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1 Annual report dated October 31, 2015, enclosed. Schwab Target Funds Schwab Target 2010 Fund Schwab Target 2015 Fund Schwab Target 2020 Fund Schwab Target 2025 Fund Schwab Target 2030 Fund Schwab Target 2035 Fund Schwab Target 2040 Fund Schwab Target 2045 Fund Schwab Target 2050 Fund Schwab Target 2055 Fund Go paperless today. Simplify your financial life by viewing these documents online. Sign up at schwab.com/paperless Current performance may be substantially different from what is contained in this report. Please click here for more current fund performance and other information. This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

2 This wrapper is not part of the shareholder report.

3 Schwab Target Funds Annual Report October 31, 2015 Schwab Target 2010 Fund Schwab Target 2015 Fund Schwab Target 2020 Fund Schwab Target 2025 Fund Schwab Target 2030 Fund Schwab Target 2035 Fund Schwab Target 2040 Fund Schwab Target 2045 Fund Schwab Target 2050 Fund Schwab Target 2055 Fund

4 Schwab Target Funds In This Report Performance at a Glance... 1 From the President... 3 Fund Management... 5 Performance and Fund Facts Schwab Target 2010 Fund... 6 Schwab Target 2015 Fund... 8 Schwab Target 2020 Fund Schwab Target 2025 Fund Schwab Target 2030 Fund Schwab Target 2035 Fund Schwab Target 2040 Fund Schwab Target 2045 Fund Schwab Target 2050 Fund Schwab Target 2055 Fund Fund Expenses Financial Statements and Portfolio Holdings Schwab Target 2010 Fund Schwab Target 2015 Fund Schwab Target 2020 Fund Schwab Target 2025 Fund Schwab Target 2030 Fund Schwab Target 2035 Fund Schwab Target 2040 Fund Schwab Target 2045 Fund Schwab Target 2050 Fund Schwab Target 2055 Fund Financial Notes Report of Independent Registered Public Accounting Firm Other Federal Tax Information Investment Advisory Agreement Approval Trustees and Officers Glossary Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM). Distributor: Charles Schwab & Co., Inc. (Schwab).

5 Performance at a Glance The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit Total Return for the 12 Months Ended October 31, 2015 Schwab Target 2010 Fund (Ticker Symbol: SWBRX) 2.03% Target 2010 Composite Index 2.26% Fund Category: Morningstar Target Date % Performance Details pages 6-7 Schwab Target 2015 Fund (Ticker Symbol: SWGRX) 1.99% Target 2015 Composite Index 2.32% Fund Category: Morningstar Target Date % Performance Details pages 8-9 Schwab Target 2020 Fund (Ticker Symbol: SWCRX) 2.25% Target 2020 Composite Index 2.58% Fund Category: Morningstar Target Date % Performance Details pages Schwab Target 2025 Fund (Ticker Symbol: SWHRX) 2.36% Target 2025 Composite Index 2.68% Fund Category: Morningstar Target Date % Performance Details pages Schwab Target 2030 Fund (Ticker Symbol: SWDRX) 2.44% Target 2030 Composite Index 2.71% Fund Category: Morningstar Target Date % Performance Details pages All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. The components that make up each of the composite indexes may vary over time. For index definitions, please see the Glossary. Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. Schwab Target Funds 1

