Schwab Wealth Investment Advisory, Inc. Code of Ethics

Effective June 2015

Introduction
 
Rule 204A-1 under the Investment Advisers Act of 1940 ("Advisers Act") requires all investment advisors registered with the Securities and Exchange Commission ("SEC") to adopt codes of ethics that set forth standards of conduct and require compliance with federal securities laws.
 
Schwab Wealth Investment Advisory, Inc. ("SWIA") is an investment advisor registered with the SEC with respect to sponsorship of discretionary portfolio management of accounts enrolled in the Schwab Intelligent Portfolios and Institutional Intelligent Portfolios wrap-fee programs. To this end, SWIA hereby adopts this code of ethics ("Advisor Code"). This Advisor Code incorporates by reference The Charles Schwab Corporation Compliance Manual and the SWIA Compliance Manual ("Compliance Manuals"), which set forth the standards of business conduct that are required of employees of SWIA.

This Advisor Code applies to all employees of SWIA, and certain other affiliate employees, who are deemed to be Supervised Persons under the Advisor Code. The Advisers Act defines "Supervised Person" to mean any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of SWIA, or other person who provides investment advice on behalf of SWIA and is subject to the supervision and control of SWIA.
 
This Advisor Code is intended to reflect fiduciary principles that govern the conduct of SWIA and its Supervised Persons in those situations where SWIA acts as an investment advisor as defined under the Advisers Act in providing investment advice to clients ("advisory clients").
 
Included herein are sections on: 

  1. Standard of Conduct and Compliance With Laws, Rules and Regulations
  2. Protection of Material Nonpublic Information
  3. Personal Securities Trading and Disclosure Requirements
    1. Access Person Requirements
    2. ETF Blackout Period and Pre-Clearance Requirements
    3. Holdings Reports
    4. Transaction Reports ("Account Statements")
    5. Review of Transactions
  4. Compliance Certification
  5. Consequences for Failure to Comply and Reporting Certain Conduct
  6. Recordkeeping

A. Standard of Conduct and Compliance With Laws, Rules and Regulations

As a requirement of their employment, all Supervised Persons are responsible for reviewing, being familiar with, and complying with this Advisor Code and the Compliance Manuals.
 
Supervised Persons must comply with all of the laws, rules, and regulations applicable to the business in which they engage, including, among others, securities, banking, and other federal, state, and local laws. Although not expected to know the details of each law governing SWIA business, each Supervised Person is expected to be familiar with and comply with the company-wide policies and procedures, as they apply to his or her business unit and, when in doubt, to seek advice from supervisors, managers, or other appropriate personnel.

B. Protection of Material Nonpublic Information
 
Supervised Persons must review and comply with the “Inside Information” and “Confidentiality of Information” sections of the Compliance Manual chapters: “Inside Information and Information Barriers” and “Protecting Firm Information & Information Security Requirements.” It is unlawful to trade in any security on the basis of material nonpublic (or inside) information or to disclose such information to others who may profit from it. This applies to all types of securities, including equities, exchange-traded funds, options, debt, and mutual funds. Please refer to the “Inside Information and Information Barriers” chapter of the Compliance Manuals for a definition of material nonpublic (or inside) information.

C. Personal Securities Trading and Disclosure Requirements
 
Rule 204A-1 of the Advisers Act requires all Access Persons of an investment advisor registered with the SEC to report, and the investment advisor to review, their personal securities transactions and holdings periodically. The Advisers Act defines "Access Person" to mean any Supervised Person of an investment advisor who:

  1. Has access to nonpublic information regarding any advisory client's purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any strategy (i.e., strategies managed by Charles Schwab Investment Advisory Inc. ("CSIA")) , or
  2. Is involved in making securities recommendations to advisory clients in advisory accounts, or who has access to such recommendations that are nonpublic.

Certain SWIA employees, and other affiliate employees, have been identified as SWIA Access Persons. The "Employee Securities Accounts & Investments" chapters of the Compliance Manuals detail employee securities account disclosure obligations and in-house requirements for all employees, including but not limited to prohibitions regarding trading in IPOs and private placements. In addition to the policies outlined in the chapters, SWIA Access Persons are prohibited from using nonpublic information regarding portfolio holdings, model changes, or client transactions for their personal benefit.

