N-CSRS

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.csimfunds.com.

Total Returns for the 6 Months Ended August 31, 2015
Schwab U.S. REIT ETF (Ticker Symbol: SCHH)
Market Price Return¹	-8.92%
NAV Return¹	-8.65%
Dow Jones U.S. Select REIT Index	-8.64%
ETF Category: Morningstar Real Estate²	-9.32%
Performance Details	page 6

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 cannot be invested in directly. Performance results less than one year are not annualized.

For index definitions, please see the Glossary.

Small-company stocks are subject to greater volatility than many other asset classes.

The fund is subject to risks associated with the direct ownership of real estate securities and an investment in the fund will be closely linked to the performance of the real estate markets.

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.

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Select REIT Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by CSIM. The Schwab U.S. REIT ETF is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

ETF performance must be shown based on both a market price and 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.

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.

2Schwab U.S. REIT ETF

From the President

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

Dear Shareholder,

At Charles Schwab Investment Management, our goal is to provide foundational products with consistent performance that help investors to build well-diversified portfolios. The Schwab U.S. REIT ETF represents an important part of our product line-up, providing the potential for both current income and capital appreciation, and may add diversification to an income stream. The fund tracks the Dow Jones U.S. Select REIT Index and provides the benefits of ETF investing, including transparency, intraday trading, and potential tax efficiency, at one of the lowest operating expense ratios in the industry.

For the six-month reporting period ended August 31, 2015, the fund closely tracked the return of the Dow Jones U.S. Select REIT Index. After a strong performance in 2014, U.S. REITs stumbled during the reporting period and generated disappointing returns that trailed those of the broader market. Though the U.S. economy has been generally improving, concerns surrounding the timing of a potential short-term interest rate rise in the U.S. have negatively affected many income-focused investments, including REITs. Fluctuating commodity prices, the debt crisis in Greece, and the deceleration of the Chinese economy contributed to heightened market volatility, especially in the second half of the reporting period. These factors weighed heavily on most markets and created a difficult environment for real estate investors during the period.

In this environment, the performance of U.S. REITs was mostly negative across sub-industries. Specialized REITs, which include REITs that do not generate a majority of their revenues and income from real estate rental and

Asset Class Performance Comparison % returns during the six months ended 8/31/2015

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM.

Nothing in this report represents a recommendation of a security by the investment adviser.

Management views and portfolio holdings may have changed since the report date.

Schwab U.S. REIT ETF3

Fund Management

Agnes Hong, CFA, Vice President and Head of Passive Equity Products, leads the portfolio management teams of Schwab’s passive equity funds and equity ETFs. She also has overall responsibility for all aspects of the management of the fund. Prior to joining CSIM in 2009, Ms. Hong spent five years as a portfolio manager at Barclays Global Investors (currently BlackRock), where she managed institutional index funds and quantitative active funds. Prior to that, Ms. Hong worked in management consulting and product management, servicing global financial services clients.

Ferian Juwono, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining CSIM in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors), where he spent over three years as a portfolio manager, managing equity index funds for institutional clients, and nearly two years as a senior business analyst. Prior to that, Mr. Juwono worked for over four years as a senior financial analyst with Union Bank of California.

Chuck Craig, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining CSIM in 2012, Mr. Craig worked at Guggenheim Funds (formerly Claymore Group), where he spent over five years as a managing director of portfolio management and supervision, and three years as vice president of product research and development. Prior to that, he worked as an equity research analyst at First Trust Portfolios (formerly Niké Securities), and a trader and analyst at PMA Securities, Inc.

Schwab U.S. REIT ETF5

Schwab U.S. REIT ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	3 Years	Since Inception*
Fund: Schwab U.S. REIT ETF (1/13/11)
Market Price Return²	-8.92%	1.83%	7.87%	10.73%
NAV Return²	-8.65%	1.78%	7.90%	10.72%
Dow Jones U.S. Select REIT Index	-8.64%	1.87%	7.99%	10.85%
ETF Category: Morningstar Real Estate³	-9.32%	-1.44%	6.87%	9.63%

Fund Expense Ratio⁴: 0.07%

Statistics
Number of Holdings	94
Weighted Average Market Cap (millions)	$17,298
Price/Earnings Ratio (P/E)	38.4
Price/Book Ratio (P/B)	2.3
Portfolio Turnover Rate^5,6	4%

Sector Weightings % of Investments
Specialized REIT	28.6%
Retail REIT	26.3%
Residential REIT	20.3%
Office REIT	15.4%
Industrial REIT	5.0%
Diversified REIT	3.0%
Other	1.4%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Simon Property Group, Inc.	10.2%
Public Storage	5.3%
Equity Residential	4.8%
Health Care REIT, Inc.	4.1%
AvalonBay Communities, Inc.	4.0%
Prologis, Inc.	3.6%
Ventas, Inc.	3.3%
Boston Properties, Inc.	3.2%
HCP, Inc.	3.1%
General Growth Properties, Inc.	2.9%
Total	44.5%

For index definitions, please see the Glossary.

Small-company stocks are subject to greater volatility than many other asset classes.

The fund is subject to risks associated with the direct ownership of real estate securities, and an investment in the fund will be closely linked to the performance of the real estate markets.

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.

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 trading and management costs incurred by the fund.

Source of Sector Classification: S&P and MSCI.

*	Inception (1/13/11) 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	ETF performance must be shown based on both a market price and 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	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

6Schwab U.S. REIT ETF

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 March 1, 2015 and held through August 31, 2015.

Actual Return line in the table below provides 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 the fund under the heading entitled “Expenses Paid During Period.”

Hypothetical Return line in the table below provides information about hypothetical account values and hypothetical expenses based on the 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 the 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.

	Expense Ratio¹ (Annualized)	Beginning Account Value at 3/1/15	Ending Account Value (Net of Expenses) at 8/31/15	Expenses Paid During Period² 3/1/15–8/31/15
Schwab U.S. REIT ETF
Actual Return	0.07%	$1,000.00	$ 913.50	$ 0.34
Hypothetical 5% Return	0.07%	$1,000.00	$1,024.75	$0.36

¹	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights.
²	Expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 184 days of the period, and divided by 366 days of the fiscal year.

Schwab U.S. REIT ETF7

Schwab U.S. REIT ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	3/1/13– 2/28/14	3/1/12– 2/28/13	3/1/11– 2/29/12	1/12/11 ¹– 2/28/11
Per-Share Data ($)
Net asset value at beginning of period	40.04	33.06	31.96	28.30	27.28	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.66 ²	0.92	0.80	0.72	0.65	0.06
Net realized and unrealized gains (losses)	(4.09)	6.91	1.08	3.71	0.98	2.22
Total from investment operations	(3.43)	7.83	1.88	4.43	1.63	2.28
Less distributions:
Distributions from net investment income	(0.40)	(0.85)	(0.78)	(0.77)	(0.61)	—
Net asset value at end of period	36.21	40.04	33.06	31.96	28.30	27.28
Total return (%)	(8.65) ³	24.04	6.08	15.83	6.15	9.12 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.07 ⁴	0.07	0.07	0.10 ⁵	0.13	0.13 ⁴
Net investment income (loss)	3.39 ⁴	2.56	2.52	2.43	2.50	3.82 ⁴
Portfolio turnover rate⁶	4 ³	15	11	7	5	— ³
Net assets, end of period ($ x 1,000)	1,493,542	1,269,306	790,052	466,567	277,370	69,566

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 2/28/13 is a blended ratio.

⁶

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

8 See financial notes

Schwab U.S. REIT ETF

Portfolio Holdings as of August 31, 2015 (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 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.csimfunds.com/schwabetfs_prospectus.

Holdings by Category		Cost ($)	Value ($)
99.7%	Common Stock	1,479,722,332	1,488,700,800
0.2%	Other Investment Companies	4,210,949	4,054,078
99.9%	Total Investments	1,483,933,281	1,492,754,878
0.1%	Other Assets and Liabilities, Net		787,061
100.0%	Net Assets		1,493,541,939

Security	Number of Shares	Value ($)
Common Stock 99.7% of net assets
Diversified REITs 3.0%
Cousins Properties, Inc.	556,505	5,103,151
Duke Realty Corp.	943,901	17,046,852
First Potomac Realty Trust	170,583	1,792,827
Liberty Property Trust	405,715	12,471,679
PS Business Parks, Inc.	54,462	3,973,548
Washington Real Estate Investment Trust	187,412	4,610,335
		44,998,392
Health Care REITs 0.5%
Care Capital Properties, Inc. *	226,102	7,187,783
Hotel & Resort REITs 0.6%
Hersha Hospitality Trust	131,434	3,212,247
Xenia Hotels & Resorts, Inc.	304,144	5,626,664
		8,838,911
Industrial REITs 5.0%
DCT Industrial Trust, Inc.	238,158	7,647,253
EastGroup Properties, Inc.	88,292	4,767,768
First Industrial Realty Trust, Inc.	302,942	5,874,045
Prologis, Inc.	1,429,197	54,309,486
Rexford Industrial Realty, Inc.	152,991	1,976,644
		74,575,196
Office REITs 15.4%
Alexandria Real Estate Equities, Inc.	198,396	17,060,072
BioMed Realty Trust, Inc.	558,885	10,339,373
Boston Properties, Inc.	420,590	47,686,494
Brandywine Realty Trust	494,248	5,990,286
Columbia Property Trust, Inc.	337,380	7,213,184

Security	Number of Shares	Value ($)
Corporate Office Properties Trust	256,237	5,388,664
Douglas Emmett, Inc.	375,426	10,373,020
Equity Commonwealth *	352,002	9,042,931
Franklin Street Properties Corp.	243,402	2,533,815
Highwoods Properties, Inc.	256,147	9,718,217
Kilroy Realty Corp.	240,946	15,627,758
Mack-Cali Realty Corp.	234,753	4,396,924
New York REIT, Inc.	454,273	4,351,935
Parkway Properties, Inc.	230,233	3,646,891
Piedmont Office Realty Trust, Inc., Class A	415,890	7,053,494
SL Green Realty Corp.	271,425	28,095,202
Vornado Realty Trust	477,420	41,626,250
		230,144,510
Residential REITs 20.3%
American Campus Communities, Inc.	307,278	10,524,271
American Homes 4 Rent, Class A	381,329	6,093,637
Apartment Investment & Management Co., Class A	424,077	15,279,494
AvalonBay Communities, Inc.	360,729	59,541,929
Camden Property Trust	236,981	17,069,741
Education Realty Trust, Inc.	132,011	3,861,322
Equity LifeStyle Properties, Inc.	218,109	12,161,758
Equity Residential	997,947	71,103,724
Essex Property Trust, Inc.	179,318	38,485,229
Home Properties, Inc.	157,630	11,697,722
Mid-America Apartment Communities, Inc.	206,342	16,216,418
Post Properties, Inc.	147,221	8,150,155
Silver Bay Realty Trust Corp.	105,326	1,649,405
Sun Communities, Inc.	139,171	9,075,341
UDR, Inc.	705,406	22,784,614
		303,694,760
Retail REITs 26.3%
Acadia Realty Trust	186,692	5,516,749
Brixmor Property Group, Inc.	457,958	10,450,602
CBL & Associates Properties, Inc.	468,160	6,966,221
Cedar Realty Trust, Inc.	212,552	1,330,575
DDR Corp.	814,558	12,454,592
Equity One, Inc.	223,446	5,253,215
Federal Realty Investment Trust	188,538	24,336,485
General Growth Properties, Inc.	1,721,485	43,691,289
Inland Real Estate Corp.	245,918	2,068,170
Kimco Realty Corp.	1,125,369	25,939,755
Kite Realty Group Trust	231,265	5,437,040
Pennsylvania Real Estate Investment Trust	189,882	3,767,259
Ramco-Gershenson Properties Trust	215,822	3,345,241
Regency Centers Corp.	258,709	15,344,031
Rouse Properties, Inc.	96,683	1,502,454
Saul Centers, Inc.	31,557	1,557,022
Simon Property Group, Inc.	850,165	152,451,588
Tanger Factory Outlet Centers, Inc.	264,375	8,364,825
Taubman Centers, Inc.	168,026	11,592,114
The Macerich Co.	384,109	29,261,424
Urban Edge Properties	251,189	5,252,362

See financial notes 9

Schwab U.S. REIT ETF

Portfolio Holdings (Unaudited) continued

Security	Number of Shares	Value ($)
Weingarten Realty Investors	311,574	9,858,201
WP GLIMCHER, Inc.	510,860	6,186,515
		391,927,729
Specialized REITs 28.6%
Ashford Hospitality Prime, Inc.	78,430	1,084,687
Ashford Hospitality Trust, Inc.	251,248	1,944,659
CubeSmart	450,896	11,403,160
DiamondRock Hospitality Co.	543,217	6,388,232
Digital Realty Trust, Inc.	372,401	23,580,431
DuPont Fabros Technology, Inc.	181,830	4,860,316
Extra Space Storage, Inc.	335,560	24,656,949
FelCor Lodging Trust, Inc.	349,835	2,823,168
HCP, Inc.	1,261,710	46,758,973
Health Care REIT, Inc.	959,458	60,781,664
Healthcare Realty Trust, Inc.	278,530	6,378,337
Hospitality Properties Trust	409,748	10,538,719
Host Hotels & Resorts, Inc.	2,075,752	36,803,083
LaSalle Hotel Properties	308,749	9,713,244
LTC Properties, Inc.	97,621	3,981,961
Pebblebrook Hotel Trust	198,054	7,537,935
Public Storage	396,777	79,859,307
Senior Housing Properties Trust	643,424	10,101,757
Sovran Self Storage, Inc.	97,586	8,756,392
Strategic Hotels & Resorts, Inc. *	750,080	10,118,579
Sunstone Hotel Investors, Inc.	568,574	7,863,378
Universal Health Realty Income Trust	35,610	1,638,060
Ventas, Inc.	904,408	49,760,528
		427,333,519
Total Common Stock
(Cost $1,479,722,332)		1,488,700,800

Security	Number of Shares	Value ($)
Other Investment Companies 0.2% of net assets
Equity Fund 0.2%
SPDR Dow Jones REIT ETF	45,000	3,784,050
Money Market Fund 0.0%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a)	270,028	270,028
Total Other Investment Companies
(Cost $4,210,949)		4,054,078

End of Investments

At 08/31/15, the tax basis cost of the fund's investments was $1,485,236,947 and the unrealized appreciation and depreciation were $68,311,021 and ($60,793,090), respectively, with a net unrealized appreciation of $7,517,931.

*	Non-income producing security.
(a)	The rate shown is the 7-day yield.

ETF —	Exchange Traded Fund
REIT —	Real Estate Investment Trust

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$1,488,700,800	$—	$—	$1,488,700,800
Other Investment Companies¹	4,054,078	—	—	4,054,078
Total	$1,492,754,878	$—	$—	$1,492,754,878

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 August 31, 2015.

10 See financial notes

Schwab U.S. REIT ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$24,296,946	$26,973,906
Net realized gains		19,189,107	50,557,126
Net change in unrealized appreciation (depreciation)	+	(176,647,669)	145,570,492
Increase (Decrease) in net assets resulting from operations		(133,161,616)	223,101,524
Distributions to Shareholders
Distributions from net investment income		($14,261,320)	($24,242,790)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		12,150,000	$470,397,764	12,800,000	$470,767,488
Shares redeemed	+	(2,600,000)	(98,738,439)	(5,000,000)	(190,372,676)
Net transactions in fund shares		9,550,000	$371,659,325	7,800,000	$280,394,812
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		31,700,000	$1,269,305,550	23,900,000	$790,052,004
Total increase	+	9,550,000	224,236,389	7,800,000	479,253,546
End of period		41,250,000	$1,493,541,939	31,700,000	$1,269,305,550
Net investment income not yet distributed			$14,379,052		$4,343,426

See financial notes 13

Schwab U.S. REIT ETF

Financial Notes, unaudited

1. Business Structure of the Fund:

Schwab U.S. REIT ETF 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 fund discussed in this report, which is highlighted:

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

The fund issues and redeems shares at its net assets 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/or 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 fund 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).

The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, the 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 fund uses in its preparation of financial statements. The fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board 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).

