nvcsrs

0000950123-14-009546.txt : 20140902 0000950123-14-009546.hdr.sgml : 20140901 20140902130921 ACCESSION NUMBER: 0000950123-14-009546 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20140630 FILED AS OF DATE: 20140902 DATE AS OF CHANGE: 20140902 EFFECTIVENESS DATE: 20140902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB STRATEGIC TRUST CENTRAL INDEX KEY: 0001454889 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-22311 FILM NUMBER: 141077051 BUSINESS ADDRESS: STREET 1: 211 MAIN STREET STREET 2: CHARLES SCHWAB INVESTMENT MANAGEMENT,INC CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 800-648-5300 MAIL ADDRESS: STREET 1: 211 MAIN STREET STREET 2: CHARLES SCHWAB INVESTMENT MANAGEMENT,INC CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FORMER COMPANY: FORMER CONFORMED NAME: Schwab Strategic Trust DATE OF NAME CHANGE: 20090127

0001454889 S000029407 Schwab U.S. TIPS ETF

C000090317 Schwab U.S. TIPS ETF SCHP

0001454889 S000029408 Schwab Short-Term U.S. Treasury ETF

C000090318 Schwab Short-Term U.S. Treasury ETF SCHO

0001454889 S000029409 Schwab Intermediate-Term U.S. Treasury ETF

C000090319 Schwab Intermediate-Term U.S. Treasury ETF SCHR

0001454889 S000033156 Schwab U.S. Aggregate Bond ETF

C000102078 Schwab U.S. Aggregate Bond ETF SCHZ

N-CSRS 1 f30250nvcsrs.htm FORM N-CSRS nvcsrs

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-22311

Schwab Strategic Trust – Fixed Income ETFs

(Exact name of registrant as specified in charter)

211 Main Street, San Francisco, California 94105

(Address of principal executive offices) (Zip code)

Marie Chandoha
Schwab Strategic Trust – Fixed Income ETFs
211 Main Street, San Francisco, California 94105
(Name and address of agent for service)

Registrant’s telephone number, including area code: (415) 636-7000

Date of fiscal year end: December 31

Date of reporting period: June 30, 2014

Item 1: Report(s) to Shareholders.

Semiannual report dated June 30, 2014, enclosed.

Schwab Fixed-Income ETFs

Schwab U.S. TIPS ETF^tm

Schwab Short-Term

U.S. Treasury ETF^tm

Schwab Intermediate-Term

U.S. Treasury ETF^tm

Schwab U.S. Aggregate

Bond ETF^tm

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This wrapper is not part of the shareholder report.

Schwab Fixed-Income ETFs

Semiannual Report

June 30, 2014

Schwab U.S. TIPS ETF^tm

Schwab Short-Term

U.S. Treasury ETF^tm

Schwab Intermediate-Term

U.S. Treasury ETF^tm

Schwab U.S. Aggregate

Bond ETF^tm

This page is intentionally left blank.

In This Report


Performance at a Glance		4
From the President		5
Fund Management		7
Performance and Fund Facts
Schwab U.S. TIPS ETF™		8
Schwab Short-Term U.S. Treasury ETF™		9
Schwab Intermediate-Term U.S. Treasury ETF™		10
Schwab U.S. Aggregate Bond ETF™		11
Fund Expenses		12
Financial Statements and Portfolio Holdings
Schwab U.S. TIPS ETF™		13
Schwab Short-Term U.S. Treasury ETF™		19
Schwab Intermediate-Term U.S. Treasury ETF™		25
Schwab U.S. Aggregate Bond ETF™		31
Financial Notes		52
Trustees and Officers		61
Glossary		63
EX-99.CERT
EX-99.906CERT

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: SEI Investments Distribution Co. (SIDCO).

Performance at a Glance

The performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. To obtain performance information current to the most recent month end, please visit www.schwabetfs.com.


Total Returns for the Six Months Ended June 30, 2014

Schwab U.S. TIPS ETF^tm (Ticker Symbol: SCHP)


Market Price Return¹			6.04%
NAV Return¹			5.78%
Barclays U.S. TIPS Index (Series-L)			5.83%
ETF Category: Morningstar Inflation-Protected Bond²			4.83%


Performance Details			page 8




Schwab Short-Term U.S. Treasury ETF^tm (Ticker Symbol: SCHO)


Market Price Return¹			0.30%
NAV Return¹			0.36%
Barclays U.S. 1-3 Year Treasury Bond Index			0.41%
ETF Category: Morningstar Short Government²			0.36%


Performance Details			page 9




Schwab Intermediate-Term U.S. Treasury ETF^tm (Ticker Symbol: SCHR)


Market Price Return¹			2.65%
NAV Return¹			2.59%
Barclays U.S. 3-10 Year Treasury Bond Index			2.63%
ETF Category: Morningstar Intermediate Government²			2.46%


Performance Details			page 10




Schwab U.S. Aggregate Bond ETF^tm (Ticker Symbol: SCHZ)


Market Price Return¹			4.08%
NAV Return¹			3.96%
Barclays U.S. Aggregate Bond Index			3.93%
ETF Category: Morningstar Intermediate-Term Bond²			3.69%


Performance Details			page 11

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. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

For index definitions, please see the Glossary.

Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.

Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV). Brokerage commissions will reduce returns.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. An investment in the fund(s) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Government backing applies only to the government issued bonds that make up the fund, not the fund itself.

TIPS generally have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses.

Barclays and the names identifying the Barclays’ indices are trademarks or names of Barclays Bank PLC and its affiliates (“Barclays”) and have been licensed for use in connection with the listing and trading of the funds. The funds are not sponsored by, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of investing in such funds.


¹		Since ETFs are baskets of securities that trade on a stock exchange, ETF performance must be shown based on both a Market Price and a Net Asset Value (NAV) basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
²		Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.

4 Schwab Fixed-Income ETFs

From the President

Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.

Dear Shareholder,

As President and CEO of Charles Schwab Investment Management, Inc., I’d like to thank you for trusting us to help you meet your investment goals, and for reading this important report regarding the Schwab Fixed-Income ETFs. These funds are available at some of the lowest operating expense ratios in the industry, and track market-leading, fixed-income indices that are based on various segments of the bond market. The funds also provide the benefits of an ETF, including transparency, intraday trading, and potential tax efficiency, and are part of our product line-up that can serve as the foundation for a well-constructed investment portfolio.

For the six-month reporting period ended June 30, 2014, the funds generated moderately positive returns that tracked their respective indices. Soft economic growth early in the year due partly to harsh winter weather contributed to a decline in intermediate- and long-term bond yields that helped to support the performance of bonds. When bond yields fall, bond returns generally rise. Bond yields also declined as the Federal Reserve reassured investors that low short-term interest rates remained necessary, even though the economy had improved enough for the Fed to begin reducing its policies aimed at holding down long-term interest rates.

Amid this environment, corporate bonds outperformed Treasuries, and long-term bonds generated higher returns than short-term bonds. In addition, Treasury Inflation-Protected Securities outperformed many other fixed-income sectors, helped by a combination of rising inflation that resulted in higher prices for these securities, and declining yields. Reflecting these conditions, the

Yields of U.S. Treasury Securities: Effective Yields of Three-Month, Two-Year and 10-Year Treasuries

Yields, or interest rates, represent the cost of borrowing money. Rapid economic growth, waning investor interest in bonds, an increase in the issuance of bonds, or the expectation of higher inflation can drive rates up, while the opposite conditions can push rates down.

Data source: Bloomberg L.P.

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.

Indices are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. Index return figures assume dividends and distributions were reinvested. Past performance is not a guarantee of future results.

Schwab Fixed-Income ETFs 5

From the President continued

For the six-month reporting period ended June 30, 2014, the funds generated moderately positive returns that tracked their respective indices.

Barclays U.S. Aggregate Bond Index returned 3.9%, and the Barclays U.S. TIPS Index returned 5.8%.

For more information about the performance, holdings, and portfolio characteristics of the Schwab Fixed-Income ETFs, please continue reading this report. In addition, you can find further details about these products by visiting www.schwabetfs.com, or by contacting us at 1-800-435-4000.

Sincerely,

6 Schwab Fixed-Income ETFs

Fund Management



		Matthew Hastings, CFA, Managing Director and Head of Taxable Bond Strategies, leads the portfolio management team for the Schwab Fixed Income ETFs and Schwab’s taxable bond funds. He also has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 1999, Mr. Hastings was in fixed-income sales and trading at Lehman Brothers. He has worked in the fixed-income securities industry since 1996.

		Steven Chan, CFA, Managing Director and Portfolio Manager, is responsible for the day-to-day co-management of the funds. His primary focus is government securities, including Treasury inflation-protected securities. Mr. Chan has been a portfolio manager with CSIM since 2007, and has held a number of positions at the firm since beginning his tenure in 1996. His previous roles include managing the Portfolio Operations and Analytics group, and working as a senior manager in Finance. Prior to joining CSIM, Mr. Chan was a manager of finance at GT Capital Management.

		Brandon Matsui, CFA, Managing Director and Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2010, Mr. Matsui was an associate portfolio manager on the Beta Management team at BNY Mellon for 11 months. Prior to that, Mr. Matsui spent five years at BlackRock Solutions, where he served as an analyst in the portfolio analytics group, and also a risk analytics manager for their corporate, asset management, and pension clients.

		Steven Hung, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the Schwab U.S. Aggregate Bond ETF. His primary focus is corporate bonds. Prior to joining CSIM in 1999, Mr. Hung was an associate in Schwab’s management training program for nine months. In that role, he worked as a clerk on the Options Trading Floor of the Pacific Coast Stock Exchange.

		Alfonso Portillo, Jr., Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the Schwab U.S. Aggregate Bond ETF. His primary focus is securitized products. Prior to joining CSIM in 2007, Mr. Portillo worked for ten years at Pacific Investment Management Company, most recently as a vice president and member of the mortgage- and asset-backed portfolio management team. He has worked in fixed-income asset management since 1996.

Schwab Fixed-Income ETFs 7

Schwab U.S. TIPS ETF™

Performance and Fund Facts as of 06/30/14

Average Annual Total Returns¹


Fund and Inception Date	6 Months			1 Year			3 Years			Since Inception*


Fund: Schwab U.S. TIPS ETF^tm (8/5/10)
Market Price Return²		6.04	%		4.40	%		3.42	%	4.48%
NAV Return²		5.78	%		4.36	%		3.46	%	4.50%
Barclays U.S. TIPS Index (Series-L)		5.83	%		4.44	%		3.55	%	4.62%
ETF Category: Morningstar Inflation-Protected Bond³		4.83	%		3.74	%		3.22	%	4.52%

Fund Expense Ratio⁴: 0.07%

Portfolio Composition % of investments


By Security Type⁵


U.S. Government Obligations			99.9%
Short-Term Investments & Other Assets⁶			0.1%



Weighted Average Maturity⁷			8.6 Yrs
Weighted Average Duration⁷			7.7 Yrs

For index definitions, please see the Glossary.

Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV). Brokerage commissions will reduce returns.

Barclays and the names identifying the Barclays’ indices are trademarks or names of Barclays Bank PLC and its affiliates (“Barclays”) and have been licensed for use in connection with the listing and trading of the fund. The fund is not sponsored by, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of investing in such fund.

Portfolio holdings may have changed since the report date.

An index is a statistical composite of a specified financial market or sector. Unlike the fund, an index does not actually hold a portfolio of securities and its return is not inclusive of operational and transaction costs incurred by the fund.

TIPS generally have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses.


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Since ETFs are baskets of securities that trade on a stock exchange, ETF performance must be shown based on both a Market Price and a Net Asset Value (NAV) basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³		Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security type by the investment adviser.
⁶		Represents the fund’s position in money market mutual funds registered under the Investment Company Act of 1940, as amended.
⁷		See Glossary for definitions of maturity and duration.

8 Schwab Fixed-Income ETFs

Schwab Short-Term U.S. Treasury ETF™

Performance and Fund Facts as of 06/30/14

Average Annual Total Returns¹


Fund and Inception Date	6 Months			1 Year			3 Years			Since Inception*


Fund: Schwab Short-Term U.S. Treasury ETF^tm (8/5/10)
Market Price Return²		0.30	%		0.66	%		0.53	%	0.67%
NAV Return²		0.36	%		0.66	%		0.54	%	0.66%
Barclays U.S. 1-3 Year Treasury Bond Index		0.41	%		0.76	%		0.63	%	0.77%
ETF Category: Morningstar Short Government³		0.36	%		0.61	%		0.43	%	0.53%

Fund Expense Ratio⁴: 0.08%

Portfolio Composition % of investments


By Security Type⁵


U.S. Government Obligations			99.4%
Short-Term Investments & Other Assets⁶			0.6%



Weighted Average Maturity⁷			2.0 Yrs
Weighted Average Duration⁷			1.9 Yrs

For index definitions, please see the Glossary.

Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV). Brokerage commissions will reduce returns.

Barclays and the names identifying the Barclays’ indices are trademarks or names of Barclays Bank PLC and its affiliates (“Barclays”) and have been licensed for use in connection with the listing and trading of the fund. The fund is not sponsored by, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of investing in such fund.

Portfolio holdings may have changed since the report date.


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Since ETFs are baskets of securities that trade on a stock exchange, ETF performance must be shown based on both a Market Price and a Net Asset Value (NAV) basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³		Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security type by the investment adviser.
⁶		Represents the fund’s position in money market mutual funds registered under the Investment Company Act of 1940, as amended.
⁷		See Glossary for definitions of maturity and duration.

Schwab Fixed-Income ETFs 9

Schwab Intermediate-Term U.S. Treasury ETF™

Performance and Fund Facts as of 06/30/14

Average Annual Total Returns¹


Fund and Inception Date	6 Months			1 Year			3 Years			Since Inception*


Fund: Schwab Intermediate-Term U.S. Treasury ETF^tm (8/5/10)
Market Price Return²		2.65	%		2.16	%		2.97	%	2.91%
NAV Return²		2.59	%		2.09	%		2.95	%	2.90%
Barclays U.S. 3-10 Year Treasury Bond Index		2.63	%		2.18	%		3.07	%	3.03%
ETF Category: Morningstar Intermediate Government³		2.46	%		2.27	%		2.41	%	2.38%

Fund Expense Ratio⁴: 0.10%

Portfolio Composition % of investments


By Security Type⁵


U.S. Government Obligations			99.7%
Short-Term Investments & Other Assets⁶			0.3%



Weighted Average Maturity⁷			5.6 Yrs
Weighted Average Duration⁷			5.2 Yrs

For index definitions, please see the Glossary.

Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV). Brokerage commissions will reduce returns.

Barclays and the names identifying the Barclays’ indices are trademarks or names of Barclays Bank PLC and its affiliates (“Barclays”) and have been licensed for use in connection with the listing and trading of the fund. The fund is not sponsored by, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of investing in such fund.

Portfolio holdings may have changed since the report date.


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Since ETFs are baskets of securities that trade on a stock exchange, ETF performance must be shown based on both a Market Price and a Net Asset Value (NAV) basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³		Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security type by the investment adviser.
⁶		Represents the fund’s position in money market mutual funds registered under the Investment Company Act of 1940, as amended.
⁷		See Glossary for definitions of maturity and duration.

10 Schwab Fixed-Income ETFs

Schwab U.S. Aggregate Bond ETF™

Performance and Fund Facts as of 06/30/14

Average Annual Total Returns¹


Fund and Inception Date	6 Months			1 Year			Since Inception*


Fund: Schwab U.S. Aggregate Bond ETF^tm (7/14/11)
Market Price Return²		4.08	%		4.82	%	3.19%
NAV Return²		3.96	%		4.37	%	3.14%
Barclays U.S. Aggregate Bond Index		3.93	%		4.37	%	3.32%
ETF Category: Morningstar Intermediate-Term Bond³		3.69	%		4.35	%	3.13%

Fund Expense Ratio⁴: 0.06%

Portfolio Composition % of investments


By Security Type⁵


U.S. Government and Government Agencies			37.1%
Mortgage-Backed Securities⁶			27.7%
Corporate Bonds			22.1%
Foreign Securities			5.0%
Short-Term Investments & Other Assets⁷			4.7%
Commercial Mortgage Backed Securities			2.0%
Municipal Bonds			0.9%
Asset-Backed Obligations			0.5%



Weighted Average Maturity⁸			6.8 Yrs
Weighted Average Duration⁸			5.2 Yrs

For index definitions, please see the Glossary.

Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV). Brokerage commissions will reduce returns.

Barclays and the names identifying the Barclays’ indices are trademarks or names of Barclays Bank PLC and its affiliates (“Barclays”) and have been licensed for use in connection with the listing and trading of the fund. The fund is not sponsored by, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of investing in such fund.

Portfolio holdings may have changed since the report date.


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		Since ETFs are baskets of securities that trade on a stock exchange, ETF performance must be shown based on both a Market Price and a Net Asset Value (NAV) basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³		Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security type by the investment adviser.
⁶		The fund may seek to obtain exposure to U.S. agency mortgage pass-through securities, in part or in full, through the use of “to-be-announced” or “TBA” transactions, which are standardized contracts for future delivery of mortgage pass-through securities in which the exact mortgage pools to be delivered are not specified until a few days prior to settlement. These transactions represented approximately 4.1% of total investments on June 30, 2014.
⁷		Includes the fund’s position in money market mutual funds registered under the Investment Company Act of 1940, as amended.
⁸		See Glossary for definitions of maturity and duration.

Schwab Fixed-Income ETFs 11

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

As a fund shareholder, you may incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares; and, (2) ongoing costs, including management fees and other fund expenses.

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning January 1, 2014 and held through June 30, 2014.

Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund under the heading entitled “Expenses Paid During Period.”

Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.

You may use this information to compare the ongoing costs of investing in a fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, including any brokerage commissions you may pay when purchasing or selling shares of a fund. Therefore, the hypothetical return lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.


					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio¹		Account Value		(Net of Expenses)		During Period²
	(Annualized)		at 1/1/14		at 6/30/14		1/1/14–6/30/14

Schwab U.S. TIPS ETF^tm
Actual Return		0.07%	$	1,000.00	$	1,057.80	$	0.36
Hypothetical 5% Return		0.07%	$	1,000.00	$	1,024.45	$	0.35


Schwab Short-Term U.S. Treasury ETF^tm
Actual Return		0.08%	$	1,000.00	$	1,003.60	$	0.40
Hypothetical 5% Return		0.08%	$	1,000.00	$	1,024.40	$	0.40


Schwab Intermediate-Term U.S. Treasury ETF^tm
Actual Return		0.10%	$	1,000.00	$	1,025.90	$	0.50
Hypothetical 5% Return		0.10%	$	1,000.00	$	1,024.30	$	0.50


Schwab U.S. Aggregate Bond ETF^tm
Actual Return		0.05%	$	1,000.00	$	1,039.60	$	0.25
Hypothetical 5% Return		0.05%	$	1,000.00	$	1,024.55	$	0.25


¹		Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights.
²		Expenses for each share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year.

12 Schwab Fixed-Income ETFs

Schwab U.S. TIPS ETF™

Financial Statements

Financial Highlights


	1/1/14–			1/1/13–			1/1/12–			1/1/11–			8/4/10¹–
	6/30/14*			12/31/13			12/31/12			12/31/11			12/31/10


Per-Share Data ($)

Net asset value at beginning of period		52.92			58.31			55.46			50.37			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.64			0.28			0.92			1.56			0.20
Net realized and unrealized gains (losses)		2.42			(5.32	)		2.85			5.09			0.37	²

Total from investment operations		3.06			(5.04	)		3.77			6.65			0.57
Less distributions:
Distributions from net investment income		(0.26	)		(0.35	)		(0.92	)		(1.56	)		(0.20	)

Net asset value at end of period		55.72			52.92			58.31			55.46			50.37

Total return (%)		5.78	³		(8.66	)		6.83			13.38			1.13	³

Ratios/Supplemental Data (%)

Ratios to average net assets:
Total expenses		0.07	⁴		0.07			0.12	⁵		0.14			0.14	⁴
Net investment income (loss)		2.46	⁴		0.51			1.72			3.03			1.27	⁴
Portfolio turnover rate⁶		11	³		20			22			26			6	³
Net assets, end of period ($ x 1,000)		459,655			399,564			571,441			288,373			80,591

* Unaudited.

¹ Commencement of operations.

² The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.

³ Not annualized.

⁴ Annualized.

⁵ Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 12/31/12 is a blended ratio.

