Schwab S&P 500 Index Portfolio |
|||||
Semiannual report dated June 30, 2014 |
7.14% | S&P 500® Index: measures U.S. large-cap stocks | |||
3.19% | Russell 2000® Index: measures U.S. small-cap stocks | |||
4.78% | MSCI EAFE® Index (Net): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East | |||
3.93% | Barclays U.S. Aggregate Bond Index: measures the U.S. bond market | |||
0.02% | Barclays U.S. Treasury Bills 1-3 Months Index: measures short-term U.S. Treasury obligations |
Agnes Hong, CFA, Managing Director and Head of Passive Equity Strategies, leads the portfolio management teams of Schwabs index mutual funds and equity ETFs. She also has overall responsibility for all aspects of the management of the portfolio. Prior to joining CSIM in 2009, Ms. Hong spent five years as a portfolio manager at Barclays Global Investors (subsequently acquired by BlackRock), where she managed institutional index funds and quantitative active funds. Prior to that, Ms. Hong worked in management consulting and product management, servicing global financial services clients. | ||
Ferian Juwono, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the portfolio. Prior to joining CSIM in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors), where he spent over three years as a portfolio manager, managing equity index funds for institutional clients, and nearly two years as a senior business analyst. Prior to that, Mr. Juwono worked for over four years as a senior financial analyst with Union Bank of California. | ||
Ron Toll, Portfolio Manager, is responsible for the day-to-day co-management of the portfolio. Mr. Toll has been a portfolio manager with CSIM since 2007, and has held a number of positions at the firm since beginning his tenure in 1998. His previous roles include serving as a manager in Portfolio Operations, and as a manager in Portfolio Operations and Analytics. |
Portfolio and inception Date | 6 Months | 1 Year | 5 Years | 10 Years | ||||||||||||||||
Portfolio: Schwab S&P 500 Index Portfolio (11/01/96)
|
6.99 | % | 24.33 | % | 18.51 | % | 7.64 | % | ||||||||||||
S&P
500®
Index
|
7.14 | % | 24.61 | % | 18.83 | % | 7.78 | % | ||||||||||||
Fund Category: Morningstar Large-Cap Blend
|
6.39 | % | 23.65 | % | 17.47 | % | 7.32 | % |
Number of Holdings
|
504 | |||
Weighted Average Market Cap ($ x 1,000,000)
|
$125,080 | |||
Price/Earnings Ratio (P/E)
|
19.0 | |||
Price/Book Ratio (P/B)
|
2.7 | |||
Portfolio Turnover
Rate4
|
1% |
Information Technology
|
18.5% | |||
Financials
|
15.8% | |||
Health Care
|
13.1% | |||
Consumer Discretionary
|
11.7% | |||
Energy
|
10.7% | |||
Industrials
|
10.3% | |||
Consumer Staples
|
9.4% | |||
Materials
|
3.5% | |||
Utilities
|
3.1% | |||
Telecommunication Services
|
2.4% | |||
Other
|
1.5% | |||
Total
|
100.0% |
Apple, Inc.
|
3.2% | |||
Exxon Mobil Corp.
|
2.4% | |||
Microsoft Corp.
|
1.8% | |||
Johnson & Johnson
|
1.7% | |||
General Electric Co.
|
1.5% | |||
Wells Fargo & Co.
|
1.4% | |||
Chevron Corp.
|
1.4% | |||
Berkshire Hathaway, Inc., Class B
|
1.3% | |||
JPMorgan Chase & Co.
|
1.2% | |||
The Procter & Gamble Co.
|
1.2% | |||
Total
|
17.1% |
1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. | |
2 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolios returns would have been lower. Portfolio performance does not reflect the additional fees and expenses imposed by the insurance company under the variable insurance product contract. If those contract fees and expenses were included, the performance would be less than that shown. Please refer to the variable insurance product prospectus for a complete listing of these expenses. | |
3 | As stated in the prospectus. Reflects the total annual operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. | |
4 | Not annualized. | |
5 | This list is not a recommendation of any security by the investment adviser. |
Ending |
||||||||||||||||
Beginning |
Account Value |
Expenses Paid |
||||||||||||||
Expense
Ratio1 |
Account Value |
(Net of Expenses) |
During
Period2 |
|||||||||||||
(Annualized) | at 1/1/14 | at 6/30/14 | 1/1/146/30/14 | |||||||||||||
Schwab S&P 500 Index Portfolio | ||||||||||||||||
Actual Return
|
0.22% | $ | 1,000.00 | $ | 1,069.90 | $ | 1.13 | |||||||||
Hypothetical 5% Return
|
0.22% | $ | 1,000.00 | $ | 1,023.70 | $ | 1.10 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. | |
2 | Expenses for the portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year. |
1/1/14 |
1/1/13 |
1/1/12 |
1/1/11 |
1/1/10 |
1/1/09 |
|||||||||||||||||||||
6/30/14* | 12/31/13 | 12/31/12 | 12/31/11 | 12/31/10 | 12/31/09 | |||||||||||||||||||||
Per-Share Data ($)
|
||||||||||||||||||||||||||
Net asset value at beginning of period
|
27.03 | 20.82 | 18.30 | 18.27 | 16.24 | 13.18 | ||||||||||||||||||||
Income (loss) from investment operations:
|
||||||||||||||||||||||||||
Net investment income (loss)
|
0.24 | 0.42 | 0.41 | 0.34 | 0.38 | 0.31 | ||||||||||||||||||||
Net realized and unrealized gains (losses)
|
1.65 | 6.19 | 2.45 | 0.02 | 1 | 2.00 | 3.14 | |||||||||||||||||||
Total from investment operations
|
1.89 | 6.61 | 2.86 | 0.36 | 2.38 | 3.45 | ||||||||||||||||||||
Less distributions:
|
||||||||||||||||||||||||||
Distributions from net investment income
|
(0.42 | ) | (0.40 | ) | (0.34 | ) | (0.33 | ) | (0.35 | ) | (0.39 | ) | ||||||||||||||
Net asset value at end of period
|
28.50 | 27.03 | 20.82 | 18.30 | 18.27 | 16.24 | ||||||||||||||||||||
Total return (%)
|
6.99 | 2 | 32.06 | 15.74 | 1.89 | 14.68 | 26.18 | |||||||||||||||||||
Ratios/Supplemental Data (%)
|
||||||||||||||||||||||||||
Ratios to average net assets:
|
||||||||||||||||||||||||||
Net operating expenses
|
0.22 | 3 | 0.24 | 0.28 | 0.27 | 0.28 | 0.28 | |||||||||||||||||||
Gross operating expenses
|
0.23 | 3 | 0.26 | 0.29 | 0.28 | 0.30 | 0.30 | |||||||||||||||||||
Net investment income (loss)
|
1.80 | 3 | 1.84 | 2.03 | 1.82 | 1.79 | 2.10 | |||||||||||||||||||
Portfolio turnover rate
|
1 | 2 | 2 | 4 | 4 | 3 | 4 | |||||||||||||||||||
Net assets, end of period ($ x 1,000,000)
|
209 | 193 | 139 | 122 | 123 | 127 |
Cost |
Value |
|||||||||||
Holdings by Category | ($) | ($) | ||||||||||
98 | .6% | Common Stock | 97,357,443 | 205,835,743 | ||||||||
1 | .4% | Short-Term Investments | 2,931,126 | 2,931,126 | ||||||||
100 | .0% | Total Investments | 100,288,569 | 208,766,869 | ||||||||
0 | .2% | Collateral Invested for Securities on Loan | 319,182 | 319,182 | ||||||||
(0 | .2%) | Other Assets and Liabilities, Net | (411,432 | ) | ||||||||
100 | .0% | Net Assets | 208,674,619 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Common Stock 98.6% of net assets
|
||||||||
Automobiles & Components 1.2% |
||||||||
BorgWarner, Inc.
|
2,800 | 182,532 | ||||||
Delphi Automotive plc
|
3,400 | 233,716 | ||||||
Ford Motor Co.
|
46,736 | 805,729 | ||||||
General Motors Co.
|
15,543 | 564,211 | ||||||
Harley-Davidson, Inc.
|
2,602 | 181,750 | ||||||
Johnson Controls, Inc.
|
7,700 | 384,461 | ||||||
The Goodyear Tire & Rubber Co.
|
3,262 | 90,618 | ||||||
2,443,017 | ||||||||
Banks 5.9% |
||||||||
Bank of America Corp.
|
124,287 | 1,910,291 | ||||||
BB&T Corp.
|
8,492 | 334,840 | ||||||
Citigroup, Inc.
|
35,904 | 1,691,078 | ||||||
Comerica, Inc.
|
2,130 | 106,841 | ||||||
Fifth Third Bancorp
|
9,805 | 209,337 | ||||||
Hudson City Bancorp, Inc.
|
5,100 | 50,133 | ||||||
Huntington Bancshares, Inc.
|
9,356 | 89,256 | ||||||
JPMorgan Chase & Co.
|
44,732 | 2,577,458 | ||||||
KeyCorp
|
10,300 | 147,599 | ||||||
M&T Bank Corp.
|
1,571 | 194,882 | ||||||
Peoples United Financial, Inc.
|
3,700 | 56,129 | ||||||
Regions Financial Corp.
|
16,027 | 170,207 | ||||||
SunTrust Banks, Inc.
|
6,300 | 252,378 | ||||||
The PNC Financial Services Group, Inc.
|
6,326 | 563,330 | ||||||
U.S. Bancorp
|
21,454 | 929,387 | ||||||
Wells Fargo & Co.
|
56,650 | 2,977,524 | ||||||
Zions Bancorp
|
2,008 | 59,176 | ||||||
12,319,846 | ||||||||
Capital Goods 7.7% |
||||||||
3M Co.
|
7,330 | 1,049,949 | ||||||
Allegion plc
|
1,033 | 58,550 | ||||||
AMETEK, Inc.
|
2,800 | 146,384 | ||||||
Caterpillar, Inc.
|
7,380 | 801,985 | ||||||
Cummins, Inc.
|
2,000 | 308,580 | ||||||
Danaher Corp.
|
7,110 | 559,770 | ||||||
Deere & Co.
|
4,440 | 402,042 | ||||||
Dover Corp.
|
2,000 | 181,900 | ||||||
Eaton Corp. plc
|
5,634 | 434,832 | ||||||
Emerson Electric Co.
|
8,311 | 551,518 | ||||||
Fastenal Co.
|
3,152 | 155,992 | ||||||
Flowserve Corp.
|
1,700 | 126,395 | ||||||
Fluor Corp.
|
1,900 | 146,110 | ||||||
General Dynamics Corp.
|
3,810 | 444,056 | ||||||
General Electric Co.
|
118,520 | 3,114,706 | ||||||
Honeywell International, Inc.
|
9,256 | 860,345 | ||||||
Illinois Tool Works, Inc.
|
4,644 | 406,629 | ||||||
Ingersoll-Rand plc
|
3,100 | 193,781 | ||||||
Jacobs Engineering Group, Inc. *
|
1,583 | 84,342 | ||||||
Joy Global, Inc.
|
1,100 | 67,738 | ||||||
L-3 Communications Holdings, Inc.
|
1,100 | 132,825 | ||||||
Lockheed Martin Corp.
|
3,130 | 503,085 | ||||||
Masco Corp.
|
3,910 | 86,802 | ||||||
Northrop Grumman Corp.
|
2,554 | 305,535 | ||||||
PACCAR, Inc.
|
4,094 | 257,226 | ||||||
Pall Corp.
|
1,200 | 102,468 | ||||||
Parker Hannifin Corp.
|
1,735 | 218,142 | ||||||
Pentair plc
|
2,399 | 173,016 | ||||||
Precision Castparts Corp.
|
1,700 | 429,080 | ||||||
Quanta Services, Inc. *
|
2,597 | 89,804 | ||||||
Raytheon Co.
|
3,713 | 342,524 | ||||||
Rockwell Automation, Inc.
|
1,590 | 199,004 | ||||||
Rockwell Collins, Inc.
|
1,600 | 125,024 | ||||||
Roper Industries, Inc.
|
1,179 | 172,146 | ||||||
Snap-on, Inc.
|
688 | 81,542 | ||||||
Stanley Black & Decker, Inc.
|
1,823 | 160,096 | ||||||
Textron, Inc.
|
3,300 | 126,357 | ||||||
The Boeing Co.
|
7,896 | 1,004,608 | ||||||
United Technologies Corp.
|
9,968 | 1,150,806 | ||||||
W.W. Grainger, Inc.
|
700 | 177,989 | ||||||
Xylem, Inc.
|
2,000 | 78,160 | ||||||
16,011,843 | ||||||||
Commercial & Professional Supplies 0.7% |
||||||||
Cintas Corp.
|
1,157 | 73,516 | ||||||
Equifax, Inc.
|
1,442 | 104,603 | ||||||
Iron Mountain, Inc.
|
2,133 | 75,615 | ||||||
Nielsen N.V.
|
3,583 | 173,453 | ||||||
Pitney Bowes, Inc.
|
2,300 | 63,526 | ||||||
Republic Services, Inc.
|
3,236 | 122,871 | ||||||
Robert Half International, Inc.
|
1,550 | 73,997 | ||||||
Stericycle, Inc. *
|
1,000 | 118,420 | ||||||
The ADT Corp.
|
2,300 | 80,362 | ||||||
The Dun & Bradstreet Corp.
|
500 | 55,100 | ||||||
Tyco International Ltd.
|
5,452 | 248,611 | ||||||
Waste Management, Inc.
|
5,155 | 230,583 | ||||||
1,420,657 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Consumer Durables & Apparel 1.3% |
||||||||
Coach, Inc.
|
3,100 | 105,989 | ||||||
D.R. Horton, Inc.
|
3,422 | 84,113 | ||||||
Fossil Group, Inc. *
|
600 | 62,712 | ||||||
Garmin Ltd.
|
1,500 | 91,350 | ||||||
Harman International Industries, Inc.
|
800 | 85,944 | ||||||
Hasbro, Inc.
|
1,275 | 67,639 | ||||||
Leggett & Platt, Inc.
|
1,600 | 54,848 | ||||||
Lennar Corp., Class A
|
2,000 | 83,960 | ||||||
Mattel, Inc.
|
3,900 | 151,983 | ||||||
Michael Kors Holdings Ltd. *
|
2,200 | 195,030 | ||||||
Mohawk Industries, Inc. *
|
700 | 96,838 | ||||||
Newell Rubbermaid, Inc.
|
3,124 | 96,813 | ||||||
NIKE, Inc., Class B
|
8,640 | 670,032 | ||||||
PulteGroup, Inc.
|
3,665 | 73,886 | ||||||
PVH Corp.
|
986 | 114,967 | ||||||
Ralph Lauren Corp.
|
700 | 112,483 | ||||||
Under Armour, Inc. Class A *
|
1,900 | 113,031 | ||||||
VF Corp.
|
4,040 | 254,520 | ||||||
Whirlpool Corp.
|
933 | 129,892 | ||||||
2,646,030 | ||||||||
Consumer Services 1.7% |
||||||||
Carnival Corp.
|
5,022 | 189,078 | ||||||
Chipotle Mexican Grill, Inc. *
|
360 | 213,303 | ||||||
Darden Restaurants, Inc.
|
1,591 | 73,615 | ||||||
Graham Holdings Co., Class B
|
52 | 37,342 | ||||||
H&R Block, Inc.
|
3,000 | 100,560 | ||||||
Marriott International, Inc., Class A
|
2,657 | 170,314 | ||||||
McDonalds Corp.
|
11,682 | 1,176,845 | ||||||
Starbucks Corp.
|
8,820 | 682,491 | ||||||
Starwood Hotels & Resorts Worldwide, Inc.
|
2,340 | 189,119 | ||||||
Wyndham Worldwide Corp.
|
1,580 | 119,638 | ||||||
Wynn Resorts Ltd.
|
957 | 198,635 | ||||||
Yum! Brands, Inc.
|
5,200 | 422,240 | ||||||
3,573,180 | ||||||||
Diversified Financials 5.0% |
||||||||
Affiliated Managers Group, Inc. *
|
600 | 123,240 | ||||||
American Express Co.
|
10,852 | 1,029,529 | ||||||
Ameriprise Financial, Inc.
|
2,278 | 273,360 | ||||||
Berkshire Hathaway, Inc., Class B *
|
21,280 | 2,693,197 | ||||||
BlackRock, Inc.
|
1,483 | 473,967 | ||||||
Capital One Financial Corp.
|
6,680 | 551,768 | ||||||
CME Group, Inc.
|
3,700 | 262,515 | ||||||
Discover Financial Services
|
5,490 | 340,270 | ||||||
E*TRADE Financial Corp. *
|
3,812 | 81,043 | ||||||
Franklin Resources, Inc.
|
4,700 | 271,848 | ||||||
Intercontinental Exchange, Inc.
|
1,359 | 256,715 | ||||||
Invesco Ltd.
|
5,339 | 201,547 | ||||||
Legg Mason, Inc.
|
1,400 | 71,834 | ||||||
Leucadia National Corp.
|
3,500 | 91,770 | ||||||
McGraw Hill Financial, Inc.
|
3,230 | 268,187 | ||||||
Moodys Corp.
|
2,223 | 194,868 | ||||||
Morgan Stanley
|
16,596 | 536,549 | ||||||
Navient Corp.
|
5,000 | 88,550 | ||||||
Northern Trust Corp.
|
2,631 | 168,937 | ||||||
State Street Corp.
|
5,100 | 343,026 | ||||||
T. Rowe Price Group, Inc.
|
3,123 | 263,612 | ||||||
The Bank of New York Mellon Corp.
|
13,478 | 505,155 | ||||||
The Charles Schwab Corp. (a)
|
13,893 | 374,139 | ||||||
The Goldman Sachs Group, Inc.
|
4,965 | 831,340 | ||||||
The NASDAQ OMX Group, Inc.
|
1,400 | 54,068 | ||||||
10,351,034 | ||||||||
Energy 10.7% |
||||||||
Anadarko Petroleum Corp.
|
5,987 | 655,397 | ||||||
Apache Corp.
|
4,608 | 463,657 | ||||||
Baker Hughes, Inc.
|
5,163 | 384,385 | ||||||
Cabot Oil & Gas Corp.
|
4,800 | 163,872 | ||||||
Cameron International Corp. *
|
2,413 | 163,384 | ||||||
Chesapeake Energy Corp.
|
5,900 | 183,372 | ||||||
Chevron Corp.
|
22,500 | 2,937,375 | ||||||
Cimarex Energy Co.
|
1,029 | 147,620 | ||||||
ConocoPhillips
|
14,510 | 1,243,942 | ||||||
CONSOL Energy, Inc.
|
2,719 | 125,264 | ||||||
Denbury Resources, Inc.
|
4,300 | 79,378 | ||||||
Devon Energy Corp.
|
4,532 | 359,841 | ||||||
Diamond Offshore Drilling, Inc. (b)
|
800 | 39,704 | ||||||
Ensco plc, Class A
|
2,700 | 150,039 | ||||||
EOG Resources, Inc.
|
6,428 | 751,176 | ||||||
EQT Corp.
|
1,800 | 192,420 | ||||||
Exxon Mobil Corp.
|
50,756 | 5,110,114 | ||||||
FMC Technologies, Inc. *
|
2,780 | 169,775 | ||||||
Halliburton Co.
|
9,982 | 708,822 | ||||||
Helmerich & Payne, Inc.
|
1,300 | 150,943 | ||||||
Hess Corp.
|
3,210 | 317,437 | ||||||
Kinder Morgan, Inc.
|
7,897 | 286,345 | ||||||
Marathon Oil Corp.
|
7,864 | 313,931 | ||||||
Marathon Petroleum Corp.
|
3,432 | 267,936 | ||||||
Murphy Oil Corp.
|
2,032 | 135,087 | ||||||
Nabors Industries Ltd.
|
3,200 | 93,984 | ||||||
National Oilwell Varco, Inc.
|
4,986 | 410,597 | ||||||
Newfield Exploration Co. *
|
1,641 | 72,532 | ||||||
Noble Corp., plc
|
2,900 | 97,324 | ||||||
Noble Energy, Inc.
|
4,200 | 325,332 | ||||||
Occidental Petroleum Corp.
|
9,297 | 954,151 | ||||||
ONEOK, Inc.
|
2,400 | 163,392 | ||||||
Peabody Energy Corp.
|
2,800 | 45,780 | ||||||
Phillips 66
|
6,688 | 537,916 | ||||||
Pioneer Natural Resources Co.
|
1,700 | 390,677 | ||||||
QEP Resources, Inc.
|
2,404 | 82,938 | ||||||
Range Resources Corp.
|
2,014 | 175,117 | ||||||
Rowan Cos. plc, Class A
|
1,300 | 41,509 | ||||||
Schlumberger Ltd.
|
15,391 | 1,815,369 | ||||||
Southwestern Energy Co. *
|
4,173 | 189,830 | ||||||
Spectra Energy Corp.
|
7,781 | 330,537 | ||||||
Tesoro Corp.
|
1,500 | 88,005 | ||||||
The Williams Cos., Inc.
|
8,702 | 506,544 | ||||||
Transocean Ltd.
|
4,024 | 181,201 | ||||||
Valero Energy Corp.
|
6,465 | 323,897 | ||||||
22,327,848 | ||||||||
Food & Staples Retailing 2.2% |
||||||||
Costco Wholesale Corp.
|
5,187 | 597,335 | ||||||
CVS Caremark Corp.
|
13,819 | 1,041,538 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Safeway, Inc.
|
2,740 | 94,092 | ||||||
Sysco Corp.
|
7,100 | 265,895 | ||||||
The Kroger Co.
|
6,040 | 298,557 | ||||||
Wal-Mart Stores, Inc.
|
19,050 | 1,430,083 | ||||||
Walgreen Co.
|
10,377 | 769,247 | ||||||
Whole Foods Market, Inc.
|
4,200 | 162,246 | ||||||
4,658,993 | ||||||||
Food, Beverage & Tobacco 5.1% |
||||||||
Altria Group, Inc.
|
23,478 | 984,667 | ||||||
Archer-Daniels-Midland Co.
|
7,735 | 341,191 | ||||||
Brown-Forman Corp., Class B
|
1,927 | 181,466 | ||||||
Campbell Soup Co.
|
2,000 | 91,620 | ||||||
Coca-Cola Enterprises, Inc.
|
2,700 | 129,006 | ||||||
ConAgra Foods, Inc.
|
4,978 | 147,747 | ||||||
Constellation Brands, Inc., Class A *
|
1,900 | 167,447 | ||||||
Dr Pepper Snapple Group, Inc.
|
2,300 | 134,734 | ||||||
General Mills, Inc.
|
7,258 | 381,335 | ||||||
Hormel Foods Corp.
|
1,500 | 74,025 | ||||||
Kellogg Co.
|
3,000 | 197,100 | ||||||
Keurig Green Mountain, Inc.
|
1,500 | 186,915 | ||||||
Kraft Foods Group, Inc.
|
7,036 | 421,808 | ||||||
Lorillard, Inc.
|
4,308 | 262,659 | ||||||
McCormick & Co., Inc. - Non Voting Shares
|
1,500 | 107,385 | ||||||
Mead Johnson Nutrition Co.
|
2,400 | 223,608 | ||||||
Molson Coors Brewing Co., Class B
|
1,978 | 146,689 | ||||||
Mondelez International, Inc., Class A
|
19,990 | 751,824 | ||||||
Monster Beverage Corp. *
|
1,700 | 120,751 | ||||||
PepsiCo, Inc.
