Ultra Shares.
20Schwab Municipal Money Funds | Financial Highlights
Schwab California Municipal Money Fund
|
Investor Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(1) |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01)(4) | | | | | | (0.00)(3) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | — | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.00)(3) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.03% | | | | | | 0.32% | | | | | | 1.10% | | | | | | 1.10%(4) | | | | | | 0.45% | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.10%(5) | | | | | | 0.28%(5)(6) | | | | | | 0.35% | | | | | | 0.35% | | | | | | 0.42%(7) | | |
|
Gross operating expenses
|
| | | | 0.35% | | | | | | 0.46% | | | | | | 0.49% | | | | | | 0.49% | | | | | | 0.53% | | |
|
Net investment income (loss)
|
| | | | 0.01% | | | | | | 0.37% | | | | | | 1.08% | | | | | | 1.12% | | | | | | 0.48% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 2,224 | | | | | $ | 3,405 | | | | | $ | 6,168 | | | | | $ | 5,526 | | | | | $ |
1,453 |
| |
|
Ultra Shares
|
| |
1/1/21–
12/31/21 |
| |
9/24/20(8) –
12/31/20 |
| | | | | | | | | | | | | ||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00(3 | ) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3 | ) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total from investment operations
|
| | | | 0.00(3 | ) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Total return | | | | | 0.03 | % | | | | 0.01%(9) | | | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | |
|
0.09
|
%(5)
|
| |
|
0.16%(5)(10)
|
| | | | | | | | | | | | | | | | | | | | |
|
Gross operating expenses
|
| | | | 0.20 | % | | | | 0.20%(10) | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)
|
| | | | 0.01 | % | | | | 0.01%(10) | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 778 | | | $ | 375 | | | | | | | | | | | | | | | | | | | | | ||
(1)
Effective October 3, 2017, the share class name of Value Advantage Shares was changed to Investor Shares.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
These amounts include a non-recurring special distribution. The effect on the distributions from net investment income was less than $0.005 and the effect on the total return was 0.01%.
(5)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(6)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(7)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(8)
Commencement of operations.
(9)
Not annualized.
(10)
Annualized.
Schwab Municipal Money Funds | Financial Highlights21
Schwab New York Municipal Money Fund
|
Investor Shares
|
| |
1/1/21–
12/31/21 |
| |
1/1/20–
12/31/20 |
| |
1/1/19–
12/31/19 |
| |
1/1/18–
12/31/18 |
| |
1/1/17–
12/31/17(1) |
| |||||||||||||||
|
Per-Share Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net asset value at beginning of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Income (loss) from investment operations:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)(2)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.00(3) | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.00(3) | | | | | | (0.00)(3) | | | | | | 0.01 | | |
|
Total from investment operations
|
| | | | 0.00(3) | | | | | | 0.00(3) | | | | | | 0.01 | | | | | | 0.01 | | | | | | 0.01 | | |
|
Less distributions:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net investment income
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01)(4) | | | | | | (0.01)(4) | | |
|
Distributions from net realized gains
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | — | | | | | | — | | | | | | (0.00)(3) | | |
|
Total distributions
|
| | | | (0.00)(3) | | | | | | (0.00)(3) | | | | | | (0.01) | | | | | | (0.01) | | | | | | (0.01) | | |
|
Net asset value at end of period
|
| | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | | | | $ | 1.00 | | |
|
Total return
|
| | | | 0.06% | | | | | | 0.34% | | | | | | 1.18% | | | | | | 1.16%(4) | | | | | | 0.56%(4) | | |
|
Ratios/Supplemental Data
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Ratios to average net assets:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.12%(5) | | | | | | 0.30%(5)(6) | | | | | | 0.35% | | | | | | 0.35% | | | | | | 0.42%(7) | | |
|
Gross operating expenses
|
| | | | 0.38% | | | | | | 0.49% | | | | | | 0.51% | | | | | | 0.52% | | | | | | 0.56% | | |
|
Net investment income (loss)
|
| | | | 0.01% | | | | | | 0.43% | | | | | | 1.16% | | | | | | 1.16% | | | | | | 0.48% | | |
|
Net assets, end of period (x 1,000,000)
|
| | | $ | 470 | | | | | $ | 668 | | | | | $ | 1,466 | | | | | $ | 1,126 | | | | | $ |
322 |
| |
|
Ultra Shares
|
| |
1/1/21–
12/31/21 |
| |
9/24/20(8) –
12/31/20 |
| | | | | | | | | | | | | ||||||||||||
| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net asset value at beginning of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net investment income (loss)(2)
|
| | | | 0.00(3 | ) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Net realized and unrealized gains (losses)
|
| | | | 0.00(3 | ) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total from investment operations
|
| | | | 0.00(3 | ) | | | | 0.00(3) | | | | | | | | | | | | | | | | | | | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Distributions from net investment income
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Distributions from net realized gains
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
|
Total distributions
|
| | | | (0.00 | )(3) | | | | (0.00)(3) | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at end of period | | | | $ | 1.00 | | | $ | 1.00 | | | | | | | | | | | | | | | | | | | | | ||
| Total return | | | | | 0.06 | % | | | | 0.02%(9) | | | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
|
Net operating expenses
|
| | | | 0.12 | %(5) | | | | 0.19%(10) | | | | | | | | | | | | | | | | | | | | | |
|
Gross operating expenses
|
| | | | 0.23 | % | | | | 0.22%(10) | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income (loss)
|
| | | | 0.01 | % | | | | 0.03%(10) | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 98 | | | $ | 119 | | | | | | | | | | | | | | | | | | | | | ||
(1)
Effective October 3, 2017, the share class name of Value Advantage Shares was changed to Investor Shares.
(2)
Calculated based on the average shares outstanding during the period.
(3)
Per-share amount was less than $0.005.
(4)
Amounts include special distributions. For the periods ended December 31, 2018 and December 31, 2017, the effects on the distributions from net investment income were less than $0.005 and $0.005, respectively, and the effects on total returns were 0.04% and 0.08%, respectively.
(5)
Reflects the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(6)
Effective September 24, 2020, the contractual expense limitation changed. The ratio presented for period ended December 31, 2020 is a blended ratio.
(7)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
(8)
Commencement of operations.
(9)
Not annualized.
(10)
Annualized.
22Schwab Municipal Money Funds | Financial Highlights
Fund Management
The investment adviser for the funds is Charles Schwab Investment Management, Inc., dba Schwab Asset Management, 211 Main Street, San Francisco, CA 94105. The investment adviser was founded in 1989 and as of March 31, 2022, managed approximately $658.6 billion in assets.
The investment adviser oversees the asset management and administration of the funds. As compensation for these services, the investment adviser receives a management fee from each fund. For the 12 months ended December 31, 2021, these fees were 0.08% for the Schwab AMT Tax-Free Money Fund, 0.10% for the Schwab Municipal Money Fund, 0.08% for the Schwab California Municipal Money Fund and 0.08% for the Schwab New York Municipal Money Fund. These figures, which are expressed as a percentage of each fund’s average daily net assets, represent the actual amounts paid, including the effects of reductions. Reductions include any contractual or voluntary waivers or reimbursements. Any applicable contractual expense limitation is described in the Fund Summary section. In addition to any contractual expense limitation for the funds, the investment adviser and/or its affiliates also may voluntarily waive and/or reimburse expenses in excess of their current fee waiver and reimbursement commitment to the extent necessary to maintain a non-negative net yield for a share class.
A discussion regarding the basis for the Board of Trustees’ approval of the funds’ investment advisory agreement is available in each fund’s 2021 semiannual report, which covers the period from January 1, 2021 through June 30, 2021.