6 Performance at a Glance continued The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit Total Return for the 12 Months Ended October 31, 2015 Schwab Target 2035 Fund (Ticker Symbol: SWIRX) 2.43% Target 2035 Composite Index 2.71% Fund Category: Morningstar Target Date % Performance Details pages Schwab Target 2040 Fund (Ticker Symbol: SWERX) 2.48% Target 2040 Composite Index 2.67% Fund Category: Morningstar Target Date % Performance Details pages Schwab Target 2045 Fund (Ticker Symbol: SWMRX) 2.37% Target 2045 Composite Index 2.64% Fund Category: Morningstar Target Date % Performance Details pages Schwab Target 2050 Fund (Ticker Symbol: SWNRX) 2.44% Target 2050 Composite Index 2.61% Fund Category: Morningstar Target Date % Performance Details pages Schwab Target 2055 Fund (Ticker Symbol: SWORX) 2.36% Target 2055 Composite Index 2.58% Fund Category: Morningstar Target Date % Performance Details pages Minimum Initial Investment 1 $100 All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. The components that make up each of the composite indexes may vary over time. For index definitions, please see the Glossary. Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, a fund s total return would have been lower. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. 1 Please see the funds prospectus for further detail and eligibility requirements. 2 Schwab Target Funds

7 From the President Dear Shareholder, Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report. At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that enable investors to build well-diversified portfolios. The Schwab Target Funds are managed according to projected retirement dates and rebalanced to become more conservative as a target date approaches and beyond. Within each fund is a mix of active, passive, proprietary, and third-party strategies, seeking to provide diversification. For the 12-month reporting period ended October 31, 2015, the funds generated returns that generally reflected positive returns for U.S. stocks and flat returns for broad international equity indexes amid market volatility. The funds performance included positive returns for some of the underlying investment strategies. For near-dated funds, returns reflected their more conservative positioning and lower exposure to volatile investment areas during the period compared with the longer-dated funds. Despite market volatility later in the period stimulated by concern about global growth and speculation that the Fed might raise interest rates, the S&P 500 Index returned 5.2% for the period. The bond market generated modest returns amid the low interest rate environment, relatively stable credit conditions and limited inflation. Reflecting these conditions, the Barclays U.S. Aggregate Bond Index returned 2.0%. Outside the U.S., turbulence in Greece, China, and select emerging markets translated into challenges that reduced returns in U.S. dollar terms as Asset Class Performance Comparison % returns during the 12 months ended 10/31/2015 This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below. 15% 10% 5.20% S&P 500 Index: measures U.S. large-cap stocks 5% 0.34% Russell 2000 Index: measures U.S. small-cap stocks 0.07% MSCI EAFE Index (Net): measures (in U.S. dollars) 0% large-cap stocks in Europe, Australasia and the Far East 1.96% Barclays U.S. Aggregate Bond Index: measures the U.S. bond market 0.01% Barclays U.S. Treasury Bills 1-3 Months Index: measures short-term U.S. Treasury obligations -5% -10% 10/31/14 12/26 2/27 4/24 6/26 8/28 10/31/15 Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Past performance is not an indication of future results. For index definitions, please see the Glossary. Data source: Index provider websites and CSIM. Nothing in this report represents a recommendation of a security by the investment adviser. Management views and portfolio holdings may have changed since the report date. Schwab Target Funds 3

8 From the President continued For the 12-month reporting period ended October 31, 2015, the funds generated returns that generally reflected positive returns for U.S. stocks and flat returns for broad international equity indexes amid market volatility. commodities prices fell globally. Meanwhile, lackluster global economic growth led to differences in central bank policies, particularly between those of the U.S., Japan, and the euro zone. This caused foreign currencies to depreciate versus the U.S. dollar, particularly among emerging markets, reducing returns in U.S. dollar terms. As a result, the MSCI EAFE Index (Net), which broadly represents the performance of international stocks, returned -0.1%. 1 For more information about the Schwab Target Funds, please continue reading this report. In addition, you can find answers to frequently asked questions and more details about these funds by visiting We are also happy to hear from you at Sincerely, 1 The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes. 4 Schwab Target Funds

9 Fund Management Zifan Tang, Ph.D., CFA, Managing Director and Head of Asset Allocation Strategies, leads the portfolio management team and has overall responsibility for all aspects of the management of the funds. She was appointed portfolio manager of the funds in February Prior to joining CSIM in 2012, Ms. Tang was a product manager at Thomson Reuters and, from 1997 to 2009, worked as a portfolio manager at Barclays Global Investors, which was subsequently acquired by BlackRock. Schwab Target Funds 5

