Form 497K
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Summary Prospectus |
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April 30, 2012 |
Schwab AMT Tax-Free Money Fund
Ticker Symbol: Sweep
Shares: SWFXX
Before you invest, you may want to review the funds
prospectus, which contains more information about the fund and its risks. You can find the funds prospectus, Statement of Additional Information (SAI) and other information about the fund online at www.schwabfunds.com/prospectus. You
can also obtain this information at no cost by calling 1-866-414-6349 or by sending an email request to orders@mysummaryprospectus.com. If you purchase or hold fund shares through a financial intermediary, the funds prospectus,
SAI, and other information about the fund are available from your financial intermediary.
The funds prospectus and SAI, both dated
April 30, 2012, include a more detailed discussion of fund investment policies and the risks associated with various fund investments. The prospectus and SAI are incorporated by reference into the summary prospectus, making them legally a part
of the summary prospectus.
Investment objective
The funds goal is to seek the highest current income exempt from federal income tax that is consistent with stability of capital and liquidity.
Fund fees and expenses
This table describes the fees and expenses you may pay if you buy and hold Sweep Shares of the fund.
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Shareholder fees
(fees paid directly from your investment) |
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None |
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Annual fund operating
expenses (expenses that you pay each year as a % of the value of your investment) |
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Management fees |
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0.33 |
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Distribution (12b-1) fees |
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None |
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Other expenses |
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0.36 |
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Total annual fund operating expenses |
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0.69 |
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Less expense reduction |
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(0.07 |
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Total annual fund operating expenses after expense reduction1 |
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0.62 |
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1 |
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 0.62% for so long as the investment adviser serves as the adviser to the fund (the contractual expense limitation agreement). This contractual expense limitation agreement may only be amended or
terminated with the approval of the funds Board of Trustees. Non-routine expenses that are not subject to the foregoing contractual expense limitation agreement include, but are not limited to, any reimbursement payments made by
the Sweep Shares to the investment adviser and/or its affiliates of fund fees and expenses that were previously waived or reimbursed by the investment adviser and/or its affiliates in order to maintain a positive net yield for the Sweep Shares (the
voluntary yield waiver). As of the three-year period ended December 31, 2011, the investment adviser and/or its affiliates waived fees for the Sweep Shares in the amount of $19,417,285 under the voluntary yield waiver. Any future
reimbursement of these previously waived fees made by the Sweep Shares to the investment adviser and/or its affiliates may cause the total annual fund operating expenses of the Sweep Shares to exceed the expense limitation under the contractual
expense limitation agreement. If any actual or scheduled reimbursement payments to the investment adviser and/or its affiliates under the voluntary fee waiver materially impact the total annual fund operating expenses of the Sweep Shares, this fee
table will be amended to reflect that impact.
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This example is intended to help you compare the cost of investing in the funds Sweep Shares with the cost of investing in other mutual 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 Sweep Shares operating expenses remain the same. The
figures are based on total annual fund operating expenses after expense reduction. The expenses would be the same whether you stayed in the fund or sold your shares at the end of each period. Your actual costs may be higher or lower.
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Expenses on a $10,000 investment |
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1 year |
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3 years |
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5 years |
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10 years |
$63 |
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$199 |
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$346 |
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$774 |
Principal investment strategies
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 issuers 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 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 funds 80%
investment policy stated above.
Many of the funds 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 funds manager seeks to maximize current income within the limits of the
funds investment objective and credit, maturity and diversification policies. Some of these policies may be stricter than the federal regulations that apply to all money funds.
The investment advisers credit research department analyzes and monitors the securities that the fund owns or is considering buying. The manager may adjust the funds holdings or its average
maturity based on actual or anticipated changes in interest rates or credit quality. To preserve its investors capital, the fund seeks to maintain a stable $1.00 share price.
During unusual market conditions, the fund may invest in 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.