|
17,919 | 1,600,884 | ||||||
Philip Morris International, Inc.
|
18,590 | 1,567,323 | ||||||
Reynolds American, Inc.
|
3,678 | 221,967 | ||||||
The Coca-Cola Co.
|
44,675 | 1,892,433 | ||||||
The Hershey Co.
|
1,744 | 169,813 | ||||||
The JM Smucker Co.
|
1,246 | 132,786 | ||||||
Tyson Foods, Inc., Class A
|
3,186 | 119,602 | ||||||
10,756,785 | ||||||||
Health Care Equipment & Services 4.2% |
||||||||
Abbott Laboratories
|
17,855 | 730,269 | ||||||
Aetna, Inc.
|
4,282 | 347,185 | ||||||
AmerisourceBergen Corp.
|
2,660 | 193,276 | ||||||
Baxter International, Inc.
|
6,413 | 463,660 | ||||||
Becton, Dickinson & Co.
|
2,285 | 270,316 | ||||||
Boston Scientific Corp. *
|
15,290 | 195,253 | ||||||
C.R. Bard, Inc.
|
920 | 131,569 | ||||||
Cardinal Health, Inc.
|
3,934 | 269,715 | ||||||
CareFusion Corp. *
|
2,417 | 107,194 | ||||||
Cerner Corp. *
|
3,400 | 175,372 | ||||||
Cigna Corp.
|
3,191 | 293,476 | ||||||
Covidien plc
|
5,329 | 480,569 | ||||||
DaVita HealthCare Partners, Inc. *
|
2,230 | 161,274 | ||||||
DENTSPLY International, Inc.
|
1,600 | 75,760 | ||||||
Edwards Lifesciences Corp. *
|
1,200 | 103,008 | ||||||
Express Scripts Holding Co. *
|
9,137 | 633,468 | ||||||
Humana, Inc.
|
1,800 | 229,896 | ||||||
Intuitive Surgical, Inc. *
|
454 | 186,957 | ||||||
Laboratory Corp. of America Holdings *
|
1,004 | 102,810 | ||||||
McKesson Corp.
|
2,716 | 505,746 | ||||||
Medtronic, Inc.
|
11,816 | 753,388 | ||||||
Patterson Cos., Inc.
|
980 | 38,720 | ||||||
Quest Diagnostics, Inc.
|
1,760 | 103,294 | ||||||
St. Jude Medical, Inc.
|
3,304 | 228,802 | ||||||
Stryker Corp.
|
3,495 | 294,698 | ||||||
Tenet Healthcare Corp. *
|
1,125 | 52,808 | ||||||
UnitedHealth Group, Inc.
|
11,581 | 946,747 | ||||||
Varian Medical Systems, Inc. *
|
1,200 | 99,768 | ||||||
WellPoint, Inc.
|
3,436 | 369,748 | ||||||
Zimmer Holdings, Inc.
|
1,983 | 205,954 | ||||||
8,750,700 | ||||||||
Household & Personal Products 2.0% |
||||||||
Avon Products, Inc.
|
4,916 | 71,823 | ||||||
Colgate-Palmolive Co.
|
10,278 | 700,754 | ||||||
Kimberly-Clark Corp.
|
4,453 | 495,263 | ||||||
The Clorox Co.
|
1,600 | 146,240 | ||||||
The Estee Lauder Cos., Inc., Class A
|
3,000 | 222,780 | ||||||
The Procter & Gamble Co.
|
31,982 | 2,513,465 | ||||||
4,150,325 | ||||||||
Insurance 2.8% |
||||||||
ACE Ltd.
|
3,997 | 414,489 | ||||||
Aflac, Inc.
|
5,512 | 343,122 | ||||||
American International Group, Inc.
|
16,971 | 926,277 | ||||||
Aon plc
|
3,510 | 316,216 | ||||||
Assurant, Inc.
|
800 | 52,440 | ||||||
Cincinnati Financial Corp.
|
1,735 | 83,350 | ||||||
Genworth Financial, Inc., Class A *
|
5,600 | 97,440 | ||||||
Lincoln National Corp.
|
3,062 | 157,509 | ||||||
Loews Corp.
|
3,620 | 159,316 | ||||||
Marsh & McLennan Cos., Inc.
|
6,498 | 336,726 | ||||||
MetLife, Inc.
|
13,303 | 739,115 | ||||||
Principal Financial Group, Inc.
|
3,163 | 159,668 | ||||||
Prudential Financial, Inc.
|
5,460 | 484,684 | ||||||
The Allstate Corp.
|
5,340 | 313,565 | ||||||
The Chubb Corp.
|
2,880 | 265,450 | ||||||
The Hartford Financial Services Group, Inc.
|
5,315 | 190,330 | ||||||
The Progressive Corp.
|
6,473 | 164,155 | ||||||
The Travelers Cos., Inc.
|
4,239 | 398,763 | ||||||
Torchmark Corp.
|
1,000 | 81,920 | ||||||
Unum Group
|
2,976 | 103,446 | ||||||
XL Group plc
|
3,300 | 108,009 | ||||||
5,895,990 | ||||||||
Materials 3.5% |
||||||||
Air Products & Chemicals, Inc.
|
2,509 | 322,708 | ||||||
Airgas, Inc.
|
795 | 86,583 | ||||||
Alcoa, Inc.
|
13,855 | 206,301 | ||||||
Allegheny Technologies, Inc.
|
1,315 | 59,307 | ||||||
Avery Dennison Corp.
|
1,100 | 56,375 | ||||||
Ball Corp.
|
1,800 | 112,824 | ||||||
Bemis Co., Inc.
|
1,200 | 48,792 | ||||||
CF Industries Holdings, Inc.
|
615 | 147,926 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
E.I. du Pont de Nemours & Co.
|
10,854 | 710,286 | ||||||
Eastman Chemical Co.
|
1,800 | 157,230 | ||||||
Ecolab, Inc.
|
3,197 | 355,954 | ||||||
FMC Corp.
|
1,500 | 106,785 | ||||||
Freeport-McMoRan Copper & Gold, Inc.
|
12,277 | 448,110 | ||||||
International Flavors & Fragrances, Inc.
|
900 | 93,852 | ||||||
International Paper Co.
|
5,098 | 257,296 | ||||||
LyondellBasell Industries N.V., Class A
|
4,923 | 480,731 | ||||||
MeadWestvaco Corp.
|
1,949 | 86,263 | ||||||
Monsanto Co.
|
6,195 | 772,764 | ||||||
Newmont Mining Corp.
|
5,846 | 148,722 | ||||||
Nucor Corp.
|
3,799 | 187,101 | ||||||
Owens-Illinois, Inc. *
|
2,000 | 69,280 | ||||||
PPG Industries, Inc.
|
1,600 | 336,240 | ||||||
Praxair, Inc.
|
3,462 | 459,892 | ||||||
Sealed Air Corp.
|
2,528 | 86,382 | ||||||
Sigma-Aldrich Corp.
|
1,482 | 150,393 | ||||||
The Dow Chemical Co.
|
14,105 | 725,843 | ||||||
The Mosaic Co.
|
3,900 | 192,855 | ||||||
The Sherwin-Williams Co.
|
1,033 | 213,738 | ||||||
United States Steel Corp.
|
1,500 | 39,060 | ||||||
Vulcan Materials Co.
|
1,555 | 99,131 | ||||||
7,218,724 | ||||||||
Media 3.5% |
||||||||
Cablevision Systems Corp., Class A
|
2,500 | 44,125 | ||||||
CBS Corp., Class B - Non Voting Shares
|
6,480 | 402,667 | ||||||
Comcast Corp., Class A
|
30,728 | 1,649,479 | ||||||
DIRECTV *
|
5,580 | 474,356 | ||||||
Discovery Communications, Inc., Class A *
|
2,600 | 193,128 | ||||||
Gannett Co., Inc.
|
2,560 | 80,154 | ||||||
News Corp., Class A *
|
5,493 | 98,544 | ||||||
Omnicom Group, Inc.
|
3,040 | 216,509 | ||||||
Scripps Networks Interactive, Inc., Class A
|
1,200 | 97,368 | ||||||
The Interpublic Group of Cos., Inc.
|
4,997 | 97,491 | ||||||
The Walt Disney Co.
|
19,036 | 1,632,147 | ||||||
Time Warner Cable, Inc.
|
3,293 | 485,059 | ||||||
Time Warner, Inc.
|
10,374 | 728,774 | ||||||
Twenty-First Century Fox, Inc., Class A
|
22,474 | 789,961 | ||||||
Viacom, Inc., Class B
|
4,680 | 405,896 | ||||||
7,395,658 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences
8.9% |
||||||||
AbbVie, Inc.
|
18,793 | 1,060,677 | ||||||
Actavis plc *
|
2,162 | 482,234 | ||||||
Agilent Technologies, Inc.
|
3,967 | 227,865 | ||||||
Alexion Pharmaceuticals, Inc. *
|
2,300 | 359,375 | ||||||
Allergan, Inc.
|
3,510 | 593,962 | ||||||
Amgen, Inc.
|
8,947 | 1,059,056 | ||||||
Biogen Idec, Inc. *
|
2,804 | 884,129 | ||||||
Bristol-Myers Squibb Co.
|
19,586 | 950,117 | ||||||
Celgene Corp. *
|
9,500 | 815,860 | ||||||
Eli Lilly & Co.
|
11,643 | 723,845 | ||||||
Forest Laboratories, Inc. *
|
2,835 | 280,665 | ||||||
Gilead Sciences, Inc. *
|
18,151 | 1,504,899 | ||||||
Hospira, Inc. *
|
1,997 | 102,586 | ||||||
Johnson & Johnson
|
33,438 | 3,498,284 | ||||||
Merck & Co., Inc.
|
34,540 | 1,998,139 | ||||||
Mylan, Inc. *
|
4,391 | 226,400 | ||||||
PerkinElmer, Inc.
|
1,200 | 56,208 | ||||||
Perrigo Co., plc
|
1,600 | 233,216 | ||||||
Pfizer, Inc.
|
75,391 | 2,237,605 | ||||||
Regeneron Pharmaceuticals, Inc. *
|
942 | 266,087 | ||||||
Thermo Fisher Scientific, Inc.
|
4,715 | 556,370 | ||||||
Vertex Pharmaceuticals, Inc. *
|
2,800 | 265,104 | ||||||
Waters Corp. *
|
1,000 | 104,440 | ||||||
Zoetis, Inc.
|
5,922 | 191,103 | ||||||
18,678,226 | ||||||||
Real Estate 2.2% |
||||||||
American Tower Corp.
|
4,670 | 420,206 | ||||||
Apartment Investment & Management Co., Class A
|
1,577 | 50,890 | ||||||
AvalonBay Communities, Inc.
|
1,434 | 203,900 | ||||||
Boston Properties, Inc.
|
1,809 | 213,788 | ||||||
CBRE Group, Inc., Class A *
|
3,600 | 115,344 | ||||||
Crown Castle International Corp.
|
3,900 | 289,614 | ||||||
Equity Residential
|
3,900 | 245,700 | ||||||
Essex Property Trust, Inc.
|
700 | 129,437 | ||||||
General Growth Properties, Inc.
|
6,000 | 141,360 | ||||||
HCP, Inc.
|
5,416 | 224,114 | ||||||
Health Care REIT, Inc.
|
3,610 | 226,239 | ||||||
Host Hotels & Resorts, Inc.
|
9,060 | 199,411 | ||||||
Kimco Realty Corp.
|
4,853 | 111,522 | ||||||
Plum Creek Timber Co., Inc.
|
2,060 | 92,906 | ||||||
Prologis, Inc.
|
5,832 | 239,637 | ||||||
Public Storage
|
1,700 | 291,295 | ||||||
Simon Property Group, Inc.
|
3,637 | 604,760 | ||||||
The Macerich Co.
|
1,663 | 111,005 | ||||||
Ventas, Inc.
|
3,400 | 217,940 | ||||||
Vornado Realty Trust REIT
|
2,060 | 219,864 | ||||||
Weyerhaeuser Co. (b)
|
6,966 | 230,505 | ||||||
4,579,437 | ||||||||
Retailing 4.0% |
||||||||
Amazon.com, Inc. *
|
4,405 | 1,430,656 | ||||||
AutoNation, Inc. *
|
700 | 41,776 | ||||||
AutoZone, Inc. *
|
400 | 214,496 | ||||||
Bed Bath & Beyond, Inc. *
|
2,516 | 144,368 | ||||||
Best Buy Co., Inc.
|
3,125 | 96,906 | ||||||
CarMax, Inc. *
|
2,500 | 130,025 | ||||||
Dollar General Corp. *
|
3,585 | 205,636 | ||||||
Dollar Tree, Inc. *
|
2,600 | 141,596 | ||||||
Expedia, Inc.
|
1,200 | 94,512 | ||||||
Family Dollar Stores, Inc.
|
1,148 | 75,929 | ||||||
GameStop Corp., Class A
|
1,200 | 48,564 | ||||||
Genuine Parts Co.
|
1,900 | 166,820 | ||||||
Kohls Corp.
|
2,310 | 121,691 | ||||||
L Brands, Inc.
|
2,808 | 164,717 | ||||||
Lowes Cos., Inc.
|
12,140 | 582,599 | ||||||
Macys, Inc.
|
4,322 | 250,762 | ||||||
Netflix, Inc. *
|
700 | 308,420 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Nordstrom, Inc.
|
1,750 | 118,878 | ||||||
OReilly Automotive, Inc. *
|
1,309 | 197,135 | ||||||
PetSmart, Inc.
|
1,100 | 65,780 | ||||||
Ross Stores, Inc.
|
2,400 | 158,712 | ||||||
Staples, Inc.
|
7,350 | 79,674 | ||||||
Target Corp.
|
7,487 | 433,872 | ||||||
The Gap, Inc.
|
3,176 | 132,026 | ||||||
The Home Depot, Inc.
|
16,265 | 1,316,814 | ||||||
The Priceline Group, Inc. *
|
620 | 745,860 | ||||||
The TJX Cos., Inc.
|
8,220 | 436,893 | ||||||
Tiffany & Co.
|
1,326 | 132,931 | ||||||
Tractor Supply Co.
|
1,600 | 96,640 | ||||||
TripAdvisor, Inc. *
|
1,300 | 141,258 | ||||||
Urban Outfitters, Inc. *
|
1,200 | 40,632 | ||||||
8,316,578 | ||||||||
Semiconductors & Semiconductor Equipment 2.3% |
||||||||
Altera Corp.
|
3,951 | 137,337 | ||||||
Analog Devices, Inc.
|
3,630 | 196,274 | ||||||
Applied Materials, Inc.
|
14,070 | 317,279 | ||||||
Avago Technologies Ltd.
|
2,975 | 214,408 | ||||||
Broadcom Corp., Class A
|
6,614 | 245,512 | ||||||
First Solar, Inc. *
|
900 | 63,954 | ||||||
Intel Corp.
|
58,836 | 1,818,032 | ||||||
KLA-Tencor Corp.
|
2,000 | 145,280 | ||||||
Lam Research Corp.
|
1,912 | 129,213 | ||||||
Linear Technology Corp.
|
2,730 | 128,501 | ||||||
Microchip Technology, Inc.
|
2,400 | 117,144 | ||||||
Micron Technology, Inc. *
|
12,651 | 416,850 | ||||||
NVIDIA Corp.
|
6,700 | 124,218 | ||||||
Texas Instruments, Inc.
|
12,768 | 610,183 | ||||||
Xilinx, Inc.
|
3,213 | 152,007 | ||||||
4,816,192 | ||||||||
Software & Services 9.8% |
||||||||
Accenture plc, Class A
|
7,400 | 598,216 | ||||||
Adobe Systems, Inc. *
|
5,471 | 395,882 | ||||||
Akamai Technologies, Inc. *
|
2,000 | 122,120 | ||||||
Alliance Data Systems Corp. *
|
641 | 180,281 | ||||||
Autodesk, Inc. *
|
2,620 | 147,716 | ||||||
Automatic Data Processing, Inc.
|
5,613 | 444,999 | ||||||
CA, Inc.
|
3,644 | 104,729 | ||||||
Citrix Systems, Inc. *
|
2,060 | 128,853 | ||||||
Cognizant Technology Solutions Corp., Class A *
|
7,210 | 352,641 | ||||||
Computer Sciences Corp.
|
1,700 | 107,440 | ||||||
eBay, Inc. *
|
13,488 | 675,209 | ||||||
Electronic Arts, Inc. *
|
3,558 | 127,625 | ||||||
Facebook, Inc., Class A *
|
20,323 | 1,367,535 | ||||||
Fidelity National Information Services, Inc.
|
3,300 | 180,642 | ||||||
Fiserv, Inc. *
|
3,120 | 188,198 | ||||||
Google, Inc., Class A *
|
3,348 | 1,957,475 | ||||||
Google, Inc., Class C *
|
3,348 | 1,926,037 | ||||||
International Business Machines Corp.
|
11,245 | 2,038,381 | ||||||
Intuit, Inc.
|
3,396 | 273,480 | ||||||
MasterCard, Inc., Class A
|
11,820 | 868,415 | ||||||
Microsoft Corp.
|
88,845 | 3,704,837 | ||||||
Oracle Corp.
|
40,618 | 1,646,248 | ||||||
Paychex, Inc.
|
4,046 | 168,152 | ||||||
Red Hat, Inc. *
|
2,100 | 116,067 | ||||||
salesforce.com, Inc. *
|
6,689 | 388,497 | ||||||
Symantec Corp.
|
7,841 | 179,559 | ||||||
Teradata Corp. *
|
1,800 | 72,360 | ||||||
The Western Union Co.
|
6,559 | 113,733 | ||||||
Total System Services, Inc.
|
1,800 | 56,538 | ||||||
VeriSign, Inc. *
|
1,425 | 69,554 | ||||||
Visa, Inc., Class A
|
5,948 | 1,253,303 | ||||||
Xerox Corp.
|
13,167 | 163,797 | ||||||
Yahoo! Inc. *
|
11,010 | 386,781 | ||||||
20,505,300 | ||||||||
Technology Hardware & Equipment 6.4% |
||||||||
Amphenol Corp., Class A
|
1,900 | 183,046 | ||||||
Apple, Inc.
|
71,266 | 6,622,750 | ||||||
Cisco Systems, Inc.
|
60,546 | 1,504,568 | ||||||
Corning, Inc.
|
15,465 | 339,457 | ||||||
EMC Corp.
|
24,197 | 637,349 | ||||||
F5 Networks, Inc. *
|
895 | 99,739 | ||||||
FLIR Systems, Inc.
|
1,500 | 52,095 | ||||||
Harris Corp.
|
1,200 | 90,900 | ||||||
Hewlett-Packard Co.
|
22,118 | 744,934 | ||||||
Jabil Circuit, Inc.
|
2,127 | 44,454 | ||||||
Juniper Networks, Inc. *
|
5,700 | 139,878 | ||||||
Motorola Solutions, Inc.
|
2,676 | 178,141 | ||||||
NetApp, Inc.
|
3,900 | 142,428 | ||||||
QUALCOMM, Inc.
|
19,949 | 1,579,961 | ||||||
SanDisk Corp.
|
2,759 | 288,122 | ||||||
Seagate Technology plc
|
3,879 | 220,405 | ||||||
TE Connectivity Ltd.
|
4,964 | 306,974 | ||||||
Western Digital Corp.
|
2,500 | 230,750 | ||||||
13,405,951 | ||||||||
Telecommunication Services 2.4% |
||||||||
AT&T, Inc.
|
61,342 | 2,169,053 | ||||||
CenturyLink, Inc.
|
6,785 | 245,617 | ||||||
Frontier Communications Corp.
|
11,096 | 64,801 | ||||||
Verizon Communications, Inc.
|
48,945 | 2,394,879 | ||||||
Windstream Holdings, Inc. (b)
|
7,243 | 72,140 | ||||||
4,946,490 | ||||||||
Transportation 2.0% |
||||||||
C.H. Robinson Worldwide, Inc.
|
1,900 | 121,201 | ||||||
CSX Corp.
|
11,891 | 366,362 | ||||||
Delta Air Lines, Inc.
|
10,022 | 388,052 | ||||||
Expeditors International of Washington, Inc.
|
2,300 | 101,568 | ||||||
FedEx Corp.
|
3,320 | 502,582 | ||||||
Kansas City Southern
|
1,300 | 139,763 | ||||||
Norfolk Southern Corp.
|
3,700 | 381,211 | ||||||
Ryder System, Inc.
|
600 | 52,854 | ||||||
Southwest Airlines Co.
|
7,986 | 214,504 | ||||||
Union Pacific Corp.
|
10,706 | 1,067,923 | ||||||
United Parcel Service, Inc., Class B
|
8,331 | 855,260 | ||||||
4,191,280 | ||||||||
Utilities 3.1% |
||||||||
AES Corp.
|
7,450 | 115,848 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
AGL Resources, Inc.
|
1,643 | 90,414 | ||||||
Ameren Corp.
|
3,100 | 126,728 | ||||||
American Electric Power Co., Inc.
|
5,769 | 321,737 | ||||||
CenterPoint Energy, Inc.
|
4,850 | 123,869 | ||||||
CMS Energy Corp.
|
3,196 | 99,555 | ||||||
Consolidated Edison, Inc.
|
3,350 | 193,429 | ||||||
Dominion Resources, Inc.
|
6,874 | 491,628 | ||||||
DTE Energy Co.
|
2,000 | 155,740 | ||||||
Duke Energy Corp.
|
8,263 | 613,032 | ||||||
Edison International
|
3,880 | 225,467 | ||||||
Entergy Corp.
|
2,227 | 182,814 | ||||||
Exelon Corp.
|
10,149 | 370,236 | ||||||
FirstEnergy Corp.
|
4,769 | 165,580 | ||||||
Integrys Energy Group, Inc.
|
897 | 63,804 | ||||||
NextEra Energy, Inc.
|
5,155 | 528,284 | ||||||
NiSource, Inc.
|
3,546 | 139,500 | ||||||
Northeast Utilities
|
3,600 | 170,172 | ||||||
NRG Energy, Inc.
|
3,986 | 148,279 | ||||||
Pepco Holdings, Inc.
|
3,150 | 86,562 | ||||||
PG&E Corp.
|
5,514 | 264,782 | ||||||
Pinnacle West Capital Corp.
|
1,550 | 89,652 | ||||||
PPL Corp.
|
7,467 | 265,303 | ||||||
Public Service Enterprise Group, Inc.
|
6,014 | 245,311 | ||||||
SCANA Corp.
|
1,600 | 86,096 | ||||||
Sempra Energy
|
2,731 | 285,963 | ||||||
TECO Energy, Inc.
|
2,140 | 39,547 | ||||||
The Southern Co.
|
10,529 | 477,806 | ||||||
Wisconsin Energy Corp.
|
2,500 | 117,300 | ||||||
Xcel Energy, Inc.