Schwab Municipal Money Funds | Fund Management23
Investing in the Funds
In this section, you will find information on buying, selling and exchanging shares. Eligible Investors may only invest in a fund through an intermediary by placing orders through your brokerage account at Schwab or an account with another broker/dealer, investment adviser, 401(k) plan, employee benefit plan, administrator, bank, or other financial intermediary (intermediary) that is authorized to accept orders on behalf of the fund (intermediary orders). You also will see how to choose a distribution option for your investment. These pages include helpful information on taxes as well.
The funds generally are not registered for sale in jurisdictions outside the United States and are intended for purchase by persons residing in the United States. A person is considered resident in the United States if at the time of the investment (i) the account has an address of record in the United States or a U.S. territory (including APO/FPO/DPO) and (ii) all account owners are resident in the United States or a U.S. territory and have a valid U.S. taxpayer identification number. If an existing account is updated to reflect a non-U.S. address, the account may be restricted from making additional investments.
Municipal money funds are generally not appropriate investments for IRAs and other tax-deferred accounts. Please consult with your tax advisor about your situation.
Exchanges from a fund into a permissible Schwab Fund may be subject to a liquidity fee imposed by the fund or exchanges may be prevented if a fund has imposed a redemption gate.
Each of the funds is a retail money market fund. Under Rule 2a-7 of the 1940 Act, a “retail money market fund” is defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons, which means that a retail money market fund’s shares can be held only by individual investors (Eligible Investors).
Natural persons may invest in the funds through certain tax-advantaged savings accounts, trusts and other retirement and investment accounts, which may include, among others: participant-directed defined contribution plans; individual retirement accounts; simple retirement accounts; custodial accounts; deferred compensation plans for government or tax-exempt organization employees; Archer medical savings account plans; college savings plans; health savings account plans; ordinary trusts and estates of natural persons; or certain other retirement and investment accounts having an institutional decision maker with ultimate investment authority held by the natural person beneficial owner (e.g., a plan sponsor in certain retirement arrangements or an investment adviser managing discretionary investment accounts).
Investing Through a Financial Intermediary
Placing Orders Through Your Intermediary
When you place orders through Schwab or another intermediary, you are not placing your orders directly with a fund, and you must follow Schwab’s or the other intermediary’s transaction procedures. Your intermediary may impose different or additional conditions than the funds on purchases, redemptions and exchanges of fund shares. These differences may include initial and subsequent investment requirements, exchange policies, fund choices, and cut-off times for investment and trading restrictions. Your intermediary may independently establish and charge its customers transaction fees, account fees and other fees in addition to the fees charged by the funds, and the intermediary may require its customers to pay a commission when transacting in fund shares. These additional fees will vary between intermediaries and may vary over time and would increase the cost of your investment and lower investment returns. You should consult your intermediary directly for information regarding these conditions and fees. The funds are not responsible for the failure of your intermediary to carry out its responsibilities.
Only certain intermediaries are authorized to accept orders on behalf of a fund. If your fund shares are no longer held by an authorized intermediary, a fund may impose restrictions on your ability to manage or maintain your shares. For example, you will not be able to place orders to purchase additional shares. To remove these restrictions, you may move your shares to Schwab or another intermediary that is authorized to accept fund orders.
Buying, Selling, Exchanging and Converting Shares Through an Intermediary
To purchase, redeem, exchange or convert shares held in your Schwab account or in your account at another intermediary, you must place your orders with the intermediary that holds your shares. You may not purchase, redeem, exchange or convert shares held in your intermediary account directly with a fund.
When selling or exchanging shares, you should be aware of the following fund policies:
24Schwab Municipal Money Funds | Investing in the Funds
•
For accounts held through a financial intermediary, each fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within two business days following receipt of a shareholder redemption order; however, each fund may take up to seven days to pay sale proceeds.
•
Each fund reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may incur transaction expenses and taxable gains in converting these securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
•
Exchange orders are limited to Schwab Funds (that are not Sweep Investments®) and must meet the minimum investment and other requirements for the fund and share class, if applicable, into which you are exchanging.
•
You should obtain and read the prospectus for the fund into which you are exchanging prior to placing your order.
•
Conversion orders are limited to other shares classes of your Fund (that are not Sweep Investments®), and must meet the minimum investment and other requirements for the share class into which you are exchanging.
Investing Directly with the Funds
Placing Direct Orders
Investors generally may not purchase shares directly from the funds’ transfer agent, BNY Mellon Investment Servicing (US) Inc. The funds reserve the right to accept direct purchases from certain eligible shareholders (Eligible Shareholders) and to suspend the privilege of directly purchasing additional shares of the funds at any time.
Financial intermediaries and Eligible Shareholders may contact the transfer agent by telephone at 1-877-332-2371.
Share Price
The funds are open for business each day that the NYSE is open except when the following federal holidays are observed: Columbus Day and Veterans Day. The funds calculate their share prices each business day, as of the close of the NYSE (generally 4:00 p.m. Eastern time). If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, each fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
A fund’s share price is its net asset value per share, or NAV, which is the fund’s net assets divided by the number of its shares outstanding. The funds seek to maintain a stable NAV of $1.00.
Orders that are received in good order are executed at the next NAV to be calculated. Orders to buy shares that are accepted no later than the close of a fund (generally 4:00 p.m. Eastern time) generally will receive the next business day’s dividend. Orders to sell or exchange shares that are accepted and executed no later than the close of a fund on a given day generally will receive that day’s dividend.
The funds value their investment holdings on the basis of amortized cost (cost plus any discount, or minus any premium, accrued since purchase). Many money market funds use this method to calculate NAV.
Additional Policies Affecting Your Investment
Each Fund Reserves Certain Rights, including the following:
•
To involuntarily redeem your shares after providing 60 days’ written notice if you do not satisfy the eligibility requirements for a retail money market fund (i.e., you are not a natural person).
•
To deny purchase of fund shares to investors who do not satisfy the eligibility requirements to invest in a retail money market fund (i.e., investor is not a natural person).
•
To temporarily reduce or suspend dividend payments in an effort to maintain a fund’s stable $1.00 share price.
•
To materially modify or terminate the exchange privilege upon 60 days’ written notice to shareholders.
•
To change or waive a fund’s investment minimums.
•
To suspend the right to sell shares back to a fund, and delay sending proceeds, during times when trading on the NYSE is restricted or halted, or otherwise as permitted by the SEC, such as to facilitate an orderly liquidation of a fund.
Schwab Municipal Money Funds | Investing in the Funds25
•
To withdraw or suspend any part of the offering made by this prospectus.
•
To impose a liquidity fee and/or redemption gate (as discussed below).
Investment Minimums
Choose a fund and a share class. Your choice may depend on the amount of your investment. Each fund offers two share classes. You may convert your Investor Shares into Ultra Shares at any time if your account balance in a fund is at least $1,000,000. You must contact a fund, Schwab or your other intermediary to request an interclass exchange of your shares — conversion is not automatic. Not all share classes may be available through financial intermediaries other than Schwab.
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Schwab AMT Tax-Free Money Fund | | ||||||||||||
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab Municipal Money Fund | | ||||||||||||
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab California Municipal Money Fund | | ||||||||||||
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
| | Schwab New York Municipal Money Fund | | ||||||||||||
| |
Investor Shares
|
| | |
|
None
|
| | | |
|
None
|
| |
| |
Ultra Shares
|
| | | $ | 1,000,000 | | | | | $ | 1 | | |
These minimums may be waived for certain retirement plans and plan participants, and for certain investment programs, or in a fund’s sole discretion.