⁶ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 13

Schwab U.S. TIPS ETF

Portfolio Holdings as of June 30, 2014 (Unaudited)

This section shows all the securities in the fund’s portfolio and their values as of the report date.

The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The fund also makes available its complete schedule of portfolio holdings on a daily basis on the fund’s website at www.schwabetfs.com.

For fixed rate obligations, the rate shown is the interest rate (the rate established when the obligation was issued). For variable rate obligations, the rate shown is the rate as of the report date. The maturity date shown for all the securities is the final legal maturity.

Cost

Value

Holdings by Category

($)

.3%

U.S. Government Securities

457,811,527

456,383,354

.1%

Other Investment Company

353,284

.4%

Total Investments

458,164,811

456,736,638

.6%

Other Assets and
Liabilities, Net

2,918,201

100

.0%

Net Assets

459,654,839


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)

U.S. Government Securities 99.3% of net assets

U.S. Treasury Obligations 99.3%


U.S. Treasury Inflation Protected Securities
1.88%, 07/15/15		10,414,911		10,818,489
2.00%, 01/15/16		10,206,644		10,764,846
0.13%, 04/15/16		20,513,998		21,062,132
2.50%, 07/15/16		9,988,858		10,845,702
2.38%, 01/15/17		8,661,881		9,479,390
0.13%, 04/15/17		23,084,468		23,888,731
2.63%, 07/15/17		7,426,231		8,317,379
1.63%, 01/15/18		7,841,286		8,558,058
0.13%, 04/15/18		25,665,185		26,523,429
1.38%, 07/15/18		7,734,455		8,454,688
2.13%, 01/15/19		7,195,282		8,107,069
0.13%, 04/15/19		9,154,321		9,428,950
1.88%, 07/15/19		8,175,430		9,205,044
1.38%, 01/15/20		9,915,028		10,878,669
1.25%, 07/15/20		15,236,709		16,705,680
1.13%, 01/15/21		17,428,002		18,890,386
0.63%, 07/15/21		18,500,086		19,491,505
0.13%, 01/15/22		20,419,575		20,563,124
0.13%, 07/15/22		21,062,314		21,210,382
0.13%, 01/15/23		21,159,459		21,096,615
0.38%, 07/15/23		20,988,230		21,407,995
0.63%, 01/15/24		20,939,104		21,707,988
2.38%, 01/15/25		13,543,905		16,417,786
2.00%, 01/15/26		9,866,265		11,631,438
2.38%, 01/15/27		7,937,803		9,748,574
1.75%, 01/15/28		7,948,774		9,157,226
3.63%, 04/15/28		6,990,900		9,826,549
2.50%, 01/15/29		7,666,721		9,681,612
3.88%, 04/15/29		8,307,001		12,148,989
3.38%, 04/15/32		3,092,943		4,471,714
2.13%, 02/15/40		4,334,268		5,517,393
2.13%, 02/15/41		5,390,595		6,915,109
0.75%, 02/15/42		9,495,032		8,944,605
0.63%, 02/15/43		6,921,296		6,294,088
1.38%, 02/15/44		7,462,894		8,222,020

Total U.S. Government Securities
(Cost $457,811,527)				456,383,354



	Number		Value
Security	of Shares		($)

Other Investment Company 0.1% of net assets

Money Market Fund 0.1%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a)		353,284		353,284

Total Other Investment Company
(Cost $353,284)				353,284



End of Investments

At 06/30/14, the tax basis cost of the fund’s investments was $459,015,065 and the unrealized appreciation and depreciation were $2,827,644 and ($5,106,071), respectively, with a net unrealized depreciation of ($2,278,427).


(a)		The rate shown is the 7-day yield.

14 See financial notes

Schwab U.S. TIPS ETF

Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2014 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Other Significant

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total

U.S. Government Securities¹

$—

$456,383,354

$—

$456,383,354

Other Investment Company¹

353,284

—

353,284

Total

$353,284

$456,383,354

$—

$456,736,638


¹		As categorized in Portfolio Holdings.

The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended June 30, 2014.

See financial notes 15

Schwab U.S. TIPS ETF

Statement of

Assets and Liabilities

As of June 30, 2014; unaudited



Assets

Investments, at value (cost $458,164,811)		$456,736,638
Receivables:
Investments sold		4,621,107
Interest	+	1,962,550

Total assets		463,320,295

Liabilities

Payables:
Investments bought		3,662,699
Investment adviser fees	+	2,757

Total liabilities		3,665,456

Net Assets

Total assets		463,320,295
Total liabilities	—	3,665,456

Net assets		$459,654,839

Net Assets by Source
Capital received from investors		463,368,292
Net investment income not yet distributed		2,714,340
Net realized capital losses		(4,999,620	)
Net unrealized capital depreciation		(1,428,173	)

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$459,654,839

8,250,000

$55.72

16 See financial notes

Schwab U.S. TIPS ETF

Statement of

Operations

For the period January 1, 2014 through June 30, 2014; unaudited



Investment Income

Interest		$5,281,277

Expenses

Investment adviser fees		146,247

Total expenses	−	146,247

Net investment income		5,135,030

Realized and Unrealized Gains (Losses)

Net realized losses on investments		(1,300,965	)
Net realized gains on in-kind redemptions	+	917,874

Net realized losses		(383,091	)
Net change in unrealized appreciation (depreciation) on investments	+	19,249,124

Net realized and unrealized gains		18,866,033

Increase in net assets resulting from operations		$24,001,063

See financial notes 17

Schwab U.S. TIPS ETF

Statements of

Changes in Net Assets

For the current and prior report periods
Figures for the current period are unaudited



Operations


1/1/14-6/30/14				1/1/13-12/31/13
Net investment income		$5,135,030			$2,533,097
Net realized gains (losses)		(383,091	)		4,147,621
Net change in unrealized appreciation (depreciation)	+	19,249,124			(54,646,100	)

Increase (Decrease) in net assets resulting from operations		24,001,063			(47,965,382	)

Distributions to Shareholders

Distributions from net investment income		($2,010,930	)		($3,095,550	)

Transactions in Fund Shares


		1/1/14-6/30/14					1/1/13-12/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			1,100,000		$60,155,971			1,800,000		$102,874,782
Shares redeemed	+		(400,000	)	(22,055,350	)		(4,050,001	)	(223,691,157	)

Net transactions in fund shares			700,000		$38,100,621			(2,250,001	)	($120,816,375	)

Shares Outstanding and Net Assets

		1/1/14-6/30/14					1/1/13-12/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			7,550,000		$399,564,085			9,800,001		$571,441,392
Total increase or decrease	+		700,000		60,090,754			(2,250,001	)	(171,877,307	)

End of period			8,250,000		$459,654,839			7,550,000		$399,564,085


Net investment income not yet distributed/Distributions in excess of net investment income					$2,714,340					($409,760	)

18 See financial notes

Schwab Short-Term U.S. Treasury ETF™

Financial Statements

Financial Highlights


	1/1/14–			1/1/13–			1/1/12–			1/1/11–			8/4/10¹–
	6/30/14*			12/31/13			12/31/12			12/31/11			12/31/10


Per-Share Data ($)

Net asset value at beginning of period		50.51			50.53			50.50			49.99			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.10			0.15			0.15			0.21			0.06
Net realized and unrealized gains (losses)		0.08			(0.02	)		0.03			0.51			(0.01	)

Total from investment operations		0.18			0.13			0.18			0.72			0.05
Less distributions:
Distributions from net investment income		(0.08	)		(0.15	)		(0.15	)		(0.21	)		(0.06	)

Net asset value at end of period		50.61			50.51			50.53			50.50			49.99

Total return (%)		0.36	²		0.25			0.35			1.43			0.11	²

Ratios/Supplemental Data (%)

Ratios to average net assets:
Total expenses		0.08	³		0.08			0.11	⁴		0.12			0.12	³
Net investment income (loss)		0.42	³		0.31			0.29			0.42			0.37	³
Portfolio turnover rate⁵		56	²		101			101			74			48	²
Net assets, end of period ($ x 1,000)		546,585			444,497			250,105			181,805			49,990

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 12/31/12 is a blended ratio.

⁵ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 19

Schwab Short-Term U.S. Treasury ETF

Portfolio Holdings as of June 30, 2014 (Unaudited)

This section shows all the securities in the fund’s portfolio and their values as of the report date.

Cost

Value

Holdings by Category

($)

.0%

U.S. Government Securities

539,803,894

540,816,079

.6%

Other Investment Company

3,431,001

.6%

Total Investments

543,234,895

544,247,080

.4%

Other Assets and
Liabilities, Net

2,337,979

100

.0%

Net Assets

546,585,059


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)

U.S. Government Securities 99.0% of net assets

U.S. Treasury Obligations 99.0%


U.S. Treasury Notes
0.25%, 07/15/15		6,920,000		6,927,432
1.75%, 07/31/15		11,586,000		11,786,948
0.25%, 08/15/15		10,273,000		10,283,437
1.25%, 08/31/15		13,632,000		13,807,989
1.25%, 09/30/15		13,212,000		13,390,825
0.25%, 10/15/15		10,199,000		10,209,954
1.25%, 10/31/15		12,558,000		12,736,073
4.50%, 11/15/15		12,558,000		13,296,762
0.25%, 11/30/15		10,282,000		10,287,223
0.25%, 12/15/15		11,905,000		11,908,024
0.25%, 12/31/15		17,780,000		17,782,774
2.13%, 12/31/15		717,000		737,095
0.38%, 01/15/16		19,064,000		19,095,284
0.38%, 01/31/16		9,096,000		9,109,853
2.00%, 01/31/16		2,203,000		2,262,851
0.25%, 02/29/16		10,012,000		10,003,009
2.63%, 02/29/16		11,460,000		11,901,611
0.38%, 03/15/16		11,905,000		11,912,679
2.25%, 03/31/16		6,064,000		6,264,991
2.38%, 03/31/16		456,000		472,227
0.25%, 04/15/16		22,918,000		22,867,420
0.38%, 04/30/16		17,953,000		17,948,799
2.63%, 04/30/16		8,911,000		9,276,841
0.25%, 05/15/16		16,721,000		16,675,285
1.75%, 05/31/16		10,469,000		10,735,227
0.50%, 06/15/16		5,000,000		5,006,640
1.50%, 06/30/16		5,677,000		5,794,531
3.25%, 06/30/16		19,319,000		20,395,880
1.50%, 07/31/16		8,316,000		8,489,788
3.25%, 07/31/16		6,920,000		7,317,360
3.00%, 08/31/16		20,605,000		21,708,501
3.00%, 09/30/16		8,680,000		9,158,077
0.63%, 10/15/16		7,940,000		7,948,996
1.00%, 10/31/16		989,000		998,426
3.13%, 10/31/16		989,000		1,047,335
0.63%, 11/15/16		11,620,000		11,623,626
4.63%, 11/15/16		7,936,000		8,689,301
0.88%, 11/30/16		1,080,000		1,086,750
2.75%, 11/30/16		820,000		861,897
0.63%, 12/15/16		11,620,000		11,615,003
3.25%, 12/31/16		12,243,000		13,029,233
0.75%, 01/15/17		11,478,000		11,498,178
0.63%, 02/15/17		20,186,000		20,137,897
4.63%, 02/15/17		10,548,000		11,626,290
3.00%, 02/28/17		9,318,000		9,875,626
1.00%, 03/31/17		16,694,000		16,795,733
0.88%, 04/30/17		16,444,000		16,474,833
0.88%, 05/15/17		10,000,000		10,014,060
0.88%, 06/15/17		7,500,000		7,503,225
0.75%, 06/30/17		10,000,000		9,960,940
2.50%, 06/30/17		10,000,000		10,477,340

Total U.S. Government Securities
(Cost $539,803,894)				540,816,079



	Number		Value
Security	of Shares		($)

Other Investment Company 0.6% of net assets

Money Market Fund 0.6%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a)		3,431,001		3,431,001

Total Other Investment Company
(Cost $3,431,001)				3,431,001



End of Investments

At 6/30/14, the tax basis cost of the fund’s investments was $543,234,895 and the unrealized appreciation and depreciation were $1,022,138 and ($9,953), respectively, with a net unrealized appreciation of $1,012,185.


(a)		The rate shown is the 7-day yield.

20 See financial notes

Schwab Short-Term U.S. Treasury ETF

Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2014 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Other Significant

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total

U.S. Government Securities¹

$—

$540,816,079

$—

$540,816,079

Other Investment Company¹

3,431,001

—

3,431,001

Total

$3,431,001

$540,816,079

$—

$544,247,080


¹		As categorized in Portfolio Holdings.

See financial notes 21

Schwab Short-Term U.S. Treasury ETF

Statement of

Assets and Liabilities

As of June 30, 2014; unaudited



Assets

Investments, at value (cost $543,234,895)		$544,247,080
Receivables:
Investments sold		47,728,365
Fund shares sold		2,529,985
Interest	+	1,562,829

Total assets		596,068,259

Liabilities

Payables:
Investments bought		49,479,604
Investment adviser fees	+	3,596

Total liabilities		49,483,200

Net Assets

Total assets		596,068,259
Total liabilities	—	49,483,200

Net assets		$546,585,059

Net Assets by Source
Capital received from investors		545,478,262
Net investment income not yet distributed		201,729
Net realized capital losses		(107,117	)
Net unrealized capital appreciation		1,012,185

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$546,585,059

10,800,000

$50.61

22 See financial notes

Schwab Short-Term U.S. Treasury ETF

Statement of

Operations

For the period January 1, 2014 through June 30, 2014; unaudited



Investment Income

Interest		$1,204,866
Securities on loan	+	405

Total investment income		1,205,271

Expenses

Investment adviser fees		194,022

Total expenses	−	194,022

Net investment income		1,011,249

Realized and Unrealized Gains (Losses)

Net realized gains on investments		140,613
Net realized gains on in-kind redemptions	+	5,735

Net realized gains		146,348
Net change in unrealized appreciation (depreciation) on investments	+	553,560

Net realized and unrealized gains		699,908

Increase in net assets resulting from operations		$1,711,157

See financial notes 23

Schwab Short-Term U.S. Treasury ETF

Statements of

Changes in Net Assets

For the current and prior report periods
Figures for the current period are unaudited



Operations


1/1/14-6/30/14				1/1/13-12/31/13
Net investment income		$1,011,249			$1,047,068
Net realized gains		146,348			111,244
Net change in unrealized appreciation (depreciation)	+	553,560			(9,551	)

Increase in net assets resulting from operations		1,711,157			1,148,761

Distributions to Shareholders

Distributions from net investment income		($809,520	)		($1,047,550	)

Transactions in Fund Shares


		1/1/14-6/30/14					1/1/13-12/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			2,050,000		$103,711,925			6,150,000		$310,518,979
Shares redeemed	+		(50,000	)	(2,525,910	)		(2,300,001	)	(116,227,732	)

Net transactions in fund shares			2,000,000		$101,186,015			3,849,999		$194,291,247

Shares Outstanding and Net Assets

		1/1/14-6/30/14					1/1/13-12/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			8,800,000		$444,497,407			4,950,001		$250,104,949
Total increase	+		2,000,000		102,087,652			3,849,999		194,392,458

End of period			10,800,000		$546,585,059			8,800,000		$444,497,407


Net investment income not yet distributed					$201,729					$—

24 See financial notes

Schwab Intermediate-Term U.S. Treasury ETF™

Financial Statements

Financial Highlights


	1/1/14–			1/1/13–			1/1/12–			1/1/11–			8/4/10¹–
	6/30/14*			12/31/13			12/31/12			12/31/11			12/31/10


Per-Share Data ($)

Net asset value at beginning of period		52.08			54.18			53.39			49.31			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.37			0.56			0.58			0.82			0.28
Net realized and unrealized gains (losses)		0.98			(2.10	)		0.79			4.08			(0.69	)

Total from investment operations		1.35			(1.54	)		1.37			4.90			(0.41	)
Less distributions:
Distributions from net investment income		(0.31	)		(0.56	)		(0.58	)		(0.82	)		(0.28	)

Net asset value at end of period		53.12			52.08			54.18			53.39			49.31

Total return (%)		2.59	²		(2.86	)		2.57			10.02			(0.83	)²

Ratios/Supplemental Data (%)

Ratios to average net assets:
Total expenses		0.10	³		0.10			0.11	⁴		0.12			0.12	³
Net investment income (loss)		1.36	³		1.06			1.07			1.62			1.58	³
Portfolio turnover rate⁵		23	²		54			47			46			20	²
Net assets, end of period ($ x 1,000)		207,150			236,969			216,733			117,452			34,517

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 12/31/12 is a blended ratio.

⁵ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 25

Schwab Intermediate-Term U.S. Treasury ETF

Portfolio Holdings as of June 30, 2014 (Unaudited)

This section shows all the securities in the fund’s portfolio and their values as of the report date.

Cost

Value

Holdings by Category

($)

.1%

U.S. Government Securities

207,174,450

205,419,661

.3%

Other Investment Company

566,537

.4%

Total Investments

207,740,987

205,986,198

.6%

Other Assets and
Liabilities, Net

1,164,218

100

.0%

Net Assets

207,150,416


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)

U.S. Government Securities 99.1% of net assets

U.S. Treasury Obligations 99.1%


U.S. Treasury Bonds
8.50%, 02/15/20		578,000		787,728
8.75%, 05/15/20		429,000		595,774
8.75%, 08/15/20		1,918,000		2,682,877


U.S. Treasury Notes
0.50%, 07/31/17		1,000,000		986,875
2.38%, 07/31/17		1,828,000		1,908,618
4.75%, 08/15/17		2,965,000		3,315,009
1.88%, 09/30/17		2,036,000		2,092,625
1.88%, 10/31/17		1,076,000		1,106,053
4.25%, 11/15/17		3,027,000		3,349,445
0.63%, 11/30/17		3,833,000		3,774,907
2.25%, 11/30/17		1,013,000		1,053,005
0.75%, 12/31/17		7,475,000		7,381,271
3.50%, 02/15/18		3,229,000		3,498,421
0.75%, 02/28/18		3,182,000		3,132,405
2.75%, 02/28/18		5,364,000		5,671,593
0.63%, 04/30/18		923,000		901,331
1.38%, 06/30/18		1,560,000		1,563,718
1.38%, 07/31/18		4,764,000		4,770,698
4.00%, 08/15/18		7,909,000		8,766,320
1.50%, 08/31/18		4,432,000		4,455,543
1.38%, 09/30/18		4,523,000		4,517,875
1.25%, 10/31/18		3,140,000		3,116,083
3.75%, 11/15/18		3,670,000		4,037,429
1.25%, 11/30/18		2,574,000		2,550,976
1.38%, 12/31/18		4,280,000		4,262,949
1.25%, 01/31/19		2,540,000		2,511,722
2.75%, 02/15/19		1,780,000		1,878,665
1.38%, 02/28/19		2,919,000		2,898,018
1.50%, 02/28/19		2,240,000		2,236,501
1.25%, 04/30/19		1,928,000		1,899,381
3.13%, 05/15/19		3,129,000		3,356,219
1.00%, 06/30/19		6,265,000		6,072,890
0.88%, 07/31/19		3,212,000		3,089,041
3.63%, 08/15/19		3,751,000		4,118,921
3.38%, 11/15/19		2,808,000		3,051,836
1.00%, 11/30/19		2,028,000		1,949,731
1.13%, 12/31/19		3,027,000		2,925,075
3.63%, 02/15/20		2,305,000		2,535,770
1.25%, 02/29/20		4,249,000		4,120,867
1.13%, 04/30/20		680,000		652,561
3.50%, 05/15/20		2,771,000		3,030,457
1.38%, 05/31/20		4,021,000		3,909,482
2.63%, 08/15/20		4,706,000		4,898,654
2.00%, 09/30/20		1,758,000		1,761,571
1.75%, 10/31/20		1,797,000		1,771,871
2.63%, 11/15/20		3,901,000		4,052,772
2.00%, 11/30/20		2,029,000		2,028,207
2.38%, 12/31/20		1,966,000		2,008,700
2.13%, 01/31/21		4,318,000		4,339,590
3.63%, 02/15/21		3,565,000		3,924,423
2.00%, 02/28/21		1,560,000		1,553,907
2.25%, 04/30/21		2,169,000		2,190,521
3.13%, 05/15/21		3,590,000		3,833,445
2.00%, 05/31/21		1,800,000		1,786,711
2.13%, 08/15/21		2,515,000		2,513,820
2.00%, 11/15/21		4,112,000		4,061,241
2.00%, 02/15/22		1,249,000		1,229,777
1.75%, 05/15/22		3,888,000		3,743,110
1.63%, 08/15/22		3,354,000		3,184,727
1.63%, 11/15/22		1,018,000		962,248
2.00%, 02/15/23		8,502,000		8,256,241
1.75%, 05/15/23		3,125,000		2,960,450
2.50%, 08/15/23		2,106,000		2,118,834
2.75%, 11/15/23		3,388,000		3,472,832
2.75%, 02/15/24		6,053,000		6,191,081
2.50%, 05/15/24		2,061,000		2,058,263

Total U.S. Government Securities
(Cost $207,174,450)				205,419,661



	Number		Value
Security	of Shares		($)

Other Investment Company 0.3% of net assets

Money Market Fund 0.3%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a)		566,537		566,537

Total Other Investment Company
(Cost $566,537)				566,537



End of Investments

26 See financial notes

Schwab Intermediate-Term U.S. Treasury ETF

Portfolio Holdings (Unaudited) continued

At 6/30/14, the tax basis cost of the fund’s investments was $207,740,987 and the unrealized appreciation and depreciation were $495,718 and ($2,250,507), respectively, with a net unrealized depreciation of ($1,754,789).


