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EXHIBIT 2
BYLAWS
OF
SCHWAB INVESTMENTS
ARTICLE 1
Agreement and Declaration of Trust,
Resident Agent and Principal Office
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to
the Agreement and Declaration of Trust, dated October 25, 1990, and as from time
to time in effect (the "Declaration of Trust"), of Schwab Investments, the
Massachusetts business trust established by the Declaration of Trust (the
"Trust").
Unless otherwise specified herein, capitalized terms in these Bylaws shall
have the meaning given such terms in the Declaration of Trust.
1.2 Resident Agent of the Trust. The Trust shall have an agent for service
of process residing in The Commonwealth of Massachusetts.
1.3 Principal Office of the Trust. The initial principal office of the
Trust shall be located in San Francisco, California. The Trust may have such
other offices as the Trustees may determine or as they may authorize.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Board of the Trustees, the President or the Treasurer or by two
or more Trustees, sufficient notice thereof being given to each Trustee by the
Secretary or an Assistant Secretary or by the officer or the Trustees calling
the meeting.
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2.3 Notice. It shall be sufficient notice to the Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram, telex
or telecopy or other electronic facsimile transmission method at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before the meeting, is filed with the records of
the meeting, or to any Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him or her. Neither notice
of a meeting nor a waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
ARTICLE 3
Officers
3.1 Enumeration: Qualification. The officers of the Trust shall be a
President, a Treasurer, and a Secretary who shall also be the Clerk, and such
other officers including a Chairman of the Board of the Trustees, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time may in their discretion
appoint. The Chairman of the Board of the Trustees, if one is elected, shall be
a Trustee and may but need not be a Shareholder; and any other officer may but
not need be a Trustee or a Shareholder. Any two or more offices may be held by
the same person.
3.2 Election. The President, the Treasurer, and the Secretary shall be
elected by the Trustees upon the occurrence of a vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any office may be filled at any time.
3.3 Tenure. The Chairman of the Board of the Trustees, if one is elected,
the President, the Treasurer and the Secretary shall hold office until their
respective successors are chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed or becomes disqualified. Each other officer
shall hold office and each agent shall retain authority at the pleasure of the
Trustees.
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3.4 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and as set forth in the
Declaration of Trust, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
Chairman of the Board of the Trustees or, if there is none or in the absence of
the Chairman, the President shall preside at all meetings of the Shareholders
and of the Trustees. The Chairman of the Trustees, if there is one, shall be the
chief executive officer and, unless the Trustees otherwise provide, the
President shall be the chief operating officer. If there is no Chairman of the
Board of Trustees, the President shall be the chief executive officer.
3.6 Treasurer. Unless otherwise provided by the Trustees, the Treasurer
shall be the chief financial and accounting officer of the Trust, and shall,
subject to the provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or manager, or
transfer, Shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to time by the
Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
Shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the Shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman of the Board of the Trustees
the President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement with the
Trust, no officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
3.9 General Manager. The person elected to and possessed of the
office of General Manager those duties and powers commonly associated with
the office of executive vice president and chief operating officer of a
Massachusetts business corporation,
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including without limitation the power to execute on behalf of the Fund all
documents and agreements duly-authorized by the Trustees and to otherwise
contractually obligate and bind the Fund within the bounds of the officeholder's
actual authority. It is expressly intended, however, that nothing herein shall
authorize the General Manager to take any action which he or she does not
believe to be in the best interests of the Fund, or in any event to knowingly
commit any criminal or otherwise unlawful act in the name of the Fund.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may participate in a
meeting of such Committee by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and subsequent fiscal
years shall end on such date in subsequent years.
ARTICLE 7
Seal
7.1 General. At the discretion of the Trustees, the Trust may have a seal.
The seal of the Trust, if any, shall consist of a flat-faced die with the word
"Massachusetts", together with the name of the Trust and the year of its
organization cut or engraved thereon but, unless otherwise required by the
Trustees,
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the seal shall not be necessary to be placed on, and its absence shall not
impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, by any Vice-President, or by the Treasurer or the Secretary and
need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for Shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such Shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such Shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of Share certificates.
In that event, each Shareholder shall be entitled to a certificate stating the
number of Shares owned by him or her, in such form as shall be prescribed from
time to time by the Trustees. Such certificates shall be signed by the Chairman
of the Board of the Trustees, the President or any Vice-President and by the
Treasurer or Assistant Treasurer. Such signatures may be facsimile if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall cease to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he were such officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a Share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificates to Pledgee. A pledgee of Shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificates shall express on its face that it
is held as collateral security, and the name of the pledgor shall
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be stated thereon, who alone shall be liable as a Shareholder and entitled to
vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of Share certificates and may, by written notice
to each Shareholder, require the surrender of Share certificates to the Trust
for cancellation. Such surrender and cancellation shall not effect the ownership
of Shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1. Certain Definitions. When used herein the following words shall have
the following meanings: "Distributor" shall mean any one or more corporations,
firms or associations which have distributor's or principal underwriter's
contracts in effect with the Trust providing that redeemable Shares issued by
the Trust shall be offered and sold by such Distributor. "Manager" shall mean
any corporation, firm or association which may at the time have an advisory or
management contract with the Trust and any corporation, firm or association
which may at any time have a sub-advisory contract relating to the Trust with
any such Manager.
