February 28, 2018 Schwab Target Funds Underlying Emerging Markets Strategy Addition

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1 February 28, 208 Schwab Target Funds Underlying Emerging Markets Strategy Addition Charles Schwab Investment Management, Inc. Adds Emerging Markets Strategy Charles Schwab Investment Management (CSIM) reviews the strategic asset allocation framework and capital market expectations on an annual basis, seeking opportunities to further enhance the Schwab Target Funds (Funds) on a long-term basis for investors. As part of our philosophy along with this annual review, CSIM continually assesses possible portfolio enhancements in order to appropriately provide for growth opportunity while managing and helping to reduce investment risks throughout the glide path. The most recent strategic asset allocation and capital markets review resulted in a shift within the equity allocation of each Fund s portfolio, slightly reducing overall U.S. equities and slightly increasing non-u.s. developed and emerging markets equities. This shift was announced in January 208, along with the updated policy allocations. Consistent with our philosophy, and following the adjustments to the equity allocations implemented with the 208 policy allocations, CSIM is adding the Goldman Sachs Emerging Markets Equity Insights Fund (GERIX) as an underlying investment within the Schwab Target Funds, effective February 28, 208. The additional active emerging markets strategy will complement the Funds overall portfolio by adding additional process and style diversification. The table below displays the emerging markets allocations along the glide path (per 208 policy allocations). Emerging Markets Policy Allocations Net Operating Expense Ratio Laudus Mondrian Emerging Markets Fund - Instl (LEMNX).20% % 0.7%.2%.8% 2.3% 2.8% 3.% 3.4% 3.6% Goldman Sachs Emerging Markets Equity Insights Fund-Inst. (GERIX).5% % 0.4% 0.8%.%.5%.8% 2.0% 2.2% 2.3% Go ldman Sachs Asset Management Goldman Sachs Asset Management, L.P. (GSAM) is a wholly owned subsidiary of the Goldman Sachs Group, a publically traded company. GSAM managed $.29 trillion dollars as of December 3, 207. The Quantitative Investment Strategies (QIS) team, responsible for managing this strategy manages $35.2billion in assets, with the team managing over 35.4billion across multiple markets. The investment process for the Goldman Sachs Emerging Markets Equity Insights Fund is highly quantitative analyzing global data sets in order to forecast equity returns. The diversified strategy seeks to maintain market exposure similar to its benchmark while identifying attractive companies based on GSAMs proprietary quantitative strategies. Within the Funds, CSIM selects underlying strategies from both a universe of industry recognized external investment managers and proprietary strategies. This approach, along with utilizing both active and passive underlying strategies, allows the Funds to seek broad strategy diversification and manager expertise across asset classes.

2 Proprietary strategies CSIM assumes the day-to-day investment management responsibilities, including funds from the Schwab Funds family. Externally managed strategies unaffiliated funds or strategies the Schwab Target Funds invest in. Contact us: Investors should consider carefully information contained in the prospectus, or, if available, the summary prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by visiting schwabfunds.com. Please read the prospectus carefully before investing. The values of the funds will fluctuate up to and after the target dates. There is no guarantee the funds will provide adequate income at or through retirement. The funds are built for investors who expect to start gradual withdrawals of fund assets on the target date, to begin covering expenses in retirement. The principal value of the funds is no guaranteed at any time, and will continue to fluctuate up to and after the target date. Charles Schwab Investment Management, Inc. (CSIM) is the investment advisor for Schwab Funds and Laudus Funds. Schwab Funds are distributed by Charles Schwab & Co., Inc. (Schwab), Member SIPC. The Laudus Group of Funds includes the Laudus Mondrian Funds and Laudus U.S. Large Cap Growth Fund, whichare part of the Laudus Trust and distributed by ALPS Distributors, Inc. (ALPS); and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Schwab. CSIM and Schwab, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation, and are not affiliated with ALPS. CSIM is not affiliated with Goldman Sachs Asset Management, L.P. or the Goldman Sachs Group. The material in this presentation is based on information from a variety of sources we consider reliable, but we do not represent that the information is accurate or complete. Errors and omissions can occur. None of the information constitutes a recommendation by Charles Schwab Investment Management, Inc. or their affiliates or a solicitation of an offer to buy or sell any securities. 208 Charles Schwab Investment Management, Inc. All rights reserved. (028-88V6) 2

3 January 3, 208 Schwab Target Date Funds Schwab Target Funds Schwab Target Index Funds Charles Schwab Investment Management, Inc. Releases 208 Target Date Allocations Charles Schwab Investment Management (CSIM) has released the 208 policy allocations for the Schwab Target Funds and the Schwab Target Index Funds (collectively, the Funds). The policy allocations are updated annually as the glide path progresses. There are no changes to the Funds overall glide path strategy and each of the Funds will continue to transition from equity to fixed income and cash equivalents over time as depicted below. Please refer to for the full 208 target date fund policy allocations The values of the Funds will fluctuate up to and after the target date. There is no guarantee the Funds will provide adequate income at or through retirement. Equity includes Domestic Equity, International Equity, and Global Real Estate. Fixed Income includes Intermediate- Term Bond, Inflation-Protected Bond, International Bond, Cash Equivalents and Short-Term Bond.