10 Schwab Target 2010 Fund The Schwab Target 2010 Fund (the 2010 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2010 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2010 Fund s asset allocation was approximately 38.1% equity securities, 55.4% fixed income securities, and 6.5% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2010 Fund s Portfolio Holdings included in this report.) Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms. Performance. For the 12-month reporting period ended October 31, 2015, the 2010 Fund returned 2.03%. The 2010 Fund s internally calculated comparative index, the Target 2010 Composite Index (the composite index), returned 2.26%. Positioning and Strategies. The 2010 Fund s asset allocations were broadly in line with those of the composite index over the reporting period. The 2010 Fund s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index s U.S. equity allocation component, the S&P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the comparative index by various degrees, all contributed positively to the 2010 Fund s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2010 Fund s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%. The 2010 Fund s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. The 2010 Fund s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2010 Fund s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, the 2010 Fund s positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return. As of 10/31/15: Statistics Asset Class Weightings % of Investments 1 Top Holdings % of Net Assets 2,3 Number of Holdings 22 Portfolio Turnover Rate 33% Fixed-Income Funds Intermediate-Term Bond 38.6% Equity Funds Large-Cap 25.4% Fixed-Income Funds Short-Term Bond 9.4% Equity Funds International 8.9% Fixed-Income Funds Inflation-Protected Bond 6.2% Money Market Fund 3.8% Short-Term Investments 2.5% Equity Funds Small-Cap 2.6% Equity Funds Global Real Estate 2.0% Fixed-Income Funds International Bond 0.6% Total 100.0% Schwab Total Bond Market Fund 23.2% Schwab Short-Term Bond Market Fund 9.3% Metropolitan West Total Return Bond Fund, Class I 9.3% Schwab Core Equity Fund 7.0% Laudus U.S. Large Cap Growth Fund 6.3% Schwab Treasury Inflation Protected Securities Index Fund 6.2% Schwab S&P 500 Index Fund 5.7% Laudus International MarketMasters Fund, Select Shares 5.3% Wells Fargo Advantage Core Bond Fund, Class I 4.8% Schwab Value Advantage Money Fund, Ultra Shares 3.8% Total 80.9% Management views and portfolio holdings may have changed since the report date. The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. 1 The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. 2 This list is not a recommendation of any security by the investment adviser. 3 The holdings listed exclude any temporary liquidity investments. 6 Schwab Target Funds

11 Schwab Target 2010 Fund Performance and Fund Facts as of 10/31/15 The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit October 31, 2005 October 31, 2015 Performance of Hypothetical $10,000 Investment 1 $25K $20K $15K $10K Fund $15,543 Target 2010 Composite Index $16,936 Dow Jones U.S. Total Stock Market Index $21,741 Barclays U.S. Aggregate Bond Index $15,862 $5K $0K 10/31/05 10/06 10/07 10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/31/15 Average Annual Total Returns 1,2 Fund and Inception Date 1 Year 5 Years 10 Years Fund: Schwab Target 2010 Fund (7/1/05) 2.03% 5.99% 4.51% Target 2010 Composite Index 2.26% 5.96% 5.41% Dow Jones U.S. Total Stock Market Index SM 4.40% 14.11% 8.07% Barclays U.S. Aggregate Bond Index 1.96% 3.03% 4.72% Fund Category: Morningstar Target Date % 5.14% 4.16% Fund Expense Ratios 3 : Net 0.50%; Gross 0.67% All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. For index definitions, please see the Glossary. 1 Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 2 Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. 3 As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.50%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Schwab Target Funds 7

