PACCAR Inc Savings Investment Plan (SIP)

PACCAR Inc Savings Investment Plan (SIP) August 1, 2016 Dear PACCAR Employee, PACCAR provides excellent retirement benefits through its company-sponsored 401(k) plan the PACCAR Inc Savings Investment Plan (SIP), and a defined benefit pension plan the PACCAR Inc Retirement Plan. These two plans are important components of your family s retirement financial plan. Only twenty four of the Fortune 500 companies provide retirement programs similar to PACCAR s. Starting September 1, 2016, we are enhancing the SIP Program: New U.S. Employees who join PACCAR on or after September 1, 2016 will be automatically enrolled in the SIP Program. The company match will be provided per pay period instead of once per year. You will have enhanced control over your retirement plans and increased flexibility in managing them. New investment fund programs will be provided. Please review the enclosed Guide to learn more about the enhancements and how they can help you achieve your retirement goals. If you have investments in any of the Fidelity Asset Manager Funds, review pages 1 and 2 closely, as you may want to update your investment options before August 31, 2016. Sincerely, Jack K. LeVier Vice President Human Resources ERNA

Enhancements to the PACCAR Inc Savings Investment Plan (SIP) Are Coming September 1, 2016 Enhancements That Can Help You Achieve Your Retirement Goals PACCAR offers the Savings Investment Plan (SIP) to help you reach your retirement goals. When you contribute to the Plan, the Company provides a PACCAR stock match on up to 5% of your eligible pay. Beginning September 1, 2016, the SIP will provide: Immediate per paycheck match Enhanced flexibility Enhanced investment options Immediate Per Paycheck Match Beginning September 1, 2016, PACCAR is enhancing the way the company match is credited to your account. Instead of matching once per year, PACCAR will credit the company match to your SIP account each pay period. Employees will no longer be required to have worked one year and to be actively employed on December 31st to be eligible for the company match. A year-to-date 2016 match (for your eligible contributions made between January 1 August 31, 2016) will be credited to your SIP account in September, 2016. Current Annual Match NEW! Per Paycheck Match Up to a 5% match after one year of service must be employed as of December 31 to receive match Up to a 5% match immediately will be credited to your SIP account each pay period Enhanced Investment Options PACCAR provides you with a range of cost-effective investment choices that can assist you in meeting your retirement goals. Three NEW low-cost index are being added to the SIP fund lineup: Bond Index Fund (Northern Trust Aggregate Bond Index Fund) Small Cap Index Fund (Northern Trust Collective Russell 2000 Index Fund) International Index Fund (Northern Trust EAFE Index Fund Tier 3) Information on these is enclosed and will be available at www.401k.com after September 1, 2016. As part of PACCAR s ongoing effort to streamline plan costs, three are being removed from the SIP fund lineup: Fidelity Asset Manager 20% Fidelity Asset Manager 50% Fidelity Asset Manager 70% If you have investments in one of these, you should be aware of the impact of these changes. To see how your existing balance and your future contributions will be impacted, see the chart on the next page. The JPMorgan Mid Cap Value Fund Institutional Class will now be called the Mid Cap Value Fund managed by J.P. Morgan and it will have a lower net expense ratio.

On September 1, 2016, if you have investments in one of the following, your existing account balances and future contributions will transfer as follows: If you are currently invested in Beginning September 1, 2016, your balances and future contributions will be invested in Fidelity Asset Manager 20% Fidelity Freedom Index Fund that aligns with your assumed retirement date at age 65. Fidelity Asset Manager 50% Fidelity Asset Manager 70% The Freedom Index Funds provide a simple solution whereby the asset allocation becomes more conservative as the anticipated target age approaches. See the enclosed Qualified Default Investment Alternative summary for more details and to determine to which Freedom Index Fund your balance and future contributions will be mapped. You don t have to take any action if you want your Fidelity Asset Manager account balances and/or future contributions to map to the Fidelity Freedom Index Funds starting September 1, 2016. To redirect your current and future contributions log onto Fidelity NetBenefits at www.401k.com or call the Fidelity Retirement Benefits Line at 1-800-835-5098 prior to 4 p.m. ET on August 31, 2016. As always, you can make investment changes online at anytime. Adding a Default Investment Option to the Plan The Fidelity Freedom Index Funds will become the Plan s default investment option for participants who don t make an investment election. See the enclosed Qualified Default Investment Alternative summary to get more details. The investment risk of each Freedom Index Fund changes over time as the fund s asset allocation changes. These risks are subject to the asset allocation decisions of the investment adviser. Pursuant to the adviser s ability to use an active asset allocation strategy for the Freedom Funds, investors may be subject to a different risk profile compared to the fund s neutral asset allocation strategy. The are subject to the volatility of the financial markets, including that of equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, commodity-linked, and foreign securities. No target date fund is considered a complete retirement program and there is no guarantee any single fund will provide sufficient retirement income at or through retirement. Principal invested is not guaranteed at any time, including at or after the target dates. Upcoming Key Dates u August 31, 2016 Last day to redirect before changes take effect September 1, 2016 Updated investment fund lineup in place Starting September 1,2016 To get more details about these enhancements or to make changes, log onto Fidelity NetBenefits at www.401k.com or call the Fidelity Retirement Benefits Line at 1-800-835-5098. Representatives are available from 8:30 a.m. to 8:00 p.m. ET. 2