The fund invests in certain other investment companies (underlying funds). 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 fund's 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 fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:

• Securities traded on an exchange or over-the-counter: Traded securities are valued at the closing value for the day, or, on days when no closing value has been reported, at halfway between the most recent bid and ask quotes. Securities that are primarily traded on foreign exchanges are valued at the official closing price or the last sales price on the exchange where the securities are principally traded with these values then translated into U.S. dollars at the current exchange rate, unless these securities are fair valued as discussed below.

• Securities for which no quoted value is available: The Board has adopted procedures to fair value the 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

Schwab U.S. REIT ETF

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. The 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 the 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 fund pursuant to the valuation procedures.

• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's 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 fund discloses the fair value of its investments in a hierarchy that prioritizes the significant 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 fund determines 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 NAV, 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, without consideration to the classification level of the specific investments held by an underlying fund.

• 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 fund's 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 fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund 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 fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.

Schwab U.S. REIT ETF

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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

The levels associated with valuing the fund's investments as of August 31, 2015 are disclosed in the Portfolio Holdings.

(b) Security Transactions:

Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.

When the fund closes out a futures contract position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly.

The fund invests in real estate investment trusts (REITs) which report information on the source of their distributions annually. Certain distributions received from REITs during the year, which are known to be a return of capital or realized gains, are recorded as a reduction to the cost of the individual REITs or realized gains on investments, respectively.

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the fund records certain foreign security dividends on the day it learns of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.

(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 the 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 the fund are charged directly to the fund.

(f) Distributions to Shareholders:

The fund makes distributions from net investment income, if any, quarterly and from net realized capital gains, if any, once a year.

(g) 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.

(h) Federal Income Taxes:

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

(i) Indemnification:

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

Schwab U.S. REIT ETF

Financial Notes, unaudited (continued)

3. Risk Factors:

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

Market Risk. Stock and bond markets and the values of securities held by the fund rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that the investors could lose money.

Investment Style Risk. The fund is not actively managed. Therefore, the fund follows the securities included in the index during upturns as well as downturns. Because of its indexing strategy, the fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the fund's expenses, the fund’s performance may be below that of its respective index.

Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.

Large-Cap Risk. The fund will invest in large-cap segments of the U.S. stock market. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap U.S. stocks fall behind other types of investments—mid- or small-cap stocks, for instance—the fund’s large-cap holdings could reduce performance.

Small- and Mid-Cap Risk. Even larger REITs and other real estate companies may be small- to medium- sized companies in relation to the equity markets as a whole. Historically, small- and mid-cap stocks have been riskier than large-cap stocks. Small- and mid-cap companies themselves may be more vulnerable to adverse business or economic events than larger, more established companies. Stock prices of smaller companies may be based in substantial part on future expectations rather than current achievements and may move sharply, especially during market upturns and downturns. During a period when small- and mid-cap stocks fall behind other types of investments—bonds or large-cap stocks, for instance—the fund’s small- and mid-cap holdings could reduce performance.

REITs Risk. In addition to the risks associated with investing in securities of real estate companies and real estate related companies, REITs are subject to certain additional risks. Equity REITs may be affected by changes in the value of the underlying properties owned by the trusts. Further, REITs are dependent upon specialized management skills and may have their investments in relatively few properties, or in a small geographic area or a single property type. Failure of a company to qualify as a REIT under federal tax law may have adverse consequences to the fund. In addition, REITs have their own expenses, and the fund will bear a proportionate share of those expenses.

Real Estate Investment Risk. Due to the composition of the index, the fund concentrates its investments in real estate companies and companies related to the real estate industry. As such, the fund is subject to risks associated with the direct ownership of real estate securities and an investment in the fund will be closely linked to the performance of the real estate markets. These risks include, among others: declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds or other limits to accessing the credit or capital markets; defaults by borrowers or tenants, particularly during an economic downturn; and changes in interest rates.

Tracking Error Risk. As an index fund, the fund seeks to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of the 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.

Derivatives Risk. The principal types of derivatives used by the fund 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 leverage risk, market risk and liquidity risk, are discussed elsewhere in this section.

The fund’s use of derivatives is also subject to credit risk, lack-of-availability risk, valuation risk, correlation risk and tax risk. Credit risk is the risk that the counterparty to a derivative transaction may not fulfill its contractual obligations. 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

Schwab U.S. REIT ETF

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

risks could cause the fund to lose more than the initial amount invested. The fund’s use of derivatives could reduce the fund’s performance, increase the fund’s volatility, and cause the fund to lose more than the initial amount invested. Furthermore, the use of derivatives subject to regulation by the Commodity Futures Trading Commission (CFTC) could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.

Concentration Risk. To the extent that the fund's or the index's portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class (including the real estate industry, as described above), 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.

Liquidity Risk. A particular investment may be difficult to purchase or sell. The fund may be unable to sell illiquid securities at an advantageous time or price.

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.

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 the 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 the fund in the secondary market, and may receive less than NAV when they sell those shares in the secondary market. The market price of fund shares may deviate, sometimes significantly, from NAV during periods of market volatility.

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

4. Affiliates and Affiliated Transactions:

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

For its advisory services to the fund, CSIM is entitled to receive an annual fee, payable monthly, equal to 0.07% of the fund's average daily net assets.

Certain Schwab funds may own shares of other Schwab Funds. The table below reflects the percentage of shares of the fund that are owned by other Schwab funds as of August 31, 2015.


Schwab VIT Balanced Portfolio	0.2%
Schwab VIT Balanced with Growth Portfolio	0.5%
Schwab VIT Growth Portfolio	0.5%

Pursuant to an exemptive order issued by the SEC, the fund may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review of the Board. The fund 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 fund.

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

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

Schwab U.S. REIT ETF

Financial Notes, unaudited (continued)

6. Board of Trustees:

The Board may include people who are officers and/or directors of CSIM or its affiliates. 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 the Trustees and Officers table at the end of this report.

7. Borrowing from Banks:

The fund has access to custodian overdraft facilities. During the period, the fund also had access to an uncommitted line of credit of $100 million with State Street. The fund pays interest on the amounts it borrows at rates that are negotiated periodically.

There were no borrowings from the line of credit by the fund during the period. However, the fund may have utilized its overdraft facility and incurred an interest expense, which is disclosed in the fund's Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

Effective October 8, 2015, the existing line of credit was terminated and the fund became a participant in a syndicated, committed line of credit of $530 million with State Street, as agent.

8. Purchases and Sales/Maturities of Investment Securities:

For the period ended August 31, 2015, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities		Sales/Maturities of Securities
Schwab U.S. REIT ETF	$63,208,258		$52,281,908

9. In-Kind Transactions:

The consideration for the purchase of Creation Units of the fund generally consists of the in-kind deposit of a designated portfolio of equity 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 August 31, 2015 were as follows:

	In-Kind Purchases of Securities		In-Kind Sales of Securities
Schwab U.S. REIT ETF	$461,012,149		$90,648,496

For the period ended August 31, 2015, the fund realized net capital gains or losses resulting from in-kind redemptions of Creation Units. Because such gains or losses are not taxable to the fund 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 fund's 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 August 31, 2015 are disclosed in the fund's Statement of Operations.

10. Federal Income Taxes

As of February 28, 2015, the fund had no capital loss carryforwards.

For tax purposes, net realized 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 February 28, 2015, the fund had capital losses carryforwards utilized in the amount of $876,325.

Trustees and Officers

The tables below give information about the trustees and officers for the Schwab Strategic Trust, which includes the fund 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 95 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, and Position(s) with the trust; (Terms of office, and length of Time Served¹)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Robert W. Burns 1959 Trustee (Trustee Schwab Strategic Trust since 2009)	Retired/Private Investor (Jan. 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 Schwab Strategic Trust since 2012)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant, LLC (wealth management) (Jan. 2008 – April 2012).	21	None
Charles A. Ruffel 1956 Trustee (Trustee Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2015)	Co-Chief Executive Officer, Kudu Investment Management, LLC (financial services) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015).	95	None

Interested Trustees
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Walter W. Bettinger II² 1960 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust and Laudus Institutional Trust since 2010)	Director, President and Chief Executive Officer, The Charles Schwab Corporation and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present).	95	Director, The Charles Schwab Corporation (2008 – present)

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 since 2010)	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; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (January 2011 – present); 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 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 Funds plc and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer 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, Laudus Funds and Schwab ETFs (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 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, Laudus Funds and Schwab ETFs (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 since 2011)	Senior Vice President (Sept. 2011 – present), Vice President (March 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; 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 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 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 pass-throughs), asset-backed securities, and commercial mortgage-backed securities.

beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500^®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.

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

cap, capitalization See “market cap.”

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.

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.

Dow Jones U.S. Select REIT Index A float-adjusted market capitalization weighted index comprised of real estate investment trusts (REITs).

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.

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.

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

market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.

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.

median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.

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.

price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.

price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.

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

real estate investment trust (REIT) Real estate companies that own and commonly operate income producing commercial and/or residential real estate.

S&P 500 Index A market capitalization index that is designed to measure the performance of 500 leading publicly held companies in leading industries of the U.S. economy.

Schwab ETFs™ 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.csimfunds.com/schwabetfs_prospectus, the SEC’s website at 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.csimfunds.com/schwabetfs_prospectus or the SEC’s website at www.sec.gov.

Schwab ETFs™

U.S. ETFs

Schwab U.S. Broad Market ETF™
Schwab U.S. Large-Cap ETF™
Schwab U.S. Large-Cap Growth ETF™
Schwab U.S. Large-Cap Value ETF™
Schwab U.S. Mid-Cap ETF™
Schwab U.S. Small-Cap ETF™
Schwab U.S. Dividend Equity ETF™
Schwab U.S. REIT ETF™

International ETFs

Schwab International Equity ETF™
Schwab International Small-Cap Equity ETF™
Schwab Emerging Markets Equity ETF™

Fixed Income ETFs

Schwab U.S. Aggregate Bond ETF™
Schwab Short-Term U.S. Treasury ETF™
Schwab Intermediate-Term U.S. Treasury ETF™
Schwab U.S. TIPS ETF™

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.

Performance at a Glance

Total Returns for the 6 Months Ended August 31, 2015
Schwab Fundamental U.S. Broad Market Index ETF (Ticker Symbol: FNDB)
Market Price Return¹	-7.16%
NAV Return¹	-7.11%
Russell Fundamental U.S. Index	-6.99%
ETF Category: Morningstar Large Value²	-6.70%
Performance Details	page 6

Schwab Fundamental U.S. Large Company Index ETF (Ticker Symbol: FNDX)
Market Price Return¹	-7.25%
NAV Return¹	-7.20%
Russell Fundamental U.S. Large Company Index	-7.05%
ETF Category: Morningstar Large Value²	-6.70%
Performance Details	page 7

Schwab Fundamental U.S. Small Company Index ETF (Ticker Symbol: FNDA)
Market Price Return¹	-6.47%
NAV Return¹	-6.54%
Russell Fundamental U.S. Small Company Index	-6.39%
ETF Category: Morningstar Small Blend²	-5.93%
Performance Details	page 8

Total Returns for the 6 Months Ended August 31, 2015
Schwab Fundamental International Large Company Index ETF (Ticker Symbol: FNDF)
Market Price Return¹	-8.03%
NAV Return¹	-7.66%
Russell Fundamental Developed ex-U.S. Large Company Index (Net)*	-7.67%
ETF Category: Morningstar Foreign Large Value²	-9.88%
Performance Details	pages 9-10

Schwab Fundamental International Small Company Index ETF (Ticker Symbol: FNDC)
Market Price Return¹	-3.21%
NAV Return¹	-2.83%
Russell Fundamental Developed ex-U.S. Small Company Index (Net)*	-2.68%
ETF Category: Morningstar Foreign Small/Mid Blend²	-2.39%
Performance Details	pages 11-12

Schwab Fundamental Emerging Markets Large Company Index ETF (Ticker Symbol: FNDE)
Market Price Return¹	-17.58%
NAV Return¹	-17.51%
Russell Fundamental Emerging Markets Large Company Index (Net)*	-17.24%
ETF Category: Morningstar Diversified Emerging Markets²	-15.81%
Performance Details	pages 13-14

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.

Index ownership — each of the names identifying a Russell Fundamental Index is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the funds under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental Index ETFs are not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the funds.

*	The total return cited for the index is calculated net of foreign withholding taxes.
¹	ETF performance must be shown based on both a market price and 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.

2Schwab Fundamental Index 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,

In recent years, fundamentally weighted strategies have experienced considerable asset growth. Unlike traditional equity indices that are often weighted by market capitalization, fundamentally weighted indices select and weight stocks by objective non-price measures, such as dividends, cash flow, and sales. By using this weighting methodology, the Schwab Fundamental Index ETFs can serve as effective complements to capitalization-weighted index funds and actively managed investment vehicles. These funds also provide the benefits of ETF investing, including transparency, intraday trading, and potential tax efficiency.

For the six-month reporting period ended August 31, 2015, the funds produced negative returns that closely tracked their respective indices amid a broad decline in global equity indices. Internationally, emerging markets suffered the steepest losses of the period as a result of falling commodity prices and the deceleration of China’s economy, with the Russell Fundamental Emerging Markets Large Company Index posting a return of -17.2%¹ during the period. Both emerging and developed markets struggled against a strong U.S. dollar. When the U.S. dollar rises against foreign currencies, returns on overseas investments will generally be reduced in U.S. dollar terms. Meanwhile, in the U.S., fears of an increasingly overvalued stock market and

Asset Class Performance Comparison % returns during the 6 months ended 8/31/2015

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM.

Nothing in this report represents a recommendation of a security by the investment adviser.

Management views and portfolio holdings may have changed since the report date.

Schwab Fundamental Index ETFs3

From the President continued

For the six-month reporting period ended August 31, 2015, the funds produced negative returns that closely tracked their respective indices amid a broad decline in global equity indices.

anticipation of a Federal Reserve move on short-term interest rates outweighed relatively stable economic conditions. The Russell Fundamental U.S. Large Company Index returned -7.1%, while the Russell Fundamental Developed ex-U.S. Large Company Index returned -7.7%.¹

For more information about the performance, holdings, and portfolio characteristics of the Schwab Fundamental Index ETFs, please continue reading this report. In addition, you can find further details about these ETFs by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-800-435-4000.

Sincerely,

Index figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and cannot be invested in directly. Past performance is not an indication of future results.

¹	The total returns cited for the Russell Fundamental Emerging Markets Large Company Index and Russell Fundamental Developed ex-U.S. Large Company Index are net of foreign withholding taxes.

4Schwab Fundamental Index ETFs

Fund Management

Agnes Hong, CFA, Vice President and Head of Passive Equity Products, leads the portfolio management teams of Schwab’s passive equity funds and equity ETFs. She also has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 2009, Ms. Hong spent five years as a portfolio manager at Barclays Global Investors (currently BlackRock), where she managed institutional index funds and quantitative active funds. Prior to that, Ms. Hong worked in management consulting and product management, servicing global financial services clients.

Chuck Craig, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2012, Mr. Craig worked at Guggenheim Funds (formerly Claymore Group), where he spent over five years as a managing director of portfolio management and supervision, and three years as vice president of product research and development. Prior to that, he worked as an equity research analyst at First Trust Portfolios (formerly Niké Securities), and a trader and analyst at PMA Securities, Inc.

Jane Qin, Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2012, Ms. Qin worked at The Bank of New York Mellon Corporation, where she spent more than two years as an associate equity portfolio manager, and nearly two years as a performance analyst. Prior to that, Ms. Qin worked at Wells Fargo Fund Management as a mutual fund analyst and at CIGNA Reinsurance as a risk analyst.