12 Schwab Target 2015 Fund The Schwab Target 2015 Fund (the 2015 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2015 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2015 Fund s asset allocation was approximately 40.0% equity securities, 53.8% fixed income securities, and 6.2% cash and cash equivalents (including money market funds). At its target date, the 2015 Fund s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2015 Fund s Portfolio Holdings included in this report.) Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms. Performance. For the 12-month reporting period ended October 31, 2015, the 2015 Fund returned 1.99%. The 2015 Fund s internally calculated comparative index, the Target 2015 Composite Index (the composite index), returned 2.32%. Positioning and Strategies. The 2015 Fund s asset allocations were broadly in line with those of the composite index over the reporting period. The 2015 Fund s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index s U.S. equity allocation component, the S&P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2015 Fund s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2015 Fund s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%. The 2015 Fund s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. The 2015 Fund s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2015 Fund s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, the 2015 Fund s positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return. As of 10/31/15: Statistics Asset Class Weightings % of Investments 1 Top Holdings % of Net Assets 2,3 Number of Holdings 23 Portfolio Turnover Rate 33% Fixed-Income Funds Intermediate-Term Bond 37.5% Equity Funds Large-Cap 26.6% Equity Funds International 9.4% Fixed-Income Funds Short-Term Bond 9.0% Fixed-Income Funds Inflation-Protected Bond 6.0% Short-Term Investments 3.7% Equity Funds Small-Cap 2.7% Money Market Fund 2.3% Equity Funds Global Real Estate 2.1% Fixed-Income Funds International Bond 0.7% Total 100.0% Schwab Total Bond Market Fund 22.3% Metropolitan West Total Return Bond Fund, Class I 9.3% Schwab Short-Term Bond Market Fund 9.0% Schwab Core Equity Fund 7.4% Laudus U.S. Large Cap Growth Fund 6.6% Schwab S&P 500 Index Fund 6.0% Schwab Treasury Inflation Protected Securities Index Fund 6.0% Laudus International MarketMasters Fund, Select Shares 5.6% Wells Fargo Advantage Core Bond Fund, Class I 4.5% Schwab International Core Equity Fund 3.7% Total 80.4% Management views and portfolio holdings may have changed since the report date. The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. 1 The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. 2 This list is not a recommendation of any security by the investment adviser. 3 The holdings listed exclude any temporary liquidity investments. 8 Schwab Target Funds

13 Schwab Target 2015 Fund Performance and Fund Facts as of 10/31/15 The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit March 12, 2008 October 31, 2015 Performance of Hypothetical $10,000 Investment 1 $25K $20K $15K $10K Fund $14,618 Target 2015 Composite Index $14,622 Dow Jones U.S. Total Stock Market Index $18,951 Barclays U.S. Aggregate Bond Index $13,944 $5K $0K 3/12/08 10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/31/15 Average Annual Total Returns 1,2 Fund and Inception Date 1 Year 5 Years Since Inception Fund: Schwab Target 2015 Fund (3/12/08) 1.99% 6.77% 5.09% Target 2015 Composite Index 2.32% 6.70% 5.09% Dow Jones U.S. Total Stock Market Index SM 4.40% 14.11% 8.72% Barclays U.S. Aggregate Bond Index 1.96% 3.03% 4.44% Fund Category: Morningstar Target Date % 5.71% 4.24% Fund Expense Ratios 3 : Net 0.53%; Gross 0.64% All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. For index definitions, please see the Glossary. 1 Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 2 Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. 3 As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.53%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Schwab Target Funds 9