Enhanced Flexibility Other enhancements effective September 1, 2016, include: Enhancement Removal of the current three-year transfer restriction on Company match New in-service withdrawal options New withdrawal options when you leave PACCAR Ninety-day wait period is removed Maximum pre-tax contribution rate increased to 75% Newly eligible employees will automatically be enrolled in the SIP New rollover provision How You Benefit Company match (PACCAR stock) balances will be freely transferrable to other SIP investment options at any time. As an active employee, you can now withdraw from the SIP in the following situations: At age 59½ Financial hardship For an immediate and serious financial need for which the withdrawal is: Necessary to satisfy the financial need Not more than the need Your only way to obtain to meet the financial hardship For more details on what is covered as a hardship withdrawal, go to www.401k.com starting September 1, 2016. When you leave PACCAR, you will be able to withdraw from your account in regular installments or as a lump sum. Penalties may apply depending on your age at time of withdrawal. The requirement to withdraw all of your or no has been eliminated. If you suspend your contributions, you can restart them at any time. The ninety-day wait period has been removed. You can save even more with the maximum contribution rate increasing from 35% to 75% (subject to applicable limits). All newly hired employees will automatically be enrolled in the SIP at a pre-tax contribution rate of 5%, unless they opt out within 45 days. If you leave PACCAR with a SIP balance of more than $1,000 but less than $5,000 and you take no action, the Plan will automatically establish an Individual Retirement Account (IRA) for you at Fidelity at the direction of PACCAR. Your account balance will be rolled over so you keep your account invested for retirement. Get Guidance Online or By Phone Use Fidelity s online Planning & Guidance Center at www.401k.com to help you make the most of your retirement assets and achieve your retirement goals. You can speak with a Fidelity Workplace Planning & Guidance Consultant by calling 1-800-603-4015. This dedicated number provides direct access to trained consultants. 3

This document is intended to satisfy the requirements for a Summary of Material Modifications under the Department of Labor s requirements and should be kept with your copy of the Plan s Summary Plan Description. Before investing in any investment option, consider the risks, charges and expenses. Contact Fidelity for a prospectus, or if available, a summary prospectus. Read it carefully. Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money. IMPORTANT: The projections or other information generated by the Planning & Guidance Center s Retirement Analysis regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Your results may vary with each use and over time. Guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serve as the primary basis for your investment or tax-planning decisions. This Letter summarizes certain provisions of the PACCAR Inc Savings Investment Plan (the Plan ). It does not, however, attempt to explain all the details, provisions, limitations, restrictions and exclusions of the Plan. In the event that there is any discrepancy between the Plan documents and this Letter, the Plan documents will prevail. PACCAR reserves the right to change or terminate the Plan or specific provisions of the Plan at any time. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 761867.1.0 4

Your PACCAR Inc Savings Investment Plan (SIP or the Plan ) Qualified Default Investment Alternative As a current PACCAR employee, this notice is being provided to you for informational purposes only. No action is required from you. U.S. Department of Labor regulations require that plan sponsors provide retirement plan participants with certain notices regarding plan features. Beginning September 1, 2016, the Index Funds will become the SIP s default investment option for participants who don t make an active investment election. You are receiving this notice because you are currently a participant in the Plan. Under the Plan, any contributions for which you do not provide investment direction will be invested in the Plan s designated default option (the Plan Designated Fund ). You have the right under the Plan to direct the investment of your existing balances and future contributions to any of the Plan s available investment options, including the right to transfer out of the Plan Designated Fund to another investment option. Your contributions will continue to be invested as you have directed unless you provide alternative direction. The Index Funds used as the Plan Designated Fund are based on the assumption that the participant will retire at age 65. The following table indicates which fund your contributions will be directed to, based on the date of birth provided for you by your employer. To obtain information about other plan investment options, please log onto NetBenefits at www.401k.com or call the Fidelity Retirement Benefits Line at 1-800-835-5098 to speak to a representative. You may also make changes to your investment elections for future contributions and/or exchange all or a portion of your existing balance into other options available under the Plan via NetBenefits or by phone. We encourage you to review your investment mix and deferral percentage and update as appropriate.