Schwab Fundamental Index ETFs5

Schwab Fundamental U.S. Broad Market Index ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	Since Inception*
Fund: Schwab Fundamental U.S. Broad Market Index ETF (8/15/13)
Market Price Return²	-7.16%	-3.11%	7.77%
NAV Return²	-7.11%	-3.21%	7.76%
Russell Fundamental U.S. Index	-6.99%	-2.95%	8.10%
ETF Category: Morningstar Large Value³	-6.70%	-2.02%	7.44%

Fund Expense Ratio⁴: 0.32%

Statistics
Number of Holdings	1,499
Weighted Average Market Cap (millions)	$98,086
Price/Earnings Ratio (P/E)	21.3
Price/Book Ratio (P/B)	2.1
Portfolio Turnover Rate^5,6	6%

Sector Weightings % of Investments
Financials	14.6%
Information Technology	13.7%
Consumer Discretionary	13.3%
Energy	12.5%
Health Care	11.3%
Consumer Staples	11.3%
Industrials	10.9%
Utilities	4.3%
Telecommunication Services	3.9%
Materials	3.7%
Other	0.5%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Exxon Mobil Corp.	3.9%
AT&T, Inc.	2.4%
Chevron Corp.	1.9%
Microsoft Corp.	1.7%
JPMorgan Chase & Co.	1.3%
General Electric Co.	1.2%
International Business Machines Corp.	1.2%
The Procter & Gamble Co.	1.2%
Wal-Mart Stores, Inc.	1.2%
Apple, Inc.	1.2%
Total	17.2%

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.

Index ownership — “Russell Fundamental U.S. Index” is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental U.S. Broad Market Index ETF is not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (8/15/13) 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	ETF performance must be shown based on both a market price and 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	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

6Schwab Fundamental Index ETFs

Schwab Fundamental U.S. Large Company Index ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	Since Inception*
Fund: Schwab Fundamental U.S. Large Company Index ETF (8/15/13)
Market Price Return²	-7.25%	-3.34%	7.73%
NAV Return²	-7.20%	-3.40%	7.69%
Russell Fundamental U.S. Large Company Index	-7.05%	-3.09%	8.06%
ETF Category: Morningstar Large Value³	-6.70%	-2.02%	7.44%

Fund Expense Ratio⁴: 0.32%

Statistics
Number of Holdings	638
Weighted Average Market Cap (millions)	$107,391
Price/Earnings Ratio (P/E)	20.4
Price/Book Ratio (P/B)	2.1
Portfolio Turnover Rate^5,6	6%

Sector Weightings % of Investments
Financials	13.9%
Information Technology	13.8%
Energy	13.3%
Consumer Discretionary	12.9%
Consumer Staples	12.0%
Health Care	11.8%
Industrials	10.0%
Utilities	4.3%
Telecommunication Services	4.2%
Materials	3.5%
Other	0.3%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Exxon Mobil Corp.	4.3%
AT&T, Inc.	2.6%
Chevron Corp.	2.1%
Microsoft Corp.	1.9%
JPMorgan Chase & Co.	1.4%
International Business Machines Corp.	1.4%
General Electric Co.	1.4%
Apple, Inc.	1.4%
The Procter & Gamble Co.	1.4%
Wal-Mart Stores, Inc.	1.4%
Total	19.3%

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.

Index ownership — “Russell Fundamental U.S. Large Company Index” is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental U.S. Large Company Index ETF is not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (8/15/13) 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	ETF performance must be shown based on both a market price and 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	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

Schwab Fundamental Index ETFs7

Schwab Fundamental U.S. Small Company Index ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	Since Inception*
Fund: Schwab Fundamental U.S. Small Company Index ETF (8/15/13)
Market Price Return²	-6.47%	-1.77%	7.98%
NAV Return²	-6.54%	-1.94%	7.91%
Russell Fundamental U.S. Small Company Index	-6.39%	-1.67%	8.28%
ETF Category: Morningstar Small Blend³	-5.93%	-1.17%	6.81%

Fund Expense Ratio⁴: 0.32%

Statistics
Number of Holdings	892
Weighted Average Market Cap (millions)	$4,251
Price/Earnings Ratio (P/E)	35.6
Price/Book Ratio (P/B)	1.8
Portfolio Turnover Rate^5,6	15%

Sector Weightings % of Investments
Financials	21.9%
Industrials	20.1%
Consumer Discretionary	16.5%
Information Technology	12.9%
Health Care	7.2%
Materials	5.6%
Energy	5.0%
Consumer Staples	3.9%
Utilities	3.9%
Telecommunication Services	1.1%
Other	1.9%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Sealed Air Corp.	0.4%
Endurance Specialty Holdings Ltd.	0.4%
Sears Holdings Corp.	0.3%
Netflix, Inc.	0.3%
Service Corp. International	0.3%
D.R. Horton, Inc.	0.3%
Masco Corp.	0.3%
StanCorp Financial Group, Inc.	0.3%
SkyWest, Inc.	0.3%
Western Refining, Inc.	0.3%
Total	3.2%

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 cannot be invested in directly. Performance results less than one year are not annualized.

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.

Investments in smaller companies typically exhibit higher volatility.

Index ownership — “Russell Fundamental U.S. Small Company Index” is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental U.S. Small Company Index ETF is not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (8/15/13) 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	ETF performance must be shown based on both a market price and 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	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

8Schwab Fundamental Index ETFs

Schwab Fundamental International Large Company Index ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	Since Inception*
Fund: Schwab Fundamental International Large Company Index ETF (8/15/13)
Market Price Return²	-8.03%	-11.37%	0.97%
NAV Return²	-7.66%	-11.05%	0.99%
Russell Fundamental Developed ex-U.S. Large Company Index (Net)	-7.67%	-10.93%	1.26%
ETF Category: Morningstar Foreign Large Value³	-9.88%	-15.57%	-1.51%

Fund Expense Ratio⁴: 0.32%

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. Indices are unmanaged and cannot be invested in directly. Performance results less than one year are not annualized.

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.

International investing may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations.

Index ownership — “Russell Fundamental Developed ex-U.S. Large Company Index” is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental International Large Company Index ETF is not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.

*	Inception (8/15/13) 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	ETF performance must be shown based on both a market price and 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.

Schwab Fundamental Index ETFs9

Schwab Fundamental International Large Company Index ETF

Performance and Fund Facts as of 08/31/15 continued

Statistics
Number of Holdings	838
Weighted Average Market Cap (millions)	$52,423
Price/Earnings Ratio (P/E)	23.3
Price/Book Ratio (P/B)	1.3
Portfolio Turnover Rate^1,2	5%

Sector Weightings % of Investments
Financials	19.2%
Industrials	12.7%
Energy	12.0%
Consumer Discretionary	11.2%
Consumer Staples	10.1%
Materials	8.8%
Telecommunication Services	7.8%
Health Care	7.4%
Utilities	6.2%
Information Technology	4.2%
Other	0.4%
Total	100.0%

Top Equity Holdings % of Net Assets³
BP plc	2.1%
Royal Dutch Shell plc, A Shares	1.9%
Total S.A.	1.7%
Royal Dutch Shell plc, B Shares	1.2%
HSBC Holdings plc	1.2%
Nestle S.A. – Reg'd	1.1%
Telefonica S.A.	1.1%
Banco Santander S.A.	1.1%
Vodafone Group plc	1.0%
Eni S.p.A.	1.0%
Total	13.4%

Country Weightings % of Investments

Japan	22.9%
United Kingdom	16.8%
France	11.1%
Germany	8.8%
Canada	5.9%
Switzerland	5.7%

Netherlands	5.3%
Australia	4.9%
Spain	4.3%
Italy	4.0%
Other Countries	10.3%
Total	100.0%

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

¹	Not annualized.
²	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
³	This list is not a recommendation of any security by the investment adviser.

10Schwab Fundamental Index ETFs

Schwab Fundamental International Small Company Index ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	Since Inception*
Fund: Schwab Fundamental International Small Company Index ETF (8/15/13)
Market Price Return²	-3.21%	-5.42%	3.70%
NAV Return²	-2.83%	-5.16%	3.57%
Russell Fundamental Developed ex-U.S. Small Company Index (Net)	-2.68%	-4.80%	4.21%
ETF Category: Morningstar Foreign Small/Mid Blend³	-2.39%	-5.59%	3.90%

Fund Expense Ratio⁴: 0.46%

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.

Small-company stocks are subject to greater volatility than many other asset classes.

Index ownership — “Russell Fundamental Developed ex-U.S. Small Company Index” is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental International Small Company Index ETF is not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.

*	Inception (8/15/13) 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	ETF performance must be shown based on both a market price and 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.

Schwab Fundamental Index ETFs11

Schwab Fundamental International Small Company Index ETF

Performance and Fund Facts as of 08/31/15 continued

Statistics
Number of Holdings	1,375
Weighted Average Market Cap (millions)	$3,046
Price/Earnings Ratio (P/E)	25.3
Price/Book Ratio (P/B)	1.4
Portfolio Turnover Rate^1,2	13%

Sector Weightings % of Investments
Industrials	24.5%
Consumer Discretionary	19.0%
Financials	15.7%
Materials	10.8%
Information Technology	9.1%
Consumer Staples	9.0%
Health Care	5.1%
Energy	3.1%
Telecommunication Services	1.7%
Utilities	1.3%
Other	0.7%
Total	100.0%

Top Equity Holdings % of Net Assets³
Koninklijke BAM Groep N.V.	0.3%
Alps Electric Co., Ltd.	0.2%
IT Holdings Corp.	0.2%
Kikkoman Corp.	0.2%
Ryohin Keikaku Co., Ltd.	0.2%
Matsumotokiyoshi Holdings Co., Ltd.	0.2%
Greene King plc	0.2%
iShares MSCI EAFE Small-Cap ETF	0.2%
Banca Popolare di Milano Scarl	0.2%
Nichirei Corp.	0.2%
Total	2.1%

Country Weightings % of Investments

Japan	40.9%
United Kingdom	13.1%
Canada	6.9%
Australia	4.9%
France	4.3%

Germany	3.6%
Italy	3.0%
Switzerland	2.8%
Other Countries	20.5%
Total	100.0%

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

¹	Not annualized.
²	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
³	This list is not a recommendation of any security by the investment adviser.

12Schwab Fundamental Index ETFs

Schwab Fundamental Emerging Markets Large Company Index ETF

Performance and Fund Facts as of 08/31/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	Since Inception*
Fund: Schwab Fundamental Emerging Markets Large Company Index ETF (8/15/13)
Market Price Return²	-17.58%	-29.38%	-9.53%
NAV Return²	-17.51%	-29.72%	-9.84%
Russell Fundamental Emerging Markets Large Company Index (Net)	-17.24%	-29.47%	-9.34%
ETF Category: Morningstar Diversified Emerging Markets³	-15.81%	-23.69%	-7.19%

Fund Expense Ratio⁴: 0.48%

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.

Emerging markets involve heightened risks related to the same factors as international investing, as well as increased volatility and lower trading volume.

Index ownership — “Russell Fundamental Emerging Markets Large Company Index” is a joint trademark of Frank Russell Company (Russell) and Research Affiliates LLC (RA) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of RA. Subject to RA’s intellectual property rights in certain content, Russell is the owner of all copyrights related to the Russell Fundamental Index Series. Russell is the owner of the trademarks and copyrights related to the Russell Indexes. Schwab Fundamental Emerging Markets Large Company Index ETF is not sponsored, endorsed, sold or promoted by Russell or RA, and Russell and RA do not make any representation regarding the advisability of investing in shares of the fund.

*	Inception (8/15/13) 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	ETF performance must be shown based on both a market price and 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.

Schwab Fundamental Index ETFs13

Schwab Fundamental Emerging Markets Large Company Index ETF

Performance and Fund Facts as of 08/31/15 continued

Statistics
Number of Holdings	283
Weighted Average Market Cap (millions)	$47,461
Price/Earnings Ratio (P/E)	13.9
Price/Book Ratio (P/B)	0.9
Portfolio Turnover Rate^1,2	10%

Sector Weightings % of Investments
Energy	26.0%
Financials	18.9%
Information Technology	14.5%
Telecommunication Services	9.9%
Materials	9.7%
Consumer Discretionary	6.3%
Industrials	5.2%
Consumer Staples	4.1%
Utilities	3.4%
Other	2.0%
Total	100.0%

Top Equity Holdings % of Net Assets³
Gazprom PAO	4.6%
Samsung Electronics Co., Ltd.	4.0%
LUKOIL PJSC	2.9%
China Mobile Ltd.	2.4%
China Construction Bank Corp., H Shares	2.2%
Taiwan Semiconductor Manufacturing Co., Ltd.	1.9%
Hon Hai Precision Industry Co., Ltd.	1.8%
Industrial & Commercial Bank of China Ltd., H Shares	1.8%
Petroleo Brasileiro S.A., Preferred Stock	1.6%
China Petroleum & Chemical Corp., H Shares	1.6%
Total	24.8%

Country Weightings % of Investments

Republic of Korea	17.9%
China	17.0%
Russia	14.1%
Taiwan	12.2%
Brazil	12.1%

South Africa	6.6%
Mexico	3.9%
Poland	2.7%
Other Countries	13.5%
Total	100.0%

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

¹	Not annualized.
²	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
³	This list is not a recommendation of any security by the investment adviser.

14Schwab Fundamental Index ETFs

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

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.

	Expense Ratio¹ (Annualized)	Beginning Account Value at 3/1/15	Ending Account Value (Net of Expenses) at 8/31/15	Expenses Paid During Period² 3/1/15–8/31/15
Schwab Fundamental U.S. Broad Market Index ETF
Actual Return	0.32%	$1,000.00	$ 928.90	$1.55
Hypothetical 5% Return	0.32%	$1,000.00	$1,023.49	$1.63
Schwab Fundamental U.S. Large Company Index ETF
Actual Return	0.32%	$1,000.00	$ 928.00	$1.55
Hypothetical 5% Return	0.32%	$1,000.00	$1,023.49	$1.63
Schwab Fundamental U.S. Small Company Index ETF
Actual Return	0.32%	$1,000.00	$ 934.60	$1.56
Hypothetical 5% Return	0.32%	$1,000.00	$1,023.49	$1.63
Schwab Fundamental International Large Company Index ETF
Actual Return	0.32%	$1,000.00	$ 923.40	$1.55
Hypothetical 5% Return	0.32%	$1,000.00	$1,023.49	$1.63
Schwab Fundamental International Small Company Index ETF
Actual Return	0.46%	$1,000.00	$ 971.70	$2.28
Hypothetical 5% Return	0.46%	$1,000.00	$ 1,022.79	$2.34
Schwab Fundamental Emerging Markets Large Company Index ETF
Actual Return	0.46%	$1,000.00	$ 824.90	$2.11
Hypothetical 5% Return	0.46%	$1,000.00	$ 1,022.79	$2.34

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 fund are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184 days of the period, and divided by 366 days of the fiscal year.

Schwab Fundamental Index ETFs15

Schwab Fundamental U.S. Broad Market Index ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	8/14/13 ¹– 2/28/14
Per-Share Data ($)
Net asset value at beginning of period	30.54	27.36	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.31 ²	0.54	0.21
Net realized and unrealized gains (losses)	(2.46)	3.14	2.28
Total from investment operations	(2.15)	3.68	2.49
Less distributions:
Distributions from net investment income	(0.31)	(0.50)	(0.13)
Net asset value at end of period	28.08	30.54	27.36
Total return (%)	(7.11) ³	13.54	9.99 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.32 ⁴	0.32	0.32 ⁴
Net investment income (loss)	2.07 ⁴	2.14	2.11 ⁴
Portfolio turnover rate⁵	6 ³	10	5 ³
Net assets, end of period ($ x 1,000)	220,421	212,247	58,823

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

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

16 See financial notes

Schwab Fundamental U.S. Broad Market Index ETF

Condensed Portfolio Holdings as of August 31, 2015 (Unaudited)

This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab ETFs™ at 1-800-435-4000. This complete schedule, filed on the fund's Form N-CSR, is also available on the SEC's website at www.sec.gov.

In addition, 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 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.csimfunds.com/schwabetfs_prospectus.