14 Schwab Target 2020 Fund The Schwab Target 2020 Fund (the 2020 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2020 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2020 Fund s asset allocation was approximately 54.4% equity securities, 41.2% fixed income securities, and 4.4% cash and cash equivalents (including money market funds). At its target date, the 2020 Fund s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2020 Fund s Portfolio Holdings included in this report.) Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms. Performance. For the 12-month reporting period ended October 31, 2015, the 2020 Fund returned 2.25%. The 2020 Fund s internally calculated comparative index, the Target 2020 Composite Index (the composite index), returned 2.58%. Positioning and Strategies. The 2020 Fund s asset allocations were broadly in line with those of the composite index over the reporting period. The 2020 Fund s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index s U.S. equity allocation component, the S&P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2020 Fund s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2020 Fund s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%. The 2020 Fund s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2020 Fund s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2020 Fund s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, small positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return. As of 10/31/15: Statistics Asset Class Weightings % of Investments 1 Top Holdings % of Net Assets 2,3 Number of Holdings 24 Portfolio Turnover Rate 25% Equity Funds Large-Cap 34.8% Fixed-Income Funds Intermediate-Term Bond 31.9% Equity Funds International 13.7% Fixed-Income Funds Short-Term Bond 5.3% Equity Funds Small-Cap 3.8% Short-Term Investments 2.8% Equity Funds Global Real Estate 2.8% Fixed-Income Funds Inflation-Protected Bond 2.3% Fixed-Income Funds International Bond 1.1% Money Market Fund 1.5% Total 100.0% Schwab Total Bond Market Fund 16.9% Schwab Core Equity Fund 9.7% Metropolitan West Total Return Bond Fund, Class I 8.8% Laudus U.S. Large Cap Growth Fund 8.6% Laudus International MarketMasters Fund, Select Shares 8.1% Schwab S&P 500 Index Fund 7.9% Schwab International Core Equity Fund 5.4% Schwab Short-Term Bond Market Fund 5.3% Schwab Dividend Equity Fund 4.3% TCW Relative Value Large Cap Fund, Class I 3.4% Total 78.4% Management views and portfolio holdings may have changed since the report date. The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. 1 The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. 2 This list is not a recommendation of any security by the investment adviser. 3 The holdings listed exclude any temporary liquidity investments. 10 Schwab Target Funds

15 Schwab Target 2020 Fund Performance and Fund Facts as of 10/31/15 The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit October 31, 2005 October 31, 2015 Performance of Hypothetical $10,000 Investment 1 $25K $20K $15K $10K Fund $17,540 Target 2020 Composite Index $18,316 Dow Jones U.S. Total Stock Market Index $21,741 Barclays U.S. Aggregate Bond Index $15,862 $5K $0K 10/31/05 10/06 10/07 10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/31/15 Average Annual Total Returns 1,2 Fund and Inception Date 1 Year 5 Years 10 Years Fund: Schwab Target 2020 Fund (7/1/05) 2.25% 7.98% 5.77% Target 2020 Composite Index 2.58% 7.94% 6.24% Dow Jones U.S. Total Stock Market Index SM 4.40% 14.11% 8.07% Barclays U.S. Aggregate Bond Index 1.96% 3.03% 4.72% Fund Category: Morningstar Target Date % 6.02% 4.59% Fund Expense Ratios 3 : Net 0.61%; Gross 0.65% All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. For index definitions, please see the Glossary. 1 Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 2 Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. 3 As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.61%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Schwab Target Funds 11