|
5,933 | 191,221 | ||||||
6,475,659 | ||||||||
Total Common Stock | ||||||||
(Cost $97,357,443) | 205,835,743 | |||||||
Issuer |
Face Amount |
Value |
||||||
Rate, Maturity Date | ($) | ($) | ||||||
Short-Term Investments 1.4% of net assets
|
||||||||
Time Deposits 1.3% |
||||||||
DNB | ||||||||
0.03%,
07/01/14
|
579,078 | 579,078 | ||||||
Skandinaviska Enskilda Banken | ||||||||
0.03%,07/01/14
|
2,092,057 | 2,092,057 | ||||||
2,671,135 | ||||||||
U.S. Treasury Bill 0.1% |
||||||||
U.S. Treasury Bill | ||||||||
0.02%,
09/18/14 (c)(d)
|
260,000 | 259,991 | ||||||
Total Short-Term Investments | ||||||||
(Cost $2,931,126) | 2,931,126 | |||||||
End of Investments.
|
||||||||
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Collateral Invested for Securities on
Loan 0.2% of net assets
|
||||||||
Wells Fargo Advantage Government Money Market Fund
0.01% (e)
|
319,182 | 319,182 | ||||||
Total Collateral Invested for Securities on Loan | ||||||||
(Cost $319,182) | 319,182 | |||||||
End of Collateral Invested for Securities on Loan.
|
* | Non-income producing security. | |
(a) | Issuer is affiliated with the funds adviser. | |
(b) | All or a portion of this security is on loan. Securities on loan were valued at $315,668. | |
(c) | All or a portion of this security is held as collateral for open futures contracts. | |
(d) | The rate shown is the purchase yield. | |
(e) | The rate shown is the 7-day yield. |
REIT
|
Real Estate Investment Trust |
Contract |
Unrealized |
|||||||||||
Number of |
Value |
Appreciation |
||||||||||
Contracts | ($) | ($) | ||||||||||
Futures Contracts
|
||||||||||||
S&P 500 Index, e-mini, Long,
expires 09/19/14
|
28 | 2,733,360 | 33,750 |
Quoted
Prices in |
Significant |
|||||||||||||||
Active
Markets for |
Other
Significant |
Unobservable |
||||||||||||||
Identical
Assets |
Observable
Inputs |
Inputs |
||||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Common
Stock1
|
$205,835,743 | $ | $ | $205,835,743 | ||||||||||||
Short-Term
Investments1
|
| 2,931,126 | | 2,931,126 | ||||||||||||
Total
|
$205,835,743 | $2,931,126 | $ | $208,766,869 | ||||||||||||
Other Financial Instruments
|
||||||||||||||||
Collateral Invested for Securities on Loan
|
$319,182 | $ | $ | $319,182 | ||||||||||||
Futures
Contracts2
|
33,750 | | | 33,750 |
1
|
As categorized in Portfolio Holdings. | |
2
|
Futures contracts are not included in Investments in the schedule of portfolio holdings and are valued at unrealized appreciation or depreciation. |
Assets
|
||||||
Investments in affiliated issuers, at value (cost $158,789)
|
$374,139 | |||||
Investments in unaffiliated issuers, at value (cost
$100,129,780) including securities on loan of $315,668
|
+ | 208,392,730 | ||||
Total investments, at value (cost $100,288,569)
|
208,766,869 | |||||
Collateral invested for securities on loan
|
319,182 | |||||
Receivables:
|
||||||
Dividends
|
215,718 | |||||
Variation margin on futures contracts
|
560 | |||||
Income from securities on loan
|
241 | |||||
Fund shares sold
|
25 | |||||
Interest
|
2 | |||||
Prepaid expenses
|
+ | 593 | ||||
Total assets
|
209,303,190 | |||||
Liabilities
|
||||||
Collateral held for securities on loan
|
319,182 | |||||
Payables:
|
||||||
Investments bought
|
180,673 | |||||
Investment adviser and administrator fees
|
2,597 | |||||
Fund shares redeemed
|
78,677 | |||||
Accrued expenses
|
+ | 47,442 | ||||
Total liabilities
|
628,571 | |||||
Net Assets
|
||||||
Total assets
|
209,303,190 | |||||
Total liabilities
|
− | 628,571 | ||||
Net assets
|
$208,674,619 | |||||
Net Assets by Source
|
||||||
Capital received from investors
|
107,637,959 | |||||
Net investment income not yet distributed
|
1,779,660 | |||||
Net realized capital losses
|
(9,255,051 | ) | ||||
Net unrealized capital appreciation
|
108,512,051 | |||||
Net Asset Value (NAV)
|
Shares |
||||||||||||
Net Assets | ÷ | Outstanding | = | NAV | ||||||||
$208,674,619
|
7,321,872 | $28.50 |
Investment Income
|
||||||
Dividends received from affiliated issuer
|
$1,597 | |||||
Dividends received from unaffiliated issuers (net of foreign
withholding taxes of $204)
|
1,971,296 | |||||
Interest
|
717 | |||||
Securities on loan
|
+ | 1,592 | ||||
Total investment income
|
1,975,202 | |||||
Expenses
|
||||||
Investment adviser and administrator fees
|
146,468 | |||||
Professional fees
|
23,100 | |||||
Shareholder reports
|
12,010 | |||||
Transfer agent fees
|
10,983 | |||||
Index fee
|
10,718 | |||||
Independent trustees fees
|
10,333 | |||||
Portfolio accounting fees
|
6,576 | |||||
Custodian fees
|
4,636 | |||||
Other expenses
|
+ | 1,513 | ||||
Total expenses
|
226,337 | |||||
Expense reduction by CSIM
|
− | 10,983 | ||||
Net expenses
|
− | 215,354 | ||||
Net investment income
|
1,759,848 | |||||
Realized and Unrealized Gains (Losses)
|
||||||
Net realized gains on investments
|
394,832 | |||||
Net realized gains on futures contracts
|
+ | 345,719 | ||||
Net realized gains
|
740,551 | |||||
Net change in unrealized appreciation (depreciation) on
affiliated issuer
|
11,349 | |||||
Net change in unrealized appreciation (depreciation) on
investments
|
11,122,632 | |||||
Net change in unrealized appreciation (depreciation) on futures
contracts
|
+ | (91,103 | ) | |||
Net change in unrealized appreciation (depreciation)
|
+ | 11,042,878 | ||||
Net realized and unrealized gains
|
11,783,429 | |||||
Increase in net assets resulting from operations
|
$13,543,277 |
Operations
|
||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||
Net investment income
|
$1,759,848 | $3,048,534 | ||||||||
Net realized gains (losses)
|
740,551 | (769,458 | ) | |||||||
Net change in unrealized appreciation (depreciation)
|
+ | 11,042,878 | 43,340,343 | |||||||
Increase in net assets from operations
|
13,543,277 | 45,619,419 | ||||||||
Distributions to Shareholders
|
||||||||||
Distributions from net investment income
|
($3,029,534 | ) | ($2,746,605 | ) |
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | VALUE | SHARES | VALUE | |||||||||||||||
Shares sold
|
601,330 | $16,441,445 | 1,314,487 | $31,642,871 | ||||||||||||||
Shares reinvested
|
106,300 | 3,029,534 | 118,083 | 2,746,605 | ||||||||||||||
Shares redeemed
|
+ | (545,374 | ) | (14,809,098 | ) | (970,143 | ) | (23,175,830 | ) | |||||||||
Net transactions in fund shares
|
162,256 | $4,661,881 | 462,427 | $11,213,646 | ||||||||||||||
Shares Outstanding and Net Assets
|
||||||||||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | NET ASSETS | SHARES | NET ASSETS | |||||||||||||||
Beginning of period
|
7,159,616 | $193,498,995 | 6,697,189 | $139,412,535 | ||||||||||||||
Total increase
|
+ | 162,256 | 15,175,624 | 462,427 | 54,086,460 | |||||||||||||
End of period
|
7,321,872 | $208,674,619 | 7,159,616 | $193,498,995 | ||||||||||||||
Net investment income not yet distributed
|
$1,779,660 | $3,049,346 |
Schwab Annuity Portfolios (organized January 21, 1994)
|
||||
Schwab Money Market Portfolio
|
||||
Schwab MarketTrack Growth Portfolio II
|
||||
Schwab S&P 500 Index Portfolio
|
||||
Schwab VIT Balanced Portfolio
|
||||
Schwab VIT Balanced with Growth Portfolio
|
||||
Schwab VIT Growth Portfolio
|
||||
| Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below. | |
| Securities for which no quoted value is available: The Board has adopted procedures to fair value the funds securities when market prices are not readily available or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a securitys primary pricing source is unable or unwilling to provide a price; or when a securitys primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the funds valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ |
techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures. |
| Futures Contracts (futures): Futures are valued at their settlement prices as of the close of their exchanges. | |
| Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value. |
| Level 1 quoted prices in active markets for identical securities Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and futures contracts. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices. | |
| Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. | |
| Level 3 significant unobservable inputs (including the funds own assumptions in determining the fair value of investments) Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds results of operations. |
Average
Daily Net Assets
|
||||
First $500 million
|
0.15% | |||
More than $500 million but not exceeding $5 billion
|
0.09% | |||
More than $5 billion but not exceeding $10 billion
|
0.08% | |||
Over $10 billion
|
0.07% |
Realized |
Dividends |
|||||||||||||||||||||||||
Balance
of |
Balance
of |
Market |
Gains
(Losses) |
Received |
||||||||||||||||||||||
Shares
Held |
Gross |
Gross |
Shares
Held |
Value
at |
01/01/14
to |
01/01/14
to |
||||||||||||||||||||
at
12/31/13
|
Purchases
|
Sales
|
at
06/30/14
|
06/30/14
|
06/30/14
|
06/30/14
|
||||||||||||||||||||
13,106 | 787 | | 13,893 | $374,139 | $ | $1,597 |
Purchases
of Securities
|
Sales/Maturities
of Securities
|
|||||
$7,025,669 | $1,086,326 |
Expiration
Date
|
||||
December 31, 2014
|
$880,924 | |||
December 31, 2015
|
| |||
December 31, 2016
|
2,899,868 | |||
December 31, 2017
|
1,365,160 | |||
December 31, 2018
|
257,470 | |||
Total
|
$5,403,422 | |||
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
2. | the Funds investment performance and how it compared to that of certain other comparable mutual funds; |
3. | the Funds expenses and how those expenses compared to those of certain other comparable mutual funds; |
4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served1) | During the Past Five Years | the Trustee | Other Directorships | |||
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 present). | 76 |
Director, WageWorks, Inc.
(2010 present) Director, Redwood Trust, Inc. (1998 present) Director, PMI Group Inc. (2001 2009) |
|||
John F. Cogan 1947 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 present); Senior Fellow, Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 2000 present). | 76 |
Director, Gilead Sciences, Inc.
(2005 present) Director, Monaco Coach Corporation (2005 2009) |
|||
David L. Mahoney 1954 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Private Investor. | 76 |
Director, Symantec Corporation
(2003 present) Director, Corcept Therapeutics Incorporated (2004 present) |
|||
Kiran M. Patel 1948 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 Sept. 2013). | 76 | Director, KLA-Tencor Corporation (2008 present) | |||
Gerald B. Smith 1950 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 present). | 76 |
Director, Eaton
(2012 present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 2013) Director, Oneok, Inc. (2009 2013) Lead Independent Director, Board of Cooper Industries (2002 2012) |
|||
Joseph H. Wender 1944 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 present); Partner, Colgin Partners, LLC (vineyards) (February 1998 present). | 76 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 present) | |||
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served) | During the Past Five Years | the Trustee | Other Directorships | |||
Charles R.
Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Annuity Portfolios since 1994.) |
Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | 76 | None | |||
Walter W. Bettinger
II2 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. | 97 | None | |||
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Annuity Portfolios since 2010.) |
Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 present); Director, President and Chief Executive Officer (Dec. 2010 present), Chief Investment Officer (Sept. 2010 Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 present), and Chief Investment Officer (Sept. 2010 Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Annuity Portfolios since 2004.) |
Senior Vice President and Chief Financial Officer (Nov. 2004 present), Chief Operating Officer (Jan. 2011 present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 present) and Schwab ETFs (Oct. 2009 present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer Equities (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Equities, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Equities, Schwab Funds and Laudus Funds (June 2011 present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 Jan. 2009). | |
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer Fixed Income (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Fixed Income, Schwab Funds and Laudus Funds (June 2011 present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 Jan. 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President (Sept. 2011 present), Vice President (March 2004 Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 present), Vice President (Jan. 2011 Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 present) and Chief Legal Officer (Dec. 2011 present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 present); Secretary (May 2011 present) and Chief Legal Officer (Nov. 2011 present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Annuity Portfolios since 2005.) |
Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 present); Vice President (Dec. 2005 present), Chief Legal Officer and Clerk (March 2007 present), Laudus Funds; Vice President (Nov. 2005 present) and Assistant Secretary (June 2007 present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 present). | |
1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first. | |
2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. | |
3 | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
Schwab Money Market Portfoliotm |
|||||
Semiannual report dated June 30, 2014 |
Lynn Paschen, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day management of the portfolio. Prior to joining CSIM in 2011, Ms. Paschen held a number of positions at American Century Investments. She most recently was a portfolio manager, and from 2000 to 2003 worked as a fixed income trader. She has managed money market funds since 2003. |
% of investments | ||||
1-7 Days
|
17.1% | |||
8-30 Days
|
37.0% | |||
31-60 Days
|
16.7% | |||
61-90 Days
|
14.0% | |||
91-180 Days
|
13.8% | |||
More than 180 Days
|
1.4% | |||
Total
|
100.0% |
Weighted Average
Maturity2
|
43 Days | |
Credit Quality Of
Holdings3
% of portfolio |
100% Tier 1 |
% of investments | ||||
Government Agency Debt
|
76.1% | |||
Repurchase Agreement
|
||||
Treasury
|
14.7% | |||
Treasury Debt
|
9.2% | |||
Total
|
100.0% |
* | The investment adviser and its affiliates may recapture expenses or fees they waived under a voluntary yield waiver until the third anniversary of the end of the fiscal year in which such waiver occurs, subject to certain limitations. For more information on the potential impact of such recapture on future yields, see financial note 4. | |
1 | As shown in the Portfolio Holdings section of the shareholder report. | |
2 | Money funds must maintain a dollar-weighted average maturity of no longer than 60 days and cannot invest in any security whose effective maturity is longer than 397 days (approximately 13 months). | |
3 | Tier 1 securities are rated in one of the two highest rating categories by two nationally recognized statistical rating organizations (NRSROs), or by one if only one NRSRO has rated the securities, or, if unrated, determined to be of comparable quality by CSIM pursuant to guidelines adopted by the Board of Trustees. Money market fund shares and U.S. government securities are also Tier 1 securities. The fund uses NRSRO credit ratings from Standard & Poors Corp., Moodys Investors Service, Fitch Ratings, and/or DBRS. The fund may use different ratings provided by other rating agencies for purposes of determining compliance with the funds investment policies. The fund itself has not been rated by an independent credit rating agency. |
Schwab Money Market Portfoliotm | |||||
Seven-Day Yield
|
0.01 | % | |||
Seven-Day Effective Yield
|
0.01 | % | |||
1 | Portfolio yields do not reflect the additional fees and expenses imposed by the insurance company under the variable insurance product contract. If those contract fees and expenses were included, the yields would be less than those shown. Please refer to the variable insurance product prospectus for a complete listing of these expenses. | |
2 | The investment adviser and its affiliates have voluntarily waived expenses to maintain a positive net yield for the portfolio (voluntary yield waiver). Without the voluntary yield waiver, the portfolios yield would have been lower. The voluntary yield waiver added 0.42% to the seven-day yield. Please see financial note 4 for additional details. |
Ending |
||||||||||||||||
Beginning |
Account Value |
Expenses Paid |
||||||||||||||
Expense
Ratio1 |
Account Value |
(Net of Expenses) |
During
Period2 |
|||||||||||||
(Annualized) | at 1/1/14 | at 6/30/14 | 1/1/146/30/14 | |||||||||||||
Schwab Money Market Portfoliotm | ||||||||||||||||
Actual Return
|
0.07% | $ | 1,000.00 | $ | 1,000.10 | $ | 0.35 | |||||||||
Hypothetical 5% Return
|
0.07% | $ | 1,000.00 | $ | 1,024.45 | $ | 0.35 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. | |
2 | Expenses for the portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year. |
1/1/14 |
1/1/13 |
1/1/12 |
1/1/11 |
1/1/10 |
1/1/09 |
|||||||||||||||||||||
6/30/14* | 12/31/13 | 12/31/12 | 12/31/11 | 12/31/10 | 12/31/09 | |||||||||||||||||||||
Per-Share Data ($)
|
||||||||||||||||||||||||||
Net asset value at beginning of period
|
1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||||||||||||||||
Income (loss) from investment operations:
|
||||||||||||||||||||||||||
Net investment income (loss)
|
0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | ||||||||||||||
Net realized and unrealized gains (losses)
|
0.00 | 1 | 0.00 | 1,2 | 0.00 | 1 | (0.00 | )1 | (0.00 | )1 | 0.00 | 1 | ||||||||||||||
Total from investment operations
|
0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | 0.00 | 1 | ||||||||||||||
Less distributions:
|
||||||||||||||||||||||||||
Distributions from net investment income
|
(0.00 | )1 | (0.00 | )1 | (0.00 | )1 | (0.00 | )1 | (0.00 | )1 | (0.00 | )1 | ||||||||||||||
Distributions from net realized gains
|
| | | | (0.00 | )1 | | |||||||||||||||||||
Total distributions
|
(0.00 | )1 | (0.00 | )1 | (0.00 | )1 | (0.00 | )1 | (0.00 | )1 | (0.00 | )1 | ||||||||||||||
Net asset value at end of period
|
1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||||||||||||||||
Total return (%)
|
0.01 | 3 | 0.01 | 0.01 | 0.01 | 0.05 | 0.10 | |||||||||||||||||||
Ratios/Supplemental Data (%)
|
||||||||||||||||||||||||||
Ratios to average net assets:
|
||||||||||||||||||||||||||
Net operating expenses
|
0.07 | 4,5 | 0.08 | 5 | 0.12 | 5 | 0.10 | 5 | 0.18 | 5 | 0.34 | 5,6 | ||||||||||||||
Gross operating expenses
|
0.51 | 4 | 0.52 | 0.49 | 0.45 | 0.46 | 0.47 | |||||||||||||||||||
Net investment income (loss)
|
0.01 | 4 | 0.01 | 0.01 | 0.01 | 0.01 | 0.12 | |||||||||||||||||||
Net assets, end of period ($ x 1,000,000)
|
109 | 106 | 116 | 144 | 149 | 163 |
Cost |
Value |
|||||||||||
Holdings by Category | ($) | ($) | ||||||||||
73 | .2% | Fixed-Rate Obligations | 80,078,667 | 80,078,667 | ||||||||
11 | .5% | Variable-Rate Obligations | 12,502,214 | 12,502,214 | ||||||||
0 | .0% | Other Investment Company | 45,600 | 45,600 | ||||||||
14 | .6% | Repurchase Agreements | 15,984,159 | 15,984,159 | ||||||||
99 | .3% | Total Investments | 108,610,640 | 108,610,640 | ||||||||
0 | .7% | Other Assets and Liabilities, Net | 787,713 | |||||||||
100 | .0% | Net Assets | 109,398,353 |
Face |
||||||||||||||||||||
Effective |
Maturity |
Amount |
Value |
|||||||||||||||||
Issuer | Footnotes | Rate | Maturity | Date | ($) | ($) | ||||||||||||||
Fixed-Rate Obligations 73.2% of net assets
|
||||||||||||||||||||
Government Agency Debt 64.1% |
||||||||||||||||||||
Fannie Mae | 1.50% | 09/08/14 | 5,000,000 | 5,013,022 | ||||||||||||||||
0.13% | 09/15/14 | 1,400,000 | 1,399,610 | |||||||||||||||||
0.11% | 09/22/14 | 1,158,000 | 1,157,720 | |||||||||||||||||
0.08% | 10/07/14 | 1,500,000 | 1,499,673 | |||||||||||||||||
Federal Home Loan Bank | 0.07% | 07/16/14 | 4,950,000 | 4,949,856 | ||||||||||||||||
0.11% | 07/16/14 | 2,000,000 | 1,999,908 | |||||||||||||||||
0.07% | 07/22/14 | 20,000,000 | 19,999,184 | |||||||||||||||||
0.08% | 08/01/14 | 3,160,000 | 3,159,782 | |||||||||||||||||
0.10% | 08/27/14 | 4,000,000 | 3,999,398 | |||||||||||||||||
0.07% | 10/03/14 | 5,000,000 | 4,999,086 | |||||||||||||||||
0.07% | 10/08/14 | 3,500,000 | 3,499,326 | |||||||||||||||||
0.09% | 12/03/14 | 5,000,000 | 4,998,106 | |||||||||||||||||
0.11% | 03/03/15 | 1,500,000 | 1,498,877 | |||||||||||||||||
Freddie Mac | 5.00% | 07/15/14 | 3,200,000 | 3,205,975 | ||||||||||||||||
0.10% | 08/26/14 | 1,000,000 | 999,852 | |||||||||||||||||
0.14% | 09/03/14 | 2,000,000 | 1,999,502 | |||||||||||||||||
0.07% | 09/05/14 | 2,000,000 | 1,999,762 | |||||||||||||||||
0.09% | 09/08/14 | 2,000,000 | 1,999,647 | |||||||||||||||||
0.08% | 09/24/14 | 1,700,000 | 1,699,679 | |||||||||||||||||
70,077,965 | ||||||||||||||||||||
Treasury Debt 9.1% |
||||||||||||||||||||
United States Treasury Department | 0.13% | 07/31/14 | 10,000,000 | 10,000,702 | ||||||||||||||||
Total Fixed-Rate Obligations | ||||||||||||||||||||
(Cost $80,078,667) | 80,078,667 | |||||||||||||||||||
Face |
||||||||||||||||||||
Effective |
Maturity |
Amount |
Value |
|||||||||||||||||
Issuer | Footnotes | Rate | Maturity | Date | ($) | ($) | ||||||||||||||
Variable-Rate Obligations 11.5% of net assets
|
||||||||||||||||||||
Government Agency Debt 11.5% |
||||||||||||||||||||
Farm Credit System | 0.24% | 07/01/14 | 03/04/15 | 2,500,000 | 2,501,537 | |||||||||||||||
Federal Home Loan Bank | 0.11% | 07/09/14 | 12/09/14 | 10,000,000 | 10,000,677 | |||||||||||||||
Total Variable-Rate Obligations | ||||||||||||||||||||
(Cost $12,502,214) | 12,502,214 | |||||||||||||||||||
Other Investment Company 0.0% of net assets
|
||||||||||||||||||||
Money Market Fund 0.0% |
||||||||||||||||||||
State Street Institutional US Government Money Market Fund, Premier Class | (a) | 0.00% | n/a | n/a | 45,600 | 45,600 | ||||||||||||||
Total Other Investment Company | ||||||||||||||||||||
(Cost $45,600) | 45,600 | |||||||||||||||||||
Maturity |
||||||||||||||||||||
Effective |
Maturity |
Amount |
Value |
|||||||||||||||||
Issuer | Footnotes | Rate | Maturity | Date | ($) | ($) | ||||||||||||||
Repurchase Agreements 14.6% of net assets
|
||||||||||||||||||||
Treasury Repurchase Agreements 14.6% |
||||||||||||||||||||
Barclays Capital, Inc | ||||||||||||||||||||
Issued
06/30/14,
repurchase date
07/01/14
(Collateralized by U.S. Treasury Securities valued at $6,103,877, 2.25%, due 07/31/18) |
0.07% | 07/01/14 | 5,984,171 | 5,984,159 | ||||||||||||||||
BNP Paribas Securities Corp | ||||||||||||||||||||
Issued
06/30/14,
repurchase date
07/01/14
(Collateralized by U.S. Treasury Securities valued at $10,200,039, 0.75% - 4.00%, due 02/15/18 - 08/15/18) |
0.09% | 07/01/14 | 10,000,025 | 10,000,000 | ||||||||||||||||
Total Repurchase Agreements | ||||||||||||||||||||
(Cost $15,984,159) | 15,984,159 | |||||||||||||||||||
End of
Investments.