Holdings by Category		Cost ($)	Value ($)
99.5%	Common Stock	222,526,397	219,198,227
0.0%	Rights	1,852	1,852
0.5%	Other Investment Companies	1,188,415	1,188,415
100.0%	Total Investments	223,716,664	220,388,494
0.0%	Other Assets and Liabilities, Net		32,312
100.0%	Net Assets		220,420,806

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.5% of net assets
Automobiles & Components 1.2%
Other Securities		1.2	2,551,330
Banks 5.7%
Bank of America Corp.	134,510	1.0	2,197,893
Citigroup, Inc.	28,393	0.7	1,518,458
JPMorgan Chase & Co.	45,050	1.3	2,887,705
Wells Fargo & Co.	40,785	1.0	2,175,064
Other Securities		1.7	3,774,393
		5.7	12,553,513
Capital Goods 7.9%
3M Co.	5,725	0.4	813,751
General Electric Co.	110,816	1.2	2,750,453
United Technologies Corp.	10,444	0.4	956,775
Other Securities		5.9	12,927,015
		7.9	17,447,994
Commercial & Professional Services 1.2%
Other Securities		1.2	2,664,799
Consumer Durables & Apparel 1.4%
Other Securities		1.4	3,006,147

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Services 2.0%
McDonald's Corp.	14,431	0.6	1,371,234
Other Securities		1.4	3,058,340
		2.0	4,429,574
Diversified Financials 3.3%
Berkshire Hathaway, Inc., Class B *	12,040	0.7	1,613,842
The Charles Schwab Corp. (a)	3,482	0.0	105,783
The Goldman Sachs Group, Inc.	4,669	0.4	880,573
Other Securities		2.2	4,677,633
		3.3	7,277,831
Energy 12.5%
Chevron Corp.	52,468	1.9	4,249,383
ConocoPhillips	38,904	0.9	1,912,132
Exxon Mobil Corp.	114,531	3.9	8,617,313
Occidental Petroleum Corp.	12,622	0.4	921,532
Phillips 66	20,220	0.7	1,598,795
Schlumberger Ltd.	11,786	0.4	911,883
Valero Energy Corp.	18,595	0.5	1,103,427
Other Securities		3.8	8,256,176
		12.5	27,570,641
Food & Staples Retailing 4.0%
Costco Wholesale Corp.	7,110	0.5	995,755
CVS Health Corp.	20,745	1.0	2,124,288
Wal-Mart Stores, Inc.	42,099	1.2	2,725,068
Walgreens Boots Alliance, Inc.	13,707	0.5	1,186,341
Other Securities		0.8	1,684,561
		4.0	8,716,013
Food, Beverage & Tobacco 5.3%
Altria Group, Inc.	18,498	0.4	991,123
PepsiCo, Inc.	16,368	0.7	1,521,078
Philip Morris International, Inc.	22,957	0.8	1,831,969
The Coca-Cola Co.	38,027	0.7	1,495,222
Other Securities		2.7	5,962,222
		5.3	11,801,614
Health Care Equipment & Services 5.9%
Anthem, Inc.	9,150	0.6	1,290,607
Medtronic plc	11,750	0.4	849,407
UnitedHealth Group, Inc.	15,128	0.8	1,750,310
Other Securities		4.1	9,057,744
		5.9	12,948,068
Household & Personal Products 2.0%
The Procter & Gamble Co.	38,643	1.2	2,730,901
Other Securities		0.8	1,616,910
		2.0	4,347,811
Insurance 3.6%
The Travelers Cos., Inc.	10,290	0.5	1,024,369
Other Securities		3.1	6,995,195
		3.6	8,019,564

See financial notes 17

Schwab Fundamental U.S. Broad Market Index ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Materials 3.7%
Other Securities		3.7	8,231,501
Media 3.2%
Comcast Corp., Class A	20,914	0.5	1,178,086
The Walt Disney Co.	13,032	0.6	1,327,700
Time Warner, Inc.	12,490	0.4	888,039
Other Securities		1.7	3,658,412
		3.2	7,052,237
Pharmaceuticals, Biotechnology & Life Sciences 5.5%
Amgen, Inc.	6,933	0.5	1,052,291
Eli Lilly & Co.	10,597	0.4	872,663
Johnson & Johnson	25,174	1.1	2,365,852
Merck & Co., Inc.	27,596	0.7	1,486,045
Pfizer, Inc.	82,765	1.2	2,666,688
Other Securities		1.6	3,601,063
		5.5	12,044,602
Real Estate 1.9%
Other Securities		1.9	4,276,425
Retailing 5.5%
Lowe's Cos., Inc.	16,518	0.5	1,142,550
Target Corp.	15,684	0.6	1,218,804
The Home Depot, Inc.	14,816	0.8	1,725,471
Other Securities		3.6	8,063,416
		5.5	12,150,241
Semiconductors & Semiconductor Equipment 2.2%
Intel Corp.	77,541	1.0	2,213,020
Other Securities		1.2	2,620,121
		2.2	4,833,141
Software & Services 6.8%
International Business Machines Corp.	18,563	1.2	2,745,282
Microsoft Corp.	85,703	1.7	3,729,795
Oracle Corp.	30,702	0.5	1,138,737
Other Securities		3.4	7,376,625
		6.8	14,990,439
Technology Hardware & Equipment 4.7%
Apple, Inc.	24,046	1.2	2,711,427
Cisco Systems, Inc.	61,984	0.7	1,604,146
Hewlett-Packard Co.	62,697	0.8	1,759,278
Other Securities		2.0	4,284,703
		4.7	10,359,554
Telecommunication Services 3.9%
AT&T, Inc.	158,136	2.4	5,250,115
Verizon Communications, Inc.	54,146	1.1	2,491,257
Other Securities		0.4	844,179
		3.9	8,585,551
Transportation 1.8%
Other Securities		1.8	3,896,810

Security	Number of Shares	% of Net Assets	Value ($)
Utilities 4.3%
Other Securities		4.3	9,442,827
Total Common Stock
(Cost $222,526,397)			219,198,227

Rights 0.0% of net assets
Telecommunication Services 0.0%
Other Securities		0.0	1,852
Total Rights
(Cost $1,852)			1,852

Other Investment Companies 0.5% of net assets
Money Market Fund 0.2%
Other Securities		0.2	441,752
Securities Lending Collateral 0.3%
Other Securities		0.3	746,663
Total Other Investment Companies
(Cost $1,188,415)			1,188,415

End of Investments.

At 08/31/15, the tax basis cost of the fund's investments was $223,731,993 and the unrealized appreciation and depreciation were $15,078,711 and ($18,422,210), respectively, with a net unrealized depreciation of ($3,343,499).

For the following notes, please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	Issuer is affiliated with the fund's adviser.
(b)	All or a portion of this security is on loan. Securities on loan were valued at $749,488. Non-cash collateral pledged to the fund for securities on loan amounted to $27,521.
(c)	The rate shown is the 7-day yield.
(d)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(e)	Illiquid security. At the period end, the value of these amounted to $1,852 or 0.0% of net assets.

CVR —	Contingent Value Rights
REIT —	Real Estate Investment Trust

In addition to the above, the fund held the following at 08/31/15:

	Number of Contracts	Contract Value ($)	Unrealized Depreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 09/18/15	6	590,760	(23,189)

18 See financial notes

Schwab Fundamental U.S. Broad Market Index ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Assets Valuation Input

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$219,198,227	$—	$—	$219,198,227
Rights ¹	—	—	1,852	1,852
Other Investment Companies¹	1,188,415	—	—	1,188,415
Total	$220,386,642	$—	$1,852	$220,388,494
Liabilities Valuation Input

Other Financial Instruments
Futures Contracts²	($23,189)	$—	$—	($23,189)

¹	As categorized in the complete schedule of portfolio holdings.
²	Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

Investments in Securities	Balance as of February 28, 2015	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of August 31, 2015
Rights	$1,852	$—	$—	$—	$—	$—	$—	$1,852
Total	$1,852	$—	$—	$—	$—	$—	$—	$1,852

See financial notes 19

Schwab Fundamental U.S. Broad Market Index ETF

Statement of

Assets and Liabilities

As of August 31, 2015; unaudited

Assets
Investments in affiliated issuers, at value (cost $87,986)		$105,783
Investments in unaffiliated issuers, at value (cost $222,882,015) including securities on loan of $749,488		219,536,048
Collateral invested for securities on loan, at value (cost $746,663)	+	746,663
Total investments, at value (cost $223,716,664)		220,388,494
Cash		102,396
Deposit with broker for futures contracts		27,600
Receivables:
Investments sold		225
Fund shares sold		1,403,954
Dividends		632,040
Income from securities on loan	+	2,825
Total assets		222,557,534
Liabilities
Collateral held for securities on loan		746,663
Payables:
Investments bought		1,370,717
Investment adviser fees		13,198
Variation margin on futures contracts	+	6,150
Total liabilities		2,136,728
Net Assets
Total assets		222,557,534
Total liabilities	–	2,136,728
Net assets		$220,420,806
Net Assets by Source
Capital received from investors		223,140,244
Net investment income not yet distributed		859,994
Net realized capital losses		(228,073)
Net unrealized capital depreciation		(3,351,359)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$220,420,806		7,850,001		$28.08

20 See financial notes

Schwab Fundamental U.S. Broad Market Index ETF

Statement of

Operations

For the period March 1, 2015 through August 31, 2015; unaudited

Investment Income
Dividends received from affiliated issuer		$458
Dividends received from unaffiliated issuers (net of foreign withholding tax of $588)		2,659,900
Securities on loan	+	15,118
Total investment income		2,675,476
Expenses
Investment adviser fees		358,289
Total expenses	–	358,289
Net investment income		2,317,187
Realized and Unrealized Gains (Losses)
Net realized gains on affiliated issuer		3,077
Net realized losses on unaffiliated investments		(128,866)
Net realized losses on futures contracts		(18,755)
Net realized losses on foreign currency transactions	+	(1)
Net realized losses		(144,545)
Net change in unrealized appreciation (depreciation) on affiliated issuer		3,410
Net change in unrealized appreciation (depreciation) on unaffiliated investments		(18,961,912)
Net change in unrealized appreciation (depreciation) on futures contracts	+	(23,565)
Net change in unrealized appreciation (depreciation)	+	(18,982,067)
Net realized and unrealized losses		(19,126,612)
Decrease in net assets resulting from operations		($16,809,425)

See financial notes 21

Schwab Fundamental U.S. Broad Market Index ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$2,317,187	$2,720,571
Net realized losses		(144,545)	(55,475)
Net change in unrealized appreciation (depreciation)	+	(18,982,067)	12,915,457
Increase (decrease) in net assets resulting from operations		(16,809,425)	15,580,553
Distributions to Shareholders
Distributions from net investment income		($2,276,300)	($2,041,330)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		900,000	$27,259,536	4,800,000	$139,884,389
Shares redeemed	+	—	—	—	—
Net transactions in fund shares		900,000	$27,259,536	4,800,000	$139,884,389
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		6,950,001	$212,246,995	2,150,001	$58,823,383
Total increase	+	900,000	8,173,811	4,800,000	153,423,612
End of period		7,850,001	$220,420,806	6,950,001	$212,246,995
Net investment income not yet distributed			$859,994		$819,107

22 See financial notes

Schwab Fundamental U.S. Large Company Index ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	8/14/13 ¹– 2/28/14
Per-Share Data ($)
Net asset value at beginning of period	30.55	27.27	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.33 ²	0.52	0.21
Net realized and unrealized gains (losses)	(2.51)	3.25	2.18
Total from investment operations	(2.18)	3.77	2.39
Less distributions:
Distributions from net investment income	(0.26)	(0.49)	(0.12)
Net asset value at end of period	28.11	30.55	27.27
Total return (%)	(7.20) ³	13.92	9.59 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.32 ⁴	0.32	0.32 ⁴
Net investment income (loss)	2.18 ⁴	2.24	2.20 ⁴
Portfolio turnover rate⁵	6 ³	10	6 ³
Net assets, end of period ($ x 1,000)	690,093	336,043	72,259

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

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

See financial notes 23

Schwab Fundamental U.S. Large Company Index ETF

Condensed Portfolio Holdings as of August 31, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.5%	Common Stock	736,722,324	686,681,938
0.3%	Other Investment Companies	2,093,038	2,093,038
99.8%	Total Investments	738,815,362	688,774,976
0.2%	Other Assets and Liabilities, Net		1,318,433
100.0%	Net Assets		690,093,409

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.5% of net assets
Automobiles & Components 1.2%
Other Securities		1.2	8,129,682
Banks 5.8%
Bank of America Corp.	467,172	1.1	7,633,590
Citigroup, Inc.	98,936	0.8	5,291,097
JPMorgan Chase & Co.	155,511	1.4	9,968,255
Wells Fargo & Co.	139,544	1.1	7,441,881
Other Securities		1.4	9,350,972
		5.8	39,685,795
Capital Goods 7.5%
3M Co.	20,027	0.4	2,846,638
General Electric Co.	380,045	1.4	9,432,717
United Technologies Corp.	36,162	0.5	3,312,801
Other Securities		5.2	36,309,545
		7.5	51,901,701
Commercial & Professional Services 0.8%
Other Securities		0.8	5,784,918
Consumer Durables & Apparel 1.1%
Other Securities		1.1	7,877,296

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Services 1.8%
McDonald's Corp.	49,840	0.7	4,735,797
Other Securities		1.1	7,398,075
		1.8	12,133,872
Diversified Financials 3.3%
Berkshire Hathaway, Inc., Class B *	40,774	0.8	5,465,347
The Charles Schwab Corp. (a)	13,004	0.1	395,062
The Goldman Sachs Group, Inc.	16,254	0.4	3,065,504
Other Securities		2.0	13,652,338
		3.3	22,578,251
Energy 13.3%
Chevron Corp.	181,258	2.1	14,680,085
ConocoPhillips	134,092	1.0	6,590,622
Exxon Mobil Corp.	394,109	4.3	29,652,761
Occidental Petroleum Corp.	43,223	0.5	3,155,711
Phillips 66	69,736	0.8	5,514,026
Schlumberger Ltd.	40,716	0.5	3,150,197
Valero Energy Corp.	64,722	0.6	3,840,603
Other Securities		3.5	24,832,297
		13.3	91,416,302
Food & Staples Retailing 4.3%
Costco Wholesale Corp.	24,403	0.5	3,417,640
CVS Health Corp.	71,534	1.1	7,325,082
Wal-Mart Stores, Inc.	144,078	1.4	9,326,169
Walgreens Boots Alliance, Inc.	47,688	0.6	4,127,396
Other Securities		0.7	5,098,438
		4.3	29,294,725
Food, Beverage & Tobacco 5.6%
Altria Group, Inc.	63,059	0.5	3,378,701
PepsiCo, Inc.	56,322	0.8	5,234,003
Philip Morris International, Inc.	78,713	0.9	6,281,297
The Coca-Cola Co.	128,466	0.7	5,051,283
Other Securities		2.7	18,841,664
		5.6	38,786,948
Health Care Equipment & Services 6.0%
Anthem, Inc.	30,960	0.6	4,366,908
Medtronic plc	39,851	0.4	2,880,829
UnitedHealth Group, Inc.	51,897	0.9	6,004,483
Other Securities		4.1	27,940,450
		6.0	41,192,670
Household & Personal Products 2.1%
The Procter & Gamble Co.	132,128	1.4	9,337,486
Other Securities		0.7	5,264,363
		2.1	14,601,849
Insurance 3.6%
The Travelers Cos., Inc.	35,655	0.5	3,549,455
Other Securities		3.1	21,438,003
		3.6	24,987,458

24 See financial notes

Schwab Fundamental U.S. Large Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Materials 3.5%
Other Securities		3.5	24,447,432
Media 3.3%
Comcast Corp., Class A	71,468	0.6	4,025,793
The Walt Disney Co.	44,829	0.7	4,567,179
Time Warner, Inc.	43,307	0.4	3,079,128
Other Securities		1.6	11,295,326
		3.3	22,967,426
Pharmaceuticals, Biotechnology & Life Sciences 5.8%
Amgen, Inc.	24,176	0.5	3,669,433
Eli Lilly & Co.	36,932	0.4	3,041,350
Johnson & Johnson	86,469	1.2	8,126,357
Merck & Co., Inc.	95,093	0.7	5,120,758
Pfizer, Inc.	285,964	1.3	9,213,760
Other Securities		1.7	10,693,211
		5.8	39,864,869
Real Estate 1.2%
Other Securities		1.2	8,349,196
Retailing 5.5%
Lowe's Cos., Inc.	57,904	0.6	4,005,220
Target Corp.	54,201	0.6	4,211,960
The Home Depot, Inc.	51,487	0.9	5,996,176
Other Securities		3.4	23,739,254
		5.5	37,952,610
Semiconductors & Semiconductor Equipment 2.1%
Intel Corp.	268,304	1.1	7,657,396
Other Securities		1.0	6,970,149
		2.1	14,627,545
Software & Services 6.9%
International Business Machines Corp.	63,883	1.4	9,447,657
Microsoft Corp.	295,543	1.9	12,862,031
Oracle Corp.	106,056	0.6	3,933,617
Other Securities		3.0	21,435,413
		6.9	47,678,718
Technology Hardware & Equipment 4.7%
Apple, Inc.	82,932	1.4	9,351,412
Cisco Systems, Inc.	212,991	0.8	5,512,207
Hewlett-Packard Co.	216,346	0.9	6,070,669
Other Securities		1.6	11,664,973
		4.7	32,599,261
Telecommunication Services 4.2%
AT&T, Inc.	544,275	2.6	18,069,930
Verizon Communications, Inc.	185,955	1.2	8,555,790
Other Securities		0.4	2,123,194
		4.2	28,748,914

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 1.6%
Other Securities		1.6	11,329,040
Utilities 4.3%
Other Securities		4.3	29,745,460
Total Common Stock
(Cost $736,722,324)			686,681,938

Other Investment Companies 0.3% of net assets
Money Market Fund 0.1%
Other Securities		0.1	580,860
Securities Lending Collateral 0.2%
Other Securities		0.2	1,512,178
Total Other Investment Companies
(Cost $2,093,038)			2,093,038

End of Investments.

