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SUPPLEMENT TO THE
SCHWAB MARKETTRACK(TM) GROWTH
PORTFOLIO II
SCHWAB S&P 500 PORTFOLIO
PROSPECTUS
DATED APRIL 30, 1998 AS AMENDED
DECEMBER 4, 1998
The section of the Schwab MarketTrack Growth Portfolio II ("Growth Fund")
Prospectus titled "International Stocks" is amended to include the following
information.
Certain European countries plan to convert to a common "euro" currency beginning
January 1, 1999. The value of securities of issuers in those countries may be
adversely affected by the conversion as a result of greater fluctuations in
currency exchange rates, investor expectations leading up to the conversion and
other factors.
Although the Investment Manager is taking steps to minimize the risk that the
Fund's operations will be affected, it is not possible to identify or eliminate
all risk related to the conversion that may affect the smooth operations of the
Fund or its performance.
Please read the Statement of Additional Information dated April 30, 1998, as
amended December 4, 1998, for more details.
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SUPPLEMENT TO THE SCHWAB ANNUITY PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 1998 AS AMENDED DECEMBER 4, 1998
The section titled "Foreign Investments" is amended to read as follows.
In addition to the risks discussed above, it is unforeseeable what risk, if any,
may exist as a result of the upcoming conversion of the eleven of the fifteen
Economic Union Member States from their respective local currency to the
official currency of the Economic and Monetary Union (EMU). Exchange rates
between the U.S. dollar and the local currencies involved in the conversion may
become more volatile as the conversion date of January 1, 1999 approaches. There
also may be increased volatility in the exchange rates for currencies of other
European countries. After January 3, 1999, the euro will be the official
currency of the EMU, the rate of exchange will have been set between the euro
and the local currency of each converting country and the European Central Bank,
all national central banks and all stock exchanges and depositories will price,
trade and settle in euro even if the securities traded are not denominated in
euro. Issuers of securities that require converting may experience increased
costs as a result of the conversion, which may affect the value of their
securities. It also is possible that uncertainties related to the conversion
will affect investor expectations and cause investments to shift away from
European countries, thereby making the European market less liquid. All of these
factors could affect the value of the Growth Fund's investments.
The Investment Manager is working with the Growth Fund's service providers,
such as the custodian and fund accountant, to ensure that the Growth Fund
continues to operate smoothly after the conversion. However, it is not possible
to know precisely what affect the conversion will have on the Growth Fund or
the ability of its service providers to provide uninterrupted service. For
example, each security transaction that requires converting to euro may involve
rounding that could affect the value of the security converted. As a result of
the Growth Fund's and its service providers' reliance on computer systems,
certain system changes may be implemented in order to accommodate the change in
currency. While the Investment Manager is taking steps to minimize the impact
of the conversion on the Growth Fund, it is not possible to eliminate the risk
that the Growth Fund may be affected.