|
(a) | The rate shown is the 7-day yield. |
Assets
|
||||||
Investments, at cost and value
|
$92,626,481 | |||||
Repurchase agreements, at cost and value
|
+ | 15,984,159 | ||||
Total investments, at cost and value (Note 2a)
|
108,610,640 | |||||
Cash
|
1 | |||||
Receivables:
|
||||||
Fund shares sold
|
773,797 | |||||
Interest
|
103,591 | |||||
Receivable from investment adviser
|
740 | |||||
Prepaid expenses
|
+ | 359 | ||||
Total assets
|
109,489,128 | |||||
Liabilities
|
||||||
Payables:
|
||||||
Fund shares redeemed
|
49,839 | |||||
Distributions to shareholders
|
409 | |||||
Accrued expenses
|
+ | 40,527 | ||||
Total liabilities
|
90,775 | |||||
Net Assets
|
||||||
Total assets
|
109,489,128 | |||||
Total liabilities
|
− | 90,775 | ||||
Net assets
|
$109,398,353 | |||||
Net Assets by Source
|
||||||
Capital received from investors
|
109,352,345 | |||||
Net realized capital gains
|
46,008 | |||||
Net Asset Value (NAV)
|
Shares |
||||||||||||
Net Assets | ÷ | Outstanding | = | NAV | ||||||||
$109,398,353
|
109,399,170 | $1.00 |
Investment Income
|
||||||
Interest
|
$41,631 | |||||
Expenses
|
||||||
Investment adviser and administrator fees
|
187,395 | |||||
Professional fees
|
27,150 | |||||
Portfolio accounting fees
|
21,167 | |||||
Shareholder reports
|
15,838 | |||||
Transfer agent fees
|
11,238 | |||||
Independent trustees fees
|
7,394 | |||||
Custodian fees
|
3,122 | |||||
Other expenses
|
+ | 1,109 | ||||
Total expenses
|
274,413 | |||||
Expense reduction by CSIM and its affiliates
|
− | 238,136 | ||||
Net expenses
|
− | 36,277 | ||||
Net investment income
|
5,354 | |||||
Realized Gains (Losses)
|
||||||
Net realized gains on investments
|
407 | |||||
Increase in net assets resulting from operations
|
$5,761 |
Operations
|
||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||
Net investment income
|
$5,354 | $11,617 | ||||||||
Net realized gains
|
+ | 407 | 46,681 | 1 | ||||||
Increase in net assets from operations
|
5,761 | 58,298 | ||||||||
Distributions to Shareholders
|
||||||||||
Distributions from net investment income
|
($5,354 | ) | ($11,617 | ) | ||||||
Transactions in Fund Shares*
|
||||||||||
Shares sold
|
60,812,210 | 115,039,074 | ||||||||
Shares reinvested
|
4,942 | 11,611 | ||||||||
Shares redeemed
|
+ | (57,211,627 | ) | (125,643,578 | ) | |||||
Net transactions in fund shares
|
3,605,525 | (10,592,893 | ) | |||||||
Net Assets
|
||||||||||
Beginning of period
|
105,792,421 | 116,338,633 | ||||||||
Total increase or decrease
|
+ | 3,605,932 | (10,546,212 | ) | ||||||
End of period
|
$109,398,353 | $105,792,421 |
*
|
Transactions took place at $1.00 per share; figures for share quantities are the same as for dollars. | |
1
|
Net realized gains includes payment from affiliate. (See financial note 4) |
Schwab Annuity Portfolios (organized January 21, 1994)
|
||||
Schwab Money Market Portfolio
|
||||
Schwab MarketTrack Growth Portfolio II
|
||||
Schwab S&P 500 Index Portfolio
|
||||
Schwab VIT Balanced Portfolio
|
||||
Schwab VIT Balanced with Growth Portfolio
|
||||
Schwab VIT Growth Portfolio
|
||||
| Level 1 quoted prices in active markets for identical securities Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices. | |
| Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Securities held by money funds operating under Rule 2a-7 of the 1940 Act are valued at amortized cost which approximates current market value and are considered to be valued using Level 2 inputs. | |
| Level 3 significant unobservable inputs (including the funds own assumptions in determining the fair value of investments) Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds results of operations. |
Average
Daily Net Assets
|
||||
First $1 billion
|
0.35% | |||
More than $1 billion but not exceeding $10 billion
|
0.32% | |||
More than $10 billion but not exceeding $20 billion
|
0.30% | |||
More than $20 billion but not exceeding $40 billion
|
0.27% | |||
Over $40 billion
|
0.25% |
Expiration Date | ||||||||||||||||||
December 31,
2014
|
December 31,
2015
|
December 31,
2016
|
December 31,
2017
|
Total
|
||||||||||||||
$495,734 | $464,329 | $472,070 | $226,898 | $1,659,031 |
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
2. | the Funds investment performance and how it compared to that of certain other comparable mutual funds; |
3. | the Funds expenses and how those expenses compared to those of certain other comparable mutual funds; |
4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served1) | During the Past Five Years | the Trustee | Other Directorships | |||
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 present). | 76 |
Director, WageWorks, Inc.
(2010 present) Director, Redwood Trust, Inc. (1998 present) Director, PMI Group Inc. (2001 2009) |
|||
John F. Cogan 1947 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 present); Senior Fellow, Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 2000 present). | 76 |
Director, Gilead Sciences, Inc.
(2005 present) Director, Monaco Coach Corporation (2005 2009) |
|||
David L. Mahoney 1954 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Private Investor. | 76 |
Director, Symantec Corporation
(2003 present) Director, Corcept Therapeutics Incorporated (2004 present) |
|||
Kiran M. Patel 1948 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 Sept. 2013). | 76 | Director, KLA-Tencor Corporation (2008 present) | |||
Gerald B. Smith 1950 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 present). | 76 |
Director, Eaton
(2012 present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 2013) Director, Oneok, Inc. (2009 2013) Lead Independent Director, Board of Cooper Industries (2002 2012) |
|||
Joseph H. Wender 1944 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 present); Partner, Colgin Partners, LLC (vineyards) (February 1998 present). | 76 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 present) | |||
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served) | During the Past Five Years | the Trustee | Other Directorships | |||
Charles R.
Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Annuity Portfolios since 1994.) |
Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | 76 | None | |||
Walter W. Bettinger
II2 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. | 97 | None | |||
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Annuity Portfolios since 2010.) |
Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 present); Director, President and Chief Executive Officer (Dec. 2010 present), Chief Investment Officer (Sept. 2010 Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 present), and Chief Investment Officer (Sept. 2010 Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Annuity Portfolios since 2004.) |
Senior Vice President and Chief Financial Officer (Nov. 2004 present), Chief Operating Officer (Jan. 2011 present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 present) and Schwab ETFs (Oct. 2009 present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer Equities (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Equities, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Equities, Schwab Funds and Laudus Funds (June 2011 present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 Jan. 2009). | |
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer Fixed Income (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Fixed Income, Schwab Funds and Laudus Funds (June 2011 present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 Jan. 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President (Sept. 2011 present), Vice President (March 2004 Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 present), Vice President (Jan. 2011 Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 present) and Chief Legal Officer (Dec. 2011 present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 present); Secretary (May 2011 present) and Chief Legal Officer (Nov. 2011 present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Annuity Portfolios since 2005.) |
Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 present); Vice President (Dec. 2005 present), Chief Legal Officer and Clerk (March 2007 present), Laudus Funds; Vice President (Nov. 2005 present) and Assistant Secretary (June 2007 present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 present). | |
1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first. | |
2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. | |
3 | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
Schwab MarketTrack Growth Portfolio IItm |
|||||
Semiannual report dated June 30, 2014 |
7.14% | S&P 500® Index: measures U.S. large-cap stocks | |||
3.19% | Russell 2000® Index: measures U.S. small-cap stocks | |||
4.78% | MSCI EAFE® Index (Net): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East | |||
3.93% | Barclays U.S. Aggregate Bond Index: measures the U.S. bond market | |||
0.02% | Barclays U.S. Treasury Bills 1-3 Months Index: measures short-term U.S. Treasury obligations |
Zifan Tang, CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the portfolio. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Portfolio and inception Date | 6 Months | 1 Year | 5 Years | 10 Years | ||||||||||||||||
Portfolio:
Schwab MarketTrack Growth Portfolio
IItm
(11/01/96)
|
4.75 | % | 19.13 | % | 14.49 | % | 6.96 | % | ||||||||||||
Growth Composite Index
|
5.24 | % | 19.62 | % | 14.72 | % | 7.46 | % | ||||||||||||
S&P
500®
Index
|
7.14 | % | 24.61 | % | 18.83 | % | 7.78 | % | ||||||||||||
Barclays U.S. Aggregate Bond Index
|
3.93 | % | 4.37 | % | 4.85 | % | 4.93 | % | ||||||||||||
Fund Category: Morningstar Aggressive Allocation
|
5.78 | % | 19.28 | % | 14.25 | % | 6.74 | % |
Number of Holdings
|
10 | |||
Portfolio Turnover
Rate4
|
5% |
Equity Funds Large-Cap
|
40.2% | |||
Equity Funds International
|
20.0% | |||
Equity Funds Small-Cap
|
20.0% | |||
Fixed Income Funds
Intermediate Term Bond
|
14.7% | |||
Short-Term Investments
|
3.4% | |||
Money Market Fund
|
1.7% | |||
Total
|
100.0% |
Schwab S&P 500 Index Fund
|
30.3% | |||
Schwab Small-Cap Index Fund
|
20.1% | |||
Schwab International Index Fund
|
20.0% | |||
Schwab Total Bond Market Fund
|
14.8% | |||
Schwab 1000 Index Fund
|
10.0% | |||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
1.6% | |||
Total
|
96.8% |
1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. | |
2 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolios returns would have been lower. Portfolio performance does not reflect the additional fees and expenses imposed by the insurance company under the variable insurance product contract. If those contract fees and expenses were included, the performance would be less than that shown. Please refer to the variable insurance product prospectus for a complete listing of these expenses. | |
3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.18%. Net Expense: Expenses reduced by a contractual fee waiver in effect through at least 4/29/16. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. | |
4 | Not annualized. | |
5 | The portfolio invests mainly in other Schwab Funds and/or Laudus Funds. | |
6 | This list is not a recommendation of any security by the investment adviser. | |
7 | The holdings listed exclude any temporary liquidity investments. |
Ending |
||||||||||||||||
Beginning |
Account Value |
Expenses Paid |
||||||||||||||
Expense
Ratio1 |
Account Value |
(Net of Expenses) |
During
Period2 |
|||||||||||||
(Annualized) | at 1/1/14 | at 6/30/14 | 1/1/146/30/14 | |||||||||||||
Schwab MarketTrack Growth Portfolio IItm | ||||||||||||||||
Actual Return
|
0.50% | $ | 1,000.00 | $ | 1,047.50 | $ | 2.54 | |||||||||
Hypothetical 5% Return
|
0.50% | $ | 1,000.00 | $ | 1,022.32 | $ | 2.51 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio. | |
2 | Expenses for the portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year. |
1/1/14 |
1/1/13 |
1/1/12 |
1/1/11 |
1/1/10 |
1/1/09 |
|||||||||||||||||||||
6/30/14* | 12/31/13 | 12/31/12 | 12/31/11 | 12/31/10 | 12/31/09 | |||||||||||||||||||||
Per-Share Data ($)
|
||||||||||||||||||||||||||
Net asset value at beginning of period
|
19.30 | 16.04 | 14.50 | 14.89 | 13.40 | 11.09 | ||||||||||||||||||||
Income (loss) from investment operations:
|
||||||||||||||||||||||||||
Net investment income (loss)
|
(0.02 | )1 | 0.23 | 1 | 0.29 | 1 | 0.27 | 1 | 0.20 | 1 | 0.25 | |||||||||||||||
Net realized and unrealized gains (losses)
|
0.94 | 3.48 | 1.64 | (0.40 | ) | 1.62 | 2.41 | |||||||||||||||||||
Total from investment operations
|
0.92 | 3.71 | 1.93 | (0.13 | ) | 1.82 | 2.66 | |||||||||||||||||||
Less distributions:
|
||||||||||||||||||||||||||
Distributions from net investment income
|
(0.26 | ) | (0.30 | ) | (0.39 | ) | (0.26 | ) | (0.33 | ) | (0.35 | ) | ||||||||||||||
Distributions from net realized gains
|
(0.66 | ) | (0.15 | ) | | | | | ||||||||||||||||||
Total distributions
|
(0.92 | ) | (0.45 | ) | (0.39 | ) | (0.26 | ) | (0.33 | ) | (0.35 | ) | ||||||||||||||
Net asset value at end of period
|
19.30 | 19.30 | 16.04 | 14.50 | 14.89 | 13.40 | ||||||||||||||||||||
Total return (%)
|
4.75 | 2 | 23.56 | 13.46 | (1.01 | ) | 13.62 | 24.02 | ||||||||||||||||||
Ratios/Supplemental Data (%)
|
||||||||||||||||||||||||||
Ratios to average net assets:
|
||||||||||||||||||||||||||
Net operating
expenses3
|
0.50 | 4 | 0.50 | 0.50 | 0.50 | 0.50 | 0.50 | |||||||||||||||||||
Gross operating
expenses3
|
0.74 | 4 | 0.80 | 0.83 | 0.80 | 0.77 | 0.77 | |||||||||||||||||||
Net investment income (loss)
|
(0.16 | )4 | 1.28 | 1.85 | 1.78 | 1.41 | 2.03 | |||||||||||||||||||
Portfolio turnover rate
|
5 | 2 | 13 | 8 | 20 | 22 | 12 | |||||||||||||||||||
Net assets, end of period ($ x 1,000,000)
|
33 | 32 | 28 | 28 | 29 | 36 |
Cost |
Value |
|||||||||||
Holdings by Category | ($) | ($) | ||||||||||
96 | .8% | Other Investment Companies | 20,095,935 | 31,496,462 | ||||||||
3 | .4% | Short-Term Investments | 1,099,695 | 1,099,695 | ||||||||
100 | .2% | Total Investments | 21,195,630 | 32,596,157 | ||||||||
(0 | .2%) | Other Assets and Liabilities, Net | (56,648 | ) | ||||||||
100 | .0% | Net Assets | 32,539,509 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Other Investment Companies 96.8% of net assets
|
||||||||
Equity Funds 80.4% |
||||||||
International 20.0% | ||||||||
Schwab International Index Fund (a)
|
313,388 | 6,521,611 | ||||||
Large-Cap 40.3% | ||||||||
Schwab 1000 Index Fund (a)
|
62,465 | 3,252,548 | ||||||
Schwab S&P 500 Index Fund (a)
|
319,155 | 9,858,704 | ||||||
13,111,252 | ||||||||
Small-Cap 20.1% | ||||||||
Schwab Small-Cap Index Fund (a)
|
229,322 | 6,528,804 | ||||||
26,161,667 | ||||||||
Fixed-Income Fund 14.8% |
||||||||
Intermediate-Term Bond 14.8% | ||||||||
Schwab Total Bond Market Fund (a)
|
504,622 | 4,798,956 | ||||||
Money Market Fund 1.6% |
||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
0.01% (a)(b)
|
535,839 | 535,839 | ||||||
Total Other Investment Companies | ||||||||
(Cost $20,095,935) | 31,496,462 | |||||||
Issuer |
Face Amount |
Value |
||||||
Rate, Maturity Date | ($) | ($) | ||||||
Short-Term Investments 3.4% of net assets
|
||||||||
Time Deposits 3.4% |
||||||||
Australia & New Zealand Banking Group Ltd. | ||||||||
0.03%,
07/01/14
|
325,639 | 325,639 | ||||||
DNB | ||||||||
0.03%,
07/01/14
|
325,639 | 325,639 | ||||||
Skandinaviska Enskilda Banken | ||||||||
0.03%,
07/01/14
|
325,639 | 325,639 | ||||||
Sumitomo Mitsui Banking Corp. | ||||||||
0.03%,
07/01/14
|
122,778 | 122,778 | ||||||
Total Short-Term Investments | ||||||||
(Cost $1,099,695) | 1,099,695 | |||||||
End of Investments.
|
(a) | Issuer is affiliated with the funds adviser. | |
(b) | The rate shown is the 7-day yield. |
Quoted
Prices in |
Significant |
|||||||||||||||
Active
Markets for |
Other
Significant |
Unobservable |
||||||||||||||
Identical
Assets |
Observable
Inputs |
Inputs |
||||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Other Investment
Companies1
|
$31,496,462 | $ | $ | $31,496,462 | ||||||||||||
Short-Term
Investments1
|
| 1,099,695 | | 1,099,695 | ||||||||||||
Total
|
$31,496,462 | $1,099,695 | $ | $32,596,157 | ||||||||||||
1
|
As categorized in Portfolio Holdings. |
Assets
|
||||||
Investments in affiliated underlying funds, at value (cost
$20,095,935)
|
$31,496,462 | |||||
Investments in unaffiliated issuers, (cost $1,099,695)
|
+ | 1,099,695 | ||||
Total investments, at value (cost $21,195,630)
|
32,596,157 | |||||
Receivables:
|
||||||
Investments sold
|
151,000 | |||||
Dividends
|
8,603 | |||||
Fund shares sold
|
6,603 | |||||
Interest
|
1 | |||||
Prepaid expenses
|
+ | 121 | ||||
Total assets
|
32,762,485 | |||||
Liabilities
|
||||||
Payables:
|
||||||
Investments bought
|
169,612 | |||||
Investment adviser and administrator fees
|
760 | |||||
Fund shares redeemed
|
18,530 | |||||
Accrued expenses
|
+ | 34,074 | ||||
Total liabilities
|
222,976 | |||||
Net Assets
|
||||||
Total assets
|
32,762,485 | |||||
Total liabilities
|
− | 222,976 | ||||
Net assets
|
$32,539,509 | |||||
Net Assets by Source
|
||||||
Capital received from investors
|
21,748,621 | |||||
Distributions in excess of net investment income
|
(24,569 | ) | ||||
Net realized capital losses
|
(585,070 | ) | ||||
Net unrealized capital appreciation
|
11,400,527 | |||||
Net Asset Value (NAV)
|
Shares |
||||||||||||
Net Assets | ÷ | Outstanding | = | NAV | ||||||||
$32,539,509
|
1,685,681 | $19.30 |
Investment Income
|
||||||
Dividends received from affiliated underlying funds
|
$53,009 | |||||
Interest
|
+ | 152 | ||||
Total investment income
|
53,161 | |||||
Expenses
|
||||||
Investment adviser and administrator fees
|
68,364 | |||||
Professional fees
|
19,836 | |||||
Transfer agent fees
|
10,935 | |||||
Shareholder reports
|
5,778 | |||||
Independent trustees fees
|
4,351 | |||||
Portfolio accounting fees
|
2,961 | |||||
Custodian fees
|
1,920 | |||||
Other expenses
|
+ | 410 | ||||
Total expenses
|
114,555 | |||||
Expense reduction by CSIM
|
− | 36,868 | ||||
Net expenses
|
− | 77,687 | ||||
Net investment loss
|
(24,526 | ) | ||||
Realized and Unrealized Gains (Losses)
|
||||||
Net realized gains on sales of affiliated underlying funds
|
150,603 | |||||
Net realized gains on unaffiliated investments
|
+ | 58 | ||||
Net realized gains
|
150,661 | |||||
Net change in unrealized appreciation (depreciation) on
investments
|
+ | 1,355,428 | ||||
Net realized and unrealized gains
|
1,506,089 | |||||
Increase in net assets resulting from operations
|
$1,481,563 |
Operations
|
||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||
Net investment income (loss)
|
($24,526 | ) | $383,696 | |||||||
Net realized gains
|
150,661 | 1,094,335 | ||||||||
Net change in unrealized appreciation (depreciation)
|
+ | 1,355,428 | 4,801,914 | |||||||
Increase in net assets from operations
|
1,481,563 | 6,279,945 | ||||||||
Distributions to Shareholders
|
||||||||||
Distributions from net investment income
|
(416,505 | ) | (515,494 | ) | ||||||
Distributions from net realized gains
|
+ | (1,060,180 | ) | (261,488 | ) | |||||
Total distributions
|
($1,476,685 | ) | ($776,982 | ) |
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | VALUE | SHARES | VALUE | |||||||||||||||
Shares sold
|
80,723 | $1,571,220 | 160,572 | $2,826,615 | ||||||||||||||
Shares reinvested
|
76,512 | 1,476,685 | 45,786 | 776,982 | ||||||||||||||
Shares redeemed
|
+ | (106,064 | ) | (2,055,805 | ) | (295,004 | ) | (5,202,701 | ) | |||||||||
Net transactions in fund shares
|
51,171 | $992,100 | (88,646 | ) | ($1,599,104 | ) | ||||||||||||
Shares Outstanding and Net Assets
|
||||||||||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | NET ASSETS | SHARES | NET ASSETS | |||||||||||||||
Beginning of period
|
1,634,510 | $31,542,531 | 1,723,156 | $27,638,672 | ||||||||||||||
Total increase or decrease
|
+ | 51,171 | 996,978 | (88,646 | ) | 3,903,859 | ||||||||||||
End of period
|
1,685,681 | $32,539,509 | 1,634,510 | $31,542,531 | ||||||||||||||
Distributions in excess of net investment income/Net
investment income not yet distributed
|
($24,569 | ) | $416,462 |
Schwab Annuity Portfolios (organized January 21, 1994)
|
||||
Schwab Money Market Portfolio
|
||||
Schwab MarketTrack Growth Portfolio II
|
||||
Schwab S&P 500 Index Portfolio
|
||||
Schwab VIT Balanced Portfolio
|
||||
Schwab VIT Balanced with Growth Portfolio
|
||||
Schwab VIT Growth Portfolio
|
||||
| Underlying funds: Mutual funds are valued at their respective NAVs. | |
| Securities for which no quoted value is available: The Board has adopted procedures to fair value the funds securities when market prices are not readily available or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a securitys primary pricing source is unable or unwilling to provide a price; or when a securitys primary trading market is closed during regular market hours. The fund makes fair value |
determinations in good faith in accordance with the funds valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures. |
| Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value. |
| Level 1 quoted prices in active markets for identical securities Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. Investments in mutual funds are valued daily at their NAVs, which are classified as Level 1 prices. | |
| Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. | |
| Level 3 significant unobservable inputs (including the funds own assumptions in determining the fair value of investments) Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds results of operations. |
| Concentration Risk. To the extent that an underlying funds or an indexs portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the underlying fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political, or regulatory occurrences affecting that market, industry, group of industries, sector or asset class. | |
| Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective. | |
| Investment Style Risk. The underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Each underlying fund follows these stocks during upturns as well as downturns. Because of their indexing strategy, the underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying funds expenses, the underlying funds performance is normally below that of the index. | |
| Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. | |
| Tracking Error Risk. Each underlying index fund seeks to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called tracking error. Tracking error can be caused by many factors and it may be significant. | |
| Large-Cap Risk. Many of the risks of the underlying funds are associated with their investment in the large-cap segments of the stock market. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments bonds or mid- or small- cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments large-cap and mid-cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Foreign Investment Risk. An underlying funds investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); 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. To the extent an underlying funds investment in a single country or a limited number of countries represents a large percentage of the underlying funds assets, the underlying funds performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility. |
| Currency Risk. As a result of an underlying funds investments in securities denominated in, and/or receiving revenues in foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in a fund would be adversely affected. | |
| Derivatives Risk. An underlying funds use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on an underlying fund. | |
| Exchange-Traded Funds (ETF) Risk. When a fund invests in an ETF, it will bear a proportionate share of the ETFs expenses. In addition, lack of liquidity in an ETF can result in its value being more volatile than the underlying portfolio of securities. | |
| Debt Securities Risk. Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by the fund fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to their issuers ability to make timely payments or otherwise honor their obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy. | |
| Interest Rate Risk. An underlying funds investments in fixed income securities are subject to the risk that interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, an underlying funds yield will change over time. During periods when interest rates are low, an underlying funds yield (and total return) also may be low. Changes in interest rates also may affect an underlying funds share price: a sharp rise in interest rates could cause the underlying funds share price to fall. The longer the underlying funds duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central banks monetary policy (e.g., tapering of the Federal Reserve Boards quantitative easing program) or improving economic conditions may result in an increase in interest rates. | |
| Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. | |
| Securities Lending Risk. An underlying fund may lend its portfolio securities to brokers, dealers, and other financial institutions. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent. |
Average
Daily Net Assets
|
||||
First $500 million
|
0.44% | |||
Over $500 million
|
0.39% |
Schwab International Index Fund
|
0.2% | |||
Schwab 1000 Index Fund
|
0.1% | |||
Schwab S&P 500 Index Fund
|
0.1% | |||
Schwab Small-Cap Index Fund
|
0.2% | |||
Schwab Total Bond Market Fund
|
0.5% | |||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
0.0% | * |
*
|
Less than 0.1% |
Realized |
Distributions |
|||||||||||||||||||||||||||
Balance
of |
Balance
of |
Market |
Gains
(Losses) |
Received* |
||||||||||||||||||||||||
Shares
Held |
Gross |
Gross |
Shares
Held |
Value
at |
01/01/14
to |
01/01/14
to |
||||||||||||||||||||||
Underlying
Funds
|
at
12/31/13
|
Purchases
|
Sales
|
at
06/30/14
|
06/30/14
|
06/30/14
|
06/30/14
|
|||||||||||||||||||||
Schwab International Index Fund
|
321,256 | 14,484 | (22,352 | ) | 313,388 | $6,521,611 | $24,102 | $ | ||||||||||||||||||||
Schwab 1000 Index Fund
|
65,712 | 1,318 | (4,565 | ) | 62,465 | 3,252,548 | 22,249 | | ||||||||||||||||||||
Schwab S&P 500 Index Fund
|
331,594 | 9,651 | (22,090 | ) | 319,155 | 9,858,704 | 91,288 | | ||||||||||||||||||||
Schwab Small-Cap Index Fund
|
229,403 | 18,068 | (18,149 | ) | 229,322 | 6,528,804 | 15,013 | | ||||||||||||||||||||
Schwab Total Bond Market Fund
|
497,488 | 38,092 | (30,958 | ) | 504,622 | 4,798,956 | (2,049 | ) | 52,974 | |||||||||||||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
535,806 | 33 | | 535,839 | 535,839 | | 35 | |||||||||||||||||||||
Total
|
$31,496,462 | $150,603 | $53,009 | |||||||||||||||||||||||||
*
|
Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Purchases
of Securities
|
Sales/Maturities
of Securities
|
|||||
$1,481,735 | $2,110,000 |
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
2. | the Funds investment performance and how it compared to that of certain other comparable mutual funds; |
3. | the Funds expenses and how those expenses compared to those of certain other comparable mutual funds; |
4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served1) | During the Past Five Years | the Trustee | Other Directorships | |||
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 present). | 76 |
Director, WageWorks, Inc.