16 Schwab Target 2025 Fund The Schwab Target 2025 Fund (the 2025 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2025 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2025 Fund s asset allocation was approximately 65.0% equity securities, 31.7% fixed income securities, and 3.3% cash and cash equivalents (including money market funds). At its target date, the 2025 Fund s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2025 Fund s Portfolio Holdings included in this report.) Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms. Performance. For the 12-month reporting period ended October 31, 2015, the 2025 Fund returned 2.36%. The 2025 Fund s internally calculated comparative index, the Target 2025 Composite Index (the composite index), returned 2.68%. Positioning and Strategies. The 2025 Fund s asset allocations were broadly in line with those of the composite index over the reporting period. The 2025 Fund s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index s U.S. equity allocation component, the S&P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2025 Fund s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2025 Fund s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%. The 2025 Fund s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2025 Fund s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, the 2025 Fund s largest position, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index s U.S. fixed income component, detracting from relative performance. With investment-grade bonds and TIPS posting negative returns for the period, small positions in the Schwab Treasury Inflation Protected Securities Index Fund and the Loomis Sayles Investment Grade Bond Fund detracted from total return. As of 10/31/15: Statistics Asset Class Weightings % of Investments 1 Top Holdings % of Net Assets 2,3 Number of Holdings 24 Portfolio Turnover Rate 21% Equity Funds Large-Cap 40.6% Fixed-Income Funds Intermediate-Term Bond 26.2% Equity Funds International 16.9% Equity Funds Small-Cap 4.8% Equity Funds Global Real Estate 3.4% Short-Term Investments 3.4% Fixed-Income Funds Short-Term Bond 3.1% Fixed-Income Funds International Bond 1.1% Fixed-Income Funds Inflation-Protected Bond 0.5% Total 100.0% Schwab Total Bond Market Fund 12.7% Schwab Core Equity Fund 11.2% Laudus U.S. Large Cap Growth Fund 10.1% Laudus International MarketMasters Fund, Select Shares 9.6% Schwab S&P 500 Index Fund 9.2% Metropolitan West Total Return Bond Fund, Class I 7.5% Schwab International Core Equity Fund 6.5% Schwab Dividend Equity Fund 5.1% TCW Relative Value Large Cap Fund, Class I 4.0% Schwab Global Real Estate Fund 3.4% Total 79.3% Management views and portfolio holdings may have changed since the report date. The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. 1 The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. 2 This list is not a recommendation of any security by the investment adviser. 3 The holdings listed exclude any temporary liquidity investments. 12 Schwab Target Funds

17 Schwab Target 2025 Fund Performance and Fund Facts as of 10/31/15 The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit March 12, 2008 October 31, 2015 Performance of Hypothetical $10,000 Investment 1 $25K $20K $15K $10K Fund $16,561 Target 2025 Composite Index $15,862 Dow Jones U.S. Total Stock Market Index $18,951 Barclays U.S. Aggregate Bond Index $13,944 $5K $0K 3/12/08 10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/31/15 Average Annual Total Returns 1,2 Fund and Inception Date 1 Year 5 Years Since Inception Fund: Schwab Target 2025 Fund (3/12/08) 2.36% 8.85% 6.82% Target 2025 Composite Index 2.68% 8.76% 6.22% Dow Jones U.S. Total Stock Market Index SM 4.40% 14.11% 8.72% Barclays U.S. Aggregate Bond Index 1.96% 3.03% 4.44% Fund Category: Morningstar Target Date % 7.35% 4.94% Fund Expense Ratios 3 : Net 0.67%; Gross 0.73% All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. For index definitions, please see the Glossary. 1 Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 2 Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. 3 As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.67%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Schwab Target Funds 13

18 Schwab Target 2030 Fund The Schwab Target 2030 Fund (the 2030 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2030 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2030 Fund s asset allocation was approximately 73.2% equity securities, 24.1% fixed income securities, and 2.7% cash and cash equivalents (including money market funds). At its target date, the 2030 Fund s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2030 Fund s Portfolio Holdings included in this report.) Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms. Performance. For the 12-month reporting period ended October 31, 2015, the 2030 Fund returned 2.44%. The 2030 Fund s internally calculated comparative index, the Target 2030 Composite Index (the composite index), returned 2.71%. Positioning and Strategies. The 2030 Fund s asset allocations were broadly in line with those of the composite index over the reporting period. The 2030 Fund s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index s U.S. equity allocation component, the S&P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2030 Fund s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2030 Fund s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%. The 2030 Fund s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2030 Fund s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index s U.S. fixed income component, detracting from relative performance. With investment-grade bonds posting negative returns for the period, a small position in the Loomis Sayles Investment Grade Bond Fund detracted from total return. As of 10/31/15: Statistics Asset Class Weightings % of Investments 1 Top Holdings % of Net Assets 2,3 Number of Holdings 22 Portfolio Turnover Rate 19% Equity Funds Large-Cap 44.7% Fixed-Income Funds Intermediate-Term Bond 20.7% Equity Funds International 19.5% Equity Funds Small-Cap 5.8% Equity Funds Global Real Estate 3.8% Short-Term Investments 2.8% Fixed-Income Funds Short-Term Bond 1.8% Fixed-Income Funds International Bond 0.9% Total 100.0% Schwab Core Equity Fund 12.4% Laudus U.S. Large Cap Growth Fund 11.1% Laudus International MarketMasters Fund, Select Shares 10.9% Schwab S&P 500 Index Fund 10.1% Schwab Total Bond Market Fund 9.3% Schwab International Core Equity Fund 7.2% Metropolitan West Total Return Bond Fund, Class I 6.0% Schwab Dividend Equity Fund 5.6% TCW Relative Value Large Cap Fund, Class I 4.4% Schwab Small-Cap Equity Fund 3.8% Total 80.8% Management views and portfolio holdings may have changed since the report date. The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. 1 The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. 2 This list is not a recommendation of any security by the investment adviser. 3 The holdings listed exclude any temporary liquidity investments. 14 Schwab Target Funds