Options for Fund Distributions
Choose an option for fund distributions. When placing orders through an intermediary, you will select from the options for fund distributions provided by your intermediary. You should consult with your financial intermediary to discuss available options.
Information on Liquidity Fees and Redemption Gates
Pursuant to Rule 2a-7 under the 1940 Act, the Board of Trustees (Board) is permitted to impose a liquidity fee on redemptions from a fund (up to 2%) or a redemption gate to temporarily restrict redemptions from each fund up to 10 business days (in any 90-day period) in the event that a fund’s “weekly liquid assets” fall below certain designated thresholds. Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain other U.S. government or agency securities; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; and amounts receivable and due unconditionally within five business days on pending sales of portfolio securities.
If a fund’s weekly liquid assets fall below 30% of a fund’s total assets, the Board is permitted, but not required, to: (i) impose a liquidity fee of no more than 2% of the amount redeemed; and/or (ii) impose a redemption gate to temporarily suspend the right of redemption. If a fund’s weekly liquid assets fall below 10% of a fund’s total assets, a fund will impose, generally as of the beginning of the next business day, a liquidity fee of 1% of the amount redeemed unless the Board determines that such a fee would not be in the best interests of the fund or determines that a lower or higher fee (subject to the 2% limit) would be in the best interests of the fund.
Liquidity fees and redemption gates are most likely to be imposed during times of extraordinary market stress. Additionally, the Board generally expects that a liquidity fee or redemption gate would be imposed, if at all, after a fund has notified financial intermediaries and shareholders that a liquidity fee or redemption gate will be imposed (generally, as of the beginning of the next business day following the announcement that a fund will impose a liquidity fee or redemption gate). The imposition and termination of a liquidity fee or redemption gate will be reported by a fund to the SEC on Form N-CR. Such information will also be available on the fund’s website (www.schwabassetmanagement.com). In addition, the fund will make such announcements through a supplement to this prospectus and may make such announcements through a press release or by other means.
Liquidity fees would reduce the amount you receive upon redemption of your shares. A fund retains the liquidity fees for the benefit of remaining shareholders. Any redemption requests submitted while a redemption gate is in place will be cancelled without further notice. A new redemption request must be submitted to the fund if you wish to redeem your shares after the redemption gate has been lifted. For more information, please see “Purchasing and Redeeming Shares of the Fund — Liquidity Fees and Gates” in the SAI.
26Schwab Municipal Money Funds | Investing in the Funds
Payments by the Investment Adviser or its Affiliates
The investment adviser or its affiliates make payments out of their own resources, or provide products and services at a discount, to certain brokerage firms, banks, insurance companies, retirement plan service providers and other financial intermediaries that perform shareholder, recordkeeping, sub-accounting and other administrative services in connection with investments in fund shares. These payments or discounts are separate from, and may be in addition to, any shareholder service fees or other administrative fees the funds may pay to those intermediaries. The investment adviser or its affiliates also make payments out of their own resources, or provide products and services at a discount, to certain financial intermediaries in connection with certain activities or services which may facilitate, directly or indirectly, investment in the funds. These payments may relate to marketing and/or fund promotion activities and presentations, educational training programs, conferences, the development and support of technology platforms and/or reporting systems, data analytics and support, or making shares of the funds available to their customers. These payments, which may be significant, are paid by the investment adviser or its affiliates out of their own resources and not from the assets of the funds.
Payments to a financial intermediary may create potential conflicts of interest between the intermediary and its clients as the payments may provide such intermediary with an incentive to favor sales of shares of the funds over other investment options they make available to their customers. Please see the SAI for additional information.
Shareholder Servicing and Sweep Administration Plan
The Board has adopted a Shareholder Servicing and Sweep Administration Plan (the Plan) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by financial intermediaries, including Schwab (together, service providers), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to the amount in the table below. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab, as distributor of the funds (or, in the case of payments made to Schwab acting as a service provider, pursuant to Schwab’s written agreement with the funds), and a fund will pay no more than the amount in the table below, calculated based on the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service provider. Payments under the Plan are made as described above without regard to whether the fee is more or less than the service provider’s actual cost of providing the services, and if more, such excess may be retained as profit by the service provider.
|
Fund
|
| |
Shareholder Servicing Fee
|
| |||
| Schwab AMT Tax-Free Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab AMT Tax-Free Money Fund – Ultra Shares | | | | | 0.00% | | |
| Schwab Municipal Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab Municipal Money Fund – Ultra Shares | | | | | 0.00% | | |
| Schwab California Municipal Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab California Municipal Money Fund – Ultra Shares | | | | | 0.00% | | |
| Schwab New York Municipal Money Fund – Investor Shares | | | | | 0.15% | | |
| Schwab New York Municipal Money Fund – Ultra Shares | | | | | 0.00% | | |
Policy Regarding Short-Term or Excessive Trading
Each fund’s Board has adopted policies and procedures with respect to frequent purchases and redemptions of fund shares. However, the funds are money market funds and seek to provide shareholders current income, liquidity and a stable net asset value of $1.00 per share. In addition, the funds are designed to serve as a short-term cash equivalent investment for shareholders and, therefore, expect shareholders to engage in frequent purchases and redemptions. Because of the inherently liquid nature of the funds’ investments, and money market instruments in general, and the funds’ intended purpose to serve as a short-term investment vehicle for shareholders, these funds do not monitor or limit shareholder purchases and redemptions of fund shares. However, the funds’ policies and procedures do provide each fund with the right to reject any purchase or exchange orders by any investor for any reason, including orders which appear to be associated with market timing activities.
Methods to Meet Redemptions
Under normal market conditions, each fund expects to meet redemption orders by using holdings of cash/cash equivalents or by the sale of portfolio investments. In unusual or stressed market conditions or as the investment adviser determines appropriate, each fund may borrow through the fund’s bank lines of credit or through the fund’s interfund lending facility to meet redemption requests. Each fund may also utilize its custodian overdraft facility to meet redemptions, if necessary. Each fund also reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may be subject to market risk and you may incur transaction expenses and taxable gains in converting the securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
Schwab Municipal Money Funds | Investing in the Funds27
Large Shareholder Redemptions
Certain accounts or Schwab affiliates may from time to time own (beneficially or of record) or control a significant percentage of a fund’s shares. Redemptions by these shareholders of their holdings in a fund or large redemptions by several shareholders resulting from events affecting investor demand may impact the fund’s liquidity and NAV. These redemptions may also force a fund to sell securities, which may negatively impact the fund’s brokerage costs.
Customer Identification and Verification and Anti-Money Laundering Program
Customer identification and verification is part of each fund’s overall obligation to deter money laundering under federal law. Each fund has adopted an Anti-Money Laundering Compliance Program designed to prevent the fund from being used for money laundering or the financing of terrorist activities. In this regard, the funds reserve the right to (i) refuse, cancel or rescind any purchase or exchange order; (ii) freeze any account and/or suspend account services; or (iii) involuntarily close your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of fund management, they are deemed to be in the best interest of a fund or in cases when a fund is requested or compelled to do so by governmental or law enforcement authority. If your account is closed at the request of governmental or law enforcement authority, you may not receive proceeds of the redemption if a fund is required to withhold such proceeds.
Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. When you open your account, you will have to provide your name, address, date of birth, identification number and other information that will allow your financial intermediary to identify you. This information is subject to verification to ensure the identity of all persons opening an account.
Your financial intermediary is required by law to reject your new account application if the required identifying information is not provided. Your financial intermediary may contact you in an attempt to collect any missing information required on the application, and your application may be rejected if they are unable to obtain this information. In certain instances, your financial intermediary is required to collect documents that will be used solely to establish and verify your identity.