(2010 present) Director, Redwood Trust, Inc. (1998 present) Director, PMI Group Inc. (2001 2009) |
|||
John F. Cogan 1947 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 present); Senior Fellow, Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 2000 present). | 76 |
Director, Gilead Sciences, Inc.
(2005 present) Director, Monaco Coach Corporation (2005 2009) |
|||
David L. Mahoney 1954 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Private Investor. | 76 |
Director, Symantec Corporation
(2003 present) Director, Corcept Therapeutics Incorporated (2004 present) |
|||
Kiran M. Patel 1948 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 Sept. 2013). | 76 | Director, KLA-Tencor Corporation (2008 present) | |||
Gerald B. Smith 1950 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 present). | 76 |
Director, Eaton
(2012 present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 2013) Director, Oneok, Inc. (2009 2013) Lead Independent Director, Board of Cooper Industries (2002 2012) |
|||
Joseph H. Wender 1944 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 present); Partner, Colgin Partners, LLC (vineyards) (February 1998 present). | 76 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 present) | |||
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served) | During the Past Five Years | the Trustee | Other Directorships | |||
Charles R.
Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Annuity Portfolios since 1994.) |
Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | 76 | None | |||
Walter W. Bettinger
II2 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. | 97 | None | |||
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Annuity Portfolios since 2010.) |
Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 present); Director, President and Chief Executive Officer (Dec. 2010 present), Chief Investment Officer (Sept. 2010 Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 present), and Chief Investment Officer (Sept. 2010 Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Annuity Portfolios since 2004.) |
Senior Vice President and Chief Financial Officer (Nov. 2004 present), Chief Operating Officer (Jan. 2011 present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 present) and Schwab ETFs (Oct. 2009 present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer Equities (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Equities, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Equities, Schwab Funds and Laudus Funds (June 2011 present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 Jan. 2009). | |
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer Fixed Income (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Fixed Income, Schwab Funds and Laudus Funds (June 2011 present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 Jan. 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President (Sept. 2011 present), Vice President (March 2004 Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 present), Vice President (Jan. 2011 Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 present) and Chief Legal Officer (Dec. 2011 present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 present); Secretary (May 2011 present) and Chief Legal Officer (Nov. 2011 present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Annuity Portfolios since 2005.) |
Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 present); Vice President (Dec. 2005 present), Chief Legal Officer and Clerk (March 2007 present), Laudus Funds; Vice President (Nov. 2005 present) and Assistant Secretary (June 2007 present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 present). | |
1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first. | |
2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. | |
3 | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
Schwab VIT Balanced Portfolio |
|||||
Semiannual report dated June 30, 2014 |
7.14% | S&P 500® Index: measures U.S. large-cap stocks | |||
3.19% | Russell 2000® Index: measures U.S. small-cap stocks | |||
4.78% | MSCI EAFE® Index (Net): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East | |||
3.93% | Barclays U.S. Aggregate Bond Index: measures the U.S. bond market | |||
0.02% | Barclays U.S. Treasury Bills 1-3 Months Index: measures short-term U.S. Treasury obligations |
Zifan Tang, CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the portfolio. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Portfolio and inception Date | 6 Months | 1 Year | Since Inception | ||||||||||||
Portfolio: Schwab VIT Balanced Portfolio (07/25/12)
|
4.78 | % | 11.02 | % | 8.74 | % | |||||||||
VIT Balanced Composite Index
|
5.25 | % | 11.51 | % | 9.50 | % | |||||||||
S&P
500®
Index
|
7.14 | % | 24.61 | % | 24.49 | % | |||||||||
Barclays U.S. Aggregate Bond Index
|
3.93 | % | 4.37 | % | 1.10 | % | |||||||||
Fund Category: Morningstar Conservative Allocation
|
4.90 | % | 10.80 | % | 9.64 | % |
Number of Holdings
|
20 | |||
Portfolio Turnover
Rate4
|
9% |
Fixed Income
|
36.9% | |||
Stocks U.S.
|
20.7% | |||
Stocks International
|
18.3% | |||
Money Market Fund
|
11.5% | |||
Real Assets
|
9.0% | |||
Short-Term Investments
|
3.6% | |||
Total
|
100.0% |
Schwab U.S. Large-Cap ETF
|
15.8% | |||
iShares MBS ETF
|
12.4% | |||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
11.5% | |||
Schwab International Equity ETF
|
11.3% | |||
Schwab Intermediate-Term U.S. Treasury ETF
|
11.0% | |||
iShares Core U.S. Credit Bond ETF
|
6.5% | |||
Schwab U.S. REIT ETF
|
6.0% | |||
Schwab Emerging Markets Equity ETF
|
5.0% | |||
Schwab U.S. Small-Cap ETF
|
3.8% | |||
Credit Suisse Commodity Return Strategy Fund, Class I
|
3.0% | |||
Total
|
86.3% |
1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. | |
2 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolios returns would have been lower. Portfolio performance does not reflect the additional fees and expenses imposed by the insurance company under the variable insurance product contract. If those contract fees and expenses were included, the performance would be less than that shown. Please refer to the variable insurance product prospectus for a complete listing of these expenses. | |
3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.21%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. | |
4 | Not annualized. | |
5 | The portfolio intends to primarily invest in affiliated Schwab exchange traded funds (ETFs) and unaffiliated third-party ETFs. The portfolio may also invest in affiliated Schwab and Laudus Funds and unaffiliated third party mutual funds (all such ETFs and mutual funds referred to as underlying funds). The portfolio may also invest directly in equity or fixed income securities, and money market investments to achieve its investment objectives. | |
6 | This list is not a recommendation of any security by the investment adviser. | |
7 | The holdings listed exclude any temporary liquidity investments. |
Ending |
||||||||||||||||
Beginning |
Account Value |
Expenses Paid |
||||||||||||||
Expense
Ratio1 |
Account Value |
(Net of Expenses) |
During
Period2 |
|||||||||||||
(Annualized) | at 1/1/14 | at 6/30/14 | 1/1/146/30/14 | |||||||||||||
Schwab VIT Balanced Portfolio | ||||||||||||||||
Actual Return
|
0.56% | $ | 1,000.00 | $ | 1,047.80 | $ | 2.84 | |||||||||
Hypothetical 5% Return
|
0.56% | $ | 1,000.00 | $ | 1,022.02 | $ | 2.81 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio. | |
2 | Expenses for the portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year. |
1/1/14 |
1/1/13 |
7/25/121 |
||||||||||||
6/30/14* | 12/31/13 | 12/31/12 | ||||||||||||
Per-Share Data ($)
|
||||||||||||||
Net asset value at beginning of period
|
11.21 | 10.50 | 10.00 | |||||||||||
Income (loss) from investment operations:
|
||||||||||||||
Net investment income (loss)
|
0.03 | 2 | 0.17 | 2 | 0.08 | |||||||||
Net realized and unrealized gains (losses)
|
0.50 | 0.55 | 0.42 | |||||||||||
Total from investment operations
|
0.53 | 0.72 | 0.50 | |||||||||||
Less distributions:
|
||||||||||||||
Distributions from net investment income
|
(0.06 | ) | (0.01 | ) | | |||||||||
Distributions from net realized gains
|
(0.00 | )3 | | | ||||||||||
Total distributions
|
(0.06 | ) | (0.01 | ) | | |||||||||
Net asset value at end of period
|
11.68 | 11.21 | 10.50 | |||||||||||
Total return (%)
|
4.78 | 4 | 6.89 | 5.00 | 4 | |||||||||
Ratios/Supplemental Data (%)
|
||||||||||||||
Ratios to average net assets:
|
||||||||||||||
Net operating
expenses5
|
0.56 | 6 | 0.58 | 0.58 | 6 | |||||||||
Gross operating
expenses5
|
0.71 | 6 | 1.07 | 10.58 | 6 | |||||||||
Net investment income (loss)
|
0.57 | 6 | 1.55 | 3.94 | 6 | |||||||||
Portfolio turnover rate
|
9 | 4 | 18 | 1 | 4 | |||||||||
Net assets, end of period ($ x 1,000,000)
|
41 | 28 | 2 |
Cost |
Value |
|||||||||||
Holdings by Category | ($) | ($) | ||||||||||
96 | .3% | Other Investment Companies | 36,722,788 | 39,141,979 | ||||||||
3 | .6% | Short-Term Investments | 1,482,128 | 1,482,128 | ||||||||
99 | .9% | Total Investments | 38,204,916 | 40,624,107 | ||||||||
0 | .1% | Other Assets and Liabilities, Net | 40,947 | |||||||||
100 | .0% | Net Assets | 40,665,054 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Other Investment Companies 96.3% of net assets
|
||||||||
U.S. Stocks 20.6% |
||||||||
Large-Cap 15.8% | ||||||||
Schwab U.S. Large-Cap ETF (a)
|
137,482 | 6,438,282 | ||||||
Micro-Cap 1.0% | ||||||||
iShares Micro-Cap ETF
|
5,477 | 416,909 | ||||||
Small-Cap 3.8% | ||||||||
Schwab U.S. Small-Cap ETF (a)
|
28,014 | 1,535,447 | ||||||
8,390,638 | ||||||||
International Stocks 18.3% |
||||||||
Developed-Market Large-Cap 11.3% | ||||||||
Schwab International Equity ETF (a)
|
138,854 | 4,579,405 | ||||||
Developed-Market Small-Cap 2.0% | ||||||||
Schwab International Small-Cap Equity ETF (a)
|
23,922 | 819,807 | ||||||
Emerging-Market 5.0% | ||||||||
Schwab Emerging Markets Equity ETF (a)
|
77,691 | 2,022,297 | ||||||
7,421,509 | ||||||||
Real Assets 9.0% |
||||||||
Commodity 3.0% | ||||||||
Credit Suisse Commodity Return Strategy Fund,
Class I *
|
157,207 | 1,210,493 | ||||||
Real Estate 6.0% | ||||||||
Schwab U.S. REIT ETF (a)
|
69,150 | 2,445,836 | ||||||
3,656,329 | ||||||||
Fixed Income 36.9% |
||||||||
Agency Bond 2.0% | ||||||||
iShares Agency Bond ETF
|
7,189 | 809,985 | ||||||
Corporate Bond 6.5% | ||||||||
iShares Core U.S. Credit Bond ETF
|
23,658 | 2,636,448 | ||||||
High Yield Bond 1.3% | ||||||||
SPDR Barclays High Yield Bond ETF
|
12,585 | 525,172 | ||||||
Inflation-Protected Bond 1.7% | ||||||||
Schwab U.S. TIPS ETF (a)
|
12,197 | 679,373 | ||||||
International Developed-Market Bond 2.0% | ||||||||
SPDR Barclays International Treasury Bond ETF
|
13,333 | 810,513 | ||||||
Mortgage-Backed Bond 12.4% | ||||||||
iShares MBS ETF
|
46,838 | 5,068,808 | ||||||
Treasury Bond 11.0% | ||||||||
Schwab Intermediate-Term U.S. Treasury ETF (a)
|
83,948 | 4,460,997 | ||||||
14,991,296 | ||||||||
Money Market Fund 11.5% |
||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
0.01% (a)(b)
|
4,682,207 | 4,682,207 | ||||||
Total Other Investment Companies | ||||||||
(Cost $36,722,788) | 39,141,979 | |||||||
Issuer |
Face Amount |
Value |
||||||
Rate, Maturity Date | ($) | ($) | ||||||
Short-Term Investments 3.6% of net assets
|
||||||||
Time Deposits 3.6% |
||||||||
DBS Bank Ltd. | ||||||||
0.03%,
07/01/14
|
265,508 | 265,508 | ||||||
DNB | ||||||||
0.03%,
07/01/14
|
405,540 | 405,540 | ||||||
Skandinaviska Enskilda Banken | ||||||||
0.03%,
07/01/14
|
405,540 | 405,540 | ||||||
Sumitomo Mitsui Banking Corp. | ||||||||
0.03%,
07/01/14
|
405,540 | 405,540 | ||||||
Total Short-Term Investments | ||||||||
(Cost $1,482,128) | 1,482,128 | |||||||
End of Investments.
|
* | Non-income producing security. | |
(a) | Issuer is affiliated with the funds adviser. | |
(b) | The rate shown is the 7-day yield. |
ETF
|
Exchange traded fund | |
MBS
|
Mortgage-Backed Security | |
REIT
|
Real Estate Investment Trust | |
SPDR
|
Standard & Poors Depositary Receipts | |
TIPS
|
Treasury Inflation Protected Securities |
Quoted
Prices in |
Significant |
|||||||||||||||
Active
Markets for |
Other
Significant |
Unobservable |
||||||||||||||
Identical
Assets |
Observable
Inputs |
Inputs |
||||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Other Investment
Companies1
|
$39,141,979 | $ | $ | $39,141,979 | ||||||||||||
Short-Term
Investments1
|
| 1,482,128 | | 1,482,128 | ||||||||||||
Total
|
$39,141,979 | $1,482,128 | $ | $40,624,107 | ||||||||||||
1
|
As categorized in Portfolio Holdings. |
Assets
|
||||||
Investments in affiliated underlying funds, at value (cost
$25,528,622)
|
$27,663,651 | |||||
Investments in unaffiliated issuers, at value (cost $12,676,294)
|
+ | 12,960,456 | ||||
Total investments, at value (cost $38,204,916)
|
40,624,107 | |||||
Receivables:
|
||||||
Investments sold
|
150,037 | |||||
Fund shares sold
|
153,831 | |||||
Dividends
|
+ | 19 | ||||
Total assets
|
40,927,994 | |||||
Liabilities
|
||||||
Payables:
|
||||||
Investments bought
|
231,716 | |||||
Investment adviser and administrator fees
|
1,249 | |||||
Fund shares redeemed
|
4,939 | |||||
Accrued expenses
|
+ | 25,036 | ||||
Total liabilities
|
262,940 | |||||
Net Assets
|
||||||
Total assets
|
40,927,994 | |||||
Total liabilities
|
− | 262,940 | ||||
Net assets
|
$40,665,054 | |||||
Net Assets by Source
|
||||||
Capital received from investors
|
38,276,327 | |||||
Net investment income not yet distributed
|
93,633 | |||||
Net realized capital losses
|
(124,097 | ) | ||||
Net unrealized capital appreciation
|
2,419,191 | |||||
Net Asset Value (NAV)
|
Shares |
||||||||||||
Net Assets | ÷ | Outstanding | = | NAV | ||||||||
$40,665,054
|
3,480,484 | $11.68 |
Investment Income
|
||||||
Dividends received from affiliated underlying funds
|
$110,585 | |||||
Dividends received from unaffiliated underlying funds
|
75,230 | |||||
Interest
|
+ | 154 | ||||
Total investment income
|
185,969 | |||||
Expenses
|
||||||
Investment adviser and administrator fees
|
73,711 | |||||
Professional fees
|
17,185 | |||||
Transfer agent fees
|
10,681 | |||||
Custodian fees
|
4,818 | |||||
Independent trustees fees
|
4,227 | |||||
Portfolio accounting fees
|
3,013 | |||||
Shareholder reports
|
2,882 | |||||
Other expenses
|
+ | 326 | ||||
Total expenses
|
116,843 | |||||
Expense reduction by CSIM
|
− | 24,707 | ||||
Net expenses
|
− | 92,136 | ||||
Net investment income
|
93,833 | |||||
Realized and Unrealized Gains (Losses)
|
||||||
Net realized losses on sales of affiliated underlying funds
|
(57,641 | ) | ||||
Net realized losses on sales of unaffiliated underlying funds
|
+ | (23,036 | ) | |||
Net realized losses
|
(80,677 | ) | ||||
Net change in unrealized appreciation (depreciation) on
affiliated underlying funds
|
1,244,814 | |||||
Net change in unrealized appreciation (depreciation) on
unaffiliated underlying funds
|
+ | 370,864 | ||||
Net change in unrealized appreciation (depreciation)
|
+ | 1,615,678 | ||||
Net realized and unrealized gains
|
1,535,001 | |||||
Increase in net assets resulting from operations
|
$1,628,834 |
Operations
|
||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||
Net investment income
|
$93,833 | $222,651 | ||||||||
Net realized losses
|
(80,677 | ) | (40,228 | ) | ||||||
Net change in unrealized appreciation (depreciation)
|
+ | 1,615,678 | 784,145 | |||||||
Increase in net assets from operations
|
1,628,834 | 966,568 | ||||||||
Distributions to Shareholders
|
||||||||||
Distributions from net investment income
|
(222,767 | ) | (18,631 | ) | ||||||
Distributions from net realized gains
|
+ | (3,103 | ) | | ||||||
Total distributions
|
($225,870 | ) | ($18,631 | ) |
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | VALUE | SHARES | VALUE | |||||||||||||||
Shares sold
|
1,169,839 | $13,369,540 | 2,473,872 | $26,880,610 | ||||||||||||||
Shares reinvested
|
19,338 | 225,870 | 1,730 | 18,306 | ||||||||||||||
Shares redeemed
|
+ | (230,470 | ) | (2,596,594 | ) | (184,414 | ) | (2,004,307 | ) | |||||||||
Net transactions in fund shares
|
958,707 | $10,998,816 | 2,291,188 | $24,894,609 | ||||||||||||||
Shares Outstanding and Net Assets
|
||||||||||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | NET ASSETS | SHARES | NET ASSETS | |||||||||||||||
Beginning of period
|
2,521,777 | $28,263,274 | 230,589 | $2,420,728 | ||||||||||||||
Total increase
|
+ | 958,707 | 12,401,780 | 2,291,188 | 25,842,546 | |||||||||||||
End of period
|
3,480,484 | $40,665,054 | 2,521,777 | $28,263,274 | ||||||||||||||
Net investment income not yet distributed
|
$93,633 | $222,567 |
Schwab Annuity Portfolios (organized January 21, 1994)
|
||||
Schwab Money Market Portfolio
|
||||
Schwab MarketTrack Growth Portfolio II
|
||||
Schwab S&P 500 Index Portfolio
|
||||
Schwab VIT Balanced Portfolio
|
||||
Schwab VIT Balanced with Growth Portfolio
|
||||
Schwab VIT Growth Portfolio
|
||||
| Underlying funds: Mutual funds are valued at their respective NAVs. ETFs traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable. | |
| Securities for which no quoted value is available: The Board has adopted procedures to fair value the funds securities when market prices are not readily available or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a securitys primary pricing source is unable or unwilling to provide a |
price; or when a securitys primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the funds valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures. |
| Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value. |
| Level 1 quoted prices in active markets for identical securities Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and ETFs. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices. | |
| Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. | |
| Level 3 significant unobservable inputs (including the funds own assumptions in determining the fair value of investments) Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds results of operations. |
| Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. | |
| Large-Cap Risk. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments bonds or mid- or small- cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments bonds or large-cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Foreign Investment Risk. An underlying funds investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); 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 underlying funds investments, and could impair the underlying funds ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. To the extent an underlying funds investment in a single country or a limited number of countries represents a large percentage of the underlying funds assets, the underlying funds performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility. | |
| Emerging Market Risk. An underlying funds investments in securities of emerging market countries may involve certain risks that are greater than those associated with investments in securities of developed countries. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying funds investments in emerging market countries and, at times, it may be difficult to value such investments. | |
| Currency Risk. As a result of an underlying funds investments in securities denominated in, and/or receiving revenues in foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in an underlying fund would be adversely affected. | |
| Growth Investing Risk. Certain of the underlying funds pursue a growth style of investing. Growth investing focuses on a companys prospects for growth of revenue and earnings. If a companys earnings or revenues fall short of expectations, its stock price may fall dramatically. Growth stocks also can perform differently from the market as a whole and other |
types of stocks and can be more volatile than other types of stocks. Since growth companies usually invest a high portion of earnings in their business, they may lack the dividends of value stocks that can cushion stock prices in a falling market. Growth stocks may also be more expensive relative to their earnings or assets compared to value or other stocks. |
| Value Investing Risk. Certain of the underlying funds may pursue a value style of investing. Value investing focuses on companies whose stocks appear undervalued in light of factors such as the companys earnings, book value, revenues or cash flow. If an underlying funds investment advisers (or sub-advisers) assessment of a companys value or prospects for exceeding earnings expectations or market conditions is wrong, the underlying fund could suffer losses or produce poor performance relative to other funds. In addition, value stocks can continue to be undervalued by the market for long periods of time. | |
| Debt Securities Risk. Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by the fund fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to their issuers ability to make timely payments or otherwise honor their obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy. | |