Specifically, Access Persons are prohibited from using advance knowledge to trade ahead of or otherwise benefit from such knowledge.

The Investment Advisor Chief Compliance Officer or designee maintains a list of SWIA Access Persons and will promptly notify any new employees of their responsibilities under the Advisor Code.
 
Access Persons are not required to separately submit Holdings Reports, Transaction Reports, or trade confirms or statements for accounts held at SWIA"s affiliate, Charles Schwab & Co., Inc. ("CS&Co"). 

1. Access Person Requirements
 
Access Persons are those individuals who may have access to information and make decisions concerning pending portfolio management decisions affecting Schwab Intelligent Portfolios, program changes to Schwab Intelligent Portfolios or Institutional Intelligent Portfolios, or certain trading-related information. Once identified, each Access Person must disclose Holdings Reports and Transaction Reports ("Account Statements" ) for any account held outside CS&Co. in which they have a direct or indirect beneficial ownership,1 and through which securities can be purchased, sold, or held.

2. ETF Blackout Period and Pre-Clearance Requirements

Certain ETFs used in Schwab Intelligent Portfolios or Institutional Intelligent Portfolios will be subject to periodic blackout periods or pre-clearance requirements administered by the Investment Advisor Chief Compliance Officer or designee. SWIA Access Persons are prohibited from buying or selling ETFs while those ETFs are restricted from trading or without obtaining proper pre-clearance, as applicable. SWIA Access Persons will be notified as to which personal trading requirements apply to them by the SWIA Chief Compliance Officer or designee. If trading in an ETF occurs without appropriate pre-clearance, the Access Person may be in violation of the Advisor Code.

3. Holdings Reports

This report must be submitted to the Investment Advisor Chief Compliance Officer or designee no later than 10 days after the person becomes an Access Person, and the information must be current as of a date no more than 45 days prior to the date the person becomes an Access Person. Thereafter, the report must be submitted no later than the end of the first calendar quarter every year. The report must reflect current holdings and at a minimum include: 
  • The title and type of security, and as applicable the exchange ticket symbol or CUSIP number, number of shares, and principal amount of each reportable security;
  • The name of any firm in which any reportable securities are held; and
  • The date the Access Person is submitting the report.
4. Transaction Reports ("Account Statements") 

This report must be submitted to the Investment Advisor Chief Compliance Officer or designee no later than 30 days after the end of each calendar quarter.
 
Monthly or quarterly Account Statements can be used to satisfy the Transaction Report disclosure requirements, provided the Account Statement(s) includes all transactions effected during the period and includes, at a minimum, all of the following:
  • The date of each transaction, the title, and as applicable the exchange ticket symbol or CUSIP number, number of shares, and principal amount of each reportable security involved;
  • The nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition);
  • The price at which each reportable transaction was effected; and
  • The name of the firm through which the transaction was effected.
5. Review of Transactions

The Compliance Department will review personal securities transactions and holdings of all Access Persons periodically, but no less than quarterly.

D. Compliance Certification

The Compliance Department will provide each Supervised Person with a copy of this Advisor Code and any material amendments, and all Supervised Persons are required to provide Compliance with a written acknowledgment of their receipt of the Advisor Code and any amendments.
 
In addition, all Access Persons with outside accounts must certify each quarter whether any transaction was executed in those accounts.

E. Consequences for Failure to Comply, and Reporting Certain Conduct

A Supervised Person can be subject to discipline, up to and including termination of employment, if he or she violates this Advisor Code. Any Supervised Person who knows of or reasonably believes there is a violation of applicable laws or this Advisor Code must report that information immediately to the Corporate Responsibility Officer or the Ombudsperson. A Supervised Person should not conduct preliminary investigations unless authorized to do so by the Compliance Department. Anyone who in good faith raises an issue regarding a possible violation of law, regulation, or company policy or any suspected illegal or unethical behavior will be protected from retaliation. If a Supervised Person has violated this Advisor Code, making a report will not protect him or her from the consequences of his or her actions. A Supervised Person can be subject to discipline, up to and including termination of employment, if he or she violates this Advisor Code or fails to report violations that come to his or her attention.

F. Recordkeeping
 
Rule 204-2(a) (12) and (13) of the Advisers Act requires investment advisors to keep copies of all relevant material relating to the Advisor Code. Supplemental policies are reflected in the SWIA Compliance Program.