Fidelity Freedom Index Funds Descriptions Date Of Birth Fund Name Retirement Date Range Before 1941 1/1/1941-12/31/1950 1/1/1951-12/31/1960 1/1/1961-12/31/1970 1/1/1971-12/31/1980 1/1/1981-12/31/1990 Index Income Fund Index 2010 Fund Index 2020 Fund Index 2030 Fund Index 2040 Fund Index 2050 Fund 1/1/1991 and later Index 2060 Fund Retired before 2006 Current Asset Allocation* 17% domestic equity, 7%, 46% bond, and 30% shortterm 2006-2015 32% domestic equity, 14%, 38% bond, and 16% shortterm 2016-2025 42% domestic equity, 18%, 32% bond, and 8% shortterm 2026-2035 57% domestic equity, 24%, and 19% bond 2036-2045 63% domestic equity, 27%, and 10% bond 2046-2055 63% domestic equity, 27%, and 10% bond 2056 and beyond 63% domestic equity, 27%, and 10% bond Gross Expense Ratio as of 05/28/2016 0.13 Timeline selected by Plan Sponsor *The percentages represent target asset allocation at 1/1/16. Target asset allocations may appear equal due to rounding. Allocation percentages may not add up to 100% due to rounding and/or cash balances.

Index Income Fund - Objective: Seeks high current income and, as a secondary objective, capital appreciation. Strategy: Investing in a combination of Fidelity domestic equity (including commodity ), international (developed and emerging markets), bond (including treasury inflation-protected security ) and short-term (underlying Fidelity ), each of which (excluding the money market fund) seeks to provide investment results that correspond to the total return of a specific index or market segment. Allocating assets among underlying Fidelity according to a stable asset allocation strategy of approximately 17% in domestic equity, 7% in, 46% in bond and 30% in short-term. Investment Risk: The fund is subject to risks resulting from the asset allocation decisions of the Investment Adviser. The fund is subject to the volatility of the financial markets, including that of equity and fixed income investments. Fixed income investments entail issuer default and credit risk, inflation risk, and interest rate risk (as interest rates rise, bond prices usually fall and vice versa). This effect is usually more pronounced for longer-term securities. No target date fund is considered a complete retirement program and there is no guarantee and single fund will provide sufficient retirement income at or through retirement. Principal invested is not guaranteed at any time, including at or after the ' target dates. Index 2010, 2020, 2030, 2040, 2050, 2060 Fund - Objective: Seeks high total return until its target retirement date. Thereafter, the fund's objective will be to seek high current income and, as a secondary objective, capital appreciation. Strategy: Designed for investors who anticipate retiring in or within a few years of the fund's target retirement year at or around age 65 and plan to gradually withdraw the value of their account in the fund over time. Investing in a combination of Fidelity domestic equity (including commodity ), international (developed and emerging markets), bond (including treasury inflation-protected security ) and short-term (underlying Fidelity ), each of which (excluding the money market fund) seeks to provide investment results that correspond to the total return of a specific index or market segment. Allocating assets among underlying Fidelity according to an asset allocation strategy that becomes increasingly conservative until it reaches an allocation similar to that of the Fidelity Freedom Index Income Fund - approximately 17% in domestic equity, 7% in, 46% in bond and 30% in short-term (approximately 10 to 19 years after the target year). Ultimately, the fund will merge with Fidelity Freedom Index Income Fund. The Adviser may continue to seek high total return for several years beyond the fund's target retirement date in an effort to achieve the fund's overall investment objective. This description is only intended to provide a brief overview of the mutual fund. Read the fund's prospectus for more detailed information about the fund. Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully. In the event of a discrepancy between this notice and the terms of the Plan, the plan document will govern. For a mutual fund, the expense ratio is the total annual fund or class operating expenses (before waivers or reimbursements) paid by the fund and stated as a percentage of the fund's total net assets. Expense ratios change periodically and are drawn from the fund s prospectus. For more detailed fee information, see the fund prospectus or annual or semiannual reports. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield RI 02917 2016 FMR LLC. All rights reserved. 763375.2.0

Investment Descriptions as of 06/10/2016 As described in the PACCAR Savings Investment Plan Enhancements Guide, new investment options are being added to the SIP fund lineup. Please see the description of each below. Northern Trust Aggregate Bond Index Fund FPRS code: Objective: Strategy: OZHL The Northern Trust Aggregate Bond Index Fund seeks to approximate the risk and return characteristics of the Barclays Capital US Aggregate Bond Index. The Fund holds a portfolio representative of the overall U.S. bond and debt market, as characterized by the Index. This Fund does not participate in securities lending. Unit price, yield and return may vary. Risk: Short-term Redemption Fee Note: In general the bond market is volatile, and fixed income securities carry interest rate risk. (For example, as interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible. Additional risk information for this product may be found in the prospectus or other product materials, if available. None Gross Expense Ratios: 0.0425% as of 02/29/2016 Footnotes: The investment option is a collective investment trust. It is managed by Northern Trust. This description is only intended to provide a brief overview of the fund. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged market valueweighted index for U.S. dollar denominated investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. This investment option is not a mutual fund. Northern Trust Collective Russell 2000 Index Fund - DC Non-Lending FPRS code: Objective: Strategy: OZ3Z The Northern Trust Collective Russell 2000 Index Fund seeks to approximate the risk and return characteristics of the Russell 2000 Index. The Fund employs a replication technique, which generally seeks to hold each index constituent in its proportional index weight. This Fund does not participate in securities lending. The Fund may make limited use of futures and/or options for the purpose of maintaining equity exposure. Unit price and return will vary.