(a)		The rate shown is the 7-day yield.

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2014 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Other Significant

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total

U.S. Government Securities¹

$—

$205,419,661

$—

$205,419,661

Other Investment Company¹

566,537

—

566,537

Total

$566,537

$205,419,661

$—

$205,986,198


¹		As categorized in Portfolio Holdings.

See financial notes 27

Schwab Intermediate-Term U.S. Treasury ETF

Statement of

Assets and Liabilities

As of June 30, 2014; unaudited



Assets

Investments, at value (cost $207,740,987)		$205,986,198
Receivables:
Investments sold		3,780,189
Interest		1,164,994
Income from securities on loan	+	570

Total assets		210,931,951

Liabilities

Payables:
Investments bought		3,779,875
Investment adviser fees	+	1,660

Total liabilities		3,781,535

Net Assets

Total assets		210,931,951
Total liabilities	—	3,781,535

Net assets		$207,150,416

Net Assets by Source
Capital received from investors		210,745,467
Net investment income not yet distributed		244,268
Net realized capital losses		(2,084,530	)
Net unrealized capital depreciation		(1,754,789	)

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$207,150,416

3,900,000

$53.12

28 See financial notes

Schwab Intermediate-Term U.S. Treasury ETF

Statement of

Operations

For the period January 1, 2014 through June 30, 2014; unaudited



Investment Income

Interest		$1,811,900
Securities on loan	+	570

Total investment income		1,812,470

Expenses

Investment adviser fees		123,807

Total expenses	−	123,807

Net investment income		1,688,663

Realized and Unrealized Gains (Losses)

Net realized losses on investments		(569,886	)
Net realized losses on In-kind redemptions	+	(16,598	)

Net realized losses		(586,484	)
Net change in unrealized appreciation (depreciation) on investments	+	4,491,929

Net realized and unrealized gains		3,905,445

Increase in net assets resulting from operations		$5,594,108

See financial notes 29

Schwab Intermediate-Term U.S. Treasury ETF

Statements of

Changes in Net Assets

For the current and prior report periods
Figures for the current period are unaudited



Operations


1/1/14-6/30/14				1/1/13-12/31/13
Net investment income		$1,688,663			$2,468,945
Net realized gains (losses)		(586,484	)		377,705
Net change in unrealized appreciation (depreciation)	+	4,491,929			(8,098,401	)

Increase (Decrease) in net assets resulting from operations		5,594,108			(5,251,751	)

Distributions to Shareholders

Distributions from net investment income		($1,445,165	)		($2,468,175	)

Transactions in Fund Shares


		1/1/14-6/30/14					1/1/13-12/31/13
			SHARES		VALUE			SHARES		VALUE
Shares sold			1,400,000		$73,928,838			4,050,000		$214,004,441
Shares redeemed	+		(2,050,000	)	(107,895,971	)		(3,500,001	)	(186,048,570	)

Net transactions in fund shares			(650,000	)	($33,967,133	)		549,999		$27,955,871

Shares Outstanding and Net Assets

		1/1/14-6/30/14					1/1/13-12/31/13
			SHARES		NET ASSETS			SHARES		NET ASSETS
Beginning of period			4,550,000		$236,968,606			4,000,001		$216,732,661
Total increase or decrease	+		(650,000	)	(29,818,190	)		549,999		20,235,945

End of period			3,900,000		$207,150,416			4,550,000		$236,968,606


Net investment income not yet distributed					$244,268					$770

30 See financial notes

Schwab U.S. Aggregate Bond ETF™

Financial Statements

Financial Highlights


	1/1/14–			1/1/13–			1/1/12–			7/13/11¹–
	6/30/14*			12/31/13			12/31/12			12/31/11


Per-Share Data ($)

Net asset value at beginning of period		50.28			52.43			51.50			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.48			0.83			0.84			0.37
Net realized and unrealized gains (losses)		1.50			(1.97	)		1.16			1.52

Total from investment operations		1.98			(1.14	)		2.00			1.89
Less distributions:
Distributions from net investment income		(0.43	)		(1.01	)		(1.07	)		(0.39	)

Net asset value at end of period		51.83			50.28			52.43			51.50

Total return (%)		3.96	²		(2.19	)		3.90			3.79	²

Ratios/Supplemental Data (%)

Ratios to average net assets:
Total expenses		0.05	³		0.06	⁴		0.08	⁵		0.10	³
Net investment income (loss)		1.95	³		1.59			1.52			1.67	³
Portfolio turnover rate^6,7		46	²		152			151			446	²
Net assets, end of period ($ x 1,000)		741,206			497,801			387,954			164,804

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ The expense ratio would have been 0.05%, if interest expense related to charges on agency mortgage-backed securities not delivered on a timely basis had not been incurred. (See financial note 2f)

⁵ Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 12/31/12 is a blended ratio.

⁶ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

⁷ Includes to-be-announced (TBA) transactions. (See financial note 2)

See financial notes 31

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings as of June 30, 2014 (Unaudited)

This section shows all the securities in the fund’s portfolio and their values as of the report date.


				Cost		Value
Holdings by Category				($)		($)

	0	.5%	Asset-Backed Obligations		3,611,241		3,615,389
	2	.1%	Commercial Mortgage-Backed Securities		15,431,773		15,504,402
	23	.1%	Corporate Bonds		167,598,790		171,155,058
	5	.2%	Foreign Securities		38,345,556		38,716,100
	28	.8%	Mortgage-Backed Securities		210,869,439		213,712,027
	1	.0%	Municipal Bonds		6,993,490		7,175,031
	38	.7%	U.S. Government and Government Agencies		286,940,195		286,720,681
	0	.9%	Other Investment Company		6,514,302		6,514,302
	4	.0%	Short-Term Investments		29,999,658		29,999,658


	104	.3%	Total Investments		766,304,444		773,112,648
	(4	.3)%	Other Assets and Liabilities, Net				(31,906,197	)


	100	.0%	Net Assets				741,206,451


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)

Asset-Backed Obligations 0.5% of net assets


Chase Issuance Trust
Series 2012-A3 Class A3
0.79%, 06/15/17 (b)		300,000		301,162
Series 2007-A3 Class A3
5.23%, 04/15/19 (b)		100,000		110,627
Citibank Credit Card Issuance Trust
Series 2005-A2 Class A2
4.85%, 03/10/17 (b)		100,000		103,108
Series 2003-A7 Class A7
4.15%, 07/07/17 (b)		100,000		103,796
Series 2006-A3 Class A3
5.30%, 03/15/18 (b)		150,000		161,865
Series 2007-A8 Class A8
5.65%, 09/20/19 (b)		500,000		568,271
Series 2008-A1 Class A1
5.35%, 02/07/20 (b)		200,000		227,081
Ford Credit Auto Owner Trust
Series 2012-B Class A4
1.00%, 09/15/17 (b)		200,000		201,276
Series 2013-A Class A4
0.78%, 05/15/18 (b)		100,000		100,071
Series 2013-C, Class A4
1.25%, 10/15/18 (b)		225,000		226,897
Honda Auto Receivables Owner Trust
Series 2011-3 Class A3
0.88%, 09/21/15 (b)		39,580		39,630
Series 2012-4 Class A3
0.52%, 08/18/16 (b)		295,145		295,498
Hyundai Auto Receivables Trust
Series 2013-A Class A4
0.75%, 09/17/18 (b)		170,000		169,765
Series 2013-C, Class A4
1.55%, 03/15/19 (b)		150,000		151,833
Mercedes Benz Auto Lease Trust
Series 2013-B, Class A4
0.76%, 07/15/19 (b)		200,000		200,553
Nissan Auto Receivables Owner Trust
Series 2012-A Class A3
0.73%, 05/16/16 (b)		52,977		53,059
Series 2013-A Class A4
0.75%, 07/15/19 (b)		200,000		199,790
Series 2013-B, Class A4
1.31%, 10/15/19 (b)		100,000		100,845
Volkswagen Auto Loan Enhanced Trust
Series 2014-1, Class A3
0.91%, 10/22/18 (b)		300,000		300,262

Total Asset-Backed Obligations
(Cost $3,611,241)				3,615,389




Commercial Mortgage-Backed Securities 2.1% of net assets


Banc of America Commercial Mortgage Trust
Series 2007-2 Class A4
5.78%, 04/10/49 (a)(b)		500,000		550,107
Series 2007-4 Class A4
5.95%, 02/10/51 (a)(b)		173,989		193,937
Banc of America Merrill Lynch Commercial Mortgage, Inc.
Series 2005-4 Class A5A
4.93%, 07/10/45 (b)		361,000		373,323
Bear Stearns Commercial Mortgage Securities
Series 2005-PW10 Class A4
5.41%, 12/11/40 (b)		300,000		312,267
Series 2005-PWR8 Class A4
4.67%, 06/11/41 (b)		181,978		186,667
Series 2006-T24 Class A4
5.54%, 10/12/41 (b)		611,325		664,279
Series 2007-T28 Class A4
5.74%, 09/11/42 (a)(b)		1,590,000		1,782,293
Series 2007-T26 Class A4
5.47%, 01/12/45 (a)(b)		440,000		484,934
Series 2007-PW17 Class A4
5.69%, 06/11/50 (a)(b)		300,000		334,212
Citigroup Commercial Mortgage Trust
Series 2013-GC17 Class A4
4.13%, 11/10/46 (b)		150,000		160,836

32 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Comm 2014-Ccre14 Mortgage Trust
Series 2014-CR14, Class A3
3.96%, 02/10/47 (b)		240,000		254,340
Commercial Mortgage Loan Trust 2008-LS1
Series 2008-LS1 Class A4B
6.21%, 12/10/49 (a)(b)		500,000		551,805
Fannie Mae
Series 2014-M6, Class A2
2.68%, 05/25/21 (b)		650,000		659,661
2.94%, 07/25/21 (b)		550,000		566,599
Freddie Mac
Series K014, Class A1
2.79%, 10/25/20 (b)		688,842		720,110
Series K714, Class A2
3.03%, 10/25/20 (b)		290,000		303,400
2.51%, 11/25/22 (b)		1,100,000		1,088,356
Series K027, Class A2
2.64%, 01/25/23 (b)		220,000		219,271
Greenwich Capital Commercial Funding Corp.
Series 2007-GG9 Class A4
5.44%, 03/10/39 (b)		415,000		453,259
GS Mortgage Securities Trust
Series 2013-GC16, Class A2
3.03%, 11/10/46 (b)		200,000		209,060
JP Morgan Chase Commercial Mortgage Securities Corp.
Series 2005-LDP4 Class A4
4.92%, 10/15/42 (a)(b)		187,176		194,381
JP Morgan Chase Commercial Mortgage Securities Trust
Series 2012-C6 Class A3
3.51%, 05/15/45 (b)		400,000		416,012
Series 2012-CBX, Class A4
3.48%, 06/15/45 (b)		250,000		259,851
Series 2011-C4, Class A4
4.39%, 07/15/46 (b)(c)		400,000		439,231
Series 2011-C5 Class A3
4.17%, 08/15/46 (b)		400,000		434,938
Series 2007-CB18, Class A4
5.44%, 06/12/47 (b)		394,246		430,403
Series 2007-CB20 Class A4
5.79%, 02/12/51 (a)(b)		250,000		277,660
LB-UBS Commercial Mortgage Trust
Series 2005-C5 Class A4
4.95%, 09/15/30 (b)		206,216		212,681
Merrill Lynch Mortgage Trust
Series 2008-C1 Class A4
5.69%, 02/12/51 (b)		195,681		219,023
Morgan Stanley Bank of America Merrill Lynch Trust
Series 2013-C13 Class A2
2.94%, 11/15/46 (b)		280,000		290,115
Wachovia Bank Commercial Mortgage Trust
Series 2005-C21 Class A4
5.41%, 10/15/44 (a)(b)		167,193		174,606
Series 2006-C23 Class A5
5.42%, 01/15/45 (a)(b)		400,000		426,086
Series 2006-C29 Class A4
5.31%, 11/15/48 (b)		196,903		213,581
Wells Fargo Commercial Mortgage Trust
Series 2013-LC12 Class A4
4.22%, 07/15/46 (a)(b)		500,000		540,187
Series 2013-C12 Class A4
3.20%, 03/15/48 (b)		145,000		145,760
WFRBS Commercial Mortgage Trust
Series 2013-C11 Class A2
2.03%, 03/15/45 (b)		200,000		202,947
Series 2013-C12, Class A2
2.07%, 03/15/48 (b)		550,000		558,224

Total Commercial Mortgage-Backed Securities
(Cost $15,431,773)				15,504,402




Corporate Bonds 23.1% of net assets

Finance 7.5%


Banking 5.0%
Abbey National Treasury Services PLC
4.00%, 04/27/16		100,000		105,488
3.05%, 08/23/18		300,000		314,473
American Express Co.
8.13%, 05/20/19		250,000		318,025
American Express Credit Corp.
2.80%, 09/19/16		500,000		520,892
2.38%, 03/24/17		200,000		206,899
Bank of America Corp.
5.25%, 12/01/15		600,000		634,226
6.05%, 05/16/16		600,000		652,892
5.75%, 08/15/16		100,000		109,162
5.42%, 03/15/17		500,000		550,450
5.65%, 05/01/18		800,000		907,620
2.65%, 04/01/19		500,000		507,363
5.63%, 07/01/20		250,000		287,980
5.88%, 01/05/21		300,000		351,471
5.00%, 05/13/21		150,000		167,674
3.30%, 01/11/23		100,000		98,747
4.00%, 04/01/24		500,000		511,291
5.88%, 02/07/42		100,000		119,198
4.88%, 04/01/44		100,000		103,603
Bank of New York Mellon Corp.
2.50%, 01/15/16		250,000		257,504
2.30%, 07/28/16		100,000		103,182
Bank of Nova Scotia
1.38%, 07/15/16		200,000		202,385
Bank of Tokyo-Mitsubishi UFJ Ltd.
2.35%, 02/23/17 (c)		100,000		102,981
Barclays Bank PLC
5.00%, 09/22/16		100,000		108,753
5.14%, 10/14/20		200,000		219,355
BB&T Corp.
3.95%, 03/22/22 (b)		100,000		106,151
BNP Paribas S.A.
3.60%, 02/23/16		250,000		261,101
5.00%, 01/15/21		200,000		223,055
Capital One Bank USA NA
3.38%, 02/15/23		750,000		746,316
Capital One Financial Corp.
3.15%, 07/15/16		150,000		156,609
4.75%, 07/15/21		500,000		557,085
Citigroup, Inc.
3.95%, 06/15/16		550,000		580,566
1.70%, 07/25/16		150,000		152,048
4.45%, 01/10/17		500,000		538,828
6.13%, 11/21/17		300,000		343,391
5.38%, 08/09/20		450,000		516,353

See financial notes 33

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
4.05%, 07/30/22		250,000		256,564
6.68%, 09/13/43		250,000		312,350
Credit Suisse USA, Inc.
4.38%, 08/05/20		400,000		437,755
Deutsche Bank AG
1.35%, 05/30/17		100,000		100,038
3.70%, 05/30/24		200,000		200,473
Fifth Third Bancorp
5.45%, 01/15/17		100,000		109,687
Goldman Sachs Group, Inc.
3.63%, 02/07/16		250,000		260,671
5.63%, 01/15/17		500,000		550,598
5.95%, 01/18/18		200,000		227,394
2.38%, 01/22/18		500,000		508,199
6.15%, 04/01/18		500,000		573,897
5.38%, 03/15/20		250,000		283,546
5.25%, 07/27/21		100,000		112,461
5.75%, 01/24/22		100,000		115,899
3.63%, 01/22/23		250,000		251,534
3.85%, 07/08/24 (b)(g)		400,000		399,480
6.75%, 10/01/37		100,000		120,686
4.80%, 07/08/44 (b)(g)		250,000		248,775
HSBC Holdings PLC
5.10%, 04/05/21		350,000		398,274
6.50%, 09/15/37		200,000		247,418
HSBC USA, Inc.
5.00%, 09/27/20		400,000		443,716
JPMorgan Chase & Co.
1.10%, 10/15/15		650,000		652,909
2.60%, 01/15/16		750,000		770,807
6.00%, 01/15/18		1,000,000		1,146,044
6.30%, 04/23/19		450,000		532,607
3.38%, 05/01/23		250,000		245,844
6.40%, 05/15/38		300,000		382,092
5.40%, 01/06/42		300,000		343,670
KeyBank NA
1.10%, 11/25/16 (b)		100,000		100,435
Lloyds Bank PLC
4.88%, 01/21/16		550,000		585,846
4.20%, 03/28/17		200,000		216,465
2.30%, 11/27/18		250,000		254,094
6.38%, 01/21/21		500,000		604,588
Manufacturers & Traders Trust Co.
5.63%, 12/01/21 (a)(b)		250,000		261,250
Merrill Lynch & Co., Inc.
6.88%, 04/25/18		300,000		353,742
7.75%, 05/14/38		100,000		137,808
Morgan Stanley
5.38%, 10/15/15		350,000		370,716
1.75%, 02/25/16		500,000		507,307
5.45%, 01/09/17		1,050,000		1,157,362
5.95%, 12/28/17		750,000		854,533
6.63%, 04/01/18		200,000		233,992
7.30%, 05/13/19		200,000		244,807
3.75%, 02/25/23		650,000		662,447
4.10%, 05/22/23		250,000		254,073
7.25%, 04/01/32		100,000		134,472
6.38%, 07/24/42		100,000		127,350
National Australia Bank Ltd.
3.00%, 01/20/23		250,000		244,616
PNC Bank NA
2.95%, 01/30/23 (b)		250,000		245,139
PNC Financial Services Group, Inc.
3.90%, 04/29/24 (b)		500,000		510,526
PNC Funding Corp.
5.63%, 02/01/17		300,000		332,010
Rabobank Nederland
4.63%, 12/01/23		450,000		476,535
Regions Financial Corp.
2.00%, 05/15/18 (b)		500,000		498,701
Royal Bank of Canada
2.63%, 12/15/15		225,000		232,225
2.20%, 07/27/18		250,000		255,541
Royal Bank of Scotland Group PLC
4.38%, 03/16/16		350,000		370,355
6.40%, 10/21/19		200,000		235,764
Santander Holdings USA, Inc.
4.63%, 04/19/16		50,000		53,183
Sumitomo Mitsui Banking Corp.
1.80%, 07/18/17		500,000		507,782
Svenska Handelsbanken AB
2.88%, 04/04/17		250,000		261,743
Toronto-Dominion Bank
2.13%, 07/02/19		250,000		250,177
UBS AG
5.88%, 12/20/17		100,000		114,307
5.75%, 04/25/18		100,000		114,754
4.88%, 08/04/20		300,000		336,746
UBS Preferred Funding Trust V
6.24%, 05/15/16 (a)(b)		100,000		106,875
US Bancorp
3.00%, 03/15/22 (b)		100,000		101,218
Wachovia Corp.
5.75%, 06/15/17		350,000		396,056
5.75%, 02/01/18		500,000		572,867
5.50%, 08/01/35		250,000		282,525
Wells Fargo & Co.
5.63%, 12/11/17		150,000		170,816
2.13%, 04/22/19		500,000		502,280
3.45%, 02/13/23		250,000		249,237
5.38%, 11/02/43		175,000		193,248
Westpac Banking Corp.
4.88%, 11/19/19		200,000		225,545