19 Schwab Target 2030 Fund Performance and Fund Facts as of 10/31/15 The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit October 31, 2005 October 31, 2015 Performance of Hypothetical $10,000 Investment 1 $25K $20K $15K $10K Fund $18,870 Target 2030 Composite Index $19,269 Dow Jones U.S. Total Stock Market Index $21,741 Barclays U.S. Aggregate Bond Index $15,862 $5K $0K 10/31/05 10/06 10/07 10/08 10/09 10/10 10/11 10/12 10/13 10/14 10/31/15 Average Annual Total Returns 1,2 Fund and Inception Date 1 Year 5 Years 10 Years Fund: Schwab Target 2030 Fund (7/1/05) 2.44% 9.42% 6.56% Target 2030 Composite Index 2.71% 9.38% 6.78% Dow Jones U.S. Total Stock Market Index SM 4.40% 14.11% 8.07% Barclays U.S. Aggregate Bond Index 1.96% 3.03% 4.72% Fund Category: Morningstar Target Date % 7.24% 4.94% Fund Expense Ratios 3 : Net 0.72%; Gross 0.75% All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized. Performance data quoted does not reflect the non-recurring redemption fee of 2% that may be charged if shares are sold or exchanged within 30 days of the purchase date. If these fees were reflected, the performance data quoted would be lower. For index definitions, please see the Glossary. 1 Fund expenses may have been partially absorbed by CSIM and its affiliates. Without these reductions, the fund s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 2 Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. 3 As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.72%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as the investment adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. Schwab Target Funds 15