10.2 Limitation on Holdings by the Trust of Certain Securities and on
Dealings with officers or Trustees. The Trust may not purchase or retain shares
or securities issued by an issuer if one or more of the holders of the shares or
securities issued by an issuer or one or more of the officers or directors of
such issuer is an officer or Trustee of the Trust or officer or director of the
Manager and if one or more of such officers, Trustees or directors owns
beneficially more than 1/2 of 1% of the shares or securities, or both, of such
issuer and such officers, Trustees and directors owning more than 1/2 of 1% of
such shares or securities together own beneficially more 5% of such shares or
securities. Each officer and Trustee of the Trust shall keep the Treasurer of
the Trust informed of the names of all issuers shares or securities of which are
held in the portfolio of the Trust in which such officer or Trustee owns as much
as 1/2 of 1% of the outstanding shares or securities.
The Trust will not lend any of its assets to the Distributor or Manager or
to any officer or director of the Distributor or Manager or any officer or
Trustee of the Trust, and shall not permit any officer or Trustee or any officer
or director of the Distributor or Manager to deal for or on behalf of the Trust
with himself or herself as principal or agent, or with any partnership,
association or corporation in which he or she has a financial interest; provided
that the foregoing provisions shall not prevent (a) officers and Trustees of the
Trust or officers and directors of the Distributor or Manager from buying,
holding
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or selling Shares in the Trust or from being partners, officers or directors of
or otherwise financially interested in the Distributor or the Manager; (b)
purchases or sales of securities or other property if such transaction is
permitted by or is exempt or exempted from the provisions of the Investment
Company Act of 1940 or any Rule or Regulation thereunder (together, the "1940
Act"); (c) employment of legal counsel, registrar, transfer agent, Shareholder
servicing agent, dividend disbursing agent or custodian who is, or has a
partner, Shareholder, officer or director who is, an officer or Trustee of the
Trust or an officer or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and office hire and
expenses with any other investment company in which an officer or Trustee of the
Trust or an officer or director of the Distributor or Manager is an officer or
director or otherwise financially interested.
10.3 Limitation on Dealing in Securities of the Trust by Certain
officers, Trustees, Distributor or Manager. Neither the Distributor nor
Manager, nor any officer or Trustee of the Trust or officer or director of the
Distributor or Manager shall take long or short positions in securities issued
by the Trust; provided, however, that:
(a) the Distributor may purchase from the Trust and otherwise deal in
Shares issued by the Trust pursuant to the terms of its contract
with the Trust;
(b) any officer or Trustee of the Trust or officer or director of the
Distributor or Manager or any trustee or fiduciary for the benefit
of any of them may at any time, or from time to time, purchase from
the Trust or from the Distributor Shares issued by the Trust at the
price available to the public or to such officer, Trustee, director,
trustee or fiduciary, no such purchase to be in contravention of any
applicable state or federal requirement; and
(c) the Distributor or the Manager may at any time, or from time to
time, purchase for investment Shares issued by the Trust.
10.4 Securities and Cash of the Trust to be held by Custodian_subject to
Conditions.
(a) All securities and cash owned by this Trust shall be held by or
deposited with one or more banks or trust companies having
(according to its last published report) not less than $5,000,000
aggregate capital, surplus and undivided profits (any such bank or
trust company being hereby designated as "Custodian"), provided such
a Custodian can be found ready and
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willing to act; subject to such rules, regulations and orders, if
any, as the Securities and Exchange Commission may adopt, this Trust
may, or may permit any Custodian to, deposit all or any part of the
securities owned by this Trust in a system for the central handling
of securities pursuant to which all securities of any particular
class or series of any issue deposited within the system may be
transferred or pledged by bookkeeping entry, without physical
delivery. The Custodian may appoint, subject to the approval of the
Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract, with each Custodian
regarding the powers, duties and compensation of such Custodian with
respect to the cash and securities of the Trust held by such
Custodian. Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve,
use its best efforts to obtain a successor Custodian;
(ii) require that the cash and securities owned by the
Trust be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian can be found,
submit to the Shareholders, before permitting delivery
of the cash and securities owned by the Trust otherwise
than to a successor Custodian, the question whether the
Trust shall be liquidated or shall function without a
Custodian.
10.5 Requirements and Restrictions Regarding the Management Contract.
Every advisory or management contract entered into by the Trust shall provide
that in the event that the total expenses of any series of Shares of the Trust
for any fiscal year should exceed the limits imposed on investment company
expenses imposed by any statute or regulatory authority of any jurisdiction in
which Shares of the Trust are offered for sale, the compensation due the Manager
for such fiscal year shall be reduced by the amount of such excess by a
reduction or refund thereof provided, however, that where the Trust employs more
than one investment adviser, it shall be sufficient that one or more of the
investment advisers assumes the aforementioned liability to the Trust on behalf
of one or more of the other investment advisers.