				36,778,563


Brokerage 0.1%
BlackRock, Inc.
5.00%, 12/10/19		150,000		171,420
Jefferies Group LLC
3.88%, 11/09/15		300,000		310,710
5.50%, 03/15/16		250,000		267,887
6.25%, 01/15/36		250,000		262,868
Nomura Holdings, Inc.
6.70%, 03/04/20		115,000		138,422

				1,151,307


Finance Company 0.6%
GATX Corp.
1.25%, 03/04/17		100,000		99,721
5.20%, 03/15/44 (b)		100,000		106,982
General Electric Capital Corp.
5.00%, 01/08/16		275,000		293,286
1.50%, 07/12/16		250,000		253,718
1.63%, 04/02/18		500,000		501,272
6.00%, 08/07/19		100,000		118,587

34 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
4.38%, 09/16/20		300,000		331,781
4.63%, 01/07/21		250,000		278,779
4.65%, 10/17/21		250,000		278,444
6.75%, 03/15/32		250,000		330,725
6.15%, 08/07/37		150,000		186,942
5.88%, 01/14/38		450,000		547,820
6.88%, 01/10/39		100,000		134,783
6.38%, 11/15/67 (a)(b)		250,000		279,375
HSBC Finance Corp.
5.50%, 01/19/16		100,000		107,133
6.68%, 01/15/21		350,000		419,133

				4,268,481


Insurance 1.2%
ACE INA Holdings, Inc.
2.70%, 03/13/23		300,000		291,316
Aetna, Inc.
3.95%, 09/01/20		100,000		108,622
Aflac, Inc.
3.63%, 06/15/23		250,000		255,644
Allstate Corp.
3.15%, 06/15/23		100,000		100,535
4.50%, 06/15/43		300,000		312,944
American International Group, Inc.
2.38%, 08/24/15		100,000		101,825
4.88%, 09/15/16		150,000		162,335
5.60%, 10/18/16		350,000		384,999
5.85%, 01/16/18		200,000		228,502
6.40%, 12/15/20		300,000		362,665
Assurant, Inc.
2.50%, 03/15/18		400,000		403,318
6.75%, 02/15/34		100,000		119,995
Berkshire Hathaway Finance Corp.
4.25%, 01/15/21		300,000		330,872
5.75%, 01/15/40		100,000		120,326
Chubb Corp.
6.00%, 05/11/37		250,000		315,488
Cigna Corp.
2.75%, 11/15/16		100,000		103,911
4.00%, 02/15/22 (b)		150,000		159,430
5.88%, 03/15/41 (b)		250,000		306,228
5.38%, 02/15/42 (b)		300,000		343,504
CNA Financial Corp.
7.35%, 11/15/19		250,000		309,087
Genworth Holdings, Inc.
6.52%, 05/22/18		150,000		173,601
7.63%, 09/24/21		200,000		250,933
6.50%, 06/15/34		200,000		242,176
Hartford Financial Services Group, Inc.
5.38%, 03/15/17		200,000		221,176
5.95%, 10/15/36		100,000		121,435
ING US, Inc.
2.90%, 02/15/18		500,000		518,565
5.70%, 07/15/43		100,000		117,620
Lincoln National Corp.
4.00%, 09/01/23		150,000		156,116
MetLife, Inc.
5.70%, 06/15/35		100,000		120,765
4.88%, 11/13/43		150,000		162,855
Prudential Financial, Inc.
6.00%, 12/01/17		100,000		114,596
4.50%, 11/16/21		300,000		330,776
Travelers Cos., Inc.
5.90%, 06/02/19		160,000		187,974
6.25%, 06/15/37		250,000		323,490
UnitedHealth Group, Inc.
0.85%, 10/15/15		50,000		50,237
1.40%, 10/15/17		250,000		251,148
6.00%, 02/15/18		150,000		173,205
Unum Group
5.63%, 09/15/20		100,000		114,874
WellPoint, Inc.
5.25%, 01/15/16		150,000		160,339
2.30%, 07/15/18		100,000		101,976
5.85%, 01/15/36		250,000		296,046
4.63%, 05/15/42		200,000		204,428

				9,215,877


Other Financial 0.0%
CME Group, Inc.
3.00%, 09/15/22		200,000		199,403

				199,403


Real Estate Investment Trust 0.6%
Boston Properties LP
3.80%, 02/01/24 (b)		100,000		101,328
Brandywine Operating Partnership LP
3.95%, 02/15/23 (b)		750,000		756,338
BRE Properties, Inc.
3.38%, 01/15/23 (b)		200,000		193,271
Digital Realty Trust LP
5.88%, 02/01/20		250,000		278,185
5.25%, 03/15/21 (b)		250,000		268,938
HCP, Inc.
6.70%, 01/30/18		100,000		116,696
5.38%, 02/01/21 (b)		150,000		170,850
Health Care REIT, Inc.
4.13%, 04/01/19 (b)		300,000		323,043
4.50%, 01/15/24 (b)		100,000		105,566
Kilroy Realty LP
3.80%, 01/15/23 (b)		250,000		252,647
Kimco Realty Corp.
3.20%, 05/01/21 (b)		100,000		100,406
ProLogis LP
6.63%, 05/15/18		350,000		408,841
4.25%, 08/15/23 (b)		300,000		313,739
Simon Property Group LP
6.13%, 05/30/18		150,000		174,672
5.65%, 02/01/20 (b)		102,000		119,305
Ventas Realty LP
4.25%, 03/01/22 (b)		200,000		212,793
3.25%, 08/15/22 (b)		250,000		247,584

				4,144,202

				55,757,833

Industrial 13.8%


Basic Industry 1.2%
Air Products & Chemicals, Inc.
4.38%, 08/21/19		125,000		138,231
Airgas, Inc.
1.65%, 02/15/18 (b)		150,000		148,929
3.65%, 07/15/24 (b)		200,000		202,282
Barrick Gold Corp.
6.95%, 04/01/19		350,000		417,827

See financial notes 35

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
4.10%, 05/01/23		150,000		149,652
Barrick North America Finance LLC
4.40%, 05/30/21		150,000		157,175
5.75%, 05/01/43		300,000		311,879
BHP Billiton Finance USA Ltd.
3.25%, 11/21/21		100,000		102,974
5.00%, 09/30/43		300,000		332,884
CF Industries, Inc.
7.13%, 05/01/20		100,000		123,326
Domtar Corp.
10.75%, 06/01/17		100,000		124,568
Dow Chemical Co.
2.50%, 02/15/16		400,000		411,281
8.55%, 05/15/19		225,000		289,485
3.00%, 11/15/22 (b)		250,000		246,331
5.25%, 11/15/41 (b)		200,000		218,461
Eastman Chemical Co.
3.60%, 08/15/22 (b)		100,000		102,721
EI du Pont de Nemours & Co.
5.75%, 03/15/19		200,000		233,647
Freeport-McMoRan Copper & Gold, Inc.
2.38%, 03/15/18		300,000		304,741
3.10%, 03/15/20		200,000		202,240
3.55%, 03/01/22 (b)		100,000		99,195
3.88%, 03/15/23 (b)		100,000		99,878
5.45%, 03/15/43 (b)		400,000		416,512
Glencore Canada Corp.
6.20%, 06/15/35		300,000		325,733
International Paper Co.
7.50%, 08/15/21		250,000		319,002
4.75%, 02/15/22 (b)		250,000		276,099
Kinross Gold Corp.
5.13%, 09/01/21 (b)		250,000		259,326
5.95%, 03/15/24 (b)(c)		150,000		156,363
6.88%, 09/01/41 (b)		150,000		154,460
LYB International Finance BV
4.00%, 07/15/23		300,000		315,543
5.25%, 07/15/43		250,000		274,834
Monsanto Co.
4.20%, 07/15/34 (b)		250,000		253,158
Mosaic Co.
4.25%, 11/15/23 (b)		100,000		105,770
Newmont Mining Corp.
3.50%, 03/15/22 (b)		150,000		144,862
6.25%, 10/01/39		150,000		158,160
Potash Corp. of Saskatchewan, Inc.
5.88%, 12/01/36		100,000		120,481
Rio Tinto Finance USA Ltd.
1.88%, 11/02/15		170,000		172,966
6.50%, 07/15/18		100,000		118,154
Rio Tinto Finance USA PLC
3.50%, 03/22/22 (b)		100,000		102,786
4.75%, 03/22/42 (b)		100,000		104,668
Southern Copper Corp.
5.25%, 11/08/42		100,000		92,436
Teck Resources Ltd.
6.25%, 07/15/41 (b)		100,000		108,927
Vale Overseas Ltd.
6.88%, 11/21/36		100,000		111,204
Vale S.A.
5.63%, 09/11/42		200,000		196,940
Valspar Corp.
4.20%, 01/15/22 (b)		100,000		105,747
Weyerhaeuser Co.
7.38%, 03/15/32		100,000		135,489

				8,947,327


Capital Goods 1.0%
ABB Finance USA, Inc.
1.63%, 05/08/17		100,000		101,329
2.88%, 05/08/22		100,000		99,469
Avery Dennison Corp.
5.38%, 04/15/20		105,000		111,081
Boeing Co.
0.95%, 05/15/18		250,000		244,436
Caterpillar Financial Services Corp.
1.25%, 11/06/17		150,000		149,479
7.15%, 02/15/19		250,000		308,091
Caterpillar, Inc.
5.70%, 08/15/16		200,000		220,555
6.05%, 08/15/36		150,000		186,111
CRH America, Inc.
6.00%, 09/30/16		100,000		111,010
Deere & Co.
5.38%, 10/16/29		150,000		179,592
Eaton Corp.
0.95%, 11/02/15		150,000		150,711
1.50%, 11/02/17		150,000		150,307
4.00%, 11/02/32		100,000		100,387
4.15%, 11/02/42		100,000		97,157
General Electric Co.
0.85%, 10/09/15		100,000		100,528
5.25%, 12/06/17		200,000		225,828
2.70%, 10/09/22		100,000		98,385
3.38%, 03/11/24		100,000		102,107
4.13%, 10/09/42		400,000		396,696
4.50%, 03/11/44		100,000		104,627
Illinois Tool Works, Inc.
3.90%, 09/01/42 (b)		100,000		94,678
Ingersoll-Rand Global Holding Co., Ltd.
2.88%, 01/15/19 (c)		250,000		256,541
John Deere Capital Corp.
5.50%, 04/13/17		200,000		224,143
1.70%, 01/15/20		300,000		291,613
L-3 Communications Corp.
4.75%, 07/15/20		250,000		274,210
4.95%, 02/15/21 (b)		500,000		554,903
Lockheed Martin Corp.
4.25%, 11/15/19		36,000		39,773
3.35%, 09/15/21		100,000		104,018
Northrop Grumman Corp.
4.75%, 06/01/43		250,000		261,717
Owens Corning
4.20%, 12/15/22 (b)		200,000		205,723
Republic Services, Inc.
3.80%, 05/15/18		200,000		214,459
5.70%, 05/15/41 (b)		200,000		237,196
Textron, Inc.
5.95%, 09/21/21 (b)		200,000		233,001
United Technologies Corp.
1.80%, 06/01/17		400,000		408,849
5.38%, 12/15/17		300,000		340,931
6.13%, 02/01/19		150,000		177,423
3.10%, 06/01/22		100,000		101,467

36 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
6.13%, 07/15/38		150,000		193,302
4.50%, 06/01/42		150,000		157,739
Waste Management, Inc.
2.90%, 09/15/22 (b)		200,000		196,250

				7,805,822


Communications 2.2%
21st Century Fox America, Inc.
6.90%, 03/01/19		180,000		217,434
4.00%, 10/01/23		400,000		417,722
6.15%, 03/01/37		200,000		241,268
America Movil S.A.B. de C.V.
2.38%, 09/08/16		200,000		205,896
3.13%, 07/16/22		200,000		197,300
4.38%, 07/16/42		150,000		142,424
American Tower Corp.
3.40%, 02/15/19		100,000		104,727
5.05%, 09/01/20		250,000		278,939
5.00%, 02/15/24		100,000		108,822
AT&T Mobility LLC
7.13%, 12/15/31		50,000		66,076
AT&T, Inc.
0.80%, 12/01/15		100,000		100,296
5.50%, 02/01/18		400,000		453,030
5.80%, 02/15/19		200,000		232,941
3.00%, 02/15/22		350,000		349,024
6.15%, 09/15/34		200,000		239,457
5.35%, 09/01/40		250,000		272,920
5.55%, 08/15/41		100,000		112,538
4.30%, 12/15/42 (b)		200,000		190,081
4.80%, 06/15/44 (b)		400,000		409,977
British Telecommunications PLC
1.63%, 06/28/16		500,000		507,135
CBS Corp.
5.50%, 05/15/33		150,000		165,000
Comcast Corp.
5.15%, 03/01/20		250,000		286,844
3.60%, 03/01/24		250,000		257,385
4.25%, 01/15/33		200,000		206,108
6.95%, 08/15/37		200,000		270,491
4.65%, 07/15/42		500,000		520,450
Deutsche Telekom International Finance BV
8.75%, 06/15/30 (a)		100,000		146,612
DIRECTV Holdings LLC
3.50%, 03/01/16		100,000		104,392
5.88%, 10/01/19		100,000		116,444
4.45%, 04/01/24 (b)		200,000		212,486
6.00%, 08/15/40 (b)		150,000		173,306
5.15%, 03/15/42		150,000		158,112
Discovery Communications LLC
5.05%, 06/01/20		150,000		168,700
Grupo Televisa S.A.B.
6.00%, 05/15/18		200,000		228,386
5.00%, 05/13/45		150,000		151,048
NBCUniversal Media LLC
2.88%, 04/01/16		100,000		103,832
4.38%, 04/01/21		250,000		276,286
5.95%, 04/01/41		350,000		431,293
Orange S.A.
2.75%, 02/06/19		250,000		256,364
5.38%, 01/13/42		250,000		276,123
Qwest Corp.
6.75%, 12/01/21		350,000		405,812
Rogers Communications, Inc.
3.00%, 03/15/23 (b)		250,000		241,032
TCI Communications, Inc.
7.13%, 02/15/28		150,000		199,759
Telefonica Emisiones S.A.U.
6.22%, 07/03/17		150,000		169,863
5.46%, 02/16/21		250,000		284,267
7.05%, 06/20/36		150,000		191,917
Telefonos de Mexico S.A.B. de C.V.
5.50%, 11/15/19		100,000		115,179
Time Warner Cable, Inc.
5.85%, 05/01/17		150,000		168,812
5.00%, 02/01/20		250,000		280,497
6.55%, 05/01/37		350,000		436,915
Time Warner Entertainment Co. LP
8.38%, 07/15/33		100,000		147,123
Verizon Communications, Inc.
2.50%, 09/15/16		300,000		309,389
1.35%, 06/09/17		750,000		750,287
3.65%, 09/14/18		150,000		160,579
4.50%, 09/15/20		500,000		550,745
5.15%, 09/15/23		300,000		336,352
4.15%, 03/15/24 (b)		100,000		104,624
6.40%, 09/15/33		650,000		798,571
5.85%, 09/15/35		200,000		234,367
6.55%, 09/15/43		400,000		505,221
Verizon Global Funding Corp.
7.75%, 12/01/30		100,000		137,498
Vodafone Group PLC
5.45%, 06/10/19		250,000		287,134
4.38%, 03/16/21		300,000		326,940

				16,500,552


Consumer Cyclical 1.8%
Amazon.com, Inc.
2.50%, 11/29/22 (b)		350,000		331,665
CVS Caremark Corp.
4.75%, 05/18/20 (b)		500,000		560,412
6.13%, 09/15/39		300,000		374,870
5.75%, 05/15/41 (b)		250,000		300,866
5.30%, 12/05/43 (b)		200,000		226,976
Daimler Finance North America LLC
8.50%, 01/18/31		75,000		114,062
Darden Restaurants, Inc.
3.35%, 11/01/22 (b)		100,000		98,275
eBay, Inc.
1.63%, 10/15/15		125,000		127,012
1.35%, 07/15/17		500,000		502,725
Ford Motor Co.
7.45%, 07/16/31		425,000		569,714
4.75%, 01/15/43		100,000		101,495
Ford Motor Credit Co. LLC
6.63%, 08/15/17		450,000		518,373
2.38%, 01/16/18		250,000		255,594
4.25%, 09/20/22		450,000		480,820
Gap, Inc.
5.95%, 04/12/21 (b)		450,000		521,517
Home Depot, Inc.
5.40%, 03/01/16		300,000		323,858
3.75%, 02/15/24 (b)		100,000		104,743
4.88%, 02/15/44 (b)		100,000		109,410
Johnson Controls, Inc.
3.63%, 07/02/24 (b)		200,000		201,291

See financial notes 37

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
4.63%, 07/02/44 (b)		200,000		200,962
Lowe’s Cos., Inc.
3.12%, 04/15/22 (b)		300,000		305,026
Macy’s Retail Holdings, Inc.
5.90%, 12/01/16		210,000		234,161
2.88%, 02/15/23 (b)		200,000		192,340
5.13%, 01/15/42 (b)		300,000		319,409
Marriott International, Inc.
3.00%, 03/01/19 (b)		100,000		103,498
McDonald’s Corp.
5.30%, 03/15/17		86,000		95,712
3.70%, 02/15/42		114,000		105,527
NIKE, Inc.
2.25%, 05/01/23 (b)		100,000		94,510
3.63%, 05/01/43 (b)		50,000		46,365
Nordstrom, Inc.
4.00%, 10/15/21 (b)		150,000		160,814
QVC, Inc.
5.13%, 07/02/22		100,000		106,641
Starbucks Corp.
3.85%, 10/01/23 (b)		300,000		315,829
Starwood Hotels & Resorts Worldwide, Inc.
6.75%, 05/15/18		100,000		117,784
Time Warner, Inc.
5.88%, 11/15/16		250,000		278,530
2.10%, 06/01/19		300,000		298,820
4.75%, 03/29/21		300,000		333,138
7.63%, 04/15/31		100,000		137,765
7.70%, 05/01/32		200,000		278,491
6.50%, 11/15/36		250,000		306,903
4.65%, 06/01/44 (b)		300,000		295,470
Toyota Motor Credit Corp.
3.40%, 09/15/21		350,000		365,668
Viacom, Inc.
2.50%, 12/15/16		100,000		103,137
4.25%, 09/01/23 (b)		150,000		157,656
3.88%, 04/01/24 (b)		100,000		101,821
6.88%, 04/30/36		200,000		253,679
5.25%, 04/01/44 (b)		100,000		106,048
Wal-Mart Stores, Inc.
2.55%, 04/11/23 (b)		400,000		386,168
5.25%, 09/01/35		550,000		638,476
6.50%, 08/15/37		100,000		133,361
6.20%, 04/15/38		200,000		256,767
Walt Disney Co.
1.35%, 08/16/16		150,000		152,020
1.13%, 02/15/17		200,000		201,179
1.10%, 12/01/17		250,000		249,028
Wyndham Worldwide Corp.
5.63%, 03/01/21		100,000		112,866