Principal risks
The fund is subject to risks, any of which could cause an investor to lose money. The funds principal risks include:
Investment Risk. Your investment in the fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the
fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
Interest
Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the funds yield will change over time. During periods when interest rates are low, the funds yield (and total
return) also will be low. In addition, to the extent the Sweep Shares make any reimbursement payments to the investment adviser and/or its affiliates, the Sweep Sharess yield would be lower.
Credit Risk. The fund is subject to the risk that a decline in the credit quality of a portfolio investment could cause the fund to lose money
or underperform. The fund could lose money if the issuer of a portfolio investment fails to make timely principal or interest payments or if a guarantor or liquidity provider of a portfolio investment fails to honor its obligations. For fixed rate
investments, negative perceptions of the ability of an issuer, guarantor or liquidity provider to make payments or otherwise honor its obligations, as applicable, could also cause the price of that investment to decline. The credit quality of the
funds 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 funds share price or yield to fall. The funds investments in
securities with credit or liquidity enhancements provided by for
eign entities may involve certain risks that are greater than those
associated with investments in 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; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. 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.
Liquidity Support Provider Risk. The fund may invest a substantial portion of its assets in securities with guarantees and/or liquidity supports provided by a bank or other financial
institution, and the existence and nature of such supports may be a significant factor in the investment advisers 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 funds holdings. For example, a rating
agency downgrade of a credit or liquidity support 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 funds share price or yield to fall. To the
extent that a portion of the funds underlying investments are guaranteed 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 make poor security selections. The funds 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 advisers maturity decisions will also affect the funds yield,
and in unusual circumstances potentially could affect its share price. To the extent that the investment adviser anticipates interest rate trends imprecisely, the funds yield at times could lag those of other money market funds.
State and Regional Risk. State and regional factors could affect the funds 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
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
governments 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. 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.
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Summary Prospectus April 30, 2012 |
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2 of 4 |
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Schwab AMT Tax-Free Money Fund |
Taxable Determinations Risk. Some of the funds 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 funds 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 or sell. 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. The funds investments in illiquid securities may reduce the returns of the fund
because it may be unable to sell the illiquid securities at an advantageous time or price. 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 funds 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.
Regulatory Risk. The Securities and Exchange Commission (SEC) and other regulators may
adopt additional money market fund regulations in the future, which may impact the operation and performance of the fund.
Money Market
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.
Performance
The bar chart below shows
how the funds Sweep Shares investment results have varied from year to year, and the following table shows the funds Sweep 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. Because the funds original strategy was to invest primarily in municipal securities of a single
state, its performance prior to June 23, 2006, does not reflect the funds current strategy and may have been different if it did. For current performance information, please see www.schwab.com/moneyfunds or call toll-free
1-800-435-4000 for a current seven-day yield.
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Annual total returns (%) as of 12/31 |
Best quarter: 0.79% Q2 2007 Worst
quarter: 0.00% Q3 2011
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Average annual total returns
(%) as of 12/31/11 |
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1 year |
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5 years |
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10 years |
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Sweep Shares |
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0.01% |
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1.01% |
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1.17% |
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Investment adviser
Charles Schwab Investment Management, Inc.
Purchase and sale of fund shares
The fund is open for business each day that the New York Stock Exchange is open except when the following federal holidays are observed: Columbus Day and
Veterans Day.
The Sweep Shares are designed for use in conjunction with certain accounts held at Charles Schwab & Co., Inc. (Schwab)
and are subject to the eligibility 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 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 funds defensive investments in taxable
securities and securities whose interest is subject to the AMT also could generate taxable income.
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 Schwabs website for more information.
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Summary Prospectus April 30, 2012 |
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3 of 4 |
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Schwab AMT Tax-Free Money Fund |
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REG54658FLD-06 |
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Schwab AMT Tax-Free Money FundTM; Ticker Symbol: Sweep
Shares: SWFXX |
Schwab Funds®
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Summary Prospectus April 30, 2012 |
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4 of 4 |
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Schwab AMT Tax-Free Money Fund |