Each fund reserves the right to close and/or liquidate your account at the then-current day’s price if the fund or your financial intermediary is unable to verify your identity. As a result, you may be subject to a gain or loss on fund shares and will be subject to corresponding tax consequences.
Distributions and Taxes
Any investment in the funds typically involves several tax considerations. The information below is meant as a general summary for U.S. citizens and residents. Please see the SAI for additional information. Because each person’s tax situation is different, you should consult your tax advisor about the tax implications of your investment in a fund. You also can visit the Internal Revenue Service website at www.irs.gov.
As a shareholder, you are entitled to your share of the dividends a fund earns. Each fund distributes to its shareholders substantially all of its net investment income. Each fund declares a dividend every business day, based on its determination of its net investment income. The funds pay their dividends on the 15th of each month (or next business day, if the 15th is not a business day), except that in December dividends are paid on the last business day of the month. If your daily dividend is less than $0.01, you may not receive a dividend payment. To receive a dividend distribution, you must be a registered shareholder on the date that dividends are declared. Dividend distributions are paid to shareholders on the payable date. Although the funds do not typically intend to distribute any capital gains, certain funds have done so in the past and it cannot be guaranteed by the funds that they will not make any capital gains distributions for any given year.
Some funds may have tax consequences. The Schwab AMT Tax-Free Money Fund’s and Schwab Municipal Money Fund’s dividends typically are exempt from federal income tax, but are subject to state and local personal income taxes.
Dividends from the state-specific funds typically are exempt from federal and the respective state’s income taxes. Each fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax. Taxable income dividends generally are taxable in the tax year in which they are declared, whether you reinvest them or take them in cash. The sale or exchange of your fund shares may have tax consequences to you if you do not hold your shares in a tax-advantaged account, but no capital gain or loss to a shareholder is anticipated because the funds seek to maintain a stable $1.00 share price.
While interest from municipal securities generally is exempt from federal income tax, some securities in which certain of the funds may invest may produce income that is subject to the AMT. To the extent that a fund invests in these securities, shareholders who are subject to the AMT may have to pay this tax on some or all dividends received from that fund. Any fund’s defensive investments in taxable securities and securities whose interest is subject to the AMT could generate taxable income.
28Schwab Municipal Money Funds | Investing in the Funds
An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gains distributions received from a fund and net gains from redemptions or other taxable dispositions of fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds a threshold amount.
A fund may be required to withhold U.S. federal income tax on all taxable distributions payable to shareholders if they fail to provide the fund with their correct taxpayer identification number or to make required certifications, or if they have been notified by the IRS that they are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder’s U.S. federal income tax liability.
Foreign shareholders may be subject to different U.S. federal income tax treatment, including withholding tax at the rate of 30% (unless a lower treaty rate applies) on amounts treated as taxable ordinary dividends from a fund, as discussed in more detail in the SAI. Furthermore, the funds are required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the funds to enable the funds to determine whether withholding is required.
A liquidity fee imposed by a fund will reduce the amount you will receive upon the redemption of your shares, and will decrease the amount of any capital gains or increase the amount of any capital loss you will recognize from such redemption. There is some degree of uncertainty with respect to the tax treatment of liquidity fees received by money market funds, and such tax treatment may be the subject of future guidance issued by the Internal Revenue Service. If a fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the fund at such time.
At the beginning of every year, the funds provide shareholders with information detailing the tax status of any dividend a fund declared during the previous calendar year. Schwab customers also receive information on dividends and transactions in their monthly account statements.
Schwab Municipal Money Funds | Investing in the Funds29
Prospectus | April 28, 2022
Schwab Municipal Money Funds
To Learn More
This prospectus contains important information on the funds and should be read and kept for reference. You also can obtain more information from the following sources:
Annual and semiannual reports, which are sent to current fund investors, contain more information about the funds’ holdings and detailed financial information about the funds. Annual reports also contain information from the funds’ manager(s) about strategies, recent market conditions and trends and their impact on fund performance during the funds’ last fiscal period.
The Statement of Additional Information (SAI) includes a more detailed discussion of investment policies and the risks associated with various investments. The SAI is incorporated by reference into the prospectus, making it legally part of the prospectus.
For a free copy of any of these documents or to request other information or ask questions about the funds, call Schwab Funds at 1-877-824-5615. In addition, you may visit the Schwab Funds’ website at www.schwabassetmanagement.com/schwabfunds_prospectus for a free copy of a prospectus, SAI or an annual or semiannual report.
The SAI, the funds’ annual and semiannual reports and other related materials are available from the EDGAR Database on the SEC’s website (www.sec.gov). You can obtain copies of this information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov.
| | SEC File Number | | | | |
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The Charles Schwab Family of Funds 811‑05954
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| | REG13854-27 | |
Prospectus | April 28, 2022
Schwab Funds®
Schwab® Variable Share Price Money Fund
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Ultra Shares
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SVUXX
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As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved these securities or passed on whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime.
Schwab Variable Share Price Money Fund
| | Fund Summary | | | | | | | |
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| | Ticker Symbol: | | | Ultra Shares: | |
The fund’s goal is to seek current income consistent with stability of capital and liquidity. The fund’s investment objective is not fundamental and therefore may be changed by the fund’s Board of Trustees without shareholder approval.
This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.
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| | | | Ultra Shares | |
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| of the value of your investment) | | |||
| Management fees | | | | |
| Distribution (12b-1) fees | | | | |
| Other expenses | | | | |
| Total annual fund operating expenses | | | | |
| Less expense reduction | | | ( | |
| Total annual fund operating expenses after expense reduction(1) | | | | |
(1)
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. The figures are based on total annual fund operating expenses after any expense reduction. Your actual costs may be higher or lower.
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| | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | ||||||||||||
| Ultra Shares | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
The fund is a money market fund that is designed to serve as a complementary product to traditional stable share price money market funds. Unlike a traditional stable share price money market
fund, the fund will not use the amortized cost method of valuation or round the per share net asset value (NAV) to the nearest whole cent and does not seek to maintain a stable share price. As a result, the fund’s share price, which is its NAV, will vary and reflect the effects of unrealized appreciation and depreciation and realized losses and gains.
To pursue its goal, the fund invests in high-quality short-term money market investments issued by U.S. and foreign issuers, such as:
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commercial paper, including asset-backed commercial paper
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promissory notes
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certificates of deposit and time deposits
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variable- and floating-rate debt securities
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bank notes and bankers’ acceptances
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repurchase agreements
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obligations that are issued by the U.S. government, its agencies or instrumentalities, including obligations that are not guaranteed by the U.S. Treasury, such as those issued by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (U.S. government securities)
All of these investments will be denominated in U.S. dollars, including those that are issued by foreign issuers. Obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities are considered U.S. government securities under the rules that govern money market funds. Certain of the fund’s securities are subject to credit or liquidity enhancements, which are designed to provide incremental levels of creditworthiness or liquidity.
The fund may engage in repurchase agreement transactions that are collateralized by cash or U.S. government securities. In addition, the fund may engage in repurchase agreement transactions that are collateralized by money market instruments, debt securities, loan participations or other securities, including equity securities and securities that are rated below investment grade or their unrated equivalents as determined by the investment adviser.
In choosing securities, the fund’s manager seeks to maximize current income within the limits of the fund’s investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money market funds.
For temporary defensive purposes during unusual market conditions, the fund may invest up to 100% of its assets in cash, cash equivalents or other high quality short-term investments.