| Interest Rate Risk. An underlying funds investments in fixed income securities are subject to the risk that interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, an underlying funds yield will change over time. During periods when interest rates are low, an underlying funds yield (and total return) also may be low. Changes in interest rates also may affect an underlying funds share price: a sharp rise in interest rates could cause the underlying funds share price to fall. The longer the underlying funds duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central banks monetary policy (e.g., tapering of the Federal Reserve Boards quantitative easing program) or improving economic conditions may result in an increase in interest rates. | |
| Credit Risk. Certain of the underlying funds are subject to the risk that a decline in the credit quality of a portfolio investment could cause the underlying funds share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations. Securities rated below investment grade (junk bonds) involve greater risk of price declines than investment grade securities due to actual or perceived changes in the issuers creditworthiness. | |
| Prepayment and Extension Risk. An underlying funds investments in fixed income securities are subject to the risk that the securities may be paid off earlier or later than expected. Either situation could cause the underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the underlying funds yield or share price. | |
| U.S. Government Securities Risk. Some of the U.S. government securities that the underlying funds invest 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. Certain securities such as those issued by the Federal Home Loan Banks are supported by limited lines of credit maintained by their issuers with the U.S. Treasury. Securities issued by other issuers, such as 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 underlying funds own do not extend to shares of the underlying funds themselves. | |
| Real Estate Investment Risk. An underlying fund in which the portfolio may invest may have a policy of concentrating its investments in real estate companies and companies related to the real estate industry. Such an underlying fund is subject to risks associated with the direct ownership of real estate securities and a portfolios investment in such an underlying fund is subject to risks associated with the direct ownership of real estate securities and an investment in the underlying fund will be closely linked to the performance of the real estate markets. These risks include, among others, declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds or other limits to accessing the credit or capital markets; defaults by borrowers or tenants, particularly during an economic downturn; and changes in interest rates. |
| Real Estate Investment Trust (REIT) Risk. An underlying fund may invest in REITs. An underlying funds investments in REITs will be subject to the risks associated with the direct ownership of real estate, including fluctuations in the value of underlying properties, defaults by borrowers or tenants, changes in interest rates and risks related to general or local economic conditions. REITs are also subject to certain additional risks. For example, equity REITs may be affected by changes in the value of the underlying properties owned by the trusts, and mortgage REITs may be affected by the quality of any credit extended. Further, REITs are dependent upon specialized management skills and may have their investments in relatively few properties, a small geographic area or a single property type. Failure of a company to qualify as a REIT under federal tax law may have adverse consequences for the underlying fund. In addition, REITs have their own expenses, and the underlying fund will bear a proportionate share of those expenses. | |
| Mortgage-Backed and Mortgage Pass-Through Securities Risk. Certain of the mortgage-backed securities in which an underlying fund may invest are not backed by the full faith and credit of the U.S. government and there can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. Because of prepayment and extension risk, mortgage-backed securities react differently to changes in interest rates than other bonds. Small movements in interest rates both increases and decreases may quickly and significantly affect the value of certain mortgage-backed securities. Transactions in mortgage pass-through securities primarily occur through to be announced (TBA) transactions. Default by or bankruptcy of a counterparty to a TBA transaction would expose an underlying fund to possible losses because of an adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction. | |
| Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying funds performance and may increase the likelihood of capital gain distributions. | |
| Commodity Risk. To the extent that an underlying fund invests in commodity-linked derivative instruments, it may subject the underlying fund to greater volatility than investments in traditional securities. Also, commodity-linked investments may be more volatile and less liquid than the underlying commodity. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and other regulatory and market developments. The use of leveraged commodity-linked derivatives creates an opportunity for increased return, but also creates the possibility for a greater loss. | |
| Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. | |
| Derivatives Risk. An underlying funds use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. | |
| Management Risk. An underlying fund may be an actively managed mutual fund. Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser(s)) will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its objective. An underlying funds 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. | |
| Investment Style Risk. Certain underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Such underlying funds follow these stocks during upturns as well as downturns. Because of their indexing strategy, these underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying funds expenses, the underlying funds performance is normally below that of the index. |
| Tracking Error Risk. An underlying fund may seek to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called tracking error. Tracking error can be caused by many factors and it may be significant. | |
| Concentration Risk. To the extent that an underlying funds portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the underlying fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political, or regulatory occurrences affecting that market, industry, group of industries, sector or asset class. | |
| Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation. |
Schwab U.S. Large-Cap ETF
|
0.2% | |||
Schwab U.S. Small-Cap ETF
|
0.1% | |||
Schwab International Equity ETF
|
0.2% | |||
Schwab International Small-Cap Equity ETF
|
0.2% | |||
Schwab Emerging Markets Equity ETF
|
0.2% | |||
Schwab U.S. REIT ETF
|
0.2% | |||
Schwab U.S. TIPS ETF
|
0.1% | |||
Schwab Intermediate-Term U.S. Treasury ETF
|
2.2% | |||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
0.0% | * |
*
|
Less than 0.1% |
Realized |
Distributions |
|||||||||||||||||||||||||||
Balance
of |
Balance
of |
Market |
Gains
(Losses) |
Received* |
||||||||||||||||||||||||
Shares
Held |
Gross |
Gross |
Shares
Held |
Value
at |
01/01/14
to |
01/01/14
to |
||||||||||||||||||||||
Underlying
Funds
|
at
12/31/13
|
Purchases
|
Sales
|
at
06/30/14
|
06/30/14
|
06/30/14
|
06/30/14
|
|||||||||||||||||||||
Schwab U.S. Large-Cap ETF
|
99,462 | 49,241 | (11,221 | ) | 137,482 | $6,438,282 | ($4,677 | ) | $51,846 | |||||||||||||||||||
Schwab U.S. Small-Cap ETF
|
21,495 | 10,960 | (4,441 | ) | 28,014 | 1,535,447 | (773 | ) | 11,241 | |||||||||||||||||||
Schwab International Equity ETF
|
100,719 | 51,062 | (12,927 | ) | 138,854 | 4,579,405 | (4,958 | ) | | |||||||||||||||||||
Schwab International Small-Cap Equity ETF
|
18,399 | 9,486 | (3,963 | ) | 23,922 | 819,807 | (180 | ) | | |||||||||||||||||||
Schwab Emerging Markets Equity ETF
|
60,028 | 28,560 | (10,897 | ) | 77,691 | 2,022,297 | (18,708 | ) | | |||||||||||||||||||
Schwab U.S. REIT ETF
|
55,879 | 22,312 | (9,041 | ) | 69,150 | 2,445,836 | (15,369 | ) | 23,141 | |||||||||||||||||||
Schwab U.S. TIPS ETF
|
9,060 | 4,167 | (1,030 | ) | 12,197 | 679,373 | (3,728 | ) | 2,924 | |||||||||||||||||||
Schwab Intermediate-Term U.S. Treasury ETF
|
59,772 | 30,243 | (6,067 | ) | 83,948 | 4,460,997 | (9,248 | ) | 21,175 | |||||||||||||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
3,482,000 | 1,200,207 | | 4,682,207 | 4,682,207 | | 258 | |||||||||||||||||||||
Total
|
$27,663,651 | ($57,641 | ) | $110,585 | ||||||||||||||||||||||||
*
|
Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Purchases
of Securities
|
Sales/Maturities
of Securities
|
|||||
$13,110,970 | $3,017,810 |
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
2. | the Funds investment performance and how it compared to that of certain other comparable mutual funds; |
3. | the Funds expenses and how those expenses compared to those of certain other comparable mutual funds; |
4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served1) | During the Past Five Years | the Trustee | Other Directorships | |||
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 present). | 76 |
Director, WageWorks, Inc.
(2010 present) Director, Redwood Trust, Inc. (1998 present) Director, PMI Group Inc. (2001 2009) |
|||
John F. Cogan 1947 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 present); Senior Fellow, Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 2000 present). | 76 |
Director, Gilead Sciences, Inc.
(2005 present) Director, Monaco Coach Corporation (2005 2009) |
|||
David L. Mahoney 1954 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Private Investor. | 76 |
Director, Symantec Corporation
(2003 present) Director, Corcept Therapeutics Incorporated (2004 present) |
|||
Kiran M. Patel 1948 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 Sept. 2013). | 76 | Director, KLA-Tencor Corporation (2008 present) | |||
Gerald B. Smith 1950 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 present). | 76 |
Director, Eaton
(2012 present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 2013) Director, Oneok, Inc. (2009 2013) Lead Independent Director, Board of Cooper Industries (2002 2012) |
|||
Joseph H. Wender 1944 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 present); Partner, Colgin Partners, LLC (vineyards) (February 1998 present). | 76 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 present) | |||
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served) | During the Past Five Years | the Trustee | Other Directorships | |||
Charles R.
Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Annuity Portfolios since 1994.) |
Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | 76 | None | |||
Walter W. Bettinger
II2 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. | 97 | None | |||
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Annuity Portfolios since 2010.) |
Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 present); Director, President and Chief Executive Officer (Dec. 2010 present), Chief Investment Officer (Sept. 2010 Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 present), and Chief Investment Officer (Sept. 2010 Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Annuity Portfolios since 2004.) |
Senior Vice President and Chief Financial Officer (Nov. 2004 present), Chief Operating Officer (Jan. 2011 present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 present) and Schwab ETFs (Oct. 2009 present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer Equities (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Equities, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Equities, Schwab Funds and Laudus Funds (June 2011 present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 Jan. 2009). | |
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer Fixed Income (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Fixed Income, Schwab Funds and Laudus Funds (June 2011 present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 Jan. 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President (Sept. 2011 present), Vice President (March 2004 Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 present), Vice President (Jan. 2011 Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 present) and Chief Legal Officer (Dec. 2011 present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 present); Secretary (May 2011 present) and Chief Legal Officer (Nov. 2011 present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Annuity Portfolios since 2005.) |
Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 present); Vice President (Dec. 2005 present), Chief Legal Officer and Clerk (March 2007 present), Laudus Funds; Vice President (Nov. 2005 present) and Assistant Secretary (June 2007 present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 present). | |
1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first. | |
2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. | |
3 | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
Schwab VIT Balanced with Growth Portfolio |
|||||
Semiannual report dated June 30, 2014 |
7.14% | S&P 500® Index: measures U.S. large-cap stocks | |||
3.19% | Russell 2000® Index: measures U.S. small-cap stocks | |||
4.78% | MSCI EAFE® Index (Net): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East | |||
3.93% | Barclays U.S. Aggregate Bond Index: measures the U.S. bond market | |||
0.02% | Barclays U.S. Treasury Bills 1-3 Months Index: measures short-term U.S. Treasury obligations |
Zifan Tang, CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the portfolio. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Portfolio and inception Date | 6 Months | 1 Year | Since Inception | ||||||||||||
Portfolio: Schwab VIT Balanced with Growth Portfolio (07/25/12)
|
5.59 | % | 14.79 | % | 12.36 | % | |||||||||
VIT Balanced with Growth Composite Index
|
6.08 | % | 15.33 | % | 13.41 | % | |||||||||
S&P
500®
Index
|
7.14 | % | 24.61 | % | 24.49 | % | |||||||||
Barclays U.S. Aggregate Bond Index
|
3.93 | % | 4.37 | % | 1.10 | % | |||||||||
Fund Category: Morningstar Moderate Allocation
|
5.41 | % | 16.03 | % | 15.60 | % |
Number of Holdings
|
20 | |||
Portfolio Turnover
Rate4
|
4% |
Stocks U.S.
|
29.6% | |||
Fixed Income
|
28.8% | |||
Stocks International
|
26.2% | |||
Real Assets
|
9.9% | |||
Short-Term Investments
|
3.4% | |||
Money Market Fund
|
2.1% | |||
Total
|
100.0% |
Schwab U.S. Large-Cap ETF
|
22.9% | |||
Schwab International Equity ETF
|
17.3% | |||
iShares MBS ETF
|
10.5% | |||
Schwab Intermediate-Term U.S. Treasury ETF
|
8.0% | |||
Schwab U.S. REIT ETF
|
6.0% | |||
Schwab Emerging Markets Equity ETF
|
6.0% | |||
Schwab U.S. Small-Cap ETF
|
5.8% | |||
iShares Core U.S. Credit Bond ETF
|
4.5% | |||
Credit Suisse Commodity Return Strategy Fund, Class I
|
4.0% | |||
Schwab International Small-Cap Equity ETF
|
3.0% | |||
Total
|
88.0% |
1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. | |
2 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolios returns would have been lower. Portfolio performance does not reflect the additional fees and expenses imposed by the insurance company under the variable insurance product contract. If those contract fees and expenses were included, the performance would be less than that shown. Please refer to the variable insurance product prospectus for a complete listing of these expenses. | |
3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.21%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. | |
4 | Not annualized. | |
5 | The portfolio intends to primarily invest in affiliated Schwab exchange traded funds (ETFs) and unaffiliated third-party ETFs. The portfolio may also invest in affiliated Schwab and Laudus Funds and unaffiliated third party mutual funds (all such ETFs and mutual funds referred to as underlying funds). The portfolio may also invest directly in equity or fixed income securities, and money market investments to achieve its investment objectives. | |
6 | This list is not a recommendation of any security by the investment adviser. | |
7 | The holdings listed exclude any temporary liquidity investments. |
Ending |
||||||||||||||||
Beginning |
Account Value |
Expenses Paid |
||||||||||||||
Expense
Ratio1 |
Account Value |
(Net of Expenses) |
During
Period2 |
|||||||||||||
(Annualized) | at 1/1/14 | at 6/30/14 | 1/1/146/30/14 | |||||||||||||
Schwab VIT Balanced with Growth Portfolio | ||||||||||||||||
Actual Return
|
0.55% | $ | 1,000.00 | $ | 1,055.90 | $ | 2.80 | |||||||||
Hypothetical 5% Return
|
0.55% | $ | 1,000.00 | $ | 1,022.07 | $ | 2.76 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio. | |
2 | Expenses for the portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year. |
1/1/14 |
1/1/13 |
7/25/121 |
||||||||||||
6/30/14* | 12/31/13 | 12/31/12 | ||||||||||||
Per-Share Data ($)
|
||||||||||||||
Net asset value at beginning of period
|
11.86 | 10.71 | 10.00 | |||||||||||
Income (loss) from investment operations:
|
||||||||||||||
Net investment income (loss)
|
0.04 | 2 | 0.23 | 2 | 0.09 | |||||||||
Net realized and unrealized gains (losses)
|
0.62 | 0.93 | 0.62 | |||||||||||
Total from investment operations
|
0.66 | 1.16 | 0.71 | |||||||||||
Less distributions:
|
||||||||||||||
Distributions from net investment income
|
(0.09 | ) | (0.01 | ) | | |||||||||
Distributions from net realized gains
|
(0.00 | )3 | | | ||||||||||
Total distributions
|
(0.09 | ) | (0.01 | ) | | |||||||||
Net asset value at end of period
|
12.43 | 11.86 | 10.71 | |||||||||||
Total return (%)
|
5.59 | 4 | 10.79 | 7.10 | 4 | |||||||||
Ratios/Supplemental Data (%)
|
||||||||||||||
Ratios to average net assets:
|
||||||||||||||
Net operating
expenses5
|
0.55 | 6 | 0.58 | 0.58 | 6 | |||||||||
Gross operating
expenses5
|
0.57 | 6 | 0.75 | 16.10 | 6 | |||||||||
Net investment income (loss)
|
0.63 | 6 | 2.07 | 4.80 | 6 | |||||||||
Portfolio turnover rate
|
4 | 4 | 14 | 1 | 4 | |||||||||
Net assets, end of period ($ x 1,000,000)
|
92 | 70 | 2 |
Cost |
Value |
|||||||||||
Holdings by Category | ($) | ($) | ||||||||||
97 | .0% | Other Investment Companies | 81,763,739 | 89,158,246 | ||||||||
3 | .4% | Short-Term Investments | 3,113,960 | 3,113,960 | ||||||||
100 | .4% | Total Investments | 84,877,699 | 92,272,206 | ||||||||
(0 | .4%) | Other Assets and Liabilities, Net | (403,285 | ) | ||||||||
100 | .0% | Net Assets | 91,868,921 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Other Investment Companies 97.0% of net assets
|
||||||||
U.S. Stocks 29.7% |
||||||||
Large-Cap 22.9% | ||||||||
Schwab U.S. Large-Cap ETF (a)
|
448,648 | 21,010,186 | ||||||
Micro-Cap 1.0% | ||||||||
iShares Micro-Cap ETF
|
12,339 | 939,244 | ||||||
Small-Cap 5.8% | ||||||||
Schwab U.S. Small-Cap ETF (a)
|
97,248 | 5,330,163 | ||||||
27,279,593 | ||||||||
International Stocks 26.3% |
||||||||
Developed-Market Large-Cap 17.3% | ||||||||
Schwab International Equity ETF (a)
|
481,524 | 15,880,662 | ||||||
Developed-Market Small-Cap 3.0% | ||||||||
Schwab International Small-Cap Equity ETF (a)
|
80,749 | 2,767,268 | ||||||
Emerging-Market 6.0% | ||||||||
Schwab Emerging Markets Equity ETF (a)
|
211,298 | 5,500,087 | ||||||
24,148,017 | ||||||||
Real Assets 10.0% |
||||||||
Commodity 4.0% | ||||||||
Credit Suisse Commodity Return Strategy Fund,
Class I *
|
472,022 | 3,634,569 | ||||||
Real Estate 6.0% | ||||||||
Schwab U.S. REIT ETF (a)
|
156,314 | 5,528,826 | ||||||
9,163,395 | ||||||||
Fixed Income 28.9% |
||||||||
Agency Bond 2.0% | ||||||||
iShares Agency Bond ETF
|
16,329 | 1,839,788 | ||||||
Corporate Bond 4.5% | ||||||||
iShares Core U.S. Credit Bond ETF
|
37,115 | 4,136,095 | ||||||
High Yield Bond 1.3% | ||||||||
SPDR Barclays High Yield Bond ETF
|
28,904 | 1,206,164 | ||||||
Inflation-Protected Bond 1.7% | ||||||||
Schwab U.S. TIPS ETF (a)
|
27,621 | 1,538,490 | ||||||
International Developed-Market Bond 0.9% | ||||||||
SPDR Barclays International Treasury Bond ETF
|
14,711 | 894,282 | ||||||
Mortgage-Backed Bond 10.5% | ||||||||
iShares MBS ETF
|
89,013 | 9,632,987 | ||||||
Treasury Bond 8.0% | ||||||||
Schwab Intermediate-Term U.S. Treasury ETF (a)
|
138,226 | 7,345,330 | ||||||
26,593,136 | ||||||||
Money Market Fund 2.1% |
||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
0.01% (a)(b)
|
1,974,105 | 1,974,105 | ||||||
Total Other Investment Companies | ||||||||
(Cost $81,763,739) | 89,158,246 | |||||||
Issuer |
Face Amount |
Value |
||||||
Rate, Maturity Date | ($) | ($) | ||||||
Short-Term Investments 3.4% of net assets
|
||||||||
Time Deposits 3.4% |
||||||||
Australia & New Zealand Banking Group Ltd. | ||||||||
0.03%,
07/01/14
|
922,669 | 922,669 | ||||||
DNB | ||||||||
0.03%,
07/01/14
|
345,953 | 345,953 | ||||||
Skandinaviska Enskilda Banken | ||||||||
0.03%,
07/01/14
|
922,669 | 922,669 | ||||||
Wells Fargo | ||||||||
0.03%,
07/01/14
|
922,669 | 922,669 | ||||||
Total Short-Term Investments | ||||||||
(Cost $3,113,960) | 3,113,960 | |||||||
End of Investments.
