2018 Supplementary Tax Information

2018 Supplementary Tax Information

The enclosed information may be useful in the preparation of your federal, state, and/or city tax returns.

? U.S. Government Obligations Information ? Percentage of Income Earned by State and U.S. Territory

? Percentage of Income Subject to the Federal Alternative Minimum Tax (AMT)

U.S. Government Obligations Information In most states, fund dividends derived from U.S. government obligations are generally exempt from state income taxes. The percentage shown below is the portion of the dividend income paid by certain funds that qualifies for this exemption. To calculate the amount of income earned from U.S. government obligations, multiply the percentage by the ordinary dividends (excluding any short-term capital gain distributions) you received from the fund during the 2018 calendar year. Shareholders in CA, CT and NY should note that only the funds denoted with an asterisk (*) meet the minimum investment requirements of these states to permit the "pass-through" of exempt income. Funds not shown had 0% dividend income derived from U.S. government obligations.

Fund Name

U.S. Government Obligation %

Fund Name

U.S. Government Obligation %

Schwab Treasury Inflation Protected Securities Index Fund* Schwab Intermediate-Term Bond Fund Schwab U.S. Aggregate Bond Index Fund Schwab Short-Term Bond Index Fund* Schwab MarketTrack Growth PortfolioTM Schwab MarketTrack Balanced PortfolioTM Schwab MarketTrack Conservative PortfolioTM

99.94% 35.20% 31.73% 56.97%

5.49% 12.62% 18.37%

Schwab Target 2030 Index Fund Schwab Target 2035 Index Fund Schwab Target 2040 Index Fund Schwab Target 2045 Index Fund Schwab Target 2050 Index Fund Schwab Target 2055 Index Fund Schwab Target 2060 Index Fund

10.22% 7.41% 5.27% 3.72% 2.70% 1.83% 1.47%

Schwab Balanced Fund

13.03%

Schwab Advisor Cash Reserves?1,2

0.01%

Schwab Target 2010 Fund

21.51%

Schwab Cash Reserves

0.01%

Schwab Target 2015 Fund

21.59%

Schwab GNMA Fund3

7.78%

Schwab Target 2020 Fund Schwab Target 2025 Fund

18.44% 12.78%

Schwab Government Money Fund1 Schwab Retirement Government Money Fund*

25.32% 69.74%

Schwab Target 2030 Fund Schwab Target 2035 Fund

8.47% 6.04%

Schwab Treasury Obligations Money Fund1 Schwab U.S. Treasury Money Fund*1

17.31% 100.00%

Schwab Target 2040 Fund Schwab Target 2045 Fund Schwab Target 2050 Fund Schwab Target 2055 Fund Schwab Target 2060 Fund Schwab Target 2010 Index Fund Schwab Target 2015 Index Fund Schwab Target 2020 Index Fund Schwab Target 2025 Index Fund

4.01% 2.51% 1.73% 1.12% 0.64% 25.66% 23.88% 21.04% 14.52%

Schwab Value Advantage Money Fund?1 Schwab Variable Share Price Money Fund Schwab Monthly Income Fund -- Moderate Payout Schwab Monthly Income Fund -- Enhanced Payout Schwab Monthly Income Fund -- Maximum Payout Schwab U.S. TIPS ETF* Schwab Short-Term U.S. Treasury ETF* Schwab Intermediate-Term U.S. Treasury ETF* Schwab U.S. Aggregate Bond ETF

0.01% 0.01% 19.43% 24.12% 28.14% 99.95% 99.92% 99.94% 30.63%

1 Percentages apply to all share classes. 2 The Fund liquidated on October 31, 2018. 3 The Fund liquidated on November 15, 2018.

Investors should consider carefully information contained in a fund's prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses. You can view and download a prospectus by visiting . Please read the prospectus carefully before investing.

Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. ETF shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV). Charles Schwab Investment Management, Inc. and Charles Schwab & Co., Inc. do not recommend investment or reporting methods for specific tax situations. For advice on your particular tax situation, or for more information on the taxes covered in this supplement, please consult a professional tax advisor, the Internal Revenue Service or your state tax authority. Charles Schwab Investment Management, Inc. (CSIM) is the investment advisor for Schwab Funds and Schwab ETFs. Schwab Funds are distributed by Charles Schwab & Co., Inc. (Schwab), Member SIPC. Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). CSIM and Schwab are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation, and are not affiliated with SIDCO.

?2019 Charles Schwab Investment Management, Inc. All rights reserved. REF (0119-88BV) REG22669-18 (01/19)

Percentage of Income Earned by State and U.S. Territory Most states do not impose income tax on interest income derived from their own municipal obligations. The following table shows the percentage of income paid by each fund on a state-by-state basis. To calculate the amount of income attributable to a particular state or territory, you should multiply Form 1099-DIV box 10 total tax-exempt income you received in 2018 from a particular fund by the appropriate percentage below. Shareholders who are residents of CA and MN should note that investment thresholds and income limitations may prevent the "pass-through" of state-exempt income. For the Schwab California Tax-Free Bond Fund and Schwab California Municipal Money Fund, the amount of income attributable to California is 100%. For the Schwab New York Municipal Money Fund, the amount of income attributable to New York is 100%.

State

Schwab Municipal Money FundTM1 (%)

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma

Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Total

1 Percentages apply to all share classes.

2.20% 0.09% 0.84% 0.25% 4.82% 3.56% 0.20% 0.17% 1.88% 5.30% 3.45% 0.28% 0.17% 6.57% 1.21% 1.43% 0.94% 0.74% 0.91% 0.02% 1.26% 1.92% 2.05% 0.73% 0.47% 1.78% 0.00% 1.08% 2.60% 0.89% 1.98% 0.00% 15.96% 0.66% 0.15% 1.76% 0.08% 0.50% 2.40% 0.00% 0.16% 0.43% 0.08% 1.45% 17.68% 1.08% 0.00% 0.48% 4.34% 0.78% 1.65% 0.57% 100.00%

Schwab AMT Tax-Free Money FundTM1 (%)

4.55% 0.04% 0.44% 0.00% 3.68% 4.14% 0.64% 1.04% 2.26% 2.08% 2.28% 0.26% 0.14% 7.44% 1.97% 2.24% 1.01% 0.11% 1.98% 0.00% 1.10% 1.14% 5.20% 1.33% 0.60% 1.59% 0.00% 1.58% 0.67% 0.00% 1.99% 0.00% 12.49% 0.79% 0.63% 1.61% 0.26% 0.72% 2.37% 0.00% 0.00% 0.47% 0.00% 1.11% 16.85% 2.70% 0.00% 0.85% 3.28% 1.83% 2.54% 0.00% 100.00%

Schwab Tax-Free Bond FundTM (%)

1.63% 1.36% 1.11% 1.00% 9.73% 1.36% 0.41% 0.14% 0.49% 7.05% 1.64% 0.57% 0.97% 5.87% 1.05% 0.15% 1.60% 0.72% 0.95% 0.00% 1.74% 1.64% 3.48% 1.14% 1.77% 1.76% 0.52% 1.44% 1.08% 0.25% 2.48% 0.43% 10.05% 2.24% 0.08% 2.15% 0.84% 7.53% 1.88% 0.00% 0.17% 1.57% 0.37% 0.73% 9.15% 1.01% 0.94% 0.54% 3.45% 0.31% 1.35% 0.11% 100.00%

Percentage of Income Subject to the Federal Alternative Minimum Tax (AMT) Depending on your individual tax situation, you may be required to file IRS Form 6251, Alternative Minimum Tax--Individuals. Please

refer to box 11 on your Form 1099-DIV from Charles Schwab & Co., Inc. for the amount of tax-exempt interest dividends you earned that should be included on IRS Form 6251, if any. For more information about national and state-specific money funds and bond

funds, please visit .

Note: Capital gains from municipal ("tax-free", "tax-exempt") securities are not exempt from Federal taxation.

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