Schwab Variable Share Price Money Fund | Fund Summary1
The investment adviser’s credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the fund’s holdings or its average maturity based on actual or anticipated changes in credit quality or market dynamics, such as interest rates.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, low or negative interest rates, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund’s investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Risk. You could lose money by investing in the fund. Because the share price of the fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund’s yield (and total return) also could be low or even negative. In addition, the fund may be unable to pay expenses out of fund assets. Also, a change in a central bank’s monetary policy or economic conditions may result in a change in interest rates, which could have sudden and unpredictable effects on the markets. A sudden or unpredictable rise or decline in interest rates may cause volatility. Volatility in the market may decrease liquidity in the money market securities markets, making it more difficult for the fund to sell its money market investments at a time when the investment adviser might wish to sell such investments. Decreased market liquidity also may make it more difficult to value some or all of the fund’s money market securities holdings.
Repurchase Agreements Risk. When the fund enters into a repurchase agreement, the fund is exposed to the risk that the other party (i.e., the counterparty) will not fulfill its contractual obligation. In a repurchase agreement, there exists the risk that, when the fund buys a security from a counterparty that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counterparty will not repurchase the security. These risks are magnified to the extent that a repurchase agreement is secured by collateral other than cash and government securities, such as debt securities, equity securities and high-yield securities that are rated below investment grade (also referred to as junk bonds) (Alternative Collateral). High-yield securities that are used as Alternative Collateral are subject to greater levels of credit and liquidity risk, and are considered primarily speculative with respect to the issuer’s continuing ability to make principal and interest payments. Alternative Collateral may be subject to greater price volatility and may be more volatile or less liquid than other types of collateral, increasing the risk that the fund will be unable to recover fully in the event of a counterparty’s default.
Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. Even though the fund’s investments in repurchase agreements are collateralized at all times, there is some risk to the fund if the other party should default on its obligations and the fund is delayed or prevented from recovering or disposing of the collateral. The credit quality of the fund’s portfolio holdings can change rapidly in certain market environments and any downgrade or default on the part of a single portfolio investment could cause the fund’s share price or yield to fall.
Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance Agency (FHFA) since September 2008, Fannie Mae and Freddie Mac maintain only lines of credit with the U.S. Treasury. The Federal Home Loan Banks maintain limited access to credit lines from the U.S. Treasury. Other securities, such as obligations issued by the Federal Farm Credit Banks Funding Corporation, are supported solely by the credit of the issuer. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.
Credit and Liquidity Enhancements Risk. The fund may invest in securities with credit or liquidity enhancements provided by a bank or other financial institution, and the existence and nature of such enhancements may be a significant factor in the investment adviser’s decision-making process. Generally, these enhancements are employed by the issuers of the securities to reduce credit risk and provide enhanced or back-up liquidity for a purchaser, such as
2Schwab Variable Share Price Money Fund | Fund Summary
the fund. Adverse developments affecting these banks and financial institutions could therefore have a negative effect on the value of the fund’s holdings. For example, a rating agency downgrade of a credit or liquidity enhancement provider may adversely affect the value of securities held by the fund. Any decline in the value of the securities held by the fund could cause the fund’s share price or yield to fall. To the extent that a portion of the fund’s underlying investments are enhanced by the same bank or financial institution, these risks may be increased.
Foreign Investment Risk. Although the fund may invest only in U.S. dollar-denominated securities, the fund’s investments in securities of foreign issuers or securities with credit or liquidity enhancements provided by foreign entities may involve certain risks that are greater than those associated with investments in securities of U.S. issuers or securities with credit or liquidity enhancements provided by U.S. entities. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of the fund’s investments, and could impair the fund’s ability to meet its investment objective or invest in accordance with its investment strategy. In addition, sovereign risk, or the risk that a government may become unwilling or unable to meet its loan obligations or guarantees, could increase the credit risk of financial institutions connected to that particular country.
Management Risk. Any actively managed mutual fund is subject to the risk that its investment adviser will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its investment objective. The fund’s investment adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. The investment adviser’s maturity decisions will also affect the fund’s yield, and potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the fund’s yield at times could lag the yields of other money market funds.
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Redemption Risk. The fund may experience periods of heavy redemptions that could cause the fund to liquidate its assets at
inopportune times or at a loss or depressed value, particularly during periods of declining or illiquid markets. This could cause the fund to be unable to pay redemption proceeds within a short period of time.
Variable NAV Risk. The fund does not maintain a stable NAV per share. The value of the fund’s shares will be calculated to four decimal places and will fluctuate with changes in the values of the fund’s portfolio securities. You could lose money by investing in the fund.
Money Market Fund Regulation Risk. The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Money Market Fund Risk. The fund is not designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments.
![[MISSING IMAGE: aiou9jnu1fr4g2ndshg43trrebct.jpg]](aiou9jnu1fr4g2ndshg43trrebct.jpg)
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Schwab Variable Share Price Money Fund | Fund Summary3
Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™
Purchase and Sale of Fund Shares
The fund is open for business each day that the New York Stock Exchange (NYSE) is open except when the following federal holidays are observed: Columbus Day and Veterans Day. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
Investors may only invest in the fund through an account at Charles Schwab & Co., Inc. (Schwab) or another financial intermediary. When you place orders to purchase, exchange or redeem fund shares through an account at Schwab or another financial intermediary, you must follow Schwab’s or the other financial intermediary’s transaction procedures.
Set forth below are the investment minimums for the Ultra Shares of the fund. The minimums may be waived for certain investors or in the fund’s sole discretion.
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Minimum
Initial Investment |
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Minimum
Additional Investment |
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| | Ultra Shares | | | | $ | 1,000,000 | | | | | $ | 1 | | |
Tax Information
Distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).
Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
4Schwab Variable Share Price Money Fund | Fund Summary
Fund Details
Money Fund Regulations
Money market funds in the United States are subject to rules governing their operation:
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Credit quality: money market funds must invest exclusively in high-quality securities.
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Diversification: requirements for diversification limit the fund’s exposure to any given issuer, guarantor or liquidity provider.
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Maturity: money market funds must maintain a dollar-weighted average portfolio maturity of no more than 60 days and a dollar-weighted average life to maturity of no more than 120 days. In addition, money market funds cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months).
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Liquidity: taxable money market funds are subject to minimum liquidity requirements that prohibit a fund from acquiring certain types of securities if, immediately after the acquisition, the fund’s investments in daily or weekly liquid assets would be below 10% or 30%, respectively, of the fund’s total assets.
Consistent with Rule 2a-7 under the Investment Company Act of 1940, as amended (1940 Act), the fund is permitted to impose a liquidity fee and/or redemption gate during times of extraordinary market stress. Please see the section entitled “Information on Liquidity Fees and Redemption Gates” below for additional information.
The SEC and other regulatory agencies continue to review the regulation of money market funds. As of the date of this prospectus, the SEC has proposed amendments to the rules that govern money market funds. These proposed amendments, if implemented, may affect the fund’s investment strategies, performance, yield, expenses, operations and continued viability.
Portfolio Holdings
A description of the fund’s policies and procedures with respect to the disclosure of the fund’s portfolio securities is available in the fund’s Statement of Additional Information (SAI). The fund posts on its website at www.schwabassetmanagement.com/schwabfunds_prospectus a list of the securities held by the fund as of the last business day of the most recent month. This list is updated within 5 business days after the end of each month and remains available online for at least six months after the initial posting. In addition, not later than 5 business days after the end of each calendar month, the fund files a schedule of information regarding its portfolio holdings and other information about the fund as of the last day of that month with the SEC on Form N-MFP. These filings are publicly available immediately upon filing on the SEC’s website at www.sec.gov. A link to the fund’s Form N-MFP filings on the SEC’s website is available at www.schwabassetmanagement.com/schwabfunds_prospectus.