Risk: Short-term Redemption Fee Note: Gross Expense Ratios: The securities of smaller, less well-known companies can be more volatile than those of larger companies. Value and growth stocks can perform differently from other types of stocks. Growth stocks can be more volatile. Value stocks can continue to be undervalued by the market for long periods of time. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, economic or other developments. These risks may be magnified in foreign markets. None 0.05% as of 02/29/2016 Footnotes: The investment option is a collective investment trust. It is managed by Northern Trust. This description is only intended to provide a brief overview of the fund. The Russell 2000 Index is an unmanaged market capitalization-weighted index of 2,000 small company stocks of U.S. domiciled companies. This investment option is not a mutual fund. Northern Trust EAFE Index Fund - DC - Non-Lending - Tier Three FPRS code: Objective: Strategy: Risk: Short-term Redemption Fee Note: Gross Expense Ratios: OZ4Z The primary objective of the Northern Trust EAFE Index Fund is to approximate the risk and return characteristics of the MSCI Europe, Australasia, and Far East (MSCI EAFE) Index. This Index is commonly used to represent the large and medium cap segment of the non U.S. developed equity markets. To achieve its objective, the Fund employs a replication technique which generally seeks to hold each index constituent in its proportional index weight. The Fund may make limited use of futures and/or options for the purpose of maintaining equity exposure. This Fund may not participate in securities lending. Foreign securities are subject to interest-rate, currency-exchange-rate, economic, and political risks, all of which may be magnified in emerging markets. Value and growth stocks can perform differently from other types of stocks. Growth stocks can be more volatile. Value stocks can continue to be undervalued by the market for long periods of time. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, economic or other developments. Additional risk information for this product may be found in the prospectus or other product materials, if available. None 0.050% as of 03/31/2016 Footnotes: The investment option is a collective investment trust. It is managed by Northern Trust. This description is only intended to provide a brief overview of the fund. The MSCI Europe, Australasia and Far East (EAFE ) Index is an unmanaged market capitalization-weighted index of equity securities of companies domiciled in various countries. The index is designed to represent performance of developed stock markets outside the United States and Canada and excludes certain market segments unavailable to U.S. based investors. This investment option is not a mutual fund.

Mid Cap Value Fund managed by JP Morgan FPRS code: Objective: Strategy: Risk: Short-term Redemption Fee Note: Gross Expense Ratios: TD8L The investment seeks growth from capital appreciation. Under normal circumstances, the underlying investment fund invests at least 80% of its assets in equity securities of mid cap companies. "Assets" means net assets, plus the amount of borrowings for investment purposes. Mid cap companies are companies with market capitalizations equal to those within the universe of the Russell Midcap Value Index and/or between $1 billion and $20 billion at the time of purchase. Value and growth stocks can perform differently from other types of stocks. Growth stocks can be more volatile. Value stocks can continue to be undervalued by the market for long periods of time. The securities of smaller, less well-known companies can be more volatile than those of larger companies. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, economic or other developments. These risks may be magnified in foreign markets. None 0.60713% as of 06/10/2016 Footnotes: The investment option is a unitized investment option. This description is only intended to provide a brief overview of the investment option. The Fund invests solely in the JP Morgan Mid Cap Value Fund - Institutional Class (FLMVX). A revenue credit is being accrued into the Fund's daily net asset value which results in a lower expense ratio than that of the underlying investment. Performance shown is that of the Plan's investment option, the Mid Cap Value Fund managed by JP Morgan, not the JP Morgan Mid Cap Value Fund - Institutional Class. The Russell Midcap Value Index is an unmanaged market capitalization-weighted index of medium-capitalization value-oriented stocks of U.S. domiciled companies that are included in the Russell Midcap Index. Value-oriented stocks tend to have lower price-to-book ratios and lower forecasted growth values. This investment option is not a mutual fund. For non mutual fund investment options, the expense information has been provided by the plan sponsor, the investment option's manager, or the trustee. When no ratio is shown for these options, it is because none was available. There may be fees and expenses associated with the investment option. Expense information changes periodically. Please consult NetBenefits for updates. 2016 FMR LLC. All rights reserved. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 765465.2.0