				13,369,247


Consumer Non-Cyclical 3.2%
AbbVie, Inc.
2.00%, 11/06/18		700,000		699,857
2.90%, 11/06/22		500,000		484,404
Actavis, Inc.
4.63%, 10/01/42 (b)		100,000		98,755
Altria Group, Inc.
4.13%, 09/11/15		444,000		462,122
4.75%, 05/05/21		100,000		110,463
2.85%, 08/09/22		600,000		578,405
2.95%, 05/02/23		300,000		287,749
AmerisourceBergen Corp.
4.88%, 11/15/19		450,000		504,948
Amgen, Inc.
5.85%, 06/01/17		200,000		225,687
3.88%, 11/15/21 (b)		200,000		211,390
5.15%, 11/15/41 (b)		100,000		107,705
Anheuser-Busch InBev Finance, Inc.
1.13%, 01/27/17		100,000		100,553
2.15%, 02/01/19		400,000		402,872
3.70%, 02/01/24		200,000		205,674
4.63%, 02/01/44		350,000		365,636
Anheuser-Busch InBev Worldwide, Inc.
6.88%, 11/15/19		350,000		430,739
5.00%, 04/15/20		250,000		284,699
Archer-Daniels-Midland Co.
5.94%, 10/01/32		100,000		122,752
AstraZeneca PLC
6.45%, 09/15/37		150,000		195,333
Baxter International, Inc.
4.50%, 06/15/43 (b)		300,000		308,553
Boston Scientific Corp.
6.00%, 01/15/20		150,000		174,584
4.13%, 10/01/23 (b)		100,000		104,111
Bristol-Myers Squibb Co.
6.13%, 05/01/38		100,000		126,602
3.25%, 08/01/42		100,000		83,193
Cardinal Health, Inc.
1.90%, 06/15/17		200,000		203,190
1.70%, 03/15/18		400,000		398,930
3.20%, 06/15/22		400,000		401,644
Celgene Corp.
1.90%, 08/15/17		500,000		507,678
4.63%, 05/15/44 (b)		550,000		553,084
Colgate-Palmolive Co.
2.63%, 05/01/17		100,000		104,752
3.25%, 03/15/24		200,000		203,988
ConAgra Foods, Inc.
1.90%, 01/25/18		400,000		401,308
3.20%, 01/25/23 (b)		350,000		337,977
6.63%, 08/15/39		300,000		376,582
4.65%, 01/25/43 (b)		350,000		346,455
Delhaize Group S.A.
5.70%, 10/01/40		100,000		107,036
Diageo Capital PLC
5.75%, 10/23/17		100,000		114,118
1.13%, 04/29/18		150,000		147,225
Express Scripts Holding Co.
3.13%, 05/15/16		350,000		364,805
General Mills, Inc.
5.40%, 06/15/40		500,000		565,178
Gilead Sciences, Inc.
3.70%, 04/01/24 (b)		400,000		411,260
GlaxoSmithKline Capital, Inc.
5.65%, 05/15/18		150,000		172,188
2.85%, 05/08/22		150,000		148,320
Hasbro, Inc.
6.30%, 09/15/17		100,000		113,974
6.35%, 03/15/40		100,000		120,146
Johnson & Johnson
5.55%, 08/15/17		250,000		285,012
Kellogg Co.
4.45%, 05/30/16		150,000		159,979

38 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Kimberly-Clark Corp.
6.63%, 08/01/37		100,000		134,980
Koninklijke Philips N.V.
5.00%, 03/15/42		100,000		110,319
Kraft Foods Group, Inc.
5.38%, 02/10/20		200,000		227,767
3.50%, 06/06/22		500,000		514,268
Lorillard Tobacco Co.
2.30%, 08/21/17		100,000		102,141
McKesson Corp.
2.28%, 03/15/19		300,000		301,387
Medtronic, Inc.
3.63%, 03/15/24 (b)		200,000		205,547
4.00%, 04/01/43 (b)		300,000		286,899
Merck & Co., Inc.
2.25%, 01/15/16		90,000		92,506
3.88%, 01/15/21 (b)		200,000		216,091
5.85%, 06/30/39		250,000		309,229
Molson Coors Brewing Co.
3.50%, 05/01/22		200,000		202,512
Mondelez International, Inc.
4.13%, 02/09/16		250,000		262,996
2.25%, 02/01/19 (b)		250,000		251,980
6.50%, 02/09/40		105,000		134,925
Mylan, Inc.
1.80%, 06/24/16		300,000		304,396
Newell Rubbermaid, Inc.
4.70%, 08/15/20		150,000		162,760
Novartis Capital Corp.
4.40%, 04/24/20		100,000		111,275
PepsiCo, Inc.
2.25%, 01/07/19 (b)		150,000		153,155
4.88%, 11/01/40		200,000		218,183
Pfizer, Inc.
6.20%, 03/15/19		225,000		267,377
Philip Morris International, Inc.
1.13%, 08/21/17		100,000		99,780
4.50%, 03/26/20		250,000		279,239
2.50%, 08/22/22		100,000		97,040
6.38%, 05/16/38		150,000		193,107
Procter & Gamble Co.
1.80%, 11/15/15		375,000		382,372
4.70%, 02/15/19		150,000		169,590
5.55%, 03/05/37		100,000		122,282
Quest Diagnostics, Inc.
3.20%, 04/01/16		100,000		103,819
Reynolds American, Inc.
6.75%, 06/15/17		100,000		114,885
3.25%, 11/01/22		100,000		96,650
Safeway, Inc.
3.95%, 08/15/20		200,000		204,032
Sanofi
2.63%, 03/29/16		500,000		518,090
1.25%, 04/10/18		100,000		98,779
4.00%, 03/29/21		150,000		162,697
Teva Pharmaceutical Finance Co. BV
2.95%, 12/18/22		100,000		96,351
Teva Pharmaceutical Finance Co. LLC
6.15%, 02/01/36		275,000		333,572
The Coca-Cola Co.
1.50%, 11/15/15		200,000		203,058
1.15%, 04/01/18		100,000		99,109
The Kroger Co.
3.85%, 08/01/23 (b)		100,000		102,938
7.50%, 04/01/31		100,000		132,131
Thermo Fisher Scientific, Inc.
4.50%, 03/01/21		50,000		54,936
3.60%, 08/15/21 (b)		50,000		52,035
4.15%, 02/01/24 (b)		200,000		209,564
5.30%, 02/01/44 (b)		200,000		222,851
Unilever Capital Corp.
4.25%, 02/10/21		300,000		330,978
Warner Chilcott Co. LLC
7.75%, 09/15/18 (b)		500,000		526,895
Wyeth LLC
5.95%, 04/01/37		500,000		616,442
Zoetis, Inc.
4.70%, 02/01/43 (b)		100,000		101,966

				23,517,496


Energy 2.6%
Anadarko Petroleum Corp.
5.95%, 09/15/16		225,000		249,331
6.38%, 09/15/17		200,000		230,438
6.45%, 09/15/36		100,000		127,939
Apache Corp.
6.90%, 09/15/18		100,000		119,856
4.75%, 04/15/43 (b)		100,000		105,213
Baker Hughes, Inc.
3.20%, 08/15/21 (b)		300,000		309,707
BP Capital Markets PLC
3.20%, 03/11/16		500,000		522,312
1.38%, 05/10/18		800,000		793,296
4.75%, 03/10/19		250,000		280,681
Canadian Natural Resources Ltd.
5.70%, 05/15/17		300,000		336,239
3.80%, 04/15/24		150,000		154,937
6.25%, 03/15/38		100,000		124,917
Chevron Corp.
1.72%, 06/24/18 (b)		500,000		504,400
3.19%, 06/24/23 (b)		400,000		407,035
Conoco, Inc.
6.95%, 04/15/29		100,000		137,285
ConocoPhillips Canada
5.63%, 10/15/16		150,000		166,291
Devon Energy Corp.
2.25%, 12/15/18 (b)		500,000		506,366
Diamond Offshore Drilling, Inc.
4.88%, 11/01/43 (b)		100,000		101,319
Dominion Gas Holdings LLC
4.80%, 11/01/43 (b)(c)		100,000		106,811
El Paso Pipeline Partners Operating Co. LLC
4.30%, 05/01/24 (b)		100,000		101,214
4.70%, 11/01/42 (b)		300,000		281,486
Encana Corp.
5.90%, 12/01/17		100,000		113,980
6.50%, 05/15/19		150,000		178,748
3.90%, 11/15/21 (b)		200,000		211,663
6.50%, 02/01/38		175,000		220,337
Energy Transfer Partners LP
6.70%, 07/01/18		700,000		820,353
4.65%, 06/01/21 (b)		200,000		215,758
3.60%, 02/01/23 (b)		350,000		347,415
6.63%, 10/15/36		200,000		238,375
7.50%, 07/01/38		100,000		130,420

See financial notes 39

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Ensco PLC
4.70%, 03/15/21		100,000		109,097
Enterprise Products Operating LLC
6.30%, 09/15/17		100,000		115,529
3.90%, 02/15/24 (b)		400,000		414,594
6.65%, 10/15/34		250,000		319,240
EOG Resources, Inc.
2.45%, 04/01/20 (b)		200,000		201,817
Halliburton Co.
1.00%, 08/01/16		100,000		100,568
6.15%, 09/15/19		125,000		149,315
Hess Corp.
8.13%, 02/15/19		200,000		251,843
7.30%, 08/15/31		150,000		199,970
7.13%, 03/15/33		100,000		133,100
Husky Energy, Inc.
7.25%, 12/15/19		200,000		248,780
Kerr-McGee Corp.
6.95%, 07/01/24		250,000		321,699
Kinder Morgan Energy Partners LP
5.95%, 02/15/18		250,000		285,486
6.85%, 02/15/20		50,000		60,072
3.50%, 03/01/21 (b)		200,000		203,107
5.80%, 03/15/35		100,000		110,445
5.00%, 08/15/42 (b)		100,000		99,774
5.50%, 03/01/44 (b)		300,000		317,863
Magellan Midstream Partners LP
4.20%, 12/01/42 (b)		100,000		95,449
Marathon Petroleum Corp.
5.13%, 03/01/21		125,000		141,926
Nabors Industries, Inc.
2.35%, 09/15/16		100,000		102,142
6.15%, 02/15/18		100,000		114,024
5.10%, 09/15/23 (b)		100,000		109,379
Nisource Finance Corp.
3.85%, 02/15/23 (b)		100,000		102,732
Noble Energy, Inc.
5.25%, 11/15/43 (b)		400,000		442,687
Noble Holding International Ltd.
4.63%, 03/01/21		250,000		270,103
5.25%, 03/15/42		500,000		519,767
Occidental Petroleum Corp.
4.10%, 02/01/21 (b)		100,000		109,197
Petrohawk Energy Corp.
7.25%, 08/15/18 (b)		100,000		104,750
Plains All American Pipeline LP
5.75%, 01/15/20		100,000		116,285
3.65%, 06/01/22 (b)		200,000		206,885
3.85%, 10/15/23 (b)		150,000		154,374
6.65%, 01/15/37		100,000		127,336
Shell International Finance BV
4.30%, 09/22/19		100,000		111,272
6.38%, 12/15/38		250,000		330,531
4.55%, 08/12/43		250,000		264,405
Southern Natural Gas Co.
5.90%, 04/01/17 (c)		150,000		169,370
Spectra Energy Partners LP
4.75%, 03/15/24 (b)		300,000		325,647
5.95%, 09/25/43 (b)		250,000		298,959
Suncor Energy, Inc.
6.10%, 06/01/18		100,000		116,159
6.50%, 06/15/38		150,000		193,314
Talisman Energy, Inc.
3.75%, 02/01/21 (b)		150,000		155,297
Tosco Corp.
7.80%, 01/01/27		150,000		209,958
Total Capital International S.A.
2.88%, 02/17/22		500,000		499,956
3.75%, 04/10/24		100,000		104,307
TransCanada PipeLines Ltd.
3.75%, 10/16/23 (b)		50,000		51,700
4.63%, 03/01/34 (b)		100,000		106,410
5.00%, 10/16/43 (b)		50,000		54,868
Transocean, Inc.
6.38%, 12/15/21		250,000		289,647
Valero Energy Corp.
9.38%, 03/15/19		250,000		328,467
6.13%, 02/01/20		150,000		177,472
Weatherford International Ltd.
4.50%, 04/15/22 (b)		175,000		186,368
Williams Cos., Inc.
5.75%, 06/24/44 (b)		150,000		151,832
Williams Partners LP
7.25%, 02/01/17		350,000		400,268

				19,029,664


Technology 1.3%
Apple, Inc.
0.45%, 05/03/16		100,000		99,833
1.00%, 05/03/18		100,000		97,887
2.40%, 05/03/23		600,000		567,929
3.85%, 05/04/43		200,000		184,740
Arrow Electronics, Inc.
3.00%, 03/01/18		300,000		310,439
4.50%, 03/01/23 (b)		200,000		209,395
Cisco Systems, Inc.
5.50%, 02/22/16		200,000		216,233
4.45%, 01/15/20		350,000		388,237
3.63%, 03/04/24		250,000		257,487
5.90%, 02/15/39		100,000		122,499
Corning, Inc.
1.45%, 11/15/17		200,000		196,817
EMC Corp.
1.88%, 06/01/18		100,000		100,755
Fiserv, Inc.
6.80%, 11/20/17		285,000		330,036
4.63%, 10/01/20		250,000		272,906
Google, Inc.
2.13%, 05/19/16		75,000		77,301
3.38%, 02/25/24		100,000		102,560
Harris Corp.
6.15%, 12/15/40		150,000		177,258
Hewlett-Packard Co.
2.60%, 09/15/17		500,000		517,170
2.75%, 01/14/19		400,000		410,580
3.75%, 12/01/20		300,000		314,021
Intel Corp.
4.25%, 12/15/42		250,000		245,949
International Business Machines Corp.
5.70%, 09/14/17		500,000		570,077
3.38%, 08/01/23		150,000		152,039
3.63%, 02/12/24		750,000		771,096
Microsoft Corp.
2.50%, 02/08/16		100,000		103,347
1.63%, 12/06/18		250,000		250,909

40 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
4.50%, 10/01/40		100,000		104,173
NetApp, Inc.
3.38%, 06/15/21 (b)		150,000		150,476
3.25%, 12/15/22 (b)		250,000		241,174
Oracle Corp.
2.25%, 10/08/19 (g)		300,000		299,670
3.40%, 07/08/24 (b)(g)		350,000		349,195
4.30%, 07/08/34 (b)(g)		250,000		249,900
6.13%, 07/08/39		150,000		188,882
5.38%, 07/15/40		100,000		114,096
Pitney Bowes, Inc.
4.63%, 03/15/24 (b)		100,000		103,633
Science Applications International Corp.
5.50%, 07/01/33		50,000		48,737
Texas Instruments, Inc.
2.38%, 05/16/16		100,000		103,414
Xerox Corp.
2.75%, 03/15/19		300,000		305,916

				9,306,766


Transportation 0.5%
American Airlines 2013-1 Class A Pass Through Trust
4.00%, 01/15/27 (c)		389,163		393,172
Burlington Northern Santa Fe LLC
4.70%, 10/01/19		140,000		158,478
3.85%, 09/01/23 (b)		400,000		417,461
5.05%, 03/01/41 (b)		500,000		543,674
Canadian National Railway Co.
4.50%, 11/07/43 (b)		100,000		106,702
Canadian Pacific Railway Ltd.
4.50%, 01/15/22		250,000		275,452
Continental Airlines 2010-1 Class A Pass Through Trust
Series A
4.75%, 07/12/22		172,101		184,148
Continental Airlines 2012-1 Class A Pass Through Trust
Series A
4.15%, 10/11/25		95,078		99,119
CSX Corp.
4.25%, 06/01/21 (b)		150,000		163,886
4.10%, 03/15/44 (b)		100,000		94,656
FedEx Corp.
2.63%, 08/01/22		200,000		192,131
3.88%, 08/01/42		200,000		180,335
Kansas City Southern de Mexico S.A. de C.V.
2.35%, 05/15/20 (b)		350,000		335,738
Norfolk Southern Corp.
3.00%, 04/01/22 (b)		150,000		150,243
Ryder System, Inc.
2.55%, 06/01/19 (b)		100,000		101,344
United Parcel Service, Inc.
5.50%, 01/15/18		150,000		171,230

				3,567,769

				102,044,643

Utilities 1.8%


Electric 1.7%
Alabama Power Co.
3.55%, 12/01/23		200,000		207,609
American Electric Power Co., Inc.
1.65%, 12/15/17 (b)		500,000		503,073
Appalachian Power Co.
7.00%, 04/01/38		500,000		683,458
Berkshire Hathaway Energy Co.
6.50%, 09/15/37		250,000		323,459
5.15%, 11/15/43 (b)		200,000		225,129
Commonwealth Edison Co.
1.95%, 09/01/16 (b)		50,000		51,351
Consolidated Edison Co. of New York, Inc.
5.85%, 04/01/18		200,000		230,517
Consumers Energy Co.
3.38%, 08/15/23 (b)		300,000		309,126
3.95%, 05/15/43 (b)		100,000		97,724
Duke Energy Carolinas LLC
6.05%, 04/15/38		200,000		257,806
5.30%, 02/15/40		100,000		118,300
Duke Energy Corp.
2.10%, 06/15/18 (b)		1,000,000		1,011,979
3.75%, 04/15/24 (b)		150,000		154,381
Duke Energy Progress, Inc.
4.10%, 05/15/42 (b)		350,000		347,986
Entergy Corp.
3.63%, 09/15/15		250,000		258,024
Exelon Generation Co. LLC
4.00%, 10/01/20 (b)		250,000		263,922
5.60%, 06/15/42 (b)		100,000		108,745
Florida Power & Light Co.
6.20%, 06/01/36		200,000		261,897
5.95%, 02/01/38		150,000		191,556
Florida Power Corp.
6.40%, 06/15/38		91,000		122,145
Georgia Power Co.
4.75%, 09/01/40		250,000		270,243
LG&E and KU Energy LLC
3.75%, 11/15/20 (b)		150,000		158,934
Midamerican Energy Holdings Co.
5.75%, 04/01/18		100,000		114,543
6.13%, 04/01/36		200,000		248,776
National Rural Utilities Cooperative Finance Corp.
5.45%, 02/01/18		100,000		113,589
NextEra Energy Capital Holdings, Inc.
3.63%, 06/15/23 (b)		100,000		101,021
Oncor Electric Delivery Co. LLC
2.15%, 06/01/19 (b)(c)		350,000		350,731
4.55%, 12/01/41 (b)		200,000		212,179
Pacific Gas & Electric Co.
4.25%, 05/15/21 (b)		200,000		218,899
6.05%, 03/01/34		192,000		238,182
PPL Electric Utilities Corp.
2.50%, 09/01/22 (b)		200,000		195,775
PSEG Power LLC
5.13%, 04/15/20		400,000		448,556
Public Service Electric & Gas Co.
3.95%, 05/01/42 (b)		100,000		97,931
Puget Sound Energy, Inc.
5.64%, 04/15/41 (b)		250,000		309,566
San Diego Gas & Electric Co.
4.30%, 04/01/42 (b)		100,000		104,313
Sempra Energy
3.55%, 06/15/24 (b)		100,000		100,910
Southern California Edison Co.
5.50%, 08/15/18		100,000		114,391

See financial notes 41

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Southwestern Electric Power Co.
5.55%, 01/15/17		400,000		442,484
The Dayton Power & Light Co.
1.88%, 09/15/16 (c)		200,000		203,497
TransAlta Corp.
1.90%, 06/03/17		100,000		100,462
6.65%, 05/15/18		250,000		283,534
4.50%, 11/15/22 (b)		500,000		507,609
Union Electric Co.
3.90%, 09/15/42 (b)		100,000		97,246
Virginia Electric & Power Co.
5.95%, 09/15/17		300,000		344,735
6.00%, 05/15/37		300,000		381,192
Westar Energy, Inc.
4.13%, 03/01/42 (b)		100,000		99,918
Xcel Energy, Inc.
4.70%, 05/15/20 (b)		350,000		391,486
4.80%, 09/15/41 (b)		200,000		216,111

				12,195,000


Natural Gas 0.1%
ONE Gas, Inc.
3.61%, 02/01/24 (b)(c)		100,000		103,600
4.66%, 02/01/44 (b)(c)		100,000		108,163
Sempra Energy
6.00%, 10/15/39		250,000		311,317
Southwest Gas Corp.
3.88%, 04/01/22 (b)		100,000		106,240
TransCanada PipeLines Ltd.
2.50%, 08/01/22		100,000		96,708
7.63%, 01/15/39		100,000		145,849
Williams Partners LP
6.30%, 04/15/40		50,000		59,563

				931,440


Other Utilities 0.0%
Veolia Environnement S.A.
6.00%, 06/01/18		200,000		226,142

				226,142

				13,352,582

Total Corporate Bonds
(Cost $167,598,790)				171,155,058




Foreign Securities 5.2% of net assets

Foreign Agencies 1.7%


Austria 0.1%
Oesterreichische Kontrollbank AG
1.75%, 10/05/15		400,000		407,343
2.00%, 06/03/16		150,000		154,242

				561,585


Brazil 0.2%
Petrobras Global Finance BV
4.38%, 05/20/23		400,000		386,220
5.63%, 05/20/43		250,000		227,500
Petrobras International Finance Co.
5.75%, 01/20/20		500,000		535,650
5.38%, 01/27/21		400,000		418,892
6.75%, 01/27/41		400,000		414,000

				1,982,262


Canada 0.0%
Export Development Canada
1.25%, 10/27/15		100,000		101,328
Nexen, Inc.
6.40%, 05/15/37		200,000		241,448