Schwab Variable Share Price Money Fund | Fund Details5
Financial Highlights
This section provides further details about the fund’s financial history for the past five years. Certain information reflects financial results for a single fund share. “Total return” shows the percentage that an investor in the fund would have earned or lost during a given period, assuming all distributions were reinvested. The information for fiscal years ended December 31, 2017 through December 31, 2019 has been audited by the fund’s prior independent registered public accounting firm. The information for the fiscal years ended December 31, 2020 and December 31, 2021 has been audited by Deloitte & Touche LLP (Deloitte). Deloitte’s full report is included in the fund’s annual report (see back cover).
Schwab Variable Share Price Money Fund
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Ultra Shares
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1/1/21–
12/31/21 |
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1/1/20–
12/31/20 |
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1/1/19–
12/31/19 |
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1/1/18–
12/31/18 |
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1/1/17–
12/31/17 |
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| Per-Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net asset value at beginning of period | | | | $ | 1.0003 | | | | | $ | 1.0004 | | | | | $ | 1.0002 | | | | | $ | 1.0001 | | | | | $ | 1.0003 | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net investment income (loss)(1)
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| | | | 0.0003 | | | | | | 0.0057 | | | | | | 0.0217 | | | | | | 0.0201 | | | | | | 0.0103 | | |
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Net realized and unrealized gains (losses)
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| | | | (0.0000)(2) | | | | | | (0.0008) | | | | | | 0.0005 | | | | | | (0.0009) | | | | | | (0.0006) | | |
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Total from investment operations
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| | | | 0.0003 | | | | | | 0.0049 | | | | | | 0.0222 | | | | | | 0.0192 | | | | | | 0.0097 | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Distributions from net investment income
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| | | | (0.0003) | | | | | | (0.0050) | | | | | | (0.0220) | | | | | | (0.0191) | | | | | | (0.0099) | | |
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Distributions from net realized gains
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| | | | — | | | | | | — | | | | | | (0.0000)(2) | | | | | | — | | | | | | — | | |
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Total distributions
|
| | | | (0.0003) | | | | | | (0.0050) | | | | | | (0.0220) | | | | | | (0.0191) | | | | | | (0.0099) | | |
| Net asset value at end of period | | | | $ | 1.0003 | | | | | $ | 1.0003 | | | | | $ | 1.0004 | | | | | $ | 1.0002 | | | | | $ | 1.0001 | | |
| Total return | | | | | 0.03% | | | | | | 0.49% | | | | | | 2.24% | | | | | | 1.94% | | | | | | 0.97% | | |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net operating expenses
|
| | | | 0.11%(3) | | | | | | 0.18%(3) | | | | | | 0.19% | | | | | | 0.19% | | | | | | 0.20%(4) | | |
|
Gross operating expenses
|
| | | | 0.21% | | | | | | 0.31% | | | | | | 0.34% | | | | | | 0.35% | | | | | | 0.40% | | |
|
Net investment income (loss)
|
| | | | 0.03% | | | | | | 0.57% | | | | | | 2.17% | | | | | | 2.01% | | | | | | 1.03% | | |
| Net assets, end of period (x 1,000,000) | | | | $ | 2,693 | | | | | $ | 3,414 | | | | | $ | 5,388 | | | | | $ | 3,796 | | | | | $ | 1,327 | | |
(1)
Calculated
based on the average shares outstanding during the period.
(2)
Per share amount was less than $0.00005.
(3)
Reflects
the effect of a voluntary yield waiver in excess of the contractual expense limitation.
(4)
Effective October 3, 2017, the contractual expense limitation changed. The ratio presented for period ended December 31, 2017 is a blended ratio.
6Schwab Variable Share Price Money Fund | Financial Highlights
Fund Management
The investment adviser for the fund is Charles Schwab Investment Management, Inc., dba Schwab Asset Management, 211 Main Street, San Francisco, CA 94105. The investment adviser was founded in 1989 and as of March 31, 2022, managed approximately $658.6 billion in assets.
The investment adviser oversees the asset management and administration of the fund. As compensation for these services, the investment adviser receives a management fee from the fund. For the 12 months ended December 31, 2021, this fee was 0.09% for the fund. This figure, which is expressed as a percentage of the fund’s average daily net assets, represents the actual amount paid, including the effect of reductions. Reductions include any contractual waivers or reimbursements. The contractual expense limitation is described in the Fund Summary section. In addition to any contractual expense limitation for the fund, the investment adviser and/or its affiliates also may voluntarily waive and/or reimburse expenses in excess of their current fee waiver and reimbursement commitment to the extent necessary to maintain a non-negative net yield the fund.
A discussion regarding the basis for the Board of Trustees’ approval of the fund’s investment advisory agreement is available in the fund’s 2021 semiannual report, which covers the period from January 1, 2021 through June 30, 2021.
Schwab Variable Share Price Money Fund | Fund Management7
Investing in the Fund
In this section, you will find information on buying, selling and exchanging shares. Investors may only invest in the fund through an intermediary by placing orders through your brokerage account at Schwab or an account with another broker/dealer, investment adviser, 401(k) plan, employee benefit plan, administrator, bank, or other financial intermediary (intermediary) that is authorized to accept orders on behalf of the fund (intermediary orders). You also will see how to choose a distribution option for your investment. These pages include helpful information on taxes as well.
The fund generally is not registered for sale in jurisdictions outside the United States and is intended for purchase by persons residing in the United States. A person is considered resident in the United States if at the time of the investment (i) the account has an address of record in the United States or a U.S. territory (including APO/FPO/DPO) and (ii) all account owners are resident in the United States or a U.S. territory and have a valid U.S. taxpayer identification number. If an existing account is updated to reflect a non-U.S. address, the account may be restricted from making additional investments.
Exchanges from the fund into a permissible Schwab Fund may be subject to a liquidity fee imposed by the fund or exchanges may be prevented if the fund has imposed a redemption gate.
Investing Through a Financial Intermediary
Placing Orders Through Your Intermediary
When you place orders through Schwab or another intermediary, you are not placing your orders directly with the fund, and you must follow Schwab’s or the other intermediary’s transaction procedures. Your intermediary may impose different or additional conditions than the fund on purchases, redemptions and exchanges of fund shares. These differences may include initial and subsequent investment requirements, exchange policies, fund choices, and cut-off times for investment and trading restrictions. Your intermediary may independently establish and charge its customers transaction fees, account fees and other fees in addition to the fees charged by the fund, and the intermediary may require its customers to pay a commission when transacting in fund shares. These additional fees will vary between intermediaries and may vary over time and would increase the cost of your investment and lower investment returns. You should consult your intermediary directly for information regarding these conditions and fees. The fund is not responsible for the failure of your intermediary to carry out its responsibilities.
Only certain intermediaries are authorized to accept orders on behalf of the fund. If your fund shares are no longer held by an authorized intermediary, the fund may impose restrictions on your ability to manage or maintain your shares. For example, you will not be able to place orders to purchase additional shares. To remove these restrictions, you may move your shares to Schwab or another intermediary that is authorized to accept fund orders.
Buying, Selling, Exchanging and Converting Shares Through an Intermediary
To purchase, redeem, exchange or convert shares held in your Schwab account or in your account at another intermediary, you must place your orders with the intermediary that holds your shares. You may not purchase, redeem, exchange or convert shares held in your intermediary account directly with the fund.
When selling or exchanging shares, you should be aware of the following fund policies:
•
For accounts held through a financial intermediary, the fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within two business days following receipt of a shareholder redemption order; however, the fund may take up to seven days to pay sale proceeds.
•
The fund reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may incur transaction expenses and taxable gains in converting these securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
•
Exchange orders are limited to Schwab Funds (that are not Sweep Investments®) and must meet the minimum investment and other requirements for the fund and share class into which you are exchanging.