|
* | Non-income producing security. | |
(a) | Issuer is affiliated with the funds adviser. | |
(b) | The rate shown is the 7-day yield. |
ETF
|
Exchange traded fund | |
MBS
|
Mortgage-Backed Security | |
REIT
|
Real Estate Investment Trust | |
SPDR
|
Standard & Poors Depositary Receipts | |
TIPS
|
Treasury Inflation Protected Securities |
Quoted
Prices in |
Significant |
|||||||||||||||
Active
Markets for |
Other
Significant |
Unobservable |
||||||||||||||
Identical
Assets |
Observable
Inputs |
Inputs |
||||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Other Investment
Companies1
|
$89,158,246 | $ | $ | $89,158,246 | ||||||||||||
Short-Term
Investments1
|
| 3,113,960 | | 3,113,960 | ||||||||||||
Total
|
$89,158,246 | $3,113,960 | $ | $92,272,206 | ||||||||||||
1
|
As categorized in Portfolio Holdings. |
Assets
|
||||||
Investments in affiliated underlying funds, at value (cost
$60,089,148)
|
$66,875,117 | |||||
Investments in unaffiliated issuers, at value (cost $24,788,551)
|
+ | 25,397,089 | ||||
Total investments, at value (cost $84,877,699)
|
92,272,206 | |||||
Receivables:
|
||||||
Investments sold
|
320,238 | |||||
Fund shares sold
|
171,645 | |||||
Dividends
|
294 | |||||
Interest
|
+ | 2 | ||||
Total assets
|
92,764,385 | |||||
Liabilities
|
||||||
Payables:
|
||||||
Investments bought
|
861,055 | |||||
Investment adviser and administrator fees
|
3,443 | |||||
Fund shares redeemed
|
3,016 | |||||
Due to custodian
|
1 | |||||
Accrued expenses
|
+ | 27,949 | ||||
Total liabilities
|
895,464 | |||||
Net Assets
|
||||||
Total assets
|
92,764,385 | |||||
Total liabilities
|
− | 895,464 | ||||
Net assets
|
$91,868,921 | |||||
Net Assets by Source
|
||||||
Capital received from investors
|
84,422,220 | |||||
Net investment income not yet distributed
|
248,897 | |||||
Net realized capital losses
|
(196,703 | ) | ||||
Net unrealized capital appreciation
|
7,394,507 | |||||
Net Asset Value (NAV)
|
Shares |
||||||||||||
Net Assets | ÷ | Outstanding | = | NAV | ||||||||
$91,868,921
|
7,391,577 | $12.43 |
Investment Income
|
||||||
Dividends received from affiliated underlying funds
|
$319,182 | |||||
Dividends received from unaffiliated underlying funds
|
147,358 | |||||
Interest
|
+ | 360 | ||||
Total investment income
|
466,900 | |||||
Expenses
|
||||||
Investment adviser and administrator fees
|
178,937 | |||||
Professional fees
|
19,023 | |||||
Transfer agent fees
|
10,702 | |||||
Custodian fees
|
6,839 | |||||
Independent trustees fees
|
5,780 | |||||
Portfolio accounting fees
|
3,429 | |||||
Shareholder reports
|
2,965 | |||||
Other expenses
|
+ | 545 | ||||
Total expenses
|
228,220 | |||||
Expense reduction by CSIM
|
− | 10,702 | ||||
Net expenses
|
− | 217,518 | ||||
Net investment income
|
249,382 | |||||
Realized and Unrealized Gains (Losses)
|
||||||
Net realized losses on sales of affiliated underlying funds
|
(71,108 | ) | ||||
Net realized losses on sales of unaffiliated underlying funds
|
+ | (20,978 | ) | |||
Net realized losses
|
(92,086 | ) | ||||
Net change in unrealized appreciation (depreciation) on
affiliated underlying funds
|
3,663,248 | |||||
Net change in unrealized appreciation (depreciation) on
unaffiliated underlying funds
|
+ | 753,555 | ||||
Net change in unrealized appreciation (depreciation)
|
+ | 4,416,803 | ||||
Net realized and unrealized gains
|
4,324,717 | |||||
Increase in net assets resulting from operations
|
$4,574,099 |
Operations
|
||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||
Net investment income
|
$249,382 | $672,303 | ||||||||
Net realized losses
|
(92,086 | ) | (92,134 | ) | ||||||
Net change in unrealized appreciation (depreciation)
|
+ | 4,416,803 | 2,953,194 | |||||||
Increase in net assets from operations
|
4,574,099 | 3,533,363 | ||||||||
Distributions to Shareholders
|
||||||||||
Distributions from net investment income
|
(672,772 | ) | (14,602 | ) | ||||||
Distributions from net realized gains
|
+ | (12,459 | ) | | ||||||
Total distributions
|
($685,231 | ) | ($14,602 | ) |
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | VALUE | SHARES | VALUE | |||||||||||||||
Shares sold
|
1,580,976 | $19,055,233 | 6,037,874 | $68,100,595 | ||||||||||||||
Shares reinvested
|
55,127 | 685,231 | 1,327 | 14,477 | ||||||||||||||
Shares redeemed
|
+ | (121,538 | ) | (1,454,026 | ) | (316,241 | ) | (3,590,732 | ) | |||||||||
Net transactions in fund shares
|
1,514,565 | $18,286,438 | 5,722,960 | $64,524,340 | ||||||||||||||
Shares Outstanding and Net Assets
|
||||||||||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | NET ASSETS | SHARES | NET ASSETS | |||||||||||||||
Beginning of period
|
5,877,012 | $69,693,615 | 154,052 | $1,650,514 | ||||||||||||||
Total increase
|
+ | 1,514,565 | 22,175,306 | 5,722,960 | 68,043,101 | |||||||||||||
End of period
|
7,391,577 | $91,868,921 | 5,877,012 | $69,693,615 | ||||||||||||||
Net investment income not yet distributed
|
$248,897 | $672,287 |
Schwab Annuity Portfolios (organized January 21, 1994)
|
||||
Schwab Money Market Portfolio
|
||||
Schwab MarketTrack Growth Portfolio II
|
||||
Schwab S&P 500 Index Portfolio
|
||||
Schwab VIT Balanced Portfolio
|
||||
Schwab VIT Balanced with Growth Portfolio
|
||||
Schwab VIT Growth Portfolio
|
||||
| Underlying funds: Mutual funds are valued at their respective NAVs. ETFs traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable. | |
| Securities for which no quoted value is available: The Board has adopted procedures to fair value the funds securities when market prices are not readily available or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a securitys primary pricing source is unable or unwilling to provide a |
price; or when a securitys primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the funds valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures. |
| Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value. |
| Level 1 quoted prices in active markets for identical securities Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and ETFs. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices. | |
| Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. | |
| Level 3 significant unobservable inputs (including the funds own assumptions in determining the fair value of investments) Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds results of operations. |
| Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. | |
| Large-Cap Risk. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments bonds or mid- or small- cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments bonds or large-cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Foreign Investment Risk. An underlying funds investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); 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 underlying funds investments, and could impair the underlying funds ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. To the extent an underlying funds investment in a single country or a limited number of countries represents a large percentage of the underlying funds assets, the underlying funds performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility. | |
| Emerging Market Risk. An underlying funds investments in securities of emerging market countries may involve certain risks that are greater than those associated with investments in securities of developed countries. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying funds investments in emerging market countries and, at times, it may be difficult to value such investments. | |
| Currency Risk. As a result of an underlying funds investments in securities denominated in, and/or receiving revenues in foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in an underlying fund would be adversely affected. | |
| Growth Investing Risk. Certain of the underlying funds pursue a growth style of investing. Growth investing focuses on a companys prospects for growth of revenue and earnings. If a companys earnings or revenues fall short of expectations, its stock price may fall dramatically. Growth stocks also can perform differently from the market as a whole and other |
types of stocks and can be more volatile than other types of stocks. Since growth companies usually invest a high portion of earnings in their business, they may lack the dividends of value stocks that can cushion stock prices in a falling market. Growth stocks may also be more expensive relative to their earnings or assets compared to value or other stocks. |
| Value Investing Risk. Certain of the underlying funds may pursue a value style of investing. Value investing focuses on companies whose stocks appear undervalued in light of factors such as the companys earnings, book value, revenues or cash flow. If an underlying funds investment advisers (or sub-advisers) assessment of a companys value or prospects for exceeding earnings expectations or market conditions is wrong, the underlying fund could suffer losses or produce poor performance relative to other funds. In addition, value stocks can continue to be undervalued by the market for long periods of time. | |
| Debt Securities Risk. Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by the fund fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to their issuers ability to make timely payments or otherwise honor their obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy. | |
| Interest Rate Risk. An underlying funds investments in fixed income securities are subject to the risk that interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, an underlying funds yield will change over time. During periods when interest rates are low, an underlying funds yield (and total return) also may be low. Changes in interest rates also may affect an underlying funds share price: a sharp rise in interest rates could cause the underlying funds share price to fall. The longer the underlying funds duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central banks monetary policy (e.g., tapering of the Federal Reserve Boards quantitative easing program) or improving economic conditions may result in an increase in interest rates. | |
| Credit Risk. Certain of the underlying funds are subject to the risk that a decline in the credit quality of a portfolio investment could cause the underlying funds share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations. Securities rated below investment grade (junk bonds) involve greater risk of price declines than investment grade securities due to actual or perceived changes in the issuers creditworthiness. | |
| Prepayment and Extension Risk. An underlying funds investments in fixed income securities are subject to the risk that the securities may be paid off earlier or later than expected. Either situation could cause the underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the underlying funds yield or share price. | |
| U.S. Government Securities Risk. Some of the U.S. government securities that the underlying funds invest 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. Certain securities such as those issued by the Federal Home Loan Banks are supported by limited lines of credit maintained by their issuers with the U.S. Treasury. Securities issued by other issuers, such as 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 underlying funds own do not extend to shares of the underlying funds themselves. | |
| Real Estate Investment Risk. An underlying fund in which the portfolio may invest may have a policy of concentrating its investments in real estate companies and companies related to the real estate industry. Such an underlying fund is subject to risks associated with the direct ownership of real estate securities and a portfolios investment in such an underlying fund is subject to risks associated with the direct ownership of real estate securities and an investment in the underlying fund will be closely linked to the performance of the real estate markets. These risks include, among others, declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds or other limits to accessing the credit or capital markets; defaults by borrowers or tenants, particularly during an economic downturn; and changes in interest rates. |
| Real Estate Investment Trust (REIT) Risk. An underlying fund may invest in REITs. An underlying funds investments in REITs will be subject to the risks associated with the direct ownership of real estate, including fluctuations in the value of underlying properties, defaults by borrowers or tenants, changes in interest rates and risks related to general or local economic conditions. REITs are also subject to certain additional risks. For example, equity REITs may be affected by changes in the value of the underlying properties owned by the trusts, and mortgage REITs may be affected by the quality of any credit extended. Further, REITs are dependent upon specialized management skills and may have their investments in relatively few properties, a small geographic area or a single property type. Failure of a company to qualify as a REIT under federal tax law may have adverse consequences for the underlying fund. In addition, REITs have their own expenses, and the underlying fund will bear a proportionate share of those expenses. | |
| Mortgage-Backed and Mortgage Pass-Through Securities Risk. Certain of the mortgage-backed securities in which an underlying fund may invest are not backed by the full faith and credit of the U.S. government and there can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. Because of prepayment and extension risk, mortgage-backed securities react differently to changes in interest rates than other bonds. Small movements in interest rates both increases and decreases may quickly and significantly affect the value of certain mortgage-backed securities. Transactions in mortgage pass-through securities primarily occur through to be announced (TBA) transactions. Default by or bankruptcy of a counterparty to a TBA transaction would expose an underlying fund to possible losses because of an adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction. | |
| Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying funds performance and may increase the likelihood of capital gain distributions. | |
| Commodity Risk. To the extent that an underlying fund invests in commodity-linked derivative instruments, it may subject the underlying fund to greater volatility than investments in traditional securities. Also, commodity-linked investments may be more volatile and less liquid than the underlying commodity. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and other regulatory and market developments. The use of leveraged commodity-linked derivatives creates an opportunity for increased return, but also creates the possibility for a greater loss. | |
| Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. | |
| Derivatives Risk. An underlying funds use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. | |
| Management Risk. An underlying fund may be an actively managed mutual fund. Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser(s)) will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its objective. An underlying funds 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. | |
| Investment Style Risk. Certain underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Such underlying funds follow these stocks during upturns as well as downturns. Because of their indexing strategy, these underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying funds expenses, the underlying funds performance is normally below that of the index. |
| Tracking Error Risk. An underlying fund may seek to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called tracking error. Tracking error can be caused by many factors and it may be significant. | |
| Concentration Risk. To the extent that an underlying funds portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the underlying fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political, or regulatory occurrences affecting that market, industry, group of industries, sector or asset class. | |
| Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation. |
Schwab U.S. Large-Cap ETF
|
0.7% | |||
Schwab U.S. Small-Cap ETF
|
0.3% | |||
Schwab International Equity ETF
|
0.6% | |||
Schwab International Small-Cap Equity ETF
|
0.7% | |||
Schwab Emerging Markets Equity ETF
|
0.5% | |||
Schwab U.S. REIT ETF
|
0.5% | |||
Schwab U.S. TIPS ETF
|
0.3% | |||
Schwab Intermediate-Term U.S. Treasury ETF
|
3.5% | |||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
0.0% | * |
*
|
Less than 0.1% |
Realized |
Distributions |
|||||||||||||||||||||||||||
Balance
of |
Balance
of |
Market |
Gains
(Losses) |
Received* |
||||||||||||||||||||||||
Shares
Held |
Gross |
Gross |
Shares
Held |
Value
at |
01/01/14
to |
01/01/14
to |
||||||||||||||||||||||
Underlying
Funds
|
at
12/31/13
|
Purchases
|
Sales
|
at
06/30/14
|
06/30/14
|
06/30/14
|
06/30/14
|
|||||||||||||||||||||
Schwab U.S. Large-Cap ETF
|
355,558 | 100,516 | (7,426 | ) | 448,648 | $21,010,186 | ($1,532 | ) | $178,415 | |||||||||||||||||||
Schwab U.S. Small-Cap ETF
|
79,506 | 25,941 | (8,199 | ) | 97,248 | 5,330,163 | (2,390 | ) | 40,333 | |||||||||||||||||||
Schwab International Equity ETF
|
381,064 | 123,482 | (23,022 | ) | 481,524 | 15,880,662 | (2,780 | ) | | |||||||||||||||||||
Schwab International Small-Cap Equity ETF
|
67,676 | 20,233 | (7,160 | ) | 80,749 | 2,767,268 | 1,008 | | ||||||||||||||||||||
Schwab Emerging Markets Equity ETF
|
175,928 | 50,059 | (14,689 | ) | 211,298 | 5,500,087 | (22,056 | ) | | |||||||||||||||||||
Schwab U.S. REIT ETF
|
137,375 | 31,315 | (12,376 | ) | 156,314 | 5,528,826 | (31,596 | ) | 55,694 | |||||||||||||||||||
Schwab U.S. TIPS ETF
|
22,342 | 6,247 | (968 | ) | 27,621 | 1,538,490 | (4,457 | ) | 6,861 | |||||||||||||||||||
Schwab Intermediate-Term U.S. Treasury ETF
|
106,773 | 35,754 | (4,301 | ) | 138,226 | 7,345,330 | (7,305 | ) | 37,750 | |||||||||||||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
1,974,000 | 105 | | 1,974,105 | 1,974,105 | | 129 | |||||||||||||||||||||
Total
|
$66,875,117 | ($71,108 | ) | $319,182 | ||||||||||||||||||||||||
*
|
Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Purchases
of Securities
|
Sales/Maturities
of Securities
|
|||||
$20,211,200 | $3,469,355 |
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
2. | the Funds investment performance and how it compared to that of certain other comparable mutual funds; |
3. | the Funds expenses and how those expenses compared to those of certain other comparable mutual funds; |
4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served1) | During the Past Five Years | the Trustee | Other Directorships | |||
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 present). | 76 |
Director, WageWorks, Inc.
(2010 present) Director, Redwood Trust, Inc. (1998 present) Director, PMI Group Inc. (2001 2009) |
|||
John F. Cogan 1947 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 present); Senior Fellow, Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 2000 present). | 76 |
Director, Gilead Sciences, Inc.
(2005 present) Director, Monaco Coach Corporation (2005 2009) |
|||
David L. Mahoney 1954 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Private Investor. | 76 |
Director, Symantec Corporation
(2003 present) Director, Corcept Therapeutics Incorporated (2004 present) |
|||
Kiran M. Patel 1948 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 Sept. 2013). | 76 | Director, KLA-Tencor Corporation (2008 present) | |||
Gerald B. Smith 1950 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 present). | 76 |
Director, Eaton
(2012 present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 2013) Director, Oneok, Inc. (2009 2013) Lead Independent Director, Board of Cooper Industries (2002 2012) |
|||
Joseph H. Wender 1944 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 present); Partner, Colgin Partners, LLC (vineyards) (February 1998 present). | 76 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 present) | |||
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served) | During the Past Five Years | the Trustee | Other Directorships | |||
Charles R.
Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Annuity Portfolios since 1994.) |
Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | 76 | None | |||
Walter W. Bettinger
II2 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. | 97 | None | |||
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Annuity Portfolios since 2010.) |
Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 present); Director, President and Chief Executive Officer (Dec. 2010 present), Chief Investment Officer (Sept. 2010 Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 present), and Chief Investment Officer (Sept. 2010 Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Annuity Portfolios since 2004.) |
Senior Vice President and Chief Financial Officer (Nov. 2004 present), Chief Operating Officer (Jan. 2011 present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 present) and Schwab ETFs (Oct. 2009 present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer Equities (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Equities, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Equities, Schwab Funds and Laudus Funds (June 2011 present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 Jan. 2009). | |
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer Fixed Income (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Fixed Income, Schwab Funds and Laudus Funds (June 2011 present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 Jan. 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President (Sept. 2011 present), Vice President (March 2004 Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 present), Vice President (Jan. 2011 Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 present) and Chief Legal Officer (Dec. 2011 present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 present); Secretary (May 2011 present) and Chief Legal Officer (Nov. 2011 present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Annuity Portfolios since 2005.) |
Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 present); Vice President (Dec. 2005 present), Chief Legal Officer and Clerk (March 2007 present), Laudus Funds; Vice President (Nov. 2005 present) and Assistant Secretary (June 2007 present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 present). | |
1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first. | |
2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. | |
3 | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
Schwab VIT Growth Portfolio |
|||||
Semiannual report dated June 30, 2014 |
7.14% | S&P 500® Index: measures U.S. large-cap stocks | |||
3.19% | Russell 2000® Index: measures U.S. small-cap stocks | |||
4.78% | MSCI EAFE® Index (Net): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East | |||
3.93% | Barclays U.S. Aggregate Bond Index: measures the U.S. bond market | |||
0.02% | Barclays U.S. Treasury Bills 1-3 Months Index: measures short-term U.S. Treasury obligations |
Zifan Tang, CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the portfolio. Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. |
Portfolio and inception Date | 6 Months | 1 Year | Since Inception | ||||||||||||
Portfolio: Schwab VIT Growth Portfolio (07/25/12)
|
5.96 | % | 18.10 | % | 16.37 | % | |||||||||
VIT Growth Composite Index
|
6.48 | % | 18.61 | % | 17.17 | % | |||||||||
S&P
500®
Index
|
7.14 | % | 24.61 | % | 24.49 | % | |||||||||
Barclays U.S. Aggregate Bond Index
|
3.93 | % | 4.37 | % | 1.10 | % | |||||||||
Fund Category: Morningstar Aggressive Allocation
|
5.78 | % | 19.28 | % | 18.94 | % |
Number of Holdings
|
17 | |||
Portfolio Turnover
Rate4
|
3% |
Stocks U.S.
|
38.7% | |||
Stocks International
|
34.3% | |||
Fixed Income
|
12.0% | |||
Real Assets
|
9.9% | |||
Short-Term Investments
|
3.0% | |||
Money Market Fund
|
2.1% | |||
Total
|
100.0% |
Schwab U.S. Large-Cap ETF
|
29.9% | |||
Schwab International Equity ETF
|
21.3% | |||
Schwab Emerging Markets Equity ETF
|
8.0% | |||
Schwab U.S. Small-Cap ETF
|
6.8% | |||
Schwab U.S. REIT ETF
|
6.0% | |||
Schwab International Small-Cap Equity ETF
|
5.0% | |||
iShares MBS ETF
|
4.5% | |||
Schwab Intermediate-Term U.S. Treasury ETF
|
4.2% | |||
Credit Suisse Commodity Return Strategy Fund, Class I
|
3.9% | |||
iShares Core U.S. Credit Bond ETF
|
2.6% | |||
Total
|
92.2% |
1 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. | |
2 | Portfolio expenses have been partially absorbed by CSIM and its affiliates. Without these reductions, the portfolios returns would have been lower. Portfolio performance does not reflect the additional fees and expenses imposed by the insurance company under the variable insurance product contract. If those contract fees and expenses were included, the performance would be less than that shown. Please refer to the variable insurance product prospectus for a complete listing of these expenses. | |
3 | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.20%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. | |
4 | Not annualized. | |
5 | The portfolio intends to primarily invest in affiliated Schwab exchange traded funds (ETFs) and unaffiliated third-party ETFs. The portfolio may also invest in affiliated Schwab and Laudus Funds and unaffiliated third party mutual funds (all such ETFs and mutual funds referred to as underlying funds). The portfolio may also invest directly in equity or fixed income securities, and money market investments to achieve its investment objectives. | |
6 | This list is not a recommendation of any security by the investment adviser. | |
7 | The holdings listed exclude any temporary liquidity investments. |
Ending |
||||||||||||||||
Beginning |
Account Value |
Expenses Paid |
||||||||||||||
Expense
Ratio1 |
Account Value |
(Net of Expenses) |
During
Period2 |
|||||||||||||
(Annualized) | at 1/1/14 | at 6/30/14 | 1/1/146/30/14 | |||||||||||||
Schwab VIT Growth Portfolio | ||||||||||||||||
Actual Return
|
0.54% | $ | 1,000.00 | $ | 1,059.60 | $ | 2.76 | |||||||||
Hypothetical 5% Return
|
0.54% | $ | 1,000.00 | $ | 1,022.12 | $ | 2.71 |
1 | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio. | |
2 | Expenses for the portfolio are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year. |
1/1/14 |
1/1/13 |
7/25/121 |
||||||||||||
6/30/14* | 12/31/13 | 12/31/12 | ||||||||||||
Per-Share Data ($)
|
||||||||||||||
Net asset value at beginning of period
|
12.65 | 10.95 | 10.00 | |||||||||||
Income (loss) from investment operations:
|
||||||||||||||
Net investment income (loss)
|
0.03 | 2 | 0.33 | 2 | 0.13 | |||||||||
Net realized and unrealized gains (losses)
|
0.72 | 1.37 | 0.82 | |||||||||||
Total from investment operations
|
0.75 | 1.70 | 0.95 | |||||||||||
Less distributions:
|
||||||||||||||
Distributions from net investment income
|
(0.10 | ) | (0.00 | )3 | | |||||||||
Distributions from net realized gains
|
(0.00 | )3 | | | ||||||||||
Total distributions
|
(0.10 | ) | (0.00 | )3 | | |||||||||
Net asset value at end of period
|
13.30 | 12.65 | 10.95 | |||||||||||
Total return (%)
|
5.96 | 4 | 15.56 | 9.50 | 4 | |||||||||
Ratios/Supplemental Data (%)
|
||||||||||||||
Ratios to average net assets:
|
||||||||||||||
Net operating
expenses5
|
0.54 | 6 | 0.58 | 0.59 | 6,7 | |||||||||
Gross operating
expenses5
|
0.56 | 6 | 0.77 | 26.08 | 6 | |||||||||
Net investment income (loss)
|
0.51 | 6 | 2.72 | 3.96 | 6 | |||||||||
Portfolio turnover rate
|
3 | 4 | 9 | 29 | 4 | |||||||||
Net assets, end of period ($ x 1,000,000)
|
102 | 77 | 1 |
Cost |
Value |
|||||||||||
Holdings by Category | ($) | ($) | ||||||||||
97 | .1% | Other Investment Companies | 89,253,359 | 98,520,563 | ||||||||
3 | .0% | Short-Term Investments | 3,079,855 | 3,079,855 | ||||||||
100 | .1% | Total Investments | 92,333,214 | 101,600,418 | ||||||||
(0 | .1%) | Other Assets and Liabilities, Net | (86,471 | ) | ||||||||
100 | .0% | Net Assets | 101,513,947 |
Number |
Value |
|||||||
Security | of Shares | ($) | ||||||
Other Investment Companies 97.1% of net assets
|
||||||||
U.S. Stocks 38.7% |
||||||||
Large-Cap 29.9% | ||||||||
Schwab U.S. Large-Cap ETF (a)
|
647,156 | 30,306,315 | ||||||
Micro-Cap 2.0% | ||||||||
iShares Micro-Cap ETF
|
27,138 | 2,065,745 | ||||||
Small-Cap 6.8% | ||||||||
Schwab U.S. Small-Cap ETF (a)
|
126,078 | 6,910,335 | ||||||
39,282,395 | ||||||||
International Stocks 34.3% |
||||||||
Developed-Market Large-Cap 21.3% | ||||||||
Schwab International Equity ETF (a)
|
655,291 | 21,611,497 | ||||||
Developed-Market Small-Cap 5.0% | ||||||||
Schwab International Small-Cap Equity ETF (a)
|
148,163 | 5,077,546 | ||||||
Emerging-Market 8.0% | ||||||||
Schwab Emerging Markets Equity ETF (a)
|
311,576 | 8,110,323 | ||||||
34,799,366 | ||||||||
Real Assets 9.9% |
||||||||
Commodity 3.9% | ||||||||
Credit Suisse Commodity Return Strategy Fund,
Class I *
|
519,672 | 4,001,471 | ||||||
Real Estate 6.0% | ||||||||
Schwab U.S. REIT ETF (a)
|
172,246 | 6,092,341 | ||||||
10,093,812 | ||||||||
Fixed Income 12.0% |
||||||||
Corporate Bond 2.6% | ||||||||
iShares Core U.S. Credit Bond ETF
|
23,695 | 2,640,571 | ||||||
Inflation-Protected Bond 0.7% | ||||||||
Schwab U.S. TIPS ETF (a)
|
12,642 | 704,160 | ||||||
Mortgage-Backed Bond 4.5% | ||||||||
iShares MBS ETF
|
42,128 | 4,559,092 | ||||||
Treasury Bond 4.2% | ||||||||
Schwab Intermediate-Term U.S. Treasury ETF (a)
|
80,223 | 4,263,050 | ||||||
12,166,873 | ||||||||
Money Market Fund 2.2% |
||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
0.01% (a)(b)
|
2,178,117 | 2,178,117 | ||||||
Total Other Investment Companies | ||||||||
(Cost $89,253,359) | 98,520,563 | |||||||
Issuer |
Face Amount |
Value |
||||||
Rate, Maturity Date | ($) | ($) | ||||||
Short-Term Investments 3.0% of net assets
|
||||||||
Time Deposits 3.0% |
||||||||
Australia & New Zealand Banking Group Ltd. | ||||||||
0.03%,
07/01/14
|
1,016,483 | 1,016,483 | ||||||
DNB | ||||||||
0.03%,
07/01/14
|
30,406 | 30,406 | ||||||
Skandinaviska Enskilda Banken | ||||||||
0.03%,
07/01/14
|
1,016,483 | 1,016,483 | ||||||
Wellls Fargo | ||||||||
0.03%,
07/01/14
|
1,016,483 | 1,016,483 | ||||||
Total Short-Term Investments | ||||||||
(Cost $3,079,855) | 3,079,855 | |||||||
End of Investments.