20 Schwab Target 2035 Fund The Schwab Target 2035 Fund (the 2035 Fund) seeks to provide capital appreciation and income consistent with its current asset allocation, and seeks to achieve its investment objective by investing primarily in a combination of other Schwab Funds and Laudus Funds. The 2035 Fund may also invest in unaffiliated third-party mutual funds. The target asset allocation is adjusted annually by the investment adviser; as of the last annual adjustment effective January 12, 2015, the 2035 Fund s asset allocation was approximately 80.0% equity securities, 17.6% fixed income securities, and 2.4% cash and cash equivalents (including money market funds). At its target date, the 2035 Fund s allocation will be approximately 40.0% equity securities, 54.0% fixed income securities, and 6.0% cash and cash equivalents (including money market funds). (For portfolio allocations as of the end of this reporting period, please see the 2035 Fund s Portfolio Holdings included in this report.) Market Highlights. U.S. stocks posted modest gains for the 12-month report period on mixed economic data, with large-cap stocks solidly outperforming small-cap stocks. Despite some signs of continued economic recovery, growth was weaker than expected and interest rates remained low as the Federal Reserve pushed back the timing of its widely anticipated interest rate hike. Slowing growth in China weighed on global markets, as did declining energy and metals prices. Against this backdrop, the U.S. dollar was strong, reducing returns of international investments in U.S. dollar terms. Performance. For the 12-month reporting period ended October 31, 2015, the 2035 Fund returned 2.43%. The 2035 Fund s internally calculated comparative index, the Target 2035 Composite Index (the composite index), returned 2.71%. Positioning and Strategies. The 2035 Fund s asset allocations were broadly in line with those of the composite index over the reporting period. The 2035 Fund s U.S. equity exposures provided the greatest contribution to total return, particularly among large-caps. The top contributor was the Laudus U.S. Large Cap Growth Fund. The Schwab Core Equity Fund and the Schwab S&P 500 Index Fund also contributed notably. On a relative basis, both the Laudus U.S. Large Cap Growth Fund and the Schwab Core Equity Fund outperformed the composite index s U.S. equity allocation component, the S&P 500 Index, which returned 5.2%; the remaining four positions, while underperforming the S&P 500 Index by various degrees, all contributed positively to the 2035 Fund s total return. Among small-cap holdings, the Laudus Small-Cap MarketMasters Fund (Select Shares) detracted from the 2035 Fund s absolute and relative performance, while the Schwab Small-Cap Equity Fund enhanced both absolute and relative performance, outperforming the Russell 2000 Index by 2.7%. The 2035 Fund s international equity allocation contributed modestly to total return, reflecting the weak performance of international stocks. The largest positive contribution came from the Schwab International Core Equity Fund. On a relative basis, both the Schwab International Core Equity Fund and the Laudus International MarketMasters Fund (Select Shares) outperformed the composite index s international equity allocation component, the MSCI EAFE Index (Net), which returned -0.1%. With emerging markets particularly hard-hit for the reporting period, a small position in the Laudus Mondrian Emerging Markets Institutional Fund detracted from both total and relative returns, underperforming the -14.5% return of the MSCI Emerging Markets Index (Net). The 2035 Fund s allocation to the Schwab Global Real Estate Fund enhanced total return and relative performance. The 2035 Fund s U.S. fixed income allocation also contributed to total return. The greatest contribution came from the Schwab Total Bond Market Fund, although it underperformed the 2.0% return of the Barclays U.S. Aggregate Bond Index, the composite index s U.S. fixed income component, detracting from relative performance. With investment-grade bonds posting negative returns for the period, a small position in the Loomis Sayles Investment Grade Bond Fund detracted from total return. As of 10/31/15: Statistics Asset Class Weightings % of Investments 1 Top Holdings % of Net Assets 2,3 Number of Holdings 22 Portfolio Turnover Rate 14% Equity Funds Large-Cap 48.0% Equity Funds International 21.7% Fixed-Income Funds Intermediate-Term Bond 15.3% Equity Funds Small-Cap 6.8% Equity Funds Global Real Estate 4.2% Short-Term Investments 2.4% Fixed-Income Funds Short-Term Bond 0.9% Fixed-Income Funds International Bond 0.7% Total 100.0% Schwab Core Equity Fund 13.3% Laudus U.S. Large Cap Growth Fund 12.0% Laudus International MarketMasters Fund, Select Shares 11.9% Schwab S&P 500 Index Fund 10.8% Schwab International Core Equity Fund 7.9% Schwab Total Bond Market Fund 6.4% Schwab Dividend Equity Fund 5.9% TCW Relative Value Large Cap Fund, Class I 4.8% Schwab Small-Cap Equity Fund 4.4% Metropolitan West Total Return Bond Fund, Class I 4.4% Total 81.8% Management views and portfolio holdings may have changed since the report date. The Laudus U.S. Large Cap Growth Fund is part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc. 1 The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, and cash equivalents, including money market securities. 2 This list is not a recommendation of any security by the investment adviser. 3 The holdings listed exclude any temporary liquidity investments. 16 Schwab Target Funds