•
You should obtain and read the prospectus for the fund into which you are exchanging prior to placing your order.
•
Conversion orders are limited to other shares classes of your fund (that are not Sweep Investments®), and must meet the minimum investment and other requirements for the share class into which you are exchanging.
8Schwab Variable Share Price Money Fund | Investing in the Fund
Investing Directly with the Fund
Placing Direct Orders
Investors generally may not purchase shares directly from the fund’s transfer agent, BNY Mellon Investment Servicing (US) Inc. The fund reserves the right to accept direct purchases from certain eligible shareholders (Eligible Shareholders) and to suspend the privilege of directly purchasing additional shares of the fund at any time.
Financial intermediaries and Eligible Shareholders may contact the transfer agent by telephone at 1-877-332-2371.
Share Price
The fund is open for business each day that the NYSE is open except when the following federal holidays are observed: Columbus Day and Veterans Day. The fund calculates its share price each business day, as of the close of the NYSE (generally 4:00 p.m. Eastern time). If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.
The fund’s share price is its net asset value per share, or net asset value (NAV), which is the fund’s net assets divided by the number of its shares outstanding. To calculate NAV, each share class uses the following equation: (Total Assets − Total Liabilities) ÷ Total Number of Shares Outstanding = NAV.
Orders that are received in good order are executed at the next NAV to be calculated. Orders to buy shares that are accepted no later than the close of the fund (generally 4:00 p.m. Eastern time) generally will receive the next business day’s dividend. Orders to sell or exchange shares that are accepted and executed no later than the close of the fund on a given day generally will receive that day’s dividend.
In valuing its securities, the fund uses market quotes or official closing prices if they are readily available. In cases where quotes are not readily available or the adviser deems them unreliable, the fund may value securities based on fair values developed using methods approved by the fund’s Board of Trustees.
When valuing fixed income securities with remaining maturities of more than 60 days, the fund uses the value of the security provided by pricing services. The pricing services may value fixed income securities at an evaluated price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. When valuing fixed income securities with remaining maturities of 60 days or less, the fund may use the security’s amortized cost, which approximates the security’s market value.
Additional Policies Affecting Your Investment
The Fund Reserves Certain Rights, Including the Following:
•
To materially modify or terminate the exchange privilege upon 60 days’ written notice to shareholders.
•
To change or waive the fund’s investment minimums.
•
To suspend the right to sell shares back to the fund, and delay sending proceeds, during times when trading on the NYSE is restricted or halted, or otherwise as permitted by the SEC, such as to facilitate an orderly liquidation of the fund.
•
To withdraw or suspend any part of the offering made by this prospectus.
•
To impose a liquidity fee and/or redemption gate (as discussed below).
Investment Minimums
| | | | |
Minimum
Initial Investment |
| |
Minimum
Additional Investment |
| ||||||
| | Ultra Shares | | | | $ | 1,000,000 | | | | | $ | 1 | | |
The minimums may be waived for certain retirement plans and plan participants, and for certain investment programs, or in the fund’s sole discretion.
Schwab Variable Share Price Money Fund | Investing in the Fund9
Options for Fund Distributions
Choose an option for fund distributions. When placing orders through an intermediary, you will select from the options for fund distributions provided by your intermediary. You should consult with your financial intermediary to discuss available options.
Information on Liquidity Fees and Redemption Gates
Pursuant to Rule 2a-7 under the 1940 Act, the Board of Trustees (Board) is permitted to impose a liquidity fee on redemptions from the fund (up to 2%) or a redemption gate to temporarily restrict redemptions from the fund up to 10 business days (in any 90-day period) in the event that the fund’s “weekly liquid assets” fall below certain designated thresholds. Weekly liquid assets generally include cash; direct obligations of the U.S. government; certain other U.S. government or agency securities; securities that will mature or are subject to a demand feature that is exercisable and payable within five business days; and amounts receivable and due unconditionally within five business days on pending sales of portfolio securities.
If the fund’s weekly liquid assets fall below 30% of the fund’s total assets, the Board is permitted, but not required, to: (i) impose a liquidity fee of no more than 2% of the amount redeemed; and/or (ii) impose a redemption gate to temporarily suspend the right of redemption. If the fund’s weekly liquid assets fall below 10% of the fund’s total assets, the fund will impose, generally as of the beginning of the next business day, a liquidity fee of 1% of the amount redeemed unless the Board determines that such a fee would not be in the best interests of the fund or determines that a lower or higher fee (subject to the 2% limit) would be in the best interests of the fund.
Liquidity fees and redemption gates are most likely to be imposed during times of extraordinary market stress. Additionally, the Board generally expects that a liquidity fee or redemption gate would be imposed, if at all, after the fund has notified financial intermediaries and shareholders that a liquidity fee or redemption gate will be imposed (generally, as of the beginning of the next business day following the announcement that the fund will impose a liquidity fee or redemption gate). The imposition and termination of a liquidity fee or redemption gate will be reported by the fund to the SEC on Form N-CR. Such information will also be available on the fund’s website (www.schwabassetmanagement.com). In addition, the fund will make such announcements through a supplement to this prospectus and may make such announcements through a press release or by other means.
Liquidity fees would reduce the amount you receive upon redemption of your shares. The fund retains the liquidity fees for the benefit of remaining shareholders. Any redemption requests submitted while a redemption gate is in place will be cancelled without further notice. A new redemption request must be submitted to the fund if you wish to redeem your shares after the redemption gate has been lifted. For more information, please see “Purchasing and Redeeming Shares of the Fund — Liquidity Fees and Gates” in the SAI.
Payments by the Investment Adviser or its Affiliates
The investment adviser or its affiliates make payments out of their own resources, or provide products and services at a discount, to certain brokerage firms, banks, insurance companies, retirement plan service providers and other financial intermediaries that perform shareholder, recordkeeping, sub-accounting and other administrative services in connection with investments in fund shares. These payments or discounts are separate from, and may be in addition to, any shareholder service fees or other administrative fees the fund may pay to those intermediaries. The investment adviser or its affiliates also make payments out of their own resources, or provide products and services at a discount, to certain financial intermediaries in connection with certain activities or services which may facilitate, directly or indirectly, investment in the fund. These payments may relate to marketing and/or fund promotion activities and presentations, educational training programs, conferences, the development and support of technology platforms and/or reporting systems, data analytics and support, or making shares of the fund available to its customers. These payments, which may be significant, are paid by the investment adviser or its affiliates out of their own resources and not from the assets of the fund.
Payments to a financial intermediary may create potential conflicts of interest between the intermediary and its clients as the payments may provide such intermediary with an incentive to favor sales of shares of the fund over other investment options they make available to their customers. Please see the SAI for additional information.
Policy Regarding Short-Term or Excessive Trading
The fund’s Board has adopted policies and procedures with respect to frequent purchases and redemptions of fund shares. The fund is designed to serve as a short-term cash equivalent investment for shareholders and, therefore, expects shareholders to engage in frequent purchases and redemptions. Because of the inherently liquid nature of the fund’s investments, and money market instruments in general, and the fund’s intended purpose to serve as a short-term investment vehicle for shareholders, the fund does not monitor or limit shareholder purchases and redemptions of fund shares. However, the fund’s policies and procedures do provide the fund with the right to reject any purchase or exchange orders by any investor for any reason, including orders which appear to be associated with market timing activities.
