Form 497K
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Summary Prospectus |
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October 4, 2013 |
Schwab Cash Reserves
Ticker
Symbols: SWSXX
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, 2013, as supplemented October 4, 2013, 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 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 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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0.29 |
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Distribution (12b-1) fees |
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None |
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Other expenses |
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0.41 |
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Total annual fund operating expenses |
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0.70 |
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Less expense reduction |
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(0.04 |
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Total annual fund operating expenses after expense reduction1 |
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0.66 |
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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 fund to 0.66% 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 fund 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 fund (the voluntary yield waiver). As of the three-year period ended December 31, 2012, the investment adviser and/or its affiliates waived fees in the amount of $385,456,871 under the voluntary yield waiver. Any future reimbursement
of these previously waived fees made by the fund to the investment adviser and/or its affiliates may cause the funds total annual fund operating expenses 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 yield waiver materially impact the funds total annual fund operating expenses, this fee table will be amended to reflect that
impact. |
This example is intended to help you compare the cost of investing in the fund 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 funds 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 |
$67 |
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$211 |
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$368 |
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$822 |
Principal investment strategies
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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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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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 Fannie Mae and 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 funds 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 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.
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 fund makes any reimbursement payments to the investment adviser and/or its affiliates, the funds yield would be lower.
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 counter-party) will not fulfill its contractual
obligation. In a repurchase agreement, there exists the risk that, when the fund buys a security from a counter-party that agrees to repurchase the security at an agreed upon price (usually higher) and time, the counter-party 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 (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 issuers
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 counterpartys default.
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, liquidity provider
or counterparty of a
portfolio investment fails to honor its obligations. Even though the funds 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 negative perceptions of the ability of an issuer, guarantor, liquidity provider or counterparty 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.
Many of the U.S. government securities
that the fund invests in are not backed by the full faith and credit of the United States government, which means they are neither issued nor guaranteed by the U.S. Treasury. Although maintained in conservatorship by the Federal Housing Finance
Agency since September 2008, Fannie Mae (FNMA) and Freddie Mac (FHLMC) maintain only limited lines of credit with the U.S. Treasury. The Federal Home Loan Banks (FHLB) also only 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 (FFCB), 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.
Foreign Investment Risk. The funds 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; 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.
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.
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
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Summary Prospectus October 4, 2013 |
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Schwab Cash
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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 investment results have varied from year to year, and the following table shows the funds 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.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: 1.21% Q3 2007
Worst quarter: 0.01% Q2 2012
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Average annual total returns
(%) as of 12/31/12 |
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1 year |
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5 years |
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Since Inception (8/12/04) |
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Fund |
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0.06 |
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0.54 |
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1.78 |
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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 fund is designed for use in conjunction with certain accounts held at Charles Schwab & Co., Inc. (Schwab) and is
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 will generally be taxable as ordinary income or capital gains, unless you are investing through an
IRA, 401(k) or other tax-advantaged 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 Schwabs website for more information.
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Summary Prospectus October 4, 2013 |
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3 of 4 |
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Schwab Cash
Reserves |
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REG54653FLD-12 |
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Schwab Cash ReservesTM; Ticker Symbol: SWSXX |
Schwab Funds®
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Summary Prospectus October 4, 2013 |
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4 of 4 |
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Schwab Cash Reserves |