|
* | Non-income producing security. | |
(a) | Issuer is affiliated with the funds adviser. | |
(b) | The rate shown is the 7-day yield. |
ETF
|
Exchange traded fund | |
MBS
|
Mortgage-Backed Security | |
REIT
|
Real Estate Investment Trust | |
TIPS
|
Treasury Inflation Protected Securities |
Quoted
Prices in |
Significant |
|||||||||||||||
Active
Markets for |
Other
Significant |
Unobservable |
||||||||||||||
Identical
Assets |
Observable
Inputs |
Inputs |
||||||||||||||
Description
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Other Investment
Companies1
|
$98,520,563 | $ | $ | $98,520,563 | ||||||||||||
Short-Term
Investments1
|
| 3,079,855 | | 3,079,855 | ||||||||||||
Total
|
$98,520,563 | $3,079,855 | $ | $101,600,418 | ||||||||||||
1
|
As categorized in Portfolio Holdings. |
Assets
|
||||||
Investments in affiliated underlying funds, at value (cost
$76,561,875)
|
$85,253,684 | |||||
Investments in unaffiliated issuers, at value (cost $15,771,339)
|
+ | 16,346,734 | ||||
Total investments, at value (cost $92,333,214)
|
101,600,418 | |||||
Receivables:
|
||||||
Investments sold
|
390,263 | |||||
Fund shares sold
|
119,823 | |||||
Dividends
|
1,273 | |||||
Interest
|
+ | 3 | ||||
Total assets
|
102,111,780 | |||||
Liabilities
|
||||||
Payables:
|
||||||
Investments bought
|
565,475 | |||||
Investment adviser and administrator fees
|
3,818 | |||||
Fund shares redeemed
|
619 | |||||
Accrued expenses
|
+ | 27,921 | ||||
Total liabilities
|
597,833 | |||||
Net Assets
|
||||||
Total assets
|
102,111,780 | |||||
Total liabilities
|
− | 597,833 | ||||
Net assets
|
$101,513,947 | |||||
Net Assets by Source
|
||||||
Capital received from investors
|
92,156,755 | |||||
Net investment income not yet distributed
|
228,026 | |||||
Net realized capital losses
|
(138,038 | ) | ||||
Net unrealized capital appreciation
|
9,267,204 | |||||
Net Asset Value (NAV)
|
Shares |
||||||||||||
Net Assets | ÷ | Outstanding | = | NAV | ||||||||
$101,513,947
|
7,635,155 | $13.30 |
Investment Income
|
||||||
Dividends received from affiliated underlying funds
|
$403,092 | |||||
Dividends received from unaffiliated underlying funds
|
63,285 | |||||
Interest
|
+ | 416 | ||||
Total investment income
|
466,793 | |||||
Expenses
|
||||||
Investment adviser and administrator fees
|
200,017 | |||||
Professional fees
|
18,738 | |||||
Transfer agent fees
|
10,699 | |||||
Custodian fees
|
6,581 | |||||
Independent trustees fees
|
5,982 | |||||
Portfolio accounting fees
|
3,489 | |||||
Shareholder reports
|
2,788 | |||||
Other expenses
|
+ | 525 | ||||
Total expenses
|
248,819 | |||||
Expense reduction by CSIM
|
− | 10,699 | ||||
Net expenses
|
− | 238,120 | ||||
Net investment income
|
228,673 | |||||
Realized and Unrealized Gains (Losses)
|
||||||
Net realized losses on sales of affiliated underlying funds
|
(50,322 | ) | ||||
Net realized losses on sales of unaffiliated underlying funds
|
+ | (10,167 | ) | |||
Net realized losses
|
(60,489 | ) | ||||
Net change in unrealized appreciation (depreciation) on
affiliated underlying funds
|
4,871,556 | |||||
Net change in unrealized appreciation (depreciation) on
unaffiliated underlying funds
|
+ | 479,694 | ||||
Net change in unrealized appreciation (depreciation)
|
+ | 5,351,250 | ||||
Net realized and unrealized gains
|
5,290,761 | |||||
Increase in net assets resulting from operations
|
$5,519,434 |
Operations
|
||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||
Net investment income
|
$228,673 | $780,381 | ||||||||
Net realized losses
|
(60,489 | ) | (70,842 | ) | ||||||
Net change in unrealized appreciation (depreciation)
|
+ | 5,351,250 | 3,890,812 | |||||||
Increase in net assets from operations
|
5,519,434 | 4,600,351 | ||||||||
Distributions to Shareholders
|
||||||||||
Distributions from net investment income
|
(780,922 | ) | (7,298 | ) | ||||||
Distributions from net realized gains
|
+ | (5,297 | ) | | ||||||
Total distributions
|
($786,219 | ) | ($7,298 | ) |
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | VALUE | SHARES | VALUE | |||||||||||||||
Shares sold
|
1,624,874 | $20,735,118 | 6,160,749 | $73,353,144 | ||||||||||||||
Shares reinvested
|
59,114 | 786,219 | 634 | 7,200 | ||||||||||||||
Shares redeemed
|
+ | (96,979 | ) | (1,248,510 | ) | (167,721 | ) | (2,042,197 | ) | |||||||||
Net transactions in fund shares
|
1,587,009 | $20,272,827 | 5,993,662 | $71,318,147 | ||||||||||||||
Shares Outstanding and Net Assets
|
||||||||||||||||||
1/1/14-6/30/14 | 1/1/13-12/31/13 | |||||||||||||||||
SHARES | NET ASSETS | SHARES | NET ASSETS | |||||||||||||||
Beginning of period
|
6,048,146 | $76,507,905 | 54,484 | $596,705 | ||||||||||||||
Total increase
|
+ | 1,587,009 | 25,006,042 | 5,993,662 | 75,911,200 | |||||||||||||
End of period
|
7,635,155 | $101,513,947 | 6,048,146 | $76,507,905 | ||||||||||||||
Net investment income not yet distributed
|
$228,026 | $780,275 |
Schwab Annuity Portfolios (organized January 21, 1994)
|
||||
Schwab Money Market Portfolio
|
||||
Schwab MarketTrack Growth Portfolio II
|
||||
Schwab S&P 500 Index Portfolio
|
||||
Schwab VIT Balanced Portfolio
|
||||
Schwab VIT Balanced with Growth Portfolio
|
||||
Schwab VIT Growth Portfolio
|
||||
| Underlying funds: Mutual funds are valued at their respective NAVs. ETFs traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable. | |
| Securities for which no quoted value is available: The Board has adopted procedures to fair value the funds securities when market prices are not readily available or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a securitys primary pricing source is unable or unwilling to provide a |
price; or when a securitys primary trading market is closed during regular market hours. The fund makes fair value determinations in good faith in accordance with the funds valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the valuation procedures. |
| Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value. |
| Level 1 quoted prices in active markets for identical securities Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and ETFs. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices. | |
| Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. | |
| Level 3 significant unobservable inputs (including the funds own assumptions in determining the fair value of investments) Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds results of operations. |
| Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. | |
| Large-Cap Risk. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments bonds or mid- or small- cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments bonds or large-cap stocks, for instance an underlying funds performance also will lag those investments. | |
| Foreign Investment Risk. An underlying funds investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); 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 underlying funds investments, and could impair the underlying funds ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. To the extent an underlying funds investment in a single country or a limited number of countries represents a large percentage of the underlying funds assets, the underlying funds performance may be adversely affected by the economic, political and social conditions in those countries and it may be subject to increased price volatility. | |
| Emerging Market Risk. An underlying funds investments in securities of emerging market countries may involve certain risks that are greater than those associated with investments in securities of developed countries. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying funds investments in emerging market countries and, at times, it may be difficult to value such investments. | |
| Currency Risk. As a result of an underlying funds investments in securities denominated in, and/or receiving revenues in foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in an underlying fund would be adversely affected. | |
| Growth Investing Risk. Certain of the underlying funds pursue a growth style of investing. Growth investing focuses on a companys prospects for growth of revenue and earnings. If a companys earnings or revenues fall short of expectations, its stock price may fall dramatically. Growth stocks also can perform differently from the market as a whole and other |
types of stocks and can be more volatile than other types of stocks. Since growth companies usually invest a high portion of earnings in their business, they may lack the dividends of value stocks that can cushion stock prices in a falling market. Growth stocks may also be more expensive relative to their earnings or assets compared to value or other stocks. |
| Value Investing Risk. Certain of the underlying funds may pursue a value style of investing. Value investing focuses on companies whose stocks appear undervalued in light of factors such as the companys earnings, book value, revenues or cash flow. If an underlying funds investment advisers (or sub-advisers) assessment of a companys value or prospects for exceeding earnings expectations or market conditions is wrong, the underlying fund could suffer losses or produce poor performance relative to other funds. In addition, value stocks can continue to be undervalued by the market for long periods of time. | |
| Debt Securities Risk. Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by the fund fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to their issuers ability to make timely payments or otherwise honor their obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy. | |
| Interest Rate Risk. An underlying funds investments in fixed income securities are subject to the risk that interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, an underlying funds yield will change over time. During periods when interest rates are low, an underlying funds yield (and total return) also may be low. Changes in interest rates also may affect an underlying funds share price: a sharp rise in interest rates could cause the underlying funds share price to fall. The longer the underlying funds duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central banks monetary policy (e.g., tapering of the Federal Reserve Boards quantitative easing program) or improving economic conditions may result in an increase in interest rates. | |
| Credit Risk. Certain of the underlying funds are subject to the risk that a decline in the credit quality of a portfolio investment could cause the underlying funds share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations. Securities rated below investment grade (junk bonds) involve greater risk of price declines than investment grade securities due to actual or perceived changes in the issuers creditworthiness. | |
| Prepayment and Extension Risk. An underlying funds investments in fixed income securities are subject to the risk that the securities may be paid off earlier or later than expected. Either situation could cause the underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the underlying funds yield or share price. | |
| U.S. Government Securities Risk. Some of the U.S. government securities that the underlying funds invest 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. Certain securities such as those issued by the Federal Home Loan Banks are supported by limited lines of credit maintained by their issuers with the U.S. Treasury. Securities issued by other issuers, such as 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 underlying funds own do not extend to shares of the underlying funds themselves. | |
| Real Estate Investment Risk. An underlying fund in which the portfolio may invest may have a policy of concentrating its investments in real estate companies and companies related to the real estate industry. Such an underlying fund is subject to risks associated with the direct ownership of real estate securities and a portfolios investment in such an underlying fund is subject to risks associated with the direct ownership of real estate securities and an investment in the underlying fund will be closely linked to the performance of the real estate markets. These risks include, among others, declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds or other limits to accessing the credit or capital markets; defaults by borrowers or tenants, particularly during an economic downturn; and changes in interest rates. |
| Real Estate Investment Trust (REIT) Risk. An underlying fund may invest in REITs. An underlying funds investments in REITs will be subject to the risks associated with the direct ownership of real estate, including fluctuations in the value of underlying properties, defaults by borrowers or tenants, changes in interest rates and risks related to general or local economic conditions. REITs are also subject to certain additional risks. For example, equity REITs may be affected by changes in the value of the underlying properties owned by the trusts, and mortgage REITs may be affected by the quality of any credit extended. Further, REITs are dependent upon specialized management skills and may have their investments in relatively few properties, a small geographic area or a single property type. Failure of a company to qualify as a REIT under federal tax law may have adverse consequences for the underlying fund. In addition, REITs have their own expenses, and the underlying fund will bear a proportionate share of those expenses. | |
| Mortgage-Backed and Mortgage Pass-Through Securities Risk. Certain of the mortgage-backed securities in which an underlying fund may invest are not backed by the full faith and credit of the U.S. government and there can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. Because of prepayment and extension risk, mortgage-backed securities react differently to changes in interest rates than other bonds. Small movements in interest rates both increases and decreases may quickly and significantly affect the value of certain mortgage-backed securities. Transactions in mortgage pass-through securities primarily occur through to be announced (TBA) transactions. Default by or bankruptcy of a counterparty to a TBA transaction would expose an underlying fund to possible losses because of an adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction. | |
| Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying funds performance and may increase the likelihood of capital gain distributions. | |
| Commodity Risk. To the extent that an underlying fund invests in commodity-linked derivative instruments, it may subject the underlying fund to greater volatility than investments in traditional securities. Also, commodity-linked investments may be more volatile and less liquid than the underlying commodity. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and other regulatory and market developments. The use of leveraged commodity-linked derivatives creates an opportunity for increased return, but also creates the possibility for a greater loss. | |
| Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. | |
| Derivatives Risk. An underlying funds use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. | |
| Management Risk. An underlying fund may be an actively managed mutual fund. Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser(s)) will select investments or allocate assets in a manner that could cause the fund to underperform or otherwise not meet its objective. An underlying funds 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. | |
| Investment Style Risk. Certain underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Such underlying funds follow these stocks during upturns as well as downturns. Because of their indexing strategy, these underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying funds expenses, the underlying funds performance is normally below that of the index. |
| Tracking Error Risk. An underlying fund may seek to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called tracking error. Tracking error can be caused by many factors and it may be significant. | |
| Concentration Risk. To the extent that an underlying funds portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the underlying fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political, or regulatory occurrences affecting that market, industry, group of industries, sector or asset class. | |
| Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation. |
Schwab U.S. Large-Cap ETF
|
1.0% | |||
Schwab U.S. Small-Cap ETF
|
0.3% | |||
Schwab International Equity ETF
|
0.9% | |||
Schwab International Small-Cap Equity ETF
|
1.3% | |||
Schwab Emerging Markets Equity ETF
|
0.7% | |||
Schwab U.S. REIT ETF
|
0.6% | |||
Schwab U.S. TIPS ETF
|
0.2% | |||
Schwab Intermediate-Term U.S. Treasury ETF
|
2.1% | |||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
0.0% | * |
*
|
Less than 0.1% |
Realized |
Distributions |
|||||||||||||||||||||||||||
Balance
of |
Balance
of |
Market |
Gains
(Losses) |
Received* |
||||||||||||||||||||||||
Shares
Held |
Gross |
Gross |
Shares
Held |
Value
at |
01/01/14
to |
01/01/14
to |
||||||||||||||||||||||
Underlying
Funds
|
at
12/31/13
|
Purchases
|
Sales
|
at
06/30/14
|
06/30/14
|
06/30/14
|
06/30/14
|
|||||||||||||||||||||
Schwab U.S. Large-Cap ETF
|
512,021 | 135,583 | (448 | ) | 647,156 | $30,306,315 | ($265 | ) | $262,030 | |||||||||||||||||||
Schwab U.S. Small-Cap ETF
|
101,699 | 31,857 | (7,478 | ) | 126,078 | 6,910,335 | (831 | ) | 53,066 | |||||||||||||||||||
Schwab International Equity ETF
|
515,008 | 155,717 | (15,434 | ) | 655,291 | 21,611,497 | 920 | | ||||||||||||||||||||
Schwab International Small-Cap Equity ETF
|
122,392 | 32,575 | (6,804 | ) | 148,163 | 5,077,546 | 1,024 | | ||||||||||||||||||||
Schwab Emerging Markets Equity ETF
|
256,221 | 73,056 | (17,701 | ) | 311,576 | 8,110,323 | (21,678 | ) | | |||||||||||||||||||
Schwab U.S. REIT ETF
|
150,302 | 35,065 | (13,121 | ) | 172,246 | 6,092,341 | (23,853 | ) | 62,543 | |||||||||||||||||||
Schwab U.S. TIPS ETF
|
10,065 | 2,947 | (370 | ) | 12,642 | 704,160 | (1,677 | ) | 3,162 | |||||||||||||||||||
Schwab Intermediate-Term U.S. Treasury ETF
|
61,338 | 21,343 | (2,458 | ) | 80,223 | 4,263,050 | (3,962 | ) | 22,148 | |||||||||||||||||||
Schwab Value Advantage Money Fund, Institutional Prime Shares
|
2,178,000 | 117 | | 2,178,117 | 2,178,117 | | 143 | |||||||||||||||||||||
Total
|
$85,253,684 | ($50,322 | ) | $403,092 | ||||||||||||||||||||||||
*
|
Distributions received include distributions from net investment income and capital gains, if any, from the underlying funds. |
Purchases
of Securities
|
Sales/Maturities
of Securities
|
|||||
$21,033,275 | $2,555,319 |
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
2. | the Funds investment performance and how it compared to that of certain other comparable mutual funds; |
3. | the Funds expenses and how those expenses compared to those of certain other comparable mutual funds; |
4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served1) | During the Past Five Years | the Trustee | Other Directorships | |||
Mariann Byerwalter 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman of JDN Corporate Advisory LLC (advisory services firm) (Oct. 2001 present). | 76 |
Director, WageWorks, Inc.
(2010 present) Director, Redwood Trust, Inc. (1998 present) Director, PMI Group Inc. (2001 2009) |
|||
John F. Cogan 1947 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 present); Senior Fellow, Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 2000 present). | 76 |
Director, Gilead Sciences, Inc.
(2005 present) Director, Monaco Coach Corporation (2005 2009) |
|||
David L. Mahoney 1954 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Private Investor. | 76 |
Director, Symantec Corporation
(2003 present) Director, Corcept Therapeutics Incorporated (2004 present) |
|||
Kiran M. Patel 1948 Trustee (Trustee of Schwab Annuity Portfolios since 2011.) |
Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services for consumers and small businesses) (Dec. 2008 Sept. 2013). | 76 | Director, KLA-Tencor Corporation (2008 present) | |||
Gerald B. Smith 1950 Trustee (Trustee of Schwab Annuity Portfolios since 2000.) |
Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 present). | 76 |
Director, Eaton
(2012 present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 2013) Director, Oneok, Inc. (2009 2013) Lead Independent Director, Board of Cooper Industries (2002 2012) |
|||
Joseph H. Wender 1944 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 present); Partner, Colgin Partners, LLC (vineyards) (February 1998 present). | 76 | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 present) | |||
Name, Year of Birth, |
Number of |
|||||
and Position(s) with |
Portfolios in |
|||||
the trust; (Terms of |
Fund Complex |
|||||
office, and length of |
Principal Occupations |
Overseen by |
||||
Time Served) | During the Past Five Years | the Trustee | Other Directorships | |||
Charles R.
Schwab2 1937 Chairman and Trustee (Chairman and Trustee of Schwab Annuity Portfolios since 1994.) |
Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | 76 | None | |||
Walter W. Bettinger
II2 1960 Trustee (Trustee of Schwab Annuity Portfolios since 2008.) |
As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. | 97 | None | |||
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Annuity Portfolios since 2010.) |
Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 present); Director, President and Chief Executive Officer (Dec. 2010 present), Chief Investment Officer (Sept. 2010 Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 present), and Chief Investment Officer (Sept. 2010 Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Annuity Portfolios since 2004.) |
Senior Vice President and Chief Financial Officer (Nov. 2004 present), Chief Operating Officer (Jan. 2011 present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (2006 present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 present) and Schwab ETFs (Oct. 2009 present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer Equities (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Equities, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Equities, Schwab Funds and Laudus Funds (June 2011 present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 Jan. 2009). | |
Name, Year of Birth, and Position(s) |
||
with the trust; (Terms of office, and |
||
length of Time Served3) | Principal Occupations During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer Fixed Income (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President and Chief Investment Officer Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 present); Senior Vice President and Chief Investment Officer Fixed Income, Schwab Funds and Laudus Funds (June 2011 present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 Jan. 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Annuity Portfolios since 2011.) |
Senior Vice President (Sept. 2011 present), Vice President (March 2004 Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 present), Vice President (Jan. 2011 Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 present) and Chief Legal Officer (Dec. 2011 present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 present); Secretary (May 2011 present) and Chief Legal Officer (Nov. 2011 present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Annuity Portfolios since 2005.) |
Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 present); Vice President (Dec. 2005 present), Chief Legal Officer and Clerk (March 2007 present), Laudus Funds; Vice President (Nov. 2005 present) and Assistant Secretary (June 2007 present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 present). | |
1 | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds retirement policy requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of Schwab Funds who also serves as an independent trustee of the Laudus Funds to retire from the Boards of the Schwab Funds upon their required retirement date from either the Boards of Trustees of the Schwab Funds or the Laudus Funds, whichever comes first. | |
2 | Mr. Schwab and Mr. Bettinger are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser. | |
3 | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
(a) | Based on their evaluation of Registrants disclosure controls and procedures, as of a date within 90 days of the filing date, Registrants Chief Executive Officer, Marie Chandoha and Registrants Principal Financial Officer, George Pereira, have concluded that Registrants disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrants officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above. | |
(b) | During the second fiscal quarter of the period covered by this report, there have been no changes in Registrants internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrants internal control over financial reporting. |
(a)
|
(1 | ) | Code of ethics not applicable to this semi-annual report. | |||
(2 | ) | Separate certifications for Registrants principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached. | ||||
(3 | ) | Not applicable. | ||||
(b)
|
A certification for Registrants principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission. |
By:
|
/s/ Marie Chandoha
|
|||
Chief Executive Officer | ||||
Date:
|
August 12, 2014 |
By:
|
/s/ Marie Chandoha
|
|||
Chief Executive Officer | ||||
Date:
|
August 12, 2014 | |||
By:
|
/s/ George Pereira
|
|||
Principal Financial Officer | ||||
Date:
|
August 12, 2014 |
Date: August 12, 2014
|
/s/ Marie Chandoha | |
Marie Chandoha | ||
President and Chief Executive Officer |
Date: August 12, 2014
|
/s/ George Pereira | |
George Pereira | ||
Treasurer and Principal Financial Officer |
/s/ Marie Chandoha
|
Date: August 12, 2014 | |
Marie Chandoha |
||
President and Chief Executive Officer |
||
/s/ George Pereira
|
Date: August 12, 2014 | |
George Pereira |
||
Treasurer and Principal Financial Officer |
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