Methods to Meet Redemptions
Under normal market conditions, the fund expects to meet redemption orders by using holdings of cash/cash equivalents or by the sale of portfolio investments. In unusual or stressed market conditions or as the investment adviser determines appropriate, the fund may borrow through the fund’s bank lines of credit or through the fund’s interfund lending facility to meet redemption requests. The fund may
10Schwab Variable Share Price Money Fund | Investing in the Fund
also utilize its custodian overdraft facility to meet redemptions, if necessary. The fund also reserves the right to honor redemptions in liquid portfolio securities instead of cash when your redemptions over a 90-day period exceed $250,000 or 1% of the fund’s assets, whichever is less. You may be subject to market risk and you may incur transaction expenses and taxable gains in converting the securities to cash. In addition, a redemption in liquid portfolio securities would be treated as a taxable event for you and may result in the recognition of gain or loss for federal income tax purposes.
Large Shareholder Redemptions
Certain accounts or Schwab affiliates may from time to time own (beneficially or of record) or control a significant percentage of the fund’s shares. Redemptions by these shareholders of their holdings in the fund or large redemptions by several shareholders resulting from events affecting investor demand may impact the fund’s liquidity and NAV. These redemptions may also force the fund to sell securities, which may negatively impact the fund’s brokerage costs.
Customer Identification and Verification and Anti-Money Laundering Program
Customer identification and verification is part of the fund’s overall obligation to deter money laundering under federal law. The fund has adopted an Anti-Money Laundering Compliance Program designed to prevent the fund from being used for money laundering or the financing of terrorist activities. In this regard, the fund reserves the right to (i) refuse, cancel or rescind any purchase or exchange order; (ii) freeze any account and/or suspend account services; or (iii) involuntarily close your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of fund management, they are deemed to be in the best interest of the fund or in cases when the fund is requested or compelled to do so by governmental or law enforcement authority. If your account is closed at the request of governmental or law enforcement authority, you may not receive proceeds of the redemption if the fund is required to withhold such proceeds.
Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. When you open your account, you will have to provide your name, address, date of birth, identification number and other information that will allow your financial intermediary to identify you. This information is subject to verification to ensure the identity of all persons opening an account.
Your financial intermediary is required by law to reject your new account application if the required identifying information is not provided. Your financial intermediary may contact you in an attempt to collect any missing information required on the application, and your application may be rejected if they are unable to obtain this information. In certain instances, your financial intermediary is required to collect documents that will be used solely to establish and verify your identity.
The fund reserves the right to close and/or liquidate your account at the then-current day’s price if the fund or your financial intermediary is unable to verify your identity. As a result, you may be subject to a gain or loss on fund shares and will be subject to corresponding tax consequences.
Distributions and Taxes
Any investment in the fund typically involves several tax considerations. The information below is meant as a general summary for U.S. citizens and residents. Please see the SAI for additional information. Because each person’s tax situation is different, you should consult your tax advisor about the tax implications of your investment in the fund. You also can visit the Internal Revenue Service website at www.irs.gov.
As a shareholder, you are entitled to your share of the dividends the fund earns. The fund distributes to its shareholders substantially all of its net investment income. The fund declares a dividend every business day, based on its determination of its net investment income. The fund pays its dividends on the 15th of each month (or next business day, if the 15th is not a business day), except that in December dividends are paid on the last business day of the month. If your daily dividend is less than $0.01, you may not receive a dividend payment. To receive a dividend distribution, you must be a registered shareholder on the date that dividends are declared. Dividend distributions are paid to shareholders on the payable date. The fund expects to pay any capital gains distributions in December of every year to all shareholders of record.
Unless you are investing through an IRA, 401(k) or other tax-advantaged account, your fund distributions generally have tax consequences. The fund’s net investment income and short-term capital gains are distributed as dividends and will be taxable as ordinary income. Other capital gains distributions are taxable as long-term capital gains, regardless of how long you have held your shares in the fund.
The maximum individual rate applicable to “qualified dividend income” and long-term capital gains is generally either 15% or 20% depending on whether the individual’s income exceeds certain threshold amounts. Because the fund’s income is expected to consist of interest rather than dividends, it is anticipated that no portion of its distributions will generally be eligible for the lower individual tax rates applicable to qualified dividend income. Distributions generally are taxable in the tax year in which they are declared, whether you reinvest them or take them in cash.
Schwab Variable Share Price Money Fund | Investing in the Fund11
Generally, any sale or exchange of your shares is a taxable event. Because the fund does not maintain a stable share price, a sale of fund shares may result in a capital gain or loss for you. Unless you choose to adopt a simplified “NAV method” of accounting (described below), the gain or loss generally will be treated as short-term if you held your shares for one year or less, long-term if you held the shares longer. The maximum individual rate applicable to long-term capital gains is generally 15% or 20%, depending on whether the individual’s income exceeds certain threshold amounts. Any loss realized upon a taxable disposition of shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gains distributions received (or deemed received) by you with respect to the shares.
If you elect to adopt the NAV method of accounting, rather than compute gain or loss on every taxable disposition of fund shares as described above, you would determine your gain or loss based on the change in the aggregate value of your fund shares during a computation period (such as your taxable year), reduced by your net investment (purchases minus sales) in those shares during that period. Under the NAV method, any resulting net capital gain or loss would be treated as short-term capital gain or loss.
An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gains distributions received from the fund and net gains from redemptions or other taxable dispositions of fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds a threshold amount.
The fund may be required to withhold U.S. federal income tax on all distributions payable to shareholders if they fail to provide the fund with their correct taxpayer identification number or to make required certifications, or if they have been notified by the IRS that they are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder’s U.S. federal income tax liability.
Foreign shareholders may be subject to different U.S. federal income tax treatment, including withholding tax at the rate of 30% (unless a lower treaty rate applies) on amounts treated as ordinary dividends from the fund, as discussed in more detail in the SAI. Furthermore, the fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the fund to enable the fund to determine whether withholding is required.
A liquidity fee imposed by the fund will reduce the amount you will receive upon the redemption of your shares, and will decrease the amount of any capital gains or increase the amount of any capital loss you will recognize from such redemption. There is some degree of uncertainty with respect to the tax treatment of liquidity fees received by money market funds, and such tax treatment may be the subject of future guidance issued by the Internal Revenue Service. If the fund receives liquidity fees, it will consider the appropriate tax treatment of such fees to the fund at such time.
At the beginning of every year, the fund provides shareholders with information detailing the tax status of any dividend the fund declared during the previous calendar year. Schwab customers also receive information on dividends and transactions in their monthly account statements.
12Schwab Variable Share Price Money Fund | Investing in the Fund
Prospectus | April 28, 2022
Schwab Variable Share Price Money Fund
To Learn More
This prospectus contains important information on the fund and should be read and kept for reference. You also can obtain more information from the following sources:
Annual and semiannual reports, which are sent to current fund investors, contain more information about the fund’s holdings and detailed financial information about the fund. Annual reports also contain information from the fund’s manager(s) about strategies, recent market conditions and trends and their impact on fund performance during the fund’s last fiscal period.
The Statement of Additional Information (SAI) includes a more detailed discussion of investment policies and the risks associated with various investments. The SAI is incorporated by reference into the prospectus, making it legally part of the prospectus.
For a free copy of any of these documents or to request other information or ask questions about the fund, call Schwab Funds at 1-877-824-5615. In addition, you may visit the Schwab Funds’ website at www.schwabassetmanagement.com/schwabfunds_prospectus for a free copy of a prospectus, SAI or an annual or semiannual report.
The SAI, the fund’s annual and semiannual reports and other related materials are available from the EDGAR Database on the SEC’s website (www.sec.gov). You can obtain copies of this information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov.
| | SEC File Number | | | | |
| |
The Charles Schwab Family of Funds 811‑05954
|
| | REG90260-06 | |