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10.6 Reports to Shareholders: Distributions from Realized Gains. The
Trust shall send to each Shareholder of record at least semi-annually a
statement of the condition of the Trust and of the results of its operations,
containing all information required by applicable laws or regulations.
10.7 Determination of Net Asset Value Per Share. Net asset value per
Share of each series of Shares of the Trust shall mean: (i) the value of all the
assets of such series; (ii) less total liabilities of such series; (iii) divided
by the number of Shares of such series outstanding, in each case at the time of
each determination. The net asset value per Share of each series shall be
determined as of the normal close of trading on the New York Stock Exchange on
each day on which such Exchange is open. As of any time other than the normal
close of trading on such Exchange, the Trustees may cause the net asset value
per Share last determined to be determined again in a similar manner or adjusted
to reflect changes in market values of securities in the portfolio, such
adjustment to be made on the basis of changes in selected security prices
determined by the Trustees to be relevant to the portfolio of such series or in
averages or in other standard and readily ascertainable market data, and the
Trustees may fix the time when such redetermined or adjusted net asset value per
Share of each series shall become effective.
In valuing the portfolio investments of any series for determination of
net asset value per Share of such series, securities for which market quotations
are readily available shall be valued at prices which, in the opinion of the
Trustees or the person designated by the Trustees to make the determination,
most nearly represent the market value of such securities, and other securities
and assets shall be valued at their fair value as determined by or pursuant to
the direction of the Trustees, which in the case of short-term debt obligations,
commercial paper and repurchase agreements may, but need not, be on the basis of
quoted yields for securities of comparable maturity, quality and type, or on the
basis of amortized cost. Expenses and liabilities of the Trust shall be accrued
each day. Liabilities may include such reserves for taxes, estimated accrued
expenses and contingencies as the Trustees or their designates may in their sole
discretion deem fair and reasonable under the circumstances. No accruals shall
be made in respect of taxes on unrealized appreciation of securities owned
unless the Trustees shall otherwise determine. Dividends payable by the Trust
shall be deducted as at the time of but immediately prior to the determination
of net asset value per Share on the record date therefor.
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ARTICLE 11
Shareholders, Voting Powers and Meetings
11.1 Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Article IV, Section 1 of the
Declaration of Trust, provided, however, that no meeting of Shareholders is
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) with respect to any Manager or Sub-Adviser as provided in
Article IV, Section 6 of the Declaration of Trust to the extent required by the
1940 Act, (iii) with respect to any termination of this Trust to the extent and
as provided in Article IX, Section 4 of the Declaration of Trust, (iv) with
respect to any amendment of the Declaration of Trust to the extent and as
provided in Article IX, Section 7 of the Declaration of Trust, (v) to the same
extent as the stockholders of a Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (vi) with respect to such additional matters relating to the
Trust as may be required by law, the Declaration of Trust, these Bylaws or any
registration of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote.
The Shareholders of any particular series shall not be entitled to vote on any
matters as to which such series is not affected. Except with respect to matters
as to which the Trustees have determined that only the interests of one or more
particular series are affected or as required by law, all of the Shares of each
series shall, on matters as to which it is entitled to vote, vote with other
series so entitled as a single class. Notwithstanding the foregoing, with
respect to matters which would otherwise be voted on by two or more series as a
single class, the Trustees may, in their sole discretion, submit such matters to
the Shareholders of any or all such series, separately. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, the Declaration of Trust or these Bylaws to be taken by
Shareholders.
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11.2 Voting Power and Meetings. Meetings of the Shareholders may be
called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section 1 of the Declaration of Trust and for such other purposes as
may be prescribed by law, by the Declaration of Trust or by these Bylaws.
Meetings of the Shareholders may also be called by the Trustees from time to
time for the purpose of taking action upon any other matter deemed by the
Trustees to be necessary or desirable. A meeting of Shareholders may be held at
any place designated by the Trustees. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least seven days before such meeting, postage prepaid, stating
the time and place of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. Whenever notice of a meeting
is required to be given to a Shareholder under the Declaration of Trust or these
Bylaws, a written waiver thereof, executed before or after the meeting by such
Shareholder or his attorney thereunto authorized and filed with the records of
the meeting, shall be deemed equivalent to such notice.
11.3 Quorum and Required Vote. A majority of Shares entitled to vote
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of the Declaration of Trust or these
Bylaws permits or requires that holders of any series shall vote as a series,
then a majority of the aggregate number of Shares of that series entitled to
vote shall be necessary to constitute a quorum for the transaction of business
by that series. Any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by any provision of law or the Declaration
of Trust or these Bylaws, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee, provided that where any
provision of law or of the Declaration of Trust or these Bylaws permits or
requires that the holders of any series shall vote as a series, then a majority
of the Shares of that series voted on the matter (or a plurality with respect to
the election of a Trustee) shall decide that matter insofar as that series is
concerned.
11.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
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11.5 Record Dates. For the purpose of determining the Shareholders who
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 90
days before the date of any meeting of Shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have such
right notwithstanding any transfer of Shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the register or transfer books for all or any part of such
period.
ARTICLE 12
Amendments to the Bylaws
12.1 General. These Bylaws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
May 13, 1991
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