4 Portfolio Updates: CSIM reviews the strategic asset allocation framework and capital market expectations on an annual basis, seeking opportunities to further enhance the Funds on a long-term basis for investors. Equities In 208, the Funds will make the following adjustments within the equity allocation of each portfolio: Overall U.S. equities will be slightly reduced while allocations to non-u.s. developed and emerging markets equities will be slightly increased. Schwab Target Index Funds - the U.S. to non-u.s. equities shift ranges from 0% in the earlier dated funds to 2.5% in the later dated funds. Schwab Target Funds - the U.S. to non-u.s. equities shift ranges from 0.5% in the earlier dated funds to 5.5% in the later dated funds. Additionally, for the Schwab Target Funds, allocations to mid-cap domestic equities will be added with the 208 annual rolldown implementation. The mid-cap exposure will range from 0.7% in the earlier dated funds to.7% in the later dated funds. These enhancements are consistent with our strategic beliefs to align allocations with investors life stages. Higher exposure to more volatile asset classes early in the glide path support long-term wealth accumulation, then shifting to more conservative positions as the glide path progresses to protect investors savings. We believe increasing non-u.s. equities will provide geographic diversification while reducing single-country risks. Intermediate-Term Bond Schwab Target Funds Consistent with our sub-advisor oversight process, CSIM elected to add the Baird Aggregate Bond Fund (BAGIX) managed by Baird Advisors. On January 3, 208 CSIM will be adding Baird Aggregate Bond Fund (BAGIX) to the selection of underlying investment strategies within the Schwab Target Funds. Baird Aggregate Bond Fund (BAGIX) will be replacing Wells Fargo Advantage Core Bond Fund (MBFIX), which was removed from the portfolio as of January 3, 208. Baird Advisors was chosen from a universe of over 260 core bond strategies. CSIM s analysis indicates the portfolio is the best overall complement to the existing strategies. Baird is comprised of senior team members who have developed and implemented their strategy for over 30 years. Baird s process, focusing on fundamental security selection is clear, understandable and consistent. Within the Schwab Target Funds, CSIM selects underlying strategies from both proprietary strategies and a universe of industry recognized external investment managers. This approach, along with utilizing both active and passive underlying strategies, allows the Schwab Target Funds to seek broad strategy diversification and manager expertise across asset classes. For the intermediate-term bond asset class externally managed strategies, the Schwab Target Funds now combine the value-driven, credit-intensive Loomis Sayles Investment Grade Bond Fund, the security and sector selection focused TCW MetWest Total Return Bond Fund, with the duration neutral, valued based Baird Aggregate Bond Fund. Proprietary strategies CSIM assumes the day-to-day investment management responsibilities, including funds from the Schwab Funds family. Externally managed strategies unaffiliated funds or strategies the Schwab Target Funds invest in. Contact us: schwab-funds@schwab.com Investors should consider carefully information contained in the prospectus, or, if available, the summary prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by visiting schwabfunds.com. Please read the prospectus carefully before investing. The values of the funds will fluctuate up to and after the target dates. There is no guarantee the funds will provide adequate income at or through retirement. The funds are built for investors who expect to start gradual withdrawals of fund assets on the target date, to begin covering expenses in retirement. The principal 2

5 value of the funds is no guaranteed at any time, and will continue to fluctuate up to and after the target date. Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab Funds, and Charles Schwab & Co., Inc. (Schwab), Member SIPC, the distributor for Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Charles Schwab Investment Management, Inc. (CSIM) is the investment advisor for Laudus Funds. The Laudus Group of Funds includes the Laudus Mondrian Funds and Laudus U.S. Large Cap Growth Fund, which are part of the Laudus Trust and distributed by ALPS Distributors, Inc. (ALPS); and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. (Schwab), Member SIPC. Schwab and CSIM, affiliates and subsidiaries of The Charles Schwab Corporation, are not affiliated with ALPS. The material in this presentation is based on information from a variety of sources we consider reliable, but we do not represent that the information is accurate or complete. Errors and omissions can occur. None of the information constitutes a recommendation by Charles Schwab Investment Management, Inc. or their affiliates or a solicitation of an offer to buy or sell any securities. 208 Charles Schwab Investment Management, Inc. All rights reserved. (08-8ALB) 3