At 08/31/15, the tax basis cost of the fund's investments was $738,903,410 and the unrealized appreciation and depreciation were $11,560,225 and ($61,688,659), respectively, with a net unrealized depreciation of ($50,128,434).

For the following notes, please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	Issuer is affiliated with the fund's adviser.
(b)	All or a portion of this security is on loan. Securities on loan were valued at $1,599,205. Non-cash collateral pledged to the fund for securities on loan amounted to $103,264.
(c)	The rate shown is the 7-day yield.

REIT —

Real Estate Investment Trust

In addition to the above, the fund held the following at 08/31/15:

	Number of Contracts	Contract Value ($)	Unrealized Depreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 09/18/15	17	1,673,820	(55,525)

See financial notes 25

Schwab Fundamental U.S. Large Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Assets Valuation Input

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$686,681,938	$—	$—	$686,681,938
Other Investment Companies¹	2,093,038	—	—	2,093,038
Total	$688,774,976	$—	$—	$688,774,976
Liabilities Valuation Input

Other Financial Instruments
Futures Contracts²	($55,525)	$—	$—	($55,525)

¹	As categorized in the complete schedule of portfolio holdings.
²	Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation.

26 See financial notes

Schwab Fundamental U.S. Large Company Index ETF

Statement of

Assets and Liabilities

As of August 31, 2015; unaudited

Assets
Investments in affiliated issuers, at value (cost $387,554)		$395,062
Investments in unaffiliated issuers, at value (cost $736,915,630) including securities on loan of $1,599,205		686,867,736
Collateral invested for securities on loan, at value (cost $1,512,178)	+	1,512,178
Total investments, at value (cost $738,815,362)		688,774,976
Cash		306,552
Deposit with broker for futures contracts		165,600
Receivables:
Investments sold		5,724
Fund shares sold		16,918,747
Dividends		2,175,642
Income from securities on loan	+	4,664
Total assets		708,351,905
Liabilities
Collateral held for securities on loan		1,512,178
Payables:
Investments bought		13,863,619
Investment adviser fees		40,955
Fund shares redeemed		2,824,319
Variation margin on futures contracts	+	17,425
Total liabilities		18,258,496
Net Assets
Total assets		708,351,905
Total liabilities	–	18,258,496
Net assets		$690,093,409
Net Assets by Source
Capital received from investors		727,347,586
Net investment income not yet distributed		2,889,110
Net realized capital gains		9,952,624
Net unrealized capital depreciation		(50,095,911)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$690,093,409		24,550,001		$28.11

See financial notes 27

Schwab Fundamental U.S. Large Company Index ETF

Statement of

Operations

For the period March 1, 2015 through August 31, 2015; unaudited

Investment Income
Dividends received from affiliated issuer		$1,375
Dividends received from unaffiliated issuers (net of foreign withholding tax of $1,809)		7,363,070
Securities on loan	+	20,054
Total investment income		7,384,499
Expenses
Investment adviser fees		944,499
Total expenses	–	944,499
Net investment income		6,440,000
Realized and Unrealized Gains (Losses)
Net realized gains on affiliated issuer		13,616
Net realized losses on unaffiliated investments		(355,347)
Net realized gains on in-kind redemptions		10,557,683
Net realized losses on futures contracts	+	(100,059)
Net realized gains		10,115,893
Net change in unrealized appreciation (depreciation) on affiliated issuer		(16,351)
Net change in unrealized appreciation (depreciation) on unaffiliated investments		(70,952,959)
Net change in unrealized appreciation (depreciation) on futures contracts	+	(55,377)
Net change in unrealized appreciation (depreciation)	+	(71,024,687)
Net realized and unrealized losses		(60,908,794)
Decrease in net assets resulting from operations		($54,468,794)

28 See financial notes

Schwab Fundamental U.S. Large Company Index ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$6,440,000	$3,875,641
Net realized gains		10,115,893	1,653,873
Net change in unrealized appreciation (depreciation)	+	(71,024,687)	17,970,076
Increase (decrease) in net assets resulting from operations		(54,468,794)	23,499,590
Distributions to Shareholders
Distributions from net investment income		($4,815,930)	($2,790,460)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		17,650,000	$531,090,439	8,700,000	$253,334,704
Shares redeemed	+	(4,100,000)	(117,755,726)	(350,000)	(10,258,984)
Net transactions in fund shares		13,550,000	$413,334,713	8,350,000	$243,075,720
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		11,000,001	$336,043,420	2,650,001	$72,258,570
Total increase	+	13,550,000	354,049,989	8,350,000	263,784,850
End of period		24,550,001	$690,093,409	11,000,001	$336,043,420
Net investment income not yet distributed			$2,889,110		$1,265,040

See financial notes 29

Schwab Fundamental U.S. Small Company Index ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	8/14/13 ¹– 2/28/14
Per-Share Data ($)
Net asset value at beginning of period	30.68	28.44	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.21 ²	0.34	0.12
Net realized and unrealized gains (losses)	(2.21)	2.22	3.41
Total from investment operations	(2.00)	2.56	3.53
Less distributions:
Distributions from net investment income	(0.16)	(0.32)	(0.09)
Net asset value at end of period	28.52	30.68	28.44
Total return (%)	(6.54) ³	9.06	14.14 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.32 ⁴	0.32	0.32 ⁴
Net investment income (loss)	1.40 ⁴	1.32	1.16 ⁴
Portfolio turnover rate⁵	15 ³	22	9 ³
Net assets, end of period ($ x 1,000)	413,512	187,141	55,465

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

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

30 See financial notes

Schwab Fundamental U.S. Small Company Index ETF

Condensed Portfolio Holdings as of August 31, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.9%	Common Stock	442,086,639	412,967,310
0.0%	Rights	14,969	14,969
1.9%	Other Investment Companies	8,019,751	8,019,751
101.8%	Total Investments	450,121,359	421,002,030
(1.8%)	Other Assets and Liabilities, Net		(7,490,273)
100.0%	Net Assets		413,511,757

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.9% of net assets
Automobiles & Components 1.0%
Other Securities		1.0	4,303,230
Banks 5.2%
Zions Bancorp	41,869	0.3	1,214,201
Other Securities		4.9	20,446,446
		5.2	21,660,647
Capital Goods 12.1%
Acuity Brands, Inc.	5,066	0.2	987,211
Lennox International, Inc.	10,489	0.3	1,238,122
Masco Corp.	52,046	0.3	1,365,167
Orbital ATK, Inc.	15,527	0.3	1,175,549
Spirit AeroSystems Holdings, Inc., Class A *	20,279	0.3	1,036,460
WABCO Holdings, Inc. *	8,471	0.2	976,876
Other Securities		10.5	43,258,692
		12.1	50,038,077
Commercial & Professional Services 5.2%
ABM Industries, Inc.	32,758	0.3	1,048,584
Copart, Inc. *	30,275	0.3	1,060,231
Other Securities		4.6	19,226,888
		5.2	21,335,703

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Durables & Apparel 3.6%
D.R. Horton, Inc.	45,539	0.3	1,383,019
Harman International Industries, Inc.	10,155	0.2	992,550
Other Securities		3.1	12,674,628
		3.6	15,050,197
Consumer Services 4.6%
Service Corp. International	47,928	0.3	1,421,065
Other Securities		4.3	17,421,538
		4.6	18,842,603
Diversified Financials 3.6%
ETRADE Financial Corp.	43,907	0.3	1,154,315
Federated Investors, Inc., Class B	31,631	0.2	980,561
SEI Investments Co.	21,917	0.3	1,108,562
Other Securities		2.8	11,596,167
		3.6	14,839,605
Energy 5.1%
McDermott International, Inc. *	229,368	0.3	1,165,189
SEACOR Holdings, Inc. *	17,129	0.3	1,104,992
Western Refining, Inc.	28,942	0.3	1,245,085
WPX Energy, Inc. *	148,458	0.3	1,085,228
Other Securities		3.9	16,304,367
		5.1	20,904,861
Food & Staples Retailing 1.0%
SUPERVALU, Inc. *	127,284	0.3	1,048,820
Other Securities		0.7	3,049,238
		1.0	4,098,058
Food, Beverage & Tobacco 2.6%
Flowers Foods, Inc.	43,229	0.2	1,003,345
Universal Corp.	21,556	0.3	1,060,771
Other Securities		2.1	8,587,893
		2.6	10,652,009
Health Care Equipment & Services 5.0%
MEDNAX, Inc. *	12,959	0.3	1,043,848
Other Securities		4.7	19,819,582
		5.0	20,863,430
Household & Personal Products 0.4%
Other Securities		0.4	1,730,981
Insurance 4.0%
Allied World Assurance Co. Holdings AG	24,141	0.2	964,192
Aspen Insurance Holdings Ltd.	21,614	0.2	992,299
CNO Financial Group, Inc.	60,425	0.3	1,081,003
Endurance Specialty Holdings Ltd.	22,826	0.4	1,455,157
StanCorp Financial Group, Inc.	11,962	0.3	1,360,199
Other Securities		2.6	10,585,152
		4.0	16,438,002

See financial notes 31

Schwab Fundamental U.S. Small Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Materials 5.7%
Crown Holdings, Inc. *	22,272	0.3	1,104,023
Martin Marietta Materials, Inc.	7,123	0.3	1,195,239
Sealed Air Corp.	34,149	0.4	1,756,966
Other Securities		4.7	19,565,585
		5.7	23,621,813
Media 1.9%
Other Securities		1.9	8,010,790
Pharmaceuticals, Biotechnology & Life Sciences 2.3%
Endo International plc *	15,527	0.3	1,195,579
Other Securities		2.0	8,304,339
		2.3	9,499,918
Real Estate 9.5%
Apartment Investment & Management Co., Class A	27,608	0.2	994,716
Jones Lang LaSalle, Inc.	6,778	0.2	1,009,041
Rayonier, Inc.	44,032	0.2	1,012,736
UDR, Inc.	30,300	0.2	978,690
Other Securities		8.7	35,163,171
		9.5	39,158,354
Retailing 5.7%
GNC Holdings, Inc., Class A	21,541	0.2	1,008,119
Group 1 Automotive, Inc.	12,051	0.3	1,053,257
Netflix, Inc. *	12,404	0.3	1,426,832
Sears Holdings Corp. *(d)	53,676	0.3	1,432,076
The Men's Wearhouse, Inc.	19,972	0.3	1,127,419
Other Securities		4.3	17,450,359
		5.7	23,498,062
Semiconductors & Semiconductor Equipment 2.9%
Other Securities		2.9	11,795,937
Software & Services 5.6%
Convergys Corp.	49,740	0.3	1,124,124
EarthLink Holdings Corp.	123,121	0.2	1,032,985
Science Applications International Corp.	21,885	0.3	1,067,331
VeriSign, Inc. *	17,114	0.3	1,179,839
Other Securities		4.5	18,745,797
		5.6	23,150,076
Technology Hardware & Equipment 4.6%
F5 Networks, Inc. *	7,982	0.2	969,095
Other Securities		4.4	18,249,143
		4.6	19,218,238
Telecommunication Services 1.1%
Level 3 Communications, Inc. *	21,814	0.2	975,740
Other Securities		0.9	3,753,944
		1.1	4,729,684

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 3.2%
SkyWest, Inc.	78,646	0.3	1,250,471
Other Securities		2.9	11,863,509
		3.2	13,113,980
Utilities 4.0%
WGL Holdings, Inc.	17,729	0.2	960,912
Other Securities		3.8	15,452,143
		4.0	16,413,055
Total Common Stock
(Cost $442,086,639)			412,967,310

Rights 0.0% of net assets
Telecommunication Services 0.0%
Other Securities		0.0	14,969
Total Rights
(Cost $14,969)			14,969

Other Investment Companies 1.9% of net assets
Money Market Fund 0.2%
Other Securities		0.2	923,861
Securities Lending Collateral 1.7%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (c)		1.7	7,095,890
Total Other Investment Companies
(Cost $8,019,751)			8,019,751

End of Investments.

At 08/31/15, the tax basis cost of the fund's investments was $450,152,866 and the unrealized appreciation and depreciation were $12,067,277 and ($41,218,113), respectively, with a net unrealized depreciation of ($29,150,836).

For the following notes, please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(b)	Illiquid security. At the period end, the value of these amounted to $14,969 or 0.0% of net assets.
(c)	The rate shown is the 7-day yield.
(d)	All or a portion of this security is on loan. Securities on loan were valued at $6,774,318. Non-cash collateral pledged to the fund for securities on loan amounted to $10,965.

CVR —	Contingent Value Rights
REIT —	Real Estate Investment Trust

32 See financial notes

Schwab Fundamental U.S. Small Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

In addition to the above, the fund held the following at 08/31/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
Russell 2000 Index, e-mini, Long, expires 09/18/15	1	115,750	2,958

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$412,967,310	$—	$—	$412,967,310
Rights ¹	—	—	14,969	14,969
Other Investment Companies¹	8,019,751	—	—	8,019,751
Total	$420,987,061	$—	$14,969	$421,002,030
Other Financial Instruments
Futures Contracts²	$2,958	$—	$—	$2,958

¹	As categorized in the complete schedule of portfolio holdings.
²	Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

Investments in Securities	Balance as of February 28, 2015	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of August 31, 2015
Rights	$14,969	$—	$—	$—	$—	$—	$—	$14,969
Total	$14,969	$—	$—	$—	$—	$—	$—	$14,969

See financial notes 33

Schwab Fundamental U.S. Small Company Index ETF

Statement of

Assets and Liabilities

As of August 31, 2015; unaudited

Assets
Investments, at value (cost $443,025,469) including securities on loan of $6,774,318		$413,906,140
Collateral invested for securities on loan, at value (cost $7,095,890)	+	7,095,890
Total investments, at value (cost $450,121,359)		421,002,030
Deposit with broker for futures contracts		40,800
Receivables:
Investments sold		7,738
Fund shares sold		4,289,020
Dividends		440,429
Income from securities on loan	+	31,655
Total assets		425,811,672
Liabilities
Collateral held for securities on loan		7,095,890
Payables:
Investments bought		5,178,653
Investment adviser fees		24,722
Variation margin on futures contracts	+	650
Total liabilities		12,299,915
Net Assets
Total assets		425,811,672
Total liabilities	–	12,299,915
Net assets		$413,511,757
Net Assets by Source
Capital received from investors		436,653,217
Net investment income not yet distributed		923,088
Net realized capital gains		5,051,823
Net unrealized capital depreciation		(29,116,371)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$413,511,757		14,500,001		$28.52

34 See financial notes

Schwab Fundamental U.S. Small Company Index ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$2,470,220	$1,309,944
Net realized gains		5,236,623	1,015,667
Net change in unrealized appreciation (depreciation)	+	(41,983,687)	9,506,145
Increase (decrease) in net assets resulting from operations		(34,276,844)	11,831,756
Distributions to Shareholders
Distributions from net investment income		($1,794,435)	($1,067,580)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		11,000,000	$338,181,256	4,550,000	$132,596,467
Shares redeemed	+	(2,600,000)	(75,739,658)	(400,000)	(11,684,208)
Net transactions in fund shares		8,400,000	$262,441,598	4,150,000	$120,912,259
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		6,100,001	$187,141,438	1,950,001	$55,465,003
Total increase	+	8,400,000	226,370,319	4,150,000	131,676,435
End of period		14,500,001	$413,511,757	6,100,001	$187,141,438
Net investment income not yet distributed			$923,088		$247,303

36 See financial notes

Schwab Fundamental International Large Company Index ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	8/14/13 ¹– 2/28/14
Per-Share Data ($)
Net asset value at beginning of period	27.17	28.26	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.50 ²	0.30	0.36
Net realized and unrealized gains (losses)	(2.58)	(0.92) ³	3.04
Total from investment operations	(2.08)	(0.62)	3.40
Less distributions:
Distributions from net investment income	—	(0.47)	(0.14)
Net asset value at end of period	25.09	27.17	28.26
Total return (%)	(7.66) ⁴	(2.11)	13.60 ⁴
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.32 ⁵	0.32	0.32 ⁵
Net investment income (loss)	3.70 ⁵	2.50	4.00 ⁵
Portfolio turnover rate⁶	5 ⁴	11	8 ⁴
Net assets, end of period ($ x 1,000)	699,997	290,670	62,164

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

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.

⁴

Not annualized.

⁵

Annualized.

⁶

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

See financial notes 37

Schwab Fundamental International Large Company Index ETF

Condensed Portfolio Holdings as of August 31, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.0%	Common Stock	753,063,762	692,719,251
0.4%	Preferred Stock	3,713,046	3,078,011
0.0%	Rights	—	5,499
0.4%	Other Investment Companies	2,961,888	2,961,888
99.8%	Total Investments	759,738,696	698,764,649
0.2%	Other Assets and Liabilities, Net		1,232,392
100.0%	Net Assets		699,997,041

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.0% of net assets
Australia 4.9%
BHP Billiton Ltd.	226,015	0.6	4,034,674
Commonwealth Bank of Australia	54,043	0.4	2,876,599
Westpac Banking Corp.	120,631	0.4	2,659,713
Other Securities		3.5	24,570,669
		4.9	34,141,655
Austria 0.4%
Other Securities		0.4	2,611,476
Belgium 1.0%
Other Securities		1.0	6,935,670
Canada 5.9%
Royal Bank of Canada	48,323	0.4	2,663,667
Other Securities		5.5	38,489,129
		5.9	41,152,796
Denmark 0.8%
Other Securities		0.8	5,967,300
Finland 1.0%
Other Securities		1.0	6,807,681

Security	Number of Shares	% of Net Assets	Value ($)
France 11.1%
AXA S.A.	113,923	0.4	2,868,949
BNP Paribas S.A.	70,523	0.6	4,446,511
Compagnie de Saint-Gobain	61,683	0.4	2,831,328
Engie	217,373	0.6	3,893,409
Orange S.A.	346,239	0.8	5,466,366
Sanofi	60,015	0.8	5,929,149
Total S.A.	261,445	1.7	11,953,785
Vivendi S.A.	132,874	0.5	3,282,176
Other Securities		5.3	36,860,859
		11.1	77,532,532
Germany 8.4%
Allianz SE - Reg'd	23,717	0.5	3,780,278
BASF SE	65,725	0.8	5,289,172
Bayer AG - Reg'd	27,074	0.5	3,669,188
Daimler AG - Reg'd	61,382	0.7	4,928,668
Deutsche Telekom AG - Reg'd	308,699	0.8	5,273,202
E.ON SE	357,128	0.6	4,043,635
Siemens AG - Reg'd	45,576	0.6	4,517,466
Other Securities		3.9	27,449,637
		8.4	58,951,246
Hong Kong 0.9%
Other Securities		0.9	6,217,120
Ireland 0.7%
Other Securities		0.7	4,767,989
Israel 0.5%
Other Securities		0.5	3,392,290
Italy 3.9%
Enel S.p.A.	927,420	0.6	4,173,322
Eni S.p.A.	420,774	1.0	6,897,710
Intesa Sanpaolo S.p.A.	851,529	0.4	3,104,765
UniCredit S.p.A.	489,820	0.5	3,199,755
Other Securities		1.4	10,089,002
		3.9	27,464,554
Japan 22.9%
Canon, Inc.	89,399	0.4	2,734,679
Honda Motor Co., Ltd.	122,333	0.6	3,860,225
KDDI Corp.	115,893	0.4	2,886,208
Mitsubishi UFJ Financial Group, Inc.	512,914	0.5	3,386,413
Nippon Telegraph & Telephone Corp.	109,213	0.6	4,172,146
Sumitomo Mitsui Financial Group, Inc.	64,760	0.4	2,652,710
Tokyo Electric Power Co., Inc. *	394,675	0.4	2,703,142
Toyota Motor Corp.	104,202	0.9	6,184,105
Other Securities		18.7	131,505,479
		22.9	160,085,107
Luxembourg 0.4%
Other Securities		0.4	2,998,417

38 See financial notes

Schwab Fundamental International Large Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Netherlands 5.3%
Royal Dutch Shell plc, A Shares	498,510	1.9	13,003,749
Royal Dutch Shell plc, B Shares	309,874	1.2	8,132,945
Other Securities		2.2	15,854,278
		5.3	36,990,972
New Zealand 0.1%
Other Securities		0.1	892,579
Norway 0.8%
Statoil A.S.A.	181,306	0.4	2,678,904
Other Securities		0.4	3,127,890
		0.8	5,806,794
Portugal 0.2%
Other Securities		0.2	1,614,696
Singapore 0.8%
Other Securities		0.8	5,386,166
Spain 4.3%
Banco Bilbao Vizcaya Argentaria S.A.	366,382	0.5	3,392,217
Banco Santander S.A.	1,234,891	1.1	7,554,974
Iberdrola S.A.	409,860	0.4	2,780,747
Telefonica S.A.	553,817	1.1	7,812,747
Other Securities		1.2	8,327,713
		4.3	29,868,398
Sweden 2.3%
Other Securities		2.3	16,030,327
Switzerland 5.6%
Nestle S.A. - Reg'd	107,815	1.1	7,949,133
Novartis AG - Reg'd	68,269	1.0	6,685,357
Roche Holding AG	17,791	0.7	4,856,858
Other Securities		2.8	20,069,666
		5.6	39,561,014
United Kingdom 16.8%
AstraZeneca plc	78,463	0.7	4,971,855
Barclays plc	995,036	0.6	4,001,141
BP plc	2,609,627	2.1	14,469,052
British American Tobacco plc	74,640	0.6	3,993,764
GlaxoSmithKline plc	276,095	0.8	5,692,221
HSBC Holdings plc	1,006,299	1.1	8,027,858
Rio Tinto plc	81,830	0.4	3,005,407
Tesco plc	1,277,738	0.5	3,760,336
Vodafone Group plc	2,070,499	1.0	7,219,098
Other Securities		9.0	62,401,740
		16.8	117,542,472
Total Common Stock
(Cost $753,063,762)			692,719,251

Security	Number of Shares	% of Net Assets	Value ($)
Preferred Stock 0.4% of net assets
Germany 0.4%
Other Securities		0.4	2,858,047
Italy 0.0%
Other Securities		0.0	219,964
Total Preferred Stock
(Cost $3,713,046)			3,078,011

Rights 0.0% of net assets
Australia 0.0%
Other Securities		0.0	5,499
Total Rights
(Cost $—)			5,499

Other Investment Companies 0.4% of net assets
United States 0.4%
Money Market Fund 0.2%
Other Securities		0.2	1,615,091
Securities Lending Collateral 0.2%
Other Securities		0.2	1,346,797
Total Other Investment Companies
(Cost $2,961,888)			2,961,888

End of Investments.

At 08/31/15, the tax basis cost of the fund's investments was $759,828,882 and the unrealized appreciation and depreciation were $15,396,008 and ($76,460,241), respectively, with a net unrealized depreciation of ($61,064,233).

For the following notes, please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	The rate shown is the 7-day yield.
(b)	All or a portion of this security is on loan. Securities on loan were valued at $1,548,083. Non-cash collateral pledged to the fund for securities on loan amounted to $265,345.

ADR —	American Depositary Receipt
CDI —	CHESS Depositary Interest
CVA —	Dutch Certificate
Reg'd —	Registered
REIT —	Real Estate Investment Trust
RSP —	Risparmio (Convertible Savings Shares)

See financial notes 39

Schwab Fundamental International Large Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

In addition to the above, the fund held the following at 08/31/15:

	Number of Contracts	Contract Value ($)	Unrealized Depreciation ($)
Futures Contracts
MSCI EAFE, e-mini, Long, expires 09/18/15	20	1,732,700	(91,161)

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Assets Valuation Input

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$692,719,251	$—	$—	$692,719,251
Preferred Stock¹	3,078,011	—	—	3,078,011
Rights ¹	5,499	—	—	5,499
Other Investment Companies¹	2,961,888	—	—	2,961,888
Total	$698,764,649	$—	$—	$698,764,649
Liabilities Valuation Input

Other Financial Instruments
Futures Contracts²	($91,161)	$—	$—	($91,161)

¹	As categorized in the complete schedule of portfolio holdings.
²	Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

Investments in Securities	Balance as of February 28, 2015	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of August 31, 2015
Common Stock
Netherlands	$29,564	($808)	($4,053)	$—	($24,703)	$—	$—	$—
Total	$29,564	($808)	($4,053)	$—	($24,703)	$—	$—	$—

40 See financial notes

Schwab Fundamental International Large Company Index ETF

Statement of

Assets and Liabilities

As of August 31, 2015; unaudited

Assets
Investments, at value (cost $758,391,899) including securities on loan of $1,548,083		$697,417,852
Collateral invested for securities on loan, at value (cost $1,346,797)	+	1,346,797
Total investments, at value (cost $759,738,696)		698,764,649
Deposit with broker for futures contracts		79,200
Foreign currency, at value (cost $386,869)		381,143
Receivables:
Dividends		1,938,346
Foreign tax reclaims		233,499
Income from securities on loan	+	963
Total assets		701,397,800
Liabilities
Collateral held for securities on loan		1,346,797
Payables:
Investment adviser fees		42,362
Variation margin on futures contracts	+	11,600
Total liabilities		1,400,759
Net Assets
Total assets		701,397,800
Total liabilities	–	1,400,759
Net assets		$699,997,041
Net Assets by Source
Capital received from investors		753,533,311
Net investment income not yet distributed		10,767,870
Net realized capital losses		(3,218,195)
Net unrealized capital depreciation		(61,085,945)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$699,997,041		27,900,001		$25.09

See financial notes 41

Schwab Fundamental International Large Company Index ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$10,225,443	$3,605,434
Net realized losses		(1,703,337)	(1,488,508)
Net change in unrealized appreciation (depreciation)	+	(66,119,522)	2,252,137
Increase (decrease) in net assets resulting from operations		(57,597,416)	4,369,063
Distributions to Shareholders
Distributions from net investment income		($—)	($3,534,000)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		17,200,000	$466,924,214	8,500,000	$227,670,907
Shares redeemed	+	—	—	—	—
Net transactions in fund shares		17,200,000	$466,924,214	8,500,000	$227,670,907
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		10,700,001	$290,670,243	2,200,001	$62,164,273
Total increase	+	17,200,000	409,326,798	8,500,000	228,505,970
End of period		27,900,001	$699,997,041	10,700,001	$290,670,243
Net investment income not yet distributed			$10,767,870		$542,427

See financial notes 43

Schwab Fundamental International Small Company Index ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	8/14/13 ¹– 2/28/14
Per-Share Data ($)
Net asset value at beginning of period	27.22	27.75	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.28 ²	0.41	0.15
Net realized and unrealized gains (losses)	(1.05)	(0.53) ³	2.78
Total from investment operations	(0.77)	(0.12)	2.93
Less distributions:
Distributions from net investment income	—	(0.41)	(0.18)
Net asset value at end of period	26.45	27.22	27.75
Total return (%)	(2.83) ⁴	(0.32)	11.73 ⁴
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.46 ⁵	0.46	0.46 ⁵
Net investment income (loss)	2.03 ⁵	1.73	1.09 ⁵
Portfolio turnover rate⁶	13 ⁴	21	18 ⁴
Net assets, end of period ($ x 1,000)	312,111	68,046	24,977

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

⁴

Not annualized.

⁵

Annualized.

⁶

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

44 See financial notes

Schwab Fundamental International Small Company Index ETF

Condensed Portfolio Holdings as of August 31, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.3%	Common Stock	324,181,328	310,023,650
0.3%	Preferred Stock	958,756	924,869
0.8%	Other Investment Companies	2,357,250	2,348,544
100.4%	Total Investments	327,497,334	313,297,063
(0.4%)	Other Assets and Liabilities, Net		(1,186,015)
100.0%	Net Assets		312,111,048

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.3% of net assets
Australia 4.9%
Other Securities		4.9	15,344,456
Austria 1.0%
Wienerberger AG	32,749	0.2	582,353
Other Securities		0.8	2,495,616
		1.0	3,077,969
Belgium 1.1%
Bekaert N.V.	22,350	0.2	647,867
Other Securities		0.9	2,777,148
		1.1	3,425,015
Canada 6.9%
Other Securities		6.9	21,609,435
Denmark 1.6%
Other Securities		1.6	5,088,058
Finland 1.7%
Huhtamaki Oyj	17,673	0.2	574,473
Other Securities		1.5	4,815,789
		1.7	5,390,262

Security	Number of Shares	% of Net Assets	Value ($)
France 4.4%
Societe BIC S.A.	3,542	0.2	561,388
Other Securities		4.2	13,027,409
		4.4	13,588,797
Germany 3.4%
Telefonica Deutschland Holding AG	101,376	0.2	616,008
Other Securities		3.2	9,968,381
		3.4	10,584,389
Hong Kong 2.1%
Other Securities		2.1	6,678,790
Ireland 0.8%
Other Securities		0.8	2,407,638
Israel 1.0%
Other Securities		1.0	3,051,023
Italy 3.0%
Banca Popolare di Milano Scarl	645,528	0.2	684,616
Italcementi S.p.A.	55,246	0.2	617,174
Other Securities		2.6	7,936,826
		3.0	9,238,616
Japan 41.0%
Alps Electric Co., Ltd.	23,528	0.2	738,739
Aoyama Trading Co., Ltd.	15,598	0.2	583,067
Autobacs Seven Co., Ltd.	34,064	0.2	627,114
Calsonic Kansei Corp.	78,540	0.2	549,589
Credit Saison Co., Ltd.	28,566	0.2	572,805
Dena Co., Ltd.	34,779	0.2	635,972
Don Quijote Holdings Co., Ltd.	15,027	0.2	584,042
FamilyMart Co., Ltd.	11,718	0.2	543,427
Fujikura Ltd.	127,809	0.2	633,851
Fukuoka Financial Group, Inc.	111,779	0.2	556,197
IT Holdings Corp.	31,039	0.2	728,175
Kikkoman Corp.	22,553	0.2	726,736
Koito Manufacturing Co., Ltd.	16,408	0.2	563,249
Matsumotokiyoshi Holdings Co., Ltd.	14,589	0.2	701,851
Megmilk Snow Brand Co., Ltd.	32,156	0.2	610,827
Morinaga Milk Industry Co., Ltd.	136,117	0.2	661,574
NGK Insulators Ltd.	24,011	0.2	541,503
Nichirei Corp.	108,488	0.2	664,258
Otsuka Corp.	11,465	0.2	605,487
Ryohin Keikaku Co., Ltd.	3,202	0.2	712,348
Santen Pharmaceutical Co., Ltd.	39,008	0.2	609,978
Shimadzu Corp.	38,867	0.2	572,493
Sohgo Security Services Co., Ltd.	14,472	0.2	632,930
Toho Holdings Co., Ltd.	27,991	0.2	616,248
Toyota Boshoku Corp.	36,844	0.2	614,751
Tsuruha Holdings, Inc.	7,460	0.2	606,970
Valor Co., Ltd.	22,900	0.2	644,378
Other Securities		35.6	111,184,803
		41.0	128,023,362
Luxembourg 0.6%
Other Securities		0.6	1,722,439

See financial notes 45

Schwab Fundamental International Small Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Netherlands 2.1%
Koninklijke BAM Groep N.V. *	171,573	0.3	949,318
Other Securities		1.8	5,517,192
		2.1	6,466,510
New Zealand 0.7%
Other Securities		0.7	2,315,416
Norway 0.9%
Other Securities		0.9	2,915,026
Portugal 0.3%
Other Securities		0.3	1,078,253
Singapore 1.4%
Other Securities		1.4	4,360,091
Spain 2.2%
Gamesa Corp. Tecnologica S.A.	37,573	0.2	565,410
Other Securities		2.0	6,368,561
		2.2	6,933,971
Sweden 2.2%
Other Securities		2.2	6,791,500
Switzerland 2.8%
Galenica AG - Reg'd	441	0.2	567,297
Other Securities		2.6	8,234,591
		2.8	8,801,888
United Kingdom 13.2%
Cable & Wireless Communications plc	691,726	0.2	638,325
Debenhams plc	473,378	0.2	551,138
Greene King plc	54,467	0.2	687,754
Hammerson plc	58,066	0.2	560,839
Hays plc	243,342	0.2	597,693
London Stock Exchange Group plc	14,347	0.2	556,055
National Express Group plc	136,325	0.2	620,617
Provident Financial plc	13,156	0.2	596,901
Segro plc	85,456	0.2	551,486
SIG plc	189,289	0.2	546,736
The British Land Co. plc	49,133	0.2	619,646
Other Securities		11.0	34,603,556
		13.2	41,130,746
Total Common Stock
(Cost $324,181,328)			310,023,650

Preferred Stock 0.3% of net assets
Germany 0.2%
Other Securities		0.2	763,601

Security	Number of Shares	% of Net Assets	Value ($)
Sweden 0.1%
Other Securities		0.1	161,268
Total Preferred Stock
(Cost $958,756)			924,869

Other Investment Companies 0.8% of net assets
United States 0.8%
Equity Fund 0.2%
iShares MSCI EAFE Small-Cap ETF	14,000	0.2	686,840
Money Market Fund 0.1%
Other Securities		0.1	141,362
Securities Lending Collateral 0.5%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (a)		0.5	1,520,342
Total Other Investment Companies
(Cost $2,357,250)			2,348,544

End of Investments.

At 08/31/15, the tax basis cost of the fund's investments was $327,520,607 and the unrealized appreciation and depreciation were $13,068,732 and ($27,292,276), respectively, with a net unrealized depreciation of ($14,223,544).

For the following notes, please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	The rate shown is the 7-day yield.
(b)	All or a portion of this security is on loan. Securities on loan were valued at $1,438,877. Non-cash collateral pledged to the fund for securities on loan amounted to $50,359.
(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 $160,836 or 0.1% of net assets.
(d)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(e)	Illiquid security. At the period end, the value of these amounted to $97,855 or 0.0% of net assets.

ADR —	American Depositary Receipt
CDI —	CHESS Depositary Interest
ETF —	Exchange Traded Fund
GDR —	Global Depositary Receipt
Reg'd —	Registered
REIT —	Real Estate Investment Trust

46 See financial notes

Schwab Fundamental International Small Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$305,663,559	$—	$—	$305,663,559
Singapore ¹	3,478,919	—	—	3,478,919
Capital Goods	783,317	—	97,855	881,172
Preferred Stock¹	924,869	—	—	924,869
Other Investment Companies¹	2,348,544	—	—	2,348,544
Total	$313,199,208	$—	$97,855	$313,297,063

¹	As categorized in the complete schedule of portfolio holdings.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

Investments in Securities	Balance as of February 28, 2015	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of August 31, 2015
Common Stock
Singapore	$—	$—	($36,760)	$114,543	$—	$20,072	$—	$97,855
Rights	1,854	1,722	(1,854)	—	(1,722)	—	—	—
Total	$1,854	$1,722	($38,614)	$114,543	($1,722)	$20,072	$—	$97,855

All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The change in net unrealized appreciation (depreciation) for Level 3 Investments held by the fund at August 31, 2015 was ($36,760).

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 security transfers out of Level 1 to Level 3 due to the result of fair valued securities for which no quoted value was available. There were no transfers between Level 1 and Level 2 for the period ended August 31, 2015.

See financial notes 47

Schwab Fundamental International Small Company Index ETF

Statement of

Assets and Liabilities

As of August 31, 2015; unaudited

Assets
Investments, at value (cost $325,976,992) including securities on loan of $1,438,877		$311,776,721
Collateral invested for securities on loan, at value (cost $1,520,342)	+	1,520,342
Total investments, at value (cost $327,497,334)		313,297,063
Foreign currency, at value (cost $104,886)		104,403
Receivables:
Investments sold		47
Dividends		411,896
Foreign tax reclaims		37,854
Income from securities on loan	+	4,588
Total assets		313,855,851
Liabilities
Collateral held for securities on loan		1,520,342
Payables:
Investments bought		197,419
Investment adviser fees	+	27,042
Total liabilities		1,744,803
Net Assets
Total assets		313,855,851
Total liabilities	–	1,744,803
Net assets		$312,111,048
Net Assets by Source
Capital received from investors		325,440,826
Net investment income not yet distributed		2,108,688
Net realized capital losses		(1,234,958)
Net unrealized capital depreciation		(14,203,508)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$312,111,048		11,800,001		$26.45

48 See financial notes

Schwab Fundamental International Small Company Index ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$2,176,113	$657,000
Net realized gains (losses)		(864,046)	41,533
Net change in unrealized appreciation (depreciation)	+	(16,161,838)	594,456
Increase (decrease) in net assets resulting from operations		(14,849,771)	1,292,989
Distributions to Shareholders
Distributions from net investment income		($—)	($704,650)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		9,600,000	$267,391,791	1,700,000	$45,347,254
Shares redeemed	+	(300,000)	(8,476,621)	(100,000)	(2,866,746)
Net transactions in fund shares		9,300,000	$258,915,170	1,600,000	$42,480,508
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		2,500,001	$68,045,649	900,001	$24,976,802
Total increase	+	9,300,000	244,065,399	1,600,000	43,068,847
End of period		11,800,001	$312,111,048	2,500,001	$68,045,649
Net investment income not yet distributed/Distributions in excess of net investment income			$2,108,688		($67,425)

50 See financial notes

Schwab Fundamental Emerging Markets Large Company Index ETF

Financial Statements

Financial Highlights

	3/1/15– 8/31/15*	3/1/14– 2/28/15	8/14/13 ¹– 2/28/14
Per-Share Data ($)
Net asset value at beginning of period	24.16	24.98	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.48 ²	0.37	0.12
Net realized and unrealized gains (losses)	(4.71)	(0.87)	(0.00) ³
Total from investment operations	(4.23)	(0.50)	0.12
Less distributions:
Distributions from net investment income	—	(0.32)	(0.14)
Net asset value at end of period	19.93	24.16	24.98
Total return (%)	(17.51) ⁴	(1.98)	0.45 ⁴
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.46 ⁵	0.46	0.46 ⁵
Net investment income (loss)	4.12 ⁵	2.20	1.01 ⁵
Portfolio turnover rate⁶	10 ⁴	13	6 ⁴
Net assets, end of period ($ x 1,000)	267,078	96,642	22,482

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Per-share amount was less than $0.005.

⁴

Not annualized.

⁵

Annualized.

⁶

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

See financial notes 51

Schwab Fundamental Emerging Markets Large Company Index ETF

Condensed Portfolio Holdings as of August 31, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
89.3%	Common Stock	285,248,224	238,619,586
8.7%	Preferred Stock	32,907,918	23,130,982
2.0%	Other Investment Companies	5,867,245	5,460,380
100.0%	Total Investments	324,023,387	267,210,948
(0.0%)	Other Assets and Liabilities, Net		(133,041)
100.0%	Net Assets		267,077,907

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 89.3% of net assets
Brazil 6.1%
Ambev S.A.	319,565	0.6	1,674,925
Banco do Brasil S.A.	282,226	0.5	1,381,588
Petroleo Brasileiro S.A. *	1,161,884	1.3	3,387,798
Vale S.A.	541,440	1.0	2,663,904
Other Securities		2.7	7,185,778
		6.1	16,293,993
Chile 0.9%
Other Securities		0.9	2,285,158
China 17.0%
Bank of China Ltd., H Shares	8,287,132	1.4	3,785,324
China Construction Bank Corp., H Shares	8,344,528	2.2	5,868,050
China Mobile Ltd.	536,326	2.4	6,498,153
China Petroleum & Chemical Corp., H Shares	6,354,840	1.6	4,231,066
CNOOC Ltd.	2,222,478	1.0	2,755,855
Industrial & Commercial Bank of China Ltd., H Shares	7,921,499	1.8	4,681,320
PetroChina Co., Ltd., H Shares	3,258,477	1.0	2,707,672
Other Securities		5.6	14,888,287
		17.0	45,415,727
Colombia 0.3%
Other Securities		0.3	807,215

Security	Number of Shares	% of Net Assets	Value ($)
Czech Republic 0.3%
Other Securities		0.3	893,057
Greece 0.5%
Other Securities		0.5	1,443,994
Hungary 0.7%
Other Securities		0.7	1,770,599
India 2.5%
Infosys Ltd. ADR	95,452	0.6	1,637,002
Reliance Industries Ltd. GDR (a)	106,091	1.0	2,768,975
Other Securities		0.9	2,115,421
		2.5	6,521,398
Indonesia 1.2%
Other Securities		1.2	3,230,195
Malaysia 1.9%
Other Securities		1.9	5,164,759
Mexico 3.9%
America Movil S.A.B. de C.V., Series L	3,449,400	1.2	3,138,995
Other Securities		2.7	7,346,870
		3.9	10,485,865
Peru 0.1%
Other Securities		0.1	338,958
Philippines 0.2%
Other Securities		0.2	534,685
Poland 2.7%
Polski Koncern Naftowy Orlen S.A.	131,207	1.0	2,567,695
Other Securities		1.7	4,491,305
		2.7	7,059,000
Republic of Korea 16.9%
Hyundai Mobis Co., Ltd.	7,597	0.5	1,326,384
Hyundai Motor Co.	21,935	1.0	2,763,319
Kia Motors Corp.	42,152	0.6	1,735,618
Korea Electric Power Corp.	33,255	0.5	1,349,601
LG Chem Ltd.	6,738	0.5	1,333,073
LG Corp.	29,140	0.5	1,433,902
LG Electronics, Inc.	34,995	0.5	1,316,658
POSCO	15,901	1.0	2,554,377
Samsung Electronics Co., Ltd.	11,539	4.0	10,624,368
Shinhan Financial Group Co., Ltd.	45,188	0.6	1,511,042
SK Holdings Co., Ltd.	13,847	1.2	3,161,014
SK Innovation Co., Ltd. *	27,741	0.9	2,343,121
Other Securities		5.1	13,726,840
		16.9	45,179,317
Russia 12.5%
Gazprom PAO	5,535,731	4.6	12,295,263
LUKOIL PJSC *	202,029	2.9	7,663,900
MMC Norilsk Nickel PJSC *	8,374	0.5	1,326,511

52 See financial notes

Schwab Fundamental Emerging Markets Large Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Surgutneftegas OAO *	6,827,613	1.3	3,509,489
Tatneft PAO *	367,039	0.7	1,776,882
Other Securities		2.5	6,814,857
		12.5	33,386,902
South Africa 6.6%
MTN Group Ltd.	195,405	1.0	2,607,070
Sasol Ltd.	103,486	1.2	3,315,094
Standard Bank Group Ltd.	126,771	0.5	1,396,519
Other Securities		3.9	10,309,546
		6.6	17,628,229
Taiwan 12.2%
Asustek Computer, Inc.	136,176	0.5	1,238,877
Chunghwa Telecom Co., Ltd.	507,764	0.6	1,541,894
Formosa Chemicals & Fibre Corp.	563,882	0.5	1,206,239
Formosa Plastics Corp.	531,704	0.4	1,171,723
Hon Hai Precision Industry Co., Ltd.	1,648,738	1.8	4,687,370
Taiwan Semiconductor Manufacturing Co., Ltd.	1,249,352	1.9	4,953,480
Other Securities		6.5	17,799,869
		12.2	32,599,452
Thailand 1.4%
PTT PCL NVDR	189,400	0.5	1,416,075
Other Securities		0.9	2,340,570
		1.4	3,756,645
Turkey 1.4%
Other Securities		1.4	3,824,438
Total Common Stock
(Cost $285,248,224)			238,619,586

Preferred Stock 8.7% of net assets
Brazil 6.0%
Banco Bradesco S.A.	294,948	0.7	1,866,580
Itau Unibanco Holding S.A.	399,471	1.1	2,911,923
Petroleo Brasileiro S.A. *	1,740,585	1.6	4,391,784
Vale S.A.	768,596	1.1	2,985,966
Other Securities		1.5	3,935,493
		6.0	16,091,746
Colombia 0.1%
Other Securities		0.1	322,922
Republic of Korea 1.0%
Samsung Electronics Co., Ltd.	2,094	0.6	1,540,292
Other Securities		0.4	1,002,347
		1.0	2,542,639
Russia 1.6%
AK Transneft OAO *	1,332	1.2	3,152,320
Other Securities		0.4	1,021,355
		1.6	4,173,675
Total Preferred Stock
(Cost $32,907,918)			23,130,982

Security	Number of Shares	% of Net Assets	Value ($)
Other Investment Companies 2.0% of net assets
United States 2.0%
Equity Funds 1.6%
iShares India 50 ETF	80,374	0.8	2,203,855
WisdomTree India Earnings Fund	108,466	0.8	2,131,357
		1.6	4,335,212
Money Market Fund 0.4%
Other Securities		0.4	1,089,252
Securities Lending Collateral 0.0%
Other Securities		0.0	35,916
Total Other Investment Companies
(Cost $5,867,245)			5,460,380

End of Investments.

At 08/31/15, the tax basis cost of the fund's investments was $327,064,737 and the unrealized appreciation and depreciation were $0 and ($59,853,789), respectively, with a net unrealized depreciation of ($59,853,789).

For the following notes, please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	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 $2,768,975 or 1.0% of net assets.
(b)	All or a portion of this security is on loan. Securities on loan were valued at $32,961.
(c)	The rate shown is the 7-day yield.
(d)	Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets.
(e)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.

ADR —	American Depositary Receipt
ETF —	Exchange Traded Fund
GDR —	Global Depositary Receipt
NVDR —	Non-Voting Depositary Receipt
Reg'd —	Registered

In addition to the above, the fund held the following at 08/31/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
MSCI EAFE, e-mini, Long, expires 09/18/15	14	572,250	17,606

See financial notes 53

Schwab Fundamental Emerging Markets Large Company Index ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$238,619,586	$—	$—	$238,619,586
Preferred Stock¹	23,130,982	—	—	23,130,982
Other Investment Companies¹	5,460,380	—	—	5,460,380
Total	$267,210,948	$—	$—	$267,210,948
Other Financial Instruments
Futures Contracts²	$17,606	$—	$—	$17,606

¹	As categorized in the complete schedule of portfolio holdings.
²	Futures contracts are not included in Investments in the schedule of condensed portfolio holdings and are valued at unrealized appreciation or depreciation.

Level 3 investments at the beginning and/or end of the period in relation to net assets were not significant and accordingly, a reconciliation of Level 3 assets for the six months ended August 31, 2015 is not presented.

54 See financial notes

Schwab Fundamental Emerging Markets Large Company Index ETF

Statement of

Assets and Liabilities

As of August 31, 2015; unaudited

Assets
Investments, at value (cost $323,987,471) including securities on loan of $32,961		$267,175,032
Collateral invested for securities on loan, at value (cost $35,916)	+	35,916
Total investments, at value (cost $324,023,387)		267,210,948
Deposit with broker for futures contracts		49,950
Foreign currency, at value (cost $296,932)		294,415
Receivables:
Dividends		335,101
Variation margin on futures contracts		840
Foreign tax reclaims		104
Income from securities on loan	+	27
Total assets		267,891,385
Liabilities
Collateral held for securities on loan		35,916
Payables:
Investments bought		754,710
Investment adviser fees	+	22,852
Total liabilities		813,478
Net Assets
Total assets		267,891,385
Total liabilities	–	813,478
Net assets		$267,077,907
Net Assets by Source
Capital received from investors		323,670,801
Net investment income not yet distributed		4,460,815
Net realized capital losses		(4,245,485)
Net unrealized capital depreciation		(56,808,224)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$267,077,907		13,400,001		$19.93

See financial notes 55

Schwab Fundamental Emerging Markets Large Company Index ETF

Statement of

Operations

For the period March 1, 2015 through August 31, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $675,054)		$4,872,003
Securities on loan	+	844
Total investment income		4,872,847
Expenses
Investment adviser fees		489,111
Total expenses	–	489,111
Net investment income		4,383,736
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(3,963,869)
Net realized gains on in-kind redemptions		304,843
Net realized losses on futures contracts		(107,471)
Net realized losses on foreign currency transactions	+	(82,071)
Net realized losses		(3,848,568)
Net change in unrealized appreciation (depreciation) on investments		(54,200,271)
Net change in unrealized appreciation (depreciation) on futures contracts		15,630
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	(12,338)
Net change in unrealized appreciation (depreciation)	+	(54,196,979)
Net realized and unrealized losses		(58,045,547)
Decrease in net assets resulting from operations		($53,661,811)

56 See financial notes

Schwab Fundamental Emerging Markets Large Company Index ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	3/1/15-8/31/15		3/1/14-2/28/15
Net investment income		$4,383,736	$999,175
Net realized losses		(3,848,568)	(439,509)
Net change in unrealized appreciation (depreciation)	+	(54,196,979)	(2,090,161)
Decrease in net assets resulting from operations		(53,661,811)	(1,530,495)
Distributions to Shareholders
Distributions from net investment income		($—)	($826,020)

Transactions in Fund Shares
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	VALUE	SHARES	VALUE
Shares sold		9,700,000	$230,784,552	3,100,000	$76,516,387
Shares redeemed	+	(300,000)	(6,686,539)	—	—
Net transactions in fund shares		9,400,000	$224,098,013	3,100,000	$76,516,387
Shares Outstanding and Net Assets
		3/1/15-8/31/15		3/1/14-2/28/15
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		4,000,001	$96,641,705	900,001	$22,481,833
Total increase	+	9,400,000	170,436,202	3,100,000	74,159,872
End of period		13,400,001	$267,077,907	4,000,001	$96,641,705
Net investment income not yet distributed			$4,460,815		$77,079

See financial notes 57

Schwab Fundamental Index 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. Mid-Cap ETF
Schwab Fundamental U.S. Broad Market Index ETF	Schwab U.S. Small-Cap ETF
Schwab Fundamental U.S. Large Company Index ETF	Schwab U.S. Dividend Equity ETF
Schwab Fundamental U.S. Small Company Index ETF	Schwab U.S. REIT ETF
Schwab Fundamental International Large Company Index ETF	Schwab International Equity ETF
Schwab Fundamental International Small Company Index ETF	Schwab International Small-Cap Equity ETF
Schwab Fundamental Emerging Markets Large Company Index ETF	Schwab Emerging Markets Equity ETF
Schwab U.S. Broad Market ETF	Schwab U.S. TIPS ETF
Schwab U.S. Large-Cap ETF	Schwab Short-Term U.S. Treasury ETF
Schwab U.S. Large-Cap Growth ETF	Schwab Intermediate-Term U.S. Treasury ETF
Schwab U.S. Large-Cap Value ETF	Schwab U.S. Aggregate Bond ETF

The funds issue and redeem shares at their net assets 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/or 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 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).

The funds invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the 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:

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

• 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 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.

• Futures contracts: Futures contracts are valued at their settlement prices as of the close of their exchanges.

• Short-term securities (60 days or less to maturity): A short-term security may be valued at its amortized cost when it approximates the security's market value.

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 significant 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, ETFs and futures contracts. 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, without consideration to the classification level of the specific investments held by an underlying fund.

• 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

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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.

The levels associated with valuing the funds' investments as of August 31, 2015 are disclosed in the Condensed Portfolio Holdings.

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

Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (initial margin) whenever it enters into a futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized appreciation or depreciation until the contract is closed, at which time the gains or losses are realized. Futures contracts are traded publicly on exchanges, and their market value may change daily.

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 each 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.

The value of the securities on loan and the related collateral as of August 31, 2015, if any, are disclosed in each fund's Condensed Portfolio Holdings. The value of the securities on loan and the investments of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange appreciation or depreciation arises from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

and unrealized foreign exchange gains or losses are reported in foreign currency transactions or translations on the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. In those instances, the funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.

When a fund closes out a futures contract position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly.

(d) Investment Income:

Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.

Income received from foreign sources may result in withholding tax. Withholding taxes are accrued at the same time as the related income if the tax rate is fixed and known, unless a tax withheld is reclaimable from the local tax authorities in which case it is recorded as receivable. If the tax rate is not known or estimable, such expense or reclaim receivable is recorded when the net proceeds are received.

(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) Distributions to Shareholders:

Schwab Fundamental U.S. Broad Market Index ETF, Schwab Fundamental U.S. Large Company Index ETF, and Schwab Fundamental U.S. Small Company Index ETF generally make distributions from net investment income, if any, quarterly. Schwab Fundamental International Large Company Index ETF, Schwab Fundamental International Small Company Index ETF, and Schwab Fundamental Emerging Markets Large Company Index ETF generally make distributions from net investment income, if any, annually. All funds generally make distributions from net realized capital gains, if any, once a year.

(g) Accounting Estimates:

(h) 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 net realized 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.

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(i) Foreign Taxes:

The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of August 31, 2015, if any, are reflected in each fund's Statement of Assets and Liabilities.

(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.

(k) New Accounting Pronouncements:

In June 2014, Accounting Standards Update (ASU) No. 2014-11, Topic 806 Transfers and Servicing — Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures, was issued and is effective for interim periods beginning after March 15, 2015 and annual periods beginning after December 15, 2014. The ASU modifies accounting guidance and enhances disclosure requirements for repurchase agreement and securities lending transactions. Management is currently evaluating the impact the adoption of ASU 2014-11 may have on the funds’ financial statement disclosures.

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. Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of the investment in a fund will fluctuate, which means that the investors 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 strategies, 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 may be below that of their respective index.

Large-Cap Risk. Certain funds invest in large-cap stocks. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap U.S. stocks fall behind other types of investments—mid- or small-cap stocks, for instance—a fund’s large-cap holdings could reduce performance.

Mid-Cap Risk. Certain funds invest in mid-cap stocks. Mid-cap stocks tend to go in and out of favor based on market and economic conditions. Stocks of mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when mid-cap stocks fall behind other types of investments—bonds or large-cap stocks, for instance—a fund’s mid-cap holdings could reduce performance.

Small-Cap Risk. Certain funds invest in small-cap stocks. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments—large-cap and mid-cap stocks, for instance—a fund’s small-cap holdings could reduce performance.

Foreign Investment Risk. A fund’s investments in securities of foreign 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; changes in currency exchange rates or exchange control regulations (including

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of a fund's investments, and could impair the fund's ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. Foreign securities also include American Depositary receipts (ADRs), Global Depositary receipts (GDRs), and European Depositary receipts (EDRs), which are receipts issued by U.S. and foreign banks that represent shares of foreign-based corporations. Investment in ADRs, GDRs and EDRs may be less liquid than the underlying shares in their primary trading market and GDRs, many of which are issued by companies in emerging markets, may be more volatile. To the extent a fund's investments in a single country or a limited number of countries represent a larger percentage of the fund's assets, the fund's performance may be adversely affected by the economic, political and social conditions in those countries and the fund may be subject to increased price volatility.

Emerging Markets Risk. Certain funds invest in emerging markets. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar and, at times, it may be difficult to value such investments.

Sampling Index Tracking Risk. Certain funds 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 investment adviser’s investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. Because certain funds utilize a sampling approach they may not track the return of their respective index as well as they would if the funds purchased all of the securities in their respective index.

Tracking Error Risk. As an index fund, each fund seeks to track the performance of the index, although it may not be successful in doing so. The divergence between the performance of a fund and the index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.

Derivatives Risk. Each fund may use derivatives to enhance returns or hedge against market declines. Examples of derivatives are options, futures, options on futures and swaps. An option is the right to buy or sell an instrument at a specific price before a specific date. A future is an agreement to buy or sell a financial instrument at a specific price on a specific day. A swap is an agreement whereby two parties agree to exchange payment streams calculated in relation to a rate, index, instrument or certain securities and a predetermined amount.

A 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 liquidity risk and market risk, are discussed elsewhere in this section. The fund’s use of derivatives is also subject to credit risk, leverage risk, lack of availability risk, valuation risk, correlation risk and tax risk. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Credit risk is the risk that the counterparty to a derivatives transaction may not fulfill its obligations. Leverage risk is the risk that a small percentage of assets invested in derivatives can have a disproportionately large impact on the fund. 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 initial amount invested. The use of derivatives, subject to regulation by the Commodity Futures Trading Commission (CFTC), could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.

Liquidity Risk. A particular investment may be difficult to purchase or sell. A fund may be unable to sell a security at an advantageous time or price.

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.

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

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.

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. The market price of fund shares may deviate, sometimes significantly, from NAV during periods of market volatility or as a result of other factors impacting foreign securities, including liquidity, irregular trading activity and timing differences between foreign markets where securities trade and the secondary market where fund shares are sold.

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 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
0.32%		0.32%		0.32%		0.32%		0.46%		0.46%

The funds may engage in certain transactions involving affiliates. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corporation shares owned by the funds during the report period:

Fund	Balance of Shares Held at 02/28/15	Gross Purchases	Gross Sales	Balance of Shares Held at 8/31/15	Market Value at 8/31/15	Realized Gains (Losses) 3/1/15 to 8/31/15	Dividends Received 3/1/15 to 8/31/15
Schwab Fundamental U.S. Broad Market Index ETF	3,997	486	(1,001)	3,482	$105,783	$3,077	$458
Schwab Fundamental U.S. Large Company Index ETF	7,089	9,020	(3,105)	13,004	395,062	13,616	1,375

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. 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.

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

5. Other Service Providers (continued):

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.

The funds may engage in direct transactions with certain other Schwab funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and/or officers. For the period ended August 31, 2015, each fund's total aggregate security transactions with other Schwab funds were as follows:


Schwab Fundamental U.S. Broad Market Index ETF	$526,919
Schwab Fundamental U.S. Large Company Index ETF	11,548,547
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	44,437

6. Board of Trustees:

7. Borrowing from Banks:

The funds have access to custodian overdraft facilities. During the period, the funds also had access 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 an interest expense, which is disclosed on a fund's Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

Effective October 8, 2015, the existing line of credit was terminated and the funds became participants in a syndicated, committed line of credit of $530 million with State Street, as agent.

8. Derivatives:

Certain funds entered into equity index futures contracts during the report period. The funds invested in futures contracts to equitize available cash. The fair value and variation margin for futures contracts held at August 31, 2015 are presented on the Condensed Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds’

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

8. Derivatives (continued):

accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:

	Contract Values	Number of Contracts
Schwab Fundamental U.S. Broad Market Index ETF	$444,288	4
Schwab Fundamental U.S. Large Company Index ETF	914,945	9
Schwab Fundamental U.S. Small Company Index ETF	579,875	5
Schwab Fundamental International Large Company Index ETF	1,019,233	11
Schwab Fundamental International Small Company Index ETF	76,417	1
Schwab Fundamental Emerging Markets Large Company Index ETF	387,561	8

9. Purchases and Sales/Maturities of Investment Securities:

For the period ended August 31, 2015, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales/Maturities of Securities
Schwab Fundamental U.S. Broad Market Index ETF	$13,522,976	$12,209,740
Schwab Fundamental U.S. Large Company Index ETF	42,671,724	34,618,572
Schwab Fundamental U.S. Small Company Index ETF	59,706,939	50,726,824
Schwab Fundamental International Large Company Index ETF	41,467,477	29,334,133
Schwab Fundamental International Small Company Index ETF	33,180,517	27,241,244
Schwab Fundamental Emerging Markets Large Company Index ETF	160,322,740	21,496,109

10. 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 equity 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 a fund.

The in-kind transactions for the period ended August 31, 2015 were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab Fundamental U.S. Broad Market Index ETF	$26,729,110	$—
Schwab Fundamental U.S. Large Company Index ETF	496,062,080	88,368,736
Schwab Fundamental U.S. Small Company Index ETF	330,228,720	74,280,839
Schwab Fundamental International Large Company Index ETF	461,072,250	—
Schwab Fundamental International Small Company Index ETF	263,106,771	8,209,633
Schwab Fundamental Emerging Markets Large Company Index ETF	91,181,252	2,406,006

Schwab Fundamental Index ETFs

Financial Notes, unaudited (continued)

10. In-Kind Transactions (continued):

For the period ended August 31, 2015, 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 August 31, 2015 are disclosed in the funds' Statements of Operations.

11. Federal Income Taxes

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of February 28, 2015, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:

Expiration Date	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
No expiration*	$100,125	$187,754	$223,286	$1,471,155	$364,566	$84,642
Total	$100,125	$187,754	$223,286	$1,471,155	$364,566	$84,642

*	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.

For tax purposes, net realized 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 February 28, 2015, the funds had no capital losses deferred and no capital loss carryforwards utilized.

As of February 28, 2015, 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 February 28, 2015, the funds did not incur any interest or penalties.

12. Other:

As a result of recent political and military actions undertaken by the Russian Federation, the U.S. and the European Union have instituted various economic sanctions against Russian individuals and entities. The U.S. and/or the European Union may impose additional economic sanctions, or take other actions, against individuals and/or companies in specific sectors of the Russian economy, including, but not limited to, the financial services, energy, metals and mining, engineering, and defense and defense related materials sectors. These sanctions, and the threat of additional sanctions, could have adverse consequences for the Russian economy, including continued weakening of the Russian currency, downgrades in Russia’s credit rating, and a significant decline in the value and liquidity of securities issued by Russian companies or the Russian government. Any of these events could negatively impact a fund's investment in Russian securities. These sanctions have the possibility of impairing a fund’s ability to invest in accordance with its investment strategy and/or to meet its investment objective.

In addition, as index based products, the funds will generally maintain exposure to Russian securities to the extent the indexes which they track include such securities. For this reason, the sanction instituted against Russia, and any continued disruption of the Russian economy, could negatively impact a fund’s performance to the extent its index and its portfolio contain securities of Russian issuers, and, depending on the fund’s exposure to Russian issuers, the impact could be significant.

13. 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 95 funds.

Independent Trustees
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served¹)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Robert W. Burns 1959 Trustee (Trustee Schwab Strategic Trust since 2009)	Retired/Private Investor (Jan. 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 Schwab Strategic Trust since 2012)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant, LLC (wealth management) (Jan. 2008 – April 2012).	21	None
Charles A. Ruffel 1956 Trustee (Trustee Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2015)	Co-Chief Executive Officer, Kudu Investment Management, LLC (financial services) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015).	95	None

Interested Trustees
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Walter W. Bettinger II² 1960 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust and Laudus Institutional Trust since 2010)	Director, President and Chief Executive Officer, The Charles Schwab Corporation and Charles Schwab & Co., Inc. (2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present).	95	Director, The Charles Schwab Corporation (2008 – present)

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 since 2010)	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; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (January 2011 – present); 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 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 Funds plc and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer 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, Laudus Funds and Schwab ETFs (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 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, Laudus Funds and Schwab ETFs (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 since 2011)	Senior Vice President (Sept. 2011 – present), Vice President (March 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; 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 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

144A securities These securities may be sold only to qualified institutional buyers under Securities Act Rule 144A.

American Depositary Receipt (ADR) U.S. dollar-denominated receipts issued by U.S. banks or trust companies that represent shares of foreign-based corporations.

ask See “offer.”

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. Treasury Bills 1 – 3 Months Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.

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

cap, capitalization See “market cap.”

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

European Depositary Receipt (EDR) A negotiable security (receipt) that is issued by a European bank, and that represents shares of foreign-based corporations.

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

Global Depositary Receipt (GDR) A negotiable security (receipt) that is issued by a foreign bank, and that represents shares of foreign-based corporations.

gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.