Schwab Intelligent Portfolios & Q1 2023 Market Performance¹

Upbeat intro music plays in the background.

The Charles Schwab logo appears with additional blue squares in the background. The Intelligent Portfolios logo then appears next to the Charles Schwab logo, where they then both fade to the bottom right corner of the screen.

The text "Schwab Intelligent Portfolios^® Market Commentary Q1 2023" appears on the screen with a white animated line creating a square. 

The title screen fades away to reveal the speaker, David Koenig, standing in front of a bright and blurred background.

On-Screen text: David Koenig, CFA^® , FRM^® , Chief Investment Strategist, Schwab Intelligent Portfolios. 

Hello, I'm David Koenig, Chief Investment Strategist for Schwab Intelligent Portfolios, with your quarterly update. The first quarter of 2023 began with a strong rally but ended with renewed volatility. 

A volatility icon appears, with a bank icon appearing shortly after.

Near quarter-end, the Federal Reserve raised rates another quarter point despite stress in the banking sector spurred by its rapid rate hikes in 2022. 

While continuing its inflation fight, the Fed also tried to ease bank jitters by stating that, "The U.S. banking system is sound and resilient."

The screen fades to an interstitial screen that reads "How markets performed in Q1 2023." That screen fades to reveal a chart labeled "The U.S. stock market delivered strong gains in Q1."

A dark gray line animates on the chart, representing the U.S. Large Cap Stocks (S&P 500 Index) performance, and starts at 0% in January 2021. It ends at about 10% in April 2023.

Despite the late-quarter turbulence, the U.S. stock market, as measured by the S&P 500 Index, delivered a strong gain for the second consecutive quarter as large consumer technology stocks rallied.

A second line appears on the chart, in blue, representing International Stocks (MSCI EAFE Index) performance, and starts at 0% in January 2021. It ends at about negative 2% in April 2023.

International developed market large cap stocks also saw solid gains for the quarter.

A third line appears on the chart, in purple, representing the U.S. Small Cap Stocks (Russell 2000 Index) performance, and starts at 0% in January 2021. It ends at about negative 9% in April 2023.

While riskier equity asset classes, such as small cap stocks and emerging markets stocks, were relatively flat as investor risk appetite moderated amid growing recession fears. 

Screen transitions to another chart related to Bond performance labeled "Bonds rallied in Q1."

Four bars animate on to show Q1 Return % for High-yield Bonds (3.8%), Investment-grade Corporate Bonds (3.5%), Treasuries (2.6%), and Securitized Bonds (2.5%). 

Bonds also delivered solid gains as longer-term interest rates eased and the Fed slowed its pace of rate hikes. Core bonds, such as Treasuries, mortgage-backed securities, and corporate bonds, were among the top performers. 

The screen fades back to David. 

Cash also delivered solid gains, as it did throughout 2022, and gold was the top performer amid the economic uncertainty. On the economic front, overall growth remained positive, although corporate earnings expectations continued to soften. 

A new chart appears labeled "Inflation continued to ease from its 2022 highs." An animated blue line begins at 2013 and ends at 2023 and shows an approximately 0.5% average percentage change from a year ago. 

Inflation remained stubborn but continued to ease from its 2022 highs. 

The screen transitions to a new chart labeled "Unemployment remained at historical lows," showing the unemployment rate starting from Jan 2020 through Mar 2023 and a 3.5% unemployment rate with an animated blue line.

And unemployment remained at historical lows. 

The screen fades to a dark blue background with white onscreen text aligned left in a white box that reads "How Schwab Intelligent Portfolios performed in Q1 2023."

For Schwab Intelligent Portfolios, Q1 brought a second-consecutive quarter of positive returns. 

The screen fades to show an outline circle depicting growth charts. There are sections denoting allocations of Stocks, Cash, Fixed income, and Commodities. The chart says "Stocks delivered solid returns."

Growth portfolios were the top performers as stocks delivered solid returns for the quarter despite the volatility. 

The allocations in the circle shift with the caption changing to "Moderate portfolios saw moderate gains due to mix of stocks and bonds."

Moderate portfolios saw moderate gains due to their balanced mix of stocks and bonds. 

The allocations in the circle shift again with the caption changing to "Conservative portfolios saw solid gains as bonds moved higher."

And conservative portfolios also saw solid gains as bonds moved higher. 

The screen fades to an interstitial screen that reads "Looking ahead to Q2 2023". The screen transitions back to David. 

Looking ahead to Q2, market volatility is likely to remain elevated amid the economic uncertainty. While recession risk is heightened, government action has helped to ease the stresses in the financial system. 

A government icon appears on screen. 

It remains to be seen whether additional unraveling occurs or whether the Fed is able to thread the needle between concerns about the financial system and current inflation. 

The government icon fades away on screen, and a blue box with white text appears on the right side of the screen. The text builds and reads "Schwab Intelligent Portfolios can help you:

●    Stick with your long-term plan.
●    Diversify your portfolio.
●    Rebalance periodically.
●    Keep costs low."

Despite the uncertainty, it's important to remain focused on your longer-term goals and time-tested investment principles like those followed by Schwab Intelligent Portfolios—such as investing in a diversified portfolio, rebalancing as markets fluctuate, and keeping costs low. 

The screen transitions back to David. A blue banner appears along the bottom of the screen with the text "For volatility strategies and FAQs, visit schwab.com/downturn."

Thank you for watching. As always, we have many online resources available to help you navigate the current environment as you work toward your financial goals, and we're available by phone to answer any questions. 

The screen fades to a solid dark blue background with the text: "Additional Resources. We are here 24/7. Contact a service professional at (855) 694-5208. Learn more. Investing Insights blog at intelligent.schwab.com. Volatility strategies and FAQs at schwab.com/downturn."

The screen transitions back to David one final time. 

We wish you the best of success in 2023, and we look forward to continuing to serve you in the coming quarters and years. 

Upbeat music plays in the background.

The screen fades to the same animated Schwab Intelligent Portfolios logo sequence from the beginning of the video. It then shrinks and moves to the center top of the frame. The following disclosures appear below the logos:

Investment Products: Not FDIC-Insured • No Bank Guarantee • May Lose Value

This quarterly commentary is designed to provide you with insight into the market environment during the quarter. How your portfolio performed is dependent upon your asset allocation across the risk spectrum from conservative to aggressive, as well as criteria such as when you opened your account, the timing of any deposits/withdrawals, timing of portfolio rebalances, whether you are enrolled in tax-loss harvesting and other criteria.

Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs. Schwab Intelligent Portfolios^® and Schwab Intelligent Portfolios Premium^® are made available through Charles Schwab & Co. Inc. ("Schwab"), a dually registered investment advisor and broker dealer.

Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. ("CSIA"). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation.

Schwab Intelligent Portfolios^® and Schwab Intelligent Portfolios Premium^® are designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client's selected risk profile. Trading may not take place daily.

Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses. 
Tax‐loss harvesting is available for clients with invested assets of $50,000 or more in their account. Clients must choose to activate this feature.

Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. For more information on indexes please see www.schwab.com/indexdefinitions.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Investing involves risk including loss of principal. 

© 2023 Charles Schwab & Co., Inc., Member SIPC. All rights reserved. 0423-31R2 

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