				342,776


Germany 0.7%
Kreditanstalt fuer Wiederaufbau
1.25%, 10/26/15 (d)		250,000		253,188
2.63%, 02/16/16 (d)		600,000		621,734
2.00%, 06/01/16 (d)		100,000		102,913
4.88%, 01/17/17 (d)		450,000		496,457
1.25%, 02/15/17 (d)		600,000		607,501
4.50%, 07/16/18 (d)		500,000		560,875
4.88%, 06/17/19 (d)		700,000		805,276
4.00%, 01/27/20 (d)		350,000		388,962
2.75%, 09/08/20 (d)		500,000		519,689
2.38%, 08/25/21 (d)		300,000		301,742
Landwirtschaftliche Rentenbank
1.88%, 09/17/18 (d)		500,000		508,889

				5,167,226


Japan 0.1%
Japan Bank for International Cooperation
2.25%, 07/13/16		400,000		413,289

				413,289


Mexico 0.3%
Pemex Project Funding Master Trust
6.63%, 06/15/35		700,000		827,750
Petroleos Mexicanos
5.75%, 03/01/18		250,000		282,500
3.13%, 01/23/19 (c)		100,000		103,700
5.50%, 01/21/21		400,000		451,000
4.88%, 01/18/24 (c)		200,000		215,000
5.50%, 06/27/44		200,000		209,200

				2,089,150


Norway 0.1%
Statoil A.S.A.
2.45%, 01/17/23		100,000		96,169
3.70%, 03/01/24		400,000		419,176
4.25%, 11/23/41		100,000		101,218

				616,563


Republic of Korea 0.1%
Export-Import Bank of Korea
4.38%, 09/15/21		300,000		326,890
5.00%, 04/11/22		200,000		227,240
Korea Development Bank
4.00%, 09/09/16		200,000		212,787
3.00%, 03/17/19		500,000		517,072

				1,283,989


Sweden 0.1%
Svensk Exportkredit AB
5.13%, 03/01/17		150,000		166,609
1.13%, 04/05/18		250,000		247,771

				414,380

				12,871,220

42 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)

Foreign Local Government 0.4%


Canada 0.4%
Hydro-Quebec
2.00%, 06/30/16		400,000		410,881
1.38%, 06/19/17		250,000		252,295
8.05%, 07/07/24		60,000		83,027
Province of British Columbia
2.00%, 10/23/22		200,000		190,044
Province of Manitoba
1.13%, 06/01/18		250,000		247,398
Province of Ontario
2.30%, 05/10/16		200,000		206,580
1.00%, 07/22/16		600,000		604,362
4.00%, 10/07/19		225,000		247,861
2.45%, 06/29/22		200,000		195,637
Province of Quebec
7.50%, 09/15/29		68,000		96,967

				2,535,052

Industrial 0.0%


Canada 0.0%
Nexen, Inc.
5.88%, 03/10/35		150,000		169,613

				169,613

Sovereign 1.5%


Brazil 0.2%
Brazilian Government International Bond
6.00%, 01/17/17		500,000		557,250
4.88%, 01/22/21		100,000		109,500
2.63%, 01/05/23		500,000		463,000
4.25%, 01/07/25		250,000		253,688
8.25%, 01/20/34		150,000		208,500
7.13%, 01/20/37		100,000		127,000

				1,718,938


Canada 0.0%
Canada Government International Bond
0.88%, 02/14/17		100,000		100,305

				100,305


Chile 0.1%
Chile Government International Bond
2.25%, 10/30/22		300,000		284,100
3.63%, 10/30/42		100,000		88,250

				372,350


Colombia 0.1%
Colombia Government International Bond
7.38%, 03/18/19		300,000		366,750
7.38%, 09/18/37		100,000		136,750
6.13%, 01/18/41		250,000		301,250

				804,750


Italy 0.1%
Italy Government International Bond
5.25%, 09/20/16		250,000		272,979
5.38%, 06/12/17		100,000		110,984
6.88%, 09/27/23		150,000		192,410

				576,373


Mexico 0.3%
Mexico Government International Bond
5.63%, 01/15/17		600,000		667,500
3.50%, 01/21/21		150,000		156,150
3.63%, 03/15/22		400,000		416,000
8.00%, 09/24/22		100,000		134,000
4.00%, 10/02/23		350,000		368,287
6.05%, 01/11/40		300,000		365,100
4.75%, 03/08/44		200,000		205,000

				2,312,037


Panama 0.0%
Panama Government International Bond
5.20%, 01/30/20		100,000		112,100
6.70%, 01/26/36		200,000		247,700

				359,800


Peru 0.0%
Peruvian Government International Bond
7.13%, 03/30/19		250,000		305,625

				305,625


Philippines 0.1%
Philippine Government International Bond
4.20%, 01/21/24		300,000		317,625
5.50%, 03/30/26		600,000		694,500

				1,012,125


Poland 0.1%
Poland Government International Bond
5.00%, 10/19/15		150,000		158,888
3.00%, 03/17/23		300,000		292,200

				451,088


Republic of Korea 0.1%
Republic of Korea
7.13%, 04/16/19		150,000		185,259
3.88%, 09/11/23		250,000		270,553

				455,812


South Africa 0.1%
South Africa Government International Bond
4.67%, 01/17/24		600,000		614,250

				614,250


Turkey 0.3%
Turkey Government International Bond
6.75%, 04/03/18		200,000		226,300
7.00%, 03/11/19		250,000		288,687
5.63%, 03/30/21		500,000		547,500
7.38%, 02/05/25		500,000		608,750
4.88%, 04/16/43		500,000		472,500

				2,143,737

				11,227,190

*Supranational 1.6%**
African Development Bank
2.50%, 03/15/16		150,000		155,295
0.88%, 05/15/17		200,000		199,908
Asian Development Bank
2.50%, 03/15/16		150,000		155,322
1.13%, 03/15/17		650,000		655,610
European Bank for Reconstruction & Development
1.63%, 09/03/15		500,000		507,848

See financial notes 43

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
1.00%, 02/16/17		750,000		753,613
European Investment Bank
4.63%, 10/20/15		400,000		422,691
0.63%, 04/15/16		550,000		551,867
2.50%, 05/16/16		500,000		519,003
0.50%, 08/15/16		500,000		499,628
5.13%, 05/30/17		1,000,000		1,120,659
1.00%, 06/15/18		250,000		246,710
1.88%, 03/15/19		350,000		353,432
4.00%, 02/16/21		700,000		778,459
Inter-American Development Bank
5.13%, 09/13/16		100,000		109,685
1.13%, 03/15/17		500,000		505,763
1.75%, 08/24/18		250,000		253,675
3.88%, 02/14/20		200,000		221,209
3.88%, 10/28/41		100,000		100,212
3.20%, 08/07/42		100,000		89,527
4.38%, 01/24/44		150,000		164,328
International Bank for Reconstruction & Development
2.13%, 03/15/16		400,000		412,028
0.50%, 04/15/16		350,000		350,455
0.88%, 04/17/17		350,000		350,901
1.88%, 03/15/19		750,000		761,596
International Finance Corp.
1.13%, 11/23/16		350,000		352,846
2.13%, 11/17/17		500,000		517,436
1.25%, 07/16/18		250,000		249,329
1.75%, 09/04/18		300,000		303,694
Nordic Investment Bank
0.50%, 04/14/16		250,000		250,296

				11,913,025

Total Foreign Securities
(Cost $38,345,556)				38,716,100




Mortgage-Backed Securities 28.8% of net assets

U.S. Government Agency Mortgages 28.8%
Fannie Mae
5.50%, 06/01/15 to 09/01/38 (b)		4,685,911		5,260,708
7.00%, 08/01/16 to 04/01/37 (b)		104,566		115,449
6.00%, 12/01/16 to 10/01/39 (b)		2,653,268		2,999,972
5.00%, 02/01/18 to 08/01/41 (b)		6,349,768		7,071,804
4.50%, 03/01/18 to 01/01/44 (b)		10,986,169		11,945,555
4.00%, 05/01/18 to 05/01/44 (b)		14,341,483		15,271,494
3.50%, 10/01/18 to 09/01/43 (b)		16,856,012		17,468,530
6.50%, 05/01/19 to 10/01/39 (b)		698,887		786,736
2.50%, 05/01/23 to 09/01/28 (b)		4,837,445		4,924,059
3.00%, 09/01/23 to 07/01/43 (b)		19,316,895		19,354,492
8.50%, 05/01/25 (b)		4,406		5,036
2.00%, 02/01/28 to 09/01/28 (b)		276,084		272,983
2.14%, 10/01/35 (a)(b)		264,668		279,439
1.79%, 05/01/38 (a)(b)		241,125		257,635
3.33%, 04/01/40 (a)(b)		90,845		96,231
3.62%, 05/01/40 (a)(b)		76,850		82,340
Fannie Mae TBA
2.00%, 08/01/29 (b)		500,000		492,988
2.50%, 08/01/29 to 07/01/44 (b)		1,500,000		1,487,891
3.00%, 08/01/29 to 07/01/44 (b)		1,700,000		1,728,461
3.50%, 08/01/29 to 07/01/44 (b)		2,600,000		2,707,781
4.00%, 07/01/44 to 08/01/44 (b)		4,400,000		4,665,180
4.50%, 07/01/44 (b)		1,100,000		1,191,610
Freddie Mac
5.50%, 07/01/15 to 05/01/40 (b)		2,741,070		3,067,261
7.50%, 09/01/16 (b)		1,775		1,849
6.50%, 03/01/17 to 09/01/39 (b)		940,352		1,054,312
6.00%, 04/01/17 to 10/01/38 (b)		1,735,541		1,959,556
4.00%, 04/01/18 to 07/01/44 (b)		8,914,790		9,479,127
4.50%, 04/01/18 to 09/01/42 (b)		5,162,187		5,612,575
5.00%, 06/01/18 to 12/01/43 (b)		4,724,674		5,233,227
3.50%, 02/01/26 to 07/01/43 (b)		8,740,186		9,022,670
3.00%, 07/01/26 to 09/01/43 (b)		10,222,211		10,272,489
2.50%, 07/01/27 to 02/01/43 (b)		3,398,567		3,450,795
2.00%, 10/01/27 to 04/01/28 (b)		136,805		135,212
Freddie Mac TBA
2.00%, 08/01/29 (b)		500,000		492,246
2.50%, 08/01/29 to 08/01/44 (b)		800,000		803,380
3.50%, 08/01/29 to 07/01/44 (b)		1,400,000		1,466,203
3.00%, 07/01/44 (b)		1,300,000		1,282,835
4.50%, 07/01/44 (b)		1,900,000		2,056,931
4.00%, 08/01/44 (b)		1,100,000		1,162,412
Ginnie Mae
5.00%, 11/15/17 to 02/20/44 (b)		5,167,453		5,732,959
6.50%, 05/15/24 (b)		6,518		7,412
4.00%, 04/20/26 to 05/20/44 (a)(b)		8,772,509		9,400,468
5.50%, 04/20/26 to 07/20/38 (b)		1,034,410		1,170,658
3.50%, 05/20/26 to 05/20/44 (a)(b)		9,666,448		10,094,275
3.00%, 02/20/27 to 07/20/43 (a)(b)		7,553,884		7,680,322
2.50%, 01/20/28 to 02/20/43 (b)		470,998		482,031

44 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
2.00%, 07/20/28 (b)		23,172		22,913
1.63%, 04/20/32 (a)(b)		183,121		190,705
4.50%, 02/20/34 to 03/20/44 (b)		8,694,787		9,512,568
6.00%, 02/15/37 to 12/15/38 (b)		901,829		1,021,770
4.00%, 10/20/37 (a)(b)		39,994		42,025
1.63%, 08/20/38 to 03/20/40 (a)(b)		467,353		481,255
2.00%, 03/20/40 to 05/20/43 (a)(b)		686,652		704,414
2.50%, 02/20/44 (a)(b)		210,027		214,523
Ginnie Mae TBA
4.50%, 07/01/44 (b)		400,000		436,891
5.50%, 07/01/44 (b)		600,000		670,149
2.50%, 08/01/44 (b)		300,000		288,938
3.00%, 08/01/44 (b)		3,900,000		3,924,313
3.50%, 08/01/44 (b)		3,900,000		4,051,984
4.00%, 08/01/44 (b)		2,400,000		2,562,000

Total Mortgage-Backed Securities
(Cost $210,869,439)				213,712,027




Municipal Bonds 1.0% of net assets

Fixed-Rate Obligations 1.0%
Bay Area Toll Authority
RB (Build America Bonds) Series 2010S3
6.91%, 10/01/50		100,000		141,762
California
GO (Build America Bonds) Series 2009
7.50%, 04/01/34		300,000		427,350
GO (Build America Bonds) Series 2010
7.95%, 03/01/36 (b)		350,000		427,000
GO (Build America Bonds) Series 2009
7.55%, 04/01/39		400,000		601,728
Catholic Health Initiatives
1.60%, 11/01/17		100,000		98,494
4.35%, 11/01/42		225,000		216,467
Commonwealth of Massachusetts
GO (Build America Bonds) Series 2009
5.46%, 12/01/39		100,000		119,726
Connecticut
GO Bonds Series 2008A
5.85%, 03/15/32		200,000		243,134
Dallas County Hospital District
GO (Build America Bonds) Series C
5.62%, 08/15/44		150,000		182,988
Georgia
GO (Build America Bonds) Series H
4.50%, 11/01/25		800,000		898,008
Grand Parkway Transportation Corp.
RB Series 2013E
5.18%, 10/01/42		200,000		232,126
Illinois
GO Bonds (Pension Funding) Series 2003
4.95%, 06/01/23		100,000		105,681
GO Bonds (Pension Funding) Series 2003
5.10%, 06/01/33		500,000		502,860
JobsOhio Beverage System
RB (Build America Bonds) Series B
3.99%, 01/01/29		250,000		251,435
Los Angeles USD
GO (Build America Bonds) Series 2010
6.76%, 07/01/34		200,000		268,068
Metropolitan Government of Nashville & Davidson County
GO (Build America Bonds) Series 2010
5.71%, 07/01/34		20,000		22,730
Metropolitan Transportation Authority
RB (Build America Bonds) Series E
6.81%, 11/15/40		150,000		202,527
New Jersey State Turnpike Authority
RB (Build America Bonds) Series 2010A
7.10%, 01/01/41		100,000		140,181
New Jersey Transportation Trust Fund Authority
RB (Build America Bonds) Series 2010C
5.75%, 12/15/28		150,000		173,729
New York City Municipal Water Finance Authority
Water System RB (Build America Bonds) Series 2009
5.75%, 06/15/41		200,000		249,350
Water System RB (Build America Bonds) Series 2011CC
5.88%, 06/15/44		250,000		321,083
New York City Transitional Finance Authority
RB (Build America Bonds) Series 2011A1
5.51%, 08/01/37		200,000		240,498
President & Fellows of Harvard College
3.62%, 10/01/37		350,000		333,686
San Francisco City & County Public Utilities Commission
Water System RB (Build America Bonds) Series 2010DE
6.00%, 11/01/40		430,000		541,262
Texas Transportation Commission
RB (Build America Bonds) Series B
5.03%, 04/01/26		200,000		233,158

Total Municipal Bonds
(Cost $6,993,490)				7,175,031




U.S. Government and Government Agencies 38.7% of net assets

U.S. Government Agency Securities 3.6%
Fannie Mae
1.63%, 10/26/15		2,032,000		2,067,003
0.75%, 04/20/17		900,000		896,113
1.13%, 04/27/17		769,000		773,087
2.00%, 05/16/17 (b)		2,500,000		2,569,162
0.88%, 08/28/17		1,172,000		1,166,039
1.00%, 10/16/17 (b)		150,000		149,048
0.88%, 02/08/18		350,000		345,337
0.88%, 05/21/18		1,250,000		1,229,489
1.13%, 05/25/18 (b)		300,000		295,944
1.88%, 02/19/19		1,500,000		1,520,707
2.25%, 10/17/22 (b)		300,000		287,197
7.13%, 01/15/30		277,000		405,542
Federal Farm Credit Bank
4.88%, 12/16/15		321,000		342,338
0.54%, 11/07/16 (b)		500,000		498,632
Federal Home Loan Bank
0.50%, 11/20/15		1,850,000		1,854,803
1.00%, 06/21/17		1,585,000		1,591,408

See financial notes 45

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
1.00%, 11/09/17 (b)		500,000		496,409
5.00%, 11/17/17		1,185,000		1,337,992
Freddie Mac
0.50%, 06/06/16 (b)		500,000		499,985
0.88%, 02/22/17		1,650,000		1,653,186
1.00%, 07/28/17		119,000		119,127
1.00%, 09/29/17		350,000		349,445
0.88%, 03/07/18		2,750,000		2,711,714
2.38%, 01/13/22		2,351,000		2,347,984
3.00%, 01/18/28 (b)		200,000		187,197
6.75%, 03/15/31		264,000		379,451
Tennessee Valley Authority
6.75%, 11/01/25		488,000		653,096

				26,727,435

U.S. Treasury Obligations 35.1%
U.S. Treasury Bonds
9.13%, 05/15/18		2,301,000		2,994,087
8.00%, 11/15/21		2,121,000		2,971,720
6.00%, 02/15/26		880,000		1,176,587
6.75%, 08/15/26		1,307,000		1,860,637
6.13%, 11/15/27		2,356,000		3,236,371
5.25%, 02/15/29		1,804,000		2,313,208
6.25%, 05/15/30		1,466,000		2,084,010
4.75%, 02/15/37		1,566,000		1,969,123
4.38%, 02/15/38		2,337,000		2,790,890
3.50%, 02/15/39		1,453,000		1,516,569
4.38%, 11/15/39		866,000		1,037,305
4.63%, 02/15/40		805,000		1,001,344
4.25%, 11/15/40		202,000		237,934
3.75%, 08/15/41		1,602,000		1,740,672
3.13%, 02/15/42		2,901,000		2,807,623
3.00%, 05/15/42		1,473,000		1,389,684
2.75%, 08/15/42		2,663,000		2,382,344
2.75%, 11/15/42		1,695,000		1,513,450
2.88%, 05/15/43		1,183,000		1,081,335
3.63%, 08/15/43		1,612,000		1,703,052
3.75%, 11/15/43		314,000		339,169
3.63%, 02/15/44		3,005,000		3,171,684
3.38%, 05/15/44		1,000,000		1,006,875
U.S. Treasury Notes
0.25%, 07/31/15		3,500,000		3,503,895
1.75%, 07/31/15		5,302,000		5,393,958
0.25%, 08/15/15		6,250,000		6,256,350
0.25%, 09/15/15		4,349,000		4,353,840
1.25%, 10/31/15		6,526,000		6,618,539
0.25%, 12/15/15		3,071,000		3,071,780
0.38%, 01/15/16		6,545,000		6,555,740
0.38%, 02/15/16		2,847,000		2,850,616
0.25%, 02/29/16		2,640,000		2,637,629
2.13%, 02/29/16 (h)		1,165,000		1,200,110
0.38%, 03/15/16		6,390,000		6,394,122
0.38%, 03/31/16		2,112,000		2,112,577
0.38%, 04/30/16		2,500,000		2,499,415
2.00%, 04/30/16 (h)		2,272,000		2,339,228
2.63%, 04/30/16		3,374,000		3,512,520
0.25%, 05/15/16		1,200,000		1,196,719
0.38%, 05/31/16		2,000,000		1,998,320
3.25%, 05/31/16		1,036,000		1,092,373
0.50%, 06/30/16		5,000,000		5,004,490
1.50%, 06/30/16 (h)		2,658,000		2,713,029
0.63%, 07/15/16		2,148,000		2,154,713
1.00%, 08/31/16		1,074,000		1,085,244
1.00%, 09/30/16		2,148,000		2,169,145
3.00%, 09/30/16		1,668,000		1,759,870
0.63%, 10/15/16		5,924,000		5,930,712
0.63%, 11/15/16		1,612,000		1,612,503
0.88%, 12/31/16		2,148,000		2,159,410
0.75%, 01/15/17		1,612,000		1,614,834
0.88%, 01/31/17		2,148,000		2,157,816
0.88%, 02/28/17		2,112,000		2,120,085
0.75%, 03/15/17		3,175,000		3,175,124
3.25%, 03/31/17		2,245,000		2,396,888
0.88%, 04/15/17		2,750,000		2,756,875
0.88%, 04/30/17		2,750,000		2,755,156
0.63%, 05/31/17		4,193,000		4,165,486
0.63%, 08/31/17 (h)		2,822,000		2,791,466
1.88%, 08/31/17		3,293,600		3,387,649
1.88%, 09/30/17		1,986,000		2,041,235
0.75%, 10/31/17		3,800,000		3,763,782
1.88%, 10/31/17 (h)		1,723,000		1,771,123
0.75%, 12/31/17		1,725,000		1,703,370
0.75%, 02/28/18		1,052,000		1,035,604
2.88%, 03/31/18 (h)		1,965,000		2,086,431
0.63%, 04/30/18		2,425,000		2,368,068
2.63%, 04/30/18 (h)		3,066,000		3,226,726
1.38%, 06/30/18		1,598,000		1,601,808
1.50%, 08/31/18		1,074,000		1,079,705
1.38%, 09/30/18		4,135,000		4,130,315
1.25%, 10/31/18		2,693,000		2,672,487
1.25%, 11/30/18		1,612,000		1,597,581
1.50%, 12/31/18		2,148,000		2,149,343
1.25%, 01/31/19		2,094,000		2,070,688
1.50%, 01/31/19		2,148,000		2,146,909
1.38%, 02/28/19		1,584,000		1,572,614
1.50%, 02/28/19		1,320,000		1,317,938
1.63%, 03/31/19		3,967,000		3,978,933
1.25%, 04/30/19		1,799,000		1,772,296
1.63%, 04/30/19		1,500,000		1,502,988
1.13%, 05/31/19		1,500,000		1,466,367
1.50%, 05/31/19		2,875,000		2,860,737
1.63%, 06/30/19		1,000,000		1,000,039
0.88%, 07/31/19 (h)		3,257,000		3,132,319
3.38%, 11/15/19		3,069,700		3,336,260
1.00%, 11/30/19		1,464,000		1,407,498
1.38%, 01/31/20		2,794,000		2,732,445
1.13%, 03/31/20		1,366,000		1,312,961
1.88%, 06/30/20		1,328,000		1,326,963
2.63%, 08/15/20		1,753,000		1,824,764
2.63%, 11/15/20		2,574,000		2,674,144
2.38%, 12/31/20		4,037,000		4,124,680
3.63%, 02/15/21 (h)		1,977,000		2,176,321
2.00%, 02/28/21		1,939,000		1,931,426
2.25%, 03/31/21		1,556,000		1,572,957
2.25%, 04/30/21		2,750,000		2,777,285
2.00%, 05/31/21		2,500,000		2,481,543
2.13%, 06/30/21		1,000,000		999,922
2.13%, 08/15/21		2,143,900		2,142,895
1.63%, 08/15/22		1,935,000		1,837,342
1.63%, 11/15/22		2,149,000		2,031,308
2.00%, 02/15/23		1,574,000		1,528,502
2.50%, 08/15/23		2,148,000		2,161,090
2.75%, 11/15/23		3,499,000		3,586,611

46 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
2.75%, 02/15/24		3,084,000		3,154,352
2.50%, 05/15/24		1,000,000		998,672

				259,993,246

Total U.S. Government and Government Agencies
(Cost $286,940,195)				286,720,681



	Number		Value
Security	of Shares		($)

Other Investment Company 0.9% of net assets

Money Market Fund 0.9%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (e)		6,514,302		6,514,302

Total Other Investment Company
(Cost $6,514,302)				6,514,302



Security	Face		Value
Rate, Maturity Date	Amount ($)		($)

Short-Term Investments 4.0% of net assets

U.S. Government Agency Securities 4.0%
Federal Home Loan Bank
0.01%, 07/15/14 (f)		15,000,000		14,999,941
0.04%, 07/18/14 (f)		15,000,000		14,999,717

Total Short-Term Investments
(Cost $29,999,658)				29,999,658



End of Investments

At 06/30/14, the tax basis cost of the fund’s investments was $766,387,831 and the unrealized appreciation and depreciation were $9,631,963 and ($2,907,146), respectively, with a net unrealized appreciation of $6,724,817.


*		Supranational bonds represent the debt of international organizations or institutions such as the World Bank, the International Monetary Fund, regional multilateral development banks and others.
(a)		Variable-rate security.
(b)		The effective maturity may be shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or as the result of embedded demand features (puts or calls).
(c)		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $2,709,160 or 0.4% of net assets.
(d)		Guaranteed by the Republic of Germany.
(e)		The rate shown is the 7-day yield.
(f)		The rate shown is the purchase yield.
(g)		Delayed-delivery security.
(h)		All or a portion of this security is held as collateral for delayed-delivery securities.


GO —		General obligation
RB —		Revenue bond
REIT —		Real Estate Investment Trust
USD —		Unified school district

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2014 (see financial note 2(a) for additional information):


	Quoted Prices in				Significant
	Active Markets for		Other Significant		Unobservable
	Identical Assets		Observable Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total

Asset-Backed Obligations		$—		$3,615,389		$—		$3,615,389
Commercial Mortgage-Backed Securities		—		15,504,402		—		15,504,402
Corporate Bonds¹		—		171,155,058		—		171,155,058
Foreign Securities¹		—		38,716,100		—		38,716,100
Mortgage-Backed Securities¹		—		213,712,027		—		213,712,027
Municipal Bonds¹		—		7,175,031		—		7,175,031
U.S. Government and Government Agencies¹		—		286,720,681		—		286,720,681
Other Investment Company¹		6,514,302		—		—		6,514,302
Short-Term Investments¹		—		29,999,658		—		29,999,658

Total		$6,514,302		$766,598,346		$—		$773,112,648


¹		As categorized in Portfolio Holdings.

See financial notes 47

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued

Balance

Change in

Balance

as of

Realized

Unrealized

Gross

as of

December 31,

Gains

Gross

Transfers

June 30,

Investments in Securities

2013

(Losses)

Purchases

Sales

out

2014

Corporate Bonds

$96,750

$—

($96,750

)

$—

Total

$96,750

$—

($96,750

)

$—

The fund’s policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were transfers from Level 3 to Level 2 due to a change in pricing methodology. There were no transfers between Level 1 and Level 2 for the period ended June 30, 2014.

48 See financial notes

Schwab U.S. Aggregate Bond ETF

Statement of

Assets and Liabilities

As of June 30, 2014; unaudited



Assets

Investments, at value (cost $766,304,444)		$773,112,648
Receivables:
Investments sold		24,302,670
Fund shares sold		5,177,624
Interest	+	4,220,548

Total assets		806,813,490

Liabilities

Payables:
Investments bought		65,602,299
Investment adviser fees		3,094
Due to custodian		1,043
Accrued expenses	+	603

Total liabilities		65,607,039

Net Assets

Total assets		806,813,490
Total liabilities	—	65,607,039

Net assets		$741,206,451

Net Assets by Source
Capital received from investors		737,272,479
Net investment income not yet distributed		707,669
Net realized capital losses		(3,581,901	)
Net unrealized capital appreciation		6,808,204

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$741,206,451

14,300,000

$51.83

See financial notes 49

Schwab U.S. Aggregate Bond ETF

Statement of

Operations

For the period January 1, 2014 through June 30, 2014; unaudited



Investment Income

Interest		$5,977,069*

Expenses

Investment adviser fees		149,610
Interest expense	+	2,334*

Total expenses	−	151,944

Net investment income		5,825,125

Realized and Unrealized Gains (Losses)

Net realized gains on investments		909,198
Net realized gains on in-kind redemptions	+	26,325

Net realized gains		935,523
Net change in unrealized appreciation (depreciation) on investments	+	16,068,475

Net realized and unrealized gains		17,003,998

Increase in net assets resulting from operations		$22,829,123


*		Includes $2,520 in interest income and $2,334 in interest expense related to charges on Agency Mortgage-Backed Securities not received or delivered on a timely basis (see financial note 2f).

50 See financial notes

Schwab U.S. Aggregate Bond ETF

Statements of

Changes in Net Assets

For the current and prior report periods
Figures for the current period are unaudited



Operations


1/1/14-6/30/14				1/1/13-12/31/13
Net investment income		$5,825,125			$6,969,676
Net realized gains (losses)		935,523			(2,053,425	)
Net change in unrealized appreciation (depreciation)	+	16,068,475			(15,634,974	)

Increase (Decrease) in net assets resulting from operations		22,829,123			(10,718,723	)

Distributions to Shareholders

Distributions from net investment income		($5,119,070	)		($8,792,880	)

Transactions in Fund Shares

1/1/14-6/30/14

1/1/13-12/31/13

SHARES

VALUE

SHARES

VALUE

Shares sold

4,500,000

$230,820,708

2,900,000

$149,889,900

Shares redeemed

(100,000

)

(5,125,035

)

(400,001

)

(20,531,254

)

Net transactions in fund shares

4,400,000

$225,695,673

2,499,999

$129,358,646

Shares Outstanding and Net Assets

1/1/14-6/30/14

1/1/13-12/31/13

SHARES

NET ASSETS

SHARES

NET ASSETS

Beginning of period

9,900,000

$497,800,725

7,400,001

$387,953,682

Total increase

4,400,000

243,405,726

2,499,999

109,847,043

End of period

14,300,000

$741,206,451

9,900,000

$497,800,725

Net investment income not yet distributed

$707,669

$1,614

See financial notes 51

Schwab Fixed-Income ETFs

Financial Notes, unaudited

1. Business Structure of the Funds

Each of the funds in this report is a series of Schwab Strategic Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the operational funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:



Schwab Strategic Trust (organized January 27, 2009)		Schwab U.S. Dividend Equity ETF
Schwab U.S. TIPS ETF		Schwab International Equity ETF
Schwab U.S. Short-Term U.S. Treasury ETF		Schwab International Small-Cap Equity ETF
Schwab U.S. Intermediate-Term U.S. Treasury ETF		Schwab Emerging Markets Equity ETF
Schwab U.S. Aggregate Bond ETF		Schwab U.S. REIT ETF
Schwab U.S. Broad Market ETF		Schwab Fundamental U.S. Broad Market Index ETF
Schwab U.S. Large-Cap ETF		Schwab Fundamental U.S. Large Company Index ETF
Schwab U.S. Large-Cap Growth ETF		Schwab Fundamental U.S. Small Company Index ETF
Schwab U.S. Large-Cap Value ETF		Schwab Fundamental International Large Company Index ETF
Schwab U.S. Mid-Cap ETF		Schwab Fundamental International Small Company Index ETF
Schwab U.S. Small-Cap ETF		Schwab Fundamental Emerging Markets Large Company Index ETF

The funds issue and redeem shares at their net asset value per share (“NAV”) only in large blocks of shares, typically 50,000 shares or more (“Creation Units”). These transactions are usually in exchange for a basket of securities and an amount of cash. As a practical matter, only institutions or large investors purchase or redeem Creation Units. Except when aggregated in Creation Units, shares of the fund are not redeemable securities.

Individual shares of the funds trade on national securities exchanges and elsewhere during the trading day and can only be bought and sold at market prices throughout the trading day through a broker-dealer. Because fund shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (premium) or less than NAV (discount).

Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.

2. Significant Accounting Policies:

The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services - Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the U.S. Securities and Exchange Commission (“SEC”).

(a) Security Valuation:

Under procedures approved by the funds’ Board of Trustees (the “Board”), the investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair market value. Among other things, these procedures allow the funds to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:


	•	Bonds and notes: Bonds and notes are valued at halfway between the most recent bid and ask quotes or, if such quotes are unavailable, at prices for securities of comparable maturity, credit quality and type. Valuations for bonds and notes are provided by independent bond-pricing services.

	•	Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):


		price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.


	•	Short-term securities (60 days or less to maturity): Short-term securities are valued at amortized cost, which approximates market value.

	•	Underlying funds: Mutual funds are valued at their respective NAVs. Exchange traded funds (“ETFs”) traded on a recognized securities exchange are valued at the last reported sale price that day or the official closing price, if applicable.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the valuation. If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.

The three levels of the fair value hierarchy are as follows:


	•	Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities and ETFs. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices.

	•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

	•	Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

The levels associated with valuing the funds’ investments as of June 30, 2014 are disclosed in the Portfolio Holdings.

(b) Accounting Policies for certain Portfolio Investments (if held):

Securities Lending: Under the trust’s Securities Lending Program, a fund (lender) may make short-term loans of its securities to another party (borrower) to generate additional revenue for the fund. The borrower pledges collateral in the form of cash, securities issued or fully guaranteed by the U.S. government or foreign governments, or letters of credit issued by a bank. Collateral at the individual loan level is required to be maintained on a daily marked-to-market basis in an amount at least equal to the current value of the securities loaned. The lending agent provides a fund with indemnification against borrower default (the borrower fails to return the security on loan) reducing the risk of loss as a result of default. The cash collateral of securities loaned is currently invested in money market portfolios operating under Rule 2a-7 of the 1940 Act. Each fund bears the risk of loss with respect to the investment of cash collateral. The terms of the securities lending agreement allow the funds to terminate any loans at any given time. Securities lending income, as disclosed in a fund’s Statement of Operations, if applicable, represents the income earned from the investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent and broker rebates which are subject to adjustments pursuant to the securities lending agreement. On loans not collateralized by cash, a fee is received from the borrower, and is allocated between a fund and the lending agent. A fund retains the right to recall a security on loan. The aggregate market value of securities loaned will not at any time exceed one-third of the total assets of a fund, including collateral received from the loan (at market value computed at the time of the loan). Total costs and expenses, including agent fees, associated with securities lending activities under the trust’s Securities Lending Program paid to the unaffiliated lending agent are approximately 15% of the gross lending revenues.

Inflation-Protected Securities: The Schwab U.S. TIPS ETF invests in inflation-protected securities. Inflation-protected securities are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. Over the life of an inflation-protected security, interest is paid based on a fixed percentage of the inflation-adjusted principal value. Any increase or decrease in the principal amount of an inflation-protected security will be included as interest income on the Statement of Operations, even though investors do not receive their principal until maturity.

TBA Commitments: The Schwab U.S. Aggregate Bond ETF may enter into “TBA” (to be announced) commitments to purchase or sell securities for a fixed price at a future date. Payments or proceeds of TBA commitments are not delivered until the contractual settlement date. Unsettled TBA commitments are valued at the current market value generally according to the procedures described above in Security Valuation section. The fund’s use of TBA commitments may cause the fund to experience higher portfolio turnover and higher transaction costs.

Agency MBS Transactions: In November 2012, the Treasury Market Practices Group (an industry group sponsored by the Federal Reserve Bank of New York) recommended the margining of certain forward-settling Agency MBS transactions to reduce counterparty and systemic risks. The Treasury Market Practices Group recommended market participants exchange two-way variation margin on a regular basis. In April 2014, the Schwab U.S. Aggregate Bond ETF began posting variation margin with certain counterparties in instances where the unrealized gain/loss on such transactions exceeded certain pre-determined thresholds.

(c) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains or losses from security transactions are based on the identified costs of the securities involved. Gains and losses from paydowns on mortgage and asset backed securities are recorded as adjustments to interest income.

(d) Investment Income:

Interest income is recorded as it accrues. If a fund buys a debt security at a discount (less than face value) or a premium (more than face value), it amortizes premiums and accretes discounts from the current date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. If the security is callable (meaning that the issuer has the option to pay it off before its maturity date), then the fund amortizes the premium to the security’s call date and price, rather than the maturity date and price.

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(e) Expenses:

Pursuant to the Investment Advisory Agreement (“Advisory Agreement”) between Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”) and the trust, the investment adviser will pay the operating expenses of each fund, excluding interest expense, taxes, any brokerage expenses, and extraordinary or non-routine expenses. Interest expense, taxes, any brokerage expenses and extraordinary or non-routine expenses that are specific to a fund are charged directly to the fund.

(f) Agency Mortgage-Backed Securities Charges:

Due to market conditions or other reasons, delivery of agency debt and agency mortgage-backed securities may not occur on a timely basis. In these instances, the fund may fail to receive a security purchased causing the fund to be unable to deliver a security sold. The Treasury Market Practices Group (an industry group sponsored by the Federal Reserve Bank of New York) recommended voluntary fail charges when agency debt and agency mortgage-backed securities are not delivered as agreed by the parties. During the period ended June 30, 2014, the Schwab U.S. Aggregate Bond ETF received $2,520 and paid out $2,334 for agency mortgaged-backed securities not received or delivered on a timely basis.

(g) Distributions to Shareholders:

The funds make distributions from net investment income, if any, monthly and from net realized capital gains, if any, once a year.

(h) Accounting Estimates:

The accounting policies described in this report conform to GAAP. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.

(i) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(j) Indemnification:

Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss attributable to these arrangements to be remote.

3. Risk Factors:

Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.

Market Risk. Bond markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that the shareholder could lose money.

Investment Style Risk. The funds are not actively managed. Therefore, the funds follow the securities included in the index during upturns as well as downturns. Because of their indexing strategy, the funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the funds’ expenses, the funds’ performance is normally below that of their respective index.

Interest Rate Risk. The funds are subject to the risk that interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, a fund’s yield will change over time. During periods when interest rates are low, a fund’s yield (and total return) also may be low. Changes in interest rates also may affect a fund’s share price: a sharp rise in interest rates

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

could cause a fund’s share price to fall. The longer a fund’s duration, the more sensitive to interest rate movements its share price is likely to be. Because interest rates in the United States are at, or near, historically low levels, a change in a central bank’s monetary policy (e.g., tapering of the Federal Reserve Board’s quantitative easing program) or improving economic conditions may result in an increase in interest rates. Rising interest rates may decrease liquidity in the fixed income securities markets, making it more difficult for a fund to sell its fixed income securities holdings at a time when the investment adviser might wish to sell such securities. In addition, decreased market liquidity may make it more difficult to value some or all of a fund’s fixed income securities holdings.

Credit Risk. The funds are subject to the risk that a decline in the credit quality of a portfolio investment could cause the funds to lose money or underperform. The funds could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest payments or otherwise honor its obligations.

Inflation Protected Security Risk. The value of inflation-protected securities, including TIPS, generally will fluctuate in response to changes in “real” interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall. Real interest rates represent nominal (or stated) interest rates reduced by the expected impact of inflation. In addition, interest payments on inflation-indexed securities will generally vary up or down along with the rate of inflation.

Sampling Index Tracking Risk. To the extent a fund uses statistical sampling techniques, the fund may not fully replicate the index and may hold securities not included in the index. As a result, a fund is subject to the risk that the Adviser’s investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. If a fund uses a sampling approach, it may not track the return of the index as well as it would if a fund purchased all of the securities in its benchmark index.

Tracking Error Risk. As index funds, the funds seek to track the performance of their benchmark index, although they may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called “tracking error”. Tracking error can be caused by many factors and it may be significant. For example, a fund may not invest in certain securities in its benchmark index or match the securities’ weighting to the benchmark.

Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase or sell. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer, including, for example, during periods of rising interest rates. In addition, dealer inventories of certain securities — an indication of the ability of dealers to engage in “market making” — are at, or near, historic lows in relation to market size, which could potentially lead to decreased liquidity. A fund’s investments in illiquid securities may reduce the returns of the fund because it may be unable to sell the illiquid securities at an advantageous time or price. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.

Securities Lending Risk. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.

Shares of the Fund May Trade at Prices Other Than NAV. Fund shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of the shares of a fund will approximate the fund’s NAV, there may be times when the market price and the NAV vary significantly. Investors may pay more than NAV when they buy shares of a fund in the secondary market, and may receive less than NAV when they sell those shares in the secondary market.

Market Trading Risk. Although fund shares are listed on national securities exchanges, there can be no assurance that an active trading market for fund shares will develop or be maintained. If an active market is not maintained, investors may find it difficult to buy or sell fund shares.

Non-U.S. Issuer Risk. Schwab U.S. Aggregate Bond ETF may invest in U.S.-registered, dollar-denominated bonds of non-U.S. corporations, governments, agencies and supra-national entities to the extent such bonds are included in the fund’s index. The fund’s investments in bonds of non-U.S. issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with bonds issued by non-U.S. corporations and entities in emerging markets.

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

Mortgage-Backed and Mortgage Pass-Through Securities Risk. With respect to the Schwab U.S. Aggregate Bond ETF, certain of the mortgage-backed securities in which the fund may invest are not backed by the full faith and credit of the U.S. government and there can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. Because of prepayment and extension risk, mortgage-backed securities react differently to changes in interest rates than other bonds. Small movements in interest rates — both increases and decreases — may quickly and significantly affect the value of certain mortgage-backed securities. Transactions in mortgage pass-through securities primarily occur through TBA transactions, as described in the fund’s prospectus. Default by or bankruptcy of a counterparty to a TBA transaction would expose the fund to possible losses because of an adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction.

Prepayment and Extension Risk. Certain of the funds’ investments are subject to the risk that the securities may be paid off earlier or later than expected. Either situation could cause a fund to hold securities paying lower than market rates of interest, which could hurt the fund’s yield or share price.

Derivatives Risk. Schwab U.S. Aggregate bond ETF may invest in derivatives instruments. The principal types of derivatives the fund may use are futures contracts. A futures contract is an agreement to buy or sell a financial instrument at a specific price on a specific day. The fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Certain of these risks, such as market risk, liquidity risk, and credit risk are discussed elsewhere in this section. The fund’s use of derivatives is also subject to leverage risk, lack of availability risk, valuation risk, correlation risk and tax risk. Leverage risk is the risk that use of derivatives may magnify the effect of any decrease or increase in the value of the fund’s portfolio securities. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Valuation risk is the risk that a particular derivative may be valued incorrectly. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Tax risk is the risk that the use of derivatives may cause the fund to realize higher amounts of short-term capital gain. These risks could cause the fund to lose more than the principal amount invested.

Concentration Risk. To the extent that a fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.

Lack of Government Insurance or Guarantee. An investment in a fund is not a bank deposit and it is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.

4. Affiliates and Affiliated Transactions:

CSIM, a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser pursuant to an Advisory Agreement between CSIM and the trust.

For its advisory services to the funds, CSIM is entitled to receive an annual fee, payable monthly, based on a percentage of each fund’s average daily net assets as follows:

Schwab

Schwab U.S.

Schwab

Short-Term

Intermediate-Term

Aggregate

U.S. TIPS ETF

U.S. Treasury ETF

Bond ETF

0.07%

0.08%

0.10%

0.05%

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

Certain Schwab funds may own shares of other Schwab funds. The table below reflects the percentages of shares of each fund in this report that are owned by other Schwab funds as of June 30, 2014, as applicable:


			Schwab
	Schwab		Intermediate-Term
	U.S. TIPS ETF		U.S. Treasury ETF

Schwab VIT Balanced Portfolio		0.1%		2.2%
Schwab VIT Balanced with Growth Portfolio		0.3%		3.5%
Schwab VIT Growth Portfolio		0.2%		2.1%

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds including Schwab ETFs. All loans are for temporary or emergency purposes only. The interest rate to be charged on a loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board. The funds had no interfund borrowing or lending activity during the period.

5. Other Service Providers:

SEI Investments Distribution Co. is the principal underwriter and distributor of shares of the funds.

State Street Bank and Trust Company (“State Street”) serves as the funds’ transfer agent. As part of these services, the transfer agent maintains records pertaining to the sale, redemption and transfer of the funds’ shares.

State Street also serves as custodian and accountant for the funds. The custodian is responsible for the daily safekeeping of securities and cash held by the funds. The funds’ accountant maintains all books and records related to the funds’ transactions.

6. Board of Trustees:

The Board may include people who are officers and/or directors of CSIM or its affiliate. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees. For information regarding the trustees please refer to Trustees and Officers table at the end of this report.

7. Borrowing from Banks:

The funds have access to custodian overdraft facilities and to an uncommitted line of credit of $100 million with State Street. The funds pay interest on the amounts they borrow at rates that are negotiated periodically.

There were no borrowings from the line of credit by the funds during the period. However, the funds may have utilized their overdraft facility and incurred interest expense, which is disclosed on the funds’ Statements of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

8. Purchases and Sales/Maturities of Investment Securities:

For the period ended June 30, 2014, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:


	Purchases of Long-Term
	U.S. Government		Purchases of Other		Total Purchases of
	Securities		Long-Term Securities		Long-Term Securities

Schwab U.S. TIPS ETF		$45,643,463		$—		$45,643,463
Schwab Short-Term U.S. Treasury ETF		275,381,363		—		275,381,363
Schwab Intermediate-Term U.S. Treasury ETF		54,802,223		—		54,802,223
Schwab U.S. Aggregate Bond ETF		387,723,919		99,591,120		487,315,039

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

8. Purchases and Sales/Maturities of Investment Securities (continued):


	Sales/Maturities of
	Long-Term
	U.S. Government		Sales/Maturities of		Total Sales/Maturities of
	Securities		Other Long-Term Securities		Long-Term Securities

Schwab U.S. TIPS ETF		$46,279,448		$—		$46,279,448
Schwab Short-Term U.S. Treasury ETF		274,071,340		—		274,071,340
Schwab Intermediate-Term U.S. Treasury ETF		54,714,558		—		54,714,558
Schwab U.S. Aggregate Bond ETF		254,314,643		22,403,998		276,718,641

9. In-Kind Transactions:

The consideration for the purchase of Creation Units of a fund generally consists of the in-kind deposit of a designated portfolio of fixed-income securities, which constitutes an optimized representation of the securities involved in a relevant fund’s underlying index, and an amount of cash. Investors purchasing and redeeming Creation Units are subject to a standard creation transaction fee and a standard redemption transaction fee paid to the custodian to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. Purchasers and redeemers of Creation Units for cash are subject to an additional variable charge paid to the fund that will offset the transaction costs to the fund of buying or selling portfolio securities. In addition, purchasers and redeemers of shares in Creation Units are responsible for payment of the costs of transferring securities to or out of the fund. From time to time, CSIM may cover the cost of any transaction fees when believed to be in the best interests of the fund.

The in-kind transactions for the period ended June 30, 2014 were as follows:


	In-Kind Purchases of Securities		In-Kind Sales of Securities

Schwab U.S. TIPS ETF		$59,419,660		$21,819,097
Schwab Short-Term U.S. Treasury ETF		101,785,043		2,488,838
Schwab Intermediate-Term U.S. Treasury ETF		72,618,720		106,148,485
Schwab U.S. Aggregate Bond ETF		17,526,470		1,757,355

For the period ended June 30, 2014, the funds realized net capital gains or losses resulting from in-kind redemptions of Creation Units. Because such gains or losses are not taxable to the funds and are not distributed to existing fund shareholders, the gains or losses are reclassified from accumulated net realized gains or losses to capital received from investors at the end of the funds’ tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the period ended June 30, 2014 are disclosed in the funds’ Statements of Operations.

10. Federal Income Taxes

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2013, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:

Schwab

Schwab U.S.

Schwab

Short-Term

Intermediate-Term

Aggregate

Expiration Date

U.S. TIPS ETF

U.S. Treasury ETF

Bond ETF

December 31, 2018

$39

$366

$2,072

$—

No expiration*

2,623,699

124,115

1,463,316

3,933,506

Total

$2,623,738

$124,481

$1,465,388

$3,933,506


*		As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss. However, such losses must be utilized prior to the pre-enactment capital losses, which may increase the likelihood that the pre-enactment capital losses may expire unused. Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as short-term capital loss, irrespective of the character of the original loss.

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

10. Federal Income Taxes (continued):

For tax purposes, realized net capital losses and late-year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended December 31, 2013, the funds had capital losses deferred as follows:

Schwab

Schwab U.S.

Schwab

Short-Term

Intermediate-Term

Aggregate

U.S. TIPS ETF

U.S. Treasury ETF

Bond ETF

Deferred capital losses

$1,422,345

$128,984

$17,175

$515,860

As of December 31, 2013, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended December 31, 2013, the funds did not incur any interest or penalties.

11. Subsequent Events:

Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.

Trustees and Officers

The tables below give information about the trustees and officers for the Schwab Strategic Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 97 funds.

The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.

Independent Trustees


Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served¹)	During the Past Five Years	the Trustee	Other Directorships

Robert W. Burns 1959 Trustee (Trustee of Schwab Strategic Trust since 2009.)	Retired/Private Investor (January 2009 – present); Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) and President, PIMCO Funds.	21	Director, PS Business Parks, Inc. (2005 – 2012).


Stephen Timothy Kochis 1946 Trustee (Trustee of Schwab Strategic Trust since 2012.)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant (wealth management) (January 2008 – April 2012).	21	None


Charles A. Ruffel 1956 Trustee (Trustee of Schwab Strategic Trust since 2009.)	Advisor (January 2008 – present) and Chief Executive Officer (January 1998 – January 2008), Asset International, Inc. (publisher of financial services information); Managing Partner and Co-Founder, Kudu Advisors, LLC (financial services) (June 2008 – present).	21	None

Interested Trustees


Name, Year of Birth,		Number of
and Position(s) with		Portfolios in
the trust; (Terms of		Fund Complex
office, and length of	Principal Occupations	Overseen by
Time Served)	During the Past Five Years	the Trustee	Other Directorships

Walter W. Bettinger II²1960 Trustee (Trustee of Schwab Strategic Trust since 2009.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services.	97	None

Officers of the Trust


Name, Year of Birth, and Position(s)
with the trust; (Terms of office, and
length of Time Served³)		Principal Occupations During the Past Five Years

Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Strategic Trust since 2010.)		Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010).


George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Strategic Trust since 2009.)		Senior Vice President and Chief Financial Officer (Nov. 2004 – present); Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).


Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer of Schwab Strategic Trust since 2011.)		Senior Vice President and Chief Investment Officer — Equities, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer — Equities, Schwab Funds and Laudus Funds (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).


Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of Schwab Strategic Trust since 2011.)		Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds and Laudus Funds (June 2011 – present); Senior Managing Director, Global Head of Active Fixed Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 – Jan. 2008).


David Lekich 1964 Chief Legal Officer and Secretary (Officer of Schwab Strategic Trust since 2011.)		Senior Vice President, Charles Schwab & Co., Inc. (Sept. 2011 – present); Senior Vice President and Chief Counsel, Charles Schwab Investment Management Inc. (Sept. 2011 – present); Vice President, Charles Schwab & Co., Inc., (March 2004 – Sept. 2011) and Charles Schwab Investment Management, Inc. (Jan 2011 – Sept. 2011); Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds (April 2011 – present); Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.


Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of Schwab Strategic Trust since 2009.)		Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (March 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).


¹		Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The Schwab ETF’s retirement policy requires that independent trustees retire by December 31 of the year in which the Trustee turns 72 or the Trustee’s twentieth year of service as an independent trustee, whichever comes first.
²		Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation, the parent company of the investment adviser.
³		The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board.

Glossary

ask See “offer.”

asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage to help offset risks and rewards, based on your goals, time horizon and risk tolerance.

asset-backed securities Bond or other debt securities that represent ownership in a pool of assets such as credit card debt.

asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.

authorized participant (AP) A large institutional investor that places orders for creation units with the funds’ distributor.

Barclays U.S. Aggregate Bond Index A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and hybrid ARM passthroughs), asset-backed securities, and commercial mortgage-backed securities.

Barclays U.S. TIPS Index (Series-L) A rules-based, market value-weighted index that tracks inflation-protected securities issued by the U.S. Treasury that have at least one year remaining to maturity, are rated investment grade, and have $250 million or more of outstanding face value.

Barclays U.S. 1 − 3 Year Treasury Bond Index An index that measures the performance of U.S. Treasury securities that have a remaining maturity of greater than or equal to one year and less than three years, are rated investment grade, and have $250 million or more of outstanding face value.

Barclays U.S. 3 − 10 Year Treasury Bond Index An index that measures the performance of U.S. Treasury securities that have a remaining maturity of greater than or equal to three years and less than 10 years, are rated investment grade, and have $250 million or more of outstanding face value.

bid The price at which someone is willing to buy a security.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

call An early repayment of a bond’s principal by the issuer, usually done because the issuer is able to refinance its bond debt at a lower rate.

call protection A term used in reference to a bond that cannot be called by the issuer before maturity, or at least for many years from the present date. A bond that offers call protection can more reliably be expected to provide a given yield over a given number of years than a bond that could be called (assuming both bonds are of the same credit quality).

capital gain, capital loss The difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.

commencement of operations The date that the first NAV was calculated.

coupon, coupon rate The annual rate of interest paid until maturity by the issuer of a debt security.

creation unit (C.U.) A basket of securities that is delivered by an authorized participant (AP) to the fund equal to the current holdings of the ETF, plus a designated cash component. In return, the APs receive a large block of ETF shares (typically 50,000 shares), which investors can then buy and sell in the secondary market.

credit quality The capacity of an issuer to make its interest and principal payments; an assessment typically rendered by an independent third-party organization.

credit risk The risk that a bond issuer may be unable to pay interest or principal to its bondholders.

duration A measure of an individual bond’s sensitivity to interest rates, expressed in years. Calculations of duration generally take into account the bond’s yield, interest payments, maturity date and call features.

weighted average duration A measure of the duration of all bonds in a fund’s portfolio, also expressed in years, based on the market value weighted average duration of each bond in the portfolio.

exchange A marketplace, or any organization or group that provides or maintains a marketplace for trading securities, options, futures, or commodities.

expense ratio The amount that is taken from the fund’s assets each year to cover the operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.

face value The value of a bond, note, mortgage or other security as given on the certificate or instrument. Face value is also referred to as par value or nominal value.

inception date The date that the shares began trading in the secondary market.

indicative optimized portfolio value (IOPV) A calculation disseminated by the stock exchange that approximates the fund’s NAV every 15 seconds throughout the trading day.

interest Payments to bondholders (usually made twice a year) as compensation for loaning the bond principal to the issuer.

interest rate risk The risk that a bond’s value will fluctuate if market interest rates change of are expected to change. Bond prices tend to move in the opposite direction of interest rates: when interest rates rise, bond prices tend to fall.

liquidity The ability to convert a security or asset quickly into cash.

market price return The return based on the change in market price per share of the fund over a given time period. Market price returns assume that dividends and capital gain distributions have been reinvested in the fund at market price.

maturity The maturity of a bond will generally be determined using a portfolio security’s final maturity date (date on which the final principal payment of a bond is scheduled to be paid); however, for securitized products, such as mortgage-backed securities and certain other asset-backed securities, maturity will be determined on an average life basis (weighted average time to receipt of all principal payments) by the investment

adviser. Because pre-payment rates of individual mortgage pools vary widely, the average life of a particular pool cannot be predicted precisely. For securities with embedded demand features, such as puts or calls, either the demand date or the final maturity date will be used depending on interest rates, yields and other market conditions. The average portfolio maturity of a fund is dollar-weighted based upon the market value of a fund’s securities at the time of the calculation.

mortgage-backed securities Bond or other debt securities that represent ownership in a pool of mortgage loans.

net asset value (NAV) The value of one share of a fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.

NAV return The return based on the change in NAV of the fund over a given time period. NAV returns assume that dividends and capital gain distributions have been reinvested in the fund.

offer (ask) The lowest price at which an individual is willing to sell a security.

open The price at which a security opened for trading on a given day.

outstanding shares, shares outstanding When speaking of the fund, indicates all shares currently held by investors.

prepayment risk The risk that a mortgage-backed security may be paid off early, typically because interest rates have fallen and the homeowners who hold the underlying mortgages have refinanced those mortgages at lower rates. In this type of situation, the investor who held the mortgage-backed security will usually have to settle for a lower rate when reinvesting the principal.

primary market The market that deals with the issuance of new securities.

replication If a fund uses a full replication method, the fund will invest substantially all of its assets proportionately in the securities included in the underlying index.

sampling If a fund uses a sampling method, the fund will not fully replicate the underlying index and may hold securities not included in the index. A fund that utilizes a sampling approach may not track the return of the index as closely as a fund that uses a full replication method.

secondary market The market in which investors purchase securities from other investors rather than directly from the issuing companies. Organized exchanges facilitate the trading of securities in the secondary market.

spread The gap between bid and ask prices of a security.

total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.

tracking error The difference between the performance of the fund and its benchmark index, positive or negative.

Treasury inflation protected security (TIPS) A United States Treasury bond whose principal increases at the same rate as the Consumer Price Index (CPI).The interest payment is then calculated off that inflated (adjusted) principal and repaid at maturity.

weighted average For mutual funds or ETFs, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

yield to maturity The annualized rate of return a bondholder could expect if the bond were held to maturity. In addition to interest payments, yield to maturity also factors in any difference between a bond’s current price and its principal amount, or face value.

Notes

Schwab ETFs^tm are designed to be low-cost, diversified investments. The funds follow broad market indices and provide exposure to specific segments of the market, making each an investment option for the core portions of an investor portfolio. The list to the right shows all currently available Schwab ETFs.

Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab ETF. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab ETFs’ website at www.schwabetfs.com, the SEC’s website at http://www.sec.gov, or by contacting Schwab ETFs at 1-800-435-4000.

Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting the fund’s website at www.schwabetfs.com or the SEC’s website at http://www.sec.gov.

Schwab ETFs^tm

U.S. ETFs

Schwab U.S. Broad Market ETF^tm

Schwab U.S. Large-Cap ETF^tm

Schwab U.S. Large-Cap Growth ETF^tm

Schwab U.S. Large-Cap Value ETF^tm

Schwab U.S. Mid-Cap ETF^tm

Schwab U.S. Small-Cap ETF^tm

Schwab U.S. Dividend Equity ETF^tm

Schwab U.S. REIT ETF^tm

International ETFs

Schwab International Equity ETF^tm

Schwab International Small-Cap Equity ETF^tm

Schwab Emerging Markets Equity ETF^tm

Fixed Income ETFs

Schwab U.S. Aggregate Bond ETF^tm

Schwab Short-Term U.S. Treasury ETF^tm

Schwab Intermediate-Term U.S. Treasury ETF^tm

Schwab U.S. TIPS ETF^tm

Fundamental Index* ETFs

Schwab Fundamental U.S. Broad Market Index ETF

Schwab Fundamental U.S. Large Company Index ETF

Schwab Fundamental U.S. Small Company Index ETF

Schwab Fundamental International Large Company Index ETF

Schwab Fundamental International Small Company Index ETF

Schwab Fundamental Emerging Markets Large Company Index ETF


*		FUNDAMENTAL INDEX is a registered trademark of Research Affiliates LLC.

Investment Adviser

Charles Schwab Investment Management, Inc.

211 Main Street, San Francisco, CA 94105

Schwab ETFs^tm

1-800-435-4000

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

Printed on recycled paper.

MFR62961-03

00120325

Item 2: Code of Ethics.

Not applicable to this semi-annual report.

Item 3: Audit Committee Financial Expert.

Not applicable to this semi-annual report.

Item 4: Principal Accountant Fees and Services.

Not applicable to this semi-annual report.

Item 5: Audit Committee of Listed Registrants.

Not applicable to this semi-annual report.

Item 6: Schedule of Investments.

The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.

Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8: Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10: Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11: Controls and Procedures.

(a)		Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Marie Chandoha and Registrant’s Principal Financial Officer, George Pereira, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above.

(b)		During the second fiscal quarter of the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting.

Item 12: Exhibits.


(a)	(1	)	Code of ethics – not applicable to this semi-annual report.

	(2	)	Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached.

	(3	)	Not applicable.

(b)	A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Schwab Strategic Trust- Fixed Income ETFs


By:		/s/ Marie Chandoha Marie Chandoha
		Chief Executive Officer

Date:		August 12, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ Marie Chandoha Marie Chandoha
		Chief Executive Officer

Date:		August 12, 2014

By:		/s/ George Pereira George Pereira
		Principal Financial Officer

Date:		August 12, 2014

EX-99.CERT 2 f30250exv99wcert.htm EX-99.CERT exv99wcert

CERTIFICATIONS

I, Marie Chandoha, certify that:

1. I have reviewed this report on Form N-CSR of Schwab Strategic Trust – Fixed Income ETFs;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosures and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 12, 2014		/s/ Marie Chandoha

		Marie Chandoha
		President and Chief Executive Officer

CERTIFICATIONS

I, George Pereira, certify that:

1. I have reviewed this report on Form N-CSR of Schwab Strategic Trust – Fixed Income ETFs;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 12, 2014		/s/ George Pereira

		George Pereira
		Treasurer and Principal Financial Officer

EX-99.906CERT 3 f30250exv99w906cert.htm EX-99.906CERT exv99w906cert

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Semiannual Report for Schwab Strategic Trust – Fixed Income ETFs (“issuer”) on Form N-CSR for the period ended June 30, 2014 (“periodic report”), each of the undersigned, being the Chief Executive Officer and Principal Financial Officer, hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The periodic report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer for the period presented therein.


/s/ Marie Chandoha		Date: August 12, 2014
Marie Chandoha
President and Chief Executive Officer

/s/ George Pereira		Date: August 12, 2014
George Pereira
Treasurer and Principal Financial Officer

This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission.

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