Mutual Fund Summary Prospectus (497k)
February 28 2014 - 2:59PM
Edgar (US Regulatory)
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Summary Prospectus
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February 28, 2014
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Schwab Municipal Money Fund
Ticker
Symbol: Sweep Shares: SWXXX
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 dated April 30, 2013 and SAI dated
April 30, 2013, as supplemented October 4, 2013 and February 28, 2014, 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 that is consistent with stability of capital and liquidity, and is exempt from federal income tax.
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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0.32
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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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0.68
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Less expense reduction
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(0.06
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)
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Total annual fund operating expenses after expense reduction
1
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0.62
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1
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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, 2012, the investment adviser and/or its affiliates waived fees for the Sweep Shares in the amount of $89,958,944 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 yield 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
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$63
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$199
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$346
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$774
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Principal investment strategies
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 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 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 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 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 foreign 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 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 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.
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 investment 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 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. 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
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Best quarter: 0.80% Q2 2007
Worst quarter: 0.00% Q3 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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10 years
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Sweep Shares
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0.01%
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0.42%
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1.08%
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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, 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 federal alternative minimum
tax (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 funds defensive investments in taxable securities 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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REG54659-11 00112450
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Schwab Municipal Money Fund
TM
; Ticker Symbol: Sweep